EXHIBIT "C" ATTACHED TO AND FORMING PART OF A SETTLEMENT AGREEMENT
MADE EFFECTIVE AS OF NOVEMBER 1, 1994 BETWEEN SAN DIEGO GAS &
ELECTRIC COMPANY AND HUSKY OIL OPERATIONS LTD.
AMENDING AGREEMENT
THIS AMENDING AGREEMENT made effective as of November 1, 1994.
BETWEEN:
SAN DIEGO GAS & ELECTRIC COMPANY, a California
corporation with its principal place of business in San
Diego, California ("SDG&E")
OF THE FIRST PART
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HUSKY OIL OPERATIONS LTD., an Alberta corporation, with
its principal place of business in Calgary, Alberta ("Seller")
OF THE SECOND PART
WHEREAS SDG&E and Seller are parties to a Natural Gas
Purchase Agreement made as of March 12, 1991 (the "Gas Purchase
Agreement"); and
WHEREAS the parties wish to amend the Gas Purchase
Agreement in the manner hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties agree as follows:
1. The terms and expressions which are defined in the Gas
Purchase Agreement shall have the same meanings where used in this
Amending Agreement except where the context otherwise requires.
2. Subsection 1.1 is amended as follows:
(a) Subsection 1.1(z) is deleted and replaced with the
following:
"(z) "NOVA" means NOVA Gas Transmission Ltd."
(b) Subsection 1.1(ii) is deleted and replaced with the
following:
"(ii) "SDG&E's Transporters" means those transporters
operating pipeline facilities which are used to transport
gas from the Delivery Point to the interconnection of the
facilities of PG&E with SoCal's
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System; being the 1993 expansion facilities of ANG, PGT
and PG&E;"
(c) The following subsection 1.1(mm.1) is added after
subsection 1.1(mm):
"(mm.1) "SoCal's System" means the facilities owned and
operated by SoCal for the transmission of natural gas and
for the purposes of Article VI shall be deemed to
interconnect with the facilities of PG&E at Kern River
Station, California and deemed to interconnect with the
facilities of El Paso and Transwestern at the
California border near Blythe, California and Needles,
California;"
(d) Subsection 1.1(qq) is deleted.
3. Section 6.1 is amended as follows:
(a) The definition of Contract Price is deleted and replaced
with the following:
"Contract Price = Reference Price - SDG&E's Unit
Transportation Cost"
(b) The definition of Reference Price is amended by deleting
"as set forth in Schedule "A" and indexed in the manner
set forth in Schedule "A"" and inserting "as calculated
pursuant to Appendix "A"."
(c) Schedule "A" to the Gas Purchase Agreement is deleted and
replaced with Appendix "A" attached hereto. Appendix A"
is incorporated into and is a part of the Gas Purchase
Agreement by this reference as though contained in the
body of such Agreement.
(d) The definition of SoCal Unit Transportation Cost is
deleted.
(e) The definition of SDG&E's Unit Transportation Cost is
deleted and replaced with the following:
"SDG&E's Unit Transportation Cost = in respect of any
Month, SDG&E's unit cost (in $U.S./MMBtu), being the sum
of all SDG&E's Transporters' fixed and variable charges
or surcharges, net of any credits, that apply to the
firm transportation of gas hereunder in such Month from
the Delivery Point to SoCal's System, including any non-
tariff costs such as shipper provided fuel and line
loss. This unit cost will be the 100% load factor rate
calculated based on an assumed full utilization of
transportation capacity held on SDG&E's Transporters
equal to the MDQ
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regardless of whether Seller delivered and SDG&E
received less than the MDQ."
(f) The last paragraph of Section 6.1 is amended by deleting
"the SoCal Unit Transportation Cost or".
4. Section 6.3 is deleted and replaced with the following:
"6.3 Rolled-in Rates.
If FERC authorizes rolled-in rates on the PGT
pipeline, the resulting transportation charges,
including any surcharges associated with the
restructuring of PG&E's Alberta and Southern Gas Co.
