RATE SCHEDULE NS
NEGOTIATED SALES SERVICE AGREEMENT
THIS AGREEMENT is entered into as of the 1 day of December, 1994,
between TRANSCO GAS MARKETING COMPANY, Agent for TRANSCONTINENTAL
GAS PIPE LINE CORPORATION ("TGPL"), a Delaware corporation ("Seller") and
SOUTH JERSEY GAS COMPANY ("Buyer").
Recitals
Seller agrees to supply, on a firm basis, such quantities of natural gas as
requested under the terms and conditions set forth;
Buyer agrees to purchase the quantities of gas requested by Buyer and made
available by Seller at the Points of Delivery;
Accordingly, Seller and Buyer agree as follows:
ARTICLE I
GENERAL TERMS
1. Definitions
Except as otherwise specified, the following terms will be construed to have
the following scope and meaning under this Agreement:
1. "Business Day" - A Day, exclusive of a Saturday, Sunday or a holiday
observed by Transporter under this Agreement. When one full Business Day's
notice is required, notice given at a given time on a Business Day shall be
adequate to provide one full Business Day's notice as of the same time on the
next Business Day.
2. "Daily Contract Quantity" (DCQ) - The daily quantity of Gas that Seller
shall make available each Day on a firm basis as specified on Exhibit "A", and
that Buyer may purchase and receive when tendered by Seller during the term of
this Agreement.
3. "Daily Nominated Quantity" - The estimated volumes Buyer anticipates in
good faith to purchase each Day.
4. "Day" - The twenty-four (24) period commencing at 7:00 a.m. Central
Standard or Daylight Time, when applicable, on any calendar day and ending at
7:00 a.m. on the following calendar day.
5. "Delivery Point(s)" - Any Point(s) of Delivery identified in Exhibit "A",
at which point(s) ownership and control of such Gas shall pass from Seller to
Buyer.
6. "FERC" - The Federal Energy Regulatory Commission or any successor
thereto.
7. "Gas" - Natural gas produced from gas wells and gas produced in
association with oil (casinghead gas) and/or the residue gas resulting from
processing either casinghead gas or gas well gas.
8. "Imbalance" - The difference between allocated receipt Gas quantities and
allocated delivery Gas quantities.
9. "Interest Rate" - The lesser of the annual prime interest rate of
Citibank, N.A., or its successor, as in effect from time to time or the maximum
non-usurious interest rate under applicable law.
10. "Maximum Daily Quantity ("MDQ) - The maximum contract quantity that
Seller shall make available each Day at the Delivery Point(s) and that Buyer may
purchase and receive when tendered by Seller.
11. "Mcf" - One thousand (1,000) cubic feet of Gas.
12. "Month" - The period beginning on the first (1 st) Day of a calendar
month and ending on the first (lst) Day of the next succeeding calendar month.
13. "Party(ies)" - Buyer and/or Seller and their assigns.
14. "Redelivery Point(s)". - Any Point(s) of Redelivery on Buyer's FT
Transportation Agreement with Transporter.
15. "Scheduling or Schedule" - If by Seller, to make Gas available or cause
Gas to be made available at the Delivery Point(s) for delivery to or for the
account of Buyer. If by Buyer, to cause Buyer's Transporter to make available
at the Delivery Point(s) transportation capacity sufficient to permit Buyer's
Transporter to receive on a firm basis the quantities Seller tenders at such
Delivery Point(s) including making all necessary and timely pipeline
nominations.
16. "Transporter" - If Buyer's Transporter, any pipeline receiving Gas at a
Delivery Point for the account of Buyer, If Seller's Transporter, any pipeline
delivering Gas for the account of Seller or Seller's supplier at a Delivery
Point.
ARTICLE 11
Quantity Obligations
1. Seller's Sales Obligation. Seller shall make available to Buyer at the
Delivery Point(s), on a firm basis, a DCQ which does not exceed 30,000 Mcf plus
the applicable fuel as retained by Transporter from the Delivery Point(s) to the
Redelivery Point(s).
