December 20, 1995
Office of Applications and Report Services
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
We are transmitting herewith Indiana Gas Company, Inc.'s
Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, pursuant to the requirements of Section
13 of the Securities Exchange Act of 1934.
The $250.00 filing fee was transmitted via FEDWIRE on
December 19, 1995.
Sincerely,
/s/Kathleen S. Morris
Kathleen S. Morris
KSM:rs
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1995
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 1-6494
INDIANA GAS COMPANY, INC.
(Exact name of Registrant as specified in its charter)
INDIANA 35-0793669
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1630 North Meridian Street,Indianapolis, Indiana 46202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 317-926-3351
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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
Registrant's classes of common stock, as of the latest
practicable date.
Common Stock-Without par value 9,080,770 November 30, 1995
Class Number of shares Date
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K ( 229.405 of this
chapter) is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-
K.[X]
Table of Contents
Page
Part I
Business
Property
Legal Proceedings
Submission of Matters to a Vote of Security Holders
Executive Officers of the Company
Part II
Market for the Registrant's Common Equity and Related
Stockholder Matters
Selected Financial Data
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants
Part III
Directors and Executive Officers of the Registrant
Executive Compensation
Securities Ownership of Certain Beneficial Owners and
Management
Certain Relationships and Related Transactions
Part IV
Exhibits, Financial Statements Schedules, and Reports on
Form 8-K
Part I
Item 1. Business
(a) General Development of the Business.
Indiana Gas Company, Inc. (company) is an
operating public utility engaged in the business of
providing gas utility service in the state of
Indiana. It was incorporated under the laws of the
state of Indiana on July 16, 1945. All of the
outstanding shares of common stock of the company
are owned by Indiana Energy, Inc. (Indiana Energy),
which is a public holding company.
All of the outstanding capital stock of
Terre Haute Gas Corporation (Terre Haute) and
Richmond Gas Corporation (Richmond) was acquired
by Indiana Energy on July 31, 1990. Both
companies were operating public utilities engaged
in the business of providing gas distribution
services in Indiana. On January 21, 1991, the
company acquired from Indiana Energy all the
outstanding capital stock of Terre Haute and
Richmond. While these companies technically
exist as separate corporate entities, their
business operations have been combined with
Indiana Gas' operations and the companies do
business under the name of Indiana Gas.
(c) Narrative Description of the Business.
At September 30, 1995, Indiana Gas supplied
gas to about 455,000 residential, commercial and
industrial customers in 281 communities in 48 of
the 92 counties in the state of Indiana. The
service area has a population of approximately 2
million and contains diversified manufacturing
and agriculture-related enterprises. The
principal industries served include automotive
parts and accessories, feed, flour and grain
processing, metal castings, aluminum products,
gypsum products, electrical equipment, metal
specialties and glass.
The largest communities served include
Muncie, Anderson, Lafayette-West Lafayette,
Bloomington, Terre Haute, Marion, New Albany,
Columbus, Jeffersonville, New Castle and
Richmond. Indiana Gas does not serve in
Indianapolis, although its general office is
located in that city.
For the fiscal year ended September 30,
1995, residential customers provided 60 percent
of revenues, commercial 20 percent and industrial
20 percent. At such date, approximately 98
percent of Indiana Gas' customers used gas for
space heating, and space heating revenues from
these customers for the fiscal year were 80
percent of total operating revenues. Sales of
gas are seasonal and strongly affected by
variations in weather conditions. During the
fiscal year ended September 30, 1995, Indiana Gas
added approximately 11,300 residential and
commercial customers.
Indiana Gas sells gas directly to
residential, commercial and industrial customers
at approved rates. Indiana Gas also transports
gas through its pipelines at approved rates to
commercial and industrial customers which have
purchased gas directly from producers or through
brokers and marketers. The total volumes of gas
provided to both sales and transportation
customers is referred to as throughput.
Gas transported on behalf of end-use
customers in fiscal 1995 represented 30 percent
(33,312 MDth) of throughput compared to 26
percent (30,125 MDth) in 1994 and 11 percent
(12,307 MDth) in 1993. Although revenues are
lower, rates for transportation generally provide
the same margins as would have been earned had
the gas been sold under normal sales tariffs.
As a result of a series of FERC orders,
including Order No. 636, Indiana Gas now
purchases all of its natural gas from producers,
brokers and marketers on both short-term and
medium-term contracts. Indiana Gas also has
contracts with pipelines for storage and
transportation of natural gas.
