Exhibit 10-A-33
AMENDED AND RESTATED
GAS SALES AGREEMENT
BETWEEN
TRANSCO ENERGY MARKETING COMPANY
AS SELLER
AND
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
AS BUYER
CONFIDENTIAL
INDEX
PAGE
I. DEFINITIONS 1
II. GOVERNMENTAL AUTHORIZATIONS 3
III. RESERVATIONS OF SELLER 4
IV. QUANTITY OF GAS 4
V. DELIVERY PRESSURE 10
Vl. POINTS OF DELIVERY AND OWNERSHIP 10
VII. TERM OF AGREEMENT 10
VIII. PRICE 10
IX. QUALITY OF GAS 14
X. METERING AND MEASUREMENT 14
XI. BILLING AND PAYMENT 15
XII. TRANSPORTATION 16
XIII. GOVERNMENTAL REGULATIONS 18
XIV. FORCE MAJEURE 20
XV. WARRANTY OF TITLE 21
XVI. RESPONSIBILITY 22
XVII. GENERAL PROVISIONS 22
AMENDED AND RESTATED
GAS SALES AGREEMENT
THIS AGREEMENT, effective the 1st day of November, 1990, between
TRANSCO ENERGY MARKETING COMPANY, as "Seller", and PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, INCORPORATED, as "Buyer", W I T N E S S E T H :
WHEREAS, Buyer is a local distribution company; and
WHEREAS, Seller purchases supplies of natural gas for resale; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer natural gas in the quantities and upon the terms and conditions
hereinafter set forth; and
WHEREAS, this agreement shall supersede and replace that certain
Gas Sales Agreement between Buyer and Seller dated January 1, 1989.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Buyer and Seller agree as follows:
ARTICLE I
DEFINITIONS
1.01 The following words and terms, wherever used in this agree-
ment, shall have the meanings set forth below:
(a) "Annual Contract Maximum" shall be equal to the DCM multiplied by the
number of days in the Contract Year.
(b) "BTU" shall mean British Thermal Unit.
(c) "Buyer's allocated DCM capacity" shall mean a volume of firm
transportation capacity available to Buyer at a TGPL receipt point
which is equal to the DCM multiplied by the percentage of capacity
allocated to such receipt point under TGPL's then current FERC Gas
Tariff.
(d) "Buyer's city gate" shall mean the interconnection of the facilities
of buyer and TGPL.
(e) "Buyer's FT Agreement" shall mean Buyer's agreement(s) with TGPL, as
may be in effect from time to time, for firm transportation of gas from
the TGPL receipt points to Buyer's city gate.
(f) "Contract Year" shall mean a period of twelve (12) consecutive months
beginning at 7:00 a.m. (C.S.T.) on November 1 and extending until 7:00
a.m. (C.S.T.) on the next November 1.
(g) "Daily Contract Maximum" or "DCM" shall be equal to the sum of 20,000
dt of gas per day
plus the quantity of gas retained by TGPL for compressor fuel and line
loss makeup, as such quantity may change from time to time during the
term of this agreement.
(h) "Day" shall mean a period beginning at 7:00 a.m. (C.S.T.) on a calendar
day and ending at 7:00 a.m. (C.S.T.) on the next calendar day.
(i) "Dekatherm" or "dt" shall mean the quantity of heat energy which is one
(1) MMBtu.
(j) "FERC" shall mean the Federal Energy Regulatory Commission.
(k) "Gas" or "natural gas" shall include casinghead gas produced with crude
oil, natural gas from gas wells, coalbed methane gas, synthetic gas,
coal gasification gas and residue gas resulting from processing any of
the foregoing.
(1) "Load Factor" for the Contract Year shall mean the percentage which is
obtained by dividing the aggregate of the daily quantities purchased by
Buyer hereunder during a Contract Year by the Annual Contract Maximum.
"Load Factor" for the Summer Period shall mean the percentage which is
obtained by dividing the aggregate of the daily quantities purchased by
Buyer hereunder during the Summer Period by a number equal to the DCM
multiplied by the number of days in the Summer Period. Makeup
quantities taken pursuant to Section 4.05 shall not be included for
purposes of calculating Load Factor.
(m) "Mcf" shall mean one thousand (1,000) cubic feet of natural gas and
"MMcf" shall mean one million (1,000,000) cubic feet of natural gas.
(n) "MMBTU" shall mean one million (1,000,000) British Thermal Units.
(o) "Month" shall mean a period beginning at 7:00 a.m.(C.S.T.) on the
first day of a calendar month and ending at 7:00 a.m.(C.S.T.) on the
first day of the next calendar month.
(p) "Pricing Point" shall mean Buyer's city gate or such other point as may
be agreed upon by the parties.
