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Exhibit 10.58
FIRM TRANSPORTATION
CARDINAL INTRASTATE PIPELINE
This Service Agreement, entered into this the 26th day of June, 1998,
by and between Cardinal Extension Company, LLC, a North Carolina limited
liability company, hereinafter referred to as "Transporter," and Piedmont
Natural Gas Company, Inc., a North Carolina corporation, hereinafter referred to
as "Shipper."
WITNESSETH
WHEREAS, Transporter is the owner of an intrastate natural gas pipeline
which interconnects with the interstate pipeline system of Transcontinental Gas
Pipe Line Corporation ("Transco") in Rockingham County, North Carolina;
WHEREAS, Transporter has sufficient capacity available on its pipeline
system to provide firm transportation service for Shipper pursuant to the terms
specified herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
assumed, Transporter and Shipper agree as follows:
ARTICLE I
DEFINITIONS
1.01 As used herein, the following terms shall have meanings defined below:
(a) "British Thermal Unit" or "BTU" -- The amount of heat required
to raise the temperature of 1 pound of water 1 degree
Fahrenheit at 60 degrees Fahrenheit.
(b) "Contract Year" -- The year beginning with the date that
service shall commence as set forth in Paragraph 13.01 hereof,
or any anniversary thereof. Provided, however, that in the
event firm service commences on a day other than the first day
of the month, the Contract Year shall be considered to
commence on the first day of the month following the day on
which service has commenced.
(c) "Cubic Foot" -- The volume of gas which occupies one cubic
foot when such gas is at a temperature of 60 degrees
Fahrenheit and an absolute pressure of 14.73 pounds per square
inch.
(d) "Day" -- A period of 24 consecutive hours beginning as nearly
as practicable at 10:00 a.m. Eastern Standard Time or Eastern
Daylight Time, as appropriate, or at such other hour as
Transporter and Shipper mutually agree.
(e) "Dekatherm" or "dt" -- The quantity of heat energy which is
1,000,000 British Thermal Units.
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(f) "Equivalent Quantity" -- The volume of gas measured in Mcf
received by Transporter at the Point of Receipt during any
given period of time, adjusted for any variations in Btu
content, it being the intent of the parties that the volumes
of gas delivered hereunder at the Point of Delivery be the
thermal equivalent of the volumes of gas received at the Point
of Receipt less any amounts attributable to fuel and line
losses.
(g) Excess Rate Schedule CFT Service -- The service shall be
available on any Day when the total quantity of gas taken by
all firm shippers in Zone 1 is less than the dekatherm
equivalent of 130,000 Mcf per day and/or the total quantity of
gas taken by all Shippers in Zone 2 is less than the dekatherm
equivalent of 140,000 Mcf per day provided that such service
has been scheduled by Shipper and allocated by Transporter on
such Day.
(h) "Force Majeure" means acts of God, strikes, lockouts or other
industrial disturbances, acts of the public enemy or
terrorists, wars, blockades, insurrections, riots, epidemics,
landslides, lighting, earthquakes, fires, storms, floods,
washouts, arrests, the order of any court or governmental
authority having jurisdiction while the same is in force and
effect, civil disturbances, explosions, breakage, accidents to
machinery or pipelines, freezing of or damage to receipt or
delivery facilities, National Weather Service warnings or
advisories, whether official or unofficial, that result in the
evacuation of facilities, inability to obtain or unavoidable
delays in obtaining material or equipment, a Force Majeure
event or Operating Conditions on the pipeline system of
Transco or any other event, condition or incident which
prevents Transco from tendering gas to Transporter for
transportation hereunder, and any other cause whether of the
kind herein enumerated or otherwise, not reasonably within the
control of either party claiming suspension and which by the
exercise of due diligence such party is unable to prevent or
overcome.
(i) "Heating Value" -- Gross heating value on a dry basis which is
the number of British Thermal Units produced by the complete
combustion at constant pressure of the amount of dry gas which
would occupy a volume of one cubic foot at 14.73 Psia and 60
degrees Fahrenheit with combustion air at the same temperature
and pressure as the gas, the products of combustion being
cooled to the initial temperature of the gas and air and the
water formed by combustion condensed to the liquid state.
(j) "Mcf" -- 1,000 cubic feet of gas.
