Gas Transmission Northwest Corp.

Third Revised Volume No. 1-A

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Effective Date: 01/01/2007, Docket: RP06-407-008, Status: Pending

Original Sheet No. 129A Original Sheet No. 129A : Pending

 

TRANSPORTATION GENERAL TERMS AND CONDITIONS

(Continued)

 

18. OPERATING PROVISIONS (Continued)

 

18.1 Firm Service (Continued)

 

(e) Valuation of Bids (Continued)

 

Unless otherwise specified in its open season posting, when

evaluating bids for long-term firm capacity with terms of three

years or more, the bid(s) with the highest net present value

("NPV") will additionally take into account a third factor:

Shipper's probability of default for the applicable bid term.

 

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 term and rate

requested and Shipper's probability of default.

 

 

 

 

 

 

 

 

(Continued)