(q) "Redetermination Date" shall mean November 1, 1992 and November 1 of
second year thereafter during the term hereof.
(r) "Summer Period" shall mean the period commencing at 7:00 a.m. (C.S.T.)
on April 1 and ending at 7:00 a.m. (C.S.T.) on November 1 of each
Contract Year.
(s) "TGPL" shall mean Transcontinental Gas Pipe Line Corporation.
(t) "TGPL receipt points" shall mean TGPL Compressor Stations 30, 45, 50,
and 62, or other established TGPL mainline pooling points.
(u) "Third party seller(s)" shall mean the party or parties from whom
Seller purchases gas.
(v) "Transporter" shall mean any pipeline company which provides any
portion of the transportation of the gas purchased hereunder from the
points of delivery stated in Article Vl to Buyer's city gate.
(w) "Transporter's Tariff" shall mean the currently effective tariff of
Transporter filed with the FERC.
(x) "Year" shall mean a period of three hundred sixty-five (365)
consecutive days with a one day adjustment for leap years.
ARTICLE II
GOVERNMENTAL AUTHORIZATIONS
2.01 Each of the parties hereto agrees to proceed with diligence in a
good faith effort to obtain, cause to be obtained or to assist the other party
in obtaining all such governmental authorizations as may be necessary to enable
each party to perform or cause to be performed its obligations under this
agreement.
ARTICLE III
RESERVATIONS OF SELLER
3.01 Subject to the other terms and provisions of this agreement,
Seller expressly reserves unto itself the right, at its sole cost and expense,
to separate and extract liquid and liquefiable hydrocarbons, other than methane,
from the gas upstream of TGPL Compressor Station 65 located in St. Helena
Parish, Louisiana, together with such methane as cannot be separated from the
ethane and heavier hydrocarbons separated or extracted from the gas, provided
that such extraction (i) shall not reduce the total heating value per cubic foot
below a level acceptable to Transporter; (ii) shall not render the gas incapable
of meeting the quality specifications described in Article IX; and (iii) shall
not cause the total number of dekatherms received by Buyer at its city gate to
be less than the number of dekatherms purchased at the point of delivery
(excluding gas retained by TGPL for fuel and line loss). All liquid and
liquefiable hydrocarbons so recovered shall belong to Seller. Notwithstanding
Article XVI hereof, Seller agrees to indemnify and hold Buyer harmless from all
claims, liability, damages, and expenses which may occur or be asserted by
reason of Seller's processing of gas hereunder.
ARTICLE IV
QUANTITY OF GAS
4.01 Subject to the other terms and provisions of this agreement,
beginning on the date deliveries commence hereunder, and daily throughout the
term hereof, Seller agrees to make available to Buyer at the point(s) of
delivery a quantity of gas equal to the Daily Contract Maximum ("DCM") or such
lesser quantity as Buyer may nominate and schedule hereunder. Anything to the
contrary notwithstanding, Seller shall not be obligated to make available to
Buyer during any Contract Year any quantities in excess of the Annual Contract
Maximum.
4.02 On or before the day before the date nominations are due under
the terms of
Transporter's Tariff ("Nomination Due Date"), Buyer shall nominate to Seller the
maximum daily quantity of gas (up to the DCM) which Buyer anticipates it will
purchase in the ensuing month ("Nominated Quantity"). If Buyer fails to nominate
any quantity of gas on or before the Nomination Due Date, Buyer shall be deemed
to have nominated a quantity equal to the DCM for such month.
4.03 (a) If in any Summer Period Buyer fails to purchase a quantity of
gas (the "Summer Period Minimum Quantity") equal to at least forty percent (40%)
of the DCM multiplied by the number of days in the Summer Period, Buyer shall
pay Seller in accordance with (i) or (ii) below, which choice shall be at
Buyer's sole discretion:
(i) a Deficiency Charge ("DC") calculated as follows:
DC = (SMQ - SQ) (SWACP)(.10)
or (ii) a Prepayment Charge ("PC") calculated as follows:
PC = (SMQ - SQ) (SWACP)
where: SMQ = Summer Period Minimum Quantity,
SQ = total quantities purchased here-
under during the Summer
Period, and
SWACP = Summer Weighted Average Commodity
Price, the weighted average of all
Commodity Prices, as defined in
Article VIII, in effect during the
Summer Period (weighted by the
number of days each such price was
in effect).
(b) If in any Contract Year Buyer fails to purchase a quantity of gas
(the "Contract Year Minimum Quantity") equal to at least sixty percent (60%) of
the DCM multiplied by the number of days in the Contract Year, Buyer shall pay
Seller either:
(i) a Deficiency Charge calculated as follows:
DC = (CYMQ - CYQ) (CYWACP)(.20)
or (ii) a Prepayment Charge calculated as follows:
PC = (CYMQ - CYQ) (CYWACP)
where: CYMQ = Contract Year Minimum Quantity.