(k) "Month" -- A period beginning as nearly as practicable at
10:00 a.m. Eastern Standard Time or Eastern Daylight time, as
appropriate, or at such other hour as Transporter and Shipper
agree upon on the first day of a calendar month and shall end
at the aforesaid time on the first day of the next succeeding
calendar month.
(l) "Operating Conditions" means the necessity to make
modifications, tests or repairs to Transporter's pipeline
system. Transporter shall exercise reasonable diligence to
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schedule maintenance so as to minimize disruption of service
to Shipper and shall provide reasonable notice of the same.
(m) "Psia" -- Pounds per square inch absolute.
(n) "Psig" -- Pounds per square inch gauge.
(o) "Scheduled Daily Delivery Quantity" -- The daily quantity of
gas requested in advance by Shipper electronically or
otherwise to Transporter covering a specific period of time.
(p) "Transportation Contract Quantity" or "TCQ" -- The quantity of
gas specified in Article 2, Paragraph 2.01, which shall be the
maximum quantity that Transporter is obligated to deliver
hereunder on any day, at the Point(s) of Delivery set forth in
Article 4 hereof.
(q) "Year" -- A period of three hundred and sixty-five (365)
consecutive days beginning on the date of initial delivery of
gas under this Service Agreement, or on any anniversary
thereof, provided, however, that any such year which contains
a date of February 29, shall consist of three hundred and
sixty-six (366) consecutive days.
ARTICLE 2
GAS TRANSPORTATION SERVICE
2.01 Subject to the terms and provisions of this Service Agreement,
Transporter agrees to receive, transport and redeliver, on a firm
basis, for Shipper's account up to the dekatherm equivalent of a
Transportation Contract Quantity ("TCQ") of 60,000 Mcf per day of
natural gas from the Point of Receipt specified in Article 3 hereof to
the Point(s) of Delivery specified in Article 4 hereto.
2.02 Transportation service rendered hereunder shall be firm and shall not
be subject to interruption or curtailment except as provided in Article
17 hereof.
ARTICLE 3
POINT OF RECEIPT
3.01 Shipper shall deliver or cause to be delivered gas for transportation
hereunder and Transporter shall receive gas quantities up to Shipper's
TCQ, plus any applicable fuel and line loss makeup, at the existing
point of interconnection between Transporter and the pipeline system of
Transco in Rockingham County, North Carolina ("Point of Receipt").
Transporter shall accept deliveries at the Point of Receipt at a
pressure sufficient to allow the gas to enter Transporter's pipeline
system at the varying pressures that may exist in such system from
time-to-time; provided, however, that such pressure(s) of the gas
delivered or caused to be delivered by Shipper shall not exceed the
maximum operating pressure(s) specified by Transporter for the Point of
Receipt.
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3.02 Shipper shall make any necessary arrangements with Transco so as to be
able to deliver gas to Transporter at the Point of Receipt; provided,
however, that such arrangements are compatible with the operating
conditions on Transporter's pipeline system.
ARTICLE 4
POINT(S) OF DELIVERY
Transporter shall deliver to Shipper, or for the account of Shipper,
Equivalent Quantities hereunder at the existing Point of Delivery
between Transporter and Shipper on the southeast side of Burlington,
North Carolina, and any future upstream points of delivery within
Shipper's TCQ capacity entitlements. Transporter shall design its
pipeline facilities and use reasonable efforts to deliver gas at the
Point(s) of Delivery at a minimum pressure of not less than 550 psig.
The maximum pressure at the Point(s) of Delivery shall not exceed the
maximum operating pressure of Transporter's pipeline at such point(s).
ARTICLE 5
DETERMINATION OF RECEIPTS AND DELIVERIES
5.01 Receipts and deliveries shall be allocated by Transporter according to
a predetermined methodology administered by Transporter for the
allocation among shippers each Day of each dt of gas which is delivered
by Transporter at the Point(s) of Delivery. Under the current
allocation methodology, the quantity of gas allocated each Day to each
Shipper at the Point of Receipt shall be deemed to be, to the maximum
extent possible, the quantities of gas delivered for such Shipper's
account at the Point(s) of Delivery hereunder adjusted for any
quantities attributable to fuel and line loss makeup.
