DISPLACEMENT SERVICE AGREEMENT
THIS AGREEMENT, made and effective as of this 4th day of April 1996, by and
between Washington Gas Light Company ("Seller") and Atlanta Gas Light Company
("Buyer").
WITNESSETH
WHEREAS, Buyer has entered into a Firm Peaking Service Agreement (FPS-1
Agreement) with Cove Point LNG Company, Limited Partnership. (Cove Point LNG)
and desires to have its Gas under the FPS- 1 Agreement delivered by displacement
from the facilities of Cove Point LNG to its facilities utilizing Seller's
services hereunder; and
WHEREAS, Seller has firm transportation arrangements on and agreements with
various interstate pipelines and a blanket certificate issued by the Federal
Energy Regulatory Commission (FERC) 39 F.E.R.C.P. 61,119 (1987), pursuant to
which Seller is willing to provide a displacement service to Buyer hereunder.
THEREFORE, in consideration of the mutual covenants and promises contained
herein, the parties do hereby agree:
I. DEFINITIONS
A. British Thermal Unit shall mean the amount of heat required to raise the
temperature of one avoirdupois pound of water one degree Fahrenheit at 60
degrees Fahrenheit.
B. Day shall mean the 24-hour period commencing at eight o'clock (8:00) a.m.
Eastern Standard Time.
C. Dekatherm or Dth shall mean a quantity of heat equal to ten therms or one
million British thermal units (one MMBtu).
D. Delivery Point shall mean the existing metering station at the point of
interconnection between the facilities of Buyer and the facilities of Seller's
Transporters.
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E. Displacement Imbalance shall be the difference between Displacement
Quantities and Exchange Quantities during the Term of this Agreement.
F. Displacement Quantity shall mean up to 69,000 dekatherms per day as such
quantity of Gas is available under Buyer's FPS-1 Agreement that Buyer nominates
for delivery to the Receipt Point.
G. Exchange Quantity shall mean on any day a quantity of gas equal to the
Displacement Quantity for such day pursuant to Buyer's FPS-1 Agreement that
Seller shall arrange to be delivered to the Delivery Point.
H. Gas means natural gas, revaporized liquefied natural gas (LNG) or any
commonly accepted suitable equivalent.
I. MMBtu shall mean one million (1,000,000) BTUs.
J. Receipt Point shall mean the point of interconnection between the facilities
of Cove Point LNG and the facilities of Seller.
K. Seller's Transporters shall mean Transcontinental Gas Pipeline Corporation or
any other interstate pipeline or entity with whom Seller has a firm
transportation agreement and under which Seller can provide Displacement Service
to Buyer hereunder.
L. Psia shall mean pounds per square inch absolute.
M. Therm shall mean a quantity of heat equal to one hundred thousand British
thermal units (100,000 Btu's).
N. Total Heating Value Per Cubic Foot shall mean the number of BTU's produced by
the combustion, at constant pressure, of one cubic foot of gas, saturated with
water vapor, at 14.73 psia and 60 degrees Fahrenheit, with air of the same
pressure and temperature as the gas, when the products of combustion are cooled
to the initial temperature of gas and air, and when the water formed by
combustion is condensed to a liquid state and then adjusted to a dry basis.
II. TERM
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The Term of this Agreement shall commence on December 15, 1996 and shall
continue through March 15, 1997. This Agreement shall continue for like periods
in subsequent years, on a year-to-year basis, unless terminated by either party
upon no less than one hundred and twenty (120) days prior written notice to the
other, non-terminating party; Provided that this agreement shall not be
terminated prior to March 15, 1997.
III. RATE
For services provided during the effectiveness of this Agreement, Seller shall
charge Buyer a rate of $0.50 per dekatherm of Gas delivered to the Delivery
Point hereunder and received by Buyer.
IV. SERVICE
A. Displacement Service. Seller shall provide a firm displacement service to
Buyer by receiving Displacement Quantities at the Receipt Point and by arranging
for equivalent Exchange Quantities to be delivered to the Delivery Point.
B. Nominations. Buyer may make Displacement Quantity Nominations to Seller in
accordance with Article VI hereunder. Upon receiving such nominations, Seller
shall arrange to receive such quantities at the Receipt Point and to deliver an
equivalent Exchange Quantity to Buyer at the Delivery Point pursuant to Seller's
flexible delivery point rights under its firm transportation agreements with
Seller's Transporters. Seller warrants that it has sufficient firm capacity on
Seller's Transporters to deliver the Exchange Quantities to the Delivery Point
on a firm basis. Buyer warrants that it has sufficient capacity to receive the
Exchange Quantities on a firm basis.