2. Buyer's Purchase Obligation. Subject only to the terms and conditions of
this Agreement, Buyer shall Schedule or cause to be Scheduled at the Delivery
Point(s) each Day during the term of this Agreement a quantity of Gas up to the
MDQ for delivery at the Delivery Point(s). Buyer's purchase obligation is
further subject to the following:
(a) No later than two (2) Days prior to Transporter's nomination
deadline for the first Day of Gas flow each Month, Buyer shall
inform Seller in writing of the Daily Nominated Quantity. The
Daily Nominated Quantity submitted each Month shall be the MDQ
for that Month. Seller will rely on such notice to Schedule
deliveries for the following Month.
(b) If Buyer purchases on any Month less than the product of fifty
five percent (55%) of the Daily Nominated Quantity and the number
of Days in that Month (Minimum Monthly Quantity), Buyer shall
forfeit nine cents ($0.09) for each Mcf below the Minimum Monthly
Quantity.
(c) If Buyer elects on any Day to purchase volumes in excess of
81,869 Mcf/Day under the FS Agreement dated August 1, 1991
between the Parties, Buyer shall forfeit under this Agreement the
product of nine cents ($0.09) and the positive difference between
Buyer's purchased volumes under the FS Agreement and 81,869 Mcf
times the number of Days in that Month.
(d) In no event shall Buyer be entitled to purchase in the aggregate
more than 111,869 Mcf/Day under this Agreement and the FS
Agreement.
ARTICLE III
Price
1. Buyer shall pay Seller each Month the product of the Commodity Charge
which shall be negotiated each Month at least two (2) Business Days prior to
Transporter's nomination deadline and the Gas volumes purchased at the Delivery
Point(s). If the Parties are unable to reach agreement, the applicable Default
Price shall be the Natural Gas Week Grand Average price as defined in Section
2(d) of Exhibit "A" of the Form of Service Agreement in Transcontinental Gas
Pipe Line Corporation's ("TGPL") Tariff plus TGPL's perfectly telescoped FT
Commodity charges, plus all applicable surcharges and fuel charges.
2. Seller shall credit Buyer each Month the product of nine cents per Mcf
($0.09/Mcf) and the MDQ. Buyer's monthly credit shall be calculated as follows:
$0.09 x 30,000 Mcf/Day x Number of Days in each Month
3. In the event that Natural Gas Week or its successor ceases publication or
the referenced price posting becomes unavailable, the Parties shall use their
Best Efforts to agree upon a substitute mechanism for determining an alternate
Default Price. If the Parties cannot agree on a substitute methodology and/or
publication by the end of the first Month for which the Default Price could not
be determined, then Seller and Buyer shall each prepare a list of three
alternative published reference postings of spot prices for Gas delivered in the
same geographic area. Each list shall set forth the highest priority index
first. Each Party shall submit its list to the other within ten (10) days after
the end of the first Month for which the price could not be determined. The
first index appearing in Seller's list that also appears in Buyer's list shall
constitute the new Default Price.
ARTICLE IV
Term of Agreement
This Agreement is effective as of December 1, 1994 through March 31, 1996.
ARTICLE V
Transportation and Balancing
Buyer hereby appoints Seller as its agent under Buyer's FT and IT Agreements
for the purpose of transporting Gas hereunder from the Delivery Point(s) to the
Redelivery Point(s) as listed on Exhibit "A". Seller is responsible for all
Imbalance charges in connection with volumes purchased under this Agreement.
ARTICLE VI
Gas Quality, Temperature, and Pressure
All Gas to be delivered hereunder shall meet or exceed the requirements of
Buyer's Transporter, including, but not limited to, the quality, temperature and
pressure.
