Tennessee Gas Pipeline Company

FIFTH REVISED VOLUME NO. 1

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Effective Date: 02/16/2003, Docket: GT02- 35-007, Status: Effective

4th Sub Ninth Revised Sheet No. 405A 4th Sub Ninth Revised Sheet No. 405A : Effective

Superseding: Seventh Revised Sheet No. 405A

 

GENERAL TERMS AND CONDITIONS (continued)

 

4.6 Transporter reserves the right to determine in its reasonable discretion, that a

Shipper who requests new service is not creditworthy to receive such service on

the basis that Shipper has outstanding payments due on invoices rendered by

Transporter on current or past service agreements and Shipper has defaulted on

such payments per the terms of Article VI of the General Terms and Conditions;

provided, however, this provision shall not affect amounts disputed by Shipper

in good faith. This Section 4.6 shall apply solely to the Shipper that is the

contract holder.

 

4.7 If a Shipper has multiple contracts with Transporter and defaults on one

contract, Transporter may deem a default by Shipper on that one contract as a

loss of creditworthiness on any other contract the Shipper has with

Transporter; provided, however, this provision shall not affect amounts

disputed by Shipper in good faith. This Section 4.7 shall apply solely to the

Shipper that is the contract holder.

 

4.8 In accordance with Article III, Sections 11.11(j) and 12.11(d) of Transporter's

General Terms and Conditions, in the event a Releasing Shipper does not

permanently release a contract to a Replacement Shipper, Transporter may

invoice the Releasing Shipper upon the Replacement Shipper's default on a

payment obligation to Transporter in accordance with Article VI of these

General Terms and Conditions for an amount up to the amount of the Releasing

Shipper's reservation charge plus interest calculated from the date the unpaid

amount was due from Replacement Shipper, net of any security held for

Replacement Shipper. Releasing Shipper shall submit the payment to Transporter

within ten (10) days of receipt of the invoice.

 

4.9 In the event Transporter constructs new facilities to accommodate a Shipper and

that Shipper is deemed uncreditworthy by Transporter, Transporter may require

an irrevocable letter of credit, or other mutually agreeable form of credit,

from Shipper in an amount up to the cost of the facilities until Transporter

has been reimbursed for the cost of the facilities. Such credit assurance may

be requested at any time prior to in-service of the facilities. To the extent

mutually agreed to as a condition of the construction, Transporter may invoke

such credit assurance requirement after the facilities are placed in-service.

In the event facilities are constructed to accommodate more than one Shipper,

the letter of credit or other mutually agreeable form of credit for each non-

creditworthy Shipper will be limited to the cost of facilities allocable to

such Shipper. The facilities under this Section 4.9 shall include those

facilities constructed in accordance with Article XVII of the General Terms and

Conditions for Shipper. This requirement is in addition to and shall not

supersede or replace any other rights that Transporter may have regarding the

construction and reimbursement of facilities.

 

In the event Shipper defaults and Transporter terminates service to Shipper,

Transporter shall draw upon and retain such collateral as necessary to reimburse

Transporter for the unamortized cost of the facilities constructed for Shipper.

The capacity underlying any terminated agreement shall be made available

pursuant to Section 5 of this Article XXVIII. Within 60 days of the capacity

being made available, to the extent such capacity has been awarded, the

collateral retained by Transporter from the original Shipper shall be reduced to

an amount equal to the net present value of that portion of the future

reservation charge revenues of the original Shipper that would have been

attributed to the cost of such facility less the net present value of that

portion of the future reservation charge revenues of the newly awarded Shipper

that may be attributed to the cost of such facility.

 

4.10 Transporter intends that this Section 4 shall be read in harmony, and not in

conflict, with the Bankruptcy Code.

 

4.11 In the event Transporter has terminated service to Shipper as a result of loss

of creditworthiness or default by Shipper, Transporter shall have the right to

assert any liens or other interests, consistent with applicable law, against any

gas Shipper may have remaining on Transporter's system.