C. Imbalances. It is the parties' intent that there be no Displacement
Imbalances during the Term of this Agreement. To the extent that measurement
records show an imbalance at the end of a month, Seller shall reimburse Buyer if
Displacement Quantities exceed Exchange Quantities, and Buyer shall reimburse
Seller if Exchange Quantities exceed Displacement Quantities. To the extent the
measurement records show an imbalance at the end of a month, Seller shall,
within 30 days, reimburse Buyer with an amount of gas equal to the positive
difference, if any, between the Displacement Quantities and the Exchange
Quantities, and Buyer shall, within 30 days, reimburse
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Seller with an amount of gas equal to the negative difference, if any, between
the Displacement Quantities and the Exchange Quantities.
V. AGENCY DESIGNATION
During the effectiveness of this Agreement, Buyer agrees to designate Seller as
Buyer's Agent under Buyer's FPS-1 Agreement for the limited purpose of making
nominations and scheduling Gas for delivery to Buyer, as well as the utilization
of Buyer's rights under such agreement. As Buyer's Agent, Seller shall be
responsible for submitting and receiving notices, making nominations and
performing all necessary administrative duties under Buyer's FPS-1 Agreement and
under Cove Point LNG's applicable FERC-approved Tariffs in order to provide
services to Buyer hereunder.
VI. NOTICES AND COMMUNICATIONS
A. Displacement Quantity Nominations. During the Term of this Agreement, Buyer
shall be the sole party to determine when to make Displacement Quantity
Nominations under Article IV-B. Buyer agrees to provide Seller with a minimum of
two (2) hours notice prior to any Day for which Buyer exercises its right to
withdraw gas from storage under its FPS-1 Agreement with Cove Point LNG. Seller
agrees to make a reasonable effort to accommodate any Displacement Quantity
Nomination provided by Buyer after the commencement of a Day. Upon receipt of
Buyer's Displacement Quantity Nomination, Seller shall nominate and schedule the
delivery of the Displacement Quantity in accordance with its agency powers and
responsibilities under Article V. Displacement Quantities delivered hereunder
shall be considered by the parties as first through the meter(s) at the Delivery
Point. Any telephonic notice provided by one party to the other under this
Paragraph A shall be followed up by facsimile transmission by the party
providing the notice.
B. Representatives. The parties agree to have at least one representative
available by telephone at all times to receive notices to each other hereunder
including notices of operational conditions on their respective systems on a
daily basis. Each shall notify the other of the name(s) and telephone number(s)
of the representative(s) authorized to receive notices hereunder. Telephone
notice to one of such representatives shall constitute sufficient notice and
shall be binding upon both parites; provided any notice of termination hereunder
be given in writing in accordance Paragraph C below.
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C. Notices. Notices required under this Agreement, except as provided in
Paragraph B above, shall be sent in writing as follows:
(a) Buyer:
Atlanta Gas Light Company
303 Peachtree Street, N. E.
Atlanta, Georgia 30308
Attn: Steve Gunther
(b) Seller:
Washington Gas Light Company
6801 Industrial Road
Springfield, Virginia 22151
Attn: Stephen J. Shaiko
Notice under this provision shall be construed as given when sent to the proper
address by registered mail with return receipt; but written notice actually
received by other means shall be fully effective. When speed of notice is
essential, written notice shall be preceded by other appropriate communication
(telephone or facsimile).
VII. LAW AND REGULATION
This Agreement shall be subject to applicable federal and state laws and
applicable orders, rules and regulations of any local, state or federal
governmental authority having or asserting jurisdiction; provided that nothing
contained herein shall be construed as a waiver of any right to question or
contest any such law, order, rule or regulation in any forum having jurisdiction
over the subject matter. This Agreement is further subject to all necessary
regulatory and governmental approvals and permits including all necessary
authorizations from FERC and other applicable federal, state, county, and local
authorities. The parties agree to use their best efforts to obtain such
approvals and permits and to cooperate in good faith to execute all papers
necessary to effectuate the mutual obligations contemplated hereunder. It is
understood that if the necessary regulatory approvals cannot be obtained, this
Agreement shall terminate, and the parties shall have no other obligation or
liability to each other.