5.02 Shipper shall cause Transco to provide Transporter with a predetermined
daily allocation methodology in writing, or electronically (by
electronic data transfer) for measured quantities based on scheduled
quantities in advance of service each Day and prior to any intra-day
changes pursuant to Section 7.02 below. The daily allocation
methodology provided by Transco shall consist of rankings for
allocation among all shippers nominating service such that receipts are
equivalent to the quantities delivered by Transporter plus any
quantities applicable for fuel or line loss makeup.
ARTICLE 6
DETERMINATION OF ALLOWABLE DAILY DELIVERY VARIATIONS
AND OVERRUN PENALTIES
6.01 Allowable daily delivery variations shall be the quantity computed as
follows:
(a) During each Day of the period beginning May 1 of any Year and
extending through the next succeeding September 30, 5 percent of
Shipper's TCQ under this Service Agreement.
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(b) During each Day of the period beginning on October 1 of any Year
and extending through the next succeeding April 30, 3.5 percent
of Shipper's TCQ under this Service Agreement.
6.02 Any quantity of gas taken by Shipper on any Day from Transporter in
excess of Shipper's TCQ under this Service Agreement shall, as adjusted
by the allowable daily delivery variations above, be an unauthorized
daily overrun unless:
(a) Shipper is utilizing the firm capacity entitlements of another
firm shipper that is not using that capacity entitlement and
Shipper has provided prior notice to Transporter, or
(b) Shipper is utilizing Excess Rate Schedule CFT Service which has
been scheduled by Shipper and allocated by Transporter on such
Day.
6.03 In the event of a Force Majeure, Shipper's revised TCQ pursuant to
Article 17 below shall be utilized to determine the allowable daily
delivery variation and unauthorized daily overrun quantity and any
penalties thereon. Notice shall be provided by Transporter to Shipper
of such revised TCQ by telephone or telecopy. Such notice shall be
confirmed in writing as soon as reasonably possible.
6.04 In the event on any Day Shipper takes unauthorized daily overrun
quantities, Shipper shall pay Transporter:
(a) an overrun charge equal to the 100 percent load factor FT rate
per dt for quantities up to, but not exceeding, the daily
allowable delivery variation set forth in Section 6.01 above,
and
(b) an overrun penalty of $25 per dt for each dt of unauthorized
daily overrun quantities in excess of the daily delivery
variation set forth in Section 6.01 above.
6.05 All overrun penalties collected by Transporter during any calendar
year, less an amount equal to the 100 percent load factor FT rate per
dt multiplied by the total volume of overruns, shall be directly
refunded to each non-overrunning firm transportation shipper for the
Month(s) in which such penalties were incurred based on each such
non-overrunning shipper's fixed cost contribution under its service
agreement with Transporter as a percentage of the total fixed cost
contributions of all non-overrunning shippers under all firm service
agreements. Such refunds shall be made by January 31 of each calendar
year.
6.06 The payment of a penalty for an unauthorized overrun quantity shall
under no circumstances be considered as giving Shipper the right to
take such unauthorized overrun quantity nor shall such payment be
considered as a substitute for any other remedy available to
Transporter or any other shipper against the offending shipper for such
unauthorized overrun.
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ARTICLE 7
SCHEDULING AND BALANCING
7.01 Shipper shall nominate service under this Service Agreement in advance
of each Month or in advance of each Day in accordance with the
nomination deadlines of Transco. Transporter, in its sole judgement,
may waive any nomination deadlines, on a non-discriminatory basis, if
Transporter determines that operating conditions permit. Such nominated
quantities shall be subject to confirmation by Transporter which shall
be based on the best operating information available to Transporter.
Such confirmed quantity shall be deemed the scheduled quantity. Shipper
and Transporter shall have scheduling personnel available to be
contacted seven days a week, twenty-four hours a day.
7.02 During any Day, Shipper may request to reschedule, on a prospective
basis, quantities scheduled pursuant to Section 7.01 above, provided
that such quantities are consistent with rescheduled quantities and
deadlines on Transco.
7.03 Shipper shall endeavor to balance receipts and deliveries as reasonably
as practicable so that the quantities delivered by Transco to
Transporter are consistent with the actual quantities taken by Shipper
at the Point(s) of Delivery. Shipper shall have the responsibility to
monitor daily receipts and deliveries during the Month based on the
best information available.
7.04 Transporter shall provide its latest estimated allocation data on
receipts and deliveries to all parties requesting such data. These
allocated quantities will be subject to change and the data is offered
for informational purposes only, and should not be relied on by Shipper
for any purposes whatsoever.