ARTICLE VII
Warranties
Seller warrants title to all Gas to be delivered by Seller to Buyer, the
right to sell the same, and that at the Delivery Point such Gas is free from all
liens, encumbrances, and adverse claims at the Point of Delivery. Seller shall
indemnify Buyer against all suits, actions, debts, accounts, damages, costs,
losses, and expenses (including attorneys' fees) arising from or out of any
adverse legal claim of any and all persons to or against the Gas prior to its
delivery at the Delivery Point.
ARTICLE VIII
Reservations of Seller
Seller and/or its assigns, expressly reserves to itself the right to
separate and extract liquid and liquefiable hydrocarbons, other than methane,
from the Gas at a point(s) downstream of the Delivery Point(s), together with
such methane as cannot be separate from the ethane and heavier hydrocarbons
separated or extracted from the Gas, and to process such Gas, provided that
Seller, and/or its assigns, by such separation, extraction and processing shall
not reduce the total heating value per cubic foot below a level acceptable to
Buyer's Transporter and provided that by such separation, extraction and
processing the Gas will not be rendered incapable of meeting Transporter's
quality specifications. All liquids and liquefiable hydrocarbons so recovered
shall belong to Seller.
ARTICLE IX
Title Transfer and Indemnity
As between the Parties, Seller shall be deemed to be in exclusive control
and possession of the Gas deliverable hereunder and responsible for any damage
or injury caused prior to the time the same shall have been delivered to Buyer.
At and after delivery of Gas to Buyer at the Delivery Point, Buyer shall be
deemed to be in exclusive control and possession thereof and responsible for any
injury or damage caused thereby. Title to the Gas delivered hereunder shall
pass from Seller to Buyer at the applicable Delivery Point.
Seller and Buyer each assumes full responsibility and liability for and shall
indemnify and hold harmless the other Party from all liability and expense on
account of any and all damages, claims or actions, including injury to and death
of persons, arising from any act or incident occurring when title to the Gas is
vested in the indemnifying Party.
ARTICLE X
Taxes
Seller shall pay or cause to be paid, the taxes lawfully levied on Seller or
otherwise applicable to the Gas delivered hereunder prior to delivery of such
Gas at the Delivery Point(s). Any tax that Seller may be required to pay as a
result of the sales transaction contemplated herein (including, but not limited
to, any sales, use or gross receipts tax, or any tax of a similar nature) shall
be reimbursed to Seller by Buyer. Buyer shall pay all taxes lawfully levied
upon the sale of the Gas at the Delivery Point(s), or lawfully levied on such
Gas after delivery at the Delivery Point(s). Buyer shall furnish to Seller
properly executed resale, exemption or such other certificates which would
eliminate the necessity of collecting or withholding any such taxes. Any such
certificate shall be deemed and is hereby made a part of this Agreement.
ARTICLE XI
Billing and Payment
1. Invoice Date and Charges. On or before the tenth (10th) of each calendar
Month, Seller shall provide Buyer with a written statement setting forth the
quantities of Gas delivered by Seller during the preceding Month and the
associated Commodity Charges with respect to service during the preceding Month,
and any credits due Buyer.
2. Payment Date. Buyer shall remit the Commodity charges on the later of
the 1Oth Day after the statement was received or the 20th Day of the calendar
Month in which the statement was received, or if such Day is not a Business Day,
the next Business Day. Payment of all funds shall be made by wire transfer, in
U.S. funds on a same day basis to the account designed on the billing statement.
3. Late Payment. If Buyer fails to remit any amounts in full when due, or
if any adjustments are made under this Agreement, including but not limited to
adjustments as a result of the resolution of a billing dispute, interest on the
unpaid portion shall accrue at a rate equal to the Interest Rate.
