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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re
THE COLUMBIA GAS SYSTEM, INC. ) Case Nos. 91-803
and COLUMBIA GAS TRANSMISSION ) 91-804
CORPORATION, )
) Chapter 11
Debtors. )
STIPULATION
WHEREAS, Texas Eastern Transmission Corporation ("Texas Eastern") and
Columbia Gas Transmission Corporation ("TCO") are parties to certain agreements
as listed on "Exhibit A" (the "Exhibit A Contracts"); and
WHEREAS, Texas Eastern and TCO are also parties to certain other
agreements as listed on "Exhibit B" ("Exhibit B Contracts"); and
WHEREAS, on April 8, 1992, the Federal Energy Regulatory Commission
("FERC") issued Order 636 ("Order 636") requiring, inter alia, restructuring of
interstate pipeline rates and services; and
WHEREAS, Texas Eastern asked its customers to submit binding
nominations for restructured services by March 2, 1993; and
WHEREAS, TCO has submitted such nominations to Texas Eastern, subject
to any required authorization by the Bankruptcy Court; and
WHEREAS, on May 7, 1993, Texas Eastern filed a Motion with this Court
to compel TCO to assume 19 contracts with Texas Eastern pursuant to 11 U.S.C.
Section 365; and
WHEREAS, Texas Eastern commenced implementation of Order No. 636 on
its own system on June 1, 1993; and
WHEREAS, TCO intends to assign several of the listed Exhibit A
Contracts to its customers as part of its own implementation of Order No. 636,
scheduled
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for November 1, 1993; and
WHEREAS, TCO intends to retain Texas Eastern services under the
remaining Exhibit A Contracts for operational reasons; and
WHEREAS, TCO has no further need for the Exhibit B Contracts; and
WHEREAS, Texas Eastern has filed proofs of claim against TCO as
follows: (i) Claim No. 10373 filed on March 16, 1992 for $117,942.99 as a
secured claim for alleged costs of expanding and relocating M&R Station 1249,
(ii) Claim No. 10947 filed on March 17, 1992 for $127,983.65 as a general
unsecured claim for FERC Order 500 and 528 billings for the months of June and
July 1991, (iii) Claim No. 10371 filed on March 16, 1992 for $2,848.23 as a
general unsecured claim for alleged gas imbalances under Contract 9095, (iv)
Claim No. 10370 filed on March 16, 1992 for $319,812.57 as a secured claim for
alleged gas imbalances under Contract 200012, (v) Claim No. 10946 for
$3,812,691.42 filed on March 17, 1992 as a secured claim for alleged gas
imbalances and pre-petition transportation services, including interest, (vi)
Claim No. 11866 for $85,310,530 filed on March 18, 1992 as a secured claim for
anticipated rejection damages under CTS Rate Schedule for firm transportation,
(vii) Claim No. 12003 for $4,608,850 filed on March 18, 1992 as a secured claim
for anticipated rejection damages under SS-1 Rate Schedule for storage service,
(viii) Claim No. 11867 for $122,898,688 filed on March 18, 1992 as a secured
claim for anticipated rejection damages under FT-1 Rate Schedule for firm
transportation, (ix) Claim No. 10372 for $173,000 filed on March 16, 1992 as a
general unsecured claim for anticipated rejection damages under Texas Eastern's
Rate Schedule X-95, (x) Claim No. 11865 for $20,565,477.34 filed on March 18,
1992 as a contingent unsecured claim for potential liabilities due under FERC
Order 94, (xi) Claim No. 12004 for $35,000,000 filed on March 18, 1992 as a
general unsecured claim for anticipated restructuring costs under Order
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636, (xii) Claim No. 10944 for $85,179,897.96 filed on March 17, 1992 as a
secured claim for flowthrough costs under FERC Orders 500 and 528, and (xiii)
Claim No. 12002 for $23,000,000 filed on March 18, 1993 as a general unsecured
claim arising from a FERC- approved PCB settlement; and
WHEREAS, TCO's claims register lists six claims which are identical to
certain of the claims listed above, and which TCO believes to be duplicative of
such claims, as follows: (i) Claim No. 11522, which is identical to Claim No.
12003, (ii) Claim No. 11521, which is identical to Claim No. 12004, (iii)
Claim No. 11526, which is identical to Claim No. 12002, (iv) Claim No. 11523,
which is identical to Claim No. 11865, (v) Claim No. 11525, which is identical
to Claim No. 11866, and (vi) Claim No. 11524, which is identical to Claim No.
11867 (collectively, the "Duplicative Claims"); and
WHEREAS, by order issued July 13, 1993, the Bankruptcy Court
disallowed numerous claims, including the Duplicative Claims; and
WHEREAS, pursuant to the Bankruptcy Court's Order of October 3, 1991
Authorizing TCO to Remedy Gas Transportation Imbalances (the "Imbalance Remedy
Order"), TCO has remedied all gas imbalances or will do so in the ordinary
course of its business; and
WHEREAS, on October 30, 1992, Texas Eastern filed a Motion, as amended
on January 29, 1993 (the "Setoff Motion") seeking to setoff Claim Nos. 10373,
10947, 10371, 10370 and 10946 against refunds totalling approximately
$4,528,025.10 owed by Texas Eastern to TCO; and
WHEREAS, Texas Eastern currently owes TCO $30,117,102.79 in refunds,
including the refunds subject to the Setoff Motion (collectively, the
"Refunds"); and
WHEREAS, TCO wishes to assume the Exhibit A Contracts in the first
WHEREAS
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clause; and
WHEREAS, TCO and Texas Eastern wish to terminate the Exhibit B
Contracts; and
WHEREAS, TCO and Texas Eastern have agreed to compromise the amount of
arrearages which Texas Eastern claims are owed by TCO to Texas Eastern under
the Contracts for pre-petition periods for $3,432,776.34, plus any subsequent
interest at FERC-approved rates.
