Cove Point LNG Limited Partnership

Second Revised Volume No. 1

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Effective Date: 06/01/2003, Docket: CP01- 76-003, Status: Effective

First Revised Sheet No. 109 First Revised Sheet No. 109 : Effective

Superseding: Original Sheet No. 109

 

GENERAL TERMS AND CONDITIONS

(Continued)

 

 

 

3. REQUESTS FOR SERVICE (Continued)

 

(g) Denial of Requests. Operator may reject any request for service from a Requestor that

is a prospective Buyer, or an existing Buyer seeking new or increased service levels,

that fails to meet Operator's creditworthiness requirements unless Buyer provides

assurance of payment as provided in Paragraph (h) below. Grounds for rejection shall

include, but shall not be limited to, Requestor's failure (a) to show that Requestor's

obligations are being paid in a timely manner, or (b) to provide reasonable assurance

that Requestor will be able to continue to pay its obligations in the future.

 

(h) Assurance of Payment. If Operator denies a request for service due to a failure to

satisfy Operator's creditworthiness requirements, Requestor may obtain service if it

provides Operator with assurance of payment as set forth below:

 

(1) In the event Operator must construct or recommission facilities to render service

to a Buyer pursuant to the Tariff. Operator shall accept as assurance of payment

any of the following:

 

(i) advance payment covering the Reservation and estimated Commodity Charges

for a period of time as agreed to by Operator and Buyer;

 

(ii) an irrevocable letter of credit from a creditworthy financial institution

in an amount agreed to by Buyer and Operator;

 

(iii) a guarantee from a creditworthy institution;

 

(iv) a surety bond from an acceptable, creditworthy insurance company in an

amount agreed to by Buyer and Operator;

 

(2) In the event service is to be rendered using Operator's existing, operational

facilities, assurance of payment shall be deemed satisfied when Buyer complies

with Section 6(e)(ii) of the General Terms and Conditions and otherwise complies

with the ongoing creditworthiness requirements set forth in Section 6(e).

 

(3) If Requestor fails to tender such assurance of payment within ten (10) days, or

such longer time period reasonably established by Operator, Operator may deny

Requestor's request for service.

 

(4) Nothing contained in this Section 3(h) shall obligate Operator to construct

facilities in order to render service.

 

(i) Execution of Service Agreement. Following the approval of a request for service and

the award of capacity by Operator, Operator shall tender to Requestor a new or amended

Service Agreement under each appropriate Rate Schedule. If Requestor fails to execute

such Service Agreement within ten (10) days after Operator tenders it to Requestor, or

within such other time period agreed to by Operator, Requestor's request for service

shall be void. Service shall not commence until Requestor returns an executed Service

Agreement to Operator. Operator may waive the provisions of this subsection on a

nondiscriminatory basis. For service under Rate Schedule LTD-2 or Rate Schedule ITS,

Requestor must have executed a Service Agreement with Operator prior to bidding for

service under Section 4 of the GT&C (Bidding Procedure).