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EXHIBIT 10.24
FIRM STORAGE SERVICE AGREEMENT
THIS AGREEMENT, made and entered into as of this 7 day of November, 1996,
by and between VIRGINIA GAS PIPELINE COMPANY, a Virginia corporation,
hereinafter referred to as "VGPC," and CITIZENS GAS UTILITY DISTRICT, a public
utility district of the State of Tennessee, hereinafter referred to as
"Citizens."
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, Citizens 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, Citizens 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, Citizens has the right to maintain an aggregate
storage quantity of up to 3,000 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.
1.2 VGPC shall redeliver a thermally equivalent quantity of gas to
Citizens 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 Citizens' Storage Gas Balance.
Citizens may withdraw during the Withdrawal Period any quantity up to the MDWQ.
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ARTICLE II
CONDITIONS OF SERVICE
2.1 Citizens shall pay VGPC $0.05 per each dth injected and $0.05 per
each dth withdrawn. Subject to the provisions of Section 2.3, Citizens 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 Citizens for any injected gas that cannot be
withdrawn for delivery to Citizens 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 Citizens' 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
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Storage Charge = Contract MSQ X Contract MDWQ X $5.64 X 3,000
Citizens's election to use the storage service at levels below the MSQ and MDWQ
shall not be considered deficiencies in performance.
2.4 Citizens 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 Citizens 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:
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Virginia Gas Pipeline Company
X.X. Xxx 0000
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone Number: (000) 000-0000, extension 17
Facsimile Machine Number: (000) 000-0000
Citizens Gas Utility District
X.X. Xxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
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 Citizens an invoice for services performed during the preceding
month.
4.2 Citizens shall pay the amounts invoiced by the twenty-fifth (25th)
day of each month in which said invoice is received by Citizens or within ten
(10) days of Citizens' receipt of VGPC's invoice.
4.3 Should Citizens fail to pay all of the amount of any invoice as
herein provided when such amount is due, Citizens 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 Citizens' account until such amount is
paid; provided, however, that if Citizens, in good faith, disputes the amount
of any such invoice or part thereof and pays to VGPC such amounts as Citizens
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
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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 Citizens 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, 2006 (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 Citizens 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 Citizens 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 Citizens 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.
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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 Citizens (by fax, phone or other means) and Citizens 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 Citizens 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 Citizens 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 Citizens in violation of this Agreement; and (d) to
prevent damage to a storage field.
8.2 Upon the issuance of an OFO, Citizens must take the actions set
forth in the OFO, which may include, but are not limited to, reducing its
withdrawals from storage.
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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 Citizens 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 Citizens 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: CITIZEN GAS UTILITY DISTRICT
By: /s/ XXXXXX XXXXXX
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Its: General Manager
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Attest: VIRGINIA GAS PIPELINE COMPANY
By: /s/ X.X. XXXXXXX
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Its: President
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EXHIBIT A
to that certain Gas Storage Agreement dated November 7, 1996 by and between
CITIZENS GAS UTILITY DISTRICT
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:
100 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 consent of VGPC.
Maximum Daily Withdrawal Quantity, in dth:
300 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.