ARTICLE 8
SHIPPER'S RESPONSIBILITIES
Shipper recognizes that, as between it and Transporter, Shipper has sole control
over its physical takes of gas from Transporter's system and therefore has a
duty to refrain from taking delivery of unauthorized overrun quantities. Shipper
further recognizes that Shipper may cause hardship and economic damage to other
shippers in the event Shipper takes delivery of unauthorized overrun quantities
for which Shipper may be held accountable either through a direct cause of
action by such other shippers or as an impleaded or third party defendant in a
suit by such other shippers. In no event shall the payment of a penalty for an
overrun quantity pursuant to this Service Agreement be considered as giving
Shipper the right to take such unauthorized overrun quantity nor shall such
payment be considered as a substitute for all other rights and remedies
(including but not limited to consequential damages) available to any other
shipper against Shipper.
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ARTICLE 9
TRANSPORTER'S RESPONSIBILITIES
Transporter recognizes that it has a duty to use reasonable care and prudent
operating procedures to allow Shipper to schedule for delivery within its TCQ,
as adjusted pursuant to a Force Majeure situation or Operating Conditions, the
gas quantities available to Shipper up to the amount verified and confirmed by
Transporter based on the best operating information available to Transporter.
Transporter also recognizes that unless forces beyond Transporter 's control
(including, but not limited to, Force Majeure, or the failure of Shipper or
Shipper's gas supplier to deliver scheduled gas quantities into Transporter's
system) cause interference with Transporter's ability to redeliver, Transporter
has a duty to tender to Shipper for redelivery the gas quantities which
Transporter has verified and confirmed as available to Shipper. Transporter
further recognizes that a breach of its duties herein may cause hardship and
economic damage to Shipper, for which Shipper reserves all rights and remedies
(including but not limited to consequential damages), and for which Transporter
may be held accountable.
ARTICLE 10
RATES AND CHARGES
10.01 For firm transportation service provided to Shipper hereunder, Shipper
shall pay to Transporter each month the sum of the following charges:
(a) Reservation Charge: Shipper's TCQ multiplied by the
reservation rate applicable to deliveries in the rate zone in
which the gas is delivered and as set forth on currently
effective Sheet No. 1 of Transporter's tariff.
(b) Commodity Charge: The applicable commodity rate set forth on
currently effective Sheet No. 1 multiplied by the quantities
of gas (dts) delivered.
(c) Excess CFT Charge: The applicable rate set forth on currently
effective Sheet No. 1 multiplied by the excess CFT quantity
delivered during that month.
10.02 Transporter shall retain from the quantities of gas received on behalf
of Shipper hereunder any applicable fuel and line loss make-up
associated with the transportation service provided hereunder.
Transporter will evaluate any fuel retention percentages applicable to
Shipper's service on an annual basis and will make any necessary
filings with the NCUC to reflect any changes at least thirty (30) days
prior to April 1 of each calendar year.
10.03 Transporter shall have the right, from time-to-time, through filings
with the governmental agency having jurisdiction to seek to change the
rates or allowance for fuel, and to change the other terms and
conditions of this Service Agreement, without limitation or
reservation; provided, however, that (a) the character of firm service,
(b) the term, (c) the quantities, (d) the Point(s) of Receipt and
Delivery, and (e) the delivery pressure shall not be subject to change
hereunder without mutual agreement of the parties. Shipper shall have
the right to
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oppose any of the foregoing and to seek other changes to the terms and
conditions of this Service Agreement to the extent that Shipper is
legally permitted to do so under applicable provision(s) of law.
Notwithstanding the foregoing, Transporter agrees to propose in any
subsequent rate cases a cost allocation and/or rate design for firm
deliveries upstream of Burlington, North Carolina that reasonably
approximate the rates Shipper would have paid if the costs of the
existing firm service had remained in the utility rate bases of PSNC
and Piedmont and in the absence of the merger of Transporter and
Cardinal Pipeline Company, LLC.
ARTICLE 11
QUALITY OF GAS
11.01 The parties hereto recognize that the natural gas delivered for
transportation hereunder will necessarily be commingled in
Transporter's pipeline system with gas received from other sources, and
that the specific gas delivered to Transporter cannot be redelivered
for Shipper's account. It is further agreed that the natural gas
delivered to and by Transporter hereunder shall be merchantable natural
gas.
