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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended.................September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from............to...................
Commission file number...................................1-3268
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 14-0555980
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
284 SOUTH AVENUE, POUGHKEEPSIE NEW YORK 12601-4879
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (914) 452-2000
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable
date. Common stock, par value $5.00 per share; 17,554,987 shares
outstanding as of October 31, 1996.
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1 - Consolidated Financial Statements 1
Consolidated Statement of Income -
Three Months Ended September 30, 1996 and 1995 2
Consolidated Statement of Income -
Nine Months Ended September 30, 1996 and 1995 3-4
Consolidated Balance Sheet - September 30, 1996
and December 31, 1995 5-6
Consolidated Statement of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 7-8
Notes to Consolidated Financial Statements 9
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-18
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 19
Item 5 - Other Information 19-22
Item 6 - Exhibits and Reports on Form 8-K 23
Signatures 24
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PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the 3 Months Ended
September 30,
1996 1995
(Thousands of Dollars)
Operating Revenues
Electric.............................. $ 104,187 $ 106,489
Gas................................... 10,106 15,780
Total - own territory................ 114,293 122,269
Electric sales to other utilities..... 3,310 5,278
Gas sales to other utilities.......... 81 -
Total Operating Revenues..... 117,684 127,547
Operating Expenses
Operation:
Fuel used in electric generation..... 13,423 17,982
Purchased electricity................ 15,306 13,787
Purchased natural gas................ 5,128 10,525
Other expenses of operation.......... 24,893 23,730
Maintenance........................... 6,173 7,650
Depreciation and amortization......... 10,709 10,488
Taxes, other than income tax.......... 16,185 16,660
Federal income tax.................... 7,867 7,908
Total Operating Expenses..... 99,684 108,730
Operating Income....................... 18,000 18,817
Other Income and Deductions
Allowance for equity funds
used during construction............. 186 126
Federal income tax.................... 51 306
Other - net........................... 2,023 1,424
Total Other Income
and Deductions.............. 2,260 1,856
Income Before Interest Charges......... 20,260 20,673
Interest Charges
Interest on mortgage bonds............ 3,559 4,215
Interest on other long-term debt...... 2,097 2,232
Interest on short-term debt........... 47 -
Other interest........................ 816 545
Allowance for borrowed funds
used during construction............. (150) (113)
Amortization of expense on debt....... 226 252
Total Interest Charges....... 6,595 7,131
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the 3 Months Ended
September 30,
1996 1995
(Thousands of Dollars)
Net Income............................ 13,665 13,542
Dividends Declared on Cumulative
Preferred Stock...................... 808 1,282
Income Available for Common Stock..... 12,857 12,260
Dividends Declared on
Common Stock......................... 9,304 9,156
Balance Retained in the Business...... $ 3,553 $ 3,104
Common Stock:
Average Shares Outstanding (000s).... 17,555 17,416
Earnings Per Share................... $ .73 $ .70
Dividends Declared................... $ .53 $.525
See Notes to Consolidated Financial Statements.
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the 9 Months Ended
September 30,
1996 1995
(Thousands of Dollars)
Operating Revenues
Electric.............................. $ 307,369 $ 300,113
Gas................................... 68,812 79,821
Total - own territory................ 376,181 379,934
Electric sales to other utilities..... 9,870 10,918
Gas sales to other utilities.......... 2,475 -
Total Operating Revenues..... 388,526 390,852
Operating Expenses
Operation:
Fuel used in electric generation..... 46,284 45,494
Purchased electricity................ 40,071 40,889
Purchased natural gas................ 35,503 46,860
Other expenses of operation.......... 75,004 72,587
Maintenance........................... 21,256 20,976
Depreciation and amortization......... 32,126 31,463
Taxes, other than income tax.......... 50,007 50,473
Federal income tax.................... 26,817 24,358
Total Operating Expenses..... 327,068 333,100
Operating Income....................... 61,458 57,752
Other Income and Deductions
Allowance for equity funds
used during construction............. 493 621
Federal income tax.................... 995 504
Other - net........................... 4,144 6,130
Total Other Income
and Deductions.............. 5,632 7,255
Income Before Interest Charges......... 67,090 65,007
Interest Charges
Interest on mortgage bonds............ 11,553 12,647
Interest on other long-term debt...... 6,341 6,744
Interest on short-term debt........... 189 6
Other interest........................ 1,823 1,400
Allowance for borrowed funds
used during construction............. (397) (559)
Amortization of expense on debt....... 713 817
Total Interest Charges....... 20,222 21,055
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
For the 9 Months Ended
September 30,
1996 1995
(Thousands of Dollars)
Net Income............................ 46,868 43,952
Premium on Preferred Stock Redemption. 378 -
Dividends Declared on Cumulative
Preferred Stock...................... 2,423 3,844
Income Available for Common Stock..... 44,067 40,108
Dividends Declared on
Common Stock......................... 27,823 27,274
Balance Retained in the Business...... $ 16,244 $ 12,834
Common Stock:
Average Shares Outstanding (000s).... 17,547 17,347
Earnings Per Share................... $2.51 $2.31
Dividends Declared................... $1.59 $1.57
See Notes to Consolidated Financial Statements.
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
September 30, December 31,
1996 1995
(Unaudited) (Audited)
(Thousands of Dollars)
ASSETS
Utility Plant
Electric....................... $1,161,385 $1,149,233
Gas............................ 143,745 140,341
Common......................... 89,223 83,220
Nuclear fuel................... 36,897 32,541
1,431,250 1,405,335
Less: Accumulated depreciation. 517,404 490,576
Nuclear fuel amortization 29,292 26,435
884,554 888,324
Construction work in progress.. 53,571 48,770
Net Utility Plant............ 938,125 937,094
Prefunded Pension Costs 8,234 922
Other Property and
Investments.................... 11,654 10,410
Current Assets
Cash and cash equivalents...... 5,550 15,478
Accounts receivable from
customers-net of allowance for
doubtful accounts............. 43,044 44,536
Accrued unbilled utility
revenues...................... 9,662 15,806
Other receivables.............. 2,520 4,674
Fuel, materials and supplies,
at average cost............... 28,442 27,590
Special deposits and
prepayments................... 19,055 12,659
Total Current Assets......... 108,273 120,743
Deferred Charges
Regulatory assets.............. 153,071 159,907
Unamortized debt expense....... 5,490 6,080
Other.......................... 16,288 14,936
Total Deferred Charges....... 174,849 180,923
Total Assets.................... $1,241,135 $1,250,092
See Notes to Consolidated Financial Statements.
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
September 30, December 31,
1996 1995
(Unaudited) (Audited)
(Thousands of Dollars)
LIABILITIES
Capitalization
Common Stock Equity
Common stock, 30,000,000
authorized; shares out-
standing ($5 par value):
1996 - 17,554,987
1995 - 17,496,051............ $ 87,775 $ 87,480
Paid-in capital............... 284,465 282,942
Retained earnings............. 106,719 90,475
Capital stock expense......... (6,372) (6,658)
Total Common Stock Equity... 472,587 454,239
Cumulative Preferred Stock
Not subject to mandatory
redemption.................. 21,030 21,030
Subject to mandatory
redemption.................. 35,000 35,000
Total Cumulative Preferred
Stock..................... 56,030 56,030
Long-term Debt................ 361,552 389,245
Total Capitalization....... 890,169 899,514
Current Liabilities
Current redemption of
preferred stock.............. - 13,000
Current maturities
of long-term debt............ 664 1,577
Notes payable................. 6,100 -
Accounts payable.............. 25,219 24,433
Accrued taxes and interest.... 14,853 7,824
Dividends payable............. 10,112 10,244
Accrued vacation.............. 4,251 4,157
Customer deposits............. 3,926 4,021
Other......................... 5,430 6,166
Total Current Liabilities... 70,555 71,422
Deferred Credits and Other
Liabilities
Regulatory liabilities........ 70,468 74,132
Operating reserves............ 6,906 6,024
Other......................... 8,750 9,659
Total Deferred Credits and
Other Liabilities.......... 86,124 89,815
Accumulated Deferred Income Tax 194,287 189,341
Total Capitalization and
Liabilities................... $1,241,135 $1,250,092
See Notes to Consolidated Financial Statements.
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the 9 Months Ended
September 30,
1996 1995
(Thousands of Dollars)
Operating Activities
Net Income.......................... $ 46,868 $ 43,952
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, amortization and
nuclear fuel amortization........ 35,893 34,160
Deferred income taxes............. 11,041 10,362
Allowance for equity funds used
during construction.............. (493) (621)
Nine Mile 2 Plant deferred
finance charges, net............. (3,642) (3,642)
Provision for uncollectibles...... 2,872 2,625
Accrued pension costs............. (5,385) (7,971)
Deferred gas costs................ (2,442) 3,041
Deferred gas refunds.............. (1,828) (1,220)
Gain on sale of long-term
investments...................... - (923)
Other - net....................... 1,735 2,527
Changes in current assets and
liabilities, net:
Accounts receivable and unbilled
utility revenues................. 6,918 8,395
Fuel, materials and supplies...... (852) 3,562
Special deposits and prepayments.. (6,396) (9,032)
Accounts payable.................. 786 1,821
Accrued taxes and interest........ 7,029 9,098
Other current liabilities......... (737) 1,992
Net cash provided by operating
activities......................... 91,367 98,126
Investing Activities
Additions to plant.................. (36,944) (33,696)
Allowance for equity funds used
during construction................ 493 621
Net additions to plant.............. (36,451) (33,075)
Proceeds from sale of long-term
investments........................ - 1,299
Nine Mile 2 Plant decommissioning
trust fund......................... (843) (1,409)
Other - net......................... (31) (901)
Net cash used in investing
activities......................... (37,325) (34,086)
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the 9 Months Ended
September 30,
1996 1995
(Thousands of Dollars)
Financing Activities
Proceeds from issuance of:
Long-term debt................... 1,765 1,000
Common stock..................... 1,818 5,347
Repayments of notes payable........ - (3,000)
Borrowings of notes payable........ 6,100 -
Retirement and redemption of
long-term debt.................... (30,634) (433)
Retirement and redemption of
cumulative preferred stock........ (13,000) -
Dividends paid on cumulative
preferred and common stock........ (30,378) (30,926)
Issuance and redemption costs...... 359 (4)
Net cash used in financing
activities........................ (63,970) (28,016)
Net Change in Cash and Cash
Equivalents.......................... (9,928) 36,024
Cash and Cash Equivalents -
Beginning Year....................... 15,478 5,792
Cash and Cash Equivalents -
End of Period........................ $ 5,550 $ 41,816
Supplemental Disclosure of
Cash Flow Information
Interest paid (net of amounts
capitalized)...................... $ 14,352 $14,330
Federal income tax paid............ 11,875 10,100
See Notes to Consolidated Financial Statements.
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Notes to Consolidated Financial Statements
1. General
The accompanying consolidated financial statements of Central
Hudson Gas & Electric Corporation (herein the Registrant or the
Company) are unaudited but, in the opinion of management,
reflect adjustments (which include normal recurring adjustments)
necessary for a fair statement of the results for the interim
periods presented. These condensed unaudited quarterly
consolidated financial statements do not contain the detail or
footnote disclosure concerning accounting policies and other
matters which would be included in annual consolidated financial
statements and, accordingly, should be read in conjunction with
the audited Consolidated Financial Statements (including the
notes thereto) included in the Company's Annual Report, on Form
10-K, for the year ended December 31, 1995. Due to the seasonal
nature of the Company's operations, financial results for
interim periods are not necessarily indicative of trends for a
twelve-month period. Certain 1995 amounts have been
reclassified to conform to the 1996 presentation.