VIII. BILLING AND METERING
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A. Billing. On or before the tenth (10th) day of each month, Seller shall render
a bill to Buyer that shall include a statement showing the amount due and any
imbalance quantities applicable to the preceding month, along with a computation
of the amount due and payable by Buyer.
B. Payment. Buyer shall remit to Seller all amounts due pursuant to this
Agreement, on or before the twentieth (20th) day of each month for service for
the preceding month. If bills are not so paid, a late payment charge may be
added equal to one percent of the unpaid bill. At the end of each nominal thirty
(30) day billing interval thereafter, Seller may add an additional late payment
charge equal to one and one-half percent of any unpaid amount. Should a dispute
arise regarding the amount payable in any invoice rendered hereunder, the owing
party shall pay the undisputed amount and notify the other party of any disputed
amount. The parties agree to negotiate in good faith to mutually resolve the
disputed amount in a timely manner with interest (determined by the prime
commercial rate charged by Citibank, N.A., New York, New York) accruing from the
original due date on any unverified disputed amount determined to be a valid
amount due.
C. Measurements. The volume and total heating value of Displacement Quantities
delivered to the Receipt Point shall be determined by meters installed and
maintained by either Cove Point or Seller at such point. The volume and total
heating value of Exchange Quantities delivered to the Delivery Point shall be
determined by Seller's Transporter(s) under such transporter's FERC-approved
Tariffs. If at the end of Term of this Agreement, measurement records show the
existence of a Displacement Imbalance, Seller, shall reimburse Buyer's cost
therefor, if Displacement Quantities exceed Exchange Quantities, and Buyer shall
reimburse Seller's cost therefor, if Exchange Quantities exceed Displacement
Quantities. To the extent the measurement records show an imbalance at the end
of a month, Seller shall, within 30 days, reimburse Buyer's costs therefor if
Displacement Quantities exceed Exchange Quantities, and Buyer shall, within 30
days, reimburse Seller's costs therefor if Exchange Quantities exceed
Displacement Quantities.
D. Inspection of Records. Each party shall have the right at reasonable hours to
examine the books, records, and charges of the other to the extent necessary to
verify the accuracy of any statement, charge, or computation made under this
Agreement. In the event an error is discovered in the amount billed in any
statement rendered by Seller, such error shall be adjusted thirty (30) days of
the determination thereof; provided
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that claim therefor shall have been made within sixty (60) days from the date of
discovery of such error. No error will be adjusted after twenty-four (24) months
from the date of such statement.
E. Metering Equipment. The parties understand that the metering equipment of
Seller's Transporters shall be utilized to measure the receipt and delivery of
Exchange Quantities under this Agreement. The parties further understand that
either Cove Point LNG's or Seller's metering equipment shall be utilized to
measure the receipt of Displacement Quantities. The parties agree to use their
best efforts and their rights under transportation agreements with interstate
pipelines and Cove Point LNG to obtain necessary measurement data and records to
verify the accurate measurement of receipts and deliveries hereunder, including
the taking of appropriate steps to correct any inaccurate readings as soon as
possible. The parties agree to be bound by the proper implementation of FERC
approved Tariffs of Seller's Transporters and Cove Point LNG regarding the
measurement of receipts and deliveries under this Agreement.
X. FORCE MAJEURE
A. Effect of Force Majeure. Neither party to this Agreement shall be liable for
any damage or loss that may occur due to any Force Majeure as defined herein;
provided that the party whose ability to perform is affected by Force Majeure
promptly notifies the other party of the Force Majeure and that such party uses
all reasonable efforts to remedy the situation and to restore its ability to
perform. In the event either party is rendered unable, wholly or in part, by
Force Majeure to carry out its obligations under this Agreement, other than the
obligations of such party to make payment of amounts due hereunder, then the
obligations of both parties hereto, so far as they are affected by Force
Majeure, shall be suspended during the continuance of such Force Majeure.