11.02 All gas delivered to Transporter for Shipper and redelivered by
Transporter to Shipper shall meet the quality standards for
transportation on the interstate pipeline system of Transco as amended
from time-to-time.
ARTICLE 12
MEASUREMENT AND MEASURING EQUIPMENT
12.01 The unit of the natural gas deliverable hereunder shall be a Dekatherm
of gas on the measurement basis hereinafter set forth.
12.02 The quantity and the Heating Value of the natural gas delivered by
Transporter to or for the account of Shipper or delivered by Shipper to
Transporter for redelivery shall be determined as follows:
(i) The unit of volume for the purpose of measurement shall be one
(1) Cubic Foot of gas at a temperature of 60 degrees
Fahrenheit and at an absolute pressure of fourteen and
seventy-three hundredths (14.73) pounds per square inch.
(ii) The unit of weight for the purpose of measurement shall be one
(1) pound mass of gas.
(iii) The average absolute atmospheric pressure shall be assumed to
be 14.73 pounds per square inch.
(iv) The temperature of the gas flowing through the meters, when
necessary for computing gas quantities, shall be determined by
the use of a recording thermometer or other temperature
measuring device. The arithmetic average of the temperature
recorded each 24-hour day, or so much of the 24 hours as gas
has been flowing, shall be used
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in computing gas quantities or instantaneous temperature
measurements may be applied to metering instruments to provide
the quantity computation.
(v) The specific gravity of the gas flowing through the meters,
when necessary for computing gas quantities, shall be, unless
otherwise agreed upon, determined by the use of a recording
gravitometer or an online process type gas chromatograph. The
arithmetic average of the 24-hour record, or so much of the 24
hours as gas has been flowing, or continuous instantaneous
specific gravity measurement may be applied to metering
instruments to provide the quality computation.
(vi) The deviation of the gas from Ideal Gas Laws shall be
calculated following the recommendations of the ANSI/API 2530
"Orifice Metering of Natural Gas and Other Related Hydrocarbon
Fluids" (A.G.A. Report No. 3) including the A.G.A. Manual for
Determination of Supercompressibility Factors of natural Gas
or the A.G.A. Transmission Measurement Committee Report No. 8
"Compressibility and Supercompressibility for Natural Gas and
Other Hydrocarbon Gases." If the composition of the gas is
such as to render the above procedure inapplicable, other
methods for determination of the deviation factors, mutually
agreed upon by Shipper and Transporter, shall be used.
(vii) The Heating Value shall be determined by either (1) the use of
a suitably located and acceptable make gas chromatograph or
(2) calculation from a fractional analysis, or (3) methods
outlined in A.G.A. Gas Measurement Committee Report No. 5,
latest edition, or (4) other methods mutually acceptable.
Dekatherms delivered shall be determined by either (1)
multiplying the Mcf delivered by a fraction the numerator of
which is the Btu per cubic foot and the denominator of which
is 1,000 or (2) multiplying the pounds mass delivered by a
fraction the numerator of which is the Btu per pound mass and
the denominator of which is 1,000,000.
12.03 Unless otherwise agreed to, Transporter will install, maintain, own and
operate, at its own expense, at or near each Point of Receipt and each
Point of Delivery, measuring stations properly equipped with standard
orifice meters, flange connections, orifice plates and other necessary
measuring equipment or other standard type meter suitable for the
purpose by which the quantity of natural gas shall be measured and
determined. The Heating Value of natural gas received or delivered
shall be measured and determined as provided above. Orifice meters
where used shall be installed and operated in accordance with ANSI/API
"Orifice Metering of Natural Gas and Other Related Hydrocarbon Fluids,"
latest revision, and shall include the use of straightening vanes.
12.04 Shipper acting jointly with Transporter may install, maintain and
operate, at its own expense, such check measuring equipment as desired,
provided that such equipment shall be so installed as not to interfere
with the operation of Transporter 's measuring equipment.
12.05 Each party shall have the right to be present at the time of
installing, reading, cleaning, changing, repairing, inspecting,
testing, calibrating, or adjusting done in connection with
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measuring equipment involved in billing and used in measuring or
checking the measurement of receipts and deliveries. The records from
such measuring equipment shall remain the property of their owner, but
upon request, each will submit to the other its records and charts,
together with calculations therefrom for inspection and verification,
subject to return within ten (10) days after receipt thereof.