CYQ = total quantities purchased
hereunder during the Contract Year.
CYWACP = Contract Year Weighted Average
Commodity Price, the weighted
average of all Buyer's monthly
Commodity Prices, as defined in
Article VIII, in effect during the
Contract Year (weighted by the
number of days each such price was
in effect).
(c) If Buyer fails to purchase the Summer Period Minimum Quantity and
the Contract Year Minimum Quantity in the same Contract Year, Buyer shall be
required to pay Deficiency or Prepayment Charges for both the Summer Period and
the Contract Year in accordance with Sections 4.03(a) and (b), provided,
however, for purposes of determining the total quantities purchased hereunder
for the Contract Year, Buyer shall be deemed to have purchased the Summer Period
Minimum Quantity during such Summer Period.
(d) Payment by Buyer of a Deficiency Charge for a Summer Period or a
Contract Year pursuant to Section 4.03(a) or (b) shall fully satisfy the
obligation of Buyer to purchase the applicable minimum quantity and the
obligation of Seller to deliver such quantity, and neither party shall have any
remaining quantity obligation or rights as to such Summer Period or Contract
Year.
4.04 If Buyer fails, for reasons other than Force Majeure or adverse
governmental action as defined below, to purchase the Contract Year Minimum
Quantity for two consecutive Contract Years, Seller shall be entitled, at its
sole option, to reduce the Annual Contract Maximum by up to the average
percentage by which Buyer's purchases were deficient during such two year
period. Such deficiency percentage shall be calculated by subtracting the
average actual Load Factor over such two (2) year period from sixty percent
(60%). Buyer's adjusted Annual Contract Maximum shall be calculated as set forth
on Attachment "A" hereto.
4.05 If Buyer shall have failed to purchase the Summer Period and/or
Contract Year Minimum Quantities specified in Section 4.03 and has paid a
Prepayment Charge for such gas
pursuant to Section 4.03(a)(ii) or 4.03(b)(ii)("Prepaid Gas"), Buyer shall have
the right, during the remaining term of this agreement, to receive makeup gas
equal to the quantity for which Buyer prepaid, subject to the provisions of this
section. Subject to the nomination requirements of Section 4.02, Buyer may
receive such makeup gas at any time after that point in the Contract Year at
which Buyer has purchased the Summer Period and Contract Year Minimum
Quantities, or on any day during the Contract Year after Buyer has purchased the
DCM on such day (provided Seller elects to make available gas in excess of the
DCM). Seller or Buyer, as applicable, shall account for any difference in price
between that at which a Prepayment Charge was paid and that applicable at the
time makeup gas is taken. Gas shall be deemed made up on a "first in, first out"
basis. The gas so made up during any subsequent Contract Year shall not be
considered purchased in such Contract Year for purposes of determining whether
Buyer has purchased the Summer Period or Contract Year Minimum Quantity. In the
event Buyer chooses to prepay and make up deficiency quantities, any quantities
of gas purchased by Buyer in subsequent periods that are in excess of the
applicable Minimum Quantities and any quantities which are purchased by Buyer in
excess of the DCM on any day shall be considered makeup quantities until all
quantities of Prepaid Gas are made up. The foregoing notwithstanding, Buyer's
rights to make up Prepaid Gas shall not obligate Seller to deliver gas in excess
of the DCM on any day or in excess of the ACM in any Contract Year, or serve to
extend the term of this agreement, and all of Buyer's rights to make up Prepaid
Gas shall cease upon the termination of this agreement. If upon termination of
this agreement, Buyer has not made up all Prepaid Gas, Seller shall, within
thirty (30) days after receipt of Buyer's invoice, pay to Buyer an amount equal
to all Prepayment Charges paid by Buyer for the Prepaid Gas not made up, less an
amount equal to the Deficiency Charges that would have been payable on such
quantities based on the Commodity Price applicable at the time such gas should
have been taken.
4.06 (a) If on any day Seller fails to deliver any portion of
the gas nominated and
scheduled by Buyer for delivery in accordance with this Article IV, Buyer shall
use reasonable efforts to replace such gas from other sources at the lowest cost
reasonably available to Buyer. If Buyer is able to replace such gas from other
sources, then Seller shall pay to Buyer, as Buyer's sole and exclusive remedy
for such failure to deliver (in addition to the adjustments specified in Section
8.03), liquidated damages in an amount equal to:
(i) the excess, if any, of
(a) the price per dekatherm reasonably paid by
Buyer for such replacement gas, such price
to be adjusted if necessary for pricing
point comparability,
over (b) the effective price per dekatherm (including
commodity charges and excluding reservation
charges) that would have been applicable to
such gas hereunder,
multiplied by
(ii) the difference between
(a) the quantity of gas so nominated and
scheduled by Buyer, and (b) the quantity of
gas actually delivered hereunder.
