Northern Natural Gas Company

Fifth Revised Volume No. 1

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Effective Date: 07/16/2005, Docket: RP05-376-000, Status: Effective

Eighth Revised Sheet No. 269 Eighth Revised Sheet No. 269 : Effective

Superseding: Seventh Revised Sheet No. 269



F. Resolution of Imbalances


Each month, subject to mutual agreement by Northern and Shipper on a not unduly

discriminatory basis, Northern and Shipper shall eliminate any Imbalance by using

any combination of the four (4) resolution mechanisms set forth below. Imbalances

will be posted on the 9th Business Day of the month. Shippers will have until the

12th Business Day of the month to access Northern's website to elect which imbalance

resolution mechanism(s) they will use and the volumes associated with each mechanism.

Any volumes not designated to be resolved using either trading (for which final

notification is due to Northern by the 17th business day), imbalance-to-storage or

in-kind resolution will automatically be cashed out. Any residual imbalance volume

remaining after trading, imbalance-to-storage or in-kind resolution methods will also

be automatically cashed-out as further explained herein.


(i) Monthly Imbalance Trading. Each month, Shipper will have the opportunity to

trade monthly imbalances with other eligible Shippers. All imbalance trading

activity shall be in accordance with Subsection L. outlined below.


(ii) Monthly Cash-out/in. Each month, Northern will either invoice the Shipper

pursuant to Section 8 of these General Terms and Conditions or credit the

Shipper the Dollar Valuation amount of the Shipper's monthly imbalance,

determined in accordance with Subsection E. (i) above.


(iii) Monthly Imbalance-to-Storage. Effective April 1, 2005, a Shipper's monthly

imbalance may be resolved as an injection to, or withdrawal from, the Shipper's

deferred delivery account(s), or the deferred delivery account of another

shipper, subject to capacity availability and the terms of the Shipper's deferred

delivery account. If the Shipper is utilizing an account of another Shipper an

executed agreement between the transfer parties must be provided to Northern

identifying the transfer parties and the transfer quantity at the time of the



When Shipper elects the imbalance to storage mechanism, Shipper must identify

the applicable transportation and storage contracts and storage point to be

used for billing purposes. The ability to use the imbalance to storage

mechanism is subject to the storage parameters of the Shipper's or the transfer

party's applicable deferred delivery agreement(s) (either FDD or IDD),

and transportation provisions thereunder. Shippers will be charged all

applicable storage, transportation, and fuel charges. For Shippers and/or

transfer party with unused monthly transportation entitlement, the firm commodity

rate shall apply. To the extent there is not sufficient unused monthly

transportation entitlement, the overrun rate shall apply. For Shippers with

unused monthly storage injection or withdrawal entitlement, the firm injection or

withdrawal rate shall apply. The transportation fee for underdeliveries (storage

injections) will be the applicable out-of-balance transportation rate. Storage

inventories will be adjusted for the imbalance volume on the 14th business day of

the month. Any residual imbalance as a result of the shipper's storage agreement

will be cashed out at the applicable weekly high/low price of the production



(iv) In-kind Resolution. Effective June 1, 2005, in-kind payback may be used to

resolve monthly imbalances after trading, up to the greater of 3% of the

shipper's monthly scheduled volumes, or 1,000 MMBtu. Volumes resolved using

other methods will not count toward the 3% limitation. The in-kind payback

volumes must be scheduled in the calendar month after receipt of notification of

the final imbalance amount that may be resolved through this in-kind process.

The Shipper may nominate any amount of in-kind payback volumes by day. Northern

will attempt to schedule the imbalance payback volumes as requested, subject to

storage or transportation-related allocations. Any residual volume remaining at

the end of the payback month will be cashed out at the high/low weekly price of

the payback month.


Shippers will schedule in-kind payback volumes on the transportation agreement of

their choice. The transportation and storage scheduling priorities for in-kind

resolution will follow the priority of the agreement scheduled. If Northern is

allocating its storage services, in-kind payback volumes will have the same

scheduling priority as Rate Schedules IDD and FDD overrun.