12.06 All installations of measurement equipment applying to or affecting
receipts and deliveries shall be made in such manner as to permit an
accurate determination of the quantity of natural gas delivered and
ready verification of the accuracy of measurement. Care shall be
exercised by Transporter and Shipper in the installation, maintenance
and operation of pressure regulating equipment so as to prevent any
inaccuracy in the determination of the quantity of gas received or
delivered hereunder.
12.07 In the event a meter is out of service, or registering inaccurately,
the quantity of natural gas received or delivered shall be determined,
(i) By using the registration of any check meter or meters if
installed and accurately registering, or, in the absence of (i),
(ii) By correcting the error or the percentage of error if
ascertainable by calibration, test, or mathematical calculation,
or in the absence of both (i) and (ii), then
(iii) By estimating the quantity of receipts or deliveries during
periods under similar conditions when the meter was registering
accurately.
12.08 The accuracy of Transporter 's measurement equipment shall be verified
by Transporter at reasonable intervals, and, if requested, in the
presence of representatives of Shipper, but Transporter shall not be
required as a matter of routine to verify the accuracy of such
equipment more frequently than once in any thirty (30) day period.
12.09 If, upon test, any measurement equipment, including recording gas
chromatograph, is found to be in error not more than two percent (2%),
previous recording of such equipment shall be considered accurate in
computing receipts and deliveries; but such equipment shall be adjusted
at once to record correctly. If, upon test, any measurement equipment
shall be found to be inaccurate by an amount exceeding two percent (2%)
at a recording corresponding to the average hourly rate of flow for the
period since the last preceding test, then any previous recordings of
such equipment shall be corrected to zero error for any period which is
definitely known, but, in case the period is not known definitely or
agreed upon, such correction shall be for a period extending over
one-half of the time elapsed since the date of the last test, not
exceeding a correction period of 16 days.
12.10 Transporter and Shipper shall preserve all original or equivalent
electronic test data, charts, or other similar records for a period
required by the applicable rules of regulatory agencies having
jurisdiction.
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ARTICLE 13
TERM OF AGREEMENT
13.01 This Agreement shall be effective as of the date hereof and shall
continue in effect until the expiration of the twentieth (20th)
Contract Year, and year-to-year thereafter, subject to termination by
either party at the end of the Contract Year or any year thereafter
upon two years advance written notice to the other party.
13.02 Firm transportation service hereunder shall commence at the Effective
Time of the Merger between Transporter and Cardinal Pipeline Company,
LLC as defined in the Agreement and Plan of Merger, as amended.
ARTICLE 14
BILLING AND PAYMENT
14.01 Transporter shall render its xxxx on or before the first Day of each
Month for the Reservation Charges due for service rendered hereunder
during the preceding calendar Month. On or before the 10th day of each
Month, Transporter shall render its xxxx for any remaining charges for
gas services rendered during the preceding calendar Month. Such xxxx
shall include any Commodity Charges, Excess CFT Charges, any
adjustments to the charges billed on the first day of the Month, and
any penalties for unauthorized overruns applicable to the Month for
which the xxxx is rendered.
14.02 Transporter and Shipper shall each, upon request of the other, deliver
to the other for examination such pertinent records and charts as shall
be necessary to verify the accuracy of any statement, chart, or
computation made by either of them under or pursuant to any of the
provisions hereof.
14.03 Shipper, except as otherwise hereinafter provided, shall pay to
Transporter by wire transfer of immediately available funds on or
before the 10th day of each Month for the Reservation Charges due for
service rendered by Transporter hereunder during the preceding month
and billed by Transporter in the statement for such month, and on or
before the 20th day for each Month for any remaining charges for
services which are due hereunder. If the normal payment due date is a
Saturday, Sunday or holiday, this payment is due the following business
Day.
14.04 Should Shipper fail to pay all of the amount of any xxxx for service
hereunder when such amount is due, interest on the unpaid portion of
such amount shall accrue at the rate equal to the prime rate of
CitiBank, N.A. or its successor, calculated from the due date until the
date of payment. If such failure to pay continues for thirty (30) days
after payment is due, Transporter, in addition to any other remedy it
may have hereunder, may suspend further transportation of natural gas
hereunder until such amount is paid; provided, however, that if Shipper
in good faith shall dispute the amount of any such xxxx or any part
hereof, and shall pay to Transporter such amount as it concedes to be
correct, and at any time thereafter within thirty (30) days of a demand
made by Transporter, shall furnish good and sufficient surety
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bond, guaranteeing payment to Transporter of the amount ultimately
found to be due under such xxxx after a final determination, which may
be reached either by agreement between the parties, arbitration or
judgment for a court or by any regulatory authority having
jurisdiction, then Transporter shall not be entitled to suspend further
delivery of natural gas unless and until default be made in the
conditions of such bond.
