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Aquila Gas Pipeline Corporation
File Number 1-12426
Exhibit 10.26
Agency Agreement Relating to Certain Marketing and Trading Services
between Aquila Energy Marketing Corporation and Aquila Gas Pipeline
Corporation, et al
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AGENCY AGREEMENT RELATING TO CERTAIN
MARKETING AND TRADING SERVICES
BETWEEN AQUILA ENERGY MARKETING CORPORATION AND
AQUILA GAS PIPELINE CORPORATION, ET AL
This Agreement is entered into as of January 1, 1999, between Aquila Energy
Marketing Corporation, a Delaware corporation (AEM), and Aquila Gas Pipeline
Corporation, a Delaware corporation (AQP), and its wholly owned subsidiaries,
including but not limited to Aquila Southwest Pipeline Corporation, Aquila
Southwest Marketing, L. P., and Tristar Gas Company, L. P. (AQP and its
subsidiaries shall be referred to collectively as Aquila Southwest).
The parties agree as follows:
1. From and after the date of this Agreement, AEM will have the exclusive
right and obligation to market, sell and trade all natural gas owned,
controlled or purchased by Aquila Southwest, and Aquila Southwest hereby
appoints AEM as its exclusive agent for such purposes. Aquila Southwest
shall compensate AEM for the direct and indirect costs, including employee
incentive amounts, incurred by AEM related to this service. Such costs
shall be charged pursuant to the Agreement Relating to Services and Other
Matters entered into between Aquila Energy Corporation and Aquila Gas
Pipeline Corporation as of August 1, 1993.
2. It is understood that, for purposes of tracking the services provided to
Aquila Southwest hereunder, AEM will establish a portfolio of business
that will be identified internally to AEM as "AEM Texas." AEM Texas will
replicate the scope of trading and marketing activities currently done by
Aquila Southwest. It is the intent of the parties that all AEM Texas
trading and marketing activities will be performed by an AEM staff that is
physically located in office space provided by AQP.
3. As part of the effectuation of this Agreement, personnel currently
employed in the marketing, sales and trading functions within Aquila
Southwest may be offered employment with AEM. AEM may but is not obligated
to hire these employees. This Agreement shall not create any third party
beneficiary rights by any past, current or future employees of Aquila
Southwest.
4. As agent for Aquila Southwest, AEM shall sell all of Aquila Southwest's
natural gas according to an existing agreement between Aquila Southwest
Marketing, L. P., and Aquila Southwest Pipeline Corporation, dated March
1, 1985, as amended (Transfer Agreement). Aquila Southwest agrees the
Transfer Agreement shall not be modified during the term of this Agreement
without the consent of AEM.
5. If necessary in order to effectuate this Agreement, all of Aquila
Southwest's inter- and intrastate transportation, storage and related
agreements shall be assigned to AEM, or AEM shall be designated as agent
to act for Aquila Southwest. Revenues and costs related to the use of
these agreements shall be part of AEM Texas.
6. Aquila Southwest shall be provided speculative trading limits measured by
Value at Risk in accordance to AEM's trading policy. Aquila Southwest
shall be given access to RiskWorks reports that are limited to the
positions and profit and loss of the AEM Texas portfolio. AEM will meet on
an as needed basis with senior management of AQP to discuss issues
relative to the performance and strategic direction of AEM's marketing and
trading efforts as they relate to this Agreement.
7. Aquila Southwest and AEM shall each have full rights to audit the books
and records of AEM Texas in order to verify the Weighted Average System
Price (WASP) and Gross Margin to meet Aquila Southwest's obligations under
its gas purchase contracts and to insure compliance with Paragraphs 1 and
2 of this Agreement. In addition, Aquila Southwest shall have the right
upon written request to have AEM furnish all documents relative to the
WASP as necessary to satisfy Aquila Southwest's supplier audit needs.
8. This Agreement shall continue for a period of two (2) years (Initial
Term), and shall continue thereafter on a year-to-year basis (Extended
Term). Either party may terminate this Agreement by giving the other six
(6) months' notice prior to the end of the Initial Term or any Extended
Term. If Aquila Energy Corporation or any of its affiliates should cease
to own at least fifty (50) percent of the outstanding shares of AQP,
either party shall have the right to terminate this Agreement on sixty
(60) days' notice, effective on or after the date when such ownership
falls below fifty (50) percent. Upon receipt of such notice of
cancellation, the parties shall meet and determine an appropriate
transition plan to return responsibility for sales and transaction
management back to Aquila Southwest. Upon termination, all rights and
obligations contained within AEM Texas shall be assumed by Aquila
Southwest.
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9. Any notices required under this Agreement shall be in writing and shall be
valid when postmarked or sent via facsimile as follows:
To AEM:
[Monthly volume/pricing communications]
Aquila Energy Marketing Corporation
Attention: Xxxx Xxxxx
000 X. X. Xxxx 000, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Facsimile No. 000-000-0000
[Other notices]
Aquila Energy Marketing Corporation
Attention: Contracts Department
0000 X. 000 Xxxxxx
Xxxxx, XX 00000
Facsimile No. 000-000-0000
To Aquila Southwest:
Aquila Gas Pipeline Corporation
Attention: Xxx Xxxxxxx
000 X. X. Xxxx 000, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Facsimile No. 000-000-0000
Signed as of the date first written above.
Aquila Energy Marketing Corporation Aquila Gas Pipeline Corporation,
Aquila Southwest Pipeline Corporation,
Aquila Southwest Marketing, L. P., and
Tristar Gas Company, L. P.
By: /s/ Xx X. Xxxxx By: /s/ Xxx Xxxxxxx
------------------------- ------------------------
Name: Xx X. Xxxxx Name: Xxx Xxxxxxx
Title: President & COO Title: President