2. Commitments and Contingencies
The Company faces a number of contingencies which arise during
the normal course of business and which have been discussed in
Note 8 (entitled "Commitments and Contingencies") to the
Consolidated Financial Statements included in the Company's 10-K
Report. These contingencies include developments in the
legislative, regulatory and competitive environment, electric
and gas industry restructuring and certain environmental matters
as well as such other factors as set forth in the Company's
annual report on Form 10-K for the year ended December 31, 1995
and all documents subsequently filed with the Securities and
Exchange Commission.
The Financial Accounting Standards Board (FASB) has issued an
exposure draft entitled "Accounting for Certain Liabilities
related to Closure and Removal of Long-Lived Assets," which
includes nuclear plant decommissioning. If the accounting
standard proposed in such exposure draft were adopted, it may
result in higher annual provisions for decommissioning to be
recognized earlier in the operating life of nuclear units and an
accelerated recognition of the decommissioning obligation. The
FASB will be deliberating this issue and the resulting final
pronouncement could be different from that proposed in the
exposure draft. The Company can make no prediction at this time
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as to the ultimate form of such proposed accounting standard,
assuming it is adopted, nor can it make any prediction as to its
ultimate effect(s) on the financial condition or results of
operations of the Company.
Except as what is disclosed above and in Part II of this
Quarterly Report, on Form 10-Q, for the quarterly period ended
September 30, 1996, and all documents previously filed with the
Securities and Exchange Commission in 1996, there have been no
material changes in the subject matters discussed in said Note
8.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OTHER MATTERS
COMPETITION
On October 1, 1996, the Company filed with the Public Service
Commission of the State of New York (PSC) its objectives to
transition from a regulated environment to a competitive
environment. See Item 5 of Part II hereof under the caption
"Other Information - Competition" for details.
RATE PROCEEDING - GAS
On October 3, 1996, the PSC issued its opinion and order on the
Company's gas case filed last year. See Item 5 of Part II
hereof under the caption "Other Information - Rate Proceedings-
Gas" for details.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q and the documents
incorporated by reference may contain statements which, to the
extent they are not recitations of historical fact, constitute
"forward-looking statements" within the meaning of the
Securities Litigation Reform Act of 1995 (Reform Act). All such
forward-looking statements are intended to be subject to the
safe harbor protection provided by the Reform Act. A number of
important factors affecting the Company's business and financial
results could cause actual results to differ materially from
those stated in the forward-looking statements. Those factors
include developments in the legislative, regulatory and
competitive environment, electric and gas industry restructuring
and certain environmental matters as well as such other factors
as set forth in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 and all documents subsequently
filed with the Securities and Exchange Commission.
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CAPITAL RESOURCES AND LIQUIDITY
For the nine months ended September 30, 1996, cash expenditures,
related to the construction program of the Company, amounted to
$36.1 million. The amount shown on the Consolidated Statement
of Cash Flows for "Net additions to plant" of $36.5 million
includes the debt portion of $397,000 of the Allowance for Funds
Used During Construction ("AFDC", as such term is described in
Note 1, entitled "Summary of Significant Accounting Policies,"
to the Consolidated Financial Statements included in the
Company's 10-K Report). The cash requirements for such
expenditures were primarily funded from internal sources.
In May 1996, the Company converted its Automatic Dividend
Reinvestment and Stock Purchase Plan and the Customer Stock
Purchase Plan from original issue to open market purchase. This
change was made because earnings per share were diluted after
several years of issuing new shares through such plans. The
Company has improved its common equity ratio from 35.4% in
December 1987 to 52.7% currently, which level is deemed
appropriate at this time. Accordingly original share issuance
under such stock plans has been temporarily discontinued.
On May 1, 1996, the Company optionally redeemed all of its $30
million 8 3/4% Series of First Mortgage Bonds due 2001 at a
redemption price of 102.07% of the principal amount. The $30.6
million total cash requirement was financed with short-term
borrowings and the liquidation of temporary cash investments.
The growth of retained earnings in the first nine months of 1996
contributed to the increase in the book value of common stock
from $25.96 at December 31, 1995 to $26.92 at September 30,
1996. The combined effect of the redemption of the Company's
7.72% Cumulative Preferred Stock and 8 3/4% Series of First
Mortgage Bonds and the growth of retained earnings in the first
nine months of 1996 contributed to the increase in the common
equity ratio from 49.7% at December 31, 1995 to 52.7% at
September 30, 1996.
On October 23, 1996, the Company entered into a new five year $50
million revolving credit facility with four banks, which
replaced a substantially similar revolving credit facility in
effect since December 1990. In addition, the Company has
several other committed and uncommitted bank facilities ranging
from $.5 million to $50 million from which it may obtain short-
term financing. Authorization from the Public Service
Commission of the State of New York (PSC), limits the short-term
borrowing amount the Company may have outstanding, at any time,
to $52 million in the aggregate.
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EARNINGS PER SHARE
Earnings per share of common stock were $.73 for the third
quarter of 1996, as compared to $.70 for the third quarter of
1995, an increase of 4%. Earnings per share of common stock were
$2.51 for the nine months ended September 30, 1996, as compared
to $2.31 for the nine months ended September 30, 1995, an
increase of 9%.
The increase in earnings per share for the quarter ended
September 30, 1996, as compared to the same period in 1995,
resulted primarily from decreased interest expense in 1996 due
primarily from the optional redemption of all of its $30 million
8 3/4% Series First Mortgage Bonds in May 1996. Also
contributing to the increase in earnings per share was a
decrease in preferred stock dividends in 1996 resulting from the
optional redemption of all outstanding shares of 7.44% and 7.72%
Series Cumulative Preferred Stock in October 1995 and January
1996, respectively. This favorable variation was partially
offset by decreased electric net operating revenue attributable
to cooler weather experienced in the current quarter. Earnings
per share were also impacted by various other items, including
decreased interest income.
The increase in per share earnings for the nine months ended
September 30, 1996, as compared to the same period in 1995,
resulted primarily from increased electric and gas net operating
revenues attributable largely to increased sales occurring
because of unseasonable weather experienced in the first nine
months of 1996. Also contributing to the increase in nine-month
earnings were decreased preferred stock dividends in 1996
resulting from the optional redemption of all outstanding shares
of the Company's 7.44% Series Cumulative Preferred Stock in
October 1995 and 7.72% Series Cumulative Preferred Stock in
January 1996, respectively. In addition to the above, interest
expense decreased for the nine months ended September 30, 1996,
resulting primarily from the optional redemption of all $30
million of the Company's 8 3/4% Series First Mortgage Bonds in
May 1996. The favorable variance in earnings per share in this
nine-month period was partially offset by decreased interest
income.
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RESULTS OF OPERATIONS
The following table reports the variation in the results of
operations for the three months and nine months ended
September 30, 1996 compared to the same periods for 1995:
3 MONTHS ENDED SEPTEMBER 30,
INCREASE
1996 1995 (DECREASE)
(Thousands of Dollars)
Operating Revenues $117,684 $127,547 $ (9,863)
Operating Expenses 99,684 108,730 (9,046)
Operating Income 18,000 18,817 (817)
Other Income & Deductions 2,260 1,856 404
Income before Interest Charges 20,260 20,673 (413)
Interest Charges 6,595 7,131 (536)
Net Income 13,665 13,542 123
Dividends Declared on Cumulative
Preferred Stock 808 1,282 (474)
Income Available for Common Stock $ 12,857 $ 12,260 $ 597
9 MONTHS ENDED SEPTEMBER 30,
INCREASE
1996 1995 (DECREASE)
(Thousands of Dollars)
Operating Revenues $388,526 $390,852 $ (2,326)
Operating Expenses 327,068 333,100 (6,032)
Operating Income 61,458 57,752 3,706
Other Income & Deductions 5,632 7,255 (1,623)
Income before Interest Charges 67,090 65,007 2,083
Interest Charges 20,222 21,055 (833)
Net Income 46,868 43,952 2,916
Premium on Preferred Stock
Redemption 378 - 378
Dividends Declared on Cumulative
Preferred Stock 2,423 3,844 (1,421)
Income Available for Common Stock $ 44,067 $ 40,108 $ 3,959
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OPERATING REVENUES
Operating revenues decreased $9.9 million (8%) for the third
quarter of 1996 as compared to the third quarter of 1995 and
decreased $2.3 million (1%) for the nine months ended September
30, 1996. Details of these revenue changes by electric and gas
departments are as follows:
INCREASE (DECREASE) FROM PRIOR PERIOD
THIRD QUARTER NINE MONTHS
Electric Gas Electric Gas
(Thousands of Dollars)
Customer Sales $(2,088) $(5,945) * $ 8,636 $(8,283)*
Sales to Other
Utilities (1,968) 81 (1,048) 2,475
Fuel and Gas Cost
Adjustment (901) (9) (1,857) (3,764)
Deferred Revenues 638 381 730 1,227
Miscellaneous 49 (101)** (253) (189)**
$(4,270) $(5,593) $ 6,208 $(8,534)
*Both firm and interruptible revenues.
**Includes revenues from transportation of customer-owned gas.
Revenues collected from or credited to customers under the
electric fuel and gas cost adjustment clauses do not affect
earnings since they are offset in fuel costs, with the exception
of revenues collected pursuant to incentive mechanisms.
During the month of March 1996, the Company began selling natural
gas to third parties who in turn resell the natural gas to their
customers. These sales totaled $81,300 for the third quarter of
1996 and $2.5 million for the nine months ended September 30,
1996. Of the profits realized from these gas sales for resale,
85% are returned to firm gas customers through the Gas
Adjustment Clause and 15% are retained by the Company.
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SALES
Total kilowatt-hour sales of electricity within the Company's
service territory decreased 1%, while firm sales of natural gas
remained stable in the third quarter of 1996 as compared to the
third quarter of 1995. For the nine months ended September 30,
1996, electric sales increased 3% and firm gas sales increased
16% compared to the same period last year. Changes in sales
from last year by major customer classifications, including
interruptible gas sales, are set forth below. Also indicated
are the changes related to transportation of customer owned gas:
INCREASE (DECREASE) FROM PRIOR PERIOD
THIRD QUARTER NINE MONTHS
Electric Gas Electric Gas
Residential (3)% 13 % 6 % 18 %
Commercial (2) 3 2 15
Industrial 5 (1) 3 16
Interruptible N/A (86) N/A (84)
Transportation of
Customer-owned
Gas N/A 207 N/A 79
Sales of electricity to residential customers in the third
quarter of 1996 decreased 3% from the comparable prior year
period due to the net effect of a 4% decrease in usage per
customer and a 1% increase in the number of customers.
Commercial sales in the third quarter of 1996 decreased 2% as
compared to last year due to the net effect of a 4% decrease in
usage per customer and a 2% increase in the number of
customers. Electric sales to industrial customers increased 5%
in the third quarter of 1996 due primarily to an increase in
usage by a large industrial customer.
For the nine months ended September 30, 1996, sales of
electricity to residential customers increased 6% due to the
combined effect of a 5% increase in usage per customer and a 1%
increase in the number of customers. Sales to commercial
customers increased 2% due to a 2% increase in the number of
customers. Electric sales to industrial customers increased 3%
for such nine-month period due primarily to an increase in
usage by a large industrial customer.
Sales of gas to residential customers for the third quarter of
1996 increased 13% due to the combined effect of a 12% increase
in usage per customer and a 1% increase in the number of
customers. Sales of gas to commercial customers for the third
quarter of 1996 increased 3% due to the combined effect of a 2%
increase in the number of customers and a 1% increase in usage
per customer. Firm gas sales to industrial customers decreased
1% for the third quarter of 1996 when compared to the same
period in 1995.
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For the nine months ended September 30, 1996, residential gas
sales increased 18% due to the combined effect of a 17%
increase in usage per customer and a 1% increase in the number
of customers. Commercial gas sales increased 15% due to the
combined effect of a 13% increase in usage per customer and a
2% increase in the number of customers. Firm gas sales to
industrial customers for the nine months ended September 30,
1996 increased 16% due largely to increases in usage by two
large industrial customers. Billing degree days were 21%
higher for the nine months ended September 30, 1996 when
compared to the same period in 1995.