Ltd. obligation:
(a) shall be the responsibility of Seller if and to the
extent it assumes SDG&E's present capacity rights
on the PGT pipeline; or
(b) shall continue to be otherwise included within the
definition of "SDG&E's Unit Transportation Cost"."
5. Section 7.1 is amended by:
(a) deleting "SoCal Unit Transportation Cost," and
(b) by replacing "WACOG" with "Base Price".
6. SDG&E and Seller each restate as being true and correct
as of the date of this Amending Agreement each of the
representations and warranties made by them and set
forth in Article XII of the Gas Purchase Agreement.
7. Section 15.1 is amended by:
(a) in the fifth line by replacing "been unable" with
"failed or will fail";
(b) in the fourteenth line adding after "SDG&E's System" the
words ", SoCal's System"; and
(c) in the last line by replacing "is unable" with "has
failed or will fail".
8. Section 15.2(c)(iv) is amended by replacing in the
seventh line "is unable" with
"has failed or will fail".
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9. Section 17.1 is amended by replacing "assigns" with
"permitted assigns".
10. Subsections 17.2(b), (c) and (d) are deleted and replaced
by the following new subsections 17.2(b), (c), and (d), and an
additional subsection 17.2(e) is added::
(b) SDG&E shall not require Seller's consent under
subsection (a) to assign all of its rights, obligations
and interests in this Agreement to an affiliate of SDG&E
that provides gas service to markets that includes core
customers in San Diego County (the "Affiliate"). In
such circumstances the Affiliate shall be bound by all
of the terms and conditions of this Agreement and,
notwithstanding such assignment, SDG&E shall continue to
remain liable for all of the obligations of the
Affiliate, whether such obligations arose prior to the
effective date of the assignment, or arise from or after
the effective date of the assignment unless and until
the Affiliate can demonstrate to Seller's reasonable
satisfaction the Affiliate's ability to meet all
existing and continuing obligations under this
Agreement.
For the purposes of this subsection 17.2(b), the term
"Affiliate" shall mean, with respect to any person, any
other person (other than an individual) that, directly
or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common
control with, such person. For the purposes of the
foregoing definition, "control" means the direct or
indirect ownership of more than 50% of the outstanding
capital stock or other equity interests having ordinary
voting power.
(c) In the event that SDG&E reasonably believes that
Seller's ability to meet its material obligations under
this Agreement is materially impaired, SDG&E may, by
written notice to Seller, require Seller to provide
further assurances within ninety (90) days, which in
SDG&E's reasonable judgment are adequate to provide
comfort that Seller can continue to perform its
material obligations hereunder. If Seller is unable to
provide such assurances, SDG&E may upon thirty (30)
days written notice terminate this Agreement.
(d) In the event that Seller reasonably believes that
SDG&E's ability to meet its material obligations under
this Agreement is materially impaired, Seller may, by
written notice to SDG&E, require SDG&E to provide
further assurances within ninety (90) days, which in
Seller's reasonable judgment are adequate to provide
comfort that SDG&E can continue to perform its material
obligations hereunder. If SDG&E is unable to provide
such assurances, Seller may upon thirty (30) days
written notice terminate this Agreement. This
subsection (d) shall not apply to the assignment
described in subsection 17.2(b).
(e) For purposes of subsections 17(2)(c) and 17(2)(d),
Seller shall mean both Seller and its permitted assigns
and SDG&E shall mean both SDG&E and its permitted
assigns."
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11. The Seller's address for notices in Section 19.1 is
deleted and replaced with the following:
"To Seller: Husky Oil Operations Ltd.
707 - 8th Avenue S.W.
P.O. Box 6525, Station "D"
Calgary, Alberta T2P 2G7
Attention: Manager, Natural Gas Supply
and Marketing
Telecopy: (403) 298-6093"
12. Section 22.2 is amended by replacing "assigns" with
"permitted assigns".
13. The following sections are added to Article XXII:
"22.7 Time of Essence. Time shall be of the essence of
this Agreement.
22.8 Severability. If one or more provisions
contained in this Agreement are invalid, illegal or
unenforceable in any respect under any applicable law
the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be
affected or impaired thereby.
