UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 2-35965
NORTH SHORE GAS COMPANY
(Exact name of registrant as specified in its charter)
Illinois 36-1558720
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
24th Floor, 130 East Randolph Drive, Chicago, Illinois 60601-6207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 240-4000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (#229.405 of this chapter)
is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K. [ X ]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant:
None.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Common Stock, without par value, 3,625,887 shares
outstanding at November 30, 1997.
Documents Incorporated by Reference
None
CONTENTS
Page
Item No. No
.
Part I
1. Business 3
2. Properties 7
3. Legal Proceedings 7
4. Submission of Matters to a Vote of Security Holders 7
Part II
5. Market for the Company's Common Stock and Related
Stockholder Matters 7
6. Selected Financial Data 8
7. Management's Discussion and Analysis of Results
of Operations and Financial Condition 9
8. Financial Statements and Supplementary Data 15
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 33
Part III
10. Directors and Executive Officers of the Company 34
11. Executive Compensation 36
12. Security Ownership of Certain Beneficial Owners and
Management 41
13. Certain Relationships and Related Transactions 41
Part IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 42
Signatures 44
Exhibit Index 45
North Shore Gas Company
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED SEPTEMBER 30, 1997
PART I
ITEM 1. BUSINESS
GENERAL
North Shore Gas Company (Company), an operating public utility,
is engaged primarily in the purchase, storage, distribution, sale,
and transportation of natural gas. It has about 140,000 residential,
commercial, and industrial retail sales and transportation customers
within its service area of approximately 275 square miles, located
in Northeastern Illinois. It serves 54 communities and adjacent
areas, including those situated along Lake Michigan from Winnetka,
Illinois, to the Illinois-Wisconsin state line. This area, with an
estimated population of about 460,000, contains residential
concentrations and a diversity of industrial and commercial
establishments, as well as some farm lands. The Company had 250
employees at September 30, 1997.
At September 30, l997, the common stock of the Company and of
its utility affiliate, The Peoples Gas Light and Coke Company
(Peoples Gas), was wholly owned by Peoples Energy Corporation
(Peoples Energy).
COMPETITION
The Company holds certificates of public convenience and
necessity issued by the Illinois Commerce Commission (Commission)
for the conduct by the Company of its operations in the territory
that it serves. It holds a license agreement from Lake County,
Illinois, and, with minor exceptions, franchises from all of the
incorporated cities and villages in its service territory. The
franchises are of various terms and expiration dates and are
generally subject to various other conditions, restrictions, or
limitations not deemed materially burdensome.
Absent extraordinary circumstances, potential competitors are
barred from constructing competing gas distribution systems in the
Company's service territory by a judicial doctrine known as the
"first in the field" doctrine. In addition, the high cost of
installing duplicate distribution facilities would render the
construction of a competing system impractical.
Competition in varying degrees exists between natural gas and
other fuels or forms of energy available to consumers in the
Company's service area.
On December 16, 1997, the State of Illinois enacted
legislation to restructure the electric market in Illinois.
Under the legislation, approximately one-third of non-residential
electric customers, including customers with very large loads, will
be able to purchase electric power from the supplier of their choice
beginning on October 1, 1999. All non-residential customers will
have this choice by December 31, 2000. All residential customers
will be given choice on May 1, 2002. Customers who buy their
electricity from a supplier other than the local electric utility
will be required to pay transition charges to the utility through
the year 2006. These charges are intended to compensate the
electric utilities for revenues lost because of customers buying
electricity from other suppliers. The legislation also allows
an electric utility to issue bonds, in aggregate amounts up to 50%
of its Illinois jurisdictional capitalization, to be financed by a
specific charge to its customers. An electric utility also may
transfer up to 15% of its assets to an affiliated or
unaffiliated entity without approval from the Illinois Commerce
Commission. In return for these and other benefits, electric
utilities are required to reduce their rates to residential
customers. The state's two largest electric utilities, including
the utility that serves northeastern Illinois, must reduce their
residential rates by 15% on August 1, 1998 and by another 5% on
May 1, 2002. The legislation does not require electric utilities
to divest their power generation assets. It is too early to determine
what effects this restructuring of the electric market will have on
the competitive position of the Company.
In addition to restructuring the electric market, the
legislation provides for additional funding for assistance to
low-income energy users, including customers of the Company. The
legislation creates a fund, financed by charges to electric and gas
customers of public utilities and participating municipal utilities
and electric co-ops, which supplements currently available
federal energy assistance.
A substantial portion of the gas that the Company delivers to
its customers consists of gas that the Company's customers purchase
directly from producers and marketers rather than from the Company.
These direct customer purchases have little effect on net income
because the Company provides transportation service for such gas
volumes and recovers margins similar to those applicable to
conventional gas sales.
A pipeline may seek to provide transportation service directly
to end-users. Such direct service by a pipeline to an end-user
would bypass the local distributor's service and reduce the
distributor's earnings. However, the Company's pipeline suppliers
have not undertaken any service bypassing the Company. The Company
has a bypass rate approved by the Commission which allows the
Company to renegotiate rates with customers that are potential
bypass candidates. (See Other Matters - Large Volume Gas Service
Agreements in Item 7.)
SALES AND RATES
The Company sells natural gas having an average heating value of
approximately 1,000 British thermal units (Btu's) per cubic foot.*
Sales are made and service rendered by the Company pursuant to a
rate schedule on file with the Commission containing various
service classifications largely reflecting customers' different
uses and levels of consumption. The Gas Charge is determined in
accordance with the provisions in Rider 2, Gas Charge, to recover
the costs incurred by the Company to purchase, transport,
manufacture, and store gas supplies. The level of the Gas Charge
under the Company's rate schedules is adjusted monthly to reflect
increases or decreases in natural gas supplier charges, purchased
storage service costs, transportation charges, and liquefied
petroleum gas costs. In addition, under the tariffs of the
Company, the difference for any month between costs recoverable
through the Gas Charge and the revenues billed to customers under
the Gas Charge is refunded to or recovered from customers.
Consistent with these tariff provisions, such difference for any
month is recorded either as a current liability or a current asset
(with a contra entry to Gas Costs). The Company also has been
recovering, through its rates, pipeline charges billed for
transition costs resulting from the implementation of Federal
Energy Regulatory Commission (FERC) Order No. 636. (See Notes 1L,
2A, and 2B of the Notes to Consolidated Financial Statements.)
The business of the Company is influenced by seasonal weather
conditions because a large element of the Company's customer load
consists of space heating. Weather-related deliveries can,
therefore, have a significant positive or negative impact on net
income. (For discussion of the effect of the seasonal nature of
gas revenues on cash flow, see Liquidity in Item 7.)
* All volumes of natural gas set forth in this report are stated
on a 1,000 Btu (per cubic foot) billing basis.
(100 cubic feet = 1 therm; 10 therms = 1 Dekatherm - Dth)
The basic marketing plan of the Company is to maintain its
existing share in all market segments and develop opportunities
emerging from changes in the utility environment and technological
equipment advances for new, expanded, or current natural gas
applications, including cogeneration, prime movers, natural gas-
fueled vehicles, and natural gas air-conditioning.
STATE LEGISLATION AND REGULATION
The Company is subject to the jurisdiction of and regulation by
the Commission, which has general supervisory and regulatory powers
over practically all phases of the public utility business in
Illinois, including rates and charges, issuance of securities,
services and facilities, systems of accounts, investments, safety
standards, transactions with affiliated interests, as defined in
the Illinois Public Utilities Act, and other matters.
In 1994, the Commission entered orders providing for full
recovery by the Company of FERC Order 636 transition costs from the
Company's gas service customers. The Commission's orders have been
appealed to the Illinois Supreme Court. (See Notes 1L, 2A, and 2B
of the Notes to Consolidated Financial Statements.)
On November 8, 1995, the Commission issued an order approving
changes in rates of the Company. (See Note 2A of the Notes to
Consolidated Financial Statements.)
FEDERAL LEGISLATION AND REGULATION
By Order entered on December 6, 1968 (Holding Company Act
Release No. 16233), the Securities and Exchange Commission,
pursuant to Section 3(a)(1) of the Public Utility Holding Company
Act of 1935 (Act), exempted Peoples Energy and its subsidiary
companies as such (including the Company) from the provisions of
the Act, other than Section 9(a)(2) thereof.
Most of the gas distributed by the Company is transported to the
Company's distribution system by interstate pipelines. In their
provision of gas services (gathering, transportation and storage
services, and gas supply) pipelines are regulated by the FERC under
the Natural Gas Act and the Natural Gas Policy Act of 1978. (See
"Sales and Rates" and "Current Gas Supply" in Item 1.)
ENVIRONMENTAL MATTERS
The Company is subject to federal and state environmental laws.
The Company is conducting environmental investigations and work at
certain sites that were the location of former manufactured gas
plant operations. (See Note 3A of the Notes to Consolidated
Financial Statements.) In addition, the Company has received a
demand for payment of environmental response costs at a former
mineral processing site in Denver, Colorado. (See Note 3B of the
Notes to Consolidated Financial Statements.) Also, the Company was
informed by the Illinois Environmental Protection Agency (IEPA)
that it was not in compliance with certain provisions of the
Illinois Environmental Protection Act which prohibit water
pollution within the State of Illinois. (See Note 3C of the Notes
to Consolidated Financial Statements.)
CURRENT GAS SUPPLY
The Company has entered into various long-term and short-term
firm gas supply contracts. When used in conjunction with contract
storage and company-owned peak-shaving facilities, such supply is
deemed sufficient to meet current and foreseeable peak and annual
market requirements.
Although the Company believes North American supply to be
sufficient to meet U.S. market demands for the foreseeable future,
it is unable to quantify or otherwise make specific representations
regarding national supply availability.
The following tabulation shows the Company's expected design
peak-day availability of gas in thousands of dekatherms (MDth)
during the 1997-1998 heating season:
Design Peak-Day Year of
Availability Contract
Source (MDth) Expiration
Firm direct purchases (1) 90 1998-2000
Liquefied petroleum gas (2) 40
Storage gas:
Leased (3) 165 1998-2000
Peoples-Manlove (4) 63 (5)
Customer-owned gas (6) 50
Total expected design
peak-day availability 408
(1)Consists of firm gas purchases from non-pipeline suppliers
delivered utilizing firm pipeline transportation. The majority
of the gas purchase contracts are negotiated annually. The
terms of the transportation contracts vary, with the longest
term being 5 years.
(2)Reflects derating of capacity, as accepted by the Commission
Staff in Docket 91-0581.
(3)Consists of leased storage services required to meet design day
requirements with contract lengths varying from 3 to 5 years.
(4)Manlove Field, Peoples Gas' underground storage facility
located near Champaign, Illinois, has a seasonal top-gas
capacity (excluding volumes required to support late-season
peaking requirements) of approximately 27,000 MDth, of which
approximately 1,566 MDth is dedicated to the Company. For the
1997-98 heating season, the Company has a contract for a
maximum daily deliverability of 63 MDth.
(5)The contract with Peoples Gas was for an initial term expiring
May 1, 1990. However, by its terms, the contract continues in
effect unless canceled by either party upon 120 days notice
prior to April 30 of any year thereafter.
(6)Consists of gas supplies purchased directly from producers and
marketers by the Company's commercial, industrial, and larger
residential customers.
The sources of gas supply (including gas transported for
customers) in MDth for the Company for the three fiscal years ended
September 30, 1997, 1996, and 1995, were as follows:
1997 1996 1995
Gas purchases 27,226 27,940 20,250
Liquefied petroleum gas produced 20 151 9
Customer-owned gas-received 12,618 12,777 12,379
Underground storage-net (123) 468 3,103
Exchange gas-net (151) (104) -
Company use, franchise requirements,
and unaccounted-for gas (546) (983) (636)
Total (a) 39,044 40,249 35,105
(a) See "Gas Sold and Transported" in Item 6.
ITEM 2. PROPERTIES
All of the principal plants and properties of the Company have
been maintained in the ordinary course of business and are believed
to be in satisfactory operating condition. The following is a
brief description of the principal plants and operating units of
the Company.
The distribution system of the Company, at September 30, 1997,
consisted of approximately 2,100 miles of distribution mains and
necessary pressure regulators, approximately 126,000 services (pipe
connecting the mains with piping on the customers' premises), and
approximately 143,000 meters installed on customers' premises.
Also, the Company's transmission system consists of approximately
15 miles of transmission pipeline. In addition, the Company has
liquefied petroleum gasification and storage facilities. It also
owns and has a substantial investment in office and service
buildings, garages, repair shops, and motor vehicles, together with
the equipment, tools, and fixtures necessary to conduct utility
business.
Most of the principal plants and properties of the Company,
other than mains, services, meters, regulators, and cushion gas in
underground storage, are located on property owned in fee.
Substantially all gas mains are located in public streets, alleys,
and highways, or under property owned by others under grants of
easements. Meters and house regulators in use and a portion of
services are located on premises being served.
Substantially all of the physical properties now owned or
hereafter acquired by the Company are subject to (a) the first-
mortgage lien of the Company's mortgage to First Trust, National
Association, as Trustee, to secure the principal amount of the
Company's outstanding first mortgage bonds and (b) in certain
cases, other exceptions and defects that do not interfere with the
use of the property.
ITEM 3. LEGAL PROCEEDINGS
See Notes 2 and 3 of the Notes to Consolidated Financial
Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company is a wholly owned subsidiary of Peoples Energy.
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA (a)
For fiscal years ended September 30, 1997 1996 1995 1994 1993
OPERATING RESULTS (thousands)
<S> <C> <C> <C> <C> <C>
Operating Revenues:
Residential $ 129,332 $ 125,502 $ 104,034 $ 130,654 $ 121,733
Commercial 19,383 18,769 14,677 21,834 20,539
Industrial 4,360 4,299 3,321 6,392 5,161
Transportation (b) 14,804 14,212 13,188 11,185 11,751
Other 996 1,027 1,309 1,060 1,041
Total Operating Revenues 168,875 163,809 136,529 171,125 160,225
Less- Gas costs 92,307 86,304 72,815 105,042 93,800
- Revenue taxes 10,794 10,751 9,158 10,962 10,622
Net Operating Revenues $ 65,774 $ 66,754 $ 54,556 $ 55,121 $ 55,803
Net Income applicable to common stock $ 14,814 $ 16,347 $ 9,048 $ 10,378 $ 8,973
Dividends declared on common stock $ 13,525 $ 11,748 $ 5,947 $ 7,107 $ 6,672
ASSETS AT YEAR-END (thousands)
Property, plant and equipment $ 295,631 $ 284,896 $ 272,869 $ 259,375 $ 248,580
Less - Accumulated depreciation 100,957 93,821 86,950 80,639 75,110
Net Property, Plant and Equipment $ 194,674 $ 191,075 $ 185,919 $ 178,736 $ 173,470
Total assets $ 230,694 $ 237,500 $ 234,633 $ 234,364 $ 235,431
Capital expenditures - construction $ 12,004 $ 13,286 $ 14,901 $ 12,595 $ 22,824
CAPITALIZATION AT YEAR-END (thousands)
Common equity $ 92,669 $ 91,380 $ 86,781 $ 83,680 $ 80,409
Long-term debt 64,604 64,664 72,724 76,925 80,925
Total Capitalization $ 157,273 $ 156,044 $ 159,505 $ 160,605 $ 161,334
CAPITALIZATION AT YEAR-END (per cent)
Common equity 59 59 54 52 50
Long-term debt 41 41 46 48 50
Total Capitalization 100 100 100 100 100
GAS SOLD AND TRANSPORTED (MDth)
Gas Sales:
Residential 21,578 22,789 19,062 20,228 20,009
Commercial 3,531 3,698 2,873 3,641 3,529
Industrial 846 930 702 1,005 953
Transportation (b) 13,089 12,832 12,468 11,964 11,655
Total Gas Sales and Transportation 39,044 40,249 35,105 36,838 36,146
Margin per Dth delivered 1.68 $ 1.66 $ 1.55 $ 1.50 $ 1.54
NUMBER OF CUSTOMERS (average)
Residential 129,488 126,454 122,591 119,190 116,644
Commercial 8,164 7,831 7,674 7,656 7,493
Industrial 892 857 820 802 809
Transportation (b) 1,659 1,677 1,626 1,479 1,399
Total Customers 140,203 136,819 132,711 129,127 126,345
DEGREE DAYS 6,806 7,080 5,897 6,701 6,679
Per cent of normal (6,536) 104 108 90 103 102
(a) The Company is a wholly owned subsidiary of Peoples Energy; therefore,
per-share data are omitted.
(b) Includes commercial, industrial, and larger residential customers.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net Income
Net income applicable to common stock decreased $1.5 million,
to $14.8 million, in fiscal 1997 from 1996, primarily a result of
the year-ago period's gain on the expiration of gas storage
contracts (see Note 5 of the Notes to Consolidated Financial
Statements). Also hindering this year's comparative results were
decreased gas deliveries due to weather that was four per cent
warmer than the previous fiscal year and conservation, increased
computer support services associated with the implementation of
the new customer information system and increased depreciation
and amortization expense. Partially offsetting these effects
were a decrease in pension expense (see Note 6A of the Notes to
Consolidated Financial Statements), a full year's effect of the
Company's November 1995 rate increase (see Note 2A of the Notes
to Consolidated Financial Statements), and decreased net interest
expense.
In 1996, net income applicable to common stock increased $7.3
million, to $16.3 million, due chiefly to weather that was 20 per
cent colder than in 1995 and to the aforementioned rate increase.
In addition, net income benefited from the previously mentioned
gain associated with the expiration of certain natural gas
storage contracts and a net credit in pension expense. These
increases were partially offset by the prior year's recognition
of the federal income tax settlement (see Note 7D of the Notes to
Consolidated Financial Statements) and the fiscal year's higher
operating costs.
A summary of variations affecting income between years is
presented below, with explanations of significant differences
following:
Fiscal 1997 Fiscal 1996
over 1996 over 1995
Amount Amount
(000's) Per Cent (000's) Per Cent
Net operating revenues (a) $ (980) (1.5) $12,198 22.4
Operation and maintenance expenses (2,064) (7.1) 4,533 18.4
Depreciation expense 234 3.1 391 5.4
Income taxes 642 7.6 3,770 81.4
Other income and deductions (1,755) (56.6) 3,718 54.5
Net income applicable to common stock (1,533) (9.4) 7,299 80.7
(a) Operating revenues, net of gas costs and revenue taxes.
Net Operating Revenues
Gross revenues of the Company are affected by changes in the
unit cost of the Company's gas purchases and do not include the
cost of gas supplies for customers who purchase gas directly from
producers and marketers rather than from the Company. The direct
customer purchases have little effect on net income because the
Company provides transportation service for such gas volumes and
recovers margins similar to those applicable to conventional gas
sales. Except for the effect of customer conservation that may
result from substantial increases in the commodity cost of gas
supplies, changes in the unit cost of gas do not significantly
affect net income because the Company's tariffs provide for
dollar-for-dollar recovery of gas costs. (See Note 1L of the
Notes to Consolidated Financial Statements.) The Company's
tariffs also provide for dollar-for-dollar recovery of the cost
of revenue taxes imposed by the state and various municipalities.
Since income is not significantly affected by changes in
revenue from customers' gas purchases from producers or marketers
rather than from the Company, changes in gas costs (except for
the effect of customer conservation that may result from
substantial increases in the commodity cost of gas supplies), or
changes in revenue taxes, the discussion below pertains to "net
operating revenues" (operating revenues, net of gas costs and
revenue taxes). The Company considers net operating revenues to
be a more pertinent measure of operating results than gross
revenues.
Net operating revenues decreased $980,000 to $65.8 million, in
1997. Natural gas deliveries decreased 1.2 bcf to 39.0 bcf, due
to weather that was four per cent warmer than in 1996 and
conservation. Net operating revenues decreased approximately
$1.1 million ($654,000 after income taxes) as a result of warmer
weather and conservation. However, a full year's effect of the
Company's rate increase improved net operating revenues by
approximately $520,000 ($314,000 after income taxes).
In 1996, net operating revenues increased $12.2 million, to
$66.8 million. Natural gas deliveries increased 5.1 bcf, to 40.2
bcf, due to weather that was 20 per cent colder than in 1995 and
over eight per cent colder than normal. Net operating revenues
increased approximately $4 million ($2.4 million after income
taxes) as a result of the colder weather. Also, the Company's
aforementioned rate increase improved net operating revenues by
about $5 million ($3 million after income taxes).
See Other Matters - Operating Statistics for details of
selected financial and operating information by gas service
classification.
Operation and Maintenance Expenses
Operation and maintenance expenses decreased $2.1 million, to
$27.1 million, in 1997, due chiefly to an $814,000 decrease in
pension expense caused by changes in settlement accounting
attributed to employees choosing early retirement and actuarial
assumptions (see Note 6A of the Notes to Consolidated Financial
Statements), reductions in costs associated with liability
insurance premiums and claim settlements ($674,000), and lower
reengineering expenses ($433,000).
In 1996, operation and maintenance expenses increased $4.5
million, to $29.1 million, due principally to the reduction of
expense from the prior year's recognition of approximately $1.5
million for an IRS settlement. (See Note 7D of the Notes to
Consolidated Financial Statements.) In addition, increases
between years resulted from greater environmental costs recovered
through rates ($1.4 million), costs associated with liability
insurance premiums and claim settlements ($562,000), and
distribution system expenses ($438,000).
Depreciation Expense
Depreciation expense increased $234,000, to $7.9 million, in
1997, and $391,000, to $7.6 million, in 1996, due largely to
depreciable property additions.
Income Taxes
Income taxes, exclusive of the $183,000 included in other
income and deductions, increased $642,000, to $9.0 million, due
mainly to higher pre-tax income.
In 1996, income taxes, exclusive of the $1.8 million included
in other income and deductions, increased $3.8 million, to $8.4
million, due mainly to higher pre-tax income.
Other Income and Deductions
Other income and deductions increased $1.8 million from the
prior year, due chiefly to the prior period's gain associated
with the expiration of natural gas storage contracts. (See Note
5 of the Notes to Consolidated Financial Statements.) Partially
offsetting this increase were reductions in interest expense on
long-term debt resulting from the Company's early redemption of
first mortgage bonds (see Note 12A of the Notes to Consolidated
Financial Statements) and other interest expense.
In 1996, other income and deductions decreased $3.7 million
from the prior year, due largely to the gain of $2.2 million,
after income taxes, associated with the expiration of certain
natural gas storage contracts. (See Note 5 of the Notes to
Consolidated Financial Statements.) Additionally, fiscal year
1996 includes lower interest on long-term debt resulting from the
Company's early redemption of first mortgage bonds. (See Note
12A of the Notes to Consolidated Financial Statements.)
Other Matters
Effect of Weather. Weather variations affect the volumes of gas
delivered for heating purposes and, therefore, can have a
significant positive or negative impact on net income, cash
position, and coverage ratios.
FERC Order 636 Costs. In 1994, the Commission entered orders
providing for full recovery by the Company of FERC Order 636
transition costs from the Company's gas service customers. The
Commission's orders have been appealed to the Illinois Supreme
Court. (See Notes 1L, 2A, and 2B of the Notes to Consolidated
Financial Statements.)
Large-Volume Gas Service Agreements. The Company has entered
into a gas service contract with a large-volume customer under a
specific rate schedule approved by the Commission. This contract
was negotiated to overcome the potential threat of bypassing the
utility's distribution system. The contract will not have a
material adverse effect on the financial position or the results
of operations of the Company.
Operating Statistics. The following table represents gas
distribution margin components:
For fiscal years ended SepteMBER 30, 1997 1996 1995
Operating Revenues (thousands):
Gas sales
Residential 129,332 125,502 104,034
Commercial 19,383 18,769 14,677
Industrial 4,360 4,299 3,321
153,075 148,570 122,032
Transportation
Residential 2,784 1,852 1,233
Commercial 5,018 6,307 6,859
Industrial 5,128 5,683 5,096
Contract Pooling 1,874 370 -
14,804 14,212 13,188
Other 996 1,027 1,309
Total Operating Revenues 168,875 163,809 136,529
Less- Gas Costs 92,307 86,304 72,815
- Revenues Taxes 10,794 10,751 9,158
Net Operating Revenues 65,774 66,754 54,556
Deliveries (MDth):
Gas Sales
Residential 21,578 22,789 19,062
Commercial 3,531 3,698 2,873
Industrial 846 930 702
25,955 27,417 22,637
Transportation (a)
Residential 2,756 1,415 579
Commercial 3,936 5,145 5,518
Industrial 6,397 6,272 6,371
13,089 12,832 12,468
Total Gas Sales and Transportation 39,044 40,249 35,105
Margin per Dth delivered 1.68 1.66 1.55
(a) Volumes associated with contract pooling service are
included in the respective customer classes.
LIQUIDITY
Source of Funds. The Company has access to outside capital
markets and to internal sources of funds that together provide
sufficient resources to meet capital requirements. It does not
anticipate any changes that would materially alter its current
liquidity position.
Due to the seasonal nature of gas usage, a major portion of
cash collections occurs between December and May. Because of
timing differences in the receipt and disbursement of cash and
the level of construction requirements, the Company may borrow on
a short-term basis. Short-term borrowings are repaid with cash
from operations, other short-term borrowings, or refinanced on a
permanent basis with debt or equity, depending on capital market
conditions and capital structure considerations.
Credit Lines. Peoples Gas has lines of credit of $129.4 million
of which the Company may borrow up to $30 million. At
September 30, 1997, Peoples Gas and the Company had unused credit
available from banks of $126.5 million. (See Note 11 of the Notes
to Consolidated Financial Statements.)
Cash Flow Activities. Net cash provided by operating activities
in 1997 decreased by $7.6 million, due chiefly to changes in
accounts payable and gas in storage. Partially offsetting these
items were increases in net receivables and other assets. In
1996, net cash provided by operating activities increased $4.8
million, due primarily to changes resulting from increased net
income, due mainly to colder weather and the rate increase, and
from accounts payable, partially offset by other assets and gas
sales revenue refundable. In 1995, net cash provided by
operating activities decreased by $800,000, due primarily to
changes related to gas costs recoverable, gas sales revenue
refundable, and net receivables, largely offset by increases
associated with gas in storage, deferred income taxes, and other
assets.
Net cash used in investing activities for 1997, 1996, and 1995
mainly represents the level of capital expenditures in the
respective years.
Net cash used in financing activities in 1997 primarily
reflects dividends paid on common stock. In 1996, net cash used
in financing activities reflects the redemption of previously
issued debt (see Note 12A of the Notes to Consolidated Financial
Statements) and higher dividends paid on common stock due to the
increase in net income. In 1995, net cash used in financing
activities reflects lower dividends paid on common stock
resulting from the reduction in net income.
Indenture Restrictions. The Company's indenture relating to its
first mortgage bonds contains provisions and covenants
restricting the payment of cash dividends and the purchase or
redemption of capital stock. At September 30, 1997, such
restrictions amounted to $11.6 million out of total retained
earnings of $67.9 million. (See Note 4 of the Notes to
Consolidated Financial Statements.)
Interest Coverage. The fixed charges coverage ratios for the
Company for fiscal 1997, 1996, and 1995 were 5.74, 5.62, and
2.93, respectively. The increase in the current fiscal year is
due to lower interest expense on bank loans, amounts refundable
to customers and long-term debt. The increase in the ratio for
fiscal year 1996 reflects the redemption of long-term debt and
higher pre-tax income resulting from colder weather and the
Commission approved rate increase. (See Results of Operations -
Net Income.) The ratio for fiscal 1995 includes the recording of
an IRS settlement in income. (See Note 7D of the Notes to
Consolidated Financial Statements.)
Debt Ratings. The long-term debt of the Company has been rated
Aa3 by Moody's Investors Service and AA- by Standard & Poor's
Rating Group since fiscal 1985. On November 25, 1997, Moody's
raised the Company's long-term debt rating to Aa2. The
commercial paper of the Company has the top rating from both
agencies.
Environmental Matters. The Company is conducting environmental
investigations and work at certain sites that were the location
of former manufactured gas operations. (See Note 3A of the Notes
to Consolidated Financial Statements.)
In February 1994, the Company received a demand from a
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (CERCLA), for
reimbursement, indemnification, and contribution for response
costs incurred at a former mineral processing site in Denver,
Colorado. The Company filed a declaratory judgment action asking
the court to declare that the Company is not liable for response
costs relating to the site. Salomon filed a counterclaim for
costs to be incurred by Salomon and Shattuck with respect to the
site. On March 7, 1997, the District Court granted North Shore
Gas' motion for summary judgment, declaring that North Shore Gas
is not liable for any response costs in connection with the
Denver site. Salomon has appealed the ruling of the District
Court to the United States Court of Appeals, Seventh Circuit.
(See Note 3B of the Notes to Consolidated Financial Statements.)
On November 14, 1995, the Illinois Attorney General filed a
complaint in the Circuit Court of Cook County naming the Company
and four other parties as defendants. The complaint alleges
violations arising out of a gasoline release that occurred in
Wheeling, Illinois, in June 1992, when a contractor who was
installing a pipeline for the Company accidentally struck a
gasoline pipeline owned by West Shore Pipeline Company. The
Company is contesting this suit. (See Note 3C of the Notes to
Consolidated Financial Statements.)
Regulatory Actions. On November 8, 1995, the Commission issued
an order approving changes in rates of the Company. (See Note 2A
of the Notes to Consolidated Financial Statements.)
Year 2000. The Company is modifying all of its computer programs
to be year 2000 compatible. The Company does not believe that
the amount of expenditures it will incur in connection with its
year 2000 modification will have a material adverse effect on the
financial position or results of operations of the Company.
CAPITAL RESOURCES
Capital Spending. Capital expenditures for additions,
replacements, and improvements to the utility plant were $12.0
million in 1997, $13.3 million in 1996, and $14.9 million in
1995.
Expenditures in fiscal 1997 decreased $1.3 million from 1996
and decreased $1.6 million in 1996 as compared to 1995. Both
years reflect the Company's commitment to its cost containment
program.
While capital expenditures for fiscal 1998 are estimated to be
$15.1 million, an increase of $3.1 million from 1997, the 1998
amount reflects a level that is consistent with the financial
goals of the Company.
There are no sinking fund requirements for long-term debt due
in fiscal 1998. (See Note 12B of the Notes to Consolidated
Financial Statements.)
The Company anticipates that future cash needs for capital
expenditures and sinking fund requirements and maturities will be
met through internally generated funds, intercompany loans from
Peoples Energy, borrowing arrangements with banks and/or the
issuance of commercial paper on an interim basis, and periodic
long-term financing involving first mortgage bonds or equity from
Peoples Energy.
Bonds Redeemed. On February 1, 1996, the Company redeemed $8
million aggregate principal amount of its Series I First Mortgage
Bonds using the proceeds of a short-term bank loan as well as
other monies of the Company. (See Note 12A of the Notes to
Consolidated Financial Statements.)
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Statement of Management's Responsibility 16
Report of Independent Public Accountants 17
Consolidated Statements of Income for fiscal years ended
September 30, 1997, 1996, and 1995 18
Consolidated Statements of Retained Earnings for fiscal
years ended September 30, 1997, 1996, and 1995 18
Consolidated Balance Sheets at September 30, 1997 and 1996 19
Consolidated Capitalization Statements at September 30, 1997
and 1996 20
Consolidated Statements of Cash Flows for fiscal years ended
September 30, 1997, 1996, and 1995 21
Notes to Consolidated Financial Statements 22
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
The financial statements and other financial information
included in this report were prepared by management, who is
responsible for the integrity and objectivity of the
presented data. The consolidated financial statements of
the Company and its subsidiaries were prepared in conformity
with generally accepted accounting principles and
necessarily include some amounts that are based on the best
estimates and judgments of management.
The Company maintains internal accounting systems and
related administrative controls, along with internal audit
programs, that are designed to provide reasonable assurance
that the accounting records are accurate and assets are
safeguarded from loss or unauthorized use. Consequently,
management believes that the accounting records and controls
are adequate to produce reliable financial statements.
Arthur Andersen LLP, the Company's independent public
accountants approved by Peoples Energy's shareholders, as a
part of its audit of the financial statements, selectively
reviews and tests certain aspects of internal accounting
controls solely to determine the nature, timing, and extent
of audit tests. Management has made available to Arthur
Andersen LLP all of the Company's financial records and
related data and believes that all representations made to
the independent public accountants during its audit were
valid and appropriate.
The Audit Committee of the Board of Directors of Peoples
Energy, comprised of six outside directors, meets
periodically with management, the internal auditors, and
Arthur Andersen LLP, jointly and separately, to assure that
appropriate responsibilities are discharged. These meetings
include discussion and review of accounting principles and
practices, internal accounting controls, audit results, and
the presentation of financial information in the annual
report of Peoples Energy.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To North Shore Gas Company:
We have audited the accompanying consolidated balance
sheets and consolidated capitalization statements of North
Shore Gas Company (an Illinois corporation, hereinafter
referred to as the Company and a wholly owned subsidiary of
Peoples Energy Corporation) and subsidiary companies at
September 30, 1997 and 1996, and the related consolidated
statements of income, retained earnings, and cash flows for
each of the three years in the period ended
September 30, 1997. These financial statements and the
schedule referred to below are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of the Company and subsidiary companies
at September 30, 1997 and 1996, and the results of their
operations and cash flows for each of the three years in the
period ended September 30, 1997, in conformity with
generally accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The financial statement schedule listed in Item 14(a)2 is
presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic
financial statements. The financial statement schedule has
been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion,
fairly states, in all material respects, the financial data
required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 31, 1997
CONSOLIDATED STATEMENTS OF INCOME
North Shore Gas Company
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Operating Revenues:
Gas sales $153,075 $148,570 $122,032
Transportation 14,804 14,212 13,188
Other 996 1,027 1,309
Total Operating Revenues 168,875 163,809 136,529
Operating Expenses:
Gas costs 92,307 86,304 72,815
Operation 24,131 25,893 21,595
Maintenance 2,933 3,235 3,000
Depreciation 7,863 7,629 7,238
Taxes- Income 9,046 8,404 4,634
- State and local revenue 10,794 10,751 9,158
- Other 2,133 2,147 2,224
Total Operating Expenses 149,207 144,363 120,664
Operating Income 19,668 19,446 15,865
Other Income and (Deductions):
Interest income 447 414 564
Interest on long-term debt (4,627) (4,937) (5,905)
Other interest expense (441) (804) (1,291)
Income taxes (183) (1,750) (225)
Miscellaneous - net (see Note 9) (50) 3,978 40
Total Other Income and Deductions (4,854) (3,099) (6,817)
Net Income Applicable to Common Stock $ 14,814 $ 16,347 $ 9,048
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
North Shore Gas Company
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Balance at Beginning of Year $ 66,623 $ 62,024 $ 58,923
Add - Net Income 14,814 16,347 9,048
Deduct- Dividends declared on common stock 13,525 11,748 5,947
Balance at End of Year $ 67,912 $ 66,623 $ 62,024
The Notes to Consolidated Financial Statements are an integral part of these
statements.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
North Shore Gas Company
At September 30, 1997 1996
(Thousands)
<S> <C> <C>
Properties and Other Assets
Capital Investments:
Property, plant and equipment, at original cost $295,631 $ 284,896
Less - Accumulated depreciation 100,957 93,821
Net property, plant and equipment 194,674 191,075
Other investments 21 113
Total Capital Investments - Net 194,695 191,188
Current Assets:
Cash and cash equivalents 344 389
Receivables -
Customers, net of allowance for uncollectible
accounts of $898 and $932, respectively 4,960 5,523
Other 1,707 3,421
Accrued unbilled revenues 2,633 3,780
Materials and supplies, at average cost 2,976 2,109
Gas in storage, at last-in, first-out cost 10,003 9,627
Gas costs recoverable through rate adjustments 1,836 2,500
Prepayments 246 371
Total Current Assets 24,705 27,720
Other Assets:
Regulatory assets (see Note 1H) 8,524 15,322
Deferred charges 2,770 3,270
Total Other Assets 11,294 18,592
Total Properties and Other Assets $230,694 $ 237,500
Capitalization and Liabilities
Capitalization (see Consolidated Capitalization Statements) $157,273 $ 156,044
Current Liabilities:
Interim loans 2,110 1,925
Accounts payable 18,884 26,929
Dividends payable on common stock 5,511 3,372
Customer gas service and credit deposits 5,634 5,269
Accrued taxes 1,952 2,297
Gas sales revenue refundable through rate adjustments 411 3,188
Accrued interest 2,037 2,038
Total Current Liabilities 36,539 45,018
Deferred Credits and Other Liabilities:
Deferred income taxes-primarily accelerated depreciation(Note7C) 20,416 19,688
Investment tax credits being amortized over
the average lives of related property 3,592 3,743
Other 12,874 13,007
Total Deferred Credits and Other Liabilities 36,882 36,438
Total Capitalization and Liabilities $ 230,694 $ 237,500
The Notes to Consolidated Financial Statements are an integral
part of these statements.
</TABLE>
CONSOLIDATED CAPITALIZATION STATEMENTS
North Shore Gas Company
At September 30, 1997 1996
(Thousands, except number of shares)
Common Stockholder's Equity:
Common stock, without par value -
Authorized 5,000,000 shares
Outstanding 3,625,887 shares $ 24,757 $ 24,757
Retained earnings (see Consolidated Statements
of Retained Earnings) 67,912 66,623
Total Common Stockholder's Equity 92,669 91,380
Long-Term Debt:
Exclusive of sinking fund payments and maturities
due within one year
First and Refunding Mortgage Bonds -
8% Series J, due November 1, 2020 24,699 24,734
6-3/8% Series K, due October 1, 2022 24,905 24,930
6.37% Series L, due May 1, 2003 15,000 15,000
Total Long-Term Debt 64,604 64,664
Total Capitalization $ 157,273 $ 156,044
The Notes to Consolidated Financial Statements are an integral part of these
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
North Shore Gas Company
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Operating Activities:
Net Income $ 14,814 $ 16,347 $ 9,048
Adjustments to reconcile net income to net cash:
Depreciation 7,863 7,629 7,238
Deferred income taxes and investment tax credit 126 (425) 3,339
Change in deferred credits and other liabilities 319 1,168 (1,146)
Change in other assets 7,298 (5,965) 573
Other - 11 8
Change in current assets and liabilities:
Receivables - net 2,277 (3,776) 131
Accrued unbilled revenues 1,147 (1,064) (355)
Materials and supplies (867) 89 (247)
Gas in storage (376) 8,769 9,025
Gas costs recoverable 664 1,573 (1,671)
Payables (8,045) 12,640 351
Customer gas service and credit deposits 365 (295) (313)
Accrued taxes (345) 1,028 (846)
Gas sales revenue refundable (2,778) (7,756) 1,168
Accrued interest - 266 (966)
Prepayments 125 (24) 30
Net Cash Provided by Operating Activities 22,587 30,215 25,367
Investing Activities:
Capital expenditures - construction (12,003) (13,286) (14,901)
Other assets 632 482 480
Net Cash Used in Investing Activities (11,371) (12,804) (14,421)
Financing Activities:
Interim loans - net 185 1,925 -
Retirement of long-term debt (60) (12,060) (4,201)
Dividends paid on common stock (11,386) (9,971) (6,164)
Net Cash Used in Financing Activities (11,261) (20,106) (10,365)
Net Increase (Decrease) in Cash and Cash Equivalents (45) (2,695) 581
Cash and Cash Equivalents at Beginning of Year 389 3,084 2,503
Cash and Cash Equivalents at End of Year $ 344 $ 389 $ 3,084
The Notes to Consolidated Financial Statements are an integral part of these
statements.
North Shore Gas Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1A Principles of Consolidation
All subsidiaries are included in the consolidated financial
statements. All significant intercompany transactions have been
eliminated in consolidation. Certain items previously reported
for years prior to 1997 have been reclassified to conform with
the current-year presentation.
1B Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
1C Concentration of Credit Risk
The Company provides natural gas service to about 140,000
customers within approximately 275 square miles in Northeastern
Illinois. Credit risk for the Company is spread over a
diversified base of residential, commercial, and industrial
retail sales and transportation customers.
The Company encourages customers to participate in its long-
standing budget payment program that allows the cost of higher
gas consumption levels associated with the heating season to be
spread over a 12-month billing cycle. Customers' payment records
are continually monitored and credit deposits are required, when
appropriate, to minimize uncollectible write-offs.
1D Revenue Recognition
Gas sales revenues are recorded on the accrual basis for all
gas delivered during the month, including an estimate for gas
delivered but unbilled at the end of each month.
1E Property, Plant and Equipment
Property, plant and equipment is stated at original cost and
includes appropriate amounts of capitalized labor costs, payroll
taxes, employee benefit costs, administrative costs, and an
allowance for funds used during construction.
1F Accounts Payable
The Company utilizes controlled disbursement banking
arrangements under which certain bank accounts have negative book
balances due to checks in transit. The negative balances are
classified as Accounts Payable.
1G Maintenance and Depreciation
The Company charges the cost of maintenance and repairs of
property and minor renewals and improvements of property to
maintenance expense. When depreciable property is retired, its
original cost is charged to the accumulated provision for
depreciation.
The provision for depreciation substantially reflects the
systematic amortization of the original cost of depreciable
property over estimated useful lives on the straight-line method.
Additionally, actual dismantling cost, net of salvage, is
included in the provision for depreciation in the month incurred.
The amounts provided are designed to cover not only losses due to
wear and tear that are not restored by maintenance, but also
losses due to obsolescence and inadequacy.
The provision for depreciation, expressed as an annual
percentage of original cost of depreciable property, is as
follows:
For fiscal years ended 1997 1996 1995
September 30,
Provision for depreciation 3.1% 3.1% 3.1%
1H Regulated Operations
The Company's utility operations are subject to regulation by
the Commission. Regulated operations are accounted for in
accordance with SFAS No. 71, "Accounting for the Effects of
Certain Types of Regulation." This standard controls the
application of generally accepted accounting principles for
companies whose rates are determined by an independent regulator
such as the Commission. Regulatory assets represent certain
costs that are expected to be recovered from customers through
the ratemaking process. When incurred, such costs are deferred
as assets in the balance sheet and subsequently recorded as
expenses when those same amounts are reflected in rates.
The following regulatory assets were reflected in Other Assets
in the Consolidated Balance Sheets at September 30, 1997 and
1996:
1997 1996
(Thousands)
Environmental costs, net of recoveries (see Note 3A) $ 6,899 $ 7,166
Transition costs from pipeline supplier (see Note 2B) 1,422 7,746
Rate case expenses 82 158
Discount, premium, expenses, and loss on reacquired bonds 113 236
Other 8 16
Total regulatory assets $ 8,524 $ 15,322
1I Income Taxes
The Company follows the liability method of accounting for
deferred income taxes. Under the liability method, deferred
income taxes have been recorded using currently enacted tax rates
for the differences between the tax basis of assets and
liabilities and the basis reported in the financial statements.
Due to the effects of regulation on the Company, certain
adjustments made to deferred income taxes are, in turn, debited
or credited to regulatory assets or liabilities. (See Note 7C.)
Each company within the consolidated group nets its income tax
related regulatory assets and liabilities. At September 30, 1997
and 1996, net regulatory income tax liabilities recorded in Other
Liabilities amounted to $5.2 million and $5.5 million,
respectively.
Investment tax credits have been deferred and are being
amortized through credits to income over the book lives of
related property.
The preceding deferred-tax and tax-credit accounting conforms
with regulations of the Commission.
1J Gas in Storage
Storage injections are priced at the fiscal-year average of
costs of supply. Withdrawals from storage are priced on the last-
in, first-out (LIFO) cost method. The estimated current
replacement cost of gas in inventory, at September 30, 1997 and
1996, exceeded the LIFO cost by approximately $16 million and
$13 million, respectively.
1K Statement of Cash Flows
For purposes of the balance sheet and the statement of cash
flows, the Company considers all short-term liquid investments
with maturities of three months or less to be cash equivalents.
Income taxes and interest paid (excluding capitalized
interest) were as follows:
For fiscal years ended 1997 1996 1995
September 30,
(Thousands)
Income taxes paid $9,053 $9,435 $ 839
Interest paid 4,889 5,119 6,354
1L Recovery of Gas Costs, Including Charges for Transition
Costs
Under the tariffs of the Company, the difference for any month
between costs recoverable through the Gas Charge and revenues
billed to customers under the Gas Charge is refunded to or
recovered from customers. Consistent with these tariff
provisions, such difference for any month is recorded either as a
current liability or as a current asset (with a contra entry to
Gas Costs).
For each gas utility, the Commission conducts annual
proceedings regarding the reconciliation of revenues from the Gas
Charge and related costs incurred for gas. In such proceedings,
costs recovered by a utility through the Gas Charge are subject
to challenge. Such proceedings regarding the Company for fiscal
years 1996 through 1997 are currently pending before the
Commission.
Pursuant to FERC Order No. 636 and successor orders, pipelines
are allowed to recover from their customers transition costs.
These costs arise from the restructuring of pipeline service
obligations required by the 636 Orders. The Company is currently
recovering pipeline charges for transition costs through the Gas
Charge. (See Notes 2A and 2B.)
1M Recovery of Costs of Environmental Activities Relating to
Former Manufactured Gas Operations
The Company is recovering the costs of environmental
activities relating to its former manufactured gas operations,
including carrying charges on the unrecovered balances, under a
rate mechanism approved by the Commission. For each utility with
such a rate mechanism, the Commission conducts annual proceedings
regarding the reconciliation of revenues from the rate mechanism
and related costs. In such proceedings, costs recovered by a
utility through the rate mechanism are subject to challenge.
Such proceedings, regarding the Company for fiscal years 1994
through 1996 are currently pending before the Commission. (See
Note 3A.)
2. RATES AND REGULATION
2A Utility Rate Proceedings
Rate Order. On November 8, 1995, the Commission issued an order
approving changes in rates of the Company that were designed to
increase annual revenues by approximately $5.6 million, exclusive
of additional charges for revenue taxes. The Company was allowed
a rate of return on original-cost rate base of 9.75 per cent,
which reflected an 11.30 per cent cost of common equity. The new
rates were implemented on November 14, 1995.
FERC Order 636 Cost Recovery. In 1994, the Commission issued
orders concluding its investigation into the appropriate means of
recovery by Illinois gas utilities of pipeline charges for FERC
Order 636 transition costs. The orders provided for the full
recovery of transition costs from the Company's gas service
customers. The Commission directed that gas supply realignment
(GSR) costs (one of the four categories of transition costs) be
recovered on a uniform volumetric basis from all transportation
and sales customers. A group of industrial transportation
customers has filed a petition with the Illinois Supreme Court
appealing the Commission's orders. If the Illinois Supreme Court
accepts the appeal, any changes made by it to the Commission's
orders would have a prospective effect only. (See Notes 1L and
2B.)
2B FERC Orders 636, 636-A, and 636-B
FERC Order 636 and successor orders require pipelines to make
separate rate filings to recover transition costs. Under a
Stipulation and Agreement (Agreement) filed by Natural Gas
Pipeline Company of America (Natural) and approved by FERC,
Natural's charges to the Company for GSR transition costs are
subject to a cap of approximately $25 million. At September 30,
1997, the Company had made payments of $23.6 million and had
accrued an additional $1.4 million toward the cap.
The 636 Orders are not expected to have a material effect on
financial position or results of operations of the Company. (See
Notes 1L and 2A.)
3. ENVIRONMENTAL MATTERS
3A Former Manufactured Gas Plant Operations
The Company, its predecessors, and certain former affiliates
operated facilities in the past at multiple sites for the purpose
of manufacturing gas and storing manufactured gas (Manufactured
Gas Sites). In connection with manufacturing and storing gas,
various by-products and waste materials were produced, some of
which might have been disposed of rather than sold. Under
certain laws and regulations relating to the protection of the
environment, the Company might be required to undertake remedial
action with respect to some of these materials. One of the
Manufactured Gas Sites is discussed in more detail below. The
Company, under the supervision of the IEPA, is conducting
investigations of two additional Manufactured Gas Sites. These
investigations may require the Company to perform additional
investigation and remediation. The investigations are in a
preliminary stage and are expected to occur over an extended
period of time.
In 1990, the Company entered into an Administrative Order on
Consent (AOC) with the United States Environmental Protection
Agency (EPA) and the IEPA to implement and conduct a remedial
investigation/feasibility study (RI/FS) of a Manufactured Gas
Site located in Waukegan, Illinois, where manufactured gas and
coking operations were formerly conducted (Waukegan Site). The
RI/FS is comprised of an investigation to determine the nature
and extent of contamination at the Waukegan Site and a
feasibility study to develop and evaluate possible remedial
actions. The Company entered into the AOC after being notified
by the EPA that the Company, General Motors Corporation (GMC) and
Outboard Marine Corporation were each a potentially responsible
party (PRP) under CERCLA with respect to the Waukegan Site. A
PRP is potentially liable for the cost of any investigative
and/or remedial work that the EPA determines is necessary.
Other parties identified as PRPs did not enter into the AOC.
Under the terms of the AOC, the Company is responsible for the
cost of the RI/FS. The Company believes, however, that it will
recover a significant portion of the costs of the RI/FS from
other entities. GMC has agreed to share equally with the Company
in funding of the RI/FS cost, without prejudice to GMC's or the
Company's right to seek a lesser cost responsibility at a later date.
The Company is accruing and deferring the costs it incurs in
connection with all of the Manufactured Gas Sites, including
related legal expenses, pending recovery through rates or from
insurance carriers or other entities. At September 30, 1997, the
total of the costs deferred by the Company, net of recoveries and
amounts billed to other entities, was $6.9 million. This amount
includes an estimate of the costs of completing the studies
required by the EPA at the Waukegan Site and the investigations
being conducted under the supervision of the IEPA referred to
above. The amount also includes an estimate of the costs of
remediation at the Waukegan Site at the minimum amount of the
current estimated range of such costs. The costs of remediation
at the other sites cannot be determined at this time. While the
Company intends to seek contribution from other entities for the
costs incurred at the sites, the full extent of such
contributions cannot be determined at this time.
The Company has filed suit against a number of insurance
carriers for the recovery of environmental costs relating to its
former manufactured gas operations. The suit asks the court to
declare that the insurers are liable under policies in effect
between 1937 and 1986 for costs incurred or to be incurred by the
Company in connection with its Manufactured Gas Sites in
Waukegan. The Company is also asking the court to award damages
stemming from the insurers' breach of their contractual
obligation to defend and indemnify the Company against these
costs. At this time, management cannot determine the timing and
extent of the Company's recovery of costs from its insurance
carriers. Accordingly, the costs deferred at September 30, 1997
have not been reduced to reflect recoveries from insurance
carriers.
Costs incurred by the Company for environmental activities
relating to former manufactured gas operations will be recovered
from insurance carriers or other entities or through rates for
utility service. Accordingly, management believes that the costs
incurred by the Company in connection with former manufactured
gas operations will not have a material adverse effect on the
financial position or results of operations of the Company. The
Company is recovering the costs of environmental activities
relating to its former manufactured gas operations, including
carrying charges on the unrecovered balances, under a rate
mechanism approved by the Commission. At September 30, 1997, it
had recovered $6.6 million of such costs through rates.
3B Former Mineral Processing Site in Denver, Colorado
In February 1994, the Company received a demand from the S.W.
Shattuck Chemical Company, Inc. (Shattuck), a responsible party
under CERCLA, for reimbursement, indemnification, and
contribution for response costs incurred at a former mineral
processing site in Denver, Colorado. Shattuck is a wholly owned
subsidiary of Salomon, Inc. (Salomon). The demand alleges that
the Company is a successor-in-interest to certain companies that
were allegedly responsible during the period 1934-1941 for the
disposal of mineral processing wastes containing radium and other
hazardous substances at the site. The cost of the remedy at the
site has been estimated by Shattuck to be approximately $31
million. Salomon has provided financial assurance for the
performance of the remediation at the site.
The Company filed a declaratory judgment action against
Salomon in the District Court for the Northern District of
Illinois. The suit asked the court to declare that the Company
is not liable for response costs incurred or to be incurred at
the Denver site. Salomon filed a counterclaim for costs to be
incurred by Salomon and Shattuck with respect to the site. On
March 7, 1997, the District Court granted the Company's motion
for summary judgment, declaring that the Company is not liable
for any response costs in connection with the Denver site.
Salomon has appealed the ruling of the District Court to the
United States Court of Appeals, Seventh Circuit.
The Company does not believe that it has liability for the
response costs, but cannot determine the matter with certainty.
At this time, the Company cannot reasonably estimate what range
of loss, if any, may occur. In the event that the Company
incurred liability, it would pursue reimbursement from insurance
carriers, other responsible parties, if any, and through its
rates for utility service.
3C Gasoline Release in Wheeling, Illinois
In June 1995, the Company received a letter from the IEPA
informing the Company that it was not in compliance with certain
provisions of the Illinois Environmental Protection Act which
prohibit water pollution within the State of Illinois. On
November 14, 1995, the Illinois Attorney General filed a
complaint in the Circuit Court of Cook County naming the Company
and four other parties as defendants. The complaint alleges that
the violations are the result of a gasoline release that occurred
in Wheeling, Illinois in June 1992, when a contractor who was
installing a pipeline for the Company accidentally struck a
gasoline pipeline owned by West Shore Pipeline Company. The
Company is contesting this suit. Management does not believe the
outcome of this suit will have a material adverse effect on
financial position or results of operations of the Company.
4. COVENANTS REGARDING RETAINED EARNINGS
The Company's indenture relating to its first mortgage bonds
contains provisions and covenants restricting the payment of cash
dividends and the purchase or redemption of capital stock. At
September 30, 1997, such restrictions amounted to $11.6 million
out of the Company's total retained earnings of $67.9 million.
5. EXPIRATION OF GAS STORAGE CONTRACTS
The Company had certain natural gas storage contracts with
Natural that expired on or before December 1, 1995. Associated
with the expiration of the contracts, the Company realized a gain
of approximately $3.7 million ($2.2 million after income taxes)
during fiscal 1996.
6. RETIREMENT AND POSTEMPLOYMENT BENEFITS
6A Pension Benefits
The Company participates in two defined benefit pension plans
covering substantially all employees. These plans provide pension
benefits that generally are based on an employee's length of
service, compensation during the five years preceding retirement,
and social security benefits. Annual contributions are made to
the plans based upon actuarial determinations and in
consideration of tax regulations and funding requirements under
federal law.
The Company also has non-qualified pension plans that provide
employees with pension benefits in excess of qualified plan
limits imposed by federal tax law.
Net pension cost for all plans for fiscal 1997, 1996, and 1995
included the following components:
1997 1996 1995
(Millions)
Service cost - benefits earned during year 0.8 1.0 1.0
Interest cost on projected benefit obligations 1.9 2.0 2.0
Actual return on plan assets (gain) (6.0) (3.9) (4.5)
Net amortization and deferral 3.7 1.7 2.3
Settlement accounting (0.3) 0.1 -
Net pension cost 0.1 0.9 0.8
In 1997 and 1996 the Company recognized a net gain of $300,000
and a net loss of $100,000, respectively, from the settlement of
portions of pension plan obligations.
The calculation of pension cost assumed a long-term rate of
return on assets of 9.0 per cent for 1997, 8.5 per cent for 1996
and 7.5 per cent for 1995. The settlement accounting cost for
1997 and 1996 was determined using a discount rate of 7.5 per
cent and assumed future compensation increases of 4.5 per cent
per year.
The following table shows the estimated funded status of the
Company's pension plans at September 30, 1997 and 1996:
1997 1996
(Millions)
Plan assets at market value 31.3 30.1
Actuarial present value of plan benefits:
Vested 18.2 18.6
Non-vested 2.7 2.3
Accumulated benefit obligation 20.9 20.9
Effect of projected future compensation increases 5.8 5.3
Projected benefit obligation 26.7 26.2
Excess of plan assets over projected benefit obligation 4.6 3.9
Less:
Unrecognized transition asset 0.3 0.4
Unrecognized prior service cost (0.2) (0.1)
Unrecognized net gain 5.4 4.5
Recognition of non-qualified plan
contributions 7-1-97 to 9-30-97 (0.1) -
Accrued pension liability (1.0) (0.9)
The projected benefit obligation and plan assets at September
30, 1997 and 1996, are based on a July 1 measurement date using a
discount rate of 7.5 per cent and assumed future compensation
increases of 4.5 per cent per year. Plan assets consist
primarily of marketable equity and fixed-income securities.
6B Other Postretirement Benefits
The Company also provides certain health care and life
insurance benefits for retired employees. Substantially all
employees may become eligible for such benefit coverage if they
reach retirement age while working for the Company. The plans are
funded based upon actuarial determinations and in consideration
of tax regulations and funding requirements under federal law.
The Company accrues the expected costs of such benefits during
the employees' years of service.
Net postretirement benefit cost for all plans for fiscal 1997,
1996, and 1995 included the following components:
1997 1996 1995
(Millions)
Service cost - benefits earned during year 0.3 0.3 0.2
Interest cost on projected benefit obligation 0.7 0.7 0.7
Actual return on plan assets (gain) (0.5) (0.2) (0.1)
Amortization of transition obligation 0.4 0.4 0.4
Net amortization and deferral 0.3 0.1 0.1
Net postretirement benefit cost 1.2 1.3 1.3
The calculation of postretirement benefit cost assumed a long-
term rate of return on assets of 9.0 per cent for 1997 and
7.5 per cent for 1996 through 1995.
Of the above total postretirement costs recognized for fiscal
years 1997, 1996, and 1995, $600,000, $600,000, and $700,000,
respectively, were funded through trust funds for future benefit
payments.
The following table sets forth the estimated funded status for
the postretirement health care and life insurance plans at
September 30, 1997 and 1996:
1997 1996
(Millions)
Plan assets at market value 2.8 1.9
Accumulated postretirement benefit obligation (APBO):
Retirees 6.5 5.8
Fully eligible active plan participants 0.8 1.5
Other active plan participants 2.7 2.6
Total APBO 10.0 9.9
Deficiency of plan assets over the APBO (7.2) (8.0)
Less:
Unrecognized transition obligation (6.8) (7.3)
Unrecognized net gain 0.4 0.1
Contributions: July 1 to September 30 0.8 0.8
Accrued postretirement benefit asset (liability) - -
The total APBO and plan assets at September 30, 1997 and 1996,
are based on a July 1 measurement date using a discount rate of
7.5 per cent and assumed future compensation increases of 4.5 per
cent per year. Plan assets consist primarily of marketable
equity and fixed-income securities.
For measurement purposes, a health care cost trend rate of 7.9 per
cent was assumed for fiscal 1998, and that rate thereafter will
decline gradually to 4.75 per cent in 2003 and subsequent years. The
health care cost trend rate assumption has a significant effect on the
amounts reported. Increasing the assumed health care cost trend rate
by one percentage point for each future year would have increased the
APBO at September 30, 1997, by $800,000 and the aggregate of service
and interest cost components of the net periodic postretirement
benefit cost by $100,000 annually.
7. TAX MATTERS
7A Provision for Income Taxes
Total income tax expense as shown on the Consolidated Statements of
Income is composed of the following:
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Current:
Federal $ 7,519 $ 8,715 $ 1,337
State 1,584 1,864 183
Total current income taxes 9,103 10,579 1,520
Deferred:
Federal 162 (278) 2,797
State 111 11 688
Total deferred income taxes 273 (267) 3,485
Investment tax credits - net:
Federal (189) (189) (191)
State 42 31 45
Total investment tax credits - net (147) (158) (146)
Total provision for income taxes $ 9,229 $ 10,154 $ 4,859
7B Tax Rate Reconciliation
The following is a reconciliation between the computed federal
income tax expense (tax rate of 35 per cent times pre-tax book income)
and the total provision for federal income tax expenses:
For fiscal years ended September 30, 1997 1996 1995
Per Cent Per Cent Per Cent
of of of
Amount Pre-tax Amount Pre-tax Amount Pre-tax
(000's) Income (000's) Income (000's) Income
Computed federal income
tax expense $7,807 35.00 $8,608 35.00 $4,547 35.00
Amortization of deferrred taxes (155) (0.70) (182) (0.74) (256) (1.97)
Other, net (160) (0.73) (178) (0.74) (348) (2.68)
Total provision for federal
income taxes $7,492 33.57 $8,248 33.52 $3,943 30.35
7C Deferred Income Taxes
Set forth in the table below are the temporary differences which
gave rise to the net deferred income tax liabilities (see Note 1I):
At September 30, 1997 1996
(Thousands)
Deferred tax liabilities:
Property - accelerated depreciation and
other property related items $ 23,910 $ 22,225
Other 995 2,453
Total deferred income tax liabilities 24,905 24,678
Deferred tax assets:
Net regulatory liabilities -
income tax amounts (2,062) (2,173)
Unamortized investment credits (1,427) (1,485)
Other (1,000) (1,332)
Total deferred income tax assets (4,489) (4,990)
Net deferred income tax liabilities $ 20,416 $ 19,688
7D Income Tax Settlement
On September 30, 1993, the Company received notification from the
IRS that settlement of past income tax returns had been reached for
fiscal years 1978 through 1990. The IRS settlement resulted in
payments of principal and interest to the Company in 1994 of
approximately $3 million, or $2.2 million after income taxes. The
Company received regulatory authorization to defer the recognition of
the settlement amount in income for fiscal year 1993, and to
recognize its portion of the settlement amount in income for fiscal
years 1994 and 1995. The Company represented to the Commission that,
having received this accounting authorization, it would not file a
request for an increase in base rates before December 1994.
As a result of the Commission's accounting authorization, the
fiscal year 1995 portion of the settlement amount for the Company was
amortized (credited) to operation expense. The effect was to offset
increases in costs that the Company would incur during the year. In
fiscal 1995, the Company amortized approximately $1.4 million, or
$1.1 million after income taxes.
8. ASSETS SUBJECT TO LIEN
The Indenture of Mortgage, dated April 1, 1955, as supplemented,
securing the first mortgage bonds issued by the Company, constitutes
a direct, first-mortgage lien on substantially all property owned by
the Company.
9. OTHER INCOME AND DEDUCTIONS - MISCELLANEOUS
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
Amortization of loss on reacquired long-term debt $(125) $ (93) $(24)
Interest on amounts recoverable from customers 42 224 20
Gain on expiration of gas storage contracts (see Note 5) - 3,717 -
Other 33 130 44
Total other income and deductions - miscellaneous $ (50) $ 3,978 $ 40
10. CAPITAL COMMITMENTS
Total contract and purchase order commitments of the Company at
September 30, 1997, amounted to approximately $900,000.
11. SHORT-TERM BORROWINGS AND CREDIT LINES
At September 30, 1997 1996
(Thousands)
Bank Loans
Peoples Gas
8.50% due March 27, 1998 $ 700 $ -
8.25% due February 11, 1997 - 700
Commercial Paper
North Shore Gas
due October 1, 1997 $ 2,110 $ -
due October 1, 1996 - 1,925
Letters of Credit
Peoples Gas $ 100 $ -
Available lines of credit
Unused bank lines $ 126,490 $ 126,775
Short-term cash needs of the Company and Peoples Gas are met
through intercompany loans from Peoples Energy, bank loans, and/or
the issuance of commercial paper. The outstanding total amount of
bank loans and commercial paper issuances cannot at any time exceed
total bank credit then in effect.
At September 30, 1997 and 1996, Peoples Gas and the Company had
combined lines of credit totaling $129.4 million. Of these amounts,
the Company could borrow up to $30 million. Agreements covering
$92 million of the total at September 30, 1997 will expire on
August 30, 1998; the agreement covering the remaining $37.4 million
will expire on January 31, 1999. Such lines of credit cover
projected short-term credit needs of Peoples Gas and the Company and
support the long-term debt treatment of Peoples Gas' adjustable-rate
mortgage bonds. Payment for the lines of credit is by fee.
12. LONG-TERM DEBT
12A Bonds Redeemed
On February 1, 1996, the Company redeemed $8 million aggregate
principal amount of its Series I First Mortgage Bonds using the
proceeds of a short-term bank loan as well as other monies of the
Company.
12B Sinking Fund Requirements and Maturities
At September 30, 1997, there were no long-term debt sinking
fund requirements and maturities for the next five years.
12C Fair Value of Financial Instruments
At September 30, 1997, the carrying amount of the Company's
long-term debt of $64.6 million had an estimated fair value of
$67.6 million. At September 30, 1996, the carrying amount of the
Company's long-term debt of $64.7 million had an estimated fair
value of $67.4 million. The estimated fair value of the
Company's long-term debt is based on quoted market prices or
yields for issues with similar terms and remaining maturities.
Since the Company is subject to regulation, any gains or losses
related to the difference between the carrying amount and the
fair value of financial instruments may not be realized by the
Company's shareholder. The carrying amount of all other
financial instruments approximates fair value.
13. QUARTERLY FINANCIAL DATA (Unaudited)
The first quarter of fiscal 1997 included a full quarter's
impact of the Commission-approved rate order. (See Note 2A of
the Notes to Consolidated Financial Statements.) All four
quarters reflected the decrease in gas deliveries due primarily
to warmer weather and conservation. However, this was offset in
all four quarters by reduced pension expense. The last three
quarters of fiscal 1996 reflected the gain from the expiration of
gas storage contracts. (See Note 5 of the Notes to Consolidated
Financial Statements.)
Net Income
Operating Operating Applicable to
Fiscal Quarters Revenues Income Common Stock
(Thousands)
1997
Fourth $ 14,597 $ (848) $ (1,975)
Third 25,648 3,615 2,490
Second 77,581 9,855 8,600
First 51,049 7,046 5,699
1996
Fourth $ 18,099 $ (225) $ (895)
Third 32,584 2,988 2,761
Second 69,967 9,901 9,300
First 43,159 6,782 5,181
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
IDENTIFICATION OF DIRECTORS
Company
Name, Principal Occupation, Age at Directorship
and Other Directorships 11-30-97 Since
Kenneth S. Balaskovits 55 1993
Vice President and Controller
of the Company, Peoples Energy,
and Peoples Gas; Director of Peoples Gas.
J. Bruce Hasch 59 1986
President and Chief Operating Officer of
the Company, Peoples Energy, and Peoples Gas;
Director of Peoples Energy and Peoples Gas.
James Hinchliff 57 1985
Senior Vice President and General Counsel
of the Company, Peoples Energy,
and Peoples Gas; Director of Peoples Gas.
Thomas M. Patrick 51 1996
Executive Vice President of the Company,
Peoples Energy, and Peoples Gas; Director of
Peoples Gas.
Richard E. Terry 60 1982
Chairman of the Board and Chief Executive
Officer of the Company, Peoples Energy, and
Peoples Gas; Director of Peoples Energy
and Peoples Gas. Mr. Terry is also a
director of Harris Bankcorp, Inc., Harris Trust
and Savings Bank, Bankmont Financial Corp.,
and Amsted Industries.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
(Continued)
IDENTIFICATION OF EXECUTIVE OFFICERS
Position at Age at Position
Name November 30, 1997 11-30-97 Held Since
Kenneth S. BalaskovitsVice President and Controller 55 1993
Emmet P. Cassidy Secretary and Treasurer 64 1989
Katherine A. Donofrio Vice President 40 1997
Willard S. Evans, Jr. Vice President 42 1997
Donald M. Field Vice President 48 1996
Joan T. Gagen Vice President 46 1994
J. Bruce Hasch President and Chief Operating 59 1990
Officer
James Hinchliff Senior Vice President and 57 1989
General Counsel
John C. Ibach Vice President 50 1992
James M. Luebbers Vice President 51 1997
William E. Morrow Vice President 41 1996
Thomas M. Patrick Executive Vice President 51 1996
Desiree Rogers Vice President 38 1997
Richard E. Terry Chairman of the Board and 60 1990
Chief Executive Officer
Directors and executive officers of the Company were elected
to serve for a term of one year or until their successors are
duly elected and qualified, except for Ms. Donofrio, Messrs.
Evans, Luebbers, Morrow, and Ms. Rogers, who were appointed.
There are no family relationships among directors and
executive officers of the Company.
All of the directors and executive officers of the Company
have been continuously employed by the Company and/or its
affiliates in various capacities for at least five years with the
exception of Ms. Rogers.
ITEM 11. EXECUTIVE COMPENSATION
The following tables set forth information concerning annual and long-
term compensation and grants of stock options, stock appreciation rights
(SARs) and restricted stock awards under Peoples Energy's Long-Term
Incentive Compensation Plan. Cash compensation for executive officers,
is paid by Peoples Gas with appropriate amounts billed to the Company for
the time such officers serve the Company. All compensation was paid by
the Company and its affiliates (Peoples Energy and Peoples Gas) for
services in all capacities during the three fiscal years set forth below,
to (1) the Chief Executive Officer and (2) the most highly compensated
executive officer of the Company other than the Chief Executive Officer.
No executive officer's cash compensation paid by the Company for service
to the Company exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards
Restricted Stock All Other
Name and Award(s)(1)(2) Options/SARs Compensation
Principal Position Year Salary($) Bonus($) ($) (#) (3)($)
<S> <C> <C> <C> <C> <C> <C>
Richard E. Terry 1997 548,500 237,900 152,663 17,800 16,455
Chairman and Cheif 1996 473,500 191,600 145,722 21,200 14,205
Executive Officer 1995 455,300 137,200 137,119 21,400 12,354
</TABLE>
(1) The total number of restricted shares held by Mr. Terry and the
aggregate market value of such shares at September 30, 1997, was
14,020 shares valued at $528,378.75. Dividends are paid on the
restricted shares at the same time and at the same rate as dividends
paid to all shareholders of common stock. Aggregate market value is
based on a per share price of $37.6875, the closing price of Peoples
Energy's stock on the New York Stock Exchange composite transactions
on September 30, 1997.
(2) Restricted stock awards granted to date vest in equal annual
increments over a five year period. If a recipient's employment with the
Company terminates, other than by reason of death, disability or
retirement after attaining age 65, the recipient forfeits all rights to
the unvested portion of the restricted stock award. In addition, the
Compensation-Nominating Committee (and with respect to the CEO, the
Compensation-Nominating Committee, subject to the approval of the non-
employee directors) may, in its sole discretion, accelerate the vesting
of any restricted stock awards granted under the Long-Term Incentive
Compensation Plan. Total restricted stock awarded to Mr. Terry for 1995
constitutes 5,325 shares, of which 1,065 shares vested in 1996; 1,065
shares vested in 1997; 1,065 shares will vest in 1998; 1,065 shares will
vest in 1999; and the remaining 1,065 shares will vest in 2000. Total
restricted stock awarded to Mr. Terry for 1996 constitutes 5,275 shares,
of which 1,055 shares vested in 1997; 1,055 shares will vest in 1998;
1,055 shares will vest in 1999; 1,055 shares will vest in 2000; and the
remaining 1,055 shares will vest in 2001. Total restricted stock awarded
to Mr. Terry for 1997 constitutes 4,425 shares, of which 885 shares will
vest in 1998; 885 shares will vest in 1999; 885 shares will vest in 2000;
885 shares will vest in 2001; and the remaining 885 shares will vest in
2002.
ITEM 11. EXECUTIVE COMPENSATION (Continued)
(3) Company contributions to the Capital Accumulation Plan accounts
of the named executive officers during the above fiscal years.
Employee contributions under the plan are subject to a maximum
limitation under the Internal Revenue Code of 1986. The Company
pays an employee who is subject to this limitation an additional
50 cents for each dollar that the employee is prevented from
contributing solely by reason of such limitation. The amounts
shown in the table above reflect, if applicable, this additional
Company payment.
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN FISCAL 1997
Individual Grants
% of Total Options/
Options/SARs SARs Granted to Exercise or Grant Date
Granted Employees in Fiscal Base Price Expiration Present Value
Name (#) (1) Year (2) ($/Sh) Date ($)(3)
<S> <C> <C> <C> <C> <c
Richard E. Terry 17,800 10.1% $34.19 02-Oct-06 $51,620
Chairman and Cheif
Executive Officer
</TABLE>
(1)The grant of an Option enables the recipient to purchase Peoples
Energy common stock at a purchase price equal to the fair market
value of the shares on the date the Option is granted. The grant
of an SAR enables the recipient to receive, for each SAR granted,
cash in an amount equal to the excess of the fair market value of
one share of Peoples Energy common stock on the date the SAR is
exercised over the fair market value of such common stock on the
date the SAR was granted. Options or SARs that expire unexercised
become available for future grants. Before an Option or SAR may
be exercised, the recipient must complete 12 months of continuous
employment subsequent to the grant of the Option or SAR. Options
and SARs may be exercised within 10 years from the date of grant,
subject to earlier termination in case of death, retirement, or
termination of employment.
(2)Based on 88,200 Options and 88,200 SARs granted to all employees
under Peoples Energy's Long-Term Incentive Compensation Plan during
fiscal 1997.
(3)Present value is determined using a variation of the Black-Scholes Option-
Pricing Model. The model assumes: a) that Options and SARs are
exercised two years after the date of grant-the averagee time Options and
SARs were held by recipients under Peoples Energy Long-Term Incentive
Compensation Plan over the past ten years; b) use of an interest rate equal
to the interest rate on a U.S. Treasury security with a maturity date
corresponding to the assumed exercise date; c) a level of volatility
calculated using weekly stock prices for the two years prior to the
date of grant; d) an expected dividend yield; and e) that no adjustments
were made for non-transferability or risk of forfeiture. This is a
theoretical value for the Options and SARs. The amount realized from
an Option or SAR ultimately depends upon the excess of the market
value of Peoples Energy's stock over the exercise price on the date
the option or SAR is exercised.
ITEM 11. EXECUTIVE COMPENSATION (Continued)
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1997
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Value of
Shares Unexercised Unexercised
Acquired Options/SARs at In-the-Money
on Fiscal Options/SARs
(Option/SAR) Value Year-End (#) at Fiscal Year-End($)
Name Exercise(#)(1) Realized($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C>
Richard E. Terry 21,200 $178,875 29,000 17,800 $204,790 $62,300
Chairman and Chief
Executive Officer
</TABLE>
(1)Includes cash-only SARs exercised by the named executive officer
in the following amount: Mr. Terry, 10,600.
PENSION PLAN TABLE
Years of Service
Average Annual
Compensation 20 25 30 35 40
$150,000 $ 54,682 $ 68,352 $ 82,022 $ 91,397 $100,772
200,000 74,682 93,352 112,022 124,522 137,022
250,000 94,682 118,352 142,022 157,647 173,272
300,000 114,682 143,352 172,022 190,772 209,522
350,000 134,682 168,352 202,022 223,897 245,772
400,000 154,682 193,352 232,022 257,022 282,022
450,000 174,682 218,352 262,022 290,147 318,272
500,000 194,682 243,352 292,022 323,272 354,522
550,000 214,682 268,352 322,022 356,397 390,772
600,000 234,682 293,352 352,022 389,522 427,022
650,000 254,682 318,352 382,022 422,647 463,272
700,000 274,682 343,352 412,022 455,772 499,522
750,000 294,682 368,352 442,022 488,897 535,772
The above table illustrates various annual straight-life benefits
at normal retirement (age 65) for the indicated levels of average
annual compensation and various periods of service, assuming no future
changes in Peoples Energy's pension benefits. The compensation used
in the computation of annual retirement benefits is substantially
equivalent to the salary and bonus reported in the Summary
Compensation Table. The benefit amounts shown reflect reduction for
applicable Social Security benefits.
Average annual compensation is the average 12-month compensation
for the highest 60 consecutive months of the last 120 months of
service prior to retirement. Compensation is total salary paid to an
employee by the Company and/or its affiliates, including bonuses under
Peoples Energy's Short-Term Incentive Compensation Plan, pre-tax
contributions under Peoples Energy's Capital Accumulation Plan, pre-
tax contributions under Peoples Energy's Health and Dependent Care
Spending Accounts Plan, and pre-tax contributions for life and health
care insurance, but excluding moving allowances, exercise of stock
options and SARs, and other compensation that has been deferred.
ITEM 11. EXECUTIVE COMPENSATION (Continued)
At September 30, 1997, the credited years of retirement
benefit service for the individuals listed in the Summary
Compensation Table are as follows: Mr. Terry, 33 years. The
benefits shown in the foregoing table are subject to maximum
limitations under the Employee Retirement Income Security Act of
1974, as amended, and the Internal Revenue Code of 1986, as
amended. Should these benefits at the time of retirement exceed
the then-permissible limits of the applicable Act, the excess
would be paid by the Company as supplemental pensions pursuant to
Peoples Energy's Supplemental Retirement Benefit Plan. The
benefits shown give effect to these supplemental pension
benefits.
SEVERANCE AGREEMENTS
Peoples Energy has entered into separate severance agreements
with certain key executives including each of the executives
named in the Summary Compensation Table. The intent of the
severance agreements is to assure the continuity of the
administration and operations of Peoples Energy and its
subsidiaries, including the Company in the event of a Change in
Control of the Company (as described below). The severance
agreements were developed in accordance with the advice of
outside consultants.
The term of each severance agreement is for the longer of 36
months after the date in which a Change in Control of Peoples
Energy occurs or 24 months after the completion of the
transaction approved by shareholders described in (iii) below of
the description of a Change in Control. A Change in Control is
defined as occurring when (i) Peoples Energy receives a report on
Schedule 13D filed with the Securities and Exchange Commission
pursuant to Section 13(d) of the Securities Exchange Act of 1934,
as amended, disclosing that any person, group, corporation, or
other entity is the beneficial owner, directly or indirectly, of
20% or more of the common stock of Peoples Energy; (ii) any
person, group, corporation, or other entity (except Peoples
Energy or a wholly-owned subsidiary), after purchasing common
stock of Peoples Energy in a tender offer or exchange offer,
becomes the beneficial owner, directly or indirectly, of 20% or
more of such common stock; (iii) the shareholders of Peoples
Energy approve (a) any consolidation or merger of Peoples Energy
in which Peoples Energy is not the continuing or surviving
corporation, other than a consolidation or merger in which
holders of Peoples Energy's common stock prior to the
consolidation or merger have substantially the same proportionate
ownership of common stock of the surviving corporation
immediately after the consolidation or merger as immediately
before; (b) any consolidation or merger in which Peoples Energy
is the continuing or surviving corporation, but in which the
common shareholders of Peoples Energy immediately prior to the
consolidation or merger do not hold at least 90% of the
outstanding common stock on Peoples Energy; (c) any sale, lease,
exchange or other transfer of all or substantially all of the
assets of Peoples Energy, except where Peoples Energy owns all of
the outstanding stock of the transferee entity or Peoples
Energy's common shareholders immediately prior to such
transaction own at least 90% of the transferee entity or group of
transferee entities immediately after such transaction; or (d)
any consolidation or merger of Peoples Energy where, after the
consolidation or merger, one entity or group of entities owns
100% of the shares of Peoples Energy, except where Peoples
Energy's common shareholders immediately prior to such merger or
consolation own at least 90% of the outstanding stock of such
entity or group of entities immediately after such consolidation
or merger; or (iv) a change in the majority of the members of
Peoples Energy's Board of Directors within a 24-month period,
unless approved by two-thirds of the directors then still in
office who were in office at the beginning of the 24-month
period.
Each severance agreement provides for payment of severance
benefits to the executive in the event that, during the term of
the severance agreement, (i) the executive's employment is
terminated by Peoples Energy or the Company, except for "cause"
as defined therein; or (ii) the executive's employment is
terminated due to a constructive discharge, which includes (a) a
material change in the executive's responsibilities, which change
would cause the executive's position with Peoples Energy or the
Company to become of less dignity, responsibility, prestige or
scope; (b) reduction, which is more than de minimis, in total
compensation; (c) assignment without the executive's consent to a
location more than 50 miles from the current place of employment;
or (d) liquidation, dissolution, consolidation, merger, or sale
of all or substantially all of the assets of Peoples Energy or
the Company, unless the successor corporation has a net worth at
least equal to that of Peoples Energy or the Company, as
applicable, and expressly assumes the obligations of Peoples
Energy under the executive's severance agreement.
The principal severance benefits payable under each severance
agreement consist of the following: (i) the executive's base
salary and accrued benefits through the date of termination,
including a pro rata portion of awards under Peoples Energy's
Short-Term Incentive Compensation (STIC) Plan; (ii) three times
the sum of the individual's base salary, the average of the STIC
Plan awards for the prior three years and the value of the Long-
Term Incentive Compensation (LTIC) Plan awards in the prior
calendar year; and (iii) the present value of the executive's
accrued benefits under the Peoples Energy's Supplemental
Retirement Benefits Plan (SRBP) that would be payable upon
retirement at normal retirement age, computed as if the executive
had completed three years of additional service. In addition,
the executive will be entitled to continuation of life insurance
and medical benefits for the longer of (a) a period of three
years after termination or (b) a period commencing after
termination and ending when the executive may receive pension
benefits without actuarial reduction, provided that Peoples
Energy's obligation for such benefits under the severance
agreement shall cease upon the executive's employment with
another employer that provides life insurance and medical
benefits. Each severance agreement also provides that the
executive's Options and SARs shall become exercisable upon a
Change in Control and that all Options and SARs shall remain
exercisable for the shorter of (a) three years after termination
or (b) the term of such Options and SARs. Any restricted stock
previously awarded to the executive under the LTIC Plan would
vest upon a Change in Control if such vesting does not occur due
to a Change in Control under the terms of the LTIC Plan. Peoples
Energy is also obligated under each severance agreement to pay an
additional amount to the executive sufficient on an after-tax
basis to satisfy any excise tax liability imposed by Section 4999
of the Internal Revenue Code of 1986, as amended. The benefits
received by the executive under each agreement are in lieu of
benefits under Peoples Energy's termination allowance plan and
the executive's benefits under the SRBP. Each executive would be
required to waive certain claims prior to receiving any severance
benefits.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
At November 30, 1997, voting securities of the Company were
beneficially owned as follows:
Title of Number of Per Cent of
Class Name and Address Shares Owned Class
Common Stock Peoples Energy Corporation
without 130 East Randolph Drive
par value Chicago, Illinois 60601 3,625,887 100
SECURITY OWNERSHIP OF MANAGEMENT
No equity securities of the Company are beneficially owned
directly or indirectly by any director or officer of the Company.
Shares of common stock, without par value, of Peoples Energy
beneficially owned directly or indirectly by all directors and
certain executive officers of the Company and all directors and
executive officers of the Company as a group at November 30,
1997, are as follows:
Shares of Peoples Energy
Common Stock Beneficially
Name Owned at November 30, 1997 (1)
Kenneth S. Balaskovits* 12,238 (2)(3)
J. Bruce Hasch* 46,656 (2)(3)
James Hinchliff* 31,005 (2)(3)
Thomas M. Patrick* 19,554 (2)(3)
Richard E. Terry* 76,717 (2)(3)
All directors and officers of the Company
as a group, including those named above
(22 in number) 317,357 (1)(2)(3)
* Director of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (Continued)
(1) The total of 317,357 shares held by all directors and
executive officers as a group is less than one per cent of
Peoples Energy's outstanding common stock. Unless otherwise
indicated, each individual has sole voting and investment
power with respect to the shares of common stock attributed
to him in the table.
(2) Includes shares that the following have a right to acquire
within 60 days following November 30, 1997, through the
exercise of stock options granted under the Long-Term
Incentive Compensation Plan of Peoples Energy: Messrs.
Balaskovits, 2,600; Hasch, 9,600; Hinchliff, 6,300; Patrick
8,300; Terry, 23,400; and all executive officers of the
Company, as a group, 78,700.
(3) Includes shares of restricted stock awarded under the Long-
Term Incentive Compensation Plan of Peoples Energy, the
restrictions on which had not lapsed at November 30, 1997,
as follows: Messrs. Balaskovits, 3,583; Hasch, 8,025;
Hinchliff, 4,925; Patrick, 4,125; Terry, 14,685; and all
executive officers as a group, 41,620. Owners of shares of
restricted stock have the right to vote such shares and to
receive dividends thereon, but have no investment power with
respect to such shares until the restrictions thereon lapse.
CHANGES IN CONTROL
None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements: Page
See Part II, Item 8. 15
2. Financial Statement Schedule:
Schedule
Number
VIII Valuation and Qualifying Accounts 43
3. Exhibits:
See Exhibit Index on page 44.
(b) Reports on Form 8-K filed during the final quarter of fiscal
year 1997:
None
<TABLE>
<CAPTION>
Schedule VIII
North Shore Gas Company and Subsidiary Companies
VALUATION AND QUALIFYING ACCOUNTS
(Thousands)
Column A Column B Column C Column D Column E
Additions Deductions
Charged Charges for the
Balance to costs Purpose for which the Balance
at beginning and reserves of deferred at end of
Description of period expenses credits were created period
Fiscal Year Ended September 30, 1997
<S> <C> <C> <C> <C>
RESERVES (deducted from assets in balance sheet):
Uncollectible items $ 932 $839 $ 873 $898
Fiscal Year Ended September 30, 1996
RESERVES (deducted from assets in balance sheet):
Uncollectible items $ 698 $801 $ 567 $932
Fiscal Year Ended September 30, 1995
RESERVES (deducted from assets in balance sheet):
Uncollectible items $ 889 $677 $ 868 $698
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NORTH SHORE GAS
COMPANY
Date: December 22, 1997 By: /s/ RICHARD E. TERRY
Richard E. Terry
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities indicated on December 22, 1997.
/s/ RICHARD E. TERRY Chairman of the Board and Chief Executive
Richard E. Terry Officer and Director
(Principal Executive Officer)
/s/ KENNETH S. BALASKOVITS Vice President and Controller and Director
Kenneth S. Balaskovits (Principal Financial and Accounting Officer)
/s/ J. BRUCE HASCH Director
J. Bruce Hasch
/s/ JAMES HINCHLIFF Director
James Hinchliff
/s/ THOMAS M. PATRICK Director
Thomas M. Patrick
North Shore Gas Company and Subsidiary Companies
EXHIBIT INDEX
(a) The exhibits listed below are filed herewith and made a part hereof:
Exhibit
Number Description of Document
3(a) Amendment to the By-Laws of the Registrant, dated
August 31, 1997.
3(b) By-Laws of the Registrant, as amended, dated
August 31, 1997.
10(a) Firm Transportation Service Agreement under Rate
Schedule FT-A or FT-G between North Shore and
Midwestern Gas Transmission Company, dated May 1,
1997.
10(b) Firm Transportation Service Agreement under Rate
Schedule FT-A between North Shore and Tennessee Gas
Pipeline Company, dated May 1, 1997.
10(c) Firm Transportation Service Agreement under Rate
Schedule FT-A or FT-GS between North Shore and
Midwestern Gas Transmission Company, dated November
1, 1997.
10(d) Firm Transportation Service Agreement under Rate
Schedule FT-A between North Shore and Tennessee Gas
Pipeline Company, dated November 1, 1997.
10(e) Firm Transportation Service Agreement under Rate
Schedule FT-A or FT-GS between North Shore and
Midwestern Gas Transmission Company, dated April 1,
1998.
10(f) Firm Transportation Service Agreement under Rate
Schedule FT-A between North Shore and Tennessee Gas
Pipeline Company, dated April 1, 1998.
12 Statement re: Computation of Ratio of Earnings to
Fixed Charges.
21 Subsidiaries of the Registrant.
23 Arthur Andersen LLP consent to incorporation by
reference in Registration Statement No. 33-60256
27 Financial Data Schedule
(b)Exhibits listed below have been filed heretofore with the
Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended, and/or the Securities Exchange Act
of 1934, as amended, and are incorporated herein by
reference. The file number and exhibit number of each such
exhibit are stated in the description of such exhibits.
3(c) Articles of Incorporation of the Registrant, as
amended on April 24, 1995 (Registrant Form 10-K
for the fiscal year ended September 30, 1995,
Exhibit 3(b)).
North Shore Gas Company and Subsidiary Companies
EXHIBIT INDEX (Continued)
4(a) Indenture, dated as of April 1, 1955, from the
Company to Continental Bank, National Association,
as Trustee; Third Supplemental Indenture, dated as
of December 20, 1963 (North Shore - File No. 2-35965,
Exhibit 4-1); Fifth Supplemental Indenture, dated as of
February 1, 1970 (File No. 2-35965, Exhibit 4-2);
Ninth Supplemental Indenture, dated as of December 1, 1987
(Form 10-K for the fiscal year ended September 30, 1987,
Exhibit 4); and Tenth Supplemental Indenture, dated
as of November 1, 1990 (Form S-3 Registration
Statement No. 33-37332, Exhibit 4b); Eleventh
Supplemental Indenture, dated as of October 1, 1992
(Form 10-K for the fiscal year ended September 30,
1992, Exhibit 4); and Twelfth Supplemental
Indenture dated as of April 1, 1993 (Form 8-K dated
April 23, 1993, Exhibit 4).
10(g) ETS Service Agreement between the Company and ANR
Pipeline Company, dated September 21, 1994. (Registrant
Form 10-K for fiscal year ended September 30, 1995,
Exhibit 10(a)); FSS Service Agreement between the
Company and ANR Pipeline Company, dated September
21, 1994. (Registrant Form 10-K for fiscal year
ended September 30, 1995, Exhibit 10(b));
Transportation Rate Schedule FTS Agreement between
the Company and Natural Gas Pipeline Company of
America, dated September 22, 1995. (Registrant
Form 10-K for fiscal year ended September 30, 1995,
Exhibit 10(c)); Storage Rate Schedule NSS Agreement
between the Company and Natural Gas Pipeline
Company of America, dated October 19, 1995.
(Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 10(d)); Transportation
Rate Schedule FTS Agreement between the Company and
Natural Gas Pipeline Company of America, dated
October 19, 1995. (Registrant Form 10-K for fiscal
year ended September 30, 1995, Exhibit 10(e));
Storage Rate Schedule DSS Agreement between the
Company and Natural Gas Pipeline Company of
America, dated December 1, 1995. (Registrant Form
10-K for fiscal year ended September 30, 1995,
Exhibit 10(f)); Firm Transportation Service
Agreement under Rate Schedule FTS-1 between the
Company and ANR Pipeline Company, dated as of
October 25, 1995. (Registrant form 10-K for fiscal
year ended September 30, 1996, Exhibit 10(g)).
Exhibit 3(a)
NORTH SHORE GAS COMPANY
RESOLVED, That, effective as of the
close of business on August 31, 1997, the By-
Laws of the Company be, and they hereby are,
amended by replacing Section 3.1 of Article
III of the By-Laws in its entirety with the
following:
ARTICLE III
Directors and Committees
SECTION 3.1. Number and Election.
The business and affairs of the Company shall
be managed and controlled by a board of
directors, five (5) in number, none of whom
needs to be a shareholder. The directors
shall be elected by the shareholders entitled
to vote at the annual meeting of such
shareholders and each director shall be
elected to serve for a term of one (1) year
and thereafter until his successor shall be
elected and shall qualify. The Board of
Directors may fill one or more vacancies
arising between meetings of shareholders by
reason of an increase in the number of
directors or otherwise.
RESOLVED FURTHER, That the
Secretary of the Company be, and he hereby
is, directed to initial a copy of the amended
By-Laws presented at this meeting and place
it with the important papers of this meeting.
Exhibit 3(b)
BY-LAWS
OF
NORTH SHORE GAS COMPANY
AMENDED AUGUST 31, 1997
NORTH SHORE GAS COMPANY
BY-LAWS
ARTICLE I - OFFICES
ARTICLE II - MEETINGS OF SHAREHOLDERS
ARTICLE III - DIRECTORS AND COMMITTEES
ARTICLE IV - OFFICERS
ARTICLE V - INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
ARTICLE VI - CERTIFICATES OF STOCK AND THEIR
TRANSFER
ARTICLE VII - MISCELLANEOUS (CONTRACTS)
ARTICLE VIII - AMENDMENT OR REPEAL OF BY-LAWS
NORTH SHORE GAS COMPANY
INDEX
PAGE
A
Amendment of By-Laws 15
Appointment of Officers 7
Assistant Controller, Duties of 10
Assistant General Counsel, Duties of 10
Assistant Secretary, Duties of 10
Assistant Treasurer, Duties of 10
Assistant Vice President, Duties of 8
B
Board of Directors 4
C
Certificates of Stock and Their Transfer 12
Chairman of the Board, Duties of 8
Committees 5
Controller, Duties of 9
Contracts, Execution of 14
D
Directors and Committees 4
E
Election of Directors 4
Election of Officers 6
F
Fees and Compensation of Directors 6
G
General Counsel, Duties of 10
NORTH SHORE GAS COMPANY
PAGE
I
Indemnification of Directors, Officers, Employees
and Agents 10
M
Meetings
Directors 4
Action Without Meeting 6
Shareholders 1
N
Notice of Meetings
Directors 4
Shareholders 2
O
Officers
Appointed 7
Elected 6
Offices, Two or More Held By One Person 7
P
President, Duties of 8
Presiding Officer
Board Meetings 5
Shareholders Meetings 3
Proxies 3
Q
Quorum
Board 5
Shareholders 2
NORTH SHORE GAS COMPANY
PAGE
S
Secretary, Duties of 9
Signatures to Checks, Drafts, etc. 14
Stock, Certificates of and their Transfer 12
T
Treasurer, Duties of 9
V
Vice President, Duties of 8
Voting
Shareholders 3
Stock Owned by Company 15
BY-LAWS
OF
NORTH SHORE GAS COMPANY
ARTICLE I
Offices
SECTION 1.1. Principal Office. The principal office of
the Company shall be in the City of Chicago, County of Cook and
State of Illinois.
SECTION 1.2. Other Offices. The Company may also have
offices at such other places both within and without the State of
Illinois as the Board of Directors may from time to time
determine or the business of the Company may require.
ARTICLE II
Meetings of Shareholders
SECTION 2.1. Annual Meeting. The annual meeting of the
shareholders shall be held on the last Thursday of the month of
March in each year, if not a legal holiday, or, if a legal
holiday, then on the next preceding business day, for the purpose
of electing directors and for the transaction of such other
business as may come before the meeting. If the election of
directors shall not be held on the day herein designated for the
annual meeting, or at any adjournment thereof, the Board of
Directors shall cause such election to be held at a special
meeting of the shareholders as soon thereafter as convenient.
SECTION 2.2. Special Meetings. Except as otherwise
prescribed by statute, special meetings of the shareholders for
any purpose or purposes, may be
called by the Chairman of the Board, the President, a majority of
the Board of Directors or shareholders owning capital stock of
the Company having not less than 20% of the total voting power.
Such request shall state the purpose or purposes of the proposed
meeting.
SECTION 2.3. Place of Meetings. Each meeting of the
shareholders for the election of directors shall be held at the
principal office of the Company in the City of Chicago, Illinois,
unless the Board of Directors shall by resolution designate
another place as the place of such meeting. Meetings of
shareholders for any other purpose may be held at such place, and
at such time as shall be determined by the Chairman of the Board,
or the President, or in their absence, by the Secretary, and
stated in the notice of the meeting or in a duly executed waiver
of notice thereof.
SECTION 2.4. Notice of Meetings. Written or printed
notice stating the place, date and hour of each annual or special
meeting of the shareholders, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called,
shall be given not less than 10 or more than 60 days before the
date of the meeting, except as otherwise provided by statute.
Notice of any meeting of the shareholders may be waived by any
shareholder.
SECTION 2.5. Quorum. The holders of a majority of the
shares issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall be requisite
for, and shall constitute, a quorum at all meetings of the
shareholders of the Company for the transaction of business,
except as otherwise provided by statute or these by-laws. If a
quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than
announcement at the meeting if the adjournment is for thirty days
or less or unless after the adjournment a new record date is
fixed, until a quorum shall be present or represented. At such
adjourned meeting, at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
SECTION 2.6. Proxies. At every meeting of the
shareholders, each shareholder having the right to vote thereat
shall be entitled to vote in person or by proxy. Such proxy
shall be appointed by an instrument in writing subscribed by such
shareholder and bearing a date not more than eleven months prior
to such meeting, unless such proxy provides for a longer period,
and shall be filed with the Secretary of the Company before, or
at the time of, the meeting.
SECTION 2.7. Voting. At each meeting of the
shareholders, each shareholder shall be entitled to one vote for
each share of stock entitled to vote thereat which is registered
in the name of such shareholder on the books of the Company. At
all elections of directors of the Company, the holders of shares
of stock of the Company shall be entitled to cumulative voting.
When a quorum is present at any meeting of the shareholders, the
vote of the holders of a majority of the shares present in person
or represented by proxy and entitled to vote at the meeting shall
be sufficient for the transaction of any business, unless
otherwise provided by statute or these by-laws.
SECTION 2.8. Presiding Officer. The presiding officer of
any meeting of the shareholders shall be the Chairman of the
Board or, in the case of the absence of the Chairman of the
Board, the President.
ARTICLE III
Directors and Committees
SECTION 3.1. Number and Election. The business and
affairs of the Company shall be managed and controlled by a board
of directors, five (5) in number, none of whom needs to be a
shareholder. The directors shall be elected by the shareholders
entitled to vote at the annual meeting of such shareholders and
each director shall be elected to serve for a term of one (1)
year and thereafter until his successor shall be elected and
shall qualify. The Board of Directors may fill one or more
vacancies arising between meetings of shareholders by reason of
an increase in the number of directors or otherwise.
SECTION 3.2. Regular Meetings. A regular meeting of the
Board of Directors shall be held immediately, or as soon as
practicable, after the annual meeting of the shareholders in each
year for the purpose of electing officers and for the transaction
of such other business as may be deemed necessary, and regular
meetings of the Board shall be held at such date and time and at
such place as the Board of Directors may from time to time
determine. Not less than two days' notice of all regular
meetings of the Board, except the meeting to be held after the
annual meeting of shareholders which shall be held without other
notice than this by-law, shall be given to each director
personally or by mail or telegram.
SECTION 3.3. Special Meetings. Special meetings of the
Board may be called at any time by the Chairman of the Board, the
President, or by any two directors, by causing the Secretary to
mail to each director, not less than three days before the time
of such meeting, a written notice stating the time and place of
such meeting. Notice of any meeting of the Board may be waived
by any director.
SECTION 3.4. Quorum. At each meeting of the Board of
Directors, the presence of not less than a majority of the total
number of directors specified in Section 3.1 hereof shall be
necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall
be the act of the Board of Directors, except as may be otherwise
specifically provided by statute. If a quorum shall not be
present at any meeting of directors, the directors present
thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be
present. In determining the presence of a quorum at a meeting of
the directors or a committee thereof for the purpose of
authorizing a contract or transaction between the Company and one
or more of its directors, or between the Company and any other
corporation, partnership, association, or other organization in
which one or more of the directors of this Company are directors
or officers, or have a financial interest in such other
organization, such interested directors may be counted in
determining a quorum.
SECTION 3.5. Presiding Officer. The presiding officer of
any meeting of the Board of Directors shall be the Chairman of
the Board or, in his absence, the President or, in his absence,
any other director elected chairman of the meeting by vote of a
majority of the directors present at the meeting.
SECTION 3.6. Committees. The Board may appoint
committees, standing or special, from time to time from among its
own members or otherwise, and may confer such powers on such
committees as the Board may determine and may revoke such powers
and terminate the existence of such committees at its pleasure.
SECTION 3.7. Action Without Meeting. Any action required
or permitted to be taken at any meeting of the Board of
Directors, or any committee thereof, may be taken without a
meeting if all members of the Board or of such committee, as the
case may be, consent thereto in writing and such writing or
writings are filed with the minutes of the proceedings of the
Board or such committee.
SECTION 3.8. Fees and Compensation of Directors.
Directors shall not receive any stated salary for their services
as such; but, by resolution of the Board of Directors, reasonable
fees, with or without expenses of attendance, may be allowed.
Members of the Board shall be allowed their reasonable traveling
expenses when actually engaged in the business of the Company, to
be audited and allowed as in other cases of demands against the
Company. Members of standing or special committees may be
allowed fees and expenses for attending committee meetings.
Nothing herein contained shall be construed to preclude any
director from serving the Company in any other capacity and
receiving compensation therefor.
ARTICLE IV
Officers
SECTION 4.1. Election of Officers. There shall be
elected by the Board of Directors in each year the following
officers: a Chairman of the Board; a President; such number of
Senior Vice Presidents, such number of Executive Vice Presidents,
such number of Vice Presidents and such number of Assistant Vice
Presidents as the Board at the time may decide upon; a Secretary;
such number of Assistant Secretaries as the Board at the time may
decide upon; a Treasurer; such number of Assistant Treasurers as
the Board at the time may decide upon; a Controller; and such
number of Assistant Controllers as the Board at the time may
decide upon; and, if the Board may decide, a General Counsel; and
such number of Deputy General Counsel and such number of
Assistant General Counsel as the Board at the time may decide
upon. Any two or more offices may be held by one person, except
that the offices of President and Secretary may not be held by
the same person. All officers shall hold their respective
offices during the pleasure of the Board.
SECTION 4.2. Appointment of Officers. The Board of
Directors, the Chairman of the Board, or the President may from
time to time appoint such other officers as may be deemed
necessary, including one or more Vice Presidents, one or more
Assistant Vice Presidents, one or more Assistant Secretaries, one
or more Assistant Treasurers, one or more Assistant Controllers,
one or more Assistant General Counsel, and such other agents,
employees and attorneys-in-fact of the Company as may be deemed
proper. Such officers, agents, employees and attorneys-in-fact
shall have such authority, (which may include the authority to
execute and deliver on behalf of the Company contracts and other
instruments in writing of any nature), perform such duties and
receive such compensation as the Board of Directors or, in the
case of appointments made by the Chairman of the Board or the
President, as the Chairman of the Board or the President, may
from time to time prescribe and determine. The Board of
Directors may from time to time authorize any officer to appoint
and remove agents and employees, to prescribe their powers and
duties and to fix their compensation therefor.
SECTION 4.3. Duties of Chairman of the Board. The
Chairman of the Board shall be the chief executive officer of the
Company and shall have control and direction of the management
and affairs of the Company and may execute all contracts, deeds,
assignments, certificates, bonds or other obligations for and on
behalf of the Company, and sign certificates of stock and records
of certificates required by law to be signed by the Chairman of
the Board. When present, the Chairman of the Board shall preside
at all meetings of the Board and of the shareholders.
SECTION 4.4. Duties of President. Subject to the control
and direction of the Chairman of the Board, and to the control of
the Board, the President shall have general management of all the
business of the Company, and he shall have such other powers and
perform such other duties as may be prescribed for him by the
Board or be delegated to him by the Chairman of the Board. He
shall possess the same power as the Chairman of the Board to sign
all certificates, contracts and other instruments of the Company.
In case of the absence or disability of the President, or in case
of his death, resignation or removal from office, the powers and
duties of the President shall devolve upon the Chairman of the
Board during absence or disability, or until the
vacancy in the office of President shall be filled.
SECTION 4.5. Duties of Vice President. Each of the
Senior Vice Presidents, Executive Vice Presidents, Vice
Presidents and Assistant Vice Presidents shall have such powers
and duties as may be prescribed for him by the Board, or be
delegated to him by the Chairman of the Board or by the
President. Each of such officers shall possess the same power as
the President to sign all certificates, contracts and other
instruments of the Company.
SECTION 4.6. Duties of Secretary. The Secretary shall
have the custody and care of the corporate seal, records and
minute books of the Company. He shall attend the meetings of the
Board, and of the shareholders, and duly record and keep the
minutes of the proceedings, and file and take charge of all
papers and documents belonging to the general files of the
Company, and shall have such other powers and duties as are
commonly incident to the office of Secretary or as may be
prescribed for him by the Board, or be delegated to him by the
Chairman of the Board or by the President.
SECTION 4.7. Duties of Treasurer. The Treasurer shall
have charge of, and be responsible for, the collection, receipt,
custody and disbursement of the funds of the Company, and shall
deposit its funds in the name of the Company in such banks, trust
companies or safety deposit vaults as the Board may direct. He
shall have the custody of the stock record books and such other
books and papers as in the practical business operations of the
Company shall naturally belong in the office or custody of the
Treasurer, or as shall be placed in his custody by the Board, the
Chairman of the Board, the President, or any Vice President, and
shall have such other powers and duties as are commonly incident
to the office of Treasurer, or as may be prescribed for him by
the Board, or be delegated to him by the Chairman of the Board or
by the President.
SECTION 4.8. Duties of Controller. The Controller shall
have control over all accounting records pertaining to moneys,
properties, materials and supplies of the Company. He shall have
charge of the bookkeeping and accounting records and functions,
the related accounting information systems and reports and
executive supervision of the system of internal accounting
controls, and such other powers and duties as are commonly
incident to the office of Controller or as may be prescribed by
the Board, or be delegated to him by the Chairman of the Board or
by the President.
SECTION 4.9. Duties of General Counsel. The General
Counsel shall have full responsibility for all legal advice,
counsel and services for the Company and its subsidiaries
including employment and retaining of attorneys and law firms as
shall in his discretion be necessary or desirable and shall have
such other powers and shall perform such other duties as from
time to time may be assigned to him by the Board, the Chairman of
the Board or the President.
SECTION 4.10. Duties of Assistant Secretary, Assistant
Treasurer, Assistant Controller and Assistant General Counsel.
The Assistant Secretary, Assistant Treasurer, Assistant
Controller and Assistant General Counsel shall assist the
Secretary, Treasurer, Controller and General Counsel,
respectively, in the performance of the duties assigned to each
and shall for such purpose have the same powers as his principal.
He shall also have such other powers and duties as may be
prescribed for him by the Board, or be delegated to him by the
Chairman of the Board or by the President.
ARTICLE V
Indemnification of Directors, Officers, Employees and Agents
SECTION 5.1. Indemnification of Directors, Officers and
Employees. The Company shall indemnify, to the fullest extent
permitted under the laws of the State of Illinois and any other
applicable laws, as they now exist or as they may be amended in
the future, any person who was or is a party, or is threatened to
be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, an action by or in
the right of the Company), by reason of the fact that he or she
is or was a director, officer or employee of the Company, or is
or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise
against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or
proceeding.
SECTION 5.2. Advancement of Expenses to Directors,
Officers and Employees. Expenses incurred by such a director,
officer or employee in defending a civil or criminal action, suit
or proceeding shall be paid by the Company in advance of the
final disposition of such action, suit or proceeding to the
fullest extent permitted under the laws of the State of Illinois
and any other applicable laws, as they now exist or as they may
be amended in the future.
SECTION 5.3. Indemnification and Advancement of Expenses
to Agents. The board of directors may, by resolution, extend the
provisions of this Article V regarding indemnification and the
advancement of expenses to any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact he or
she is or was an agent of the Company or is or was serving at the
request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
SECTION 5.4. Rights Not Exclusive. The rights provided
by or granted under this Article V are not exclusive of any other
rights to which those seeking indemnification or advancement of
expenses may be entitled.
SECTION 5.5. Continuing Rights. The indemnification and
advancement of expenses provided by or granted under this Article
V shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of that person.
ARTICLE VI
Certificates of Stock and Their Transfer
SECTION 6.1. Certificates of Stock. The certificates of
stock of the Company shall be in such form as may be determined
by the Board of Directors, shall be numbered and shall be entered
in the books of the Company as they are issued. They shall
exhibit the holder's name and number of shares and shall be
signed by the Chairman of the Board, the President or a Vice
President and also by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary and shall bear the
corporate seal or a facsimile thereof. If a certificate is
countersigned by a transfer agent or registrar, other than the
Company itself or its employee, any other signature or
countersignature on the certificate may be facsimiles. In case
any officer of the Company, or any officer or employee of the
transfer agent or registrar, who has signed or whose facsimile
signature has been placed upon such certificate ceases to be an
officer of the Company, or an officer or employee of the transfer
agent or registrar, before such certificate is issued, said
certificate may be issued with the same effect as if the officer
of the Company, or the officer or employee of the transfer agent
or registrar, had not ceased to be such at the date of issue.
SECTION 6.2. Transfer of Stock. Upon surrender to the
Company of a certificate for shares duly endorsed or accompanied
by proper evidence of succession, assignment or authority to
transfer, and upon payment of applicable taxes with respect to
such transfer, it shall be the duty of the Company, subject to
such rules and regulations as the Board of Directors may from
time to time deem advisable concerning the transfer and
registration of certificates for shares of stock of the Company,
to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
SECTION 6.3. Shareholders of Record. The Company shall
be entitled to treat the holder of record of any share or shares
of stock as the holder in fact thereof and, accordingly, shall
not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof,
except as otherwise provided by statute.
SECTION 6.4. Lost, Destroyed or Stolen Certificates. The
Board of Directors, in individual cases or by general resolution,
may direct a new certificate or certificates to be issued by the
Company as a replacement for a certificate or certificates for a
like number of shares alleged to have been lost, destroyed or
stolen, upon the making of an affidavit of that fact by the
person claiming the certificate or certificates of stock to be
lost, destroyed or stolen. When authorizing such issue of a new
certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, destroyed or stolen certificate
or certificates, or his legal representative, to give the Company
a bond in such form and amount as it may direct as indemnity
against any claim that may be made against the Company with
respect to the certificate or certificates alleged to have been
lost, destroyed or stolen.
ARTICLE VII
Miscellaneous
SECTION 7.1. Contracts and Other Instruments. All
contracts or obligations of the Company shall be in writing and
shall be signed either by the Chairman of the Board, the
President, any Executive Vice President, any Vice President, the
Treasurer, or any other officer of the Company, agent, employee
or attorney-in-fact as may be designated by the Board, the
Chairman of the Board or the President pursuant to specific
authorizations and, the seal of the Company may be attached
thereto, duly attested by the Secretary or an Assistant
Secretary, except contracts entered into in the ordinary course
of business where the amount involved is less than Five Hundred
Thousand Dollars ($500,000), and except contracts for the
employment of servants or agents, which contracts so excepted may
be entered into by the Chairman of the Board, the President, any
Executive Vice President, any Vice President, the Treasurer, or
by such officers, agents, employees or attorneys-in-fact as the
Chairman of the Board or the President may designate and
authorize. Unless the Board shall otherwise determine and
direct, all checks or drafts and all promissory notes shall be
signed by two officers of the Company. When prescribed by the
Board, bonds, promissory notes, and other obligations of the
Company may bear the facsimile signature of the officer who is
authorized to sign such instruments and, likewise, may bear the
facsimile signature of the Secretary or an Assistant Secretary.
SECTION 7.2. Voting Stock Owned by Company. Any or all
shares of stock owned by the Company in any other corporation,
and any or all voting trust certificates owned by the Company
calling for or representing shares of stock of any other
corporation, may be voted by the Chairman of the Board, the
President, any Vice President, the Secretary or the Treasurer,
either in person or by written proxy given to any person in the
name of the Company at any meeting of the shareholders of such
corporation, or at any meeting of voting trust certificate
holders, upon any question that may be presented at any such
meeting. Any such officer, or anyone so representing him by
written proxy, may on behalf of the Company waive any notice of
any such meeting required by any statute or by-law and consent to
the holding of such meeting without notice.
ARTICLE VIII
Amendment or Repeal of By-Laws
These by-laws may be added to, amended or repealed at any
regular or special meeting of the Board by a vote of a majority
of the membership of the Board.
EXHIBIT 10(a)
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
THIS AGREEMENT is made and entered into as of the 1st day of May,
1997, by and between MIDWESTERN GAS TRANSMISSION COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and NORTH SHORE GAS COMPANY, an Illinois Corporation, hereinafter
referred to as "Shipper." Transporter and Shipper shall be
collectively referred to as "Parties."
WITNESSETH:
That, in consideration of the premises and of the mutual
agreements herein contained, Transporter and Shipper agree as
follows:
ARTICLE I - DEFINITIONS
The definitions found in Article 1 of Transporter's General Terms
Conditions are incorporated herein by reference.
ARTICLE II - TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily, on a firm basis, at Eligible Receipt Point(s), from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity and deliver to
or for the account of Shipper to authorized Delivery Point(s) an
equivalent quantity of gas.
ARTICLE III- POINTS OF RECEIPT AND DELIVERY
AND ASSOCIATED PRESSURES
3.1 The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit A attached hereto. Shipper shall
have access to secondary receipt and delivery points as
specified in the applicable rate schedule (FT-A or FT-GS)
pursuant to which Shipper's volumes are being transported.
Priority of transportation to such secondary points shall be
determined in accord with Article III, Section 5 of the
General Terms and Conditions of Transporter's tariff.
3.2 Shipper may request a change to the Primary Points of
Receipt and/or Primary Points of Delivery provided in this
Agreement by submitting to Transporter a Service Request
Farm in accord with Article XXV of the General Terms and
Conditions of Transporter's FERC Gas Tariff. Priority of
transportation service to such additional Points of Receipt
and/or Delivery shall be determined pursuant to Article III,
Section 5 of the General Terms and Conditions.
3.3 Shipper shall deliver, or cause to be delivered, to
Transporter the gas to be transported hereunder at pressures
sufficient to deliver such gas into Transporter's system at
the Receipt Point(s), provided such pressure shall not
exceed Transporter's maximum allowable operating pressure.
Transporter shall deliver the gas to be transported
hereunder to or for the account of Shipper at the pressures
existing in Transporter's system at the Delivery Point(s).
SERVICE PACKAGE NO. 19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE IV- FACILITIES
All facilities are in place to render the service provided for in
this Agreement.
or
(If facilities are contemplated to be constructed, a brief
description of the facilities will be included, as well as who is
to construct, own and/or operate such facilities.)
ARTICLE V - QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported, and delivered hereunder, the
Parties agree to the quality specifications and standards for
measurement as provided for in the General Terms and Conditions
of Transporter's FERC Gas Tariff. Transporter shall be
responsible for the operation of measurement facilities at the
Delivery Point(s) and at the Receipt Point(s). In the event that
measurement facilities are not operated by Transporter, then the
responsibility for operations shall be deemed to be that of the
Balancing Party at such point. If measurement facilities are
not operated by Transporter and there is no Balancing Party at
such point, then the responsibility for operations shall be
deemed to be Shipper ' s.
ARTICLE VI - RATES FOR SERVICE
6.1 Transportation Charge - Commencing on the date of the rates,
charges and surcharges to be paid by Shipper to Transporter,
including compensation for system fuel and losses, shall be
in accordance with Transporter's applicable effective Rate
Schedule (FT-A or FT-GS) and the General Terms and
Conditions of Transporter's Tariff.
6.2 Incidental Charges - Upon execution of this Agreement,
Shipper agrees to pay Transporter for all known and
anticipated filing fees, reporting fees or similar charges
required for the rendition of the transportation service
provided for herein. Further, Shipper agrees to reimburse
Transporter for all such fees within thirty (30) days after
receiving proof of payment from Transporter.
6.3 Changes in Rates and Charges - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make changes effective
in (a) the rates, charges, terms and conditions applicable
to service pursuant to the Rate Schedule under which' this
service is rendered, (b) the Rate Schedule(s) pursuant to
which service hereunder is rendered, and (c)any provisions
of the General Terms and Conditions in Transporter's FERC
Gas Tariff applicable to those Rate Schedules, as such
Tariff may be revised or replaced from time to time.
Transporter agrees that Shipper may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter just and reasonable rates.
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE VII - RESPONSIBILITY DURING -TRANSPORTATION
As between the Parties hereto, it is agreed that from the time
gas is delivered by Shipper to Transporter at the Receipt
Point(s) and prior to delivery of such gas to or for the account
of Shipper at the Delivery Point(s), Transporter shall have the
unqualified right to commingle such gas with other gas in its
system and shall have the unqualified right to handle and treat
such gas as its own.
ARTICLE VIII - BILLINGS AND PAYMENTS
Billings and payments under this Agreement shall be in accordance
with the terms and conditions of Transporter's FERC Gas Tariff as
such Tariff may be revised or replaced from time to time.
ARTICLE IX - RATE SCHEDULES AND GENERAL TERMS AND CONDITIONS
This Agreement and all terms and provisions contained or
incorporated herein are subject to the effective provisions of
Transporter's applicable Rate Schedule(s) as set forth on Exhibit
A and Transporter's General Terms and Conditions on file with the
FERC, or other duly constituted authorities having jurisdiction,
as the same may be changed or superseded from time to time in
accordance with the rules and regulations of the FERC, which Rate
Schedule(s) and General Terms and Conditions are incorporated by
reference. To the extent a term or condition set forth in this
Contract is inconsistent with the General Terms and Conditions,
the General Terms and Conditions shall govern. Furthermore, to
the extent a term or condition set forth in this Contract is
inconsistent with the applicable Rate Schedule, the Rate Schedule
shall govern unless the relevant provision is inconsistent with
General Terms and Conditions.
ARTICLE X - REGULATION
10.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
or authorization is not so obtained or continued.
All Parties hereto shall cooperate to obtain or continue all
necessary approvals or authorizations, but no Party shall be
liable to any other Party for failure to obtain or continue
such approvals or authorizations.
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
10.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC
regulations.
10.3 In the event the Parties are unable to obtain all necessary
and satisfactory regulatory approvals for service on
facilities prior to the expiration of two (2 years from the
effective date hereof, then, prior to receipt of such
regulatory approvals, either Party may terminate this
Agreement by giving the other Party at least thirty (30)
days prior written notice, and the respective obligations
hereunder, except for the provisions of Section 6.2 herein,
shall be of no force and effect from and after the effective
date of such termination.
ARTICLE XI - WARRANTIES
Shipper agrees to indemnify and hold Transporter harmless from
all suits, actions, debts, accounts, damages, costs, losses, and
expenses (including reasonable attorneys fees) arising from or
out of breach of any warranty, express or implied, by the Shipper
herein. Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII - TERM OF AGREEMENT
12.1 This Agreement shall become effective on the date of its
execution, and shall be implemented no later than the first
day of the month following the later of the date of
execution or the completion of any necessary facilities on
Transporter's system and shall remain in full force and
effect until the 31st day of October, 1997, ("Primary
Term")and will terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement upon its termination, as
required by the General Terms and Conditions of
Transporter's FERC Gas Tariff, shall survive the other parts
of this Agreement until such time as such balancing has been
accomplished.
12.3 In addition to any other remedy Transporter may have, this
Agreement will terminate automatically in the event Shipper
fails to pay all of the amount of any bill for service
rendered by Transporter hereunder when that amount is due,
provided Transporter shall give Shipper thirty days notice
prior to any termination of service. Service may continue
hereunder if within the thirty day notice period
satisfactory assurance of payment is made in accord with the
terms and conditions of Article VI of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE XIII - NOTICES
Except when notice is required through TENN-SPEED 2, any notice,
request, demand, statement, or bill provided for in this
Agreement or any notice that either Party may desire to give to
the other shall be in writing and mailed by registered mail to
the post office address of the Party intended to receive the same
as follows:
TRANSPORTER: MIDWESTERN GAS TRANSMISSION COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by written
notice to the other.
ARTICLE XIV - ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument that
it has executed or may execute hereafter as security for
indebtedness. Either Party, without relieving itself of its
obligations under this Agreement, may assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its rights and obligations hereunder, except in accord with
Article XXI of the General Terms and Conditions of
Transporter's Tariff.
14.2 Any person or entity that succeeds by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
ARTICLE XV - MISCELLANEOUS
15.1 Except for changes specifically authorized pursuant to this
Agreement, no modification of or supplement to the terms
conditions hereof shall be or become effective until Shipper
has
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
submitted a request for change through TENN-SPEED 2 and
Shipper has been notified through TENN-SPEED 2 of
Transporter's agreement to such change.
15.2 No waiver by any Party of any one or more defaults by the
other in the performance of any provision of this Agreement
shall operate or be construed as a waiver of any future
default or defaults, whether of a like or of a different
character.
15.3 The interpretation and performance of this agreement shall
be in accordance with and controlled by the laws of the
State of Texas, without regard to Choice of Law doctrine
that refers to the laws of another jurisdiction.
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part of this Agreement for all
purposes.
15.5 If any provision of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at
Transporter's option; and if the severability option is
exercised, the remaining provisions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written.
MIDWESTERN GAS TRANSMISSION COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Vice President
Date: May 1, 1997
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED May 1, 1997
BETWEEN
MIDWESTERN GAS TRANSMISSION COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: May 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19392
SERVICE PACKAGE TQ: 9,658 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE- TQ
017024 MGT PURCHASE (Bi 2- SUMNER TN 01 R 9,658 9,658
7086, Dual
Total 9,658 9,658
Receipt
TQ:
027062 PEOPLES-UNION HILL PEOPLES GAS LIGHT & WILL IL 01 D 9,658 9,658
SALES COKE CO
NUMBER OF RECEIPT POINTS AFFECTED: 1
NUMBER OF DELIVERY POINTS AFFECTED: 1
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(b)
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
THIS AGREEMENT is made and entered into as of the 1st day of May,
1997, by and between TENNESSEE GAS PIPELINE COMPANY, a Delaware
Corporation, hereinafter referred to as "Transporter" and NORTH
SHORE GAS COMPANY, an Illinois Corporation, hereinafter referred
to as "Shipper." Transporter and Shipper shall be collectively
referred to as "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for
the account of Shipper hereunder on each day during each
year during the term hereof, which shall be 9,756
dekatherms. Any limitations of the quantities to be
received from each Point of Receipt and/or delivered to each
Point of Delivery shall be as specified on Exhibit "A"
attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily on a firm basis, the Point(s) of Receipt from Shipper or
for Shipper's account such quantity of gas as Shipper makes
available up to the Transportation Quantity, and to deliver to or
for the account of Shipper to Point(s) of Delivery an Equivalent
Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit "A" attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in
this Agreement.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported, and delivered hereunder the
Parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that
no new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter or a downstream
pipeline, then responsibility for operations shall be deemed to
be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the effective date
hereof, the rates, charges and surcharges to be paid by
Shipper to Transporter for the transportation service
provided herein shall be in accordance with Transporter's
Rate Schedule FT-A and the General Terms and Conditions of
Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been
previously paid for by Shipper, which Transporter incurs in
rendering service hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes
in (a) the rates and charges applicable to service pursuant
to Transporter's Rate Schedule FT-A, (b) the rate
schedule(s) pursuant to which service hereunder is rendered,
and (c)any provisions of the General Terms and Conditions
applicable to those rate schedules. Transporter agrees that
Shipper may protest or contest the aforementioned filings,
or may seek authorization from duly constituted regulatory
authorities for such adjustment of Transporter's existing
FERC Gas Tariff as may be found necessary to assure
Transporter just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
is not so obtained or continued. All Parties hereto shall
cooperate to obtain or continue all necessary approvals or
authorizations, but no Party shall be liable to any other
Party for failure to obtain or continue such approvals or
authorizations.
9.2 The transportation service described herein shall be
provided subject to Subpart G, Part 284, of the FERC
Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified, the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas
Tariff, Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place and of the requested effective date of service, and
that it has advised the upstream and downstream
transporters of the receipt and delivery points under this
Agreement and any quantity limitations for each point as
specified on Exhibit "A" attached hereto.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
Shipper agrees to indemnify and hold Transporter harmless
for refusal to transport gas hereunder in the event any
upstream or downstream transporter fails to receive or
deliver gas as contemplated by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter harmless
from all suits, actions, debts, accounts, damages, costs,
losses and expenses (including reasonable attorneys fees)
arising form or out of breach of any warranty by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall become effective as of the 1st day of
May, 1997, and shall remain in full force and effect until
the 31st day of October, 1997, ("Primary Term") and will
terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's Tariff, shall
survive the other parts of this Agreement until such time as
such balancing has been accomplished; provided, however,
that Transporter notifies Shipper of such imbalance not
later than twelve months after the termination of this
Agreement.
12.3 This Agreement will terminate automatically upon written
notice from Transporter in the event Shipper fails to pay
all of the amount of any bill for service rendered by
Transporter hereunder in accord with the terms and
conditions of Article VI of the General Terms and Conditions
of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XIII
NOTICES
Except as otherwise provided in the General Terms and conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
Party intended to receive the same, as follows:
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Director, Transportation Control
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument which
it has executed or may execute hereafter as security for
indebtedness. Either Party may, without relieving itself of
its obligations under this Agreement, assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its hereunder, except in accord with Article III, Section 11
of the General Terms and Conditions of Transporter's FERC
Gas Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XV
MISCELLANEOUS
15.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE
IN ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE DOCTRINES GOVERNING CHOICE
OF LAW.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at either
Party's option; and if the severability option is exercised,
the remaining provisions of the Agreement shall remain in
full force and effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement
to the terms and provisions stated in this agreement shall
be or become effective until Shipper has submitted a request
for change through the TENN-SPEED 2 System and Shipper has
been notified through TENN-SPEED 2 of Transporter's
agreement to such changes.
15.4 Exhibit "A" attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
TENNESSEE GAS PIPELINE COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: May 1, 1997
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED May 1, 1997
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: May 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19386
SERVICE PACKAGE TQ: 9,756 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
011929 TRANSCO - WHARTON TRANSCONTINENTAL GAS WHARTON TX 00 R 100 4,878 4,878
COUNTY TIE-1 PPELINE
012020 TRANSCO - FALFURRIAS TRANSCONTINENTAL GAS JIM WELLS TX 00 R 100 4,878 4,878
TRANSPORT PIPELINE
Total 9,756 9,756
Receipt
TQ:
020852 MGT SMS (Bi 1-2447, SUMNER TN 01 D 999 9,756 9,756
Dual 1-702
NUMBER OF RECEIPT POINTS AFFECTED: 2
NUMBER OF DELIVERY POINTS AFFECTED: 1
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(c)
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
THIS AGREEMENT is made and entered into as of the 1st day of
November, 1997, by and between MIDWESTERN GAS TRANSMISSION
COMPANY, a Delaware Corporation, hereinafter referred to as
"Transporter" and NORTH SHORE GAS COMPANY, an Illinois
Corporation, hereinafter referred to as "Shipper." Transporter
and Shipper shall be collectively referred to as "Parties."
WITNESSETH:
That, in consideration of the premises and of the mutual
agreements herein contained, Transporter and Shipper agree as
follows:
ARTICLE I - DEFINITIONS
The definitions found in Article 1 of Transporter's General Terms
and Conditions are incorporated herein by reference.
ARTICLE II - TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily, on a firm basis, at Eligible Receipt Point(s), from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity and deliver to
or for the account of Shipper to authorized Delivery Point(s) an
equivalent quantity of gas.
ARTICLE III- POINTS OF RECEIPT AND DELIVERY
AND ASSOCIATED PRESSURES
3.1 The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit A attached hereto. Shipper shall
have access to secondary receipt and delivery points as
specified in the applicable rate schedule (FT-A or FT-GS)
pursuant to which Shipper's volumes are being transported.
Priority of transportation to such secondary points shall be
determined in accord with Article III, Section 5 of the
General Terms and Conditions of Transporter's tariff.
3.2 Shipper may request a change to the Primary Points of
Receipt and/or Primary Points of Delivery provided in this
Agreement by submitting to Transporter a Service Request
Form in accord with Article XXV of the General Terms and
Conditions of Transporter's FERC Gas Tariff. Priority of
transportation service to such additional Points of Receipt
and/or Delivery shall be determined pursuant to Article III,
Section 5 of the General Terms and Conditions.
3.3 Shipper shall deliver, or cause to be delivered, to
Transporter the gas to be transported hereunder at pressures
sufficient to deliver such gas into Transporter's system at
the Receipt Point(s), provided such pressure shall not
exceed Transporter's maximum allowable operating pressure.
Transporter shall deliver the gas to be transported
hereunder to or for the account of Shipper at the pressures
existing in Transporter's system at the Delivery Point(s).
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE IV- FACILITIES
All facilities are in place to render the service provided for in
this Agreement.
or
(If facilities are contemplated to be constructed, a brief
description of the facilities will be included, as well as who is
to construct, own and/or operate such facilities.)
ARTICLE V - QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported, and delivered hereunder, the
Parties agree to the quality specifications and standards for
measurement as provided for in the General Terms and Conditions
of Transporter's FERC Gas Tariff. Transporter shall be
responsible for the operation of measurement facilities at the
Delivery Point(s) and at the Receipt Point(s). In the event that
measurement facilities are not operated by Transporter, then the
responsibility for operations shall be deemed to be that of the
Balancing Party at such point. If measurement facilities are
not operated by Transporter and there is no Balancing Party at
such point, then the responsibility for operations shall be
deemed to be Shipper's.
ARTICLE VI - RATES FOR SERVICE
6.1 Transportation Charge - Commencing on the date of the rates,
charges and surcharges to be paid by Shipper to Transporter,
including compensation for system fuel and losses, shall be
in accordance with Transporter's applicable effective Rate
Schedule (FT-A or FT-GS) and the General Terms and
Conditions of Transporter's Tariff.
6.2 Incidental Charges - Upon execution of this Agreement,
Shipper agrees to pay Transporter for all known and
anticipated filing fees, reporting fees or similar charges
required for the rendition of the transportation service
provided for herein. Further, Shipper agrees to reimburse
Transporter for all such fees within thirty (30) days after
receiving proof of payment from Transporter.
6.3 Changes in Rates and Charges - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make changes effective
in (a) the rates, charges, terms and conditions applicable
to service pursuant to the Rate Schedule under which this
service is rendered, (b) the Rate Schedule(s) pursuant to
which service hereunder is rendered, and (c)any provisions
of the General Terms and Conditions in Transporter's FERC
Gas Tariff applicable to those Rate Schedules, as such
Tariff may be revised or replaced from time to time.
Transporter agrees that Shipper may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter just and reasonable rates.
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE VII - RESPONSIBILITY DURING TRANSPORTATION
As between the Parties hereto, it is agreed that from the time
gas is delivered by Shipper to Transporter at the Receipt
Point(s) and prior to delivery of such gas to or for the account
of Shipper at the Delivery Point(s), Transporter shall have the
unqualified right to commingle such gas with other gas in its
system and shall have the unqualified right to handle and treat
such gas as its own.
ARTICLE VIII - BILLINGS AND PAYMENTS
Billings and payments under this Agreement shall be in accordance
with the terms and conditions of Transporter's FERC Gas Tariff as
such Tariff may be revised or replaced from time to time.
ARTICLE IX - RATE SCHEDULES AND GENERAL TERMS AND CONDITIONS
This Agreement and all terms and provisions contained or
incorporated herein are subject to the effective provisions of
Transporter's applicable Rate Schedule(s) as set forth on Exhibit
A and Transporter's General Terms and Conditions on file with the
FERC, or other duly constituted authorities having jurisdiction,
as the same may be changed or superseded from time to time in
accordance with the rules and regulations of the FERC, which Rate
Schedule(s) and General Terms and Conditions are incorporated by
reference. To the extent a term or condition set forth in this
Contract is inconsistent with the General Terms and Conditions,
the General Terms and Conditions shall govern. Furthermore, to
the extent a term or condition set forth in this Contract is
inconsistent with the applicable Rate Schedule, the Rate Schedule
shall govern unless the relevant provision is inconsistent with
General Terms and Conditions.
ARTICLE X - REGULATION
10.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
or authorization is not so obtained or continued.
All Parties hereto shall cooperate to obtain or continue all
necessary approvals or authorizations, but no Party shall be
liable to any other Party for failure to obtain or continue
such approvals or authorizations.
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
10.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC
regulations.
10.3 In the event the Parties are unable to obtain all necessary
and satisfactory regulatory approvals for service on
facilities prior to the expiration of two (2) years from the
effective date hereof, then, prior to receipt of such
regulatory approvals, either Party may terminate this
Agreement by giving the other Party at least thirty (30)
days prior written notice, and the respective obligations
hereunder, except for the provisions of Section 6.2 herein,
shall be of no force and effect from and after the effective
date of such termination.
ARTICLE XI - WARRANTIES
Shipper agrees to indemnify and hold Transporter harmless from
all suits, actions, debts, accounts, damages, costs, losses, and
expenses (including reasonable attorneys fees) arising from or
out of breach of any warranty, express or implied, by the Shipper
herein. Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII - TERM OF AGREEMENT
12.1 This Agreement shall become effective on the date of its
execution, and shall be implemented no later than the first
day of the month following the later of the date of
execution or the completion of any necessary facilities on
Transporter's system and shall remain in full force and
effect until the 31st day of March, 1998, ("Primary Term")
and will terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement upon its termination, as
required by the General Terms and Conditions of
Transporter's FERC Gas Tariff, shall survive the other parts
of this Agreement until such time as such balancing has been
accomplished.
12.3 In addition to any other remedy Transporter may have, this
Agreement will terminate automatically in the event Shipper
fails to pay all of the amount of any bill for service
rendered by Transporter hereunder when that amount is due,
provided Transporter shall give Shipper thirty days notice
prior to any termination of service. Service may continue
hereunder if within the thirty day notice period
satisfactory assurance of payment is made in accord with the
terms and conditions of Article VI of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE XIII - NOTICES
Except when notice is required through TENN-SPEED 2, any notice,
request, demand, statement, or bill provided for in this
Agreement or any notice that either Party may desire to give to
the other shall be in writing and mailed by registered mail to
the post office address of the Party intended to receive the same
as follows:
TRANSPORTER: MIDWESTERN GAS TRANSMISSION COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by written
notice to the other.
ARTICLE XIV - ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument that
it has executed or may execute hereafter as security for
indebtedness. Either Party, without relieving itself of its
obligations under this Agreement, may assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its rights and obligations hereunder, except in accord with
Article XXI of the General Terms and Conditions of
Transporter's Tariff.
14.2 Any person or entity that succeeds by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
ARTICLE XV - MISCELLANEOUS
15.1 Except for changes specifically authorized pursuant to this
Agreement, no modification of or supplement to the terms
conditions hereof shall be or become effective until Shipper has
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
submitted a request for change through TENN-SPEED 2 and
Shipper has been notified through TENN-SPEED 2 of
Transporter's agreement to such change.
15.2 No waiver by any Party of any one or more defaults by the
other in the performance of any provision of this Agreement
shall operate or be construed as a waiver of any future
default or defaults, whether of a like or of a different
character.
15.3 The interpretation and performance of this agreement shall
be in accordance with and controlled by the laws of the
State of Texas, without regard to Choice of Law doctrine
that refers to the laws of another jurisdiction.
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part of this Agreement for all
purposes.
15.5 If any provision of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at
Transporter's option; and if the severability option is
exercised, the remaining provisions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
MIDWESTERN GAS TRANSMISSION COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: November 1, 1997
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED November 1, 1997
BETWEEN
MIDWESTERN GAS TRANSMISSION COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: November 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19394
SERVICE PACKAGE TQ: 9,711 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
017024 MGT PURCHASE (Bi 2- SUMNER TN 01 R 9,711 9,711
7086, Dual
Total 9,711 9,711
Receipt
TQ:
027062 PEOPLES-UNION HILL PEOPLES GAS LIGHT & WILL IL 01 D 9,711 9,711
SALES COKE CO
NUMBER OF RECEIPT POINTS AFFECTED: 1
NUMBER OF DELIVERY POINTS AFFECTED: 1
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(d)
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
THIS AGREEMENT is made and entered into as of the 1st day of
November, 1997, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and NORTH SHORE GAS COMPANY, an Illinois Corporation, hereinafter
referred to as "Shipper." Transporter and Shipper shall be
collectively referred to as "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for
the account of Shipper hereunder on each day during each
year during the term hereof, which shall be 9,809
dekatherms. Any limitations of the quantities to be
received from each Point of Receipt and/or delivered to each
Point of Delivery shall be as specified on Exhibit "A"
attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily, on a firm basis, the Point(s) of Receipt from Shipper or
for Shipper's account such quantity of gas as Shipper makes
available up to the Transportation Quantity, and to deliver to or
for the account of Shipper to Point(s) of Delivery an Equivalent
Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit "A" attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in
this Agreement.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported and delivered hereunder the
Parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that
no new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter or a downstream
pipeline, then responsibility for operations shall be deemed to
be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing on the effective date
hereof, the rates, charges and surcharges to be paid by
Shipper to Transporter for the transportation service
provided herein shall be in accordance with Transporter's
Rate Schedule FT-A and the General Terms and Conditions of
Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees which have not been
previously paid by Shipper, which Transporter incurs in
rendering service hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes
in (a) the rates and charges applicable to service pursuant
to Transporter's Rate Schedule FT-A, (b) the rate
schedule(s) pursuant to which service hereunder is rendered,
and (c)any provisions of the General Terms and Conditions
applicable to those rate schedules. Transporter agrees that
Shipper may protest or contest the aforementioned filings,
or may seek authorization from duly constituted regulatory
authorities for such adjustment of Transporter's existing
FERC Gas Tariff as may be found necessary to assure
Transporter just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
is not so obtained or continued. All Parties hereto shall
cooperate to obtain or continue all necessary approvals or
authorizations, but no Party shall be liable to any other
Party for failure to obtain or continue such approvals or
authorizations.
9.2 The transportation service described herein shall be
provided subject to Subpart G, Part 284, of the FERC
Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified, the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas
Tariff, Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place and of the requested effective date of service, and
that it has advised the upstream and downstream
transporters of the receipt and delivery points under this
Agreement and any quantity limitations for each point as
specified on Exhibit "A" attached hereto.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
Shipper agrees to indemnify and hold Transporter harmless
for refusal to transport gas hereunder in the event any
upstream or downstream transporter fails to receive or
deliver gas as contemplated by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter harmless
from all suits, actions, debts, accounts, damages, costs,
losses and expenses (including reasonable attorneys fees)
arising form or out of breach of any warranty by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall become effective as of the 1st day of
November, 1997, and shall remain in full force and effect
until the 31st day of March, 1998, ("Primary Term") and will
terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's Tariff, shall
survive the other parts of this Agreement until such time as
such balancing has been accomplished; provided, however,
that Transporter notifies Shipper of such imbalance not
later than twelve months after the termination of this
Agreement.
12.3 This Agreement will terminate automatically upon written
notice from Transporter in the event Shipper fails to pay
all of the amount of any bill for service rendered by
Transporter hereunder in accord with the terms and
conditions of Article VI of the General Terms and Conditions
of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XIII
NOTICES
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
Party intended to receive the same, as follows:
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Director, Transportation Control
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument which
it has executed or may execute hereafter as security for
indebtedness. Either Party may, without relieving itself of
its obligations under this Agreement, assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its hereunder, except in accord with Article III of the
General Terms and Conditions of Transporter's FERC Gas
Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XV
MISCELLANEOUS
15.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE
IN ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE DOCTRINES GOVERNING CHOICE
OF LAW.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at either
Party's option; and if the severability option is exercised,
the remaining provisions of the Agreement shall remain in
full force and effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement
to the terms and provisions stated in this agreement shall
be or become effective until Shipper has submitted a request
for change through the TENN-SPEED 2 System and Shipper has
been notified through TENN-SPEED 2 of Transporter's
agreement to such changes.
15.4 Exhibit "A" attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
TENNESSEE GAS PIPELINE COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: November 1, 1997
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED November 1, 1997
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: November 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19388
SERVICE PACKAGE TQ: 9,809 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
012416 ALLAR CO #1 AMERADA HESS CORP FORREST MS 01 R 500 9,809 9,809
Total 9,809 9,809
Receipt
TQ:
020852 MGT SMS (Bi 1-2447, SUMNER TN 01 D 999 9,809 9,809
Dual 1-702
NUMBER OF RECEIPT POINTS AFFECTED: 1
NUMBER OF DELIVERY POINTS AFFECTED: 1
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(e)
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
THIS AGREEMENT is made and entered into as of the 1st day of
April, 1998, by and between MIDWESTERN GAS TRANSMISSION COMPANY,
a Delaware Corporation, hereinafter referred to as "Transporter"
and NORTH SHORE GAS COMPANY, an Illinois Corporation, hereinafter
referred to as "Shipper." Transporter and Shipper shall be
collectively referred to as "Parties."
WITNESSETH:
That, in consideration of the premises and of the mutual
agreements herein contained, Transporter and Shipper agree as
follows:
ARTICLE I - DEFINITIONS
The definitions found in Article 1 of Transporter's General Terms
and Conditions are incorporated herein by reference.
ARTICLE II - TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily, on a firm basis, at Eligible Receipt Point(s), from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity and deliver to
or for the account of Shipper to authorized Delivery Point(s) an
equivalent quantity of gas.
ARTICLE III- POINTS OF RECEIPT AND DELIVERY
AND ASSOCIATED PRESSURES
3.1 The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit A attached hereto. Shipper shall
have access to secondary receipt and delivery points as
specified in the applicable rate schedule (FT-A or FT-GS)
pursuant to which Shipper's volumes are being transported.
Priority of transportation to such secondary points shall be
determined in accord with Article III, Section 5 of the
General Terms and Conditions of Transporter's tariff.
3.2 Shipper may request a change to the Primary Points of
Receipt and/or Primary Points of Delivery provided in this
Agreement by submitting to Transporter a Service Request
Farm in accord with Article XXV of the General Terms and
Conditions of Transporter's FERC Gas Tariff. Priority of
transportation service to such additional Points of Receipt
and/or Delivery shall be determined pursuant to Article III,
Section 5 of the General Terms and Conditions.
3.3 Shipper shall deliver, or cause to be delivered, to
Transporter the gas to be transported hereunder at pressures
sufficient to deliver such gas into Transporter's system at
the Receipt Point(s), provided such pressure shall not
exceed Transporter's maximum allowable operating pressure.
Transporter shall deliver the gas to be transported
hereunder to or for the account of Shipper at the pressures
existing in Transporter's system at the Delivery Point(s).
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE IV- FACILITIES
All facilities are in place to render the service provided for in
this Agreement.
or
(If facilities are contemplated to be constructed, a brief
description of the facilities will be included, as well as who is
to construct, own and/or operate such facilities.)
ARTICLE V - QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported, and delivered hereunder, the
Parties agree to the quality specifications and standards for
measurement as provided for in the General Terms and Conditions
of Transporter's FERC Gas Tariff. Transporter shall be
responsible for the operation of measurement facilities at the
Delivery Point(s) and at the Receipt Point(s). In the event that
measurement facilities are not operated by Transporter, then the
responsibility for operations shall be deemed to be that of the
Balancing Party at such point. If measurement facilities are
not operated by Transporter and there is no Balancing Party at
such point, then the responsibility for operations shall be
deemed to be Shipper's.
ARTICLE VI - RATES FOR SERVICE
6.1 Transportation Charge - Commencing on the date of the rates,
charges and surcharges to be paid by Shipper to Transporter,
including compensation for system fuel and losses, shall be
in accordance with Transporter's applicable effective Rate
Schedule (FT-A or FT-GS) and the General Terms and
Conditions of Transporter's Tariff.
6.2 Incidental Charges - Upon execution of this Agreement,
Shipper agrees to pay Transporter for all known and
anticipated filing fees, reporting fees or similar charges
required for the rendition of the transportation service
provided for herein. Further, Shipper agrees to reimburse
Transporter for all such fees within thirty (30) days after
receiving proof of payment from Transporter.
6.3 Changes in Rates and Charges - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make changes effective
in (a) the rates, charges, terms and conditions applicable
to service pursuant to the Rate Schedule under which this
service is rendered, (b) the Rate Schedule(s) pursuant to
which service hereunder is rendered, and (c)any provisions
of the General Terms and Conditions in Transporter's FERC
Gas Tariff applicable to those Rate Schedules, as such
Tariff may be revised or replaced from time to time.
Transporter agrees that Shipper may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter just and reasonable rates.
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE VII - RESPONSIBILITY DURING TRANSPORTATION
As between the Parties hereto, it is agreed that from the time
gas is delivered by Shipper to Transporter at the Receipt
Point(s) and prior to delivery of such gas to or for the account
of Shipper at the Delivery Point(s), Transporter shall have the
unqualified right to commingle such gas with other gas in its
system and shall have the unqualified right to handle and treat
such gas as its own.
ARTICLE VIII - BILLINGS AND PAYMENTS
Billings and payments under this Agreement shall be in accordance
with the terms and conditions of Transporter's FERC Gas Tariff as
such Tariff may be revised or replaced from time to time.
ARTICLE IX - RATE SCHEDULES AND GENERAL TERMS AND CONDITIONS
This Agreement and all terms and provisions contained or
incorporated herein are subject to the effective provisions of
Transporter's applicable Rate Schedule(s) as set forth on Exhibit
A and Transporter's General Terms and Conditions on file with the
FERC, or other duly constituted authorities having jurisdiction,
as the same may be changed or superseded from time to time in
accordance with the rules and regulations of the FERC, which Rate
Schedule(s) and General Terms and Conditions are incorporated by
reference. To the extent a term or condition set forth in this
Contract is inconsistent with the General Terms and Conditions,
the General Terms and Conditions shall govern. Furthermore, to
the extent a term or condition set forth in this Contract is
inconsistent with the applicable Rate Schedule, the Rate Schedule
shall govern unless the relevant provision is inconsistent with
General Terms and Conditions.
ARTICLE X - REGULATION
10.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
or authorization is not so obtained or continued.
All Parties hereto shall cooperate to obtain or continue all
necessary approvals or authorizations, but no Party shall be
liable to any other Party for failure to obtain or continue
such approvals or authorizations.
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
10.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC
regulations.
10.3 In the event the Parties are unable to obtain all necessary
and satisfactory regulatory approvals for service on
facilities prior to the expiration of two (2) years from the
effective date hereof, then, prior to receipt of such
regulatory approvals, either Party may terminate this
Agreement by giving the other Party at least thirty (30)
days prior written notice, and the respective obligations
hereunder, except for the provisions of Section 6.2 herein,
shall be of no force and effect from and after the effective
date of such termination.
ARTICLE XI - WARRANTIES
Shipper agrees to indemnify and hold Transporter harmless from
all suits, actions, debts, accounts, damages, costs, losses, and
expenses (including reasonable attorneys fees) arising from or
out of breach of any warranty, express or implied, by the Shipper
herein. Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII - TERM OF AGREEMENT
12.1 This Agreement shall become effective on the date of its
execution, and shall be implemented no later than the first
day of the month following the later of the date of
execution or the completion of any necessary facilities on
Transporter's system and shall remain in full force and
effect until the 30th day of April, 1998, ("Primary Term")
and will terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement upon its termination, as
required by the General Terms and Conditions of
Transporter's FERC Gas Tariff shall survive the other parts
of this Agreement until such time as such balancing has been
accomplished.
12.3 In addition to any other remedy Transporter may have, this
Agreement will terminate automatically in the event Shipper
fails to pay all of the amount of any bill for service
rendered by Transporter hereunder when that amount is due,
provided Transporter shall give Shipper thirty days notice
prior to any termination of service. Service may continue
hereunder if within the thirty day notice period
satisfactory assurance of payment is made in accord with the
terms and conditions of Article VI of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE XIII - NOTICES
Except when notice is required through TENN-SPEED 2, any notice,
request, demand, statement, or bill provided for in this
Agreement or any notice that either Party may desire to give to
the other shall be in writing and mailed by registered mail to
the post office address of the Party intended to receive the same
as follows:
TRANSPORTER: MIDWESTERN GAS TRANSMISSION COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by written
notice to the other.
ARTICLE XIV - ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument that
it has executed or may execute hereafter as security for
indebtedness. Either Party, without relieving itself of its
obligations under this Agreement, may assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its rights and obligations hereunder, except in accord with
Article XXI of the General Terms and Conditions of
Transporter's Tariff.
14.2 Any person or entity that succeeds by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
ARTICLE XV - MISCELLANEOUS
15.1 Except for changes specifically authorized pursuant to this
Agreement, no modification of or supplement to the terms and
conditions hereof shall be or become effective until Shipper has
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
submitted a request for change through TENN-SPEED 2 and
Shipper has been notified through TENN-SPEED 2 of
Transporter's agreement to such change.
15.2 No waiver by any Party of any one or more defaults by the
other in the performance of any provision of this Agreement
shall operate or be construed as a waiver of any future
default or defaults, whether of a like or of a different
character.
15.3 The interpretation and performance of this agreement shall
be in accordance with and controlled by the laws of the
State of Texas, without regard to Choice of Law doctrine
that refers to the laws of another jurisdiction.
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part of this Agreement for all
purposes.
15.5 If any provision of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at
Transporter's option; and if the severability option is
exercised, the remaining provisions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
MIDWESTERN GAS TRANSMISSION COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: April 1, 1998
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED April 1, 1998
BETWEEN
MIDWESTERN GAS TRANSMISSION COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: April 1, 1998
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19393
SERVICE PACKAGE TQ: 9,658 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
017024 MGT PURCHASE (Bi 2- SUMNER TN 01 R 9,658 9,658
7086, Dual
Total 9,658 9,658
Receipt
TQ:
027062 PEOPLES-UNION HILL PEOPLES GAS LIGHT & WILL IL 01 D 9,658 9,658
SALES COKE CO
NUMBER OF RECEIPT POINTS AFFECTED: 1
NUMBER OF DELIVERY POINTS AFFECTED: 1
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(f)
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
THIS AGREEMENT is made and entered into as of the 1st day of
April, 1998, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and NORTH SHORE GAS COMPANY, an Illinois Corporation, hereinafter
referred to as "Shipper." Transporter and Shipper shall be
collectively referred to as "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for
the account of Shipper hereunder on each day during each
year during the term hereof, which shall be 9,756
dekatherms. Any limitations of the quantities to be
received from each Point of Receipt and/or delivered to each
Point of Delivery shall be as specified on Exhibit "A"
attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily on a firm basis, the Point(s) of Receipt from Shipper or
for Shipper's account such quantity of gas as Shipper makes
available up to the Transportation Quantity and to deliver to or
for the account of Shipper to Point(s) of Delivery an Equivalent
Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit "A" attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in
this Agreement.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported and delivered hereunder the
Parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that
no new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter or a downstream
pipeline, then responsibility for operations shall be deemed to
be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS SERVICE
6.1 TRANSPORTATION RATES - Commencing upon the effective date
hereof, the rates, charges and surcharges to be paid by
Shipper to Transporter for the transportation service
provided herein shall be in accordance with Transporter's
Rate Schedule FT-A and the General Terms and Conditions of
Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been
previously paid by Shipper, which Transporter incurs in
rendering service hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes
in (a) the rates and charges applicable to service pursuant
to Transporter's Rate Schedule FT-A, (b) the rate
schedule(s) pursuant to which service hereunder is rendered,
or (c)any provisions of the General Terms and Conditions
applicable to those rate schedules. Transporter agrees that
Shipper may protest or contest the aforementioned filings,
or may seek authorization from duly constituted regulatory
authorities for such adjustment of Transporter's existing
FERC Gas Tariff as may be found necessary to assure
Transporter just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
is not so obtained or continued. All Parties hereto shall
cooperate to obtain or continue all necessary approvals or
authorizations, but no Party shall be liable to any other
Party for failure to obtain or continue such approvals or
authorizations.
9.2 The transportation service described herein shall be
provided subject to Subpart G, Part 284, of the FERC
Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified, the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas
Tariff, Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place and of the requested effective date of service, and
that it has advised the upstream and downstream
transporters of the receipt and delivery points under this
Agreement and any quantity limitations for each point as
specified on Exhibit "A" attached hereto.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
Shipper agrees to indemnify and hold Transporter harmless
for refusal to transport gas hereunder in the event any
upstream or downstream transporter fails to receive or
deliver gas as contemplated by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter harmless
from all suits, actions, debts, accounts, damages, costs,
losses and expenses (including reasonable attorneys fees)
arising form or out of breach of any warranty by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall be effective as of the 1st day of
April, 1998, and shall remain in force and effect until the
30th day of April, 1998, ("Primary Term") and will terminate
on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's Tariff, shall
survive the other parts of this Agreement until such time as
such balancing has been accomplished; provided, however,
that Transporter notifies Shipper of such imbalance not
later than twelve months after the termination of this
Agreement.
12.3 This Agreement will terminate automatically upon written
notice from Transporter in the event Shipper fails to pay
all of the amount of any bill for service rendered by
Transporter hereunder in accord with the terms and
conditions of Article VI of the General Terms and Conditions
of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XIII
NOTICES
Except as otherwise provided in the General Terms and conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
Party intended to receive the same, as follows:
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Director, Transportation Control
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument which
it has executed or may execute hereafter as security for
indebtedness. Either Party may, without relieving itself of
its obligations under this Agreement, assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its hereunder, except in accord with Article III of the
General Terms and Conditions of Transporter's FERC Gas
Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XV
MISCELLANEOUS
15.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE
IN ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE DOCTRINES GOVERNING CHOICE
OF LAW.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at either
Party's option; and if the severability option is exercised,
the remaining provisions of the Agreement shall remain in
full force and effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement
to the terms and provisions stated in this agreement shall
be or become effective until Shipper has submitted a request
for change through the TENN-SPEED 2 System and Shipper has
been notified through TENN-SPEED 2 of Transporter's
agreement to such changes.
15.4 Exhibit "A" attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
TENNESSEE GAS PIPELINE COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: April 1, 1997
<TABLE>
<CAPTION>
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED April 1, 1998
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: April 1, 1998
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19387
SERVICE PACKAGE TQ: 9,756 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
011929 TRANSCO - WHARTON TRANSCONTINENTAL GAS WHARTON TX 00 R 100 4,878 4,878
COUNTY TIE-1 PPELINE
012020 TRANSCO - FALFURRIAS TRANSCONTINENTAL GAS JIM WELLS TX 00 R 100 4,878 4,878
TRANSPORT PIPELINE
Total 9,756 9,756
Receipt
TQ:
020852 MGT SMS (Bi 1-2447, SUMNER TN 01 D 999 9,756 9,756
Dual 1-702
NUMBER OF RECEIPT POINTS AFFECTED: 2
NUMBER OF DELIVERY POINTS AFFECTED: 1
</TABLE>
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
<TABLE>
<CAPTION>
Exhibit 12
North Shore Gas Company and Subsidiary Companies
Statement Re: Computation of Ratio of Earnings to Fixed Charges
(Dollars in Thousands)
Fiscal years ended September 30,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Income Before Preferred
Stock Dividends $ 14,814 $ 16,347 $ 9,048 $ 10,378 $ 8,973
Add - Income Taxes 9,229 10,154 4,859 5,087 4,788
Fixed Charges (see below) 5,068 5,741 7,196 6,648 7,198
Earnings $ 29,111 $ 32,242 $ 21,103 $ 22,113 $ 20,959
Fixed Charges:
Interest on Long-Term Debt $ 4,627 $ 4,937 $ 5,905 $ 6,326 $ 6,718
Other Interest 441 804 1,291 322 480
Total Fixed Charges $ 5,068 $ 5,741 $ 7,196 $ 6,648 $ 7,198
Ratio of Earnings to Fixed Charges 5.74 5.62 2.93 3.33 2.91
</TABLE>
Exhibit 21
North Shore Gas Company
Subsidiaries of the Registrant
Date of State of
Company Incorporation Incorporation
North Shore Exploration Company 04/25/73 Illinois
Exhibit 23
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report, dated October 31,
1997, included in this Form 10-K, into North Shore Gas
Company's previously filed Registration Statement File No.
33-60256.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
December 22, 1997
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
STATEMENTS OF INCOME, CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF
CASH FLOWS, CONSOLIDATED CAPITALIZATION STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 194,674
<OTHER-PROPERTY-AND-INVEST> 21
<TOTAL-CURRENT-ASSETS> 24,705
<TOTAL-DEFERRED-CHARGES> 2,770
<OTHER-ASSETS> 8,524
<TOTAL-ASSETS> 230,694
<COMMON> 24,757
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 67,912
<TOTAL-COMMON-STOCKHOLDERS-EQ> 92,669
0
0
<LONG-TERM-DEBT-NET> 64,604
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 2,110
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 71,311
<TOT-CAPITALIZATION-AND-LIAB> 230,694
<GROSS-OPERATING-REVENUE> 168,875
<INCOME-TAX-EXPENSE> 9,046
<OTHER-OPERATING-EXPENSES> 140,161
<TOTAL-OPERATING-EXPENSES> 149,207
<OPERATING-INCOME-LOSS> 19,668
<OTHER-INCOME-NET> 214
<INCOME-BEFORE-INTEREST-EXPEN> 19,882
<TOTAL-INTEREST-EXPENSE> 5,068
<NET-INCOME> 14,814
0
<EARNINGS-AVAILABLE-FOR-COMM> 14,814
<COMMON-STOCK-DIVIDENDS> 11,385
<TOTAL-INTEREST-ON-BONDS> 4,627
<CASH-FLOW-OPERATIONS> 22,586
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