(b) the quantity of gas actually delivered
hereunder.
If the price paid by Buyer for such replacement gas (as described in Section
4.06(a)(i)(a)) does not exceed the effective contract price (as described in
Section 4.06(a)(i)(b)), Buyer shall not be entitled to receive any damages from
Seller. If Buyer, in its reasonable discretion, replaces such gas from its own
supplies of gas in storage, Buyer shall so advise Seller and Seller may elect,
in lieu of paying the liquidated damages specified in this paragraph, to replace
such gas within Buyer's storage rights at a time specified by Buyer. At such
time Seller shall also reimburse Buyer for any injection and withdrawal charges
or costs paid or incurred by Buyer in connection with the withdrawal and use of
Buyer's storage gas and the injection of replacement gas supplied by Seller. In
such case, Seller's replacement of such gas and reimbursement of such injection
and withdrawal charges or costs (in addition to the adjustments specified in
Section 8.03) shall constitute Buyer's sole and exclusive remedy for Seller's
failure to deliver gas hereunder.
(b) If on any day Seller fails to deliver any portion of the gas
nominated and scheduled by Buyer for delivery in accordance with this Article
IV, and if Buyer is unable to replace such gas from other sources, then Seller
shall pay to Buyer, as Buyer's sole and exclusive remedy for such failure to
deliver (in addition to the adjustments specified in Section 8.03), liquidated
damages in an amount equal to the applicable Commodity Price (as defined in
Article VIII) multiplied by the difference between the quantity of gas so
nominated and scheduled by Buyer and the quantity of gas actually delivered.
(c) Anything to the contrary notwithstanding, the provisions of Sections
4.06(a) and (b) and Section 8.03 shall not apply if Seller's failure to deliver
is due to a force majeure condition or an adverse governmental action, as such
terms are defined below, or the failure of Buyer to provide sufficient
transportation capacity pursuant to Section 12.02(a).
4.07 Buyer shall timely provide to Seller all nomination and scheduling
information required by Transporter in connection with the quantities of gas
Buyer desires to purchase hereunder. Buyer shall notify Seller by telephone of
all changes in its daily scheduled quantities sufficiently in advance so that
Seller may comply with Transporter's advance notice requirements. Buyer shall
take gas as nearly as practicable at uniform hourly rates of flow, at uniform
daily deliveries and in conformance with any requirements of Transporter subject
to Article XII.
ARTICLE V
DELIVERY PRESSURE
5.01 Seller shall deliver natural gas to Buyer at Transporter's line pressure at
the point(s) of delivery
designated in Article VI hereof.
ARTICLE VI
POINTS OF DELIVERY AND OWNERSHIP
6.01 The point(s) of delivery for gas purchased and sold hereunder
shall be at the interconnection of the facilities of Transporter with the
facilities of third party sellers at Seller's sources of gas. Title shall pass
to Buyer at such point(s) of delivery.
ARTICLE VII
TERM OF AGREEMENT
7.01 Subject to the other provisions hereof, this agreement shall be
effective on November 1, 1990 and shall remain in full force and effect for a
primary term ending November 1, 2000. Beyond the primary term, this agreement
shall extend on a year to year basis, unless terminated upon six (6) months
prior written notice by either party.
ARTICLE VIII
PRICE
8.01 Subject to the other provisions of this agreement, for all gas
purchased hereunder in a month, the Base Contract Price at the Pricing Point(s)
shall be equal to the sum of:
(a) eighteen cents ($.18) plus the arithmetic average of the
following:
(i) the weighted average of the average prices for gas
delivered into TGPL for the week of publication, at
Wharton County, Texas - Station 30
8.04 The Commodity Bill for each month shall be equal to the
Commodity Price multiplied by the total quantity of gas purchased by Buyer
hereunder during such month. The Commodity Price for a month shall be equal to
eighty percent (80%) of the Base Contract Price for such month. An example of
the calculation of the Demand and Commodity Bills and adjustments thereto is
outlined in Attachment "B" hereto.
8.05 (a) Either party may initiate a redetermination of the Base
Contract Price and/or the rate design (the "applicable price component(s)") by
delivering written notice to the other party on or before the 60th day prior to
the next Redetermination Date ("Redetermination Notice"). If neither party
receives a Redetermination Notice on or before such 60th day, the applicable
price component(s) then in effect shall remain in effect for the next two (2)
year period commencing on the Redetermination Date.