22.9 Preparation. This Agreement was prepared with
each of the parties having access to its own counsel
and the parties waive any claim they may have now or in
the future based on this Agreement not having been
prepared jointly by the parties or by either to the
exclusion of the other.
14. This Amending Agreement was prepared with each of the
parties having access to its own counsel and the parties waive any
claim they may have now or in the future based on this Amending
Agreement not having been prepared jointly by the parties or by
either to the exclusion of the other.
15. This Amending Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be
an originally executed copy, and it shall not be necessary in
making proof of the Amending Agreement to produce all of such
counterparts.
16. Each party represents and warrants that the officer or
officers signing this Amending Agreement on its behalf is
authorized to do so.
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17. This Amending Agreement shall be governed by and
construed according to the laws of the Province of Alberta.
IN WITNESS WHEREOF this Agreement is executed in
multiple originals effective as of the date and year first above
written.
SAN DIEGO GAS & ELECTRIC COMPANY HUSKY OIL OPERATIONS LTD.
By: ___________________________ By: ____________________________
Name: _________________________ Name: ___________________________
Title: _________________________ Title:___________________________
By: ____________________________
Name: ___________________________
Title:___________________________
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APPENDIX "A" ATTACHED TO AND FORMING PART OF A GAS PURCHASE
AGREEMENT BETWEEN SAN DIEGO GAS & ELECTRIC COMPANY AND HUSKY OIL
OPERATIONS LTD. DATED MARCH 12, 1991 AS AMENDED BY AMENDING
AGREEMENT MADE EFFECTIVE AS OF NOVEMBER 1, 1994.
1.0 "Reference Price" for the Month = Base Price for the Month
x 0.97
2.0 "Base Price" for the Month = Southwest Basin Index for the
Month plus Southwest Transportation Cost for the Month.
3.0 The Reference Price and Base Price shall be rounded to
four decimal places.
4.0 The terms and expressions which are defined in the Gas
Purchase Agreement shall have the same meanings when used
in this Appendix unless the context otherwise requires.
CALCULATION OF SOUTHWEST BASIN INDEX
5.0 "Southwest Basin Index" for the Month (expressed in
$/MMBTU) = (0.70 x San Juan Index Price) plus (0.30 x
Permian Index Price) as described in sections 6.0 and
6.1.
6.0 "San Juan Index Price" for the Month:
(a) shall equal the index price of gas supply for
deliveries from the San Juan basin into the El Paso
system as published in the first issue of the
current month by Inside FERC's Gas Market Report, in
the table Prices of Spot Gas Delivered to Pipelines,
El Paso Natural Gas Co. San Juan Basin (expressed in
$/MMBTU);or
(b) if the index described in section 6.0(a) is not
published in the first issue of the current month,
shall equal the first posted Contract Index as
published by Natural Gas Intelligence, for
deliveries from the San Juan basin into the El Paso
system for the current month in the table
Spot Gas delivered to Pipelines 30 Day Supply
Transactions, Rocky Mountains, El Paso San
Juan (expressed in $/MMBTU).
6.1 "Permian Index Price" for the Month:
(a) shall equal the index price of gas supply for
deliveries from the Permian basin into the
Transwestern system as published in the first issue
of the current month by Inside FERC's Gas Market
Report, in the table "Prices of Spot Gas Delivered
to Pipelines", Transwestern Pipeline Co. Permian
Basin (expressed in $/MMBTU); or
(b) If the index described in section 6.1(a) is not
published in the first issue of the current month,
shall equal the first posted Contract Index as
published by Natural Gas Intelligence, for
deliveries from the Permian basin into the
Transwestern system for the current month in the
table Spot Gas Prices Delivered to Pipelines, 30 Day
Supply Transactions, West Texas/Permian Basin
Transwestern (expressed in $/MMBTU).
CALCULATION OF SOUTHWEST TRANSPORTATION COST
7.0 "Southwest Transportation Cost" for the Month (expressed
in $/MMBTU) = Transportation Fuel Cost plus
Transportation Variable Cost plus Transportation Fixed
Cost.