Interruptible gas sales decreased 86% in the third quarter of
1996 and 84% for the nine months ended September 30, 1996 due
primarily to the decrease in natural gas sold to the other
cotenant owners of the 1,200 MW Roseton Steam Electric
Generating Plant for use as boiler fuel at that plant.
Transportation gas volumes increased 207% for the third quarter
of 1996 and 79% for the nine months ended September 30, 1996
due primarily to increased gas transportation service provided
to a large industrial customer.
OPERATING EXPENSES
The following table reports the variation in the operating
expenses for the three months and nine months ended
September 30, 1996 compared to the same periods for the prior
year:
INCREASE (DECREASE) FROM PRIOR PERIOD
THIRD QUARTER NINE MONTHS
Amount Percent Amount Percent
(Dollars in Thousands)
Operating Expenses
Fuel and Purchased
Electricity $(3,040) (10) % $ (28) - %
Purchased Natural Gas (5,397) (51) (11,357) (24)
Other Expenses of
Operation 1,163 5 2,417 3
Maintenance (1,477) (19) 280 1
Depreciation and Amortiza-
tion 221 2 663 2
Taxes, Other than
Income Tax (475) (3) (466) (1)
Federal Income Tax (41) (1) 2,459 10
Total $(9,046) (8) % $ (6,032) (2)%
- 16 -
<PAGE>
The cost of fuel and purchased electricity decreased $3.0 million
(10%) for the third quarter ended September 30, 1996 resulting
primarily from decreased supply requirements and overall lower
unit cost of electric generation and purchased electricity.
Purchased natural gas costs decreased $5.4 million (51%) for the
third quarter of 1996 and $11.4 million (24%) for the nine
months ended September 30, 1996 resulting primarily from lower
interruptible gas sales for usage as boiler fuel.
Maintenance expenses, excluding a ($638,000) impact of the Unit 2
of the Nine Mile Point Nuclear Station (Nine Mile 2 Plant),
decreased $839,000 (11%) for the third quarter of 1996 due
primarily to decreased costs associated with storm restoration
efforts in 1996. The $638,000 decrease in costs associated
with the maintenance of the Nine Mile 2 Plant is offset by an
increase reflected in "Other Expenses of Operation", resulting
from Nine Mile 2 Plant regulatory cost deferrals. A scheduled
refueling outage at the Nine Mile 2 Plant commenced on
September 27, 1996, with a targeted 37-day duration.
Federal income taxes increased $2.5 million (10%) for the nine
months ended September 30, 1996 resulting primarily from
increased pre-tax operating income when compared to the same
period in 1995.
OTHER INCOME AND DEDUCTIONS AND PREFERRED STOCK DIVIDENDS
Other income and deductions decreased $1.6 million (22%) for the
nine months ended September 30, 1996. This decrease was due
largely to $1.1 million of one-time charges associated with the
optional redemption of $30 million 8 3/4% Series of First
Mortgage Bonds in May 1996 and the 1995 non-recurring gain on
the sale of long-term stock investments. This non-recurring
gain on the sale of long-term stock investments also
contributed to the decrease in federal income tax credits for
the nine months ended September 30, 1995.
Preferred stock dividends decreased by $474,000 (37%) for the
third quarter of 1996 and $1.4 million (37%) for the nine
months ended September 30, 1996 resulting from the optional
redemption of all outstanding shares of the Company's 7.44%
Series Cumulative Preferred Stock in October 1995 and 7.72%
Series Cumulative Preferred Stock in January 1996.
- 17 -
<PAGE>
COMMON STOCK DIVIDENDS
Reference is made to the subcaption "Common Stock Dividends and
Price Ranges" on Page 29 of Exhibit 13 to the 10-K Report, and
which is incorporated by reference in Part II, Item 5 of said
Report, for a discussion of the Company's dividend policies.
On September 28, 1996, the Board of Directors of the Company
declared a quarterly dividend of $.53 per share, payable
November 1, 1996 to shareholders of record as of October 10,
1996.
- 18 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Asbestos Litigation. For a discussion of suits against
Registrant involving asbestos, see the caption "Legal
Proceedings - Asbestos Litigation" in Item 3, Part I of
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 ("10-K Report") and the caption "Legal
Proceedings - Asbestos Litigation" in Item 1, Part II of
Registrant's Quarterly Reports on Form 10-Q for the quarter
ended March 31, 1996 ("First Quarter 10-Q Report") and for the
quarter ended June 30, 1996 ("Second Quarter 10-Q Report").
Since 1987, Registrant has been involved as a defendant in the
"mass tort" asbestos litigation in the United States District
Courts for the Southern and Eastern Districts of New York and
the New York State Supreme Court, County of New York. This
litigation involves thousands of plaintiffs who seek large
amounts of compensatory and punitive damages from numerous
defendants for deaths and injuries allegedly caused by exposure
to asbestos. As of October 1, 1996, Registrant has been a
defendant in approximately 960 such individual lawsuits. Many
of these lawsuits have been disposed of without any payment by
Registrant, or for immaterial amounts. While the amounts
demanded in all the remaining lawsuits total several billions
of dollars, it is Registrant's opinion, based on its experience
in such litigation and on information and relevant
circumstances known to it at this time, that these lawsuits
will not have a material adverse effect on Registrant's
financial position. However, if Registrant were ultimately held
liable under these lawsuits and insurance coverage were not
available, the cost thereof could have a material adverse
effect (a reasonable estimate of which cannot be made at this
time) on the financial condition of Registrant if Registrant
could not recover all or a substantial portion thereof in
rates. Registrant's insurance does not extend to punitive
damages.
Item 5. Other Information.
Competition. Reference is made to: (i) the caption "Business -
Other Matters - Competition" in Item 1 of Part I of
Registrant's 10-K Report, (ii) the caption "Other Information -
Competition in Item 5, Part II of Registrant's First Quarter
10-Q Report and (iii) the caption "Business - Other Matters -
Competition" in Item 5, Part II of Registrant's Second Quarter
10-Q for discussions with respect to emerging competition in
the electric industry in New York State, including the
commencement by the Public Service Commission of the State of
- 19 -
<PAGE>
New York ("PSC") of the Competitive Opportunities Proceeding.
Reference is also made to Registrant's Current Report on Form
8-K dated June 11, 1996, which describes the Opinion and Order,
issued May 20, 1996 ("May 20, 1996 Order") by the PSC in such
proceeding.
On September 18, 1996, Registrant, along with the other electric
utilities in New York State, as well as the Energy Association
of New York State, filed a lawsuit in the New York State
Supreme Court, Albany County, challenging the PSC's May 20,
1996 Order for introducing competition in the provision of
electric service in New York State. The lawsuit alleges that
the May 20, 1996 Order is defective because the PSC did not
employ the rule-making procedures mandated by State law. The
lawsuit further alleges that the PSC's refusal to recognize
petitioners' rights to continued recovery of the costs of
servicing the public is unconstitutional and impermissible
under State law, that the PSC lacks the statutory authority to
order electric utilities both to divest their generation
facilities and to deliver power sold by a third party directly
to an end-user (known as "retail wheeling").
Despite the commencement of said lawsuit, Registrant was
obligated to comply with the provision of the May 20, 1996
Order which required Registrant and four other electric
utilities to file a response to such Order incorporating its
plan for the transition of New York State's electric industry
from a highly regulated industry to a competitive market.
In Registrant's October 1, 1996 filing complying with the May 20,
1996 Order, it identified four key objectives for its
transition to a competitive environment: (i) the maintenance of
the reliability of electric service; (ii) the provision of
competitive electric prices; (iii) the offering of choice to
customers in selecting their electric supplier; and (iv)
keeping Registrant financially strong. The key provisions of
Registrant's submission were: (i) maintaining stable electric
prices for all customers for three years; (ii) exploration of
opportunities to offer discounts to Registrant's largest
industrial and commercial customers in consideration for their
commitment to purchase their full energy requirements from the
Registrant; (iii) the provision through 1999 to all customers
of all services currently provided; and (iv) the exploration of
the development of a pilot program to provide customers with a
choice of continuing to receive full electric service from
Registrant or to purchase electric energy from other suppliers.
The PSC has issued an order assigning Registrant's and the other
four submissions to Administrative Law Judges for further
proceedings. Registrant cannot at this time make any
- 20 -
<PAGE>
predictions as to the final form that its transition plan will
take, when such final transition plan will be placed into
effect, the ultimate outcome of the above-described litigation,
or the effect such litigation may have on the ongoing
development of the introduction of competition into the
electricity market in New York State.
Rate Proceedings - Gas. Reference is made to Part I, Item 1 of
Registrant's 10-K Report, the caption "Business - Rates - Rate
Proceedings - Electric and Gas" therein, and the portion of
Exhibit 13 to the 10-K Report referenced therein for
information regarding the Registrant's most recent gas case
filed with the PSC. Registrant had sought a net increase in
firm gas revenues of approximately $2.4 million during the rate
year November 1, 1996 - October 31, 1997, or 3%, based on an
11.50% return on common equity and a 9.22% return on total
invested capital.
By Opinion and Order, issued and effective October 3, 1996, the
PSC authorized no increase in Registrant's base gas rates. The
Order, in effect, recognizes a $500,000 revenue requirement
deficiency, based on a 10% return on common equity, but
eliminates such deficiency by the use of rate moderators,
including, but not limited to, the amortization of previously
retained profits from interruptible sales of gas.
The PSC also determined the projected level of the Company's
labor expense to be approximately $1.3 million less than the
Company's projections. This determination will be an
impediment to the achievement by the Company of its authorized
10% return on common equity.
Registrant was directed by the PSC to file, and did file,
amendments to its existing gas tariffs which became effective
October 8, 1996.
Nine Mile 2 Plant. Reference is made to Part I, Item 2 of
Registrant's 10-K Report and the caption "Properties - Electric
- Nine Mile 2 Plant" for a discussion of Registrant's ownership
interest in Unit No. 2 of the Nine Mile Point Nuclear Station
("Nine Mile 2 Plant"), owned, as tenants in common, by
Registrant, Niagara Mohawk Power Corporation ("Niagara
Mohawk"), New York State Electric & Gas Corporation, Long
Island Lighting Company and Rochester Gas and Electric
Corporation ("Rochester"). Niagara Mohawk operates the Nine
Mile 2 Plant.
On or about October 12, 1996, Niagara Mohawk and Rochester
announced plans that they would form a joint nuclear operating
company to support and manage the operations of Rochester's
- 21 -
<PAGE>
Ginna Nuclear Plant, the Nine Mile 2 Plant and Niagara Mohawk's
Unit No. 1 of the Nine Mile Point Nuclear Station. Such plans
reportedly include the initial formation of a nuclear services
company to provide support services.
Registrant has insufficient information to make an assessment of
such plans, and until such assessment can be made the Company
can take no position with respect to such plans.
- 22 -
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are furnished in accordance with
the provisions of Item 601 of Regulation S-K:
Exhibit No.
Regulation S-K
Item 601
Designation Exhibit Description
(10)(i)106 -- Fuel Oil Supply Contract,
effective as of September 1,
1996, between Bayway Refining
Company and Central Hudson Gas
& Electric Corporation, Consol-
idated Edison Company of New
York, Inc. and Niagara Mohawk
Power Corporation for the Rose-
ton Electric Generating Plant.
[Certain portions of the con-
tract setting forth or relating
to pricing provisions are omit-
ted and filed separately with
the Securities and Exchange
Commission pursuant to a re-
quest for confidential treat-
ment under the rules of said
Commission.]
(12) -- Statement Showing Computation
of the Ratio of Earnings to
Fixed Charges and the Ration of
Earnings to Combined Fixed
Charges and Preferred Stock
Dividends.
