Exhibit 10-A-39
FIRM TRANSPORTATION
CARDINAL EXTENSION PIPELINE COMPANY
This Service Agreement, entered into this the 26th day of June, 1998,
by and between Cardinal Extension Company, LLC, a North Carolina limited
liability company, hereinafter referred to as "Transporter," and Public Service
Company at North Carolina, Inc., a North Carolina corporation, hereinafter
referred to as "Shipper."
WITNESSETH
WHEREAS, Shipper has requested Transporter to transport natural gas on
a firm basis on its behalf;
WHEREAS, Transporter is the owner of an intrastate natural gas pipeline
which interconnects with the interstate pipeline system of Transcontinental Gas
Pipe Line Corporation ("Transco") in Rockingham County, North Carolina;
WHEREAS, Transporter has sufficient capacity available on its pipeline
system to provide firm transportation service for Shipper pursuant to the terms
specified herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
assumed, Transporter and Shipper agree as follows:
ARTICLE I
DEFINITIONS
1.01 As used herein, the following terms shall have meanings defined below:
(a) "British Thermal Unit" or "BTU" -- The amount of heat required to raise the
temperature of 1 pound of water 1 degree Fahrenheit at 60 degrees Fahrenheit.
(b) "Contract Year" -- The year beginning with the date that service shall
commence as set forth in Paragraph 13.01 hereof, or any anniversary thereof.
Provided, however, that in the event firm service commences on a day other than
the first day of the month, the Contract Year shall be considered to commence on
the first day of the month following the day on which service has commenced.
(c) "Cubic Foot" -- The volume of gas which occupies one cubic foot when such
gas is at a temperature of 60 degrees Fahrenheit and an absolute pressure of
14.73 pounds per square inch.
(d) "Day" -- A period of 24 consecutive hours beginning as nearly as practicable
at 10:00 a.m. Eastern Standard Time or Eastern Daylight Time, as appropriate, or
at such other hour as Transporter and Shipper mutually agree.
(e) "Dekatherm"or "dt" -- The quantity of heat energy which is 1,000,000 British
Thermal Units.
(f) "Equivalent Quantity" -- The volume of gas measured in Mcf received by
Transporter at the Point of Receipt during any given period of time, adjusted
for any variations in Btu content, it being the intent of the parties that the
volumes of gas delivered hereunder at the Point of Delivery be the thermal
equivalent of the volumes of gas received at the Point of Receipt less any
amounts attributable to fuel and line losses.
(g) Excess Rate Schedule CFT Service -- The service shall be available on any
Day when the total quantity of gas taken by all firm shippers in Zone 1 is less
than the dekatherm equivalent of 130,000 Mcf per day and/or the total quantity
of gas taken by all Shippers in Zone 2 is less than the dekatherm equivalent of
140,000 Mcf per day provided that such service has been scheduled by Shipper and
allocated by Transporter on such Day.
(h) "Force Majeure" means acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy or terrorists, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
storms, floods, washouts, arrests, the order of any court or governmental
authority having jurisdiction while the same is in force and effect, civil
disturbances, explosions, breakage, accidents to machinery or pipelines,
freezing of or damage to receipt or delivery facilities, National Weather
Service warnings or advisories, whether official or unofficial, that result in
the evacuation of facilities, inability to obtain or unavoidable delays in
obtaining material or equipment, a Force Majeure event or Operating Conditions
on the pipeline system of Transco or any other event, condition or incident
which prevents Transco from tendering gas to Transporter for transportation
hereunder, and any other cause whether of the kind herein enumerated or
otherwise, not reasonably within the control of either party claiming suspension
and which by the exercise of due diligence such party is unable to prevent or
overcome.
(i) "Heating Value" -- Gross heating value on a dry basis which is the number of
British Thermal Units produced by the complete combustion at constant pressure
of the amount of dry gas which would occupy a volume of one cubic foot at 14.73
Psia and 60 degrees Fahrenheit with combustion air at the same temperature and
pressure as the gas, the products of combustion being cooled to the initial
temperature of the gas and air and the water formed by combustion condensed to
the liquid state.
(j) "Mcf" -- 1,000 cubic feet of gas.