14.05 If within twelve (12) months of the date of payment, it shall be found
that Shipper has been overcharged or undercharged in any form
whatsoever under the provisions hereof, and Shipper shall have actually
paid the xxxx(s) containing such overcharge or undercharge, then within
thirty (30) days after the final determination thereof, Transporter
shall refund the amount of any such overcharge with interest thereon at
the prime rate of the CitiBank N.A. or its successor from the time such
overcharge was paid to the date of refund, and Shipper shall pay the
amount of any such undercharge but without interest.
14.06 In the event an error is discovered in the amount billed in any
statement rendered by Transporter, such error shall be adjusted within
thirty (30) days of the determination thereof, provided that claim
therefor shall have been made within sixty (60) days from the date of
discovery of such error, but in any event, within twelve (12) months
from the date of payment.
14.07 If rendition of a xxxx to Shipper by Transporter is delayed beyond the
date specified herein, then Shipper shall pay such xxxx by wire
transfer within ten (10) days after rendition thereof.
ARTICLE 15
ASSUMPTION OF RISK
15.01 As between the parties hereto, Shipper shall be deemed to be in control
and possession of the gas to be transported hereunder until it shall
have been delivered to Transporter at the Point of Receipt; and Shipper
shall be deemed to be in control and possession of the gas to be
transported hereunder after delivery for Shipper's account at the Point
of Delivery. Transporter shall be deemed to be in control and
possession of such gas after the delivery thereof to Transporter at the
Point of Receipt and prior to delivery thereof for Shipper's account at
the Point of Delivery.
15.02 Transporter shall have no responsibility with respect to any gas to be
transported hereunder or on account of anything which may be done,
happen or arise with respect thereto until it is delivered into its
facilities at the Point of Receipt and after it is received for
Shipper's account at the Point of Delivery. Shipper shall have no
responsibility with respect to such gas or on account of anything which
may be done, happen or arise with respect thereto after causing the
delivery thereof to Transporter at the Point of Receipt and prior to
delivery thereof for Shipper's account at the Point of Delivery.
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ARTICLE 16
WARRANTIES
Shipper warrants for itself, its successors and assigns, that it will at the
time of delivery to Transporter for transportation have good and merchantable
title to or the legal right to tender all gas delivered hereunder free and clear
of all liens, encumbrances and claims. Shipper shall indemnify Transporter and
save it harmless from all suits, actions, debts, accounts, damages, costs,
losses and expenses arising from or out of adverse claims of any or all persons
to said gas, including claims for any royalties, taxes, license fees or charges
applicable to such gas or to the delivery thereof to Transporter for
transportation under this Service Agreement.
ARTICLE 17
FORCE MAJEURE
17.01 In the event of either party being rendered unable, wholly or in part,
by Force Majeure or Operating Conditions to carry out its obligations
other than (i) the obligation of Shipper to pay the monthly Reservation
Charge due Transporter (except as provided in 17.03 below), and (ii)
the obligation to make payment of amounts accrued and due at the time
thereof, it is agreed that on such party's giving notice and full
particulars of such Force Majeure or Operating Conditions in writing or
by telecopy to the other party within a reasonable time after the
occurrence of the cause relied on, the obligation of both parties, so
far as they are affected by such Force Majeure or Operating Conditions,
shall be suspended during the continuance of any inability so caused,
but for no longer period, and such cause shall so far as possible be
remedied with all reasonable dispatch. Neither party shall be liable in
damages to the other for any act, omission or circumstance occasioned
by, or in consequence of, Force Majeure or Operating Conditions, as
herein defined in this Service Agreement.