(27) -- Financial Data Schedule,
pursuant to Item 601(c) of
Regulation S-K.
(b) Reports on Form 8-K. During the period covered by this
Report on Form 10-Q, Registrant filed a Current Report on Form 8-
K dated October 15, 1996, relating to a certain report filed by
Registrant with the New York State Department of Environmental
Conservation in connection with a former manufactured gas site
that is the subject of currently pending litigation filed in May
of 1995 against Registrant by the City of Newburgh, New York.
- 23 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunder duly authorized.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Registrant)
By: (SGD.) DONNA S. DOYLE
Donna S. Doyle
Controller
Authorized Officer and Chief
Accounting Officer
Dated: November 8, 1996
- 24 -
</PAGE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FOR THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED
STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $938,125
<OTHER-PROPERTY-AND-INVEST> $19,888
<TOTAL-CURRENT-ASSETS> $108,273
<TOTAL-DEFERRED-CHARGES> $174,849
<OTHER-ASSETS> $0
<TOTAL-ASSETS> $1,241,135
<COMMON> $87,775
<CAPITAL-SURPLUS-PAID-IN> $278,093
<RETAINED-EARNINGS> $106,719
<TOTAL-COMMON-STOCKHOLDERS-EQ> $472,587
$35,000
$21,030
<LONG-TERM-DEBT-NET> $361,552
<SHORT-TERM-NOTES> $6,100
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $664
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $344,202
<TOT-CAPITALIZATION-AND-LIAB> $1,241,135
<GROSS-OPERATING-REVENUE> $388,526
<INCOME-TAX-EXPENSE> $26,817
<OTHER-OPERATING-EXPENSES> $300,251
<TOTAL-OPERATING-EXPENSES> $327,068
<OPERATING-INCOME-LOSS> $61,458
<OTHER-INCOME-NET> $5,632
<INCOME-BEFORE-INTEREST-EXPEN> $67,090
<TOTAL-INTEREST-EXPENSE> $20,222
<NET-INCOME> $46,868
$2,423
<EARNINGS-AVAILABLE-FOR-COMM> $44,067
<COMMON-STOCK-DIVIDENDS> $27,823
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $91,367
<EPS-PRIMARY> $2.51
<EPS-DILUTED> $0
</TABLE>
<TABLE> EXHIBIT 12
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
<CAPTION>
1996
3 Months 9 Months 12 Months
Ended Ended Ended Year Ended December 31,
Sept 30 Sept 30 Sept 30 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
A. Net Income $13,665 $46,868 $ 55,638 $ 52,722 $ 50,929 $ 50,390 $ 47,688 $ 42,941
B. Federal Income Tax 7,816 25,822 30,655 28,687 26,806 27,158 24,363 21,361
C. Earnings before Income Taxes 21,481 72,690 86,293 81,409 77,735 77,548 72,051 64,302
D. Total Fixed Charges 1 6,699 20,679 28,409 30,433 32,679 33,820 34,888 37,737
E. Total Earnings $28,180 $93,369 $114,702 $111,842 $110,414 $111,368 $106,939 $102,039
Preferred Dividend Requirements:
F. Allowance for Preferred Stock
Dividends Under IRC Sec 247 $ 808 $ 2,423 $ 3,481 $ 4,903 $ 5,127 $ 5,562 $ 5,544 $ 5,659
G. Less Allowable Dividend Deduction 32 96 228 528 528 528 544 544
H. Net Subject to Gross-up 776 2,327 3,253 4,375 4,599 5,034 5,000 5,115
I. Ratio of Earnings before Income
Taxes to Net Income (C/A) 1.572 1.551 1.551 1.544 1.526 1.539 1.511 1.497
J. Pref. Dividend (Pre-tax) (HxI) 1,220 3,609 5,045 6,755 7,018 7,747 7,555 7,657
K. Plus Allowable Dividend Deduction 32 96 228 528 528 528 544 544
L. Preferred Dividend Factor 1,252 3,705 5,273 7,283 7,546 8,275 8,099 8,201
M. Fixed Charges (D) 6,699 20,679 28,409 30,433 32,679 33,820 34,888 37,737
N. Total Fixed Charges
and Preferred Dividends $ 7,951 $24,384 $ 33,682 $ 37,716 $ 40,225 $ 42,095 $ 42,987 $ 45,938
O. Ratio of Earnings to Fixed
Charges (E/D) 4.21 4.52 4.04 3.68 3.38 3.29 3.07 2.70
P. Ratio of Earnings to Fixed Charges
and Preferred Dividends (E/N) 3.54 3.83 3.41 2.97 2.74 2.65 2.49 2.22
<FN>
1 Includes a portion of rent expense deemed to be representive of the interest factor.
</FN>
</TABLE>
<PAGE>
THIS EXHIBIT CONTAINS CONFIDENTIAL INFORMATION WHICH HAS BEEN
REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION.
FUEL OIL SUPPLY CONTRACT
BETWEEN
BAYWAY REFINING COMPANY
AND
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
AND
NIAGARA MOHAWK POWER CORPORATION
CENTRAL HUDSON CONTRACT NO. (10)(i)106
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
NUMBER TITLE NUMBER
1.0 PARTIES 1
2.0 RECITALS AND CONSIDERATION 1
3.0 DEFINITIONS 1
4.0 TERM 3
5.0 QUANTITY 4
6.0 TITLE, WARRANTIES AND RISK OF LOSS 5
7.0 QUALITY 6
8.0 DELIVERY 8
9.0 PRICE AND PAYMENT 11
10.0 INDEMNIFICATION 16
11.0 FORCE MAJEURE AND NONPERFORMANCE 16
12.0 COMPLIANCE WITH LAWS, REGULATIONS,
CODES AND STANDARDS 17
13.0 TAXES 17
14.0 PROPRIETARY INFORMATION 19
15.0 NONWAIVER 19
16.0 EFFECT OF SECTION HEADINGS 19
17.0 APPLICABLE STATE LAW 19
18.0 ASSIGNMENT 19
19.0 NOTICES, CORRESPONDENCE, SCHEDULES AND
INVOICES 20
20.0 ARBITRATION 21
21.0 COMPLETE AGREEMENT 21
22.0 EMPLOYEE INTEREST 22
23.0 REPRESENTATIONS AND WARRANTIES
OF BOTH PARTIES 22
ATTACHMENTS: #6 RESIDUAL FUEL OIL
ATTACHMENT I-A - 1.5% SULFUR SPECIFICATIONS 25
ATTACHMENT I-B - 1.3% SULFUR SPECIFICATIONS 26
ATTACHMENT I-C - 1.0% SULFUR SPECIFICATIONS 27
ATTACHMENT I-D - 0.3% SULFUR SPECIFICATIONS 28
ATTACHMENT II - WEEKEND AND HOLIDAY PRICING 29
ATTACHMENT III - SEDIMENT DETERMINATION 31
<PAGE>
FUEL OIL SUPPLY CONTRACT
1.0 PARTIES
The Parties hereto ("Parties") enter into this Product
Supply Contract ("Contract") to be effective as of
September 1, 1996.
The Parties hereto are:
1.1 Central Hudson Gas & Electric Corporation, 284 South
Avenue, Poughkeepsie, NY 12601-4879, Consolidated
Edison Company of New York, Inc., 4 Irving Place, New
York, NY 10003, and Niagara Mohawk Power Corporation,
300 Erie Boulevard, West, Syracuse, NY 13202 (collec-
tively "BUYER").
1.2 Bayway Refining Company, a subsidiary of Tosco
Corporation, 72 Cummings Point Road, Stamford,
Connecticut 06902 ("SELLER").
2.0 RECITALS AND CONSIDERATION
Whereas this Contract is made with reference to the
following facts:
2.1 SELLER, Bayway Refining Company, a subsidiary of Tosco
Corporation, existing under the laws of the State of
Delaware, is engaged in the sale and delivery of Product
(as said term is defined herein.)
2.2 BUYER, three public utilities organized and existing
under the laws of the State of New York, is engaged in
the generation, transmission and distribution of elec-
tric energy.
2.3 SELLER has offered to sell to BUYER Product of quantity
and quality specifications as set forth herein.
2.4 SELLER and BUYER desire by this Contract to define
terms, conditions, rights, obligations, and remedies
with respect to the purchase and sale of said Product.
IN CONSIDERATION OF THE MUTUAL COVENANTS HEREINAFTER SET
FORTH, SELLER and BUYER hereby mutually agree as fol-
lows:
3.0 DEFINITIONS
When used herein with initial capitalization, whether in
the singular or plural, the following terms shall have
the following meanings:
-1-
<PAGE>
3.1 Barrel
Refers to a standard barrel of Product containing forty-
two (42) U.S. gallons when measured at sixty degrees
Fahrenheit (60) according to Table 6B of the latest
revisions of ASTM-IP Petroleum Measurement Tables, ASTM
Designation: D-1250, IP Designation: 200, as
supplemented or amended. Unless mutually agreed by the
Parties, the then most recent revision of these tables
at the time of use will be utilized.
3.2 Contract
This document, including all other Contract documents
specifically identified and incorporated herein by
reference.
3.3 Contract Volume
The quantity of Product which SELLER is obligated to
sell and deliver to BUYER in accordance with this
Contract.
3.4 Contract Year
The period of September 1 through August 31 of the
following year.
3.5 Delivery Point
BUYER's terminal ("Terminal") at its Roseton Electric
Generating Station ("Roseton Plant") to which SELLER
will make deliveries of Product in accordance with this
Contract.
3.6 Heating Value
Refers to the Heating Value of Product as measured in
BTU per gallon using ASTM Test designation D-240 as
supplemented or amended. Unless mutually agreed by the
Parties, the most recent revision of this test will be
utilized.
3.7 Inspector
Independent contractor retained to determine the
quantity and quality of product delivered.
3.8 Party or Parties
BUYER and/or SELLER
3.9 Product
No. 6 residual fuel oil of the quality and in the
quantity required to be provided by SELLER in accordance
with this Contract.
-2-
<PAGE>
3.10 Vessel
Any watercraft such as tanker or barge used or capable
of being used as a means of transporting and delivering
the Product to the Delivery Point.
3.11 Miscellaneous Terms
Where "as directed," "as required," "as approved," "as
accepted," or words of like import are used, it is
intended that such direction, requirement, approval or
acceptance be given by the BUYER.
4.0 TERM
4.1 The Initial Term of this Contract shall be a period of
two (2) years from September 1, 1996 to August 31, 1998.
The Term of the Contract shall automatically be extended
on a yearly basis for each successive Contract Year
thereafter until the Contract is terminated or canceled
by either Party in accordance with the terms and proce-
dures provided herein. The word "Term" as used herein
shall mean the Initial Term and any such extensions.
4.2 Termination by Notice
BUYER may terminate this Contract, effective as of the
end of the Initial Term or any subsequent Contract Year,
by giving written notice to the SELLER at least sixty
(60) days prior to the end of such Initial Term or
subsequent Contract Year.
SELLER may terminate this Contract, effective as of the
end of the Initial Term or any subsequent Contract Year,
by giving written notice to the BUYER at least one
hundred eighty (180) days prior to the end of such
Initial Term or subsequent Contract Year.
4.3 BUYER's Right to Adequate Assurance
If, during the Term of this Contract, the SELLER's
ability to meet its obligations under this Contract
becomes impaired to the point that BUYER has reasonable
grounds for believing that SELLER may not be able to
meet such obligations, then BUYER, by a written notice
to SELLER, may require that SELLER provide adequate
assurance that SELLER is able to continue to meet its
obligations under this Contract. If such adequate
assurance is not received by BUYER within ten (10) days
from receipt of BUYER's request thereof, BUYER shall
have the right to immediately reduce, by the amount in
question, BUYER's obligation to purchase Product from
SELLER. BUYER may obtain the amount of said reduction
-3-
<PAGE>
through purchases from third parties; such reduction to
be reflected in a notice from BUYER to SELLER which
thereupon shall become an amendment to this Contract.