(k) "Month" -- A period beginning as nearly as practicable at 10:00 a.m. Eastern
Standard Time or Eastern Daylight time, as appropriate, or at such other hour as
Transporter and Shipper agree upon on the first day of a calendar month and
shall end at the aforesaid time on the first day of the next succeeding calendar
month.
(l) "Operating Conditions" means the necessity to make modifications, tests or
repairs to Transporter's pipeline system. Transporter shall exercise reasonable
diligence to schedule maintenance so as to minimize disruption of service to
Shipper and shall provide reasonable notice of the same.
(m) "Psia" -- Pounds per square inch absolute.
(n) "Psig" -- Pounds per square inch gauge.
(o) "Scheduled Daily Delivery Quantity" -- The daily quantity of gas requested
in advance by Shipper electronically or otherwise to Transporter covering a
specific period of time.
(p) "Transportation Contract Quantity" or "TCQ" -- The quantity of gas specified
in Article 2, Paragraph 2.01, which shall be the maximum quantity that
Transporter is obligated to deliver hereunder on any day, at the Point(s) of
Delivery set forth in Article 4 hereof.
(q) "Year" -- A period of three hundred and sixty-five (365) consecutive days
beginning on the date of initial delivery of gas under this Service Agreement,
or on any anniversary thereof, provided, however, that any such year which
contains a date of February 29, shall consist of three hundred and sixty-six
(366) consecutive days.
ARTICLE 2
GAS TRANSPORTATION SERVICE
2.01 Subject to the terms and provisions of this Service Agreement, Transporter
agrees to receive, transport and redeliver, on a firm basis, for Shipper's
account up to the dekatherm equivalent of a Transportation Contract Quantity
("TCQ") of 100,000 Mcf per day of natural gas from the Point of Receipt
specified in Article 3 hereof to the Point(s) of Delivery specified in Article 4
hereto.
2.02 Transportation service rendered hereunder shall be firm and shall not be
subject to interruption or curtailment except as provided in Article 17 hereof.
ARTICLE 3
POINT OF RECEIPT
3.01 Shipper shall deliver or cause to be delivered gas for transportation
hereunder and Transporter shall receive gas quantities up to Shipper's TCQ, plus
any applicable fuel and line loss makeup, at the existing point of
interconnection between Transporter and the pipeline system of Transco in
Rockingham County, North Carolina ("Point of Receipt"). Transporter shall accept
deliveries at the Point of Receipt at a pressure sufficient to allow the gas to
enter Transporter's pipeline system at the varying pressures that may exist in
such system from time-to-time; provided, however, that such pressure(s) of the
gas delivered or caused to be delivered by Shipper shall not exceed the maximum
operating pressure(s) specified by Transporter for the Point of Receipt.
3.02 Shipper shall make any necessary arrangements with Transco so as to be able
to deliver gas to Transporter at the Point of Receipt; provided, however, that
such arrangements are compatible with the operating conditions on Transporter's
pipeline system.
ARTICLE 4
POINT(S) OF DELIVERY
Transporter shall deliver to Shipper, or for the account of Shipper, Equivalent
Quantities hereunder at the existing points of interconnection between the
systems of Transporter and Shipper and any upstream points of delivery within
Shipper's TCQ capacity entitlements. Transporter shall design its pipeline
facilities and use reasonable efforts to deliver gas at the Point(s) of Delivery
at a minimum pressure of not less than 500 psig. The maximum pressure at the
Point(s) of Delivery shall not exceed the maximum operating pressure of
Transporter's pipeline at such point(s).
ARTICLE 5
DETERMINATION OF RECEIPTS AND DELIVERIES
5.01 Receipts and deliveries shall be allocated by Transporter according to a
predetermined methodology administered by Transporter for the allocation among
shippers each Day of each dt of gas which is delivered by Transporter at the
Point(s) of Delivery. Under the current allocation methodology, the quantity of
gas allocated each Day to each Shipper at the Point of Receipt shall be deemed
to be, to the maximum extent possible, the quantities of gas delivered for such
Shipper's account at the Point(s) of Delivery hereunder adjusted for any
quantities attributable to fuel and line loss makeup.
