MidContinent Express Pipeline LLC

Original Volume No. 1

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Effective Date: 04/10/2009, Docket: RP09-136-000, Status: Effective

Original Sheet No. 181 Original Sheet No. 181

 

GENERAL TERMS AND CONDITIONS

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(4) Nothing herein shall be read to preclude MEP

from requiring, and enforcing for the term of the initial contracts,

a greater amount of security in agreements supporting an application

for a certificate to construct new or expanded facilities, including

any replacement contract entered into upon a permanent release of

capacity under such an initial contract, any assignment of such an

initial contract or any resale of capacity subject to such an initial

contract in the event of a default.

 

(c) Where a Shipper selects the prepayment option

under Section 12.1(b) of these General Terms and Conditions, the

prepayment amounts shall be deposited in an interest-bearing escrow

account if such an account has been established by Shipper which

meets the criteria set out in this paragraph. The costs of

establishing and maintaining the escrow account shall be borne by

Shipper. The escrow bank must be rated at least AA or better and

shall not be affiliated with Shipper. The escrow arrangement shall

provide for the prepayment amounts to be applied against the

Shipper's obligation under its service agreement(s) with MEP and

shall grant MEP a security interest in such amounts as an assurance

of future performance. The escrow agreement shall specify the

permitted investments of escrowed funds so as to protect principal,

and shall include only such investment options as corporations

typically use for short-term deposit of their funds. Such escrow

account shall at all times maintain the amount of prepayments

required under Section 12.1(b) of these General Terms and Conditions.

If MEP is required to draw down the funds in escrow, it will notify

the Shipper and Shipper must replenish such funds within three (3)

Business Days after such notice.

 

(d) In the event MEP constructs new lateral facilities

to accommodate a Shipper, MEP may (unless otherwise agreed) require

from the Shipper security in an amount up to the cost of the

facilities. This provision does not apply to mainline expansions.

Such security may be in any of the forms available under Section

12.1(b) of these General Terms and Conditions, at Shipper's choice.

MEP is only permitted to recover the cost of facilities once, either

through rates or through this provision. As MEP recovers the cost of

these facilities through its rates, the security required shall be

reduced accordingly. Specifically, collateral provided by Shipper

related to new facilities shall be returned to that Shipper in equal

Monthly amounts over the term of its contract for service related to