B. Definition. The term "Force Majeure" as used herein, and as applied to either
party hereto, shall include the passage of laws or promulgation of regulations,
acts of God, strikes, lockouts, or other labor disturbances, acts of sabotage,
acts of the public enemy, war, blockades, insurrections, riots, epidemics,
fires, floods, washouts, arrests, civil disturbances, explosions, breakage or
accidents to machinery or lines of pipe, failure of electrical generating or
transmission facilities and equipment, freezing of wells or pipelines, partial
or entire failure to such wells, or any other cause, whether of the kind herein
enumerated, or otherwise, not reasonably within the control of the party
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claiming Force Majeure and which by exercise of due diligence such party is
unable to prevent or overcome. It is understood that settlement of strikes,
lockouts, or labor disturbances shall be entirely within the discretion of the
affected party, and that the above requirement that any Force Majeure shall be
remedied with all reasonable dispatch shall not require the settlement of
strikes, lockouts, or labor disturbances by acceding to the demands of any
opposing party when such course is inadvisable in the sole discretion or
judgment of the party experiencing such strikes, lockouts or labor disturbances.
XI. CONFIDENTIALITY
The parties agree to treat this Agreement on a confidential basis and not
publicly disclose it to any party without the consent of the other; provided
that each party, after notice to the other party and after making all reasonable
efforts to protect confidentiality including seeking an appropriate protective
order, may disclose the Agreement to appropriate parties in connection with a
regulatory proceeding to which such party is, or may become, subject.
XII. MISCELLANEOUS TERMS
A. Integration of Agreement. This instrument and the documents expressly
incorporated herein by reference constitute the entire Agreement between the
parties regarding the Displacement Services contemplated. No statement, promise,
or inducement made by either party or agent of either party which is not
contained in this Agreement shall be binding herein. Subject to the other
provisions of this Agreement, this Agreement may not be enlarged, modified, or
altered except in writing signed by both parties.
B. Severability. If any part, term, or provision of this Agreement is
specifically held by a court or regulatory authority to be illegal or in
conflict with applicable law or regulation, the validity of the remaining
portions or provisions affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not contain the
particular part, term, or provision so held to be illegal or in conflict.
C. Waiver. No waiver by either party of any one or more defaults by the other in
the performance of any provisions of this Agreement shall operate or be
construed as a waiver of any future default or defaults, whether of a like or
different
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character. If either party should be in default of any of its obligations under
this Agreement or violates any of the terms or conditions hereof and fails to
correct or cure same within thirty (30) days after receipt of written notice
from the other party, in addition to all other legal and equitable remedies
available to the non-defaulting party, this Agreement may be terminated by such
non-defaulting party thereafter on fifteen (15) days written notice of same to
the defaulting party. Notwithstanding anything in the Agreement to the contrary,
any remedies afforded in this Agreement shall be taken and construed as
cumulative, that is in addition to every other remedy provided herein or by law.
D. Headings. Article headings have been inserted for the purpose of convenience
and ready reference. They do not purport to, and shall not be deemed to, define,
limit, or extend the scope or extent of the Articles to which they pertain.
E. Assignability and Effect. There shall be no assignment, transfer, or
subcontracting of this Agreement, nor of any interest in this Agreement, nor
delegation of duties hereunder, except upon written consent of the party against
which such assignment, delegation, or subcontracting would, in the absence of
this provision, be effective, such consent not to be unreasonably withheld.
F. Succession. This Agreement shall inure to the benefit of, and be binding
upon, the heirs, executors, administrators,, assignees, and successors of the
respective parties.
G. Indemnification. Each party hereunder agrees to indemnify, defend and hold
harmless the other from and against all liabilities, suits, actions,, damages,
costs and expenses (including, but not limited to, reasonable attorneys' fees)
resulting from or arising out of acts, omissions, negligence, breach of any
statutory duty, or intentional misconduct by itself, its officers, its employees
or agents of the indemnifying party occurring in the performance of this
Agreement.
H. Applicable Law. This Agreement shall be construed in accordance with the laws
of Virginia.
I. Possession. Solely for purposes of this Agreement, (i) Buyer shall be deemed
to be in control and possession of gas transported hereunder prior to delivery
to Seller at the Receipt Point and after redelivery to Buyer at the Delivery
Point, and (ii)
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Seller shall be deemed to be in control and possession of gas transported
hereunder after delivery to Seller at the Receipt Point.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers, as of the day and year first written above.
Seller:
WASHINGTON GAS LIGHT COMPANY
Witness:
By: /S/ Kathleen McKee By: /S/ J. M. Schepis
Secretary Senior Vice President
(Title) (Title)
Buyer:
ATLANTA GAS LIGHT COMPANY
Witness
By: /S/ Eileen G. Stanek By: /S/ Stephen J. Gunther
Director Federal Regulatory Affairs Vice President
(Title) (Title)
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