5.02 Shipper shall cause Transco to provide Transporter with a predetermined
daily allocation methodology in writing, or electronically (by electronic data
transfer) for measured quantities based on scheduled quantities in advance of
service each Day and prior to any intra-day changes pursuant to Section 7.02
below. The daily allocation methodology provided by Transco shall consist of
rankings for allocation among all shippers nominating service such that receipts
are equivalent to the quantities delivered by Transporter plus any quantities
applicable for fuel or line loss makeup.
ARTICLE 6
DETERMINATION OF ALLOWABLE DAILY DELIVERY VARIATIONS
AND OVERRUN PENALTIES
6.01 Allowable daily delivery variations shall be the quantity computed as
follows:
(a) During each Day of the period beginning May 1 of any Year and extending
through the next succeeding September 30, 5 percent of Shipper's TCQ under this
Service Agreement.
(b) During each Day of the period beginning on October 1 of any Year and
extending through the next succeeding April 30, 3.5 percent of Shipper's TCQ
under this Service Agreement.
6.02 Any quantity of gas taken by Shipper on any Day from Transporter in excess
of Shipper's TCQ under this Service Agreement shall, as adjusted by the
allowable daily delivery variations above, be an unauthorized daily overrun
unless:
(a) Shipper is utilizing the firm capacity entitlements of another firm shipper
that is not using that capacity entitlement and Shipper has provided prior
notice to Transporter, or
(b) Shipper is utilizing Excess Rate Schedule CFT Service which has been
scheduled by Shipper and allocated by Transporter on such Day.
6.03 In the event of a Force Majeure, Shipper's revised TCQ pursuant to Article
17 below shall be utilized to determine the allowable daily delivery variation
and unauthorized daily overrun quantity and any penalties thereon. Notice shall
be provided by Transporter to Shipper of such revised TCQ by telephone or
telecopy. Such notice shall be confirmed in writing as soon as reasonably
possible.
6.04 In the event on any Day Shipper takes unauthorized daily overrun
quantities, Shipper shall pay Transporter:
(a) an overrun charge equal to the 100 percent load factor FT rate per dt for
quantities up to, but not exceeding, the daily allowable delivery variation set
forth in Section 6.01 above, and
(b) an overrun penalty of $25 per dt for each dt of unauthorized daily overrun
quantities in excess of the daily delivery variation set forth in Section 6.01
above.
6.05 All overrun penalties collected by Transporter during any calendar year,
less an amount equal to the 100 percent load factor FT rate per dt multiplied by
the total volume of overruns, shall be directly refunded to each non-overrunning
firm transportation shipper for the Month(s) in which such penalties were
incurred based on each such non-overrunning shipper's fixed cost contribution
under its service agreement with Transporter as a percentage of the total fixed
cost contributions of all non-overrunning shippers under all firm service
agreements. Such refunds shall be made by January 31 of each calendar year.
6.06 The payment of a penalty for an unauthorized overrun quantity shall under
no circumstances be considered as giving Shipper the right to take such
unauthorized overrun quantity nor shall such payment be considered as a
substitute for any other remedy available to Transporter or any other shipper
against the offending shipper for such unauthorized overrun.
ARTICLE 7
SCHEDULING AND BALANCING
7.01 Shipper shall nominate service under this Service Agreement in advance of
each Month or in advance of each Day in accordance with the nomination deadlines
of Transco. Transporter, in its sole judgement, may waive any nomination
deadlines, on a non-discriminatory basis, if Transporter determines that
operating conditions permit. Such nominated quantities shall be subject to
confirmation by Transporter which shall be based on the best operating
information available to
Transporter. Such confirmed quantity shall be deemed the scheduled quantity.
Shipper and Transporter shall have scheduling personnel available to be
contacted seven days a week, twenty-four hours a day.
7.02 During any Day, Shipper may request to reschedule, on a prospective basis,
quantities scheduled pursuant to Section 7.01 above, provided that such
quantities are consistent with rescheduled quantities and deadlines on Transco.
7.03 Shipper shall endeavor to balance receipts and deliveries as reasonably as
practicable so that the quantities delivered by Transco to Transporter are
consistent with the actual quantities taken by Shipper at the Point(s) of
Delivery. Shipper shall have the responsibility to monitor daily receipts and
deliveries during the Month based on the best information available.
7.04 Transporter shall provide its latest estimated allocation data on receipts
and deliveries to all parties requesting such data. These allocated quantities
will be subject to change and the data is offered for informational purposes
only, and should not be relied on by Shipper for any purposes whatsoever.
