FIRM STORAGE SERVICE AGREEMENT
THIS AGREEMENT, made and entered into as of this 30th day of June, 1997,
by and between VIRGINIA GAS PIPELINE COMPANY, a Virginia corporation,
hereinafter referred to as "VGPC," and ALCOA, a Pennsylvania corporation,
hereinafter referred to as "ALCOA."
WITNESSETH
WHEREAS, VGPC has undertaken to provide a firm storage service under the
Utility Facilities Act of Virginia, in accordance with its Gas Tariff filed
with the State Corporation Commission of Virginia ("SCC"), and under part 284
of the Regulations of the Federal Energy Regulatory Commission ("FERC"); and
WHEREAS, ALCOA has requested storage service on a firm basis pursuant to
Rate Schedule FSS in compliance with Section 3 of VGPC's SCC Gas Tariff; and
WHEREAS, ALCOA agrees to arrange for transportation of quantities of gas
in order to deliver and receive gas to and from storage.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
QUANTITY OF SERVICE
1.1 Subject to the terms and provisions of this Agreement and the SCC Gas
Tariff applicable thereto, ALCOA has the right to maintain an aggregate
storage quantity of up to 17,400 dth ("Maximum Storage Quantity," or "MSQ").
VGPC's obligation to accept gas at the Delivery Points specified on Exhibit A
hereto for injection into storage on any day is limited to the Maximum Daily
Injection Quantity ("MDIQ") specified on Exhibit A hereto. VGPC, at its sole
discretion, may allow injections at rates above the MDIQ on a best efforts,
interruptible basis if such injections can be made without adverse effect
upon injections of other Customers or to VGPC's operations.
1.2 VGPC shall redeliver a thermally equivalent quantity of gas to ALCOA
at the Delivery Points described on Exhibit A hereto. VGPC's obligation to
withdraw gas from storage on any day is limited to the available Maximum Daily
Withdrawal Quantity ("MDWQ") specified on Exhibit A hereto. VGPC, at its sole
discretion, may allow withdrawals at rates higher than the MDWQ on a best
efforts, interruptible basis if such withdrawals can be made without adverse
effect upon withdrawals of other Customers or to VGPC's operations and such
gas is available from ALCOA's Storage Gas Balance. ALCOA may withdraw during
any day at any quantity up to the MDWQ.
ARTICLE II
CONDITIONS OF SERVICE
2.1 ALCOA shall pay VGPC $0.05 per each dth injected and $0.05 per each
dth withdrawn.
2.2 Subject to the provisions of Section 2.4, ALCOA will pay VGPC an
annual storage charge ("Annual Storage Charge") which shall be the product of
$5.64 multiplied by the Maximum Storage Quantity, which fee shall be payable
in twelve (12) equal monthly installments, ("Monthly Storage Charge")
2.3 VGPC shall reimburse ALCOA for any injected gas that cannot be
withdrawn for delivery to ALCOA at ALCOA's cost of replacing such gas,
including pipeline penalties associated with the replacement. Any gas not
withdrawn at ALCOA's option during any day or year shall be carried over to
the following day's or year's storage balance.
2.4 VGPC shall pro-rate the Monthly Storage Charge for the billing month
retroactively and prospectively to reflect any deficiencies in performance
during the month.:
Adjusted Annual
Storage Charge = the lesser of (Actual MSQ/Contract MSQ x Monthly Storage
Charge or (Actual MDWQ/Contract MDWQ) x Monthly
Storage Charge or (Actual MDIQ/Contract MDIQ) x Monthly
Storage Charge
ALCOA's election to use the storage service at levels below the MSQ and MDWQ
shall not be considered deficiencies in performance.
2.5 ALCOA shall insure that the gas delivered to VGPC at the Delivery
Points for injection meets the minimum quality specifications of East
Tennessee Natural Gas Company's FERC Tariff. VGPC shall insure that gas
delivered to ALCOA at the Delivery Points meets the minimum quality
specifications of East Tennessee Natural Gas Company's FERC Tariff.
2.6 The measurement of quantities for billing purposes, in MMBtu,
delivered to or received from VGPC shall be performed by East Tennessee
Natural Gas Company.
ARTICLE III
NOTICES
3.1 Notices hereunder shall be given to the respective party at the
applicable address, telephone number or facsimile machine number stated
below, or such other addresses, telephone numbers or facsimile numbers as the
parties shall respectively hereafter designate in writing from time to time:
For VGPC:
Virginia Gas Pipeline Company
XX Xxx 0000
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone Number: (000) 000-0000, extension 17
Facsimile Machine Number: (000) 000-0000
For ALCOA:
ALCOA STRATEGIC ENERGY LIMITED
0000-X XXXXX Xxxxxxxx Xxx Xxxxxxx Xxxxxx
000 Xxxxx Xxxxxx 0xx Xxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxx Attention: Xxxxx Xxxxx
Telephone Number: (000) 000-0000 Telephone Number: (000) 000-0000
Facsimile Machine Number: (000) 000-0000 Facsimile Machine Number: (000) 000-0000
ARTICLE IV
BILLING AND PAYMENT
4.1 On or before the fifteenth (15th) day of each calendar month, VGPC
shall submit to ALCOA an invoice for services performed during the preceding
month.