4. Seller's Suspension of Performance. If Buyer fails to make timely
payment under Section 2 and such failure is not remedied within five Business
Days after Seller gives Buyer written notice of such failure, Seller, in
addition to any other remedy it may have, may suspend further sale and delivery
of Gas until such amount, including interest at the Interest Rate, is paid;
provided, if Buyer, in good faith, disputes the amount of any such billing or
part thereof and pays to Seller the undisputed amounts, Seller shall continue to
sell and deliver Gas as provided hereunder. In the event Buyer disputes any
billing statement, Buyer must provide Seller within three Business Days of the
notice of the disputed amounts, ("Due Date") a statement with the particulars of
the dispute including the calculations with respect to any errors or
inaccuracies claimed. Should Buyer fail to timely provide evidence of the
billing errors claimed, the disputed amounts shall be owed with interest at the
Interest Rate from the Due Date. Should Buyer provide the required information,
upon the ultimate determination of the disputed portion of the statement, which
determination shall be made no later than sixty (60) days from the date of
notice of dispute, if Buyer has underpaid the amount actually due, Buyer shall
remit any amount due plus interest at the Interest Rate within 30 Days after
Buyer's receipt of an adjusted billing statement from Seller. If Buyer has
overpaid amounts actually due, Seller shall remit to Buyer any necessary refund
within 30 Days after determination of such overpayment. Interest on the refund
shall accrue at the Interest Rate from the determination date until paid.
5. Unresolved Disputes. Any dispute not resolved pursuant to the terms of
this Article XII shall be without recourse, unless litigation has been commenced
within 24 Months after the event causing the dispute is discovered or reasonably
should have been discovered.
ARTICLE XII
Notices
Any notice, request, demand, statement or bill provided for in this
Agreement, or any notice which a Party may desire to give to the other, shall be
in writing and directed to the Parties as follows:
a) If to Seller for payment:
Address Specified on Invoice
If to Seller for all other purposes:
TRANSCO GAS MARKETING COMPANY
AS AGENT FOR
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
9821 Katy Freeway
P. 0. Box 1047
Houston, Texas 77251-1047
Attention: Phillip E. Fuller
Director, Natural Gas Marketing
Telephone: (713) 932-4960
Telecopy: (713) 932-4980
If to Buyer for billing:
General Manager, Gas Supply
South Jersey Gas Company
Number One South Jersey Plaza/Route 54
Folsom, New Jersey 08037
Telephone: (609) 561-9000
Telecopy: (609) 561-8225
If to Buyer for all other purposes:
Vice President, Gas Supply
South Jersey Gas Company
Number One South Jersey Plaza/Route 54
Folsom, New Jersey 08037
Telephone: (609) 561-9000
Telecopy: (609) 561-8225
All written notices shall be mailed, delivered personally or sent by fax,
telex or telecopier. All notices given by mail or personal delivery shall be
effective on the date of actual receipt at the appropriate address. Notice by
fax, telex or telecopier shall be effective upon actual receipt if received
during recipient's normal business hours before 4:30 p.m. Central Time or at the
beginning of the next Business Day after receipt if received after 4:30 p.m.
Central Time on such Day.
ARTICLE XIII
Force Majeure
The term "Force Majeure" shall mean acts of God, strikes, lockouts,
industrial disturbances or other labor difficulties, epidemics, landslides,
lightning, earthquakes, fires, storms, floods, washouts, arrests and restraints
of rulers and people, arrests and restraints of Government, either Federal or
State, civil disturbances, explosions, sabotage, breakage or accident to
machinery or lines of pipe, freezing of wells or lines of pipe, and any other
causes of the kind enumerated, which were not anticipated at the time of the
Agreement, which are not within the control of the Party claiming suspension and
which by the exercise of due diligence such Party is unable to overcome.
Except for payments due hereunder, neither Party shall be responsible or
liable for, or deemed in breach hereof because of any failure or delay in
performance of its respective obligations hereunder to the extent such
performance is prevented by circumstances beyond the reasonable control of the
Party experiencing such failure or delay, provided that:
1. The non-performing Party gives the other Party:
a. written notice of the occurrence of a Force Majeure event at soon as
reasonably possible, but in no event later than forty-eight (48)
hours after such occurrence; and
b. written notice describing the particulars of such occurrence within
five (5) Business Days of the occurrence.