ARTICLE 8
SHIPPER'S RESPONSIBILITIES
Shipper recognizes that, as between it and Transporter, Shipper has sole control
over its physical takes of gas from Transporter's system and therefore has a
duty to refrain from taking delivery of unauthorized overrun quantities. Shipper
further recognizes that Shipper may cause hardship and economic damage to other
shippers in the event Shipper takes delivery of unauthorized overrun quantities
for which Shipper may be held accountable either through a direct cause of
action by such other shippers or as an impleaded or third party defendant in a
suit by such other shippers. In no event shall the payment of a penalty for an
overrun quantity pursuant to this Service Agreement be considered as giving
Shipper the right to take such unauthorized overrun quantity nor shall such
payment be considered as a substitute for all other rights and remedies
(including but not limited to consequential damages) available to any other
shipper against Shipper.
ARTICLE 9
TRANSPORTER'S RESPONSIBILITIES
Transporter recognizes that it has a duty to use reasonable care and prudent
operating procedures to allow Shipper to schedule for delivery within its TCQ,
as adjusted pursuant to a Force Majeure situation or Operating Conditions, the
gas quantities available to Shipper up to the amount verified and confirmed by
Transporter based on the best operating information available to Transporter.
Transporter also recognizes that unless forces beyond Transporter's control
(including, but not limited to, Force Majeure, or the failure of Shipper or
Shipper's gas supplier to deliver scheduled gas quantities into Transporter's
system) cause interference with Transporter's ability to redeliver, Transporter
has a duty to tender to Shipper for redelivery the gas quantities which
Transporter has verified and confirmed as available to Shipper. Transporter
further recognizes that a breach of its duties herein may cause hardship and
economic damage to Shipper, for which Shipper reserves all rights and remedies
(including but not limited to consequential damages), and for which Transporter
may be held accountable.
ARTICLE 10
RATES AND CHARGES
10.01 For firm transportation service provided to Shipper hereunder, Shipper
shall pay to Transporter each month the sum of the following charges:
(a) Reservation Charge: Shipper's TCQ multiplied by the reservation rate
applicable to deliveries in the rate zone in which the gas is delivered and as
set forth on currently effective Sheet No.
1 of Transporter's tariff.
(b) Commodity Charge: The applicable commodity rate set forth on currently
effective Sheet No. 1 multiplied by the quantities of gas (dts) delivered.
(c) Excess CFT Charge: The applicable rate set forth on currently effective
Sheet No. 1 multiplied by the excess CFT quantity delivered during that month.
10.02 Transporter shall retain from the quantities of gas received on behalf of
Shipper hereunder any applicable fuel and line loss make-up associated with the
transportation service provided hereunder. Transporter will evaluate any fuel
retention percentages applicable to Shipper's service on an annual basis and
will make any necessary filings with the NCUC to reflect any changes at least
thirty (30) days prior to April 1 of each calendar year.
10.03 Transporter shall have the right, from time-to-time, through filings with
the governmental agency having jurisdiction to seek to change the rates or
allowance for fuel, and to change the other terms and conditions of this Service
Agreement, without limitation or reservation; provided, however, that (a) the
character of firm service, (b) the term, (c) the quantities, (d) the Point(s) of
Receipt and Delivery, and (e) the delivery pressure shall not be subject to
change hereunder without mutual agreement of the parties. Shipper shall have the
right to oppose any of the foregoing and to seek other changes to the terms and
conditions of this Service Agreement to the extent that Shipper is legally
permitted to do so under applicable provision(s) of law.
ARTICLE 11
QUALITY OF GAS
11.01 The parties hereto recognize that the natural gas delivered for
transportation hereunder will necessarily be commingled in Transporter's
pipeline system with gas received from other sources, and that the specific gas
delivered to Transporter cannot be redelivered for Shipper's account. It is
further agreed that the natural gas delivered to and by Transporter hereunder
shall be merchantable natural gas.
11.02 All gas delivered to Transporter for Shipper and redelivered by
Transporter to Shipper shall meet the quality standards for transportation on
the interstate pipeline system of Transco as amended from time-to-time.
