UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
---------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- -------------------
Commission file number 1-12859
-----------------------------------------------------
CTG RESOURCES, INC.
----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Connecticut 06-1466463
----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Columbus Boulevard, Hartford, Connecticut 06103
----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(860) 727-3010
----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report).
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date (applicable only
to Corporate Issuers). Number of shares of common stock outstanding as of
the close of business on August 1, 1998: 8,652,171.
<PAGE>
FINANCIAL STATEMENTS
CTG RESOURCES, INC.
The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although the Company believes that
the disclosures are adequate to make the information presented not
misleading, it is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's annual report on Form 10-K. In the opinion of the
Company, all adjustments necessary to present fairly the consolidated
financial position of CTG Resources, Inc. as of June 30, 1998 and 1997 and
the results of its operations and its cash flows for the three months, nine
months and twelve months ended June 30, 1998 and 1997 have been included.
The results of operations for such interim periods are not necessarily
indicative of the results for the full year.
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
June 30, Sept. 30, June 30,
ASSETS 1998 1997 1997
------ --------- --------- ---------
<S> <C> <C> <C>
Plant and Equipment:
Regulated energy $ 439,232 $ 423,087 $ 415,023
Unregulated energy 63,241 61,163 60,935
Construction work in progress 1,702 7,703 6,107
--------- --------- ---------
504,175 491,953 482,065
Less-Allowance for depreciation 173,811 160,313 157,097
--------- --------- ---------
330,364 331,640 324,968
--------- --------- ---------
Investments, at equity 11,656 11,530 11,538
--------- --------- ---------
Current Assets:
Cash and cash equivalents 4,893 4,458 16,877
Accounts and notes receivable 42,257 28,726 39,265
Allowance for doubtful accounts (4,577) (3,439) (5,150)
Accrued utility revenue 3,834 4,624 3,436
Inventories 13,585 17,584 9,693
Prepaid expenses 4,973 8,903 5,348
--------- --------- ---------
64,965 60,856 69,469
--------- --------- ---------
Deferred Charges and Other Assets:
Unrecovered future taxes 10,467 17,263 18,642
Recoverable transition costs 139 839 1,213
Other assets 32,416 22,245 22,056
--------- --------- ---------
43,022 40,347 41,911
--------- --------- ---------
$ 450,007 $ 444,373 $ 447,886
========= ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS (Concluded)
(Thousands of Dollars)
June 30, Sept. 30, June 30,
CAPITALIZATION AND LIABILITIES 1998 1997 1997
------------------------------ --------- --------- ---------
<S> <C> <C> <C>
Capitalization:
Common Stock $ 67,490 $ 120,409 $ 120,117
Retained Earnings 61,394 49,924 56,969
--------- --------- ---------
128,884 170,333 177,086
Unearned compensation -
Restricted stock awards (745) (1,034) (1,136)
--------- --------- ---------
Common stock equity 128,139 169,299 175,950
Preferred stock, not subject to
mandatory redemption 879 884 884
Long-term debt 184,853 126,787 135,447
--------- --------- ---------
313,871 296,970 312,281
--------- --------- ---------
Current Liabilities:
Current portion of long-term debt 6,587 1,487 13,759
Notes Payable 17,000 27,500 -
Accounts payable and accrued expenses 26,400 36,968 29,147
Refundable purchased gas costs 8,685 4,714 12,586
Accrued liabilities 6,345 4,531 2,667
--------- --------- ---------
65,017 75,200 58,159
--------- --------- ---------
Deferred Credits:
Deferred income taxes 48,061 44,302 48,016
Unfunded deferred income taxes 10,467 17,263 18,642
Investment tax credits 2,817 2,982 3,038
Refundable taxes 4,290 3,491 3,486
Other 5,484 4,165 4,264
--------- --------- ---------
71,119 72,203 77,446
--------- --------- ---------
$ 450,007 $ 444,373 $ 447,886
========= ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars except for per share data)
Three Months Ended
June 30,
-----------------------------
1998 1997
---------- ----------
<S> <C> <C>
Operating Revenues $ 48,370 $ 53,234
Less: Cost of Energy 25,991 27,689
State Gross Receipts Tax 1,547 1,815
---------- ----------
Operating Margin 20,832 23,730
---------- ----------
Other Operating Expenses:
Operations & maintenance expenses 11,850 13,666
Depreciation 4,759 4,621
Income taxes (1,372) 247
Other taxes 1,820 1,854
---------- ----------
17,057 20,388
---------- ----------
Operating Income 3,775 3,342
---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 13 25
Equity in partnership earnings 856 701
Other income (126) 259
Income Taxes (457) (303)
---------- ----------
286 682
---------- ----------
Interest and Debt Expense 3,882 3,366
---------- ----------
Net Income 179 658
Less-Dividends on Preferred Stock 15 15
---------- ----------
Net Income Applicable to Common Stock $ 164 $ 643
========== ==========
Income Per Average Share of
Common Stock $ 0.02 $ 0.06
========== ==========
Dividends Per Share of Common Stock $ 0.25 $ 0.38
========== ==========
Average Common Shares Outstanding
During the Period 8,652,171 10,634,496
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CTG RESOURCES, INC. "UNAUDITED"
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars except for per share data)
Nine Months Ended
June 30,
-----------------------------
1998 1997
---------- ----------
<S> <C> <C>
Operating Revenues $ 246,182 $ 267,184
Less: Cost of Energy 131,906 147,102
State Gross Receipts Tax 8,641 9,956
---------- ----------
Operating Margin 105,635 110,126
---------- ----------
Operating Expenses:
Operations & maintenance expenses 41,228 42,183
Depreciation 14,239 13,573
Income taxes 15,112 19,682
Other taxes 5,640 5,875
---------- ----------
76,219 81,313
---------- ----------
Operating Income 29,416 28,813
---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 48 95
Equity in partnership earnings 2,519 2,187
Other income/(deductions) (1,683) (596)
Income Taxes (523) (739)
---------- ----------
361 947
---------- ----------
Interest and Debt Expense 11,748 9,697
---------- ----------
Net Income 18,029 20,063
Less-Dividends on Preferred Stock 46 46
---------- ----------
Net Income Applicable to Common Stock $ 17,983 $ 20,017
========== ==========
Income Per Average Share of
Common Stock $ 2.01 $ 1.88
========== ==========
Dividends Per Share of Common Stock $ 0.75 $ 1.14
========== ==========
Average Common Shares Outstanding
During the Period 8,945,211 10,630,668
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CTG RESOURCES, INC. "UNAUDITED"
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of dollars except for per share data)
Twelve Months Ended
June 30,
-----------------------------
1998 1997
---------- ----------
<S> <C> <C>
Operating Revenues $ 284,563 $ 307,525
Less: Cost of Energy 151,589 172,114
State Gross Receipts Tax 9,792 11,159
---------- ----------
Operating Margin 123,182 124,252
---------- ----------
Operating Expenses:
Operations & maintenance expenses 55,968 56,048
Depreciation 18,850 18,042
Income taxes 12,389 14,074
Other taxes 7,488 7,778
---------- ----------
94,695 95,942
---------- ----------
Operating Income 28,487 28,310
---------- ----------
Other Income (Deductions):
Allowance for equity funds used
during construction 79 128
Equity in partnership earnings 3,242 2,997
Other deductions (1,121) (436)
Nonrecurring items - 892
Income Taxes (753) (1,298)
---------- ----------
1,447 2,283
---------- ----------
Interest and Debt Expense 14,893 13,035
---------- ----------
Net Income 15,041 17,558
Less-Dividends on Preferred Stock 62 62
---------- ----------
Net Income Applicable to Common Stock $ 14,979 $ 17,496
========== ==========
Income Per Average Share of
Common Stock $ 1.60 $ 1.65
========== ==========
Dividends Per Share of Common Stock $ 1.13 $ 1.52
========== ==========
Average Common Shares Outstanding
During the Period 9,371,371 10,630,593
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Three Months Ended
June 30,
---------------------------
<S> <C> <C>
1998 1997
---- ----
Cash Flows from Operations $ (5,441) $ 14,738
-------- --------
Cash Flows for Investing Activities:
Capital expenditures (7,007) (5,329)
Other 261 12
-------- --------
Net cash used in investing activities (6,746) (5,317)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (2,178) (4,056)
Issuance of common stock, net - (148)
Repurchase of common stock 43 -
Other stock activity, net (4) -
Principal retired on long-term debt (10) (172)
Short-term debt 15,000 -
-------- --------
Net cash used by
financing activities 12,851 (4,376)
-------- --------
Increase in Cash and
Cash Equivalents 664 5,045
Cash and Cash Equivalents at
Beginning of Period 4,229 11,832
-------- --------
Cash and Cash Equivalents at
End of Period $ 4,893 $ 16,877
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Thousands of Dollars)
Three Months Ended
June 30,
---------------------------
<S> <C> <C>
1998 1997
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Income $ 179 $ 658
-------- --------
Adjustments to reconcile income
to net cash:
Depreciation and amortization 4,977 4,820
Deferred income taxes, net 77 (186)
Equity in partnership earnings (856) (701)
Cash distributions received from
investments 737 831
Change in assets and liabilities:
Accounts receivable 15,046 20,908
Accrued utility revenue 8,443 12,280
Inventories (4,932) (4,329)
Purchased gas costs (1,295) (2,482)
Prepaid expenses 567 (275)
Accounts payable and accrued expenses (16,566) (13,933)
Other assets/liabilities (11,818) (2,853)
-------- --------
Total adjustments (5,620) 14,080
-------- --------
Cash flows from operations $ (5,441) $ 14,738
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 4,388 $ 4,399
======== ========
Income taxes $ 4,605 $ 5,715
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Nine Months Ended
June 30,
---------------------------
<S> <C> <C>
1998 1997
---- ----
Cash Flows from Operations $ 19,778 $ 36,081
-------- --------
Cash Flows for Investing Activities:
Capital expenditures (14,188) (13,591)
Other 1,639 334
-------- --------
Net cash used in investing activities (12,549) (13,257)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (6,535) (12,120)
Issuance of common stock, net 622 (503)
Repurchase of common stock (53,541) -
Other stock activity, net (6) (645)
Issuance of long-term debt 64,000 -
Principal retired on long-term debt (834) (1,194)
Short-term debt (10,500) -
-------- --------
Net cash used by
financing activities (6,794) (14,462)
-------- --------
Increase/(Decrease) in Cash and
Cash Equivalents 435 8,362
Cash and Cash Equivalents at
Beginning of Period 4,458 8,515
-------- --------
Cash and Cash Equivalents at
End of Period $ 4,893 $ 16,877
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Thousands of Dollars)
Nine Months Ended
June 30,
---------------------------
<S> <C> <C>
1998 1997
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Net Income $ 18,029 $ 20,063
-------- --------
Adjustments to reconcile net income
to net cash:
Depreciation and amortization 14,874 14,123
Deferred income taxes, net 4,394 7,881
Equity in partnership earnings (2,519) (2,187)
Cash distributions received from
investments 1,955 1,031
Change in assets and liabilities:
Accounts receivable (11,555) (8,910)
Accrued utility revenue 790 744
Inventories 3,999 6,275
Purchased gas costs 3,971 6,574
Prepaid expenses 3,930 5,572
Accounts payable and accrued expenses (7,630) (11,740)
Other assets/liabilities (10,460) (3,345)
-------- --------
Total adjustments 1,749 16,018
-------- --------
Cash flows from operations $ 19,778 $ 36,081
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 11,078 $ 11,313
======== ========
Income taxes $ 8,027 $ 8,261
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Twelve Months Ended
June 30,
---------------------------
<S> <C> <C>
1998 1997
---- ----
Cash Flows from Operations $ 15,012 $ 28,076
-------- --------
Cash Flows for Investing Activities:
Capital expenditures (25,191) (25,587)
Nonrecurring Items - 892
Other 1,360 3,655
-------- --------
Net cash used in investing activities (23,831) (21,040)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (10,592) (16,176)
Issuance of common stock, net 622 (605)
Repurchase of common stock (52,926) -
Other stock activity, net 497 (681)
Issuance of long-term debt 64,000 -
Principal retired on long-term debt (21,766) (3,923)
Short-term debt 17,000 -
-------- --------
Net cash used by
financing activities (3,165) (21,385)
-------- --------
Decrease in Cash and
Cash Equivalents (11,984) (14,349)
Cash and Cash Equivalents at
Beginning of Period 16,877 31,226
-------- --------
Cash and Cash Equivalents at
End of Period $ 4,893 $ 16,877
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Thousands of Dollars)
Twelve Months Ended
June 30,
---------------------------
<S> <C> <C>
1998 1997
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Net Income $ 15,041 $ 17,558
-------- --------
Adjustments to reconcile net income
to net cash:
Depreciation and amortization 18,849 18,329
Deferred income taxes, net 627 1,763
Equity in partnership earnings (3,242) (2,997)
Nonrecurring Items - (892)
Cash distributions received from
investments 2,685 1,761
Change in assets and liabilities:
Accounts receivable (2,663) 3,188
Accrued utility revenue (398) 817
Inventories (3,892) (911)
Purchased gas costs (3,901) (3,960)
Prepaid expenses 375 (1,534)
Accounts payable and accrued expenses 2,428 (3,344)
Other assets/liabilities (10,897) (1,702)
-------- --------
Total adjustments (29) 10,518
-------- --------
Cash flows from operations $ 15,012 $ 28,076
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 12,823 $ 13,314
======== ========
Income taxes $ 8,027 $ 11,374
======== ========
</TABLE>
<PAGE>
"UNAUDITED"
CTG RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Thousands of Dollars)
(1) Long-term Debt
The Company has exercised its option to increase the principal amount
of its Series AA First Mortgage Bonds subject to redemption by sinking
fund on October 1, 1998, by an additional $2,500 for a total of $5,000.
