EXHIBIT 10.40.05
ANCILLARY AGREEMENT
Algonquin Gas Transmission Company ("Algonquin"), on the one hand, and
Canal Electric Company ("CEC") and Montaup Electric Company ("MEC"), on the
other hand (CEC and MEC are collectively referred to herein as "Customer"),
have this date executed a Precedent Agreement with respect to the construction
of pipeline facilities by Algonquin (referred to as the "Canal Lateral"), the
construction of certain plant facilities by Customer and the provision of firm
natural gas transportation service by Algonquin for Customer over the Canal
Lateral (the "Project"). By this Ancillary Agreement, Algonquin , Texas
Eastern Transmission Corporation, Trunkline Gas Company, and Panhandle Eastern
Pipe Line Company (individually referred to herein as "PEC pipeline" or
collectively as the "PEC pipelines") and Customer set forth certain additional
agreements relating to the Project, as follows;
A. Canal Facilities
Algonquin shall operate and maintain the Canal Lateral and all
appurtenant facilities that it constructs pursuant to the Precedent Agreement.
Customer shall operate and maintain all facilities that it constructs pursuant
to the Precedent Agreement. All facilities, whether operated and maintained
by Algonquin or Customer, shall be operated and maintained in accordance with
all applicable federal, state and local requirements.
Customer's responsibility for the capital costs of the Canal Lateral to
be constructed by Algonquin, upon which the capital cost portion of
Algonquin's rate for service over the Canal Lateral will be based, shall be
computed based on the following:
Cost of Construction Fraction Cost Responsibility
of Customer
$7,500,000 or less 100% $7,500,000
Next $500,000 80% $ 400,000
Next $500,000 60% $ 300,000
Next $500,000 40% $ 200,000
Next $500,000 20% $ 100,000
Greater than 9,500,000 0% $ 0
Maximum cost responsibility for Canal Lateral $8,500,000
B. Interruptible Transportation Services and Rates
Customer and each PEC pipeline shall enter into service agreements under
each pipeline's open access rate schedule for interruptible transportation
service for a maximum daily quantity of not less than 75,000 MMBtu and a term
of not less than 20 years (collectively the "IT Service Agreements"). The IT
Service Agreements, in combination, shall provide for the receipt of gas at
various receipt points on the systems of the PEC pipelines to be designated by
Customer and the ultimate delivery of gas to or for the benefit of Customer at
a delivery point on the Algonquin system, which shall be the inlet of the
Canal Lateral; provided, however, that in the event Customer elects to
terminate the Service Agreement pursuant to the provisions of Article IX of
the Service Agreement to be entered into pursuant to the terms of the
Precedent Agreement, and thereby pay Algonquin for the net book value of the
Canal Lateral, Customer and Algonquin agree to amend their IT Service
Agreement to provide for a delivery point at the interconnection between the
Canal Lateral and the facilities owned by Customer. Algonquin and Customer
shall enter into such other interruptible transportation service agreements
under Rate Schedule AIT-1 as may be required to transport quantities in excess
of 75,000 MMBtu per day, with the delivery point for such agreements being the
interconnect between the Canal Lateral and Customer's plant extension, and the
rate provisions of this Agreement shall not apply to such other service
agreements.
The rates for interruptible transportation services provided by one or
more of the PEC pipelines to Customer under the IT Service Agreements shall be
as may be negotiated from time to time by the parties, but shall never be
greater than the maximum tariff rates nor less than the minimum tariff rates,
and shall be subject to the following two conditions:
(1) Unless Customer agrees otherwise, for transportation under the
IT Service Agreements from a production area directly accessible to more than
one PEC pipeline on a path through the PEC pipelines for use at the electric
generating station in Sandwich, Massachusetts ("Canal Plant"), the combined
rates of the transporting PEC pipelines and any other necessary pipeline
transporters shall not exceed the sum of the individual maximum interruptible
transportation rates on the lowest cost transportation path on the PEC
pipelines from the same production area to the delivery point.