2. The suspension of performance is of no greater scope and of no longer
duration than is required by Force Majeure;
3. The non-performing Party uses its best efforts to remedy its inability to
perform, provided, however, that this Section shall not require the
settlement of any strike, walkout, lockout or other labor dispute on
terms which, in the sole judgment of the Party involved in the dispute,
are contrary to its interest. It is understood and agreed that the
settlement of strikes, walkouts, lockouts, or other labor disputes
shall be entirely within the discretion of the Party having difficulty;
4. When the non-performing Party is able to resume performance of its
obligations under this Agreement, that Party shall give the other Party
prompt written notice to that effect; and
5. A. The Force Majeure was not proximately caused by:
a) Any gross negligence or intentional acts or omissions by the non-
performing Party; or
b) Any breach or default of this Agreement by the Party seeking
Force Majeure relief.
B. Force Majeure does not include:
1. The inability of Seller to obtain Gas;
2. Failure of Buyer's markets or changes in market conditions that
affect the availability, rates or demand for Buyer's products; or
3. Failure of pipelines to provide transportation, including
curtailment or interruption by a third party pipeline of either
firm or interruptible transportation service unless such
curtailment or interruption was the result of an event of Force
Majeure as described in this Section.
ARTICLE XIV
Regulatory Bodies
This Agreement shall be subject to all valid applicable state, federal and
local laws, rules and regulations; provided that either Party 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 shall preclude Buyer or Seller or both from contesting
the validity of any such law(s), rule(s) or regulations).
In the event that the FERC, the Railroad Commission of Texas ("TRC"), or any
other regulatory or governmental body asserting jurisdiction (i) imposes price
controls on natural gas; (ii) prohibits or prevents any transaction described in
this Agreement, (iii) otherwise conditions such transactions in a manner which
materially and adversely affects the rights or obligations of either Party
hereunder; or (iv) adopts any action, rule or order which directly or
indirectly, materially and adversely affects the rights or obligations of either
Party hereunder (collectively "Adverse Governmental Action"), then the Party
affected by such Adverse Governmental Action may terminate this Agreement,
except as to all accrued rights, liabilities and obligations of the Parties by
giving thirty (30) days' prior written notice to the other and each Party shall
be held harmless as a result of such termination.
ARTICLE XV
Successors and Assigns
Any company which shall succeed by purchase, merger or consolidation to the
properties, substantially as an entirety, of Seller or Buyer, shall be entitled
to the rights and shall be subject to the obligations of its predecessor in
title under this Agreement. No other assignment of this Agreement or any of the
rights or obligations thereunder, except to an Affiliate of either Party, shall
be made unless written consent of the non-assigning Party is first obtained.
Seller or Buyer may pledge or assign its respective right, title and interest
under this Agreement to a trustee(s), individual or corporate, as security for
bonds or other obligations or securities. The Trustee(s) shall not be obligated
to perform the obligations of the assignor under this Agreement and, if the
trustee is a corporation, it shall not be required to qualify to do business in
any State in which performance of this Agreement may occur.
ARTICLE XVI
Miscellaneous
1. Headings and Exhibits - The subject headings of the Articles of this
Agreement are inserted for the purpose of convenient reference and are not
intended to be part of this Agreement nor to be considered in any interpretation
of the same. The Exhibits referenced in this Agreement are hereby incorporated
for all purposes.
2. Entire Agreement - This Agreement and the Exhibits referenced in this
Agreement contain the entire understanding and agreement between the Parties
with respect to its subject matter and supersedes all previous communications,
negotiations and agreements, whether oral or written, between the Parties with
respect to this subject matter.
