Exhibit 10(y)(y)
GAS PURCHASE/SALES CONTRACT
This AGREEMENT, made as of October 27, 1997 between BLUEFIELD GAS
COMPANY ("Buyer" or "Bluefield") and PHOENIX ENERGY SALES COMPANY ("Seller" or
"PES"), Provides:
1) Pipeline Construction
PES will install, own, and operate +/- 8 miles of 6" gathering line from
the CNGT interconnect to State Route 643 at cost to PES. Bluefield Gas
will install, own and operate +/- 2 miles of 4" distribution line from
State Route 643, inclusive of road crossing, to an existing Bluefield
Gas distribution line along Route 102 at cost to Bluefield. Construction
of the 6" pipeline by PES will provide the capacity for market growth,
as well as, for winter baseload and peaking requirements. From CNGT's
standpoint, well deliverability into its gathering system can be
enhanced only if operating line pressure that the wells flow against is
significantly reduced by delivering excess supplies off-system into the
proposed PES line. Given Bluefield's load profile, 6" pipe is needed to
minimize pipeline friction losses.
2) Reservation Fee
Within that 6" pipeline owned by PES, PES will provide to Bluefield
sufficient pipeline capacity on a firm basis with which to meet a
peaking requirement of 5,000 Dth per day. As consideration, Bluefield
will agree to pay PES an initial monthly reservation fee of $3.50/Dth
for such capacity. The fee will be redetermined after initial investment
and financing charges are recovered (to be determined based on actual
pipeline costs and interest rates), based on operating expenses and a
reasonable ROE utilizing FERC guidelines for regulated pipelines.
3) Base Gas Service
PES will make available on a "firm" basis to Bluefield, for any given
month, an average daily volume up to 2500 Dth per day of gas year round.
Bluefield will nominate to PES its monthly base gas requirements (up to
the 2500 Dth per day available) 10 days before the start of each month.
Although base gas nominations will be stated in terms of flat dth/day,
actual daily usage can vary up to the maximum pipeline capacity. The
total monthly usage would be divided by the number of days in the month
to get average usage. Average usage would be used to determined base gas
and peaking gas volumes.
4) Peaking Service
PES will also provide Bluefield a peaking service whereby Bluefield will
have access to the maximum volume, which can be delivered through the
pipeline. Maximum volume available at any given time will be dictated by
the inlet pressure at the CNGT interconnect and the outlet pressure at
the Bluefield interconnect. Based on the current operating conditions
(i.e., CNG inlet - 225 psig, Bluefield outlet - 50 psig) a total +/-
5000 Dth per day would be available for delivery
into the PES system. During any given month, a maximum average daily
volume up to 2500 Dth per day would be available for purchase by
Bluefield. Average daily volume during any given month in excess of that
month's base gas (as nominated by Bluefield) will be considered peaking
volume and will be made available on a best efforts basis.
5) Pricing
For base gas purchased during the summer months (i.e. April - October),
Bluefield will pay to PES the first of month CNG Transmission contract
index as published by Inside FERC. For base gas purchased during the
winter (i.e. November - March), Bluefield will agree to pay PES the
first of month CNG Transmission contract index as published by Inside
FERC, plus $0.10 per Dth. Gas supplied in any given month in excess of
the base gas volume nominated by Bluefield for first of month
deliveries, would be purchased at the monthly average Gas Daily pricing
for CNG Appalachia pool gas, plus the seasonal add-on (i.e. $0.10 per
Dth in the winter), if applicable. All prices will be adjusted for
shrinkage.
6) Nominations
Bluefield will nominate its required base gas volume from PES at least
ten days before the beginning of each month. Should an intra-month
nomination become necessary, Bluefield will so inform PES and PES will
use best efforts to accommodate Bluefield. PES will be as flexible as
the rules governing PES's transportation on the CNG system from
Appalachian pools will allow.
7) Rights-of-Way Easements
It shall be the responsibility of PES to obtain all Rights-of-Way
easements for the total 10-mile pipeline with the exception of the
Virginia Holding Company Agreement near Falls Mills, which will be
obtained by Bluefield Gas Company. All West Virginia state, local and
Federal construction and regulatory permits/licenses will be obtained by
PES. All Virginia permits and licenses will be obtained by Bluefield Gas
Company.
8) Measurement Station
PES will provide a measurement station as close as practical to the
VA/WVA state line. Bluefield will be supplied access to this equipment
for electronic data transfer and periodic meter testing. Billed volumes
will be based solely on this measurement unless otherwise mutually
agreed by both parties. Billings will be adjusted to reflect BTU content
determined by averaging periodic sample tests. In the event the parties
fail to agree on the accuracy of the testing, Marshall Miller and
Associates will be used to verify testing results.
9) Attachment
The attached Pool Transfer Gas Purchase/Sales Contract, General Terms
and Conditions will be included as a part of this Agreement.
10) Term
The start up date of this Agreement shall be no later than December 31,
1998. Term of the agreement will be for 15 years with a reopener every 5
years to redetermine, if necessary, the applicable reservation fee and
gas supply pricing to be paid. These fees will be subject to
redetermination via binding arbitration in the event the parties cannot
agree on price, as per guidelines described in letter dated October 16,
1997 from Joseph C. Vanzant, Jr. in reference reservation charges.
IN WITNESS HEREOF, the parties hereby have caused this Agreement
to be duly executed as of the day and year first above written.
PHOENIX ENERGY SALES COMPANY BLUEFIELD GAS COMPANY
By: s/Joseph C. Vanzant, Jr. By: s/Arthur L. Pendleton
Joseph C. Vanzant, Jr. Arthur L. Pendleton
ITS: Vice President ITS: Vice President - Operations
DATE: 11/4/97 DATE: October 27, 1997