Southwest Gas Storage Company

First Revised Volume No. 1

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Effective Date: 03/01/2004, Docket: RP04-146-000, Status: Effective

Second Revised Sheet No. 132 Second Revised Sheet No. 132 : Effective

Superseding: First Revised Sheet No. 132

GENERAL TERMS AND CONDITIONS

(Continued)

 

8. RIGHT OF FIRST REFUSAL

 

8.1 Southwest shall continue to provide firm service pursuant to a

Long-Term Agreement beyond the term specified in such Agreement

if:

 

(A) The Long-Term Agreement is extended according to its terms;

or

 

(B) Shipper exercises its Right of First Refusal pursuant to

Section 8.2.

 

8.2 The Right of First Refusal shall apply to a Long-Term Agreement

for firm service that (1) is in effect prior to August 1, 2000 or

(2) commences on or after August 1, 2000 and Shipper has agreed to

pay the Maximum Rate applicable for the service, or, if the

service is not available for twelve (12) consecutive months, the

Long-Term Agreement is for more than one year and provides for

service at the Maximum Rate applicable to the service. If a

Shipper's Agreement does not qualify for the right of first

refusal under this Section 8, then Southwest in a not unduly

discriminatory manner may agree otherwise with any such Shipper.

 

(A) If Southwest receives an acceptable offer for all or any

portion of the capacity used to provide service under

Shipper's Long-Term Agreement, Southwest shall notify Shipper

of such offer and its terms no later than six (6) months

prior to the expiration of the primary term of the Long-Term

Agreement.

 

(B) Shipper shall be permitted to designate a Quantity of Gas

less than its existing MAQ which Shipper wishes to retain

under the Right of First Refusal.

 

(C) The criteria for determining the economic value shall be the

Net Present Value (NPV) of the capacity and deliverability

charges that Shipper would pay at the rates Shipper has bid,

which shall not be less than the Minimum Rate nor greater

than the Maximum Rate, as stated on the currently effective

Tariff Sheet governing such service, over the term of service

specified in the offer, utilizing a ten percent (10%) annual

discount factor. Only revenues generated from the capacity

and deliverability charge components will be used to

calculate the NPV.