17.02 If, due to Force Majeure or Operating Conditions, Transporter is unable
to receive, transport or redeliver gas tendered by Shipper for
transportation or if Shipper is unable to deliver gas to Transporter,
then Transporter, upon providing as much notice as possible under all
of the circumstances, shall order reduction of Shipper's TCQ to the
extent necessary depending upon the type and location of the
occurrence, in accordance with the following procedures: Transporter
shall order allocation, to the extent necessary, of affected
transportation service to all shippers proportionate to each shipper's
TCQ. Where Transporter's ability to render service is impaired in a
particular segment of Transporter's system, then such allocation shall
be effected only in that segment of Transporter's system in which
service has been impaired.
17.03 Such causes or contingencies affecting the performance by either party,
however, shall not relieve it of liability unless such party shall give
notice and full particulars of such cause or contingency in writing or
by telecopy to the other party within a reasonable time after the
occurrence relied upon, nor shall such causes or contingencies
affecting the performance by either party relieve it of liability in
the event of its failure to use due diligence to remedy the situation
and remove the cause with all reasonable dispatch, provided that the
resolution of strikes, lockouts or other labor disputes shall be within
the sole discretion of the parties involved therein. Such causes or
contingencies affecting the performance by either party
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shall not relieve Shipper from its obligations to make payments of
monthly Reservation Charge except to the extent of Transporter's
negligence or willful misconduct.
ARTICLE 18
NOTICES
Notice to either party shall be in writing and shall be considered as duly
delivered when mailed to the other party at the following address:
If to Shipper:
Piedmont Natural Gas Company, Inc.
P. O. Xxx 00000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Senior Vice President - Gas Supply and Services
Facsimile number: (000) 000-0000
If to Transporter:
Cardinal Extension Company, LLC
c/o Cardinal Operating Company
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Vice President, Customer Service
Facsimile number: _________________
Such addresses may be changed from time-to-time by mailing appropriate notice
thereof to the other party by certified or registered mail.
ARTICLE 19
MISCELLANEOUS
19.01 Transporter grants the right to Shipper to direct tie-ins between its
distribution system and Transporter's intrastate pipeline for the
purpose of serving its franchise area subject to the negotiation of
mutual agreeable terms and conditions (including reimbursement
arrangements and/or incremental charges and the construction, operation
and maintenance specifications for such tie-ins) which will be set
forth in an Interconnect and Reimbursement Agreement to be negotiated
and executed by Shipper and Transporter.
19.02 This Agreement reflects the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral and written, among the parties with
respect to the subject matter hereof. This Agreement can be amended,
restated or supplemented only by the written agreement of Transporter
and Shipper.
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19.03 No waiver by either party of any default by the other party in the
performance of any provision, condition or requirement herein shall be
deemed to be a waiver of, or in any manner release the other party
from, performance of any other provision, condition or requirement
herein, nor shall such waiver be deemed to be a waiver of, or in any
manner a release of, the other party from future performance of the
same provision, condition or requirement. Any delay or omission of
either party to exercise any right hereunder shall not impair the
exercise of any such right, or any like right, accruing to it
thereafter. No waiver of a right created by this Agreement by one party
shall constitute a waiver of such right by the other party except as
may otherwise be required by law with respect to persons not parties
hereto. The failure of one party to perform its obligations hereunder
shall not release the other party from the performance of such
obligations.
19.04 This Agreement may be assigned by Shipper without the prior consent of
Transporter provided that Shipper remains responsible for any and all
obligations under this Agreement.
19.05 This Agreement and the obligations of the parties hereunder are subject
to all applicable laws, rules, orders and regulations of any
governmental authorities having jurisdiction, and to the extent of
conflict, such laws, rules, orders and regulations of governmental
authorities having jurisdiction shall control.
19.06 Any provision of this Agreement that is prohibited or unenforceable
shall be ineffective to the extent of that prohibition or
unenforceability without invalidating the remaining provisions hereof
or affecting the validity or enforceability of that provision in any
other jurisdiction.
19.07 This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument.
19.08 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NORTH CAROLINA. EXCLUDING, HOWEVER, ANY
CONFLICT OF LAWS RULES OR PRINCIPLES WHICH MIGHT REFER THE CONSTRUCTION
OR OPERATION OF THE TERMS OF THIS AGREEMENT TO THE LAWS OF ANOTHER
STATE.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
CARDINAL OPERATING COMPANY,
as Operator of
Cardinal Extension Company, LLC
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Xxxxx X. Xxxxxxx
Vice President
PIEDMONT NATURAL GAS COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
Senior Vice President
Gas Supply and Services
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