IT IS THEREFORE STIPULATED AND AGREED by the parties hereto as follows:
1. TCO shall assume the Exhibit A Contracts.
2. Upon assumption, the Contracts will be amended and conformed
to comply with Texas Eastern's Order No. 636 implementation program and will be
fully or partially assignable in accordance with Order No. 636, as it may be
amended, modified or superseded, and Texas Eastern's and TCO's approved FERC
Gas Tariff, and subject to applicable laws, rules, regulations, and orders of
applicable regulatory authorities. Without limiting the foregoing, TCO shall
have the right to assign all or a portion of the transportation and/or storage
capacity underlying the Contracts, on a temporary or permanent basis, to one or
more of TCO's customers or other parties in connection with TCO's and/or Texas
Eastern's restructuring under Order No. 636, and Texas Eastern agrees that any
permanent full or partial assignment(s) of capacity shall constitute an
assignment of the underlying Contracts pursuant to 11 U.S.C. Section 365(f).
Accordingly, upon permanent assignment of capacity by TCO to customers or other
parties, TCO shall not, consistent with the provisions of 11 U.S.C. Section
365(k), have any liability for "breach of such [contracts] occurring after such
assignment[s]" with respect to the assigned capacity; provided, however, that
TCO shall remain liable for claims billed or allocated to TCO under
FERC-approved rates for
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services prior to assignment of the underlying Contracts.
3. TCO shall be entitled to the same rights and subject to the
same obligations under Texas Eastern's tariff and FERC orders as all other
Texas Eastern customers.
4. On the tenth day following the date the order approving this
Stipulation becomes final and non-appealable, TCO shall pay to Texas Eastern
the amount of $3,432,776.34 in settlement and full satisfaction of all
arrearages claimed by Texas Eastern to be owed by TCO to Texas Eastern for
pre-petition periods under the Exhibit A Contracts. With respect to the Order
No. 94 settlement amounts, Texas Eastern shall refund TCO $18,747,217.11 and
TCO shall pay Texas Eastern $9,976,832 upon effectiveness of and in accordance
with the terms of the Order No. 94 settlement.
5. On the tenth day following the date that the order approving
this Stipulation becomes final and nonappealable, all of Texas Eastern's proofs
of claim against TCO shall be deemed withdrawn with prejudice.
6. On the tenth day following the date that the order approving
the settlement becomes final and nonappealable, the Setoff Motion and the
Motion to Compel shall be withdrawn as moot in light of TCO's assumption of the
Contracts and satisfaction of the claims asserted by Texas Eastern thereunder,
and except for the Order No. 94 refunds, Texas Eastern shall pay TCO the full
amount of the Refunds. Texas Eastern shall assert no setoff or recoupment
against the Refunds for any claim arising prior to June 1, 1993, whether or not
asserted in the Setoff Motion.
7. On the tenth day following the date that the order approving
this Stipulation becomes final and nonappealable, the Exhibit B Contracts shall
be deemed terminated by agreement of the parties (subject to any necessary
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regulatory approvals), and each party shall be deemed to have waived any claim
for damages thereunder. Any remaining imbalances under these Contracts shall
be remedied in the ordinary course.
8. This Stipulation shall not be deemed an admission of any fact
or proposition of law, and shall not be used for any purpose other than to
enforce the terms of this Stipulation and Order entered approving this
Stipulation. If the settlement as set forth in this Stipulation is not
approved in its entirety and without modification, unless the parties agree in
writing to the contrary, TCO and Texas Eastern retain all rights to assert
claims, objections and other rights that are to be resolved by this settlement,
and no party can use this settlement as evidence against TCO, Texas Eastern or
any other party in this proceeding.
Dated: Wilmington, Delaware
August 24, 1993
TEXAS EASTERN TRANSMISSION COLUMBIA GAS TRANSMISSION
CORPORATION CORPORATION
By: --------------------------- By: ------------------------------
Richard A. Perkins
Its: Senior Vice President, Marketing Its: Senior Vice President
-------------------------------- ------------------------------
& Regulatory Affairs
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EXHIBIT A
RATE CONTRACT
CATEGORY SCHEDULE NUMBER
-------- -------- --------
Exchange X-62
Transportation X-121 006507
Exchange X-128 008752
Transportation IT-1 200001
Transportation IT-1 200006
Transportation IT-1 200012
Transportation IT-1 200078
Transportation FT-1 311962
Transportation CTS 311971
Storage SS-1 400014
Operation & Maintenance
Operation & Maintenance
Operation & Maintenance
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EXHIBIT B
RATE CONTRACT
CATEGORY SCHEDULE NUMBER
-------- -------- --------
Exchange X-60 002322
Exchange X-68
Exchange X-78 002917
Transportation X-92 003273
Exchange X-95 004182
Transportation X-96 004221
Gas Sales SCQ 312044
Transportation IT-S
Transportation IT
Exchange
Gas Sales WS
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