Rates for gas services purchased from
interstate pipeline suppliers are governed by
tariffs which are subject to adjustment and
approval by the Federal Energy Regulatory
Commission (FERC) in accordance with the Natural
Gas Act. Prices for gas purchased from gas
producers and marketers are determined by market
conditions. Indiana Gas' rates and charges,
terms of service, accounting matters, issuance of
securities, and other operational matters are
regulated by the Indiana Utility Regulatory
Commission (IURC).
Adjustments to Indiana Gas' rates and
charges related to the cost of gas are made
through gas cost adjustment (GCA) procedures
established by Indiana law and administered by
the IURC. The IURC has applied the statute
authorizing the GCA procedures to reduce rates
when necessary so as to limit net operating
income, after adjusting to normal weather, to the
level authorized in the last general rate order.
On November 9, 1995, the IURC approved a
settlement agreement which provided, among other
things, an increase in Indiana Gas' authorized
utility operating income from $51.1 million to
$54.2 million beginning in fiscal 1996. (See
Item 7, 1996 Settlement Agreement.)
Information regarding environmental matters
affecting the company is incorporated herein by
reference to Item 7, Environmental Matters.
Indiana Gas had 1,084 full-time employees and 36
part-time employees as of September 30, 1995.
Item 2. Property
The properties of Indiana Gas are used for
the purchase, production, storage and
distribution of gas and are located primarily
within the state of Indiana. As of September 30,
1995, such properties included approximately
10,164 miles of distribution mains; 467,540
meters; seven reservoirs currently being used for
the underground storage of purchased gas with
approximately 107,074 acres of land held under
storage easements; 9,478,039 Dth of gas in
company-owned underground storage with a daily
deliverability of 138,860 Dth; 19,953,511 Dth of
gas in contract storage with a daily
deliverability of 235,170 Dth; and five liquefied
petroleum (propane) air-gas manufacturing plants
with a total daily capacity of 36,700 Dth of gas.
Indiana Gas' capital expenditures during the
fiscal year ended September 30, 1995, amounted to
$54.9 million.
Item 3. Legal Proceedings
See Item 8, Note 8 for litigation matters
involving insurance carriers pertaining to
Indiana Gas' former manufactured gas plants and
storage facilities.
Item 4. Submission of Matters to a Vote of Security
Holders
No matter was submitted during the fourth
quarter of the fiscal year ended September 30,
1995, to a vote of security holders.
Item 4a. Executive Officers of the Company
As of September 30, 1995, the following
individuals were Executive Officers of the
company:
<TABLE>
Family
Relation- Office or Date Elected
Name Age ship Position Held Or Appointed(1)
<S> <C> <C> <C> <C>
Lawrence A. Ferger 61 None President and Chief
Executive Officer July 1, 1987
Paul T. Baker 54 None Senior Vice President
and Chief Operating
Officer Aug. 1, 1991
Senior Vice President -
Gas Supply and
Customer Services July 1, 1987
Niel C. Ellerbrook 46 None Senior Vice
President and
Chief Financial
Officer July 1, 1987
Anthony E. Ard 54 None Senior Vice President
of Corporate Affairs Jan. 9, 1995
Vice President -
Corporate Affairs Jan. 11, 1993
Vice President and
Secretary Sep. 30, 1988
Carl L. Chapman 40 None Senior Vice President
of Corporate
Development Jan. 9, 1995
Vice President -
Planning July 1, 1987
(1) Each of the officers has served continuously since the dates indicated.
</TABLE>
Part II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters
All of the outstanding shares of Indiana Gas'
common stock are owned by Indiana Energy, Inc., and
are not traded.
During fiscal 1995, the company paid aggregate
dividends of $6.0 million, $6.0 million, $6.0
million and $6.3 million in the first, second, third
and fourth quarters, respectively.
During fiscal 1994, the company paid aggregate
dividends of $5.8 million, $5.8 million, $5.8
million and $6.0 million in the first, second, third
and fourth quarters, respectively. (See Item 8,
Note 5.)
