Exhibit 10 (b)(b)(b)
FIRM STORAGE SERVICE AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of June, 2001,
by and between VIRGINIA GAS PIPELINE COMPANY, a Virginia corporation,
hereinafter referred to as "VGPC," and Roanoke Gas Company, a Virginia
corporation, hereinafter referred to as "RGC".
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 Virginia State Corporation Commission of Virginia ("VSCC"), and under
part 284 of the Regulations of the Federal Energy Regulatory Commission
("FERC"); and
WHEREAS, RGC has requested storage service on a firm basis pursuant to
Rate Schedule FSS in compliance with Section 3 of VGPC's VSCC Gas Tariff
contingent upon pipeline service from VGPC being made available to RGC at a
delivery point on its distribution system in accordance with a firm pipeline
service agreement dated June 1, 2001; and
WHEREAS, RGC 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
SERVICE TO BE RENDERED
1.1 Subject to the terms and provisions of this Agreement and the VSCC
Gas Tariff applicable thereto, RGC has the right to maintain an aggregate
storage quantity of up to 360,000 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 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. The MSQ is separated into
the following levels of service, on the dates specified.
Firm Storage Service (Roanoke):
Maximum Daily Quantity Capacity Commencement Date
---------------------- -------- -----------------
2,000 Dth 180,000 Dth June 1, 2001
Addt'l. 2,000 Dth Addt'l l80,000 Dth April 1, 2002
This will result in the following cumulative service levels:
Firm Storage Service (Roanoke):
Maximum Daily Quantity Capacity Commencement Date
---------------------- -------- -----------------
2,000 Dth 180,000 Dth June 1, 2001
4,000 Dth 360,000 Dth April 1, 2002
1.2 VGPC shall redeliver a thermally equivalent quantity of gas to RGC
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 RGC's Storage Gas Balance. RGC may withdraw during the
Withdrawal Period any quantity up to the MDWQ.
ARTICLE II
CONDITIONS OF SERVICE
2.1 RGC shall pay VGPC $0.05 per each Dth injected and $0.05 per each
Dth withdrawn. Subject to the provisions of Section 2.3, RGC will pay VGPC an
annual storage charge ("Annual Storage Charge") which shall be the product of
$0.85 multiplied by the Maximum Storage Quantity, which fee shall be payable in
twelve (12) equal monthly installments.
2.2 VGPC shall reimburse RGC for any injected gas that cannot be
withdrawn for delivery to RGC 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 RGC's option shall be carried over to the
following year's storage balance.
2.3 On May 1, 2002 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 MDWO
---------- -----------
Storage Charge = Contract MSQ x Contract MDWQ x $0.85 x available capacity
RGC's election to use the storage service at levels below the MSQ and MDWQ shall
not be considered deficiencies in performance.
2.4 RGC 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 RGC
at the Delivery Points meets the minimum quality specifications of East
Tennessee Natural Gas Company's FERC Tariff.
2
2.5 The measurement of quantities for billing purposes, in MMBtu,
delivered to or received from VGPC shall be performed by VGPC.
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. Any notice,
request, demand, statement or xxxx respecting this Agreement shall be in
writing.
VIRGINIA GAS PIPELINE COMPANY
X.X. Xxx 0000
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, General Manager
Telephone Number: (000) 000-0000, extension 247
Facsimile Machine Number: (000) 000-0000
ROANOKE GAS COMPANY
X.X. Xxx 00000
000 Xxxxxxx Xxxxxx XX
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
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 RGC an invoice for services performed during the preceding
month.
4.2 RGC shall pay the amounts invoiced by the twenty-fifth (25th) day
of each month in which said invoice is received by RGC or within ten (10) days
of RGC's receipt of VGPC's invoice.
4.3 Should RGC fail to pay the entire amount of any invoice as herein
provided when such amount is due, RGC 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
3
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 RGC's account until such amount is paid; provided,
however, that if RGC, in good faith, disputes the amount of any such invoice or
part thereof and pays to VGPC such amounts as RGC 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 RGC stored hereunder for the recovery of any
and all amounts that 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 of 16 years from the commencement of service to each
delivery point as described in Exhibit A (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.
5.2 RGC may terminate this Agreement prior to the Termination Date by
substituting pipeline capacity, which VGPC may construct to provide
interconnections to other receipt points on other pipelines. Terminating this
Agreement and substituting pipeline capacity which VGPC may construct shall be
contingent on VGPC's ability to remarket the storage service contemplated under
this Agreement. VGPC will remarket this storage service on a best efforts
4
basis upon receiving notice from RGC requesting pipeline capacity if
contemplated pipelines are constructed.
5.3 RGC may terminate this Agreement if the Agreement for firm pipeline
service dated June 1, 2001 is terminated.
ARTICLE VI
INDEMNITY
6.1 RGC 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 RGC 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 RGC 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
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 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 VSCC 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
5
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 RGC (by fax, phone or other means) and RGC 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
RGC 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 RGC 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 over deliveries or under deliveries
by RGC in violation of this Agreement; and (d) to prevent damage to a storage
field.
8.2 Upon the issuance of an OFO, RGC 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 RGC 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.
6
ARTICLE X
MISCELLANEOUS
10.1 This Agreement constitutes the entire Agreement between the
parties and no waiver by VGPC or RGC 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 or 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: ROANOKE GAS COMPANY
By: s/Xxxx X. Xxxxxxxxxx, III
Its: Chairman and CEO
Attest: VIRGINIA GAS PIPELINE COMPANY
By: s/Xxxxxx X. Xxxxx
Its: General Manager
7
EXHIBIT "A"
to that certain Firm Storage Service Agreement dated June 1, 2001 by and between
ROANOKE GAS COMPANY
and
VIRGINIA GAS PIPELINE COMPANY
Delivery Points:
1. Saltville receipt/delivery point, Xxxxx County, Virginia. For
injections, ETNG Meter Number 7597766; 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. The Virginia Gas Pipeline Company P-25 interconnection at Saltville
for injections and withdrawals.
Maximum Daily Injection Quantity, in Dth:
1,400 Dth commencing June 1, 2001 through October 31, 2001
2,400 Dth commencing April 1, 2002
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 consent of VGPC.
Maximum Daily Withdrawal Quantity, in Dth:
2,000 Dth commencing November 1, 2001 through March 31, 2002
4,000 Dth commencing November 1, 2002
Withdrawal Period runs from November 1 through March 31 of each year.
Withdrawals may be made before November 1 and after March 31 of each year on a
best efforts, interruptible basis.