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TRANSPORTATION FUEL COST
8.0 "Transportation Fuel Cost" for the Month (expressed in
$/MMBTU) = (0.70 x El Paso Fuel Cost) plus (0.30 x
Transwestern Fuel Cost) as described in sections 8.1 and
8.2.
8.1 "El Paso Fuel Cost" for the Month, (expressed in
$/MMBTU) = [San Juan Index Price divided by (1 - EP % of
Fuel Use)] minus San Juan Index Price
where "EP % of Fuel Use" means the applicable figure
published in the Firm Transportation Tariff, T-3, for
the El Paso system, or any equivalent replacement or
successor rate or rate schedule. Currently the EP % of
Fuel Use is documented on Original Sheet No. 116 of Rate
Schedule T-3 issued on May 23, 1994, paragraph 7a.
8.2 "Transwestern Fuel Cost" for the Month (expressed in
$/MMBTU) = [Permian Index Price divided by (1 - TW % of
Fuel Use)] minus Permian Index Price
where "TW % of Fuel Use" means the applicable figure
published in the Firm Transportation Tariff, FTS-1, for
the Transwestern system, or any equivalent replacement
or successor rate or rate schedule. Currently the TW %
of Fuel Use is documented on 109th Revised Sheet No. 5
issued on August 31, 1994 in the column titled Maximum
Fuel % for the East of Thoreau Receipt Point Area.
TRANSPORTATION VARIABLE COST
9.0 "Transportation Variable Cost" for the Month (expressed
in $/MMBTU) = (0.70 x El Paso Variable Cost) plus (0.30
x Transwestern Variable Cost) as described in sections
9.1 and 9.2, but excluding Transportation Fuel Cost.
9.1 "El Paso Variable Cost" means all the transportation
variable cost components of the Firm Transportation
Tariff, T-3, including any present or future commodity
or usage surcharges or any equivalent replacement or
successor rate or rate schedule, from the San Juan basin
to the interconnection with SoCal's System (expressed in
$/MMBTU). Currently El Paso variable costs are
documented on second revised sheet No. 23 issued on
November 30, 1994 in the column titled Maximum Rate. The
components are Mainline transportation from San Juan to
California on line 1F, GRI surcharge on line 6, ACA
surcharge on line 7 and Take-or Pay Surcharge on line 8.
9.2 "Transwestern Variable Cost" means all the ransportation
variable cost components of the Firm Transportation
Tariff, FTS-1, including any present or future commodity
surcharges for the Transwestern system, or any
equivalent replacement or successor rate or rate
schedule, from the Permian basin to the interconnection
with SoCal's System (expressed in $/MMBTU). Currently
Transwestern variable costs are documented on 109th
Revised Sheet No. 5 under the heading FTS-1 Commodity
for the East of Thoreau Receipt point area.
TRANSPORTATION FIXED COST
10.0 "Transportation Fixed Cost" for the Month (expressed in
$/MMBTU) shall equal the greater of the Floor Cost as
described in section 10.1 or Average Transportation
Fixed Cost as described in section 10.2.
10.1 (a) The "Floor Cost" for the Month (expressed in
$/MMBTU) shall equal the lesser of:
(i) $0.15; or
(ii) the Full As-Billed SW Firm Service Cost as
described in section 10.1(b).
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(b) The "Full As-Billed SW Firm Service Cost" for the
Month (expressed in $/MMBTU) shall equal the sum
of, all for the Month:
(0.70 x El Paso Reservation Charge) plus (0.30 x
Transwestern Reservation Charge).
(c) "El Paso Reservation Charge" shall be as determined
in section 10.3.
(d) "Transwestern Reservation Charge" for the Month
(expressed in $/MMBTU) means the reservation charge
cost component of the Firm Transportation Tariff,
FTS-1, including any present or future reservation
surcharges for the Transwestern system, or any
equivalent replacement or successor rate or rate
schedule, from the Permian basin to the
interconnection with SoCal's System. This charge is
currently documented on 109th Revised Sheet No. 5
in the column headed MAXIMUM FTS-1 RESERVATION
CHARGE for the East of Thoreau Receipt Point Area
at the line labeled TOTAL RATE.