3. Waiver - No waiver by either Party express or implied 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 a different character. Failure by a Party to enforce any
of the terms, covenants, conditions or other provisions of this Agreement at any
time shall not in any way affect, limit, modify or waive that Party's right
thereafter to enforce strict compliance with every term, covenant, condition,
notwithstanding any course of dealing or custom of the trade.
4. Preparation - 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 not be construed against either Party by reason of its preparation.
5. Exclusion of Third Party Rights - The provisions of this Agreement shall
not impart rights enforceable by any person or organization not a Party or bound
as a Party unless a permitted successor assignee of a Party bound by this
Agreement.
6. Severability - Any provision, article or section declared or rendered
unlawful by a court of law or regulatory agency with jurisdiction over the
Parties or deemed unlawful because of a statutory change will not otherwise
affect the lawful obligations that arise under this Agreement.
7. Confidentiality - The terms of this Agreement, including but not limited
to, the price paid for Gas, the quantities of Gas purchased or sold and all
other material terms of this Agreement shall be kept confidential by the
Parties, except as required by any applicable laws, rules or regulations.
8. APPLICABLE LAW - THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES
SHALL BE INTERPRETED, PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
The Parties have executed this Agreement effective as of the date first
written above.
TRANSCO GAS MARKETING COMPANY
As Agent for
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
By:_____________________________________
Name: H. Dean Jones II
Title: Senior Vice President
SOUTH JERSEY GAS COMPANY
By: _________________________________
Name: William C. Bingham, Jr.
Title: Senior Vice President, Gas Supply
"Exhibit A"
Maximum
Delivery Redelivery Daily Quantity
Pipeline Point(s) Point(s) (Mcf)
-------- -------- ---------- --------------
TGPL Any receipt point(s) Any delivery point(s) 30,000 plus
on Buyer's FT on Buyer's FT applicable fuel
Agreement with TGPL Agreement with TGPL
Transco
Gas Marketing Company
A Transco Energy Company
9821 Katy Freeway December 19, 1994
P 0. box 1047
Houston, Texas 77261-1047
713-932-4900
Fax: 713-432-4980
South Jersey Gas Company
One South Jersey Plaza
Route 54
Folsom, NJ 08037
Attention. William C. Bingham, Jr,
Senior Vice President, Gas Supply
Re: Appointment of Transco Gas Marketing Company, as Agent for
Transcontinental Gas Pipe Line Corporation - - TGPL Firm Transportation
(FI) Agreement No(s). 3902 and TGPL Interruptible Transportation (IT)
Agreement No(s). 1387.
Gentlemen:
By this letter, South Jersey Gas Company (Buyer), designates Transco Gas
Marketing Company, as Agent for Transcontinental Gas Pipe Line Corporation
(TGPL-Merchant Services), effective beginning January 1, 1995, and until notice
of revocation is given by Buyer to TGPL-Merchant Services, or to Buyer by TGPL
Merchant Services, in writing, as Buyer's agent for the purposes of making
nominations to Transcontinental Gas Pipe Line Corporation (TGPL) for service
under the referenced FT Agreement and IT Agreement between Buyer and TGPL,
receiving TGPL's commodity bills for such transportation service, receiving
adjustments to such commodity bills and making payment to TGPL of commodity
charges for such transportation service in accordance with the transportation
agreement. TGPL-Merchant Services' agency authority under this agreement
extends to volumes of gas sold to Buyer from time to time by TGPL-Merchant
Services pursuant to the Rate Schedule NS Gas Purchase Agreement effective
December 1, 1994. TGPL-Merchant Services, by its execution hereof, acknowledges
and accepts such designation and agrees to act as Buyer's agent to the extent
set forth herein.
In the event allocation of Buyer's entitlement on TGPL under the referenced FT
transportation agreement is necessary at various points on TGPL's system due to
capacity constraints or other circumstances, and TGPL-Merchant Services is not
nominating 100 % of such entitlement, such allocation is to be made ratably
based on all nominations made under the referenced FT transportation agreement.