This has increased the Company's current portion of long-term debt by
$2,500 for fiscal 1998.
(2) Purchase of Cogeneration Facility
In June 1998, TEN acquired the assets of the 16-Megawatt cogeneration
facility which supplies Hartford Hospital with steam and electricity
and sells electricity to the local electric utility. The purchase
price of approximately $16,969 was financed through existing lines of
credit. The assets acquired in the transaction include $1,588 of cash,
$1,744 of plant and equipment and a note receivable of $13,637 of which
$4,630 is current. The note receivable relates to an existing
termination agreement with the local electric utility which is now
assigned to TEN's wholly-owned subsidiary, The Hartford Steam Company
("HSC"). Pursuant to this agreement, the utility will make payments to
HSC through December 2000.
HSC will now supply the hospital with steam and electricity over a
twenty-year contract period. The cogeneration facility is currently
off-line for upgrades and is scheduled to be back on line by January
1999 under HSC's management. Thus, earnings are expected to be
realized from this facility beginning in the second quarter of fiscal
1999. When fully operational, the facility is projected to contribute
annual earnings from operations of approximately $.03 per share. This
investment is directly linked with the diversified operations' growth
strategy of focusing on the ownership and operation of energy facility
assets.
(3) Reclassifications
Certain prior year amounts have been reclassified to conform with
current year classifications.
<PAGE>
"UNAUDITED"
CTG RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 1998
(Thousands of Dollars Except Per Share Amounts)
CTG Resources, Inc. ("the Company" or "CTG")is a holding company and parent
of the Connecticut Natural Gas Corporation ("CNG") and The Energy Network,
Inc. ("TEN"). CNG is an energy provider engaged in the regulated
distribution, sale and transportation of natural gas. TEN holds and
operates, through divisions or wholly-owned subsidiaries, CTG's unregulated,
diversified businesses which are primarily engaged in district heating and
cooling and also include the Company's equity investments in certain
partnerships, one of which is the Iroquois Gas Transmission System.
RESULTS OF OPERATIONS
Consolidated earnings per share were $.02 for the quarter, $2.01 for the
nine months and $1.60 for the twelve months ended June 30, 1998, compared to
$.06 for the quarter, $1.88 for the nine months and $1.65 for the twelve
months ended June 30, 1997. As a result of a first quarter fiscal 1998
stock repurchase, earnings have been impacted by both lower weighted average
shares outstanding and the cost of the debt which financed the transaction.
Together these factors provided net benefits to earnings per share of
approximately $.17 for the nine months and $.04 for the twelve months ended
June 1998 and lowered earnings by $.05 per share for the quarter ended June
1998. The twelve months ended June 1997 include earnings per share of $.05
related to the sale of a building and land.
Operating Margin
The following table presents the changes in gas revenues, gas operating
margin, heating degree days (a measure of weather) and gas deliveries for
all periods reported in the statements of income:
<PAGE>
<TABLE>
<CAPTION>
Three Months Nine Months Twelve Months
Ended Ended Ended
June 30, June 30, June 30,
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- --------
Gas Revenues $ 44,736 $ 48,176 $231,810 $251,670 $263,464 $285,806
======== ======== ======== ======== ======== ========
Gas Operating Margin $ 19,058 $ 20,381 $ 96,482 $ 99,866 $109,062 $112,472
======== ======== ======== ======== ======== ========
Heating Degree Days 618 864 5,474 5,939 5,591 6,074
===== ===== ===== ===== ===== =====
Commodity and
Transportation
Volumes(mmcf):
Firm Gas Sales 2,986 3,598 19,037 20,625 20,765 22,338
Interruptible Gas
Sales 1,942 2,086 7,699 7,777 9,495 9,838
Off-System Gas
Sales 3,043 2,338 8,600 7,840 10,924 11,711
Transportation
Services 1,089 1,020 3,333 3,321 4,326 4,440
------ ------ ------ ------ ------ ------
Total 9,060 9,042 38,669 39,563 45,510 48,327
====== ====== ====== ====== ====== ======
</TABLE>
Gas operating margin is equal to gas revenues less the cost of gas and
Connecticut gross revenues tax. A lower gas operating margin was earned
throughout fiscal 1998 as compared to fiscal 1997. Warmer weather during
the winter heating season is the principal reason for this decrease in gas
operating margin. This has resulted in fewer sales of gas to the firm class
of customers for winter heating. The full potential benefit to earnings
from the addition of firm heating customers since fiscal 1997 has been
somewhat diminished by effects of the warmer winter weather. The
contribution from interruptible margins has also been lower, reflecting
reduced volumes sold because of the warmer weather, and a decline in
interruptible margins overall in fiscal 1998. The margins are lower because
interruptible tariffs are sensitive to the prices of the alternative energy,
and these have declined relative to gas prices. Off-system sales have been
higher in fiscal 1998, and, though the margin from such sales may not be as
high as from other categories, this contribution to margin offsets some of
the negative impacts discussed above.
Operations and Maintenance Expenses
Consolidated operations and maintenance ("O&M") expenses are lower in all
periods of fiscal 1998 as compared to fiscal 1997. A significant factor is
the absence in fiscal 1998 of expenses related to TEN's HVAC operations
whose assets were sold in the first quarter of 1998 (See "Earnings from
Diversified Operations", below.). However, the Company has also recorded
many other variations in O&M expenses between all comparable periods which
tend to offset each other, as discussed below.
In general, when comparing the nine months ended June 1998 to 1997, lower
costs have been recorded for regulatory commission expenses, outside
purchased services and costs related to workers' compensation insurance.
Higher costs have been incurred for computer-related services, employee
benefits, pension expenses and bad debt costs.
<PAGE>
Between the comparable twelve months ended June 1998 and 1997, lower costs
have been incurred for bad debts, conservation programs, employee benefits
and pensions and costs related to workers' compensation insurance. Higher
expenses have been recorded for computer-related services and other outside
purchased services.
Insurance costs have declined because of lower actual and projected claims
realized as a result of the Company's aggressive management of claims.
Computer-related costs are higher because of outsourcing and the cost of
maintaining a new financial system. Pension costs reflect the absence of
the expenses related to the early retirement program offered in fiscal 1996
and a reduction in payments because of fewer claims, offset by higher costs
related to changes in actuarial assumptions in the plans. Employee benefits
expenses are higher because of an increase in medical claims. Offsetting
some of this increase are reduced costs resulting from changes in benefit
programs. Variations in levels of bad debt expenses typically relate to
customers' natural gas bills and actual collection levels.
In July 1998, the Company determined that the size of its Greenwich,
Connecticut regulated gas operations could be reduced while still
maintaining the level and quality of service enjoyed by the Company's
natural gas customers in the Greenwich area. This was possible because many
of the activities previously handled in Greenwich have been assumed by the
Hartford, Connecticut headquarters. In conjunction with this decision,
eleven positions have been eliminated from the Greenwich division. The net
fiscal 1998 savings from this realignment will be reflected in the fourth
quarter and is estimated to be approximately $10. Future annual savings in
payroll costs are estimated at approximately $292.
Income Taxes
Income taxes recorded in all periods ending June 1998, as compared to 1997,
are lower primarily because of lower taxable income. Other contributing
factors include a lower State of Connecticut corporate income tax rate, a
$500 income tax benefit related to previously established tax reserves which
are no longer required and a few timing-related items recorded in the
quarter ending June 1998. In the twelve months ended June 1998, the effect
of lower taxable income is partially offset by a $700 increase to the
Company's income tax reserve that was recorded late in fiscal 1997. During
the third quarter of fiscal 1998 the Internal Revenue Service began a
routine audit of the Company's 1996 federal income tax return.