ARTICLE 12
MEASUREMENT AND MEASURING EQUIPMENT
12.01 The unit of the natural gas deliverable hereunder shall be a Dekatherm of
gas on the measurement basis hereinafter set forth.
12.02 The quantity and the Heating Value of the natural gas delivered by
Transporter to or for the account of Shipper or delivered by Shipper to
Transporter for redelivery shall be determined as follows:
(i) The unit of volume for the purpose of measurement shall be one (1) Cubic
Foot of gas at a temperature of 60 degrees Fahrenheit and at an absolute
pressure of fourteen and seventy-three hundredths (14.73) pounds per square
inch.
(ii) The unit of weight for the purpose of measurement shall be one (1) pound
mass of gas.
(iii The average absolute atmospheric pressure shall be assumed to be 14.73
pounds per square inch.
(iv) The temperature of the gas flowing through the meters, when necessary for
computing gas quantities, shall be determined by the use of a recording
thermometer or other temperature measuring device. The arithmetic average of the
temperature recorded each 24-hour day, or so much of the 24 hours as gas has
been flowing, shall be used in computing gas quantities or
instantaneous temperature measurements may be applied to metering instruments to
provide the quantity computation.
(v) The specific gravity of the gas flowing through the meters, when necessary
for computing gas quantities, shall be, unless otherwise agreed upon, determined
by the use of a recording gravitometer or an online process type gas
chromatograph. The arithmetic average of the 24- hour record, or so much of the
24 hours as gas has been flowing, or continuous instantaneous specific gravity
measurement may be applied to metering instruments to provide the quality
computation.
(vi) The deviation of the gas from Ideal Gas Laws shall be calculated following
the recommendations of the ANSI/API 2530 "Orifice Metering of Natural Gas and
Other Related Hydrocarbon Fluids" (A.G.A. Report No. 3) including the A.G.A.
Manual for Determination of Supercompressibility Factors of natural Gas or the
A.G.A. Transmission Measurement Committee Report No. 8 "Compressibility and
Supercompressibility for Natural Gas and Other Hydrocarbon Gases." If the
composition of the gas is such as to render the above procedure inapplicable,
other methods for determination of the deviation factors, mutually agreed upon
by Shipper and Transporter, shall be used.
(vii) The Heating Value shall be determined by either (1) the use of a suitably
located and acceptable make gas chromatograph or (2) calculation from a
fractional analysis, or (3) methods outlined in A.G.A. Gas Measurement Committee
Report No. 5, latest edition, or (4) other methods mutually acceptable.
Dekatherms delivered shall be determined by either (1) multiplying the Mcf
delivered by a fraction the numerator of which is the Btu per cubic foot and the
denominator of which is 1,000 or (2) multiplying the pounds mass delivered by a
fraction the numerator of which is the Btu per pound mass and the denominator of
which is 1,000,000.
12.03 Unless otherwise agreed to, Transporter will install, maintain, own and
operate, at its own expense, at or near each Point of Receipt and each Point of
Delivery, measuring stations properly equipped with standard orifice meters,
flange connections, orifice plates and other necessary measuring equipment or
other standard type meter suitable for the purpose by which the quantity of
natural gas shall be measured and determined. The Heating Value of natural gas
received or delivered shall be measured and determined as provided above.
Orifice meters where used shall be installed and operated in accordance with
ANSI/API "Orifice Metering of Natural Gas and Other Related Hydrocarbon Fluids"
latest revision, and shall include the use of straightening vanes.
12.04 Shipper acting jointly with Transporter may install, maintain and operate,
at its own expense, such check measuring equipment as desired, provided that
such equipment shall be so installed as not to interfere with the operation of
Transporter's measuring equipment.
12.05 Each party shall have the right to be present at the time of installing,
reading, cleaning, changing, repairing, inspecting, testing, calibrating, or
adjusting done in connection with measuring equipment involved in billing and
used in measuring or checking the measurement of receipts and deliveries. The
records from such measuring equipment shall remain the property of their owner,
but upon request, each will submit to the other its records and charts, together
with calculations therefrom for inspection and verification, subject to return
within ten (10) days after receipt thereof.