(b) If either party receives a Redetermination Notice on or
before such 60th day, the parties shall commence negotiating in good faith
within five (5) days of such notice to redetermine the applicable price
component(s). If the parties fail to reach agreement within twenty (20) days of
such notice, any remaining disputed matters shall be referred to the respective
chief executive officers of Seller and Buyer for resolution. lf the parties
reach agreement, the redetermined applicable price components shall become
effective on the Redetermination Date. If said chief executive officers fail to
reach agreement on or before the thirtieth (30th) day prior to the
Redetermination Date, either party may terminate this agreement by giving
written notice to the other party. In such event, this agreement shall terminate
on the one hundred-fiftieth (150th) day from the date such notice of termination
is received, and the applicable price components in effect prior to the
Redetermination Date shall remain in effect until such termination.
8.06 On any day in which the Commodity Price is not competitive with
the applicable residual fuel oil price, Buyer shall be deemed to have purchased
the DCM for purposes of determining whether Buyer purchased the Summer Period
and Contract Year Minimum Quantities, regardless of the quantity of gas actually
purchased by buyer on such day. For purposes of this section, the Commodity
Price ("CP"), shall be considered competitive with the residual fuel oil price
unless:
(CP + GRFT) x.95 exceeds{RFR} OVER {6.287}
where:
GRFT = applicable gross receipt and franchise and
sales taxes
RFR = a residual fuel oil reference price which
shall be the low quote for estimated
Wilmington, North Carolina spot cargo prices
for No. 6 - 2.9% sulphur high pour residual
fuel oil published in the most recent
Platt's Oilgram Price Report.
ARTICLE IX
QUALITY OF GAS
9.01 (a) The gas delivered hereunder shall be merchantable gas which
shall comply with the quality requirements stated in the tariff(s) of the
Transporter(s) transporting the gas purchased and sold hereunder.
(b) SELLER HAS NO KNOWLEDGE OF ANY PARTICULAR OR SPECIAL
PURPOSE OF BUYER FOR THE GAS TO BE SOLD HEREUNDER AND MAKES NO WARRANTY WITH
RESPECT TO THE FITNESS OF THE GAS FOR ANY SUCH PURPOSE.
ARTICLE X
METERING AND MEASUREMENT
10.01 The unit of measurement of the gas shall be one dekatherm of gas.
The gas delivered hereunder shall be measured and metered by the initial
Transporter at Seller's sources of gas in accordance with the provisions,
specifications and standards set forth in said Transporter's tariff. Each party
shall preserve or cause to be preserved for at least one (1) year all test data,
charts, allocation statements and other similar records available to it, unless
a longer period is prescribed by applicable regulation.
ARTICLE XI
BILLING AND PAYMENT
11.01 On the first day of the month following the month in which
deliveries commence hereunder and on the first day of each month thereafter,
Seller shall render to Buyer a statement of the Reservation Charge for the prior
month. Such statement shall include adjustments, if any, which may be calculated
pursuant to Article VIII. Buyer shall pay Seller the Reservation Charge by wire
transfer to Seller's account at Citibank, N.A. (account number specified on
invoices) on or before the tenth (10th) day of each month or the tenth (10th)
day following Buyer's receipt of the Reservation Charge statement, whichever is
later.
11.02 On or before the tenth (10th) day of each month, Seller shall
render to Buyer a
statement showing the quantities of gas delivered by Seller during the preceding
month and the Commodity Charge therefor, as well as the amount and description
of any deficiency charges owed by or liquidated damages owed to Buyer hereunder
for the preceding month. Buyer shall pay Seller the amount of such statement by
wire transfer to Seller's account at Citibank, N.A. (account number specified on
invoices) on or before the twentieth (20th) day of each month or the tenth
(10th) day following the date of Buyer's receipt of such statement, whichever is
later; provided, however, if any payment date is a Saturday, Sunday or legal
holiday, such payment shall be due on the business day immediately following
such payment date.
11.03 Liquidated damages owed by Seller pursuant to the terms of this
agreement for any month shall be credited against Buyer's Commodity Charge
statement in the next month and against Reservation Charge and Commodity Charge
statements in subsequent month(s) as necessary.
11.04 If Buyer fails to pay any statement in whole or in part when due,
in addition to any other rights or remedies available to Seller, interest at a
rate equal to the prime rate of Citibank, N.A. or its successor plus 2% shall
accrue on unpaid amounts, including on unpaid interest compounded daily,
beginning on the payment due date of Seller's statement and ending when such
statement is paid. The preceding provisions of this Article XI notwithstanding,
if a legitimate good faith dispute arises between Buyer and Seller concerning a
statement, Buyer shall pay that portion of the statement not in dispute on or
before such due date, and, upon the ultimate determination of the disputed
portion of the statement, Buyer shall pay Seller the remaining amount owed plus
the interest accrued thereon. All disputes regarding quantities delivered to
Buyer's city gate shall be resolved by reference to the measurement charts and
records of TGPL at Buyer's city gate.