Other Income (Deductions)
Other Deductions are higher between all comparable periods primarily because
of costs related to the closing of certain diversified operations, as
discussed below. Without the impact of these costs, overall, the level of
Other Income/(Deductions) has not changed significantly between fiscal 1998
and 1997. Several offsetting factors have produced this result. Lower
income from overnight cash investments and higher costs for life insurance
premiums are offset by lower promotional and advertising expenses and the
absence of fiscal 1997 costs associated with the termination of the
Company's regulated propane service program.
<PAGE>
Interest and Debt Expense
Higher interest and debt expense has been recorded in fiscal 1998 primarily
because of the additional long-term debt issued during the first quarter in
conjunction with the stock repurchase offer.
Earnings from Diversified Businesses
Earnings contributed by the Company's diversified, unregulated businesses
were $.03 per share for the quarter and nine months ended June 1998 and $.14
for the twelve months ended June 1998, compared to earnings per share of
$.05, $.15 and $.28 recorded for the three, nine and twelve months ended
June 1997. The fiscal 1998 benefit to earnings per share resulting from the
lower weighted average shares outstanding is approximately $.01 for the
quarter and nine months and $.02 for the twelve months ended periods. This
is offset by the cost of the added debt issued to finance the repurchase,
equivalent to $.06 per share for the quarter and $.15 per share for the nine
and twelve months ended June 1998, for a net earnings impact from the stock
repurchase of $(.05) for the quarter, $.(14) for the nine months and $(.13)
for the twelve months ended June 1998. The twelve months ended June 1997
include $.05 per share from a net gain related to the sale of a building and
land.
Several significant factors impacting TEN's earnings have occurred in fiscal
1998. In the first quarter, the assets of TEN's wholly-owned HVAC
subsidiary, ENServe Corporation ("ENServe"), were sold. The subsequent
winding down of this operation is still in progress. TEN's fiscal 1998
earnings have benefited $.05 per share from the absence of losses that had
been recorded by ENServe in fiscal 1997. During the second quarter of
fiscal 1998, TEN assumed the full ownership of KBC Energy Services ("KBC"),
a New England natural gas marketer, and began the wind down of its
operations. The Company's share of KBC's operating losses for the nine
months ended June 30, 1998 was approximately $.08. Management does not
anticipate any significant future impact to earnings related to the closing
of these businesses.
Higher interest costs have been incurred since the first quarter of fiscal
1998 as a result of an additional $45,000 of long-term debt and $4,000 of
short-term borrowings issued to finance the purchase of approximately 2.0
million shares of the Company's common stock in a tender offer made by TEN
in October of 1997. This has impacted TEN's fiscal 1998 earnings by
approximately $(.15) per share. Lower energy and production costs for
district heating and cooling have been realized as a result of lower energy
prices. Higher sales were recorded for chilled water for cooling because of
the warmer Spring 1998 weather.
The wind down of KBC and the sale of the assets of ENServe will enable the
Company to focus its investments in fixed assets in capital intensive
businesses in keeping with its strategic plan. As a part of this plan, in
June 1998 the diversified operations purchased a 16-Megawatt cogeneration
facility which supplies a major local hospital with steam and electricity
and sells electricity to the local electric utility. (See "Investing
Activities," below.)
<PAGE>
MATERIAL CHANGES IN FINANCIAL CONDITION
Cash Flows
Cash flows from operations are lower throughout fiscal 1998 primarily
because of lower revenues in the warmer 1998 heating season.
In the quarter ended June 1998, the Company relied on cash on hand and its
available lines of credit to satisfy needs for working capital, dividends
and construction expenditures. In the three months ended June 1997 and in
the nine months ended June 1998 and 1997, cash flows from operations
satisfied the Company's cash requirements for working capital, dividend
payments, long-term debt principal payments and construction. Available
cash on hand supplemented cash flows from operations to satisfy these needs
for cash during the twelve months ended June 30 1998 and 1997.
Long-term financing issued in the first nine months of fiscal 1998 was used
to finance a stock repurchase and to refinance existing short-term debt.
Investing Activities
In June 1998, TEN acquired the assets of the 16-Megawatt cogeneration
facility which supplies Hartford Hospital with steam and electricity and
sells electricity to the local electric utility. The purchase price of
approximately $16,969 was financed through existing lines of credit. The
assets acquired in the transaction include $1,588 of cash, $1,744 of plant
and equipment and a note receivable of $13,637 of which $4,630 is current.
The note receivable relates to an existing termination agreement with the
local electric utility which is now assigned to HSC. Pursuant to this
agreement, the utility will make payments to HSC through December 2000.
TEN's wholly-owned subsidiary, The Hartford Steam Company ("HSC") will now
supply the hospital with steam and electricity over a twenty-year contract
period. The cogeneration facility is currently off-line for upgrades and is
scheduled to be back on line by January 1999 under HSC's management. Thus,
earnings are expected to be realized from this facility beginning in the
second quarter of fiscal 1999. When fully operational, the facility is
projected to contribute annual earnings from operations of approximately
$.03 per share. This investment is directly linked with the diversified
operations' growth strategy of focusing on the ownership and operation of
energy facility assets.
Subsequent Event
AGA Gas Finance Company ("GasFinCo"), in which TEN holds a 2.15% ownership
interest, ceased operations in July 1998. TEN plans to write off its $100
investment in AGA GasFinco in the fourth quarter of fiscal 1998.
Financing Activities
The Company has exercised its option to increase the principal amount of its
9.16%, Series AA First Mortgage Bonds subject to redemption by sinking fund
on October 1, 1998, by an additional $2,500, for a total of $5,000. This
has increased the Company's current portion of long-term debt by $2,500 for
fiscal 1998.
<PAGE>
Adriaen's Landing
The Company has been approached by local businesses and government agencies
regarding participation in a project known as Adriaen's Landing, a mega
center and football stadium. The Company is evaluating its options and is
committed to partnering in this project.
FORWARD LOOKING INFORMATION
This report and other Company reports, including filings with the Securities
and Exchange Commission, press releases and oral statements, contain forward
looking statements. Forward looking statements are made based upon
management's expectations and beliefs concerning future developments and
their potential effect upon the Company. The Company cautions that, while
it believes such statements to be reasonable and makes them in good faith,
they almost always vary from actual results, and the differences can be
material, depending upon the circumstances. Investors should be aware of
important factors that could have a material impact on future results.
These factors include, but are not limited to, weather, the regulatory
environment, legislative and judicial developments which affect the Company
or significant groups of its customers, economic conditions in the Company's
service territory, fluctuations in energy-related commodity prices, customer
conservation efforts, financial market conditions, interest rate
fluctuations, customers' preferences, unforeseen competition, and other
uncertainties, all of which are difficult to predict and beyond the control
of the Company.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
99(1) Exhibit Index
10(124) First Amendment to Credit Agreement, dated March 30, 1998,
among Connecticut Natural Gas Corporation and BankBoston,
N.A.
10(125) Ninth Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan, dated June 9, 1998
10(126) Ninth Amendment to Connecticut Natural Gas Corporation
Union Employee Savings Plan, dated June 9, 1998
10(127) Amendment to Connecticut Natural Gas Corporation Officer's
Retirement Plan, dated January 27, 1998
10(128) Service Agreement (#800294R, Rate Schedule FT-1), dated May
20, 1998, between Connecticut Natural Gas Corporation and
Texas Eastern Transmission Corporation
10(129) Service Agreement (#800295R, Rate Schedule FT-1), dated May
20, 1998, between Connecticut Natural Gas Corporation and
Texas Eastern Transmission Corporation
10(130) Service Agreement (#830047, Rate Schedule FT-1), dated May
20, 1998, between Connecticut Natural Gas Corporation and
Texas Eastern Transmission Corporation
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ending June 30,
1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CTG RESOURCES, INC.
Date 08/14/98 By: S/ Andrew H. Johnson
-------------------- -----------------------------------
(Andrew H. Johnson)
Treasurer and Chief Accounting Officer
(On behalf of the registrant and as
Chief Accounting Officer)
<PAGE>
Exhibit 99.1
Page 1 of 1
CTG RESOURCES, INC.
Quarterly Report on Form 10-Q
Exhibit Index
Quarter Ended June 30, 1998
Document
Item Description Description
------------ ----------- ------------
99(1) Exhibit Index Ex-99.1
10(124) First Amendment to Credit Agreement Ex-10.124
among Connecticut Natural Gas
Corporation and BankBoston, N.A.
10(125) Ninth Amendment to Connecticut Ex-10.125
Natural Gas Corporation Employee
Savings Plan
10(126) Ninth Amendment to Connecticut Ex-10.126
Natural Gas Corporation Union
Employee Savings Plan
10(127) Amendment to Connecticut Natural Ex-10.127
Gas Corporation Officer's
Retirement Plan
10(128) Service Agreement (#800294R, Rate Ex-10.128
Schedule FT-1) between Connecticut
Natural Gas Corporation and Texas
Eastern Transmission Corporation
10(129) Service Agreement (#800295R, Rate Ex-10.129
Schedule FT-1) between Connecticut
Natural Gas Corporation and Texas
Eastern Transmission Corporation
10(130) Service Agreement (#830047, Rate Ex-10.130
Schedule FT-1) between Connecticut
Natural Gas Corporation and Texas
Eastern Transmission Corporation
27 Financial Data Schedule Ex-27
<PAGE>
FIRST AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
made as of this 30th day of March, 1998, by and among CONNECTICUT NATURAL
GAS CORPORATION, a Connecticut corporation with its chief executive offices
at 100 Columbus Boulevard, Hartford, Connecticut 06144-1500 (the "Company"),
and BANKBOSTON, N.A., formerly known as The First National Bank of Boston, a
national banking association with its head office at 100 Federal Street,
Boston, Massachusetts 02110 (the "Bank").
RECITALS
--------
1. The Bank has made loans, extensions of credit and other financial
accommodations to the Company pursuant to a Revolving Credit Agreement
dated as of March 30, 1993 by and between the Bank and the Company (as
amended hereby, the "Credit Agreement").
2. The Credit Agreement by its terms expires on March 30, 1998, and
the Company has informed the Bank of its desire to extend the Credit
Agreement, and to modify and amend certain other terms of the Credit
Agreement as hereinafter set forth.
3. The Bank has considered the Company's requests and is amenable to
such requests provided that the Company enters into this Amendment and
complies with all of the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises, and in order to
induce the Bank to amend the Credit Agreement pursuant to the terms hereof,
and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEFINITIONS. Unless otherwise defined herein, all capitalized
words and phrases used in this Amendment shall have the same meanings as are
specifically set forth in the Credit Agreement.