4.2 ALCOA shall pay the amounts invoiced by the twenty-fifth (25th) day
of each month in which said invoice is received by ALCOA or within ten (10)
days of ALCOA's receipt of VGPC's invoice.
4.3 Should ALCOA fail to pay the entire amount of any invoice as herein
provided when such amount is due, ALCOA shall pay a charge for late payment
which shall be included by VGPC on the next regular monthly invoice rendered
hereunder. Such charge for late payment shall accrue interest at an annual
rate equivalent to the then current Chase Manhattan Bank prime interest rate
plus two percent (2%), but not to exceed the maximum rate permitted by law.
If such failure to pay continues for thirty (30) days after payment is due,
VGPC, in addition to any other remedy it may have, may suspend further
injections and/or withdrawals of gas for ALCOA's account until such amount is
paid; provided, however, that if ALCOA, in good faith, disputes the amount of
any such invoice or part thereof and pays to VGPC such amounts as ALCOA
concedes to be correct, then ALCOA may withhold payment without risk of
suspension to determine the final amounts due to VGPC conditioned upon the
payment of any amounts ultimately found due upon such invoices within fifteen
(15) days after a final determination, which may be reached either by
agreement or judgment of the courts, as the case may be, then
VGPC shall not be entitled to suspend further injections and/or withdrawals
of gas unless and there is a subsequent default under the conditions of this
agreement.
4.4 In the event any overcharge or undercharge in any form whatsoever
shall be found within twenty four (24) months from the date a billing
discrepancy occurs, the appropriate party shall refund the amount of
overcharge or pay the amount of undercharge within thirty (30) days after the
final determination of the amount overcharged or undercharged has been made.
Any overcharge or undercharge found after such twenty-four (24) months shall
be deemed waived by both parties. Refunds of overcharges shall be paid with
interest at the rate set forth in Section 4.3.
4.5 Both parties hereto shall have the right, at any and all reasonable
times, to examine the books and records of the other party to the extent
necessary to verify the accuracy of any statement, charge, computation or
demand made under or pursuant to this Agreement.
4.6 It is expressly understood that VGPC retains a landlord's lien
against the personal property of ALCOA's stored hereunder for the recovery of
any and all amounts which may become due and payable under this agreement
provided that no such lien may be asserted absent an unexcused failure to
make payments within 5 days after a notice of late payment has been given to
ALCOA and absent good faith concerns about ALCOA's creditworthiness.
ARTICLE V
TERM
5.1 Subject to the provisions hereof, this Agreement shall become
effective as of the date first written above and shall be in full force and
effect for a primary term through April 1, 2002 (the "Termination Date") and
shall continue and remain in force and effect for successive terms of one (1)
year each hereafter unless and until canceled by either party giving 180 days
written notice to the other party prior to the end of the primary term and
any yearly extension thereof.
ARTICLE VI
OPTIONS
6.1 On a best efforts basis, ALCOA shall have the option to increase its
MSQ under the same terms, conditions and rates as described above. This
option must be exercised no later than May 1 of the Contract Year.
6.2 If the abovementioned option is exercised, all of the previously
mentioned quantities shall be proportionally increased.
ARTICLE VII
INDEMNITY
7.1 ALCOA shall be deemed to have the exclusive control and possession of
the Gas until delivered to VGPC at the Delivery Points and after the Gas is
redelivered to ALCOA at the Delivery Points pursuant to Sections 1.1 and 1.2
hereof. VGPC shall be deemed to have the exclusive control and possession of
the Gas after it has been delivered to VGPC at the Delivery Points, until
such time as the Gas is redelivered to ALCOA at the Delivery Points pursuant
to Sections 1.1 and 1.2 hereof.
7.2 The party in control of the Gas will defend, indemnify and hold the
other harmless from and against any and all claims, causes of action or
judgments (including attorney's fees and expenses) in any way arising with
respect to the Gas while in that party's control, and the other shall not be
liable for any part thereof.
ARTICLE VIII
FORCE MAJEURE
8.1 Subject to the provisions of this Article VII, no party shall be
liable to the other party for the failure to perform in conformity with this
Agreement to the extent such failure results from an event of Force Majeure
which is beyond the reasonable control of the party affected thereby, which
wholly or partially prevents the supply, transportation, sale, delivery,
injection, storage, withdrawal or redelivery of Gas.
8.2 Events of Force Majeure shall include, by way of illustration, but
not limitation those enumerated in Section 16.2, Original Sheets No. 56 and
No. 57 of the Terms and Conditions of VGPC's SCC Gas Tariff.
