Gas Transmission Northwest Corp.

Third Revised Volume No. 1-A

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Effective Date: 01/01/2007, Docket: RP06-407-000, Status: Effective

First Revised Sheet No. 129 First Revised Sheet No. 129 : Effective

Superseding: Original Sheet No. 129

TRANSPORTATION GENERAL TERMS AND CONDITIONS

(Continued)

 

18. OPERATING PROVISIONS (Continued)

 

18.1 Firm Service (Continued)

 

(e) Valuation of Bids

 

Unless otherwise specified in its open season posting, the

bid(s) with the greatest economic value will be the bid(s)

with the highest net present value ("NPV") based on (1) the

reservation charge and any proposed usage charge revenues

guaranteed by a minimum volume commitment or otherwise that

requestor(s) would pay at the rates the requestor(s) has bid,

(2) the term of service specified in the request, as limited

by Shipper's credit quality, and (3) Shipper's probability of

default for the applicable bid term. If the economic values

of separate bids are equal, then service shall be offered to

such requestors on a pro-rata basis. The NPV is the

discounted cash flow of the bid according to the following

formula, net of revenues lost or affected by the requests for

service: n

(1 + i) - 1

Present Value per = P * R * (1-PD) * ____________

n

i (1 + i)

where: P = percent of the rate or charge that the

Shipper is willing to pay.

 

R = Rate or charge calculated as: The applicable

maximum authorized reservation charge(s) per

Dth in effect at the time of the bid for

service.

 

PD = Shipper's probability of default for the

applicable bid term.

 

i = FERC's annual interest rate divided by 12.

 

n = number of periods for which the bidder wishes

to contract.

 

The NPV formula will be affected by the rate requested, the

applicable bid term, and Shipper's probability of default. In

the event GTN intends to entertain bids for service under

index-based or other Negotiated Rate Formulae, the future value

of which cannot be determined at the time of the bidding, GTN

 

(Continued)