Northern Natural Gas Company

Fifth Revised Volume No. 1

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Effective Date: 11/22/2003, Docket: RP03-398-004, Status: Effective

Eighth Revised Sheet No. 267 Eighth Revised Sheet No. 267 : Superseded

Superseding: Seventh Revised Sheet No. 267

GENERAL TERMS AND CONDITIONS

 

32. BALANCING

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Mandatory cash-out/in shall not apply to Operational Balancing Agreements

(OBAs), except as provided on Sheet No. 264.

 

A. Definitions

 

(i) Volumetric Imbalance. Volumetric imbalance shall mean the volume

difference between receipts and deliveries, without consideration

of the dollar value of such volume but with consideration of the

applicable fuel and unaccounted-for.

 

(ii) Dollar Valuation or Dollar Volume Imbalance. Dollar Valuation or

Dollar Volume Imbalance shall be calculated by first determining

the monthly Volumetric Imbalance and then multiplying it by the

applicable Index Price (as defined below) for the same month.

 

B. Dollar Valuation

 

Northern and Shipper, or its Designee, shall receive and

deliver thermally equivalent gas volumes as nearly as

practicable at uniform hourly and daily rates of flow. Volume

differences between monthly receipts and deliveries shall be

accumulated and recorded in a Shipper account. Northern and

Shipper shall manage monthly receipts or deliveries so that the

account balance shall be kept as near to zero as practicable.

Imbalances shall be valued on a dollar volume basis, which means that

Northern will first determine the imbalance quantity for each

month by legal entity on an MMBtu basis and then will determine a

dollar value using the MMBtu quantity and the applicable

Monthly Index Price, as tiered for imbalance level. Dollar Valuation

will not apply to volumes that have been injected into or withdrawn

from storage under the Monthly Imbalance-to-Storage provisions set

forth in Subsection F. (iii) below.

 

C. Determination of Monthly Index Prices (MIPs)

 

The high, low and average Index Prices for the Market Area Index

Price, the Field Area Index Price, and the Gulf Coast Index Price

shall be determined each month using the quoted spot gas price at

price discovery points on Northern's system as appearing in "Gas

Daily," as provided below.

 

(i) Monthly Index Prices will be determined using a five-week period.

The five-week period is defined as beginning on the first Tuesday

of the calendar month for which the MIP is being established and

ending on the first or second Monday of the following month,

whichever is applicable, to arrive at a five-week period.

 

(ii) Market Area Monthly Index Prices (Market Area MIP)

 

a. The High Market Area Monthly Index Price (High Market Area

MIP) shall equal the arithmetic average of the highest

average weekly price occurring within each five-week period

at Northern-Demarcation and Northern-Ventura.

 

b. The Low Market Area Monthly Index Price (Low Market Area MIP)

shall equal the arithmetic average of the lowest average

weekly price within each five-week period at

Northern-Demarcation and Northern-Ventura.

 

c. The Average Market Area Monthly Index Price (Average Market

Area MIP) shall equal the arithmetic average of the five

average weekly prices at Northern-Demarcation and

Northern-Ventura.