FIRM STORAGE SERVICE AGREEMENT
THIS AGREEMENT, made and entered into as of this 25th day of February,
1997, by and between VIRGINIA GAS PIPELINE COMPANY, a Virginia corporation,
hereinafter referred to as "VGPC," and Natural Gas Utility District of
Xxxxxxx County, a public utility district of the State of Tennessee,
hereinafter referred to as "Xxxxxxx."
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, Xxxxxxx 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, Xxxxxxx 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, Xxxxxxx has the right to maintain an aggregate
storage quantity of up to 5,000 dth (the "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 injection 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
Xxxxxxx 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 Xxxxxxx' Storage Gas
Balance. Xxxxxxx may withdraw during the Withdrawal Period any quantity up
to the MDWQ.
ARTICLE II
CONDITIONS OF SERVICE
2.1 Xxxxxxx shall pay VGPC $0.05 per each dth injected and $0.05 per
each dth withdrawn. Subject to the provisions of Section 2.3, Xxxxxxx 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.
2.2 VGPC shall reimburse Xxxxxxx for any injected gas that cannot be
withdrawn for delivery to Xxxxxxx at Inside FERC index for deliveries into
Tennessee Gas, Zone 1, plus interruptible transportation on Tennessee Gas and
East Tennessee. Any gas not withdrawn at Xxxxxxx' option shall be carried
over to the following year's storage balance.
2.3 On May 1, 1997 and each May 1 thereafter, VGPC shall pro-rate the
Annual Storage Charge for the year retroactively and prospectively to reflect
any deficiencies in performance in the prior Withdrawal Period as follows:
Adjusted Annual Actual MSQ Actual MDWQ
= ------------ X ------------- X $5.64 X 5,000
Storage Charge Contract MSQ Contract MDWQ
Xxxxxxx' election to use the storage service at levels below the MSQ and MDWQ
shall not be considered deficiencies in performance.
2.4 Xxxxxxx 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 Xxxxxxx at the Delivery Points meets the minimum quality
specifications of East Tennessee Natural Gas Company's FERC Tariff.
2.5 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:
Virginia Gas Pipeline Company
X.X. 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
Natural Gas Utility District of Xxxxxxx County
000 Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Telephone 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 Xxxxxxx an invoice for services performed during the
preceding month.
4.2 Xxxxxxx shall pay the amounts invoiced by the twenty-fifth (25) day
of each month in which said invoice is received by Xxxxxxx or within ten (10)
days of Xxxxxxx' receipt of VGPC's invoice.
4.3 Should Xxxxxxx fail to pay all of the amount of any invoice as
herein provided when such amount is due, Xxxxxxx 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 Xxxxxxx' account until such amount
is paid; provided, however, that if Xxxxxxx, in good faith, disputes the
amount of any such invoice or part thereof and pays to VGPC such amounts as
Xxxxxxx concedes to be correct, and, at any time thereafter within thirty
(30) days of a demand made by VGPC, furnishes a good and sufficient surety
bond in an amount and with sureties satisfactory to VGPC conditioned upon the
payment of any amounts ultimately found due upon such invoices 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 until default be made
in the
conditions on such bond or 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.
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 Xxxxxxx' stored hereunder for the recovery
of any and all amounts which may become due and payable under this agreement.
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 March 1, 2007 (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
INDEMNITY
6.1 Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx at the Delivery Points pursuant
to Sections 1.1 and 1.2 hereof.
6.2 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
judgment (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 VII
FORCE MAJEURE
7.1 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.
7.2 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.
7.3 Immediately upon becoming aware of the occurrence of an 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
appear to VGPC that a storage area is losing pressure and may no longer be
viable for storage, it may immediately notify Xxxxxxx (by fax, phone or other
means) and Xxxxxxx 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 Xxxxxxx for the 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.
7.4 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.
7.5 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 VIII
OPERATIONAL FLOW ORDERS
8.1 Xxxxxxx 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 Xxxxxxx in violation of this Agreement; and (d) to prevent
damage to a storage field.
8.2 Upon the issuance of an OFO, Xxxxxxx must take the actions set forth
in the OFO, which may include, but are not limited to, reducing its
withdrawals from storage.
ARTICLE IX
SUCCESSORS AND ASSIGNS
9.1 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 Xxxxxxx
or VGPC. 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 prior written
consent of the other party.
ARTICLE X
MISCELLANEOUS
10.1 This Agreement constitutes the entire Agreement between the parties
and no waiver by VGPC or Xxxxxxx 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.
10.2 The Laws of the Commonwealth of Virginia shall govern the validity,
construction, interpretation, and effect of this Agreement.
10.3 No modification of a supplement to the terms and provisions hereof
shall be or become effective except by execution of a supplementary written
agreement between the parties.
10.4 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: NATURAL GAS UTILITY DISTRICT
OF XXXXXXX COUNTY
[ILLEGIBLE]
By: Xxxxx X. Xxxxx
--------------------
Its: General Manager
-------------------
Attest: VIRGINIA GAS PIPELINE COMPANY
By: X. X. Xxxxxxx
--------------------
[ILLEGIBLE]
Its: President
-------------------
EXHIBIT A
to that certain Gas Storage Agreement dated February 25, 1997 by and between
NATURAL GAS UTILITY DISTRICT OF XXXXXXX COUNTY
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, VA. 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:
250 Dth
Injection Period runs from on or about April 5 of each year to on or about
October 26 of each year (the "Summer Period"). Injections may be made from
October 27 to April 4 of each year (the "Winter Period") on a best efforts,
interruptible basis with the prior consent of VGPC.
Maximum Daily Withdrawal Quantity, in dth:
500 Dth
Withdrawal Period runs from November 15 through March 15 of each year.
Withdrawals may be made from November 1 to November 15, and from March 15
through March 31 of each year on a best efforts, interruptible basis.