BUYER may subsequently restore its purchases of Product
to the full amount provided for in this Contract at
BUYER's sole discretion to be reflected in a notice from
BUYER to SELLER which thereupon shall become an amend-
ment to this Contract.
5.0 QUANTITY
5.1 Contract Volume
The Contract Volume of Product to be sold and purchased
hereunder during the Initial Term shall be one hundred
(100) percent of BUYER's total Product requirements for
such Initial Term for its Roseton Plant. In this
regard, during such Initial Term, SELLER will deliver
all amounts of the Product requested by BUYER for its
Roseton Plant; but SELLER is not obligated to so deliver
the Product in excess of the Contract Volume and BUYER
will request from SELLER not less than seventy percent
(70%) of the Contract Volume. In the event BUYER, from
time to time during the Term of this Contract, seeks to
purchase Product on the spot market to be used at the
Roseton Plant, SELLER shall be notified in advance of
such proposed purchases; and SELLER shall be entitled to
submit a spot bid.
5.2 The volumes shown are estimates of the Contract Volume
for each month of the first year of the Initial Term.
The volumes shown allow for gas-firing. It is
recognized that actual Product requirements may vary
from said estimates.
MONTH ESTIMATED CONTRACT VOLUME (Barrels)
SEPTEMBER 1996 0
OCTOBER 0
NOVEMBER 200,000
DECEMBER 400,000
JANUARY 1997 600,000
FEBRUARY 600,000
MARCH 200,000
APRIL 0
MAY 0
JUNE 0
JULY 0
AUGUST 1997 0
TOTAL 2,000,000 (100% of total
requirements)
-4-
<PAGE>
The volumes for 1997/1998 are expected to be similar to
those shown for 1996/1997.
5.3 BUYER shall furnish to SELLER by the fifth day of each
calendar month during the TERM of the Contract, a
written schedule of desired deliveries for the following
three (3) months. Each schedule for the first month
following shall include proposed five-day date ranges
for deliveries as well as desired volumes and sulfur
grade(s). The parties will attempt in good faith to
accommodate subsequent changes in deliveries to the
extent mutually satisfactory. Each schedule for the
second and third months following will indicate total
volumes BUYER expects to request from SELLER during
those months.
5.4 The quantity of Product delivered or made available
hereunder, and those characteristics necessary for
quantity inspection (temperature and API gravity), shall
be determined at the time of each delivery by an inde-
pendent petroleum Inspector designated by BUYER and
acceptable to SELLER, who, at such time, shall issue
certificates showing the quantity of Product delivered.
The costs of the service of said Inspector will be
shared equally by SELLER and BUYER.
5.5 Quantities of Product delivered shall be measured by
comparing opening and closing gauges of BUYER's shore
tanks into which the Product is delivered, in accordance
with recognized petroleum industry standards applicable
thereto. Temperature adjustments to 60 degrees
Fahrenheit shall be made in accordance with Table 6B of
ASTM-IP Petroleum Measurement Tables, ASTM Designation:
D-1250, IP Designation: 200, as supplemented or
amended. Unless mutually agreed otherwise by the
Parties, the then most recent revision of these tables
at the time of use shall be utilized.
6.0 TITLE, WARRANTIES AND RISK OF LOSS
6.1 SELLER warrants it will convey good title to the Product
supplied hereunder, free and clear of all liens, special
interests, encumbrances or any other interests of third
parties whatsoever, and that the Product supplied
hereunder will meet all the quality specifications of
this Contract.
6.2 Title to and risk of loss for Product delivered to BUYER
by SELLER shall pass from SELLER to BUYER as the Product
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passes through the Vessel's last flange connecting the
permanent discharge manifold to the Terminal's mechani-
cal arms or hose facility at the point of discharge at
the Delivery Point.
7.0 QUALITY
7.1 SELLER shall sell to BUYER Product which meets the
quality specifications for one and one-half (1.5%)
percent, one and three tenths (1.3%) percent, one (1.0%)
percent and three tenths (0.3%) percent sulfur fuel as
set forth in Attachment I-A, I-B, I-C and I-D (collec-
tively termed "Attachment I") to this Contract, which
are incorporated herein and made a part hereof. BUYER
will not accept and will not allow discharge of any non-
conforming Product and all costs associated with such
non-conforming Product will be for SELLER's account.
7.2 SELLER shall notify BUYER by teletype, TWX, telegram or
by other similar means of communication not more than
twenty-four (24) hours or as soon as practical after
each Vessel sails from its port of loading, specifying
the name of Vessel, sulfur quality and quantity of
Product and scheduled date of arrival at Delivery Point.
SELLER shall provide BUYER by teletype, TWX, telegram or
other similar means of communication at least twenty-
four (24) hours prior to discharge, a copy of quality
specifications of the Product certified by an indepen-
dent petroleum Inspector based upon a loading port
sample.
If the sulfur as tested in this loading port sample is
greater than or equal to 1.48% for 1.50% maximum sulfur
Product then a second sulfur test on a second sample of
the Product to be delivered must be performed and the
results thereof communicated to BUYER prior to the
discharge of Product at the Delivery Point. If the
second test yields a sulfur test result at or below
1.5%, the Product will be accepted. Product tested
greater than 1.5% sulfur on the second test will be
rejected. If the sulfur as tested in the loading port
sample is greater than or equal to 1.28% for 1.3%
maximum sulfur Product or .985% for 1.0% maximum sulfur
Product or .285% for 0.3% maximum sulfur Product, then
the same second sampling and sulfur testing provision
will apply. Costs of the second sampling and testing
will be shared equally by BUYER and SELLER.
Upon arrival of the Vessel at the Delivery Point, the
independent petroleum Inspector referred to in
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Subsection 5.4 herein shall obtain, by recognized
industry procedures, a sample of the product to be
tested and a sample to be sealed and retained for ninety
(90) days. The results of the tested sample shall be
reported as specified in Subsection 5.4 herein. If
there is any dispute as to the results of the quality
analysis, the sealed sample of the delivery in question
held by the independent petroleum Inspector, who
inspected the Product upon arrival, shall be submitted
to an independent laboratory, mutually agreeable to the
Parties, whose determinations made in accordance with
the test methods stated in Attachment I shall be final,
binding and conclusive upon the Parties as to the
disputed quality analysis. The cost of such testing
shall be borne equally by the Parties.
7.3 BUYER shall have the right to require the removal and
proper disposal by SELLER, at SELLER's cost, of any
Product sold to BUYER by SELLER which is not in
accordance with the Contract's quality specifications,
whether the noncompliance is found during discharge, or
whether BUYER, through independent Inspectors, or by
other means, demonstrates to SELLER that the source of
noncompliance is the Product, at any time after the
delivery is made. If nonconforming Product is not
removed by SELLER, at the end of seven (7) days from the
date on which BUYER's written notice is received by
SELLER, BUYER may have the Product removed at SELLER's
expense.
7.4 Any delay to Vessel(s) caused by delivery of Product
which proves to be nonconforming and removal and dis-
posal of such nonconforming Product from tank(s) shall
be to SELLER's account. If Product proves to be con-
forming, then such delay shall be to BUYER's account.
7.5 BUYER shall have the right by notice to SELLER, by
teletype, TWX, telegram or other similar means for
communication, to change the quality specifications set
forth in Attachment I to other specifications, whether
more or less restrictive, in order for BUYER to satisfy
federal, state or local legal or regulatory require-
ments. SELLER shall make its best efforts to provide
the required Product. However, if SELLER is not able,
within thirty (30) days prior to the date BUYER requires
such changed Product as specified in BUYER's notice to
SELLER, to commit such Product to BUYER, then as of the
date the Product is required by BUYER, BUYER may reduce
BUYER's obligations to purchase from SELLER by the
quantity of Product which SELLER does not make available
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as specified in BUYER's notice to SELLER and obtain the
amount of such reduction through purchases from third
parties; such reduction to be reflected in a notice from
BUYER to SELLER which thereupon shall become an amend-
ment to this Contract.
8.0 DELIVERY
8.1 BUYER will provide a safe discharging berth, free of
wharfage or dockage charges, to which Vessels may
proceed and from which they may depart, and where they
may lie safely afloat while discharging the Product.
With assistance as necessary from BUYER's dockside
personnel, it shall be the responsibility of SELLER to
secure the Vessel to BUYER's berth prior to such dis-
charging of the Product. Hoses or mechanical arms for
discharging Product shall be furnished by BUYER at the
Delivery Point without cost to SELLER. Such hoses or
arms shall be connected to and disconnected from Ves-
sel's permanent discharge manifold flange connection by
BUYER. Vessel must have any adapters required to
connect to BUYER's two (2) ten-inch flanges.
Roseton Dock Limitations:
- LOA - 890 Feet Maximum
- Beam - No Restriction
- Bow to Centerline Manifold - None
- Water Depth in Berth - 36+ Feet MLW
(Operational Draft 31 Feet MWH Channel at Haverstraw
is Limiting)
- Shore Connection - Two (2) ten-inch flanges
- Docking is only permitted during the hours of 8 AM
through 12 MDT Eastern Time Zone (unless special
arrangements are made with BUYER) 7 days per week.
Notice of arrival must be given to the Roseton Plant
personnel by SELLER or SELLER's agents at least 24
hours prior to actual arrival.
8.2 BUYER shall pay demurrage charges at Charter Party Rates
per running hour and pro rata for any part of an hour
for all time that discharging and used laytime exceed
the laytime allowed BUYER under Subsection 8.4 herein.
If deliveries are made by time Charter Vessel, Charter
market reports of Dietze, Inc., Stamford, Connecticut,
or any recognized successor thereto, shall be accepted
as evidence of the actual foregoing rates. Should BUYER
enter into other firm contract(s) for the supply of No.
6 fuel oil for Roseton in which demurrage rates other
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<PAGE>
than the foregoing are provided for, BUYER and SELLER
agree that such rates shall, at SELLER's option, apply
in place of the foregoing rates. If, however, demurrage
is incurred at Delivery Point by reason of fire,
explosion, storm, strike, lockout stoppage, restraint of
labor or by breakdown of machinery and equipment in or
about BUYER's terminal facilities or plants, the rate of
demurrage shall be reduced to one-half per running hour
and pro rata for part of an hour for demurrage so
incurred. In the event SELLER's Vessel arrives at
Delivery Point outside its agreed upon five-day date
range and provided SELLER has not obtained BUYER's
permission for such early or late arrival, and further
provided such early or late arrival is not the fault of
BUYER, no demurrage charges directly resulting from such
early or late arrival will be applied against BUYER. In
the event that such late arrival or departure results in
demurrage being charged against BUYER by any Vessel
making deliveries for another supplier to BUYER within
that supplier's specified date range or time period
agreed to by BUYER, SELLER will reimburse BUYER for such
demurrages as may have been paid by BUYER which directly
relate thereto.
8.3 Upon arrival of Vessel at the Delivery Point and upon
obtaining by the SELLER of any and all governmental
and/or port authority approval(s) required prior to
discharge, the Master of the Vessel or his representa-
tive shall give notice to BUYER at Delivery Point that
the Vessel is ready to dock, such notice of readiness to
dock will only be accepted by BUYER during the hours of
8 AM through 12 MDT Eastern Time Zone. Laytime shall
commence upon the expiration of six (6) hours after
tender of such notice and acceptance of the same by
BUYER. The Vessel shall be deemed ready to discharge
Product within the meaning of this clause only when all
fast at BUYER's dock.