12.06 All installations of measurement equipment applying to or affecting
receipts and deliveries shall be made in such manner as to permit an accurate
determination of the quantity of natural gas delivered and ready verification of
the accuracy of measurement. Care shall be exercised by Transporter and Shipper
in the installation, maintenance and operation of pressure regulating equipment
so as to prevent any inaccuracy in the determination of the quantity of gas
received or delivered hereunder.
12.07 In the event a meter is out of service, or registering inaccurately, the
quantity of natural gas received or delivered shall be determined,
(i) By using the registration of any check meter or meters if installed and
accurately registering, or, in the absence of (i),
(ii) By correcting the error or the percentage of error if ascertainable by
calibration, test, or mathematical calculation, or in the absence of both (i)
and (ii), then
(iii) By estimating the quantity of receipts or deliveries during periods under
similar conditions when the meter was registering accurately.
12.08 The accuracy of Transporter's measurement equipment shall be verified by
Transporter at reasonable intervals, and, if requested, in the presence of
representatives of Shipper, but Transporter shall not be required as a matter of
routine to verify the accuracy of such equipment more frequently than once in
any thirty (30) day period.
12.09 If, upon test, any measurement equipment, including recording gas
chromatograph, is found to be in error not more than two percent (2%), previous
recording of such equipment shall be considered accurate in computing receipts
and deliveries; but such equipment shall be adjusted at once to record
correctly. If, upon test, any measurement equipment shall be found to be
inaccurate by an amount exceeding two percent (2%) at a recording corresponding
to the average hourly rate of flow for the period since the last preceding test,
then any previous recordings of such equipment shall be corrected to zero error
for any period which is definitely known, but, in case the period is not known
definitely or agreed upon, such correction shall be for a period extending over
one-half of the time elapsed since the date of the last test, not exceeding a
correction period of 16 days.
12.10 Transporter and Shipper shall preserve all original or equivalent
electronic test data, charts, or other similar records for a period required by
the applicable rules of regulatory agencies having jurisdiction.
ARTICLE 13
TERM OF AGREEMENT
13.01 This Agreement shall be effective as of the date hereof and shall continue
in effect until the expiration of the twentieth (20th) Contract Year, and
year-to-year thereafter, subject to termination by either party at the end of
the Contract Year or any year thereafter upon two years advance written notice
to the other party.
13.02 Firm transportation service hereunder shall commence at the Effective Time
of the Merger between Transporter and Cardinal Pipeline Company, LLC as defined
in the Agreement and Plan of Merger, as amended.
ARTICLE 14
BILLING AND PAYMENT
14.01 Transporter shall render its bill on or before the first Day of each Month
for the Reservation Charges due for service rendered hereunder during the
preceding calendar Month. On or before the 10th day of each Month, Transporter
shall render its bill for any remaining charges for gas services rendered during
the preceding calendar Month. Such bill shall include any Commodity Charges,
Excess CFT Charges, any adjustments to the charges billed on the first day of
the Month, and any penalties for unauthorized overruns applicable to the Month
for which the bill is rendered.
14.02 Transporter and Shipper shall each, upon request of the other, deliver to
the other for examination such pertinent records and charts as shall be
necessary to verify the accuracy of any statement, chart, or computation made by
either of them under or pursuant to any of the provisions hereof.
14.03 Shipper, except as otherwise hereinafter provided, shall pay to
Transporter by wire transfer of immediately available funds on or before the
10th day of each Month for the Reservation Charges due for service rendered by
Transporter hereunder during the preceding month and billed by
Transporter in the statement for such month, and on or before the 20th day for
each Month for any remaining charges for services which are due hereunder. If
the normal payment due date is a Saturday, Sunday or holiday, this payment is
due the following business Day.
14.04 Should Shipper fail to pay all of the amount of any bill for service
hereunder when such amount is due, interest on the unpaid portion of such amount
shall accrue at the rate equal to the prime rate of CitiBank, N.A. or its
successor, calculated from the due date until the date of payment. If such
failure to pay continues for thirty (30) days after payment is due, Transporter,
in addition to any other remedy it may have hereunder, may suspend further
transportation of natural gas hereunder until such amount is paid; provided,
however, that if Shipper in good faith shall dispute the amount of any such bill
or any part hereof, and shall pay to Transporter such amount as it concedes to
be correct, and at any time thereafter within thirty (30) days of a demand made
by Transporter, shall furnish good and sufficient surety bond, guaranteeing
payment to Transporter of the amount ultimately found to be due under such bill
after a final determination, which may be reached either by agreement between
the parties, arbitration or judgment for a court or by any regulatory authority
having jurisdiction, then Transporter shall not be entitled to suspend further
delivery of natural gas unless and until default be made in the conditions of
such bond.