10.2 "Average Transportation Fixed Cost" for the Month
(expressed in $/MMBTU) shall equal the quotient obtained
by dividing the sum of the following products:
(a) El Paso Reservation Charge multiplied by El Paso
Volume (both for the Month) as described in
sections 10.3 and 10.4;
(b) New SW Contracted Fixed Rate multiplied by New SW
Contracted Volume (both for the Month) as described
in sections 10.5 and 10.6; and
(c) Other SW Deemed Fixed Rate multiplied by Other SW
Volume (both for the Month) as described in
sections 10.7 and 10.8;
by Total SW Volume (for the Month) as described in
section 10.9.
10.3 "El Paso Reservation Charge" for the Month (expressed in
$/MMBTU) shall for the term of the Gas Purchase
Agreement equal the reservation charge published in the
Firm Transportation Tariff, T-3, including any present
or future reservation surcharges for the El Paso system
or any equivalent replacement or successor rate or rate
schedule, from the San Juan basin to the interconnection
with SoCal's System. The reservation charge currently
includes the sum of Transportation Reservation Charge
documented on First Revised Sheet No. 22, line 1G -
California in the column titled Maximum Rate, plus the
GRI Surcharge - High Load Factor documented on line 3A
of the same page, plus the Washington Ranch Surcharge,
as documented on Second Revised Sheet No. 29, in the
line labeled California Reservation Surcharge, all
divided by the number of days in the current month.
10.4 "El Paso Volume" for the Month (expressed in MMBTU's)
shall equal the product of 10,300 MMBTU per day
multiplied by the number of days in that Month.
10.5 (a) The "New SW Contracted Fixed Rate" for the Month
(expressed in $/MMBTU) shall equal the quotient
obtained by dividing the sum of:
(i) The reservation charge, including any present
or future reservation surcharges, (expressed
in $/MMBTU) as stated in each acquired
capacity agreement or transportation contract
of one year or longer for firm transportation
service held by SDG&E to deliver gas from the
San Juan or Permian basin on the El Paso or
Transwestern systems to SoCal's System
multiplied by the volume of gas actually
transported under each such contract,
by New SW Contracted Volume as described in
section 10.6.
The charges and volumes referenced in section
10.2(a) and all charges and volumes referenced in
section 10. 5(b) shall be excluded from this
calculation.
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(b) "Excluded Contracts" means:
(i) Any firm service transportation capacity
acquired by or for the account of SDG&E as the
result of the Southern California Edison ITCS
Proposal (OIR R.88-08-018, joint petition
No.92-07-025) or similar proposals as approved
or directed by the CPUC relating to the
assignment or release to SDG&E of El Paso or
Transwestern firm transportation service held
by SoCal; and
(ii) SDG&E's 90 Mmcf/d firm service transportation
contract with SoCal which is comprised of
transportation contracts Nos. EP98L8, EP98L2
and TW22513;
(c) If SDG&E secures any acquired capacity agreement or
transportation contract as described in section
10.5(a) that has (1) variable costs higher than (2)
the applicable tariff variable costs in sections
9.1 or 9.2, then the positive difference of (1)
minus (2) will be added to and deemed part of the
reservation charge of that contract in section
10.5(a). The resulting reservation charge cannot
exceed the Full As-Billed SW Firm Service Cost as
defined in section 10.1(b.)
10.6 "New SW Contracted Volume" for the Month (expressed in
MMBTU's) shall equal the aggregate of the volumes of gas
actually transported by SDG&E in the Month under the
firm transportation service contracts described in
section 10.5(a) and excluding only the El Paso Volume
referred to in section 10.4 and Excluded Contracts'
volumes as described in section 10.5(b).
10.7 "Other SW Deemed Fixed Rate" for the Month (expressed in
$/MMBTU) shall equal the California Index minus
(Transportation Fuel Cost plus Transportation Variable
Cost plus Southwest Basin Index).
The "California Index" for the Month (expressed in
$/MMBTU) shall equal the current month Index under the
line titled Southern CA Border on the table titled U.S.