11.05 Upon request, either party shall mail or deliver to the other
party for verification and calculation all charts, allocation statements and
other documents used in the measurement of gas delivered hereunder (to the
extent such charts are available to the party receiving such request) within ten
(10) days after the last charge for each billing period is received by Buyer.
Such charts, statements or documents shall be returned to the sender within
thirty (30) days.
ARTICLE XII
TRANSPORTATION
12.01 Seller shall arrange for the transportation of the gas sold
hereunder from the point(s) of delivery to the TGPL receipt points. Any
provision herein to the contrary notwithstanding, as part
of Seller's obligation to arrange such transportation, Seller shall indemnify
and hold Buyer harmless from all injuries, claims, liabilities and damages
irrespective of the cause thereof (other than Buyer's negligence) which arise
out of or in connection with the gas or the handling thereof during such
transportation.
12.02 (a) The gas will be transported from the TGPL receipt points to
the Pricing Point under Buyer's FT Agreement. Buyer shall maintain firm
transportation capacity with TGPL from the TGPL receipt points to the Pricing
Point in an amount at least equivalent to the DCM plus applicable fuel and shall
make such capacity available for the transportation of all quantities scheduled
hereunder. Specifically, at each TGPL receipt point Buyer shall make available
firm capacity equal to Buyer's allocated DCM capacity at such point, and Seller
shall deliver a quantity of gas equal to the quantity Buyer nominates and
schedules to be delivered at such point; provided, however, that from time to
time Buyer and Seller may agree that the portion of the Nominated Quantity to be
delivered hereunder in the ensuing month at one or more of the TGPL receipt
point(s) shall be greater than Buyer's allocated DCM capacity at such point(s)
if such additional firm capacity is available to Buyer, and that the portion to
be delivered to other TGPL receipt point(s) in such month shall be less. If such
modified allocation is agreed to, it shall be used to determine the weighted
averages described in Section 8.01. If Buyer and Seller fail to agree to such
modified allocation on or before the seventh (7th) day prior to the first day of
the ensuing month, the gas scheduled by Buyer in such month shall be delivered
to the TGPL receipt points on a pro-rata basis in accordance with Buyer's
allocated DCM capacity at each such point. Any other provision in this agreement
notwithstanding, if Seller has made the quantities of gas scheduled by Buyer
available for delivery at the TGPL receipt points in accordance with Buyer's
allocated DCM capacity or such modified allocation as the parties may have
agreed to, then to the extent Buyer fails to make sufficient firm capacity on
the TGPL system available to receive and transport such quantities, Seller's
obligation to deliver any quantities in excess of the firm capacity made
available to Seller by Buyer shall be subject to and limited by the availability
of interruptible transportation on the TGPL system, if firm transportation is
not otherwise available.
(b) Seller shall reimburse or credit Buyer for all TGPL commodity
charges which are incurred by Buyer under Buyer's FT Agreement for the
transportation of gas purchased hereunder to the Pricing Point.
12.04 Buyer and Seller shall cooperate to adjust any discrepancy
among (a) the quantity
allocated at Seller's sources of gas, (b) the quantity scheduled by Buyer and
(c) the quantity allocated as Seller's gas at Buyer's city gate by the final
Transporter.
12.05 Without waiver of any other remedies, in the event any charges,
penalties, costs or expenses are incurred or payable to Transporter as a result
of Seller's failure to give Buyer timely notice of any increase or decrease in
daily quantities to be delivered at any point of delivery or TGPL receipt point
from the quantities nominated and scheduled by-Buyer in accordance with Article
IV, Seller shall be responsible for such charges, penalties, costs or expenses.
12.06 Without waiver of any other remedies, in the event any charges,
penalties, costs or expenses are incurred or payable to Transporter as a result
of Buyer's failure to give Seller timely notice of any increase or decrease in
daily quantities to be accepted at any TGPL receipt point or Pricing Point from
the quantities nominated and scheduled by Buyer in accordance with Article IV,
Buyer shall be responsible for such charges,, penalties, costs or expenses.
12.07 For the purpose of Sections 12.05 and 12.06, notice will be
deemed timely if, under the circumstances, it should have given the party
receiving such notice reasonably sufficient time to notify Transporter of such
changes in quantities by the time required under the terms of Transporter's
tariff to avoid imposition of a penalty or charge.