8.4 For each ship delivery, BUYER shall be allowed laytime
of thirty-six (36) hours for deliveries of Product to
the Delivery Point. For each Barge delivery (nominal
100,000 barrels), BUYER shall be allowed laytime equal
to the greater of (1) 20 hours or (2) the actual Charter
Party Rate, for deliveries of Product to the Delivery
Point. If Vessel's condition, personnel or facilities
do not permit discharging in the time allowed, then the
additional time necessary shall be added to BUYER's
allowed laytime, and BUYER will be reimbursed for its
direct costs incurred because of such delay. If the
Vessel is delayed at the Delivery Point for Vessel's own
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<PAGE>
purposes, laytime shall cease during such delay and if
such delays do not permit discharging in the time
allowed, then the additional time necessary shall be
added to BUYER's allowed laytime, and BUYER will be
reimbursed for its direct costs incurred because of such
delay. In all other cases, laytime shall continue until
the hoses or mechanical arms have been disconnected. If
regulations of the Vessel's owner prohibit berthing of
Vessel or discharging of the Product during hours of
darkness or inclement weather, the time lost shall not
count as used laytime.
BUYER's regulations currently restrict docking at
Roseton to the hours of 8 AM to 12 MDT Eastern Time Zone
unless special arrangements are made with BUYER.
8.5 The Product shall be pumped out of Vessel at a maximum
shore discharge pressure of 70 psig and minimum shore
discharge pressure of 60 psig at the expense of SELLER
and at the risk and peril of SELLER up to and including
discharge of the Product through the Vessel's permanent
discharge manifold flange connection, at which place
delivery of the Product shall be taken by BUYER.
8.6 SELLER's Vessel shall depart promptly from the Delivery
Point after completion of discharging unless it has
received prior approval of BUYER. If any Vessel of
SELLER fails to depart within six (6) hours of dis-
charging Product, and BUYER is subjected to extra
dockage or port charges of any type, then SELLER shall
reimburse BUYER for such extra charges. Where a Vessel
requests permission from BUYER to stay for an additional
period, and as a result, stays beyond the time period
specified in Subsection 8.4 herein, BUYER shall not be
responsible to pay any demurrage charges relating to
said permitted stay.
8.7 Demurrage claims must be accompanied by such supporting
data as BUYER or SELLER may reasonably request.
8.8 In the event Product is spilled during the discharge of
a Vessel delivering Product to BUYER hereunder or when
the Vessel is in close proximity to BUYER's Terminal,
BUYER may immediately take all measures it deems neces-
sary and appropriate to prevent or mitigate resulting
pollution damage. Any such measures taken by BUYER
shall be at the expense of the Party or Parties respon-
sible for such spill or discharge. After taking any
such measures, BUYER shall promptly notify SELLER.
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CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X"
HAS BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION.
In the event SELLER is notified of such spill, has
knowledge of such spill or would reasonably be expected
to have knowledge of the same, SELLER shall promptly
undertake such measures as are necessary to prevent or
mitigate resulting pollution damage. SELLER shall
report immediately to the U.S. Coast Guard, other
agencies as required, and to BUYER at the Roseton Plant,
any such spillage at or in the proximity to the Delivery
Point. SELLER will request that the Master of the
Vessel undertake such measures as may be required on the
Vessel, and that he assist BUYER in its actions to
prevent or mitigate pollution damage. In the event
SELLER is responsible for such spill or discharge and
BUYER, as a result, becomes liable to any party to pay
any amount related thereto, SELLER will reimburse BUYER
as to the amount of such liability, including any legal,
professional or other costs borne by BUYER.
9.0 PRICE AND PAYMENT
Price per Barrel for Product delivered shall be calcu-
lated to four (4) decimal points and determined as
follows:
9.1 The Product Contract price per Barrel for 1.5% maximum
sulfur Product shall be calculated using the following
formula:
1. XX.XXXX% of Platt's New York Harbor Cargo Mean Spot
posting for No. 6 X.X% Sulfur XXXX
2. XX.XXXX% of Platt's New York Harbor Cargo Mean Spot
posting for No. 6 X.X% Sulfur XXXX
3. XX.XXXX% of Petroflash New York Harbor Spot Cargo
posting for No. 6 X.X% Sulfur XXXX
4. XX.XXXX% of Petroflash New York Harbor Spot Cargo
posting for No. 6 X.X% Sulfur XXXX
5. A fixed differential of $X.XXX per Barrel.
All of the above postings are based on a XXXXX-XXX
XXXXXXX at the time of delivery including XXX XX
XXXXXXXXXXXX XX XXXXXXXXX, XXX XXXXX XX XXX XXX XXXXX.
Weekend and Holiday posted prices will be determined in
accordance with Attachment II.
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<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X"
HAS BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION.
9.2 The Product Contract price per Barrel for 1.3% maximum
sulfur Product shall be calculated using the following
formula:
1. XX.X% of Platt's New York Harbor Cargo Mean Spot
posting for No. 6 X.X% Sulfur XXXX
2. XX.X% of Platt's New York Harbor Cargo Mean Spot
posting for No. 6 X.X% Sulfur XXXX
3. XX.X% of Petroflash New York Harbor Spot Cargo
posting for No. 6 X.X% Sulfur XXXX
4. XX.X% of Petroflash New York Harbor Spot Cargo
posting for No. 6 X.X% Sulfur XXXX
5. A fixed differential of $X.XXX per Barrel.
All of the above postings are based on a XXXXX-XXX
XXXXXXX at the time of delivery including XXX XX
XXXXXXXXXXXX XX XXXXXXXXX, XXX XXXXX XX XXX XXX XXXXX.
Weekend and Holiday posted prices will be determined in
accordance with Attachment II.
9.3 The Product Contract price per Barrel for 1% maximum
sulfur Product shall be calculated using the following
formula:
1. XX% of Platt's New York Harbor Cargo Mean Spot
posting for No. 6 X.X% Sulfur XXXX
2. XX% of Petroflash New York Harbor Spot Cargo
posting for No. 6 X.X% Sulfur XXXX
3. A fixed differential of $X.XXX per Barrel.
Both of the above postings are based on a XXXXX-XXX
XXXXXXX at the time of delivery including XXX XX
XXXXXXXXXXXX XX XXXXXXXXX, XXX XXXXX XX XXX XXX XXXXX.
Weekend and Holiday posted prices will be determined in
accordance with Attachment II.
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CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X"
HAS BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION.
9.4 The Product Contract price per Barrel for 0.3% maximum
sulfur Product shall be calculated using the following
formula:
1. XX% of Platt's New York Harbor Cargo Mean HP (High
Pour) Spot posting for No. 6 X.X% Sulfur XXXX
2. XX% of Petroflash New York Harbor HP (High Pour)
Spot Cargo posting for No. 6 X.X% Sulfur XXXX
3. A fixed differential of $X.XXX per Barrel.
Both of the above postings are based on a XXXXX-XXX
XXXXXXX at the time of delivery including XXX XX
XXXXXXXXXXXX XX XXXXXXXX, XXX XXXXX XX XXX XXX XXXXX.
Weekend and Holiday posted prices will be determined in
accordance with Attachment II.
9.5 SELLER shall invoice BUYER for Product delivered under
this Contract as determined in Subsections 9.1, 9.2, 9.3
and 9.4 based on date of XXXXXXXXXXXX of discharge at
BUYER's designated facilities. Attachment II, attached
hereto, specifies the posted prices to be used in
accordance with Subsections 9.1, 9.2, 9.3 and 9.4 on
days when prices are not posted solely due to such day
being non-business days when such prices are not
normally posted.
9.6 In the event that SELLER causes delivery to be made
after the date range agreed upon by BUYER and SELLER,
the Contract price shall be the XXXXX of the price based
on actual date of commencement of delivery or the price
should delivery have commenced on the last day of the 5-
day date range.
In the event that SELLER causes delivery to be made
before the date range agreed upon by BUYER and SELLER,
the Contract price shall be the XXXXX of the price based
on actual date of commencement of delivery or the price
should delivery have commenced on the first day of the
5-day date range.
9.7 BUYER shall make payment in full by wire transfer of
federal funds within XXX (XX) calendar days from date of
receipt of a correct invoice. SELLER shall furnish
BUYER a telecopy invoice and the petroleum Inspector's
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CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X"
HAS BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION.
certificate indicating discharge volume and quality
determination for deliveries to BUYER as per Section
19.1.2. Invoices received after 4 PM Eastern Time Zone
will be considered to be received on the following
BUYER's business day.
If the date payment is due falls on a Saturday or
holiday, payment shall be made on the last New York
State banking day prior to such date and if payment is
due on a Sunday, or if due on a Monday which is a
holiday, payment shall be made on the next following New
York State banking day after such date.
9.8 BUYER shall notify SELLER of any disputed amount of any
invoice, so that an attempt may be made to resolve the
difference before the date payment is due. If BUYER and
SELLER do not resolve such dispute before the payment
due date, the amount of the invoice not in dispute shall
be paid by BUYER on the due date. Payment of the
disputed amount need not be made on the due date but
shall be subject to adjustment upon final resolution of
the disputed amount through good faith negotiation
between BUYER and SELLER and paid after such adjustment.
9.9 If, as a result of the quality testing provided for in
Subsection 7.2 on the samples taken at the Delivery
Point it is determined that the combined volume of water
and sediment (converted to volume as per Attachment III)
is in excess of X.X XXXXXX XX XXX XXXXXXX, SELLER will
make a volumetric adjustment on that delivery.
9.10 If at any time during the term of this Contract a
Product reference price is not available for a particu-
lar sulfur grade of Product, then BUYER and SELLER shall
mutually agree upon an alternate pricing mechanism.
9.11 ________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________
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<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X"
HAS BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION.
9.12 If, as a result of the quality testing provided for in
Section 7.0, it is determined that the XXXXXX XXXXXXXX
XXXXXXX XXXXXXXX XXXX XXXXXXX XXXXXXX XXXXX of the
Product sold to BUYER by SELLER is less than the minimum
Heating Value specified in the quality specifications
contained in Attachment I, then BUYER shall apply the
following formula for calculation of credit due BUYER
from SELLER:
XXXXXXXX XXXXXXXX XXXXX/XXXXXX =
XXXXXXXX XXXXXXX
XXXXXXX XXXXXXXX XXXX XXXXXXXX XXXXXXX
XXXXXXX XXXXX X XXXXXXX XXXXXXXX XXXX
XXXXXXX XXXXXXXXXX XXXXXXXX XXXXX/XXXXXX
XXXXXXX XXXXX
XXX XXXXXXXX XXXXXXXX XXXXX XXX XXXXXX, XXXXXXX XXX XX
XXX XXXXXXX XXXXX XXXX, will be applied against the
total quantity of Product sold to BUYER by SELLER during
the Initial Contract Term in question. The difference
between this result and the actual total amount paid by
BUYER for deliveries of Product made during XXX XXXXXXX
XXXXXXXX XXXX shall be credit due BUYER by SELLER.
If, as a result of the quality testing provided for in
Section 7.0, it is determined that the volume weighted
Initial Contract Term average Heating Value of the
Product sold to BUYER by SELLER is XXXXXXX than the
minimum Heating Value specified in the quality specifi-
cations contained in Attachment I, then the net XXXXXX
shall be carried forward to the next succeeding Contract
Year should no notice of termination as provided herein
(Section 4.2) be given.
9.13 If it is determined that the sulfur content of any
Product sold to BUYER by SELLER is greater than the
sulfur content agreed to by BUYER, the BUYER shall have
the right to require that the nonconforming Product be
removed at SELLER's expense as described in Subsection
7.3.
9.14 Computations made with respect to the adjustment speci-
fied in Subsection 9.12 shall be paid by SELLER within
thirty (30) days of receipt of BUYER's invoice. Should
SELLER fail to make payment within said thirty (30)
days, BUYER may deduct amount due BUYER from any payment
due to SELLER.
