East Tennessee Natural Gas, LLC

Third Revised Volume No. 1

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Effective Date: 03/01/2009, Docket: RP08-487-002, Status: Effective

Substitute Original Sheet No. 315B.02 Substitute Original Sheet No. 315B.02




5.8 Allocation of Firm Capacity (continued)


(a) Existing Capacity (continued)


(7) Determination of Best Bid.


(i) All open seasons shall end at 2:00 p.m. CT not less than one

(1) Business Day prior to the date service would be

available. At the close of the bidding period for any open

season held pursuant to this Section 5.8, Transporter shall

select from among all valid bids the "best bid," as

determined pursuant to this Section 5.8(a)(7) and, if

applicable, Section 5.8(a)(8). Transporter shall review all

bids received from bidders that have not been rejected by

Transporter pursuant to Section 5.8(a)(6) above, to

determine which bid is the "best bid." For purposes of this

Section 5.8, the "best bid" shall be the bid which yields to

Transporter the highest net present value. Net present value

shall be calculated on the basis of the quantity, rate and

term reflected in the bid, as adjusted by the discount

factor, as of the date of the bid evaluation, calculated in

accordance with Section 154.501(d) of the Commission's

regulations, except that under a negotiated rate agreement

with a minimum quantity, the net present value evaluation

shall also include the fixed cost component of the usage

revenue at the minimum quantity. In determining the highest

net present value in connection with a Shipper paying a

negotiated rate higher than the maximum recourse rate, such

negotiated rate Shipper paying a rate higher than the

maximum recourse rate will be deemed to be paying a rate

equal to the maximum recourse rate.


(ii) In determining the "best bid," any request to add or change

a Receipt Point and/or a Delivery Point will be considered

to have a net present value of zero (0) when comparing such

requests to other requests for service and awarding capacity

unless the Shipper has agreed in conjunction with its

request to (i) increase its MDTQ, (ii) increase the rate

Shipper is currently paying to Transporter, if such rate is

less than the applicable maximum rate, and/or (iii) extend

the term of its firm service agreement in which case

Transporter shall consider the terms of such MDTQ increase,

rate increase and/or contract extension when calculating the

net present value. In the event that a request to add or

change a Receipt Point and/or a Delivery Point results in a

bid(s) that yields a net present value that is greater than

zero ("Positive NPV Bid"), Transporter shall award the

capacity to the bid which yields to Transporter the highest

net present value. In the event that no Positive NPV Bid(s)

is received by Transporter or point capacity remains after

Transporter has awarded capacity to or among the Positive

NPV Bid(s), Transporter shall award the remaining point

capacity to the firm Shipper whose request to change its

primary point(s) was received first-in-time by Transporter.


(8) The Risk of Default Factor shall be one (1) minus the differential

between (i) the bidder's probability of default which is calculated

by extrapolating to the maximum bid term to be used for bid

evaluation purposes, using Standard & Poor's ("S&P") most recent

"Cumulative Average Default Rates by Rating Modifier" table ("S&P

Table"), and (ii) the indicated probability of default for a bidder

with a credit rating at or above the credit ratings listed in

Section 5.8(a)(8)(i) for a like term. In addition, the Risk of