(2) The rate for transportation of gas under the IT Service
Agreement on Algonquin's system for deliveries to the inlet of the Canal
Lateral for use at the Canal Plant shall not be determined in a manner which
would disadvantage Customer because Customer elects to ship quantities of such
gas on pipelines upstream of Algonquin other than a PEC pipeline.
Specifically, when the PEC pipelines offer a transportation rate for
deliveries to the delivery point, the separate components to be charged will
be provided to Customer. The portion of the rate quoted attributable to
transportation on Algonquin will be available whether or not transportation
upstream of Algonquin is on a PEC pipe line.
C. Term
The interruptible transportation pricing agreement set forth in Part B of
this Ancillary Agreement shall become effective as of the Commencement Date
for firm transportation service by Algonquin through the Canal Lateral, as
determined in accordance with the Service Agreement, and shall continue in
effect for a period of twenty years from the Commencement Date, and year to
year thereafter until terminated by either party upon twelve months prior
written notice.
D. Miscellaneous
The PEC pipelines may from time to time designate one of them to exercise
rights or perform duties under this Ancillary Agreement on behalf of all the
PEC pipelines, provided that (1) written notice of such designation shall be
given to Canal and (2) each of the PEC pipelines will provide transportation
service only under its individual tariff and no partnership between the PEC
pipelines is created hereby.
CEC and MEC may from time to time designate one of them to exercise
rights or perform duties under this Ancillary Agreement on behalf of both CEC
and MEC, provided that (1) written notice of such designation shall be given
to the PEC Pipelines and (2) no partnership between CEC and MEC is created
hereby.
In the event of an inconsistency between this Ancillary Agreement and the
Precedent Agreement, the terms of the Precedent Agreement shall control.
No modification of this Ancillary Agreement shall be made except by the
further written agreement of the parties.
Any company which shall succeed by purchase, merger, consolidation, or
otherwise to the properties, substantially as an entirety, of any of the PEC
pipelines or CEC or MEC, or to CEC's or MEC's interest in Unit 2 of the Canal
Plant, shall be entitled to the rights and shall be subject to the obligations
of its predecessor under this Ancillary Agreement. Any party may, without
relieving itself of its obligations under this Ancillary Agreement, assign any
of its rights hereunder to a company or companies with which it is affiliated,
but otherwise no assignment of this Ancillary Agreement or any of the rights
or obligations hereunder shall be made unless there first shall have been
obtained the consent thereto in writing of the other party, which consent
shall not be unreasonably withheld.
The interpretation and performance of this Ancillary Agreement shall be
in accordance with the laws of the Commonwealth of Massachusetts.
Except as herein otherwise provided, any notice, request, or demand
provided for in this Ancillary Agreement, or any other written communication
which either party may desire to give to the other, shall be in writing and
shall be considered as duly delivered when mailed by registered or certified
mail to the address of the parties hereto, as follows:
The PEC pipelines: Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, Massachusetts 02135
Attention: Vice President, Marketing
Customer: Canal Electric Company
2421 Cranberry Highway
Wareham, Massachusetts 02871
Attention: Vice President,
Power Supply and Transmission
Montaup Electric Company
750 West Center Street
P. O. Box 543
West Bridgewater, MA 02379
Attention: Director of Integrated Resource Management
or at such other address as either party shall designate by formal written
notice.
Agreed and Accepted this 8th day of October, 1993:
ALGONQUIN GAS TRANSMISSION COMPANY
By: John J. Mullaney
Title: Vice President
TEXAS EASTERN TRANSMISSION CORPORATION
By: Richard A. Perkins
Title: Sr. Vice President
PANHANDLE EASTERN PIPE LINE COMPANY
By: William W. Grygar
Title: Vice President
TRUNKLINE GAS COMPANY
By: Gopal M. Rana
Title: Vice President
CANAL ELECTRIC COMPANY
By: James J. Keane
Title: Vice President, Power Supply & Transmission
MONTAUP ELECTRIC COMPANY
By: Arthur A. Hatch
Title: Executive Vice President
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