8.3 Immediately upon becoming aware of the occurrence of any event of
Force Majeure, the party affected shall give notice thereof to the other
party, describing such event and stating the specific obligations, the
performance of which are, or are expected to be, delayed or prevented, and
(either in the original or in supplemental notices) stating the estimated
period during which performance may be suspended or reduced, including, to
the extent known or ascertainable, the estimated extent of such reduction of
performance. Such notice of an event of Force Majeure is to be first given by
telephone communication, and then shall be confirmed in writing within five
(5) days, giving particulars available to the reporting party, and being
supplemented if necessary within twenty (20) days to give full particulars.
Not withstanding any other provision in this Agreement, the parties mutually
agree that should some cause or event, beyond the control of VGPC, make it
reasonably appear to VGPC in its best engineering effort that a storage area
is losing pressure and may no longer be viable for storage, it may
immediately notify ALCOA (by fax, phone or other means) and ALCOA shall
immediately start accepting the stored gas in order to drain the storage area
and cut down on the potential loss to VGPC, or
VGPC may otherwise dispose of such gas and pay ALCOA for the fair market
value thereof plus the value of any gas otherwise lost. Thereafter this
Agreement shall be considered of no further force and effect unless VGPC can
reasonably revitalize and stabilize such storage area to hold gas pressure in
which event VGPC shall give the thirty (30) day notice as provided in Section
3.1 and the Agreement shall thereafter continue in full force and effect.
8.4 The party relying upon an event of Force Majeure shall act prudently
and use all reasonable efforts to eliminate the effects of Force Majeure as
soon as reasonably practicable, provided that the settlement of strikes and
lockouts shall be entirely within the discretion of the party affected.
8.5 No suspension or reduction of performance by reason of an event of
Force Majeure shall invalidate this Agreement, and upon removal of the Force
Majeure, performance shall resume in this Agreement as soon as practicable.
ARTICLE IX
OPERATIONAL FLOW ORDERS
9.1 ALCOA may be subject to certain operational flow orders ("OFO's")
issued by VGPC: (a) to alleviate conditions that threaten the integrity of
VGPC's system; (b) to maintain pressures necessary for VGPC's operations; (c)
to alleviate operational problems arising from overdeliveries or
underdeliveries by ALCOA in violation of this Agreement; and (d) to prevent
damage to a storage field.
9.2 Upon the issuance of an OFO, VGPC shall notify ALCOA through notice
by telephone, confirmed by fax two (2) hours prior to the start of the OFO.
9.3 Upon the issuance of an OFO, ALCOA must take the actions set forth in
the OFO, which may include, but are not limited to, reducing its withdrawals
from storage.
ARTICLE X
SUCCESSORS AND ASSIGNS
10.1 This Agreement shall be binding upon and inure to the benefit of the
successors, assigns and legal representatives of the parties hereto. Either
party may freely assign this Agreement to a company with which it is
affiliated or which it controls, is controlled by, or is under common control
with, or any party succeeding to substantially all the interests of ALCOA or
VGPC provided that the successor entity is no less creditworthy than the
assignor and is committed to, and capable of, performing its obligation under
this Agreement. All other assignments shall be subject to the prior written
consent of the party not assigning, such approval not to be unreasonably
withheld. Either party hereto shall have the right to pledge or mortgage its
respective rights hereunder for security of its indebtedness without the
written consent of the other party.
ARTICLE XI
MISCELLANEOUS
11.1 This Agreement constitutes the entire Agreement between the parties
and no waiver by VGPC or ALCOA of any default of either party under this
Agreement shall operate as a waiver of any subsequent default whether of a
like or different character.
11.2 The laws of the Commonwealth of Virginia shall govern the validity,
construction, interpretation, and effect of this Agreement.
11.3 No modification of or supplement to the terms and provisions hereof
shall be or become effective except by execution of a supplementary written
agreement between the parties.
11.4 Exhibit A attached to this Agreement constitutes a part of this
Agreement and is incorporated herein.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above by the parties' duly authorized officers.
Attest: ALCOA
By: /s/ illegible
--------------------
ILLEGIBLE
Its: Vice President
-------------------
Attest: VIRGINIA GAS PIPELINE COMPANY
By: /s/ X. X. Xxxxxxx
--------------------
ILLEGIBLE
Its: President
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EXHIBIT A
to that certain Gas Storage Agreement dated June 30, 1997 by and between
ALCOA
and
VIRGINIA GAS PIPELINE COMPANY
Delivery Points:
1. Saltville receipt/delivery point, Xxxxx County, Virginia.
For injections: ETNG Meter Number 759766; for withdrawals:
ETNG Meter Number 759777.
2. Early Grove receipt/delivery point, Washington County, Virginia.
For injections: ETNG Meter Number 759147; for withdrawals:
ETNG Meter Number 759009.
3. Xxxxxxxxx #2 receipt point, Xxxxxxxxx County, Virginia.
For withdrawals only, ETNG Meter Number 759321.
Maximum Daily Injection Quantity, in dth:
870 Dth
Maximum Daily Withdrawal Quantity, in dth:
1,740 Dth