14.05 If within twelve (12) months of the date of payment, it shall be found
that Shipper has been overcharged or undercharged in any form whatsoever under
the provisions hereof, and Shipper shall have actually paid the bill(s)
containing such overcharge or undercharge, then within thirty (30) days after
the final determination thereof, Transporter shall refund the amount of any such
overcharge with interest thereon at the prime rate of the CitiBank N.A. or its
successor from the time such overcharge was paid to the date of refund, and
Shipper shall pay the amount of any such undercharge but without interest.
14.06 In the event an error is discovered in the amount billed in any statement
rendered by Transporter, such error shall be adjusted within thirty (30) days of
the determination thereof, provided that claim therefor shall have been made
within sixty (60) days from the date of discovery of such error, but in any
event, within twelve (12) months from the date of payment.
14.07 If rendition of a bill to Shipper by Transporter is delayed beyond the
date specified herein, then Shipper shall pay such bill by wire transfer within
ten (10) days after rendition thereof.
ARTICLE 15
ASSUMPTION OF RISK
15.01 As between the parties hereto, Shipper shall be deemed to be in control
and possession of the gas to be transported hereunder until it shall have been
delivered to Transporter at the Point of Receipt; and Shipper shall be deemed to
be in control and possession of the gas to be transported hereunder after
delivery for Shipper's account at the Point of Delivery. Transporter shall be
deemed to be in control and possession of such gas after the delivery thereof to
Transporter at the Point of Receipt and prior to delivery thereof for Shipper's
account at the Point of Delivery.
15.02 Transporter shall have no responsibility with respect to any gas to be
transported hereunder or on account of anything which may be done, happen or
arise with respect thereto until it is delivered into its facilities at the
Point of Receipt and after it is received for Shipper's account at the Point of
Delivery. Shipper shall have no responsibility with respect to such gas or on
account of anything which may be done, happen or arise with respect thereto
after causing the delivery thereof to Transporter at the Point of Receipt and
prior to delivery thereof for Shipper's account at the Point of Delivery.
ARTICLE 16
WARRANTIES
Shipper warrants for itself, its successors and assigns, that it will at the
time of delivery to Transporter for transportation have good and merchantable
title to or the legal right to tender all gas delivered hereunder
free and clear of all liens, encumbrances and claims. Shipper shall indemnify
Transporter and save it harmless from all suits, actions, debts, accounts,
damages, costs, losses and expenses arising from or out of adverse claims of any
or all persons to said gas, including claims for any royalties, taxes, license
fees or charges applicable to such gas or to the delivery thereof to Transporter
for transportation under this Service Agreement.
ARTICLE 17
FORCE MAJEURE
17.01 In the event of either party being rendered unable, wholly or in part, by
Force Majeure or Operating Conditions to carry out its obligations other than
(i) the obligation of Shipper to pay the monthly Reservation Charge due
Transporter (except as provided in 17.03 below), and (ii) the obligation to make
payment of amounts accrued and due at the time thereof, it is agreed that on
such party's giving notice and full particulars of such Force Majeure or
Operating Conditions in writing or by telecopy to the other party within a
reasonable time after the occurrence of the cause relied on, the obligation of
both parties, so far as they are affected by such Force Majeure or Operating
Conditions, shall be suspended during the continuance of any inability so
caused, but for no longer period, and such cause shall so far as possible be
remedied with all reasonable dispatch. Neither party shall be liable in damages
to the other for any act, omission or circumstance occasioned by, or in
consequence of, Force Majeure or Operating Conditions, as herein defined in this
Service Agreement.
17.02 If, due to Force Majeure or Operating Conditions, Transporter is unable to
receive, transport or redeliver gas tendered by Shipper for transportation or if
Shipper is unable to deliver gas to Transporter, then Transporter, upon
providing as much notice as possible under all of the circumstances, shall order
reduction of Shipper's TCQ to the extent necessary depending upon the type and
location of the occurrence, in accordance with the following procedures:
Transporter shall order allocation, to the extent necessary, of affected
transportation service to all shippers proportionate to each shipper's TCQ.