Buyer agrees to defend, indemnify, and hold TGPL-Merchant Services harmless from
and to reimburse TGPL-Merchant Services for all transportation charges and any
other fees paid by TGPL-Merchant Services pursuant to this agreement. Initial
reimbursement will be based on amounts billed by TGPL. Additional reimbursement
or adjustment will be made as necessary, including reimbursement for any
retroactively effective charges or surcharges related to transportation pursuant
to these agreements which may be charged by TGPL. TGPL-Merchant
South Jersey Gas Company
December 19, 1994
Page 2
Services will remit to Buyer any refunds received from TGPL for charges which
have been previously reimbursed to TGPL-Merchant Services by Buyer, unless such
refunds would result in an offsetting adjustment to Price due TGPL-Merchant
Services for gas purchased by Buyer under the terms of a gas purchase agreement
between Buyer and TGPL-Merchant Services. TGPL-Merchant Services will undertake
the obligation to determine that Proper Payment Of transportation commodity
charges is made by TGPL-Merchant Services to TGPL In accordance
with the transportation agreement.
This agreement shall not be construed to modify in any way the Gas Sales
Agreement(s) between TGPL-Merchant Services and Buyer.
Please acknowledge your agreement hereto by executing both copies of this letter
in the space provided, and returning one (1) copy to TGPL-Merchant Services.
Very truly yours,
TRANSCO GAS MARKETING COMPANY
As Agent for
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
Phillip E. Fuller
Director, Natural Gas Marketing
ACCEPTED and AGREED TO
this 22 day of December, 1994
SOUTH JERSEY GAS COMPANY
By: __________________
William C. Bingham, Jr.
Title: Senior Vice President, Gas Supply
Transco
Gas Marketing Company
A Transco Energy Company
9821 Katy Freeway
P 0. box 1047
Houston, Texas 77261-1047
713-932-4900
Fax: 713-432-4980
December 1, 1994
Mr. William C. Bingham, Jr.
South Jersey Gas Company
One South Jersey Plaza
Route 54
Folsom, New Jersey 08037
Dear Bill:
The following represents our understanding of the negotiated settlement between
South Jersey Gas Company (SJGC) and Transco Gas Marketing Company (TGMC) as
agent for Transcontinental Gas Pipe Line Corporation.
The rate paid under the existing FS sales contract (i.e., 11 1,869 Mcf/d) will
be $0.166 Mcf for the sum of the FS Service Fee and the Non-Gas Demand Charge.
This rate will become effective April 1, 1995, and will remain in effect as per
the contract. In addition, TGMC will enter into an NS sales agreement with SJGC
for 30,000 Mcf/d at a negative Demand Charge of $0.09 per Mcf. The 30,000 Mcf/d
of NS service would be limited to "set-up swing" only. Prior to the nomination
deadline for the first of the month, SJGC must inform TGPL of the estimated
volume (up to 30,000 Mcf/d) it intends to purchase under the NS service (Daily
Nominated Quantity). SJGC must for the month take a minimum 55 % of the Daily
Nominated Quantity times the number of days in the month. In addition, if SJGC
takes on any day volumes in excess of 81,869 Mcf/d under its FS contract (FS
Base Volumes), for each Mcf taken in excess of the FS Base Volumes, SJGC will
forfeit the corresponding $0.09 per Mcf NS Demand credit for the entire month.
The commodity pricing will be negotiated each month during Bid Week at either a
fixed rate, an agreed upon index rate, or will default to Natural Gas Week Grand
Weighted Average. The term of this NS Agreement will be for sixteen (16) months
beginning December 1, 1994.
Mr. William C. Bingham, Jr.
December 1, 1994
Page Two
Please indicate your agreement with this conceptual settlement and we will begin
drafting the detailed NS Agreement.
Sincerely,
H. Dean Jones II
Agreed and Accepted:
William C. Bingham, Jr.
Senior Vice President, Gas Supply
South Jersey Gas Company
16 December 1994
Date