ARTICLE XIII
GOVERNMENTAL REGULATIONS
13.01 This agreement shall be subject to all valid applicable state,
federal and local laws, rules and regulations; provided, that either party
hereto shall be entitled to regard all laws, rules and regulations issued by any
federal or state regulatory body as valid and may act in accordance therewith
until such time as the same may be held invalid by final judgment in a court of
competent jurisdiction. Nothing herein shall be taken to preclude Buyer or
Seller or both from contesting the validity of any such law(s), rule(s) or
regulation(s).
13.02 In the event that the FERC, Congress or any other governmental
body asserting jurisdiction ("governmental authority") (i) imposes price
controls on natural gas (ii) prohibits or prevents any of the transactions
described in (a) this agreement, (b) any agency agreement between Buyer and
Seller or (c) any transportation agreement between Transporter and Buyer or
Seller covering the transportation of the gas delivered hereunder; (iii)
directly or indirectly materially and adversely conditions such transactions in
a form that is unacceptable in the sole judgment of the party
affected thereby, or (iv) adopts any law, action, rule or order which directly
or indirectly, materially and adversely affects a party's rights or obligations
hereunder, (each of the events described above being referred to herein as an
"adverse governmental action"), then the party hereto affected by such adverse
governmental action (the "affected party") may terminate this agreement
effective as of the effective date of such adverse governmental action by giving
written notice of termination to the other party. However, if such adverse
governmental action becomes effective in any month from October through April
inclusive, upon Buyer's request, Seller shall continue to deliver gas hereunder
until the following May 1, provided that: (A) Buyer or Seller can arrange the
necessary transportation; (B) Buyer shall agree in writing to keep Seller whole
on a monthly basis with respect to all increased costs Seller may incur by so
continuing to perform this agreement; (C) so continuing to perform this
agreement will not result in Seller being subject to the jurisdiction of the
FERC or any successor governmental authority beyond that in effect on the date
of this agreement, and (D) Seller is able to obtain sufficient supplies of gas
to satisfy Buyer's requirements hereunder without affecting Seller's ability to
fulfill Seller's other firm sales contract obligations that are not suspended by
such adverse governmental action. If conditions (A), (B) and (C) of this
paragraph are satisfied but, due to such adverse governmental action, Seller is
unable to obtain sufficient supplies of gas to satisfy Buyer's requirements and
meet all of Seller's other firm sales obligations, then Buyer shall be entitled
to receive, until the following May 1, such proportion of the total reduced
quantity Seller is able to make available at each TGPL receipt point, if any, as
Buyer's nominated quantity for each such receipt point bears to the sum of such
nominated quantity under this agreement and the nominated quantities under
Seller's other firm contracts for such TGPL receipt point. Any provision herein
to the contrary notwithstanding, the affected party may terminate its
performance of this agreement effective immediately if continued performance
hereof would cause such party to be in violation of any enforceable law, action,
rule, order or regulation under this article.
ARTICLE XIV
FORCE MAJEURE
14.01 No failure or delay in performance, whether in whole or in part,
by either Seller or Buyer shall be deemed to be a breach hereof when such
failure or delay is occasioned by or due to any acts of God, strikes, lockouts,
or other industrial disturbances, acts of the public enemy, sabotage, wars,
blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
floods, storms,
fires, washouts, arrests and restraints of rulers and peoples, civil
disturbances, explosions, breakage or accident to machinery or lines of pipe,
hydrate obstructions of lines of pipe, lack of pipeline capacity due to a
declared force majeure event experienced by Transporter affecting the firm
transportation of gas hereunder, repairs, maintenance, improvement, replacement
or alterations to plants, lines of pipe or related facilities, partial or
complete failure to perform by persons transporting or storing gas on a firm
basis for Buyer or Seller, inability of either party to obtain necessary
machinery, materials or permits or to obtain easements or rights of way,
freezing of a well or delivery facility, well blowouts, the act of any court or
governmental authority, or any other cause, whether of the kind herein
enumerated or otherwise, not reasonably within the control of the party claiming
suspension and which, by the exercise of due diligence, such party is unable to
prevent or overcome; provided, however, that the settlement of strikes or
lockouts shall be entirely within the discretion of the party having the
difficulty, and the requirement that any force majeure shall be remedied with
the exercise of diligence shall not require the settlement of strikes or
lockouts by acceding to the demands of opposing parties when such course is
inadvisable in the discretion of the party having difficulty.