Where Transporter's ability to render service is impaired in a particular
segment of Transporter's system, then such allocation shall be effected only in
that segment of Transporter's system in which service has been impaired.
17.03 Such causes or contingencies affecting the performance by either party,
however, shall not relieve it of liability unless such party shall give notice
and full particulars of such cause or contingency in writing or by telecopy to
the other party within a reasonable time after the occurrence relied upon, nor
shall such causes or contingencies affecting the performance by either party
relieve it of liability in the event of its failure to use due diligence to
remedy the situation and remove the cause with all reasonable dispatch, provided
that the resolution of strikes, lockouts or other labor disputes shall be within
the sole discretion of the parties involved therein. Such causes or
contingencies affecting the performance by either party shall not relieve
Shipper from its obligations to make payments of monthly Reservation Charge
except to the extent of Transporter's negligence or willful misconduct.
ARTICLE 18
NOTICES
Notice to either party shall be in writing and shall be considered as duly
delivered when mailed to the other party at the following address:
If to Shipper:
Public Service Company of North Carolina, Inc.
P. O. Box 1398
Gastonia, North Carolina 28053-1398
Attention: Senior Vice President Marketing and Gas Supply
Facsimile number: ____________________
If to Transporter:
Cardinal Extension Company, LLC
c/o Cardinal Operating Company
P. O. Box 1396
Houston, Texas 77251
Attention: Vice President, Customer Service
Facsimile number: _________________
Such addresses may be changed from time-to-time by mailing appropriate notice
thereof to the other party by certified or registered mail.
ARTICLE 19
MISCELLANEOUS
19.01 Transporter grants the right to Shipper to direct tie-ins between its
distribution system and Transporter's intrastate pipeline for the purpose of
serving its franchise area subject to the negotiation of mutual agreeable terms
and conditions (including reimbursement arrangements and/or incremental charges
and the construction, operation and maintenance specifications for such tie-ins)
which will be set forth in an Interconnect and Reimbursement Agreement to be
negotiated and executed by Shipper and Transporter.
19.02 This Agreement reflects the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral and written, among the parties with respect to the subject
matter hereof. This Agreement can be amended, restated or supplemented only by
the written agreement of Transporter and Shipper.
19.03 No waiver by either party of any default by the other party in the
performance of any provision, condition or requirement herein shall be deemed to
be a waiver of, or in any manner release the other party from, performance of
any other provision, condition or requirement herein, nor shall such waiver be
deemed to be a waiver of, or in any manner a release of, the other party from
future performance of the same provision, condition or requirement. Any delay or
omission of either party to exercise any right hereunder shall not impair the
exercise of any such right, or any like right, accruing to it thereafter. No
waiver of a right created by this Agreement by one party shall constitute a
waiver of such right by the other party except as may otherwise be required by
law with respect to persons not parties hereto. The failure of one party to
perform its obligations hereunder shall not release the other party from the
performance of such obligations.
19.04 This Agreement may be assigned by Shipper without the prior consent of
Transporter provided that Shipper remains responsible for any and all
obligations under this Agreement.
19.05 This Agreement and the obligations of the parties hereunder are subject to
all applicable laws, rules, orders and regulations of any governmental
authorities having jurisdiction, and to the extent of
conflict, such laws, rules, orders and regulations of governmental authorities
having jurisdiction shall control.
19.06 Any provision of this Agreement that is prohibited or unenforceable shall
be ineffective to the extent of that prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of that provision in any other jurisdiction.
19.07 This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
19.08 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NORTH CAROLINA. EXCLUDING, HOWEVER,
ANY CONFLICT OF LAWS RULES OR PRINCIPLES WHICH MIGHT REFER THE
CONSTRUCTION OR OPERATION OF THE TERMS OF THIS AGREEMENT TO THE
LAWS OF ANOTHER STATE.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
CARDINAL OPERATING COMPANY,
as Operator of
Cardinal Extension Company, LLC
By: /s/ Frank J. Ferazzi
Frank J. Ferazzi
Vice President
PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, INC.
By: /s/s Jack G. Mason
Jack G. Mason
Vice - President, Treasurer and CFO