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<PAGE>
10.0 INDEMNIFICATION
10.1 SELLER agrees to furnish the Product as an independent
contractor and not as a subcontractor, agent or employee
of BUYER. BUYER does not retain any control or direc-
tion over SELLER, its employees or subcontractors, or
over the detail, manner or methods of the performance of
SELLER's obligations under the Contract.
10.2 Each Party hereto shall indemnify and hold harmless the
other Party, its employees and agents against any and
all claims, liability, cost or expense including,
without limitation, damages for personal injury or
property damage incurred with respect to the deliveries
of Product by SELLER pursuant to this Contract, which
that Party, its employees and agents, individually or
collectively, may suffer by reason of any act or
omission of the indemnifying Party, its employees or
agents, including, without limitation, the negligence of
the indemnifying party or any of its employees or agents
to observe or comply with any of that party's duties or
obligations under this Contract or any failure to comply
with or observe any laws, ordinances, codes, orders,
rules or regulations applicable to it, or the failure of
that Party to comply with any appropriate safety and
handling precautions.
11.0 FORCE MAJEURE AND NONPERFORMANCE
11.1 Performance of this Contract by each Party shall be
pursued with due diligence in all requirements hereof;
however, neither Party shall be liable to the other for
any loss or damage for delay or for nonperformance
(including the payment of monies) due to causes not
reasonably within its control including, but not limited
to, acts of civil or military authority (including, but
not limited to, courts or administrative agencies), acts
of God, war, riot or insurrection, inability to obtain
any required permits or license, blockades, embargoes,
sabotage, epidemics, fires, floods, strikes, lockouts or
other labor disputes or difficulties.
11.2 In the event of any delay or nonperformance caused by
any of the forces described in Subsection 11.1, the
Party affected shall, on the next business day, promptly
notify the other Party verbally and within two business
days provide the other Party with teletype, TWX, tele-
gram or other written confirmation of the nature, cause,
date of commencement and the anticipated extent of such
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<PAGE>
delay or nonperformance. If SELLER's performance is not
resumed within (30) days of such notice and BUYER
believes its Product requirements are not going to be
met, BUYER may take such steps as it deems necessary to
obtain Product, including contracting with other
suppliers of Product during the period of SELLER's
nonperformance, and BUYER shall have no obligation to
make up such deficiencies from SELLER at a later time.
11.3 If federal, state or local laws or ordinances, or rules,
or Roseton Plant fuel requirements or the fuel require-
ments of any nearby power plant restrict or prohibit or
otherwise render unsuitable or undesirable BUYER's use
of the Product as fuel for its Roseton Plant, BUYER
shall have the right to reduce the quantity of Product
deliverable under this Contract without penalty. The
amount of such quantity reduction which BUYER may elect
during any Contract Year shall be up to the amount of
Product to which any such restriction, prohibition, or
reduction in use applies.
12.0 COMPLIANCE WITH LAWS, REGULATIONS, CODES AND STANDARDS
12.1 BUYER shall have the responsibility of complying with
all applicable laws, rules, regulations, codes and
standards of all federal, state, local and municipal
governmental agencies having jurisdiction over the
operation or maintenance of the facilities and equipment
used in carrying out its obligations hereunder; includ-
ing but not limited to, applicable environmental regu-
lations governing the maximum sulphur content of the
Product, the Federal Water Pollution Control Act Amend-
ments of 1972, all applicable rules and regulations
issued by the U.S. Coast Guard and all applicable New
York State statutes and regulations.
SELLER shall have the responsibility of complying with
all applicable laws, rules, regulations, codes and
standards of all federal, state, local and municipal
governmental agencies having jurisdiction over the
operation or maintenance of the Vessels, facilities and
equipment used in carrying out its obligations hereunder
including, but not limited to, applicable environmental
regulations governing the maximum sulphur content of the
Product, the Federal Water Pollution Control Act Amend-
ments of 1972 all applicable rules and regulations
issued by the U.S. Coast Guard and all applicable New
York State statutes, rules and regulations.
13.0 TAXES
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<PAGE>
13.1 SELLER shall be responsible, with the exception of the
so-called "Petroleum Business Tax" (New York Tax Law
Article 13-A), relating to the performance of this
Contract, currently imposed equal to 6.99 cents per
gallon of Product delivered for which BUYER will provide
to SELLER a direct payment permit. New York State Sales
Tax for which BUYER is to provide SELLER with a sales
tax exemption certificate, and the so-called "Spill Tax"
(New York Navigation Law Article 12) which currently
imposes a license fee of $.04 per Barrel and a sur-
license fee of $.0425 per Barrel which total $.0825 per
Barrel, for any and all taxes, assessments, excises, and
other governmental charges now in existence (hereinafter
collectively referred to as "taxes") arising from the
performance of SELLER's obligation under this Contract
including, but not limited to, income taxes, unemploy-
ment insurance, old age benefits, retirement benefits,
life pensions, annuities, and business licenses. SELLER
shall comply with all laws relating to such taxes and
shall maintain suitable forms, books, and records
connected therewith. Should any tax or fee for which
either Party is responsible be increased, decreased or
replaced by similar taxes, the Parties agree to promptly
renegotiate the price schedule as listed in Section 9.0,
only as it may relate to such increase or decrease in
such tax or fee.
In this regard BUYER and SELLER shall, in good faith,
endeavor to agree to a revised price schedule except as
the same may be restricted by law. However, notwith-
standing the foregoing, the Parties agree that their
intention is that SELLER is not to either:
a. Absorb a tax, fee or charge of any kind as the
result of action by any federal, state or local
governing body or agency including action which
prohibits the pass-thru of a retroactively passed
tax, fee or charge, or
b. Benefit as the result of action by a federal, state
or local governing body or agency.
In the event either (a) or (b) occurs as described
above, the Parties agree to promptly meet and negotiate
in good faith appropriate changes to Contract terms and
conditions to compensate the injured party. In the
event the Parties fail to agree, either Party may
terminate this Contract upon ninety (90) days' written
notice to the other.
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14.0 PROPRIETARY INFORMATION
14.1 SELLER and BUYER have a proprietary interest in the
Contract. Accordingly, the Contract shall not be
disclosed in whole or in part by either Party, its
agents or employees to third parties without the prior
written consent of the other Party; provided, however,
that nothing contained in this Section 14.0 will be
construed to prevent either Party from enforcing any
rights created by this Contract.
14.2 Notwithstanding Subsection 14.1, the Parties shall have
the right to disclose such proprietary information to
any governmental or regulatory authority having or
purporting to have jurisdiction to require such disclo-
sure, but shall exert reasonable effort to secure
confidential treatment of any proprietary information so
provided.
15.0 NONWAIVER
15.1 Failure of the Parties to insist upon strict performance
of any provisions hereof, or failure or delay in exer-
cising any rights or remedies provided herein or by law,
or the acceptance of payment for the Product or any
combination thereof, shall not release the Parties from
any obligations under this Contract and shall not be
deemed a waiver of the Parties' right to insist upon
strict enforcement hereof, or of any right or remedies
made available under this Contract or by law, nor shall
any purported oral modification or recision of this
Contract by any employee or agent of the Parties operate
as a waiver of any of the provisions hereof.
16.0 EFFECT OF SECTION HEADINGS
16.1 Section headings appearing in this Contract are inserted
for convenience only, and shall not be deemed to estab-
lish, modify or affect the rights and obligations of the
Parties to this Contract.
17.0 APPLICABLE STATE LAW
17.1 The rights, obligations and remedies of the Parties as
specified under this Contract shall be interpreted in
accordance with and governed by, in all respects, the
laws of the State of New York.
18.0 ASSIGNMENT
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18.1 Except as otherwise provided in this Section 18.0, this
Contract shall not be assigned, delegated or otherwise
disposed of by either of the Parties without the prior
written consent of the other.
18.2 Subject to the provisions of the Federal Bankruptcy
Code, this Contract shall not be deemed an asset of
either Party and, upon five (5) days' prior written
notice, either Party may terminate the Contract without
penalty at any time during which the other Party is in
any voluntary or involuntary receivership, bankruptcy,
or insolvency proceedings.
19.0 NOTICES, CORRESPONDENCE, SCHEDULES AND INVOICES
19.1 All notices required hereunder or correspondence per-
taining to or affecting the provisions of this Contract
shall be by teletype, TWX, telegram or in writing and,
if in writing, either delivered by hand or sent by
certified or registered mail, return receipt requested,
to the Parties at the following addresses:
19.1.1 Mailed or Delivered to BUYER:
Central Hudson Gas & Electric Corporation
284 South Avenue
Poughkeepsie, NY 12601-4879
Attention: Fuels Resources
19.1.2 Invoiced to BUYER:
Central Hudson Gas & Electric Corporation
284 South Avenue
Poughkeepsie, NY 12601-4879
Attention: Fuels Resources
FAX: (914) 486-5268
19.1.3 Mailed or Delivered to SELLER:
Bayway Refining Company, a Subsidiary of
Tosco Corporation
72 Cummings Point Road
Stamford, CT 06902
Attention: Donald F. Lucey
19.1.4 Invoiced and Scheduled to SELLER:
Bayway Refining Company, a Subsidiary of
Tosco Corporation
72 Cummings Point Road
Stamford, CT 06902
Attention: Donald F. Lucey
FAX: (203) 326-7565 or 7566
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19.2 If either Party changes its address, that Party shall
give prompt written notice of the change to the other
Party.
19.3 All notices shall be deemed given on the date the Party,
to whom such notices are addressed, received or refused
the same.
20.0 ARBITRATION
20.1 Whenever a dispute arises between the Parties concerning
this Contract or any of the obligations hereunder, the
Parties shall use their best efforts to resolve the
dispute by mutual agreement. In the event the Parties
cannot reach such mutual agreement and both Parties
agree in writing to arbitrate the dispute, then the
arbitration shall be conducted in accordance with the
Commercial Rules of Arbitration or the American Arbi-
tration Association then in effect. The decision of the
arbitrators with respect to such issues shall be reduced
to writing with a full explanation of its factual and
legal basis and shall be rendered within thirty (30)
days after all evidence and arguments have been submit-
ted. There shall be three arbitrators. The Party
demanding arbitration shall inform the other Party of
the name of its arbitrator and the Party receiving
demand shall, within twenty (20) calendar days thereaf-
ter, name its arbitrator. The two arbitrators so
designated shall choose a third. In the event that the
Party receiving demand for arbitration fails to name an
arbitrator within the time specified, then an arbitrator
shall be named by the Chief Judge, United States
District Court, Southern District of New York. The
Parties shall share equally the expenses of the
impartial arbitrator's fee and shall each pay for their
own costs and expenses incurred and resulting from
arbitration.
21.0 COMPLETE AGREEMENT
21.1 This written Contract is intended as the final, complete
and exclusive statement of the terms of the Agreement
between the Parties. The Parties agree that parol or
extrinsic evidence may not be used to vary or contradict
the express terms of this Contract and that recourse may
not be had to alleged prior dealings, usage of trade,
course of dealing, or course of performance to explain
or supplement the express terms of this Contract. This
Contract shall not be amended or modified, and no waiver
of any provision hereof shall be effective, unless set
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<PAGE>
forth in a written instrument authorized and executed
with the same formality as this Contract.
22.0 EMPLOYEE INTEREST
22.1 SELLER represents to BUYER that SELLER has not given and
will not give, directly or indirectly, anything of value
to any employee or other representative of BUYER with
the view of securing this Agreement or obtaining
favorable treatment with respect to the performance of
this Agreement. If such representation is untrue, or
becomes untrue, BUYER shall have the right to declare
this Agreement null and void or to terminate it, to sue
for damages and to take such other action as may be
provided by law. If SELLER obtains knowledge at any
time that any such employee has a direct or indirect
interest in SELLER or its affiliates, (excluding routine
purchases in the open market by such employee of
securities issued by SELLER or its parent corporations),
it will immediately inform BUYER of such fact.