SPOT MARKET SUMMARY in the publication titled BTU's
Daily Gas Wire in the first issue of the current
month or if that index is not published for the current
month then the replacement index will be: The
California Border Contract Index Price on the table
titled Spot Gas Prices Delivered to Pipelines 30 Day
Supply Transactions from the publication Natural Gas
Intelligence.
10.8 "Other SW Volume" for the Month (expressed in MMBTU's)
shall equal the positive difference, if any, obtained by
subtracting from Total SW Volume, as described in
section 10.9, the sum of El Paso Volume plus New SW
Contracted Volume.
10.9 "Total SW Volume" means the total quantity of gas
(expressed in MMBTU's) received by SDG&E in the Month:
(a) at the interconnection of the El Paso system and
SoCal's System;
(b) at the interconnection of the Transwestern system
and SoCal's System.
10.10 If requested by Seller, SDG&E shall provide Seller with
current copies of all firm acquired capacity agreements
and transportation contracts, as amended from time to
time, as described in section 10.5 and as applicable to
the pricing terms of this Agreement.
ARBITRATION
11.0 (a) Subject to any other provisions of this Appendix:
(i) if any published index or price, or any rate or
tariff or other provision of the Gas Purchase
Agreement, including this Appendix, which is
required to determine the Base Price:
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(A) ceases to be available or ascertainable;
or
(B) assumes a measure or value that is wholly
inconsistent with the measure or value
represented by the component in December,
1994; or
(ii) if in the reasonable opinion of either party
the Base Price no longer represents a price
which is competitive with SDG&E's alternative
southwest gas supplies
(any of the circumstances described in (i) or (ii)
shall, subject to section 11.0(b), be referred to as
a "Pricing Event"),
then either party may by notice in writing, within ninety
(90) days of the Pricing Event, require the other party to
meet and attempt in good faith to negotiate a replacement
index, price, rate, tariff or mechanism in order that the
Base Price will be:
(iii) competitive with the cost of SDG&E's
alternative southwest gas supplies; and
(iv) insofar as possible, consistent with the
pricing structure as set out in this Appendix;
((iii) and (iv) herein shall be referred to as the
"Standard").
(b) Notwithstanding the provisions of subsection 11.0(a), in
no event shall:
(i) the concept of the Floor Cost as described in
section 10.1(a) (which may be zero or any other
amount up to and including $0.15);
(ii) the amount set forth in section 10.1(a)(i); or
(iii) the 70%/30% allocations contained in the
calculation of the Base Price, so long as gas
continues to be supplied to California from
both the San Juan and Permian basins on the
El Paso and Transwestern systems respectively;
be cause for a Pricing Event or subject to
redetermination as part of any arbitration.
(c) If the parties are unable to negotiate a replacement
index, price, rate, tariff or mechanism within three (3)
months following the provision of the notice referred to
in section 11.0(a), the parties shall proceed to
arbitration pursuant to the following provisions of this
section.
(d) The matter shall be referred to and finally resolved by
arbitration under the rules of the British Columbia
International Commercial Arbitration Centre. The
appointing authority shall be the British Columbia
International Commercial Arbitration Centre. The case
shall be administered by the British Columbia
International Commercial Arbitration Centre in
accordance with its "procedures for cases under the
BCICAC Rules". The place for arbitration shall be
Vancouver, British Columbia, Canada.
(e) Any such arbitration shall be limited to determining a
replacement index, price, rate, tariff or mechanism
which will result in a Base Price formula which will
meet the Standard. If the arbitrator determines that no
appropriate replacement index, price, rate, tariff or
mechanism exists then the arbitrator shall determine a
Base Price to apply to the Gas Purchase Agreement which
will meet the Standard.
(f) Upon a replacement index, price, rate, tariff, mechanism
or Base Price being determined by negotiation or
arbitration, the Base Price and Contract Price shall be
adjusted to reflect the difference, if any, for the
applicable month or months following the month of the
Pricing Event and any payment adjustment will be
recovered in the first payment period immediately
following
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that determination and shall include interest accrued as
if the adjustment was a Disputed Amount under Article 7
of the Gas Purchase Agreement.
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