Northern Natural Gas Company

Fifth Revised Volume No. 1

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Effective Date: 09/29/2010, Docket: RP10-1109-000, Status: Effective

Sixth Revised Sheet No. 287A Sixth Revised Sheet No. 287A

Superseding: Fifth Revised Sheet No. 287A

 

GENERAL TERMS AND CONDITIONS

 

E. Bids. During the open season, a Shipper desiring to bid on released capacity must

use Northern's website to post all valid bids, listing all pertinent terms and

conditions of the valid bids. Valid bids shall be partially executed Service

Agreements. Any acquiring Shipper must meet Northern's creditworthiness requirements

pursuant to Section 46, of GENERAL TERMS AND CONDITIONS of this Tariff.

 

Bids for released capacity shall be binding until written or electronic notice of

withdrawal is received by Northern. A bidder may not withdraw a bid for the released

capacity after the bid period ends. Once a bidder has withdrawn its bid, the bidder

may only submit a new bid for that released capacity at a higher rate.

 

Northern shall allocate available capacity to the best bid first and continue

allocating until all offered capacity is awarded. Unless the releasing Shipper

has specified otherwise, in the event equivalent bids are submitted, the

capacity will be made available on a pro rata basis to the equal bidders. Should

any one of the equal bidders veto the pro rata allocation of the capacity,

Northern will conduct a lottery to select the winning bidder, who will then be

allocated its requested capacity. The remainder will be available to the other

bidder(s) on a pro rata basis, which may again trigger the veto/lottery selection

process.

 

F. Determination and Posting of Best Offer; Awarding Capacity. At the close of the open

season Northern will evaluate the bids and will determine which bid constitutes the

best bid by determining the highest economic unit value unless the releasing Shipper

has provided Northern an alternative best bid evaluation methodology. The

releasing Shipper may designate one of the following options to determine the

best bid: 1) highest rate; 2) net revenue and 3) present value. For index-based

capacity release transactions, the releasing Shipper should provide the necessary

information and instructions to support the chosen methodology. For additional

information regarding releases using an indexed-based rate(s), see subsection P. below.

Other choices of bid evaluation methodology may be selected by the releasing Shipper at

the discretion of Northern. However, Northern is not required to offer other choices

or similar timeline treatment for other choices, nor, is it held to the timeline should

the releasing Shipper elect another method of evaluation. Northern will utilize a

calculation based on rate, term and quantity to determine the highest economic unit

value, utilizing the F.E.R.C. interest rate. The comparative economic unit value of

each bid will be determined by calculating the Net Present Value (NPV) of each bid over

the term of the bid, and then dividing by the quantity of the respective bid. The NPV

calculation shall include only revenue 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 reservation 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. Northern's evaluation will be completed and the bid to be matched (for

pre-arranged deals) or awarded will be communicated by 2:00 p.m. (CCT). Any match

response is due by 2:30 p.m. (CCT) and the award will be posted on the website by

3:00 p.m. (CCT). A contract with the contract number will be issued within one hour

of award posting, with nomination possible beginning at the next available nomination

cycle for the effective date of the contract.

 

The above capacity release timelines, as set forth in this Section 47, are applicable

to all parties; however, it is only applicable if 1) all information provided by the

parties to the transaction is valid and the acquiring shipper has been determined to be

credit worthy before the capacity release bid is tendered, 2) for index-based capacity

release transactions, the releasing Shipper has provided Northern with sufficient

instructions to evaluate the corresponding bid(s) according to the timelines

3) there are no special terms or conditions of the release and 4) one of the above

listed best bid evaluation methodologies is selected. Further, Northern may complete

the capacity release process on a different timelime if the offer includes unfamiliar

or unclear terms and conditions (e.g., designation of an index not supported by

Northern. In the event the above conditions are not met, the transaction will be

processed within three (3) business days or as soon as reasonably practicable,

whichever is sooner.

 

A new service agreement(s) and contract number(s) will be issued for temporary released

capacity. Permanently acquired capacity may be added to existing agreements if

requested.