Gas Transmission Northwest Corp.
Third Revised Volume No. 1-A
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Effective Date: 01/01/2007, Docket: RP06-407-005, Status: Pending
Second Revised Sheet No. 129 Second Revised Sheet No. 129 : Pending
Superseding: First Revised Sheet No. 129
TRANSPORTATION GENERAL TERMS AND CONDITIONS
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, 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:
(1 + i) - 1
Present Value per = P * R * (1-PD) * ____________
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
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
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