14.02 Such causes or contingencies affecting the performance of this
agreement by any party hereto, however, shall not relieve such party of
liability in the event of its negligence or in the event of its failure to
remedy the situation and remove the cause in an adequate manner and with all
reasonable dispatch. Nor shall such causes or contingencies affecting the
performance of this agreement relieve any party from its obligations to make
payments of amounts when due. Nor shall such causes or contingencies relieve any
party of liability, unless such party shall give notice and full particulars of
the same in writing or by telegraph to the other party as soon as possible after
the occurrence relied on, and like notice shall be given upon termination of
such force majeure conditions.
14.03 If, due to force majeure, the gas available for delivery by
Seller is insufficient to meet all of Seller's firm, long-term sales obligations
(those with terms of one (1) year or longer), Buyer shall not be disadvantaged
relative to Seller's other firm, long term sales commitments with respect to
allocation of supplies of gas which could reasonably be delivered to Buyer
during the continuance of the force majeure.
ARTICLE XV
WARRANTY OF TITLE
15.01 Seller warrants title to all gas delivered by it, that it has the
right to sell or deliver the same, and that such gas is free from liens and
adverse claims of every kind. Seller shall pay or cause to be paid all taxes and
other sums due on the gathering and handling of the gas delivered by Seller.
Seller shall indemnify and save Buyer harmless from and against all suits,
actions, damages, costs and expenses arising from or out of any breach of this
provision.
ARTICLE XVI
RESPONSIBILITY
16.01 As between the parties hereto, Seller shall be deemed to be in
exclusive control and possession of the gas sold hereunder until such gas has
been delivered to the point(s) of delivery, after which point Buyer shall be
deemed to be in exclusive control and possession of such gas.
16.02 The party deemed to be in control and possession of the gas sold
hereunder shall be responsible for and shall indemnify the other party with
respect to any claims, liabilities or damages arising therefrom when such gas is
in that party's control and possession.
ARTICLE XVII
GENERAL PROVISIONS
17.01 Copies of any filing submitted to the FERC, or to any state or
federal regulatory agency having jurisdiction, and any notice, request, demand,
payment or statement provided for in this agreement shall be in writing and
shall be directed to the address of the parties hereto as follows:
BUYER:
For Notices, Payment and Billing:
Public Service Company of North Carolina, Inc.
800 Cox Road
Gastonia, North Carolina 28053
Attention: Vice President - Gas Supply and Transportation
SELLER:
For Notices:
Transco Energy Marketing Company
P. O. Box 1396
Houston, Texas 77251
or
2800 Post Oak Blvd.
Houston, Texas 77056
Attention: Vice President - Gas Marketing & Operations
For Payment and Billings:
Transco Energy Marketing Company
P. O. Box 1396
Houston, Texas 77251
Attention: TEMCO Accounting
or at such other address as either party shall from time to time designate by
correspondence to the other party.
17.02 This agreement shall not be assignable by either party in whole
or in part, except with the consent of the other party, which shall not be
unreasonably withheld. This agreement shall inure to the benefit of and be
binding upon permitted successors and assigns.
17.03 This agreement is for the sole and exclusive benefit of the
parties hereto. Except as otherwise provided in the Guaranty Agreement attached
hereto between Buyer and Transco Energy Company, nothing expressed or implied
herein is intended to benefit any other person, firm or corporation not a party
hereto and none of such other persons shall have any legal or equitable right,
remedy or claim under this agreement or under any provision hereof.
17.04 This agreement constitutes the entire agreement between the
parties pertaining to the subject matter hereof; supersedes all prior agreements
and understandings, whether oral or written, which the parties may have in
connection herewith; and may not be modified except by written agreement of the
parties. The parties and their legal counsel have cooperated in the drafting of
this agreement and it shall therefore be deemed their joint work product and
shall not be construed against either party by reason of its preparation.
17.05 THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
TEXAS.
17.06 The parties acknowledge that this agreement contains commercially
sensitive information and each party agrees that it will not, without the
written consent of the other, disclose to any third party except Transco Energy
Company and Transco Energy Services Company, this agreement or the terms or
provisions thereof except to the extent, and only to the extent, that disclosure
is required (a) by law or by a court or administrative agency having
jurisdiction over the
disclosing party; (b) to obtain transportation of the gas purchased and sold
hereunder; or (c) in the course of an audit of the disclosing party, and further
provided that upon learning that disclosure is required by law or by a court or
administrative agency, the party required to make such disclosure shall
immediately notify the other party and shall take all reasonable steps requested
by such other party to limit the extent of such disclosure.
IN WITNESS WHEREOF, this instrument is executed as of the day and year
first above written.
TRANSCO ENERGY MARKETING
COMPANY
By /s/ W. Colin Harper
Vice President -
Gas Marketing and Operations
PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, INCORPORATED
By /s/ Franklin H. Yoho
Vice President -
Gas Supply and Transportation