Northern Natural Gas Company

Fifth Revised Volume No. 1

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Effective Date: 02/21/2009, Docket: RP01-223-004, Status: Effective

Fifth Revised Sheet No. 252 Fifth Revised Sheet No. 252 : Pending

Superseding: Subsitute Fourth Revised Sheet No. 252

GENERAL TERMS AND CONDITIONS

 

Once Northern has validated Shipper's request and determined that Shipper's offer

is the best bid, Northern shall send, for execution, to Shipper a Throughput

Service Agreement. Shipper shall have thirty (30) days from the date of tender

in which to execute the Throughput Service Agreement and return to Northern or

Shipper's request shall be deemed null and void. Northern is not required to

tender a Service Agreement for service at a rate less than maximum rate.

 

For purposes of the throughput request form, a Shipper may request an Operational

Area as a Point of Delivery to the facilities of a single LDC. Shipper shall be

required to specify the specific points for which gas will be delivered.

 

Additional Provisions for Requests for

Firm Throughput Service

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Northern will advise Shipper of its ability to provide the service requested.

Except as provided below, Northern will give a Shipper requesting firm service

written confirmation within seven (7) work days after receipt of a request that

a Shipper will be allowed to enter into a TF, TFX, VFT, or LFT Service Agreement

containing the points requested or amend an existing TF, TFX, VFT, or LFT Service

Agreement to change primary receipt or delivery points; Shipper may not nominate

volumes at these points until the TF, TFX, VFT, or LFT Service Agreement or

amendment is executed.

 

The effective date of the TF, TFX, VFT, or LFT Service Agreement shall be that

agreed to by Northern and the Shipper and shall be set forth in the Service

Agreement.

 

To the extent capacity is not available, a request for new firm service shall be

voided and a request to amend a primary receipt or delivery point shall be

retained in Northern's capacity tracker system. Northern shall post weekly its

available capacity on the EBB. Northern shall have the right to post notices for

solicitation of bids for particular segments of capacity. Such notice may

include a bid evaluation methodology, in which case the posting will be made at

least three (3) days prior to bidding. In addition, Northern will post whether

bids have been received and show the full net present value (NPV) analysis for

the highest bid received, the shippers' bids, and provide the actual calculation

of the NPV with sufficient clarity to permit bidders to duplicate the results.

In the event Northern receives bids for new capacity, the capacity will be

allocated to the best bid. However, in the event Northern receives no bids for

the receipt or delivery point capacity, Northern will utilize its capacity

tracker system and offer the capacity to the first shipper requesting an

amendment to an existing contract.

 

In the event a specific bid evaluation methodology has not been posted, the

default methodology for the best bid will be the bid with the highest total NPV.

The NPV is the discounted cash flow of incremental revenues to Northern for

service. Incremental revenues are those revenues above and beyond the current

revenues which Northern already receives from reservation charges being paid

prior to the bid period. Northern will utilize the standard NPV calculation

based on the revenue stream over the specified term (which shall not exceed

twenty (20) years), discounted by the FERC interest rate to determine the highest

total incremental revenues. If an alternate bid evaluation methodology is used,

Northern will post the evaluation factors to be utilized along with each factor's

weight. The NPV calculation shall include only revenues generated by the

reservation rate or a guaranteed throughput volume. In those cases where one or

more bidders is willing to pay the maximum recourse rate, the NPV used in such

cases is capped at, and may not exceed, the NPV equal to the maximum reservation

rate available to recourse shippers. For purposes of NPV evaluation, the

aggregate NPVs of two or more bids for contiguous service may be considered

provided that the combined capacity under those bids does not exceed the maximum

capacity available for bid. For purposes of bid comparisons in allocating

capacity, Shippers willing to pay more than the maximum tariff rate will be

considered to be paying the maximum tariff rate and for purposes of bid

comparisons in allocating capacity, guaranteed throughput volume service applies

only in the case of a negotiated rate.