Horizon Pipeline Company, L.L.C.

Original Volume No. 1

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Effective Date: 04/18/2002, Docket: CP00-129-001, Status: Effective

Original Sheet No. 186 Original Sheet No. 186 : Effective










EXAMPLE (4) Assume:


Capacity Release Request = 100,000/day for 5 years


Qualified Bids:


Maximum Bid Unit Bid Minimum

Volume Term Value Bid Volume

----------- ------- -------- ----------

Bid (a) 60,000/day 5 years $.18 0

Bid (b) 60,000/day 5 years $.18 0

Bid (c) 70,000/day 5 years $.18 45,000

Bid (d) 50,000/day 5 years $.18 15,000

Bid (e) 30,000/day 5 years $.18 10,000

Bid (f) 40,000/day 5 years $.17 0


Winning Qualified Bids: Bid (a) receives 30,000; Bid (b) receives

30,000; Bid (d) receives 25,000; and Bid (e) receives 15,000.


Explanation: There are many combinations of Bids (a), (b), (c),

(d) and (e) with the same Winning Bid Value. Each Bid has the same

Unit Bid Value. There is insufficient capacity being released to

provide all the Maximum Bid Volumes for Bids (a), (b), (c), (d)

and (e). Pursuant to Section 15.10(d)(2), a pro rata allocation is

attempted. This would result in each bidder receiving 100/270 of

its Maximum Bid Volume. In the case of Bid (c), Bid (c) would

receive 70,000 (100/270) = 25,925 Dth. Since this figure is below

Bid (c)'s Minimum Bid Volume of 45,000, Bid (c) must be discarded.

Bids (a), (b), (d) and (e) are able to be allocated capacity based

on a 100/270 pro rata factor. With Bid (c) discarded, the pro rata

allocation factor is now 100/200 (i.e., one-half) so that Bids

(a), (b), (d), and (e) each receive half of their Maximum Bid

Volumes. Bid (c) receives zero (0) because its Minimum Bid Volume

was too high for the initial pro rata allocation.