(letterhead of Southern Natural Gas Company appears here)
SOUTHERN NATURAL GAS
June 30, 1994
Mr. Stephen J. Gunther
Vice President-Gas Supply
and Federal Regulation
Atlanta Gas Light Company
P.O. Box 4569
Atlanta, Georgia 30302
Re: Amendment to Letter Agreement dated
October 22, 1993 among and between
Southern Natural Gas Company,
Atlanta Gas Light Company and Chattanooga Gas Company
Dear Mr. Gunther:
By letter agreement dated October 22, 1993, Atlanta Gas Light Company
(Atlanta), Southern Natural Gas Company (Southern) and Chattanooga Gas Company
(Chattanooga) agreed on certain terms and conditions with respect to the service
elections of Atlanta and Chattanooga to be effective November 1, 1993. Such
letter agreement shall be referred to throughout as the "Letter Agreement." In
paragraph 6 of the Letter Agreement, Southern agreed that it would file with the
Federal Energy Regulatory Commission ("Commission") for authorization to abandon
by assignment and novation of its obligations to Atlanta a portion of the
transportation service ("ANR Transportation Service") and storage service ("ANR
Storage Service) Southern receives from ANR Pipeline Company ("ANR") and ANR
Storage Company, ("ANR Storage") respectively. Such portion of the
transportation and storage service is attributable to service Southern provides
on its system under its Rate Schedules CSS-1, CSS-2 and STS-1 on behalf of
Atlanta. Atlanta has requested to amend the terms of paragraph 6 to the Letter
Agreement to provide for the assignment and
Mr. Stephen J. Gunther
June 30, 1994
Page 2 of 9
novation of the ANR Storage Service without the assignment and novation of the
ANR Transportation Service. Southern is agreeable to such amendment subject to
the terms and conditions set forth below.
In addition, at the time the Letter Agreement was executed, Southern intended to
implement zone matrix rates as provided by the Commission's September 3, 1993
Order in Docket Nos. RS92-10-001, et al. Southern does not now have in effect
zone matrix rates thereby requiring that the Letter Agreement be amended with
respect to the commodity rates to be charged for the transportation to be
performed by Southern under Rate Schedule STS-1. Further, on May 4, 1994, in
Docket No. RP94-183-000, the Commission issued an order which required Southern
to remove certain provisions in its Rate Schedule STS- 1 to provide for the
transportation of third party gas to and from storage. The order also required
Southern to proceed with a process under which Southern would assign its rights
in the ANR Transportation Service and ANR Storage Service at the customer's
election. The terms of this amendment reflect the terms applicable to an
election by Atlanta to take assignment of the ANR Storage Service and/or ANR
Transportation Service pursuant to the May 4 Order and under which Southern will
reflect such election in its tariff filings complying with the May 4 Order,
hereinafter the "Compliance Filings." Accordingly, in consideration of the
mutual agreements and covenants contained herein, Southern, Atlanta and
Chattanooga agree as follows:
1. Atlanta and Southern agree to the amendment of the last paragraph in
paragraph 6 to the Letter Agreement such that Southern agrees to file with the
Commission
Mr. Stephen J. Gunther
June 30,1994
Page 3 of 9
an application or request in the Compliance Filings to abandon a percentage of
the ANR Storage Service equal to that portion of the service received by Atlanta
under Southern's Rate Schedules CSS-1 and CSS-2 pursuant to the 50-day and
100-day storage service agreements ("Storage Agreements") between Southern and
ANR Storage Company dated January 31, 1979, and February 1, 1979. Further,
Atlanta and Southern continue to understand that if the abandonment, assignment
or novation is modified by the Commission and results in the allocation of GSR
costs to the ANR Storage Service or the ANR Transportation Service, then
Southern will seek authority from the Commission to rescind such abandonment,
assignment or novation and reinstate the current service if requested by AGL in
writing within fifteen (15) days of the date of the order of the Federal Energy
Regulatory Commission (Commission) resulting in such allocation; provided
however, that nothing contained herein shall obligate Southern to rescind such
abandonment or assignment without approval from the Commission.
