Trailblazer Pipeline Company

Fourth Revised Volume No. 1

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Effective Date: 12/28/2007, Docket: RP08-168-000, Status: Effective

Original Sheet No. 167 Original Sheet No. 167 : Effective

 

GENERAL TERMS AND CONDITIONS

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17. EVALUATION OF CREDIT

 

17.1 In evaluating requests for service and for certain other

purposes under this Tariff, Trailblazer will perform a credit appraisal

of Shipper.

 

(a) Acceptance of a Shipper's request for service and the

continuation of service to a Shipper are contingent upon the Shipper

satisfying creditworthiness requirements on an on-going basis. To

determine creditworthiness, a credit appraisal shall be performed in

accordance with the following criteria:

 

Trailblazer shall apply consistent evaluation practices

to all similarly situated Shippers in determining any Shipper's

financial ability to perform the payment obligations due to Trailblazer

over the term of the requested or existing service agreement.

 

A Shipper will be deemed creditworthy if (i) its long-

term unsecured debt securities are rated at least BBB- by Standard &

Poor's Corporation ("S&P") and at least Baa3 by Moody's Investor

Service ("Moody's") (provided, however, that if the Shipper's rating is

at BBB- or Baa3 and the short-term or long-term outlook is Negative,

Trailblazer may require further analysis as discussed below); and (ii)

the sum of reservation fees, commodity fees and any other associated

fees and charges for the contract term, on a net present value basis,

is less than 15% of Shipper's tangible net worth. If a Shipper has

multiple service agreement with Trailblazer, then the total potential

fees and charges of all such service agreements shall be considered in

determining creditworthiness.

 

As used in the prior paragraph, the term "tangible net

worth" means the excess of assets over liabilities from an accounting

standpoint, which is also known as "capital." For example, in the case

of a corporation, tangible net worth is represented by the capital

stock, paid-in capital in excess of par or stated value, and other free

and clear equity reserve accounts, if any. Trailblazer defines

tangible net worth for a corporation as the sum of the capital stock,

paid-in capital in excess of par or stated value, and other free and

clear equity reserve accounts less goodwill, patents, unamortized loan

costs or restructuring costs, and other intangible assets. Only actual

tangible assets are included in Trailblazer's assessment of

creditworthiness. Tangible net worth is compared with the net present

value of a Shipper's obligations to Trailblazer under its contracts in

applying the 15% test in the prior paragraph.