Item 6. Selected Financial Data
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
(Thousands)
Year Ended September 30 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Operating revenues $403,810 $475,297 $499,278 $411,260 $389,550
Margin 185,315 194,309 185,725 160,333 153,037
Operating expenses 139,127 146,466 141,452 122,206 117,421
Operating income 46,188 47,843 44,273 38,127 35,616
Interest and other - net 14,079 13,247 15,739 12,384 12,330
Net income 32,109 34,596 28,534 25,743 23,286
Dividends on preferred - - 285 1,710 1,710
stock
Earnings available for
common stock $ 32,109 $ 34,596 $ 28,249 $ 24,033 $ 21,576
Ratio of earnings to fixed 4.1 4.1 3.5 3.5 3.3
charges
Common shareholder's equity $268,154 $260,295 $249,099 $202,833 $187,651
Redeemable preferred
shareholder's equity - - - 20,000 20,000
Long-term debt (1) 173,693 156,851 184,901 149,901 163,775
$441,847 $417,146 $434,000 $372,734 $371,426
Total throughput 109,508 116,285 111,354 101,985 97,503
Annual heating degree days
as a percent of normal 87% 102% 99% 90% 87%
Utility customers served -
average 454,817 443,498 433,000 422,997 414,358
Total Assets at Year-End $655,933 $649,982 $621,658 $567,779 $515,468
(1)Includes current maturities; excludes sinking fund requirements.
</TABLE>
Item 7. Management's Discussion and Analysis of Results
of Operations and Financial Condition
Results of Operations
Earnings
Earnings available for common stock decreased to $32.1 million in
fiscal 1995 from $34.6 million in fiscal 1994 due to weather that
was 15 percent warmer than last year. This decrease was partially
offset by lower operation and maintenance expenses, as well as the
addition of new residential and commercial customers.
Earnings available for common stock increased to $34.6 million in
fiscal 1994 from $28.2 million in fiscal 1993. The increase
relfects weather that was 4 percent colder than last year,
additional residential and commercial customers and a decrease in
operation and maintenance expenses.
Margin (Revenues Less Cost of Gas)
In 1995, margin decreased 5 percent ($9 million) when compared to
1994. The decrease reflects weather that was 15 percent warmer
than last year and 13 percent warmer than normal, offset somewhat
by the addition of new residential and commercial customers.
In 1994, margin increased 5 percent ($8.6 million) when compared
to 1993. The increase reflected weather that was 4 percent colder
than the previous year and 2 percent colder than normal, as well
as the addition of new residential and commercial customers.
In 1995, total system throughput (combined sales and
transportation) decreased 6 percent (6.8 MMDth) when compared to
last year. In 1994, throughput increased 4 percent (4.9 MMDth)
when compared to 1993. Indiana Gas' rates for transportation
generally provide the same margins as are earned on the sale of
gas under its sales tariffs. Approximately one-half of total
system throughput represents gas used for space heating and is
affected by weather.
Total average cost per dekatherm of gas purchased (average
commodity and demand) decreased to $2.53 in 1995 from $2.89 in
1994. The decrease is due primarily to lower commodity costs
associated with decreased demand for gas during the very warm
winter this fiscal year.
Total average cost per dekatherm of gas purchased for 1994 was
about the same as 1993. Increased fixed costs per dekatherm
associated with pipeline rate cases and the restructuring
prescribed by Federal Energy Regulatory Commission (FERC) Order
No. 636 were offset by lower commodity costs.
Operating Expenses
Operation and maintenance expenses decreased approximately $6.4
million in 1995 when compared to 1994. The decrease is primarily
attributable to lower expenses for labor and related benefits,
distribution mains and services, advertising and outside services.
The declining operation and maintenance expenses reflect
management's efforts to control costs in response to very warm
weather.
Operation and maintenance expenses decreased approximately $2.3
million in 1994 when compared to 1993. The decrease was primarily
attributable to labor and related costs which were lower than the
levels in 1993 when additional operation and maintenance projects
were in progress.
Depreciation and amortization expense increased in 1995 and 1994
as the result of additions to utility plant to serve new customers
and to maintain dependable service to existing customers.
Federal and state income taxes decreased in 1995 due to lower
taxable income. Federal and state income taxes increased in 1994
due to higher taxable income.
Taxes other than income taxes decreased in 1995 due to lower gross
receipts tax expense resulting from decreased revenue. Property
tax expense for 1995 remained approximately the same as compared
to 1994. Taxes other than income taxes increased in 1994 as the
result of increased property tax expense, due to higher property
tax rates and higher assessed values, and as the result of higher
gross receipts tax expense.
Interest Expense
Interest expense decreased in 1995 due to a decrease in average
debt outstanding, slightly offset by an increase in interest
rates. Interest expense decreased in 1994 due to slightly lower
interest rates.
Other Operating Matters
Gas Cost Adjustment
Adjustments to Indiana Gas' rates and charges related to the cost
of gas