2. Upon execution of this amendment, receipt of consent from ANR Storage, and
receipt of authorization from the Commission, Southern agrees to assign by
execution of an assignment and novation agreement with Atlanta and ANR Storage
those portions of the Storage Agreements applicable to services provided to
Atlanta without assignment of the ANR Transportation Service. Southern's
assignment of the Storage Agreements and Atlanta's acceptance of such assignment
shall be conditioned on the occurrence of the following events:
Mr. Stephen J. Gunther
June 30,1994
Page 4 of 9
(a) The amendment by Atlanta and Southern of the Storage Transportation
Agreement dated June 1, 1979, as further described below in paragraph 3; and
(b) The receipt of authorization from the Commission acceptable to Southern and
Atlanta under either specific authority or on a pregranted basis for
authorization for Southern to abandon the ANR Storage Service by assignment to
Atlanta and for authorization to amend Southern's Rate Schedule STS under the
terms set forth below in paragraph 3; and
(c) The receipt of ANR Storage's affirmation and consent to such assignment and
novation.
It is understood that a Commission authorization rendered as requested in 2(b)
above which results in Atlanta having direct or indirect responsibility for
transition costs, including GSR costs, of ANR that are not currently included in
ANR's Rate Schedules X-115 and X-116, under which the ANR Transportation Service
is performed, may not be acceptable to Atlanta.
3. In further consideration for the agreement herein, Southern and Atlanta agree
to amend the Storage Transportation Agreement between Southern and Atlanta dated
June 1, 1979, as follows:
(a) to include monthly payment by Atlanta to Southern of Atlanta's percentage of
the MW Monthly Charge and the Michigan Wisconsin
Mr. Stephen J. Gunther
June 30,1994
Page 5 of 9
Excess Charge set forth in Section 10.2(a) (iii) and Section 10.2(a)(iv),
respectively, and the fuel gas charges set forth in Articles 4,5,6and 7 to the
Exhibit B to Southern's Rate Schedules CSS-1 and CSS-2; and
(b) to state that it is understood and agreed that it is the intent of the
parties that Southern will flow-through to Atlanta its percentage of any charges
or surcharges attributable to that portion of the ANR Transportation Service
provided to Atlanta and incurred by Southern under the ANR Transportation
Service as provided in ANR Pipeline Company's Rate Schedules X-115 and X-116, or
any applicable successor Rate Schedules.
4. Atlanta and Southern further agree that the commodity charge for service
under Rate Schedule STS-1 shall be (i) the Zone 3 commodity charge (including
applicable surcharges and fuel) set forth under Southern's Rate Schedule FT for
that portion of the total volumes delivered to Atlanta at its Redelivery Points
equal to the volumes delivered by Southern to ANR at Shadyside under Atlanta's
Rate Schedule FT Service Agreements and those volumes which were delivered to
ANR Storage for injection from pipeline sources other than Southern's system;
and, (ii) the Zone 3 commodity charge (including applicable surcharges and fuel)
under Southern's Rate Schedule IT for that portion of the total volumes
delivered to Atlanta at its Redelivery Points equal to the volumes delivered by
Southern to ANR at Shadyside under Atlanta's Rate Schedule IT Service Agreement.
It is understood and agreed that nothing contained herein shall obligate
Southern to transport
Mr. Stephen J. Gunther
June 30,1994
Page 6 of 9
and deliver any quantities of gas under Rate Schedule STS-1 on behalf of Atlanta
which exceed Atlanta's Winter Contract Quantity as set forth in Rate Schedule
STS-1. During the winter withdrawal period, Southern shall allocate such
withdrawal volumes under (i) and (ii) above on a prorata basis based on the
ratio of volumes available for withdrawal under (i) and (ii) above. Southern
shall use the gas accounting calculations of ANR Storage to determine the total
volumes available for withdrawal. If during the Contract Year, defined under
Rate Schedule STS-1, gas is withdrawn or released from the ANR Storage Service
assigned to Atlanta (Assigned Storage Service), and the withdrawn or released
storage gas is not delivered to Atlanta's Redelivery Points under the Storage
Transportation Agreement (Off-System Volume), then Atlanta shall pay Southern a
commodity charge equal to the effective summer period Zone 1 commodity rate
under Southern's FT Rate Schedule applicable to that portion of the Off-System
Volume attributable to Atlanta's deliveries to Southern at Shadyside during the
relevant Contract Year (Shadyside Portion). The Shadyside Portion shall be
determined in accordance with the following formula: SP = OS X (SV / TV) where
"SP" is the Shadyside Portion; "OS" is the Off-System Volume; "SV" is the total
volume available for withdrawal from the Assigned Storage Service as of November
1 of the Contract Year that was delivered by Atlanta to Southern at Shadyside,
as adjusted to include subsequent deliveries to storage of gas that was
delivered by Atlanta to Southern at Shadyside, if any, during the relevant
winter withdrawal period; and "TV" is the total volume available for withdrawal
from the Assigned Storage
Mr. Stephen J. Gunther
June 30,1994
Page 7 of 9
Service as of November 1 of the Contract Year, as adjusted to include subsequent
deliveries to storage, if any, during the relevant winter withdrawal period.
Atlanta agrees to calculate and inform Southern in writing of the OS, SV and TV
volumes no later than 30 days following the end of a Contract Year. Atlanta
agrees that Southern, at it sole cost and expense, shall have the right to audit
Atlanta's books and accounts to verify the submitted OS, SV and TV volumes
within one year from the date Atlanta submits such volumes to Southern. Atlanta
stipulates and agrees that, in the event Southern implements separate production
area rates or returns to a Zone Matrix Rate Design, such that production area
costs are no longer reflected in the applicable zone of delivery commodity
charge, or in the event Southern implements separate injection and withdrawal
rates for transportation in and out of storage under its Rate Schedules FT-NN
and CSS, Atlanta will not oppose paying the effective production-area commodity
charge or injection charge for the transportation service to Shadyside, provided
that each unit of storage gas transported by Southern in its production area is
charged the applicable production area rate only one time, and provided further
that for so long as such separate production area, injection or matrix rates are
in effect the separate charges for the Shadyside Portion of the Offsystem
Volumes as provided above will not apply.
5. The parties agree and acknowledge, (a) that Atlanta has waived the obligation
by Southern under paragraph 6 of the Letter Agreement to file to amend its
certificate to allow for the injection of third-party gas and to file to abandon
the ANR Storage Service and ANR Transportation Service within 45 days of the
date of the Letter Agreement; and
Mr. Stephen J. Gunther
June 30,1994
Page 8 of 9
(b) that, instead, Southern will make any necessary filings as part of or in
conjunction with the Compliance Filings required by the Commission's May 4
Order. Further, Southern and Atlanta each agree to pursue with due diligence
receipt of the necessary consent from ANR Storage to assign the ANR Storage
Service.
6. The parties agree that, except as expressly recited herein, no other terms or
conditions of the Letter Agreement shall be considered amended or waived
pursuant to this amendment and all other terms and conditions of the Letter
Agreement shall remain in full force and effect. Please indicate your agreement
to the terms of this amendment by executing this letter in the spaces provided
below.
Very truly yours,
SOUTHERN NATURAL GAS COMPANY
By: /S/ Jim J. Cleary
Its: Vice President
Agreed to and accepted
as of this 13 day
of July 1994
ATLANTA GAS LIGHT COMPANY
By: /S/ Stephen J. Gunther
Its: Vice President
Mr. Stephen J. Gunther
June 30, 1994
Page 9 of 9
Agreed to and accepted
as of this day
of :
CHATTANOOGA GAS COMPANY
By: /s/ Kenneth A. Royse
Its: President