23.0 REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES
23.1 Each Party warrants and represents to the other that:
(i) it has all requisite power, authority, licenses,
permits, permissions, approvals and franchises,
corporate or otherwise, to execute and deliver
this Contract and perform its obligations here-
under;
(ii) its execution, delivery, and performance of this
Contract has been duly authorized by, or is in
accordance with its organic instruments, this
Contract has been duly executed and delivered for
it by the signatories so authorized, and this
Contract constitutes its legal, valid and binding
obligation enforceable in accordance with its
terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganiza-
tion, moratorium or similar laws affecting the
enforcement of creditors' rights in general and
by general principles of equity;
(iii) its execution, delivery, and performance of this
Contract will not result in a breach or violation
of, or constitute a default under, any contract,
lease or instrument to which it is a party or by
which it or its properties may be bound or
affected; and
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<PAGE>
(iv) it has not received any notice, nor to the best
of its knowledge is there pending or threatened
any notice, of any violation of any applicable
laws, ordinances, regulations, rules, decrees,
awards, permits or orders which would materially
adversely affect its ability to perform here-
under.
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IN WITNESS WHEREOF, the Parties hereto have caused this
Contract to be signed by their duly authorized officers,
effective as of the date specified in Section 1.0.
______________________________
WITNESS AS TO (SELLER): BY ______________________________
________________
____________________________ __________
DATE
CENTRAL HUDSON GAS & ELECTRIC
CORPORATION FOR ITSELF AND AS
AGENT FOR CONSOLIDATED EDISON
COMPANY OF NEW YORK, INC., AND
NIAGARA MOHAWK POWER CORPORATION
ATTEST AS TO (BUYER): BY
PAUL J. GANCI
PRESIDENT AND
SECRETARY CHIEF OPERATING OFFICER
DATE
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<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X"
HAS BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
ATTACHMENT I-A
NO. 6 RESIDUAL FUEL OIL
1.5% SULFUR SPECIFICATIONS
ASTM
TEST MINIMUM MAXIMUM
Sulfur (X-Ray)-Wt % D-2622/D-4294 -- 1.5
Gravity, degrees API D-287 10.5 25
Flash Point, degrees Fahrenheit D-93 150 --
Visc. SSF @ 122 degrees Fahrenheit D-445 35 XXX
Pour Point, degrees Fahrenheit D-97 -- XX
Water Content, Vol. % D-95 -- X.X (X)
Sediment, Wt. % D-473 -- 0.2 (A)
Con Carbon, Wt. % D-189/D-4530 -- 16 (B)
Vanadium, PPM D-2788 -- 300
Ash, Wt. % D-482 -- 0.15(C)
Heating Value,
Btu./Gallon D-240 151,750 * --
Sodium, PPM D-2788 -- 75
Product must not contain petrochemical wastes or residues,
chemicals, including but not limited to caustics and acids, tar
bottoms, styrenes, olefins, or any matter foreign to No. 6
residual fuel oil. Product must have a marketable odor of
residual fuel oil.
* Minimum Contract Term Weighted Average.
(X) XXXXXXXX XX XX XXXXXXXX XXX XXXXXXXX XXXXXXX XX XXXXX XXX
XXXXXXXX XX XXXXXX XX X.X% (XXXXXXXXXX X.X).
(B) Weighted initial contract term average and weighted
average of three consecutive deliveries not to exceed 13%.
(C) Weighted initial contract term average not to exceed .10%.
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<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X"
HAS BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
ATTACHMENT I-B
NO. 6 RESIDUAL FUEL OIL
1.3% SULFUR SPECIFICATIONS
ASTM
TEST MINIMUM MAXIMUM
Sulfur (X-Ray)-Wt % D-2622/D-4294 -- 1.3
Gravity, degrees API D-287 10.5 25
Flash Point, degrees Fahrenheit D-93 150 --
Visc. SSF @ 122 degrees Fahrenheit D-445 35 XXX
Pour Point, degrees Fahrenheit D-97 -- XX
Water Content, Vol. % D-95 -- X.X (X)
Sediment, Wt. % D-473 -- 0.2 (A)
Con Carbon, Wt. % D-189/D-4530 -- 16 (B)
Vanadium, PPM D-2788 -- 300
Ash, Wt. % D-482 -- 0.15(C)
Heating Value,
Btu./Gallon D-240 151,750 * --
Sodium, PPM D-2788 -- 75
Product must not contain petrochemical wastes or
residues, chemicals, including but not limited to caustics and
acids, tar bottoms, styrenes, olefins, or any matter foreign to
No. 6 residual fuel oil. Product must have a marketable odor
of residual fuel oil.
* Minimum Contract Term Weighted Average.
(X) XXXXXXXX XX XX XXXXXXXX XXX XXXXXXXX XXXXXXX XX XXXXX XXX
XXXXXXXX XX XXXXXX XX X.X% (XXXXXXXXXX X.X).
(B) Weighted initial contract term average and weighted
average of three consecutive deliveries not to exceed 13%.
(C) Weighted initial contract term average not to exceed .10%.
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<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X"
HAS BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
ATTACHMENT I-C
NO. 6 RESIDUAL FUEL OIL
1.0% SULFUR SPECIFICATIONS
ASTM
TEST MINIMUM MAXIMUM
Sulfur (X-Ray)-Wt % D-2622/D-4294 -- 1.0
Gravity, degrees API D-287 10.5 25
Flash Point, degrees Fahrenheit D-93 150 --
Visc. SSF @ 122 degrees Fahrenheit D-445 35 XXX
Pour Point, degrees Fahrenheit D-97 -- XX
Water Content, Vol. % D-95 -- X.X (X)
Sediment, Wt. % D-473 -- 0.2 (A)
Con Carbon, Wt. % D-189/D-4530 -- 16 (B)
Vanadium, PPM D-2788 -- 300
Ash, Wt. % D-482 -- 0.15(C)
Heating Value,
Btu./Gallon D-240 151,750 * --
Sodium, PPM D-2788 -- 75
Product must not contain petrochemical wastes or
residues, chemicals, including but not limited to caustics and
acids, tar bottoms, styrenes, olefins, or any matter foreign to
No. 6 residual fuel oil. Product must have a marketable odor
of residual fuel oil.
* Minimum Contract Term Weighted Average.
(X) XXXXXXXX XX XX XXXXXXXX XXX XXXXXXXX XXXXXXX XX XXXXX XXX
XXXXXXXX XX XXXXXX XX X.X% (XXXXXXXXXX X.X).
(B) Weighted initial contract term average and weighted
average of three consecutive deliveries not to exceed 13%.
(C) Weighted initial contract term average not to exceed .10%.
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<PAGE>
CONFIDENTIAL INFORMATION REPRESENTED IN THIS FILING BY AN "X"
HAS BEEN REDACTED AND FILED SEPARATELY WITH THE U.S. SECURITIES
AND EXCHANGE COMMISSION.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
ATTACHMENT I-D
NO. 6 RESIDUAL FUEL OIL
0.3% SULFUR SPECIFICATIONS
ASTM
TEST MINIMUM MAXIMUM
Sulfur (X-Ray)-Wt % D-2622/D-4294 -- 0.3
Gravity, degrees API D-287 10.5 25
Flash Point. degrees Fahrenheit D-93 150 --
Visc. SSF @ 122 degrees Fahrenheit D-445 35 XXX
Pour Point, degrees Fahrenheit D-97 -- XXX
Water Content, Vol. % D-95 -- X.X (X)
Sediment, Wt. % D-473 -- 0.2 (A)
Con Carbon, Wt. % D-189/D4530 -- 13 (B)
Vanadium, PPM D-2788 -- 300
Ash, Wt. % D-482 -- 0.15(C)
Heating Value,
Btu./Gallon D-240 147,000 * --
Sodium, PPM D-2788 -- 75
Product must not contain petrochemical wastes or
residues, chemicals, including but not limited to caustics and
acids, tar bottoms, styrenes, olefins, or any matter foreign to
No. 6 residual fuel oil. Product must have a marketable odor
of residual fuel oil.
* Minimum Contract Term Weighted Average.
(X) XXXXXXXX XX XX XXXXXXXX XXX XXXXXXXX XXXXXXX XX XXXXX XXX
XXXXXXXX XX XXXXXX XX X.X% (XXXXXXXXXX X.X).
(B) Weighted initial contract term average and weighted
average of three consecutive deliveries not to exceed 10%.
(C) Weighted initial contract term average not to exceed .10%.
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
ATTACHMENT II
WEEKEND AND HOLIDAY PRICING
Posted prices to be used in accordance with Subsections
9.1, 9.2, 9.3 and 9.4 on days when prices are not posted solely
due to such days being non-business days.
1. Prices for Saturday and Sunday when
Friday or Monday is not a holiday.
Saturday - use preceding Friday price.
Sunday - use following Monday posted
prices.
2. Prices for Friday, Saturday and Sunday
when Friday is a holiday.
Friday - use preceding Thursday price.
Saturday - use preceding Thursday
price.
Sunday - Use following Monday posted
prices.
3. Prices for Saturday, Sunday and Monday
when Monday is a holiday.
Saturday - use preceding Friday price.
Sunday - use following Tuesday price.
Monday - use following Tuesday posted
prices.
4. Prices for Tuesday when Tuesday is a
holiday.
Tuesday - use preceding Monday posted
prices.
5. Prices for Wednesday when Wednesday is
a holiday.
Wednesday - use following Thursday
posted prices.
6. Prices for Thursday when Thursday is a
holiday.
Thursday - use preceding Wednesday
posted prices.
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<PAGE>
<TABLE> CENTRAL HUDSON GAS & ELECTRIC CORPORATION
ATTACHMENT II
PAGE 2
EXAMPLE OF PRICES
FOR
HOLIDAYS AND WEEKENDS
<CAPTION> HOLIDAY
NO FRIDAY MONDAY TUESDAY WEDNESDAY THURSDAY
DAY DATE HOLIDAY 4 7 8 9 10
<S> <C> <C> <C> <C> <C> <C> <C>
THURSDAY 3 Actual Actual Actual Actual Actual Actual
Postings Postings Postings Postings Postings Postings
FRIDAY 4 Actual Thurs. 3 Actual Actual Actual Actual
Postings Postings Postings Postings Postings Postings
SATURDAY 5 Fri. 4 Thurs. 3 Fri. 4 Fri. 4 Fri. 4 Fri. 4
Postings Postings Postings Postings Postings Postings
SUNDAY 6 Mon. 7 Mon. 7 Tues. 8 Mon. 7 Mon. 7 Mon.7
Postings Postings Postings Postings Postings Postings
MONDAY 7 Actual Actual Tues. 8 Actual Actual Actual
Postings Postings Postings Postings Postings Postings
TUESDAY 8 Actual Actual Actual Mon. 7 Actual Actual
Postings Postings Postings Postings Postings Postings
WEDNESDAY 9 Actual Actual Actual Actual Thurs. 10 Actual
Postings Postings Postings Postings Postings Postings
THURSDAY 10 Actual Actual Actual Actual Actual Wed. 9
Postings Postings Postings Postings Postings Postings
FRIDAY 11 Actual Actual Actual Actual Actual Actual
Postings Postings Postings Postings Postings Postings
</TABLE>
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ATTACHMENT III
Attached is ASTM D-473 which is used to determine the percentage
of sediment (by weight) in Crude Oils and Fuel Oils.
Section 10.1 (Note 3) describes a method for converting the
sediment result by weight to a volume result. This is done by
taking the sediment result, dividing it by 2 and multiplying by
the specific gravity of the Fuel Oil.
The result can then be added to the water test result to yield a
result for combined water and sediment (Volume) to compare to
contract limits and, if necessary, adjust the delivered barrels.
Standard Test Method for Sediment in Crude Oils
and Fuel Oils by the Extraction Method
BC-9/CONTRA96
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