2. AMENDMENTS TO THE CREDIT AGREEMENT.
(a) Section 1.1. (i) Section 1.1 is hereby amended by deleting
therefrom the definition of "Applicable Margin" and by substituting in
lieu thereof the following new definition:
APPLICABLE MARGIN. Applicable to any Loan, the
percentage set forth for the type of Loan identified
below opposite the then-effective S&P Rating:
TYPE OF LOAN A, A- OR BBB+ BBB BBB- BB+ OR BELOW
--------------- -------------- ------ ------ ------------
Base Rate Loan 0.000% 0.125% 0.250% 0.625%
Eurodollar Loan 0.300% 0.425% 0.625% 1.250%
<PAGE>
(ii) Section 1.1 is hereby amended by deleting therefrom the
definition of "Termination Date" and by substituting in lieu thereof
the following new definition:
TERMINATION DATE. March 30, 2001, as such date may
be extended for successive one-year periods pursuant to
Section 2.15 or earlier terminated pursuant to the
provisions of Sections 2.4 or 7.2; provided that in no
event shall the Termination Date occur after March 30,
2003.
(b) Section 2.3. Section 2.3 is hereby amended by deleting such
section in its entirety and by substituting in lieu thereof the
following new Section 2.3:
2.3 FEES. The Company shall pay to the Bank a
facility fee on the Commitment Amount equal to the
applicable rate set forth below opposite the appropriate
S&P Rating:
A, A- OR BBB+ BBB BBB- BB+ OR BELOW
------------- --- ---- ------------
0.150% 0.200% 0.325% 0.500%
Such fee shall be payable quarterly in arrears, on the
last day of each calendar quarter and on the Termination
Date.
(c) Section 2.15 Section 2.15 is hereby amended by deleting the
date "March 30, 1998" wherever it appears therein and substituting in
lieu thereof the date "March 30, 2003."
(d) The Credit Agreement is hereby further amended by deleting
therefrom all references therein to the (i) Adjusted CD Rate, (ii) the
Assessment Rate, (iii) the CD Bid Rate, (iv) CD Loans, and (v) CD
Reserve Percentage, all of such references to be null and void and of
no further force or effect. The Company shall have no right to borrow,
and the Bank shall have no obligation to make, any CD Loan.
3. ACKNOWLEDGMENT OF THE COMPANY. The Company hereby acknowledges
and agrees that: (a) the Company has no defense, offset or counterclaim
with respect to the payment of any sum owed to the Bank, or with respect to
the performance or observance of any warranty or covenant contained in the
Credit Agreement; and (b) the Bank has performed all obligations and duties
owed to the Company through the date hereof.
4. REPRESENTATIONS AND WARRANTIES. To induce the Bank to amend the
Credit Agreement and to consider making future Loans thereunder, the Company
represents and warrants to the Bank that:
(a) REPRESENTATIONS AND WARRANTIES. On the date hereof, the
representations and warranties set forth in the Credit Agreement (as
<PAGE>
modified by this Amendment) are true and correct, with the same effect
as though such representations and warranties had been made on the date
hereof, except to the extent that such representations and warranties
expressly relate to an earlier date.
(b) CORPORATE AUTHORITY. The Company has full power and
authority to consummate this Amendment, and to make the borrowings
under the Credit Agreement as amended by this Amendment, and has full
power and authority to incur and perform the obligations provided for
under the Credit Agreement and this Amendment, all of which have been
duly authorized by all proper and necessary corporate action. No
consent or approval of stockholders or of any public authority or
regulatory body which has not been obtained is required as a condition
to the validity or enforceability of this Amendment.
(c) AMENDMENT AS BINDING AGREEMENT. This Amendment constitutes
the valid and legally binding obligation of the Company fully
enforceable against the Company in accordance with its terms.
(d) NO CONFLICTING AGREEMENTS. The execution and performance by
the Company of this Amendment, and the borrowing by the Company under
the Credit Agreement, as amended, will not (i) violate any provision of
law, any order of any court or other agency of government, or the
Certificate of Incorporation or Bylaws of the Company; or (ii) violate
any indenture, contract, agreement or other instrument to which the
Company is a party, or by which any of its property is bound, or be in
conflict with, result in a breach of or constitute (with due notice and
or lapse of time) a default under, any such indenture, contract,
agreement or other instrument; or (iii) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever
upon any of the property or assets of the Company.
5. EFFECTIVENESS OF THIS AMENDMENT. The amendments set forth above
shall become effective as of the date of this Amendment only upon the
satisfaction of the following conditions precedent:
(a) RECEIPT OF DOCUMENT. The Bank shall have received the
original copies of this Amendment, each duly executed by the Company.
(b) NO MATERIAL ADVERSE EFFECT. No event shall have occurred
which may have a material adverse effect on the financial condition or
operations of the Company.
(c) OTHER. Such other documents as the Bank may reasonably
request.
6. EFFECT ON CREDIT AGREEMENT AND COLLATERAL DOCUMENTS. Except as
specifically amended hereby, the terms and provisions of the Credit
Agreement are in all other respects ratified and confirmed and remain in
full force and effect. All references in the Note to the Credit Agreement
or any other document, instrument or agreement executed or delivered in
connection therewith shall be deemed to refer to the Credit Agreement as
modified hereby. No reference to this Amendment need be made in any notice,
<PAGE>
writing or other communication relating to the Credit Agreement, any such
reference to the Credit Agreement to be deemed a reference thereto as
amended by this Amendment.
7. GOVERNING LAW. This Amendment shall be construed in accordance
with and governed by the laws of the Commonwealth of Massachusetts, without
regard to the conflict of laws principles thereof.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed original and all of which taken
together shall constitute one and the same Amendment.
9. NO CUSTOM. This Agreement shall not establish a custom or course
of dealing or waive, limit or condition the rights and remedies of the Bank
under the Credit Agreement Documents, all of which are expressly reserved.
10. SEVERABILITY. If any provision of this Amendment or the
application thereof to any party or circumstance is held to be invalid or
unenforceable, the remainder of this Amendment and the application of such
provision to other parties and circumstances will not be affected thereby,
the provisions of this Amendment being severable in any such instance.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Amendment to be duly
executed by its duly authorized officer and the Bank has caused this
Amendment to be executed by its duly authorized officer, all as of the date
and year first above written.
CONNECTICUT NATURAL GAS CORPORATION
By: S/ James P. Bolduc
-----------------------------------
Name: James P. Bolduc
-----------------------------------
Its: Executive Vice President
-----------------------------------
BANKBOSTON, N.A.
By: S/ Michael M. Parker
-----------------------------------
Name: Michael M. Parker
-----------------------------------
Its: Managing Director
-----------------------------------
wk4129/98deals/ctgas/amend
<PAGE>
NINTH AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
(As Amended and Restated Effective as of January 1, 1989)
The Connecticut Natural Gas Corporation Employee Savings Plan is hereby
amended as follows:
1. The second sentence of Section 4.02 is amended to read as follows,
effective July 1, 1998:
"Unless otherwise prescribed by the Committee, changes may be made on a
quarterly basis as of the date specified in the preceding sentence."
2. The seventh sentence of Section 7.06 is amended to read as
follows, effective July 1, 1998:
"Changes in the investment elections for existing Account balances and
for future contributions are permitted at any time."
3. The fourth sentence of paragraph (a) of Section 7.09, as set forth
in the Fifth Amendment, is amended by the deletion of the phrase "once per
quarter" and the substitution of the phrase "at any time" in lieu thereof,
effective July 1, 1998.
4. Subparagraph (b)(3) of Section 7.09, subparagraph (b)(7) of
Section 7.09, paragraph (c) of Section 7.09, and paragraph (f) of Section
7.09, all as set forth in the Fifth Amendment, are amended by the deletion
of the term "once per quarter" wherever the same shall appear therein,
effective July 1, 1998.<PAGE>
5. Except as hereinabove modified and amended, the Plan, as amended,
shall remain in full force and effect.
IN WITNESS WHEREOF, the Connecticut Natural Gas Corporation executes
this Ninth Amendment this 9th day of June, 1998.
ATTEST: CONNECTICUT NATURAL GAS CORPORATION
S/ Eileen Sheehan By S/ Jean S. McCarthy
------------------- ------------------------------------
Its AVP, Human Resources
2
<PAGE>
NINTH AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
(As Amended and Restated Effective as of January 1, 1989)
The Connecticut Natural Gas Corporation Union Employee Savings Plan is
hereby amended as follows:
1. The second sentence of Section 4.02 is amended to read as follows,
effective July 1, 1998:
"Unless otherwise prescribed by the Committee, changes may be made on a
quarterly basis as of the date specified in the preceding sentence."
2. Section 5.01, as set forth in the Eighth Amendment, is amended by
the addition of the following paragraph (f) at the end thereof:
"(f) The provisions of this Section 5.01, as set forth in
the Eighth Amendment, shall apply with respect to Participants
represented by the Utility Workers Union of America Local 380
(Greenwich Union), effective July 1, 1998; provided, however, that
any Participant in the Plan who is represented by the Greenwich
Union as of that date and who, as of the preceding Change Date,
April 1, 1998, had either (i) attained the age of fifty (50) years
or (ii) completed thirty (30) years of Continuous Service, shall
continue to be entitled to a matching contribution of up to six
percent (6%) of the Participant s Compensation during the Payroll
Period, or the amount of his CODA contributions for the Payroll
Period, if less."
3. The seventh sentence of Section 7.06 is amended to read as
follows, effective July 1, 1998:<PAGE>
"Changes in the investment elections for existing Account balances and
for future contributions are permitted at any time."
4. The fourth sentence of paragraph (a) of Section 7.09, as set forth
in the Sixth Amendment, is amended by the deletion of the phrase "once per
quarter" and the substitution of the phrase "at any time" in lieu thereof,
effective July 1, 1998.
5. Subparagraph (b)(3) of Section 7.09, subparagraph (b)(7) of
Section 7.09, paragraph (c) of Section 7.09, and paragraph (f) of Section
7.09, all as set forth in the Sixth Amendment, are amended by the deletion
of the term "once per quarter" wherever the same shall appear therein,
effective July 1, 1998.
6. The provisions of Section 11.04 of the Plan, as set forth in the
Eighth Amendment, entitled "Participant Loans", shall apply to Participants
represented by the Utility Workers Union of America Local 380 (Greenwich
Union) effective July 1, 1998, provided that they otherwise satisfy the
requirements set forth therein.
7. The provisions of Section 5 of the Eighth Amendment are superceded
to the extent provided by the provisions of this Ninth Amendment.
8. Except as hereinabove modified and amended, the Plan, as amended,
shall remain in full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, the Connecticut Natural Gas Corporation executes
this Ninth Amendment this 9th day of June, 1998.
ATTEST: CONNECTICUT NATURAL GAS CORPORATION
S/ Eileen Sheehan By S/ Arthur C. Marquardt
------------------- ------------------------------------
Its President
3
<PAGE>
AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
OFFICERS' RETIREMENT PLAN
This Amendment made this 27th day of January, 1998 (the "Amendment"),
by CONNECTICUT NATURAL GAS CORPORATION (the "Company") for the purpose of
amending its Officers' Retirement Plan,
W I T N E S S E T H :
WHEREAS, the Company has adopted and maintains the Officers" Retirement
Plan (the "Plan"); and
WHEREAS, the Company has reserved the right to amend the Plan in
Section 11 thereof; and
WHEREAS, the Company now wishes to amend the Plan in the following
respects;
NOW, THEREFORE, the Company amends the Plan as follows:
1. The following new Section 12A is added to the Plan, between
Sections 12 and 13:
"12A. COMPUTATION OF EXCESS BENEFIT. For purposes of subsection
(ii) of Section 1, subsection (ii) of Section 2, and subsection (ii) of
Section 4, in computing the benefit that would have been provided under
the Pension Plan if the limits imposed by the Federal tax laws upon
benefits under qualified plans (i.e., the limits under Sections 415 and
401(a)(17) of the Internal Revenue Code) did not apply, it shall also
be assumed that the definition of "Earnings" under the Pension Plan
includes amounts deferred under the Connecticut Natural Gas Corporation
Deferred Compensation Plan in the year of the deferral. It is the
intent of the Company that the amount of benefits provided hereunder
shall be unaffected by whether or not the officer has deferred amounts
under the Connecticut Natural Gas Corporation Deferred Compensation
Plan."
2. Except as hereinabove modified and amended, the Officers'
Retirement Plan, as amended, shall remain in full force and effect.
3. This Amendment is effective as of January 27, 1998.<PAGE>
IN WITNESS WHEREOF, the Company hereby executes this Amendment to the
Connecticut Natural Gas Corporation Officers' Retirement Plan on the date
first written above.
CONNECTICUT NATURAL GAS CORPORATION
By S/ Jean S. McCarthy
-----------------------------------
Name: Jean S. McCarthy
Title: AVP Human Resources
2
<PAGE>
Contract #: 800294R
-------
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
This Service Agreement, made and entered into this 20th day of May, 1998,
by and between TEXAS EASTERN TRANSMISSION CORPORATION, a Delaware Corpora-
tion (herein called "Pipeline") and CONNECTICUT NATURAL GAS CORPORATION
(herein called "Customer", whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline currently are parties to an executed
service agreement under Pipeline's Rate Schedule FT-1 (Pipeline's Contract
No. 800294 dated November 17, 1993 ("Contract No. 800294")); and
WHEREAS, Customer and Pipeline desire to enter into this Service Agreement
to supersede Contract No. 800294 to reflect the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties do covenant and agree
as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of Pipeline's
Rate Schedule FT-1, and of the General Terms and Conditions, transportation
service hereunder will be firm. Subject to the terms, conditions and
limitations hereof and of Pipeline's Rate Schedule FT-1, Pipeline agrees to
deliver for Customer's account quantities of natural gas up to the following
quantity:
Maximum Daily Quantity (MDQ) 6,340 dth
Pipeline shall receive for Customer's account, at those points on
Pipeline's system as specified in Article IV herein or available to Customer
pursuant to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Receipt) for transportation hereunder daily
quantities of gas up to Customer's MDQ, plus Applicable Shrinkage. Pipeline
shall transport and deliver for Customer's account, at those points on
Pipeline's system as specified in Article IV herein or available to Customer
pursuant to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Delivery), such daily quantities tendered up to
such Customer's MDQ.
Pipeline shall not be obligated to, but may at its discretion, receive at
any Point of Receipt on any day a quantity of gas in excess of the
applicable Maximum Daily Receipt Obligation (MDRO), plus Applicable
Shrinkage, but shall not receive in the aggregate at all Points of Receipt<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
on any day a quantity of gas in excess of the applicable MDQ, plus
Applicable Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a quantity of gas in
excess of the applicable Maximum Daily Delivery Obligation (MDDO), but shall
not deliver in the aggregate at all Points of Delivery on any day a quantity
of gas in excess of the applicable MDQ.
In addition to the MDQ and subject to the terms, conditions and
limitations hereof, Rate Schedule FT-1 and the General Terms and Conditions,
Pipeline shall deliver within the Access Area under this and all other
service agreements under Rate Schedules CDS, FT-1, and/or SCT, quantities up
to Customer's Operational Segment Capacity Entitlements, excluding those
Operational Segment Capacity Entitlements scheduled to meet Customer's MDQ,
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on June 1, 1998 and
shall continue in force and effect until October 31, 2004 and year to year
thereafter unless this Service Agreement is terminated as hereinafter
provided. This Service Agreement may be terminated by either Pipeline or
Customer upon five (5) years prior written notice to the other specifying a
termination date of October 31, 2004 or any October 31 thereafter. Subject
to Section 22 of Pipeline's General Terms and Conditions and without
prejudice to such rights, this Service Agreement may be terminated at any
time by Pipeline in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure continues for
thirty (30) days after payment is due; provided, Pipeline gives thirty (30)
days prior written notice to Customer of such termination and provided
further such termination shall not be effective if, prior to the date of
termination, Customer either pays such outstanding bill or furnishes a good
and sufficient surety bond guaranteeing payment to Pipeline of such
outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM OR
THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER TRIGGERS PREGRANTED
ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE
OF THE TERMINATION. PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO
TRIGGERS CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
Any portions of this Service Agreement necessary to correct or cash-out
imbalances under this Service Agreement as required by the General Terms and
Conditions of Pipeline's FERC Gas Tariff, Volume No. 1, shall survive the
other parts of this Service Agreement until such time as such balancing has
been accomplished.
800294R
2<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain subject to the
applicable provisions of Rate Schedule FT-1 and of the General Terms and
Conditions of Pipeline's FERC Gas Tariff on file with the Federal Energy
Regulatory Commission, all of which are by this reference made a part
hereof.
Customer shall pay Pipeline, for all services rendered hereunder and for
the availability of such service in the period stated, the applicable prices
established under Pipeline's Rate Schedule FT-1 as filed with the Federal
Energy Regulatory Commission, and as same may hereafter be legally amended
or superseded.
Customer agrees that Pipeline shall have the unilateral right to file with
the appropriate regulatory authority and make changes effective in (a) the
rates and charges applicable to service pursuant to Pipeline's Rate Schedule
FT-1, (b) Pipeline's Rate Schedule FT-1 pursuant to which service hereunder
is rendered or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule FT-1. Notwithstanding the foregoing, Customer
does not agree that Pipeline shall have the unilateral right without the
consent of Customer subsequent to the execution of this Service Agreement
and Pipeline shall not have the right during the effectiveness of this
Service Agreement to make any filings pursuant to Section 4 of the Natural
Gas Act to change the MDQ specified in Article I, to change the term of the
agreement as specified in Article II, to change Point(s) of Receipt speci-
fied in Article IV, to change the Point(s) of Delivery specified in
Article IV, or to change the firm character of the service hereunder.
Pipeline agrees that Customer may protest or contest the aforementioned
filings, and Customer does not waive any rights it may have with respect to
such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which Pipeline shall
receive and deliver gas, respectively, shall be specified in Exhibit(s) A
and B of the executed service agreement. Customer's Zone Boundary Entry
Quantity and Zone Boundary Exit Quantity for each of Pipeline's zones shall
be specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C are hereby incorporated as part of this Service
Agreement for all intents and purposes as if fully copied and set forth
herein at length.
800294R
3<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall conform
to the quality specifications set forth in Section 5 of Pipeline's General
Terms and Conditions. Customer agrees that in the event Customer tenders
for service hereunder and Pipeline agrees to accept natural gas which does
not comply with Pipeline's quality specifications, as expressly provided for
in Section 5 of Pipeline's General Terms and Conditions, Customer shall pay
all costs associated with processing of such gas as necessary to comply with
such quality specifications. Customer shall execute or cause its supplier
to execute, if such supplier has retained processing rights to the gas
delivered to Customer, the appropriate agreements prior to the commencement
of service for the transportation and processing of any liquefiable
hydrocarbons and any PVR quantities associated with the processing of gas
received by Pipeline at the Point(s) of Receipt under such Customer's
service agreement. In addition, subject to the execution of appropriate
agreements, Pipeline is willing to transport liquids associated with the gas
produced and tendered for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms
and Conditions of Pipeline's FERC Gas Tariff, any notice, request, demand,
statement, bill or payment provided for in this Service Agreement, or any
notice which any party may desire to give to the other, shall be in writing
and shall be considered as duly delivered when mailed by registered,
certified, or regular mail to the post office address of the parties hereto,
as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: CONNECTICUT NATURAL GAS CORPORATION
P O BOX 1500
100 COLUMBUS BOULEVARD
HARTFORD, CT 06144
or such other address as either party shall designate by formal written
notice.
800294R
4<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or consolidation to
the properties, substantially as an entirety, of Customer, or of Pipeline,
as the case may be, shall be entitled to the rights and shall be subject to
the obligations of its predecessor in title under this Service Agreement;
and either Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture, bank credit
agreement, assignment, receivable sale, or similar instrument which it has
executed or may execute hereafter; otherwise, neither Customer nor Pipeline
shall assign this Service Agreement or any of its rights hereunder unless it
first shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline shall be
released from its obligations hereunder without the consent of the other.
In addition, Customer may assign its rights to capacity pursuant to Section
3.14 of the General Terms and Conditions. To the extent Customer so
desires, when it releases capacity pursuant to Section 3.14 of the General
Terms and Conditions, Customer may require privity between Customer and the
Replacement Customer, as further provided in the applicable Capacity Release
Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement shall be in
accordance with the laws of the State of Texas without recourse to the law
governing conflict of laws.
This Service Agreement and the obligations of the parties are subject to
all present and future valid laws with respect to the subject matter, State
and Federal, and to all valid present and future orders, rules, and
regulations of duly constituted authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the effective date of
this Service Agreement, the contract(s) between the parties hereto as
described below:
service agreement dated November 17, 1993, between Pipeline and Customer
under Pipeline's Rate Schedule FT-1 (Pipeline's Contract No. 800294).
800294R
5<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement
to be signed by their respective Presidents, Vice Presidents or other duly
authorized agents and their respective corporate seals to be hereto affixed
and attested by their respective Secretaries or Assistant Secretaries, the
day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By S/ Tom O'Connor
-----------------------------------
ATTEST:
S/ Randall Coleman
--------------------
CONNECTICUT NATURAL GAS CORPORATION
By S/ Edna M. Karanian
-------------------------------------
ATTEST:
S/ Jay Fletcher
--------------------
800294R
6<PAGE>
<TABLE>
<CAPTION>
Contract # 800294R
-------
EXHIBIT A, TRANSPORATION PATHS
FOR BILLING PURPOSES DATED ,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"),
AND CONNECTICUT NATURAL GAS CORPORATION ("Customer"),
DATED :
(1) Customer's firm Point(s) of Receipt:
<C> <S> <C> <C> <C> <C>
Maximum Daily Receipt
Obligation (plus
Point of Applicable Shrinkage) Measurement
Receipt Description (dth) Responsibilities Owner Operator
------- ---------------------- --------------------- ---------------- ----- --------
75931 LEIDY STORAGE FIELD 6,340 CNG CNG CNG
POTTER CO., PA
</TABLE>
(2) Customer shall have Pipeline's Master Receipt Point List ("MRPL").
Customer hereby agrees that Pipeline's MRPL as revised and published
by Pipeline from time to time is incorporated herein by reference.
Customer hereby agrees to comply with the Receipt Pressure obligation as set
forth in Section 6 of Pipeline's General Terms and Conditions at such
Point(s) of Receipt.
Transportation
Transportation Path Path Quantity (Dth/D)
------------------- ---------------------
M2 to M3 6,340
SIGNED FOR IDENTIFICATION
PIPELINE: S/ Tom O'Connor
------------------------
CUSTOMER: S/ EMK
------------------------
SUPERSEDES EXHIBIT A DATED: ______________________
A-1<PAGE>
<TABLE>
<CAPTION>
Contract #:800294R
-------
EXHIBIT B, POINT(S) OF DELIVERY, DATED ,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
CONNECTICUT NATURAL GAS CORPORATION ("Customer"),
DATED :
<C> <S> <C> <C> <C> <C> <C>
Maximum
Daily Measurement
Point of Delivery Delivery Pressure Responsi-
Delivery Description Obligation Obligation bilities Owner Operator
-------- ------------------------- (dth) ------------------------- ----------- -----------------
-----------
1. 70087 ALGONQUIN - LAMBERTVILLE, 6,340 AS REQUESTED BY CUSTOMER,TX EAST TRAN TX EAST ALGONQUIN
NJ HUNTERDON CO., NJ NOT TO EXCEED 750 PSIG TRAN
2. 71078 ALGONQUIN - HANOVER, NJ 6,340 AS REQUESTED BY CUSTOMER,TX EAST TRAN TX EAST ALGONQUIN
MORRIS CO., NJ NOT TO EXCEED 750 PSIG TRAN
3. 79823 AGT - CONNECTICUT NATRL- 0 N/A N/A N/A N/A
FOR NOMINATION PURPOSES
</TABLE>
provided, however that until changed by a subsequent Agreement between
Pipeline and Customer, Pipeline's aggregate maximum daily delivery
obligations at each of the points of delivery described above, including
Pipeline's maximum daily delivery obligation under this and all other
Service Agreements existing between Pipeline and Customer, shall in no event
exceed the following:
B-1<PAGE>
<TABLE>
<CAPTION>
Contract #:800294R
-------
EXHIBIT B, POINT(S) OF DELIVERY, DATED ,
CONNECTICUT NATURAL GAS CORPORATION
<S> <C>
AGGREGATE MAXIMUM DAILY
POINT OF DELIVERY DELIVERY OBLIGATION (DTH)
----------------- -------------------------
No. 1 54,617
No. 2 31,626
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: S/ Tom O'Connor
---------------------------
CUSTOMER: S/ EMK
---------------------------
SUPERSEDES EXHIBIT B DATED: ______________________
B-2<PAGE>
Contract #: 800295R
-------
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
This Service Agreement, made and entered into this 20th day of May, 1998,
by and between TEXAS EASTERN TRANSMISSION CORPORATION, a Delaware Corpora-
tion (herein called "Pipeline") and CONNECTICUT NATURAL GAS CORPORATION
(herein called "Customer", whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline currently are parties to an executed
service agreement under Pipeline s Rate Schedule FT-1 (Pipeline s Contract
No. 800295 dated November 17, 1993 ('Contract No. 800295')); and
WHEREAS, Customer and Pipeline desire to enter into this Service Agreement
to supersede Contract No. 800295 to reflect the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties do covenant and agree
as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of Pipeline's
Rate Schedule FT-1, and of the General Terms and Conditions, transportation
service hereunder will be firm. Subject to the terms, conditions and
limitations hereof and of Pipeline's Rate Schedule FT-1, Pipeline agrees to
deliver for Customer's account quantities of natural gas up to the following
quantity:
Maximum Daily Quantity (MDQ) 4,231 dth
Pipeline shall receive for Customer's account, at those points on
Pipeline's system as specified in Article IV herein or available to Customer
pursuant to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Receipt) for transportation hereunder daily
quantities of gas up to Customer's MDQ, plus Applicable Shrinkage. Pipeline
shall transport and deliver for Customer's account, at those points on
Pipeline's system as specified in Article IV herein or available to Customer
pursuant to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Delivery), such daily quantities tendered up to
such Customer's MDQ.
Pipeline shall not be obligated to, but may at its discretion, receive at
any Point of Receipt on any day a quantity of gas in excess of the
applicable Maximum Daily Receipt Obligation (MDRO), plus Applicable
Shrinkage, but shall not receive in the aggregate at all Points of Receipt
on any day a quantity of gas in excess of the applicable MDQ, plus
Applicable Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a quantity of gas in
excess of the applicable Maximum Daily Delivery Obligation (MDDO), but shall
not deliver in the aggregate at all Points of Delivery on any day a quantity
of gas in excess of the applicable MDQ.<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
In addition to the MDQ and subject to the terms, conditions and
limitations hereof, Rate Schedule FT-1 and the General Terms and Conditions,
Pipeline shall deliver within the Access Area under this and all other
service agreements under Rate Schedules CDS, FT-1, and/or SCT, quantities up
to Customer's Operational Segment Capacity Entitlements, excluding those
Operational Segment Capacity Entitlements scheduled to meet Customer's MDQ,
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on June 1, 1998 and
shall continue in force and effect until October 31, 2004, and year to year
thereafter unless this Service Agreement is terminated as hereinafter
provided. This Service Agreement may be terminated by either Pipeline or
Customer upon five (5) years prior written notice to the other specifying a
termination date of October 31, 2004 or any October 31 thereafter. Subject
to Section 22 of Pipeline's General Terms and Conditions and without
prejudice to such rights, this Service Agreement may be terminated at any
time by Pipeline in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure continues for
thirty (30) days after payment is due; provided, Pipeline gives thirty (30)
days prior written notice to Customer of such termination and provided
further such termination shall not be effective if, prior to the date of
termination, Customer either pays such outstanding bill or furnishes a good
and sufficient surety bond guaranteeing payment to Pipeline of such
outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM OR
THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER TRIGGERS PREGRANTED
ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE
OF THE TERMINATION. PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO
TRIGGERS CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
Any portions of this Service Agreement necessary to correct or cash-out
imbalances under this Service Agreement as required by the General Terms and
Conditions of Pipeline's FERC Gas Tariff, Volume No. 1, shall survive the
other parts of this Service Agreement until such time as such balancing has
been accomplished.
800295R
2<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain subject to the
applicable provisions of Rate Schedule FT-1 and of the General Terms and
Conditions of Pipeline's FERC Gas Tariff on file with the Federal Energy
Regulatory Commission, all of which are by this reference made a part
hereof.
Customer shall pay Pipeline, for all services rendered hereunder and for
the availability of such service in the period stated, the applicable prices
established under Pipeline's Rate Schedule FT-1 as filed with the Federal
Energy Regulatory Commission, and as same may hereafter be legally amended
or superseded.
Customer agrees that Pipeline shall have the unilateral right to file with
the appropriate regulatory authority and make changes effective in (a) the
rates and charges applicable to service pursuant to Pipeline's Rate Schedule
FT-1, (b) Pipeline's Rate Schedule FT-1 pursuant to which service hereunder
is rendered or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule FT-1. Notwithstanding the foregoing, Customer
does not agree that Pipeline shall have the unilateral right without the
consent of Customer subsequent to the execution of this Service Agreement
and Pipeline shall not have the right during the effectiveness of this
Service Agreement to make any filings pursuant to Section 4 of the Natural
Gas Act to change the MDQ specified in Article I, to change the term of the
agreement as specified in Article II, to change Point(s) of Receipt speci-
fied in Article IV, to change the Point(s) of Delivery specified in
Article IV, or to change the firm character of the service hereunder.
Pipeline agrees that Customer may protest or contest the aforementioned
filings, and Customer does not waive any rights it may have with respect to
such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which Pipeline shall
receive and deliver gas, respectively, shall be specified in Exhibit(s) A
and B of the executed service agreement. Customer's Zone Boundary Entry
Quantity and Zone Boundary Exit Quantity for each of Pipeline's zones shall
be specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C are hereby incorporated as part of this Service
Agreement for all intents and purposes as if fully copied and set forth
herein at length.
800295R
3<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall conform
to the quality specifications set forth in Section 5 of Pipeline's General
Terms and Conditions. Customer agrees that in the event Customer tenders
for service hereunder and Pipeline agrees to accept natural gas which does
not comply with Pipeline's quality specifications, as expressly provided for
in Section 5 of Pipeline's General Terms and Conditions, Customer shall pay
all costs associated with processing of such gas as necessary to comply with
such quality specifications. Customer shall execute or cause its supplier
to execute, if such supplier has retained processing rights to the gas
delivered to Customer, the appropriate agreements prior to the commencement
of service for the transportation and processing of any liquefiable
hydrocarbons and any PVR quantities associated with the processing of gas
received by Pipeline at the Point(s) of Receipt under such Customer's
service agreement. In addition, subject to the execution of appropriate
agreements, Pipeline is willing to transport liquids associated with the gas
produced and tendered for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms
and Conditions of Pipeline's FERC Gas Tariff, any notice, request, demand,
statement, bill or payment provided for in this Service Agreement, or any
notice which any party may desire to give to the other, shall be in writing
and shall be considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: CONNECTICUT NATURAL GAS CORPORATION
P O BOX 1500
100 COLUMBUS BOULEVARD
HARTFORD, CT 06144
or such other address as either party shall designate by formal written
notice.
800295R
4<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or consolidation to
the properties, substantially as an entirety, of Customer, or of Pipeline,
as the case may be, shall be entitled to the rights and shall be subject to
the obligations of its predecessor in title under this Service Agreement;
and either Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture, bank credit
agreement, assignment, receivable sale, or similar instrument which it has
executed or may execute hereafter; otherwise, neither Customer nor Pipeline
shall assign this Service Agreement or any of its rights hereunder unless it
first shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline shall be
released from its obligations hereunder without the consent of the other.
In addition, Customer may assign its rights to capacity pursuant to Section
3.14 of the General Terms and Conditions. To the extent Customer so
desires, when it releases capacity pursuant to Section 3.14 of the General
Terms and Conditions, Customer may require privity between Customer and the
Replacement Customer, as further provided in the applicable Capacity Release
Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement shall be in
accordance with the laws of the State of Texas without recourse to the law
governing conflict of laws.
This Service Agreement and the obligations of the parties are subject to
all present and future valid laws with respect to the subject matter, State
and Federal, and to all valid present and future orders, rules, and
regulations of duly constituted authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the effective date of
this Service Agreement, the contract(s) between the parties hereto as
described below:
service agreement dated November 17, 1993, between Pipeline and Customer
under Pipeline's Rate Schedule FT-1 (Pipeline s Contract No. 800295).
800295R
5<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement
to be signed by their respective Presidents, Vice Presidents or other duly
authorized agents and their respective corporate seals to be hereto affixed
and attested by their respective Secretaries or Assistant Secretaries, the
day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By S/ Tom O'Connor
-----------------------------------
ATTEST:
S/ Randall Coleman
------------------
CONNECTICUT NATURAL GAS CORPORATION
By S/ E. M. Karanian
------------------------------------
ATTEST:
Jay Fletcher
------------------
800295R
6<PAGE>
<TABLE>
<CAPTION>
Contract # 800295R
-------
EXHIBIT A, TRANSPORATION PATHS
FOR BILLING PURPOSES DATED ,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"),
AND CONNECTICUT NATURAL GAS CORPORATION ("Customer"),
DATED :
(1) Customer's firm Point(s) of Receipt:
<S> <C> <C> <C> <C> <C>
Maximum Daily Receipt
Obligation (plus
Point of Applicable Shrinkage) Measurement
Receipt Description (dth) Responsibilities Owner Operator
------- ---------------------- --------------------- ---------------- ----- --------
75082 OAKFORD STORAGE FIELD 4,231 CNG PIPELINE CNG
WESTMORELAND CO., PA
</TABLE>
(2) Customer shall have Pipeline's Master Receipt Point List ("MRPL").
Customer hereby agrees that Pipeline's MRPL as revised and published
by Pipeline from time to time is incorporated herein by reference.
Customer hereby agrees to comply with the Receipt Pressure obligation as set
forth in Section 6 of Pipeline's General Terms and Conditions at such
Point(s) of Receipt.
Transportation
Transportation Path Path Quantity (Dth/D)
------------------- ---------------------
M2 to M3 4,231
SIGNED FOR IDENTIFICATION
PIPELINE: S/ Tom O'Connor
------------------------
CUSTOMER: S/ EMK
------------------------
SUPERSEDES EXHIBIT A DATED: ______________________
A-1<PAGE>
<TABLE>
<CAPTION>
Contract #:800295R
-------
EXHIBIT B, POINT(S) OF DELIVERY, DATED ,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
CONNECTICUT NATURAL GAS CORPORATION ("Customer"),
DATED :
<C> <S> <C> <C> <C> <C> <C>
Maximum
Daily Measurement
Point of Delivery Delivery Pressure Responsi-
Delivery Description Obligation Obligation bilities Owner Operator
-------- ------------------------- (dth) ------------------------- ----------- -----------------
-----------
1. 70087 ALGONQUIN - LAMBERTVILLE, 4,231 AS REQUESTED BY CUSTOMER,TX EAST TRAN TX EAST ALGONQUIN
NJ HUNTERDON CO., NJ NOT TO EXCEED 750 PSIG TRAN
2. 71078 ALGONQUIN - HANOVER, NJ 4,231 AS REQUESTED BY CUSTOMER,TX EAST TRAN TX EAST ALGONQUIN
MORRIS CO., NJ NOT TO EXCEED 750 PSIG TRAN
3. 79823 AGT - CONNECTICUT NATRL- 0 N/A N/A N/A N/A
FOR NOMINATION PURPOSES
</TABLE>
provided, however that until changed by a subsequent Agreement between
Pipeline and Customer, Pipeline's aggregate maximum daily delivery
obligations at each of the points of delivery described above, including
Pipeline's maximum daily delivery obligation under this and all other
Service Agreements existing between Pipeline and Customer, shall in no event
exceed the following:
B-1<PAGE>
<TABLE>
<CAPTION>
Contract #:800295R
-------
EXHIBIT B, POINT(S) OF DELIVERY, DATED ,
CONNECTICUT NATURAL GAS CORPORATION
<S> <C>
AGGREGATE MAXIMUM DAILY
POINT OF DELIVERY DELIVERY OBLIGATION (DTH)
----------------- -------------------------
No. 1 54,617
No. 2 31,626
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: S/ Tom O'Connor
---------------------------
CUSTOMER: S/ EMK
---------------------------
SUPERSEDES EXHIBIT B DATED: ______________________
B-2<PAGE>
Contract #: 830047
------
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
This Service Agreement, made and entered into this 20th day of May,
1998, by and between TEXAS EASTERN TRANSMISSION CORPORATION, a Delaware
Corporation (herein called "Pipeline") and CONNECTICUT NATURAL GAS
CORPORATION (herein called "Customer", whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline are parties to an executed service
agreement under Pipeline's Rate Schedule CDS (Pipeline Contract No. 820009
("Contract No. 820009")); and
WHEREAS, Customer and Pipeline desire to enter into this Service
Agreement to supersede Contract No. 820009 and convert Customer's existing
capacity entitlements under Contract No. 820009 into this Service Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties do covenant and agree
as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of Pipeline's
Rate Schedule FT-1, and of the General Terms and Conditions, transportation
service hereunder will be firm. Subject to the terms, conditions and
limitations hereof Pipeline's Rate Schedule FT-1, Pipeline agrees to deliver
for Customer s account quantities of natural gas up to the following
quantity:
Maximum Daily Quantity (MDQ) 30,644 dth
provided, however, that Customer and Pipeline shall have
six (6) options to reduce the MDQ under this Service Agreement as
set forth below. Such options to reduce the MDQ under this Service
Agreement require two (2) years prior written notice. Such
options to reduce the MDQ under this Service Agreement: (1) shall
not be cumulative; (2) must be exercised sequentially; and (3) are
available to reduce the MDQ by any amount not in excess of the
830047
1
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
following quantities: (i) First Option--up to 7,355 Dth with such
reduction becoming effective on November 1, 1999, or any November
1 thereafter but prior to and including November 1, 2004; (ii)
Second Option--up to 4,290 Dth with such reduction becoming
effective on November 1, 2000, or any November 1 thereafter but
prior to and including November 1, 2004; (iii) Third Option--up to
4,290 Dth with such reduction becoming effective on November 1,
2001, or any November 1 thereafter but prior to and including
November 1, 2004; (iv) Fourth Option--up to 4,290 Dth with such
reduction becoming effective on November 1, 2002, or any November
1 thereafter but prior to and including November 1, 2004; (v)
Fifth Option--up to 4,290 Dth with such reduction becoming
effective on November 1, 2003, or any November 1 thereafter but
prior to and including November 1, 2004; and (vi) Sixth Option--up
to 6,129 Dth with such reduction becoming effective on November 1,
2004. In the event either Customer or Pipeline exercises its right
to reduce the MDQ of this Service Agreement as set forth in this
ARTICLE I, any such reduction(s) will be subject to Pipeline's
right of pregranted abandonment or Customer's right of first
refusal, as applicable, as set forth in ARTICLE II of this Service
Agreement.
Pipeline shall receive for Customer s account, at those points on
Pipeline s system as specified in Article IV herein or available to Customer
pursuant to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Receipt) for transportation hereunder daily
quantities of gas up to Customer s MDQ, plus Applicable Shrinkage. Pipeline
shall transport and deliver for Customer s account, at those points on
Pipeline s system as specified in Article IV herein or available to Customer
pursuant to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Delivery), such daily quantities tendered up to
such Customer s MDQ.
Pipeline shall not be obligated to, but may at its discretion, receive
at any Point of Receipt on any day a quantity of gas in excess of the
applicable Maximum Daily Receipt Obligation (MDRO), plus Applicable
Shrinkage, but shall not receive in the aggregate at all Points of Receipt
on any day a quantity of gas in excess of the applicable MDQ, plus
Applicable Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a quantity of gas in
excess of the applicable Maximum Daily Delivery Obligation (MDDO), but shall
not deliver in the aggregate at all Points of Delivery on any day a quantity
of gas in excess of the MDQ.
In addition to the MDQ and subject to the terms, conditions and
limitations hereof, Rate Schedule FT-1 and the General Terms and Conditions,
Pipeline shall deliver within the Access Area under this and all other
service agreements under Rate Schedules CDS, FT-1, and/or SCT, quantities up
to Customer's Operational Segment Capacity Entitlements, excluding those
Operational Segment Capacity Entitlements scheduled to meet Customer's MDQ,
830047
2
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on June 1, 1998
and, subject to the provisions of ARTICLE I of this Service Agreement,
shall continue in force and effect until October 31, 2004 and year to year
thereafter unless this Service Agreement is terminated as hereinafter
provided. This Service Agreement may be terminated by either Pipeline or
Customer upon two (2) years prior written notice to the other specifying a
termination date of October 31, 2004, or any October 31 thereafter. Subject
to Section 22 of Pipeline's General Terms and Conditions and without
prejudice to such rights, this Service Agreement may be terminated at any
time by Pipeline in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure continues for
thirty (30) days after payment is due; provided, Pipeline gives thirty (30)
days prior written notice to Customer of such termination and provided
further such termination shall not be effective if, prior to the date of
termination, Customer either pays such outstanding bill or furnishes a good
and sufficient surety bond guaranteeing payment to Pipeline of such
outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM OR
THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER TRIGGERS PREGRANTED
ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE
OF THE TERMINATION. PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO
TRIGGERS CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
Any portions of this Service Agreement necessary to correct or cash-out
imbalances under this Service Agreement as required by the General Terms and
Conditions of Pipeline's FERC Gas Tariff, Volume No. 1, shall survive the
other parts of this Service Agreement until such time as such balancing has
been accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain subject to
the applicable provisions of Rate Schedule FT-1 and of the General Terms and
Conditions of Pipeline's FERC Gas Tariff on file with the Federal Energy
Regulatory Commission, all of which are by this reference made a part
hereof.
830047
3
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
Customer shall pay Pipeline, for all services rendered hereunder and
for the availability of such service in the period stated, the applicable
prices established under Pipeline's Rate Schedule FT-1 as filed with the
Federal Energy Regulatory Commission, and as same may hereafter be legally
amended or superseded.
Customer agrees that Pipeline shall have the unilateral right to file
with the appropriate regulatory authority and make changes effective in (a)
the rates and charges applicable to service pursuant to Pipeline's Rate
Schedule FT-1, (b) Pipeline's Rate Schedule FT-1 pursuant to which service
hereunder is rendered or (c) any provision of the General Terms and
Conditions applicable to Rate Schedule FT-1. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have the unilateral right
without the consent of Customer subsequent to the execution of this Service
Agreement and Pipeline shall not have the right during the effectiveness of
this Service Agreement to make any filings pursuant to Section 4 of the
Natural Gas Act to change the MDQ specified in Article I, to change the term
of the agreement as specified in Article II, to change Point(s) of Receipt
specified in Article IV, to change the Point(s) of Delivery specified in
Article IV, or to change the firm character of the service hereunder.
Pipeline agrees that Customer may protest or contest the aforementioned
filings, and Customer does not waive any rights it may have with respect to
such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which Pipeline
shall receive and deliver gas, respectively, shall be specified in
Exhibit(s) A and B of the executed service agreement. Customer's Zone
Boundary Entry Quantity and Zone Boundary Exit Quantity for each of
Pipeline's zones shall be specified in Exhibit C of the executed service
agreement.
Exhibit(s) A, B and C are hereby incorporated as part of this Service
Agreement for all intents and purposes as if fully copied and set forth
herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall
conform to the quality specifications set forth in Section 5 of Pipeline's
General Terms and Conditions. Customer agrees that in the event Customer
tenders for service hereunder and Pipeline agrees to accept natural gas
which does not comply with Pipeline's quality specifications, as expressly
830047
4
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
provided for in Section 5 of Pipeline's General Terms and Conditions,
Customer shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications. Customer shall
execute or cause its supplier to execute, if such supplier has retained
processing rights to the gas delivered to Customer, the appropriate
agreements prior to the commencement of service for the transportation and
processing of any liquefiable hydrocarbons and any PVR quantities associated
with the processing of gas received by Pipeline at the Point(s) of Receipt
under such Customer's service agreement. In addition, subject to the
execution of appropriate agreements, Pipeline is willing to transport
liquids associated with the gas produced and tendered for transportation
hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms
and Conditions of Pipeline's FERC Gas Tariff, any notice, request, demand,
statement, bill or payment provided for in this Service Agreement, or any
notice which any party may desire to give to the other, shall be in writing
and shall be considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: CONNECTICUT NATURAL GAS CORPORATION
P.O. BOX 1500
100 Columbus Boulevard
Hartford, CT 06144
or such other address as either party shall designate by formal written
notice.
830047
5
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or consolidation
to the properties, substantially as an entirety, of Customer, or of
Pipeline, as the case may be, shall be entitled to the rights and shall be
subject to the obligations of its predecessor in title under this Service
Agreement; and either Customer or Pipeline may assign or pledge this Service
Agreement under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar instrument
which it has executed or may execute hereafter; otherwise, neither Customer
nor Pipeline shall assign this Service Agreement or any of its rights
hereunder unless it first shall have obtained the consent thereto in writing
of the other; provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the consent of the
other. In addition, Customer may assign its rights to capacity pursuant to
Section 3.14 of the General Terms and Conditions. To the extent Customer so
desires, when it releases capacity pursuant to Section 3.14 of the General
Terms and Conditions, Customer may require privity between Customer and the
Replacement Customer, as further provided in the applicable Capacity Release
Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement shall be
in accordance with the laws of the State of Texas without recourse to the
law governing conflict of laws.
This Service Agreement and the obligations of the parties are subject
to all present and future valid laws with respect to the subject matter,
State and Federal, and to all valid present and future orders, rules, and
regulations of duly constituted authorities having jurisdiction.
830047
6
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the effective date
of this Service Agreement, the contract(s) between the parties hereto as
described below:
service agreement dated November 15, 1996 between Pipeline and Customer
under Pipeline's Rate Schedule CDS (Pipeline's Contract Nos.
820009).
830047
7
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
IN WITNESS WHEREOF, the parties hereto have caused this Service
Agreement to be signed by their respective Presidents, Vice Presidents or
other duly authorized agents and their respective corporate seals to be
hereto affixed and attested by their respective Secretaries or Assistant
Secretaries, the day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By S/ Tom O'Connor
--------------------------------------
ATTEST:
S/ Randall Coleman
-------------------
CONNECTICUT NATURAL GAS CORPORATION
By S/ Edna M. Karanian
-----------------------------------
ATTEST:
S/ Jay Fletcher
------------------------
830047
8
<PAGE>
<TABLE>
<CAPTION>
Contract # 830047
------
EXHIBIT A, TRANSPORATION PATH FOR BILLING PURPOSES DATED ,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1 BETWEEN
TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
CONNECTICUT NATURAL GAS CORPORATION ("Customer"), DATED :
(1) Customer's firm Point(s) of Receipt:
<S> <C> <C> <C> <C> <C>
Maximum Daily Receipt
Obligation (plus
Point of Applicable Shrinkage) Measurement
Receipt Description (dth) Responsibilities Owner Operator
------- ---------------------- --------------------- ---------------- ----- --------
75043 ANR - ST. LANDRY PARISH 4,376 MI WI GAS PL MI WI GAS ANR P/L
ST. LANDRY PARISH, LA PL
72601 SEAGULL SHORELINE SYSTEM 4,974 SEAGULL SEAGULL SEAGULL
MATAGORDA CO., TX SHORELINE SHORELINE SHORELINE
</TABLE>
(2) Customer shall have Pipeline's Master Receipt Point List ("MRPL").
Customer hereby agrees that Pipeline's MRPL as revised and published
by Pipeline from time to time is incorporated herein by reference.
Customer hereby agrees to comply with the Receipt Pressure obligation as set
forth in Section 6 of Pipeline's General Terms and Conditions at such
Point(s) of Receipt.
Transportation
Transportation Path Path Quantity (Dth/D)
------------------- ---------------------
M1 to M3 30,644
SIGNED FOR IDENTIFICATION
PIPELINE: S/ Tom O'Connor
------------------------
CUSTOMER: S/ EMK
------------------------
SUPERSEDES EXHIBIT A DATED: ______________________
A-1<PAGE>
<TABLE>
<CAPTION>
Contract #:830047
------
EXHIBIT B, POINT(S) OF DELIVERY, DATED ,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1 BETWEEN
TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
CONNECTICUT NATURAL GAS CORPORATION ("Customer"), DATED :
<C> <S> <C> <C> <C> <C> <C>
Maximum
Daily Measurement
Point of Delivery Delivery Pressure Responsi-
Delivery Description Obligation Obligation bilities Owner Operator
-------- ------------------------- (dth) ------------------------- ----------- -----------------
-----------
1. 70087 ALGONQUIN - LAMBERTVILLE, 30,644 AS REQUESTED BY CUSTOMER,TX EAST TRAN TX EAST ALGONQUIN
NJ HUNTERDON CO., NJ NOT TO EXCEED 750 PSIG TRAN
2. 71078 ALGONQUIN - HANOVER, NJ 30,644 AS REQUESTED BY CUSTOMER,TX EAST TRAN TX EAST ALGONQUIN
MORRIS CO., NJ NOT TO EXCEED 750 PSIG TRAN
3. 79513 SS-1 AND FSS-1 STORAGE 9,506 N/A N/A N/A N/A
POINT 04/01-10/31
9,506
11/01-03/31
4.79823 AGT - CONNECTICUT NATRL- 0 N/A N/A N/A N/A
FOR NOMINATION PURPOSES
</TABLE>
provided, however that until changed by a subsequent Agreement between
Pipeline and Customer, Pipeline's aggregate maximum daily delivery
obligations at each of the points of delivery described above, including
Pipeline's maximum daily delivery obligations under this and all other
Service Agreements existing between Pipeline and Customer, shall in no event
exceed the following:
AGGREGATE MAXIMUM DAILY
POINT OF DELIVERY DELIVERY OBLIGATION (DTH)
----------------- -------------------------
No. 1 54,617
No. 2 31,626
No. 3 9,506
SIGNED FOR IDENTIFICATION
PIPELINE: S/ Tom O'Connor
CUSTOMER: S/ EMK
SUPERSEDES EXHIBIT B DATED: ______________________
B-1<PAGE>
<TABLE>
<CAPTION>
Contract #:830047
------
EXHIBIT C, ZONE BOUNDARY ENTRY QUANTITY AND ZONE BOUNDARY EXIT QUANTITY,
DATED _____________, TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("PIPELINE") AND
CONNECTICUT NATURAL GAS CORPORATION ("CUSTOMER"), DATED________________:
ZONE BOUNDARY ENTRY QUANTITY
Dth/D
TO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FROM STX ETX WLA ELA M1-24 M1-30 M1-TXG M1-TGC M2-24 M2-30 M2-TGX M2-TGC M2 M3
STX 963
ETX 2,610 1,457
WLA 443 963
ELA 24,554
M1-24 2,610
M1-30 24,554
M1-TXG 1,900
M1-TGC 1,926
M2-24
M2-30
M2-TXG
M2-TGC
M2 30,644
M3
</TABLE>
C-1<PAGE>
<TABLE>
<CAPTION>
Contract #:830047
------
EXHIBIT C (Continued)
CONNECTICUT NATURAL GAS CORPORATION
ZONE BOUNDARY EXIT QUANTITY
Dth/D
TO
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FROM STX ETX WLA ELA M1-24 M1-30 M1-TXG M1-TGC M2-24 M2-30 M2-TXG M2-TGC M2 M3
STX
ETX
WLA
ELA
M1-24 2,610
M1-30 24,554
M1-TXG 1,900
M1-TGC 1,926
M2-24
M2-30
M2-TXG
M2-TGC
M2 30,644
M3
</TABLE>
SIGNED FOR IDENTIFICATION:
PIPELINE: S/ Tom O'Connor
------------------------------------------
CUSTOMER: S/ EMK
---------------------------------------------------
SUPERSEDES EXHIBIT C DATED:
C-2<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS
SUMMARY FINANCIAL
INFORMATION EXTRACTED
FROM THE CONSOLIDATED
BALANCE SHEETS,
STATEMENTS OF INCOME,
STATEMENTS OF CASHFLOWS
AND STATEMENTS OF
CAPITALIZATION AND IS
QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO
SUCH FINANCIAL
STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 305,708
<OTHER-PROPERTY-AND-INVEST> 36,312
<TOTAL-CURRENT-ASSETS> 64,965
<TOTAL-DEFERRED-CHARGES> 43,022
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 450,007
<COMMON> 66,745
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 61,394
<TOTAL-COMMON-STOCKHOLDERS-EQ> 128,139
0
879
<LONG-TERM-DEBT-NET> 184,853
<SHORT-TERM-NOTES> 17,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 6,587
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 112,549
<TOT-CAPITALIZATION-AND-LIAB> 450,007
<GROSS-OPERATING-REVENUE> 246,182
<INCOME-TAX-EXPENSE> 15,635
<OTHER-OPERATING-EXPENSES> 201,131
<TOTAL-OPERATING-EXPENSES> 216,766
<OPERATING-INCOME-LOSS> 29,416
<OTHER-INCOME-NET> 361
<INCOME-BEFORE-INTEREST-EXPEN> 29,777
<TOTAL-INTEREST-EXPENSE> 11,748
<NET-INCOME> 18,029
46
<EARNINGS-AVAILABLE-FOR-COMM> 17,983
<COMMON-STOCK-DIVIDENDS> 6,489
<TOTAL-INTEREST-ON-BONDS> 1,546
<CASH-FLOW-OPERATIONS> 19,778
<EPS-PRIMARY> 2.01
<EPS-DILUTED> 2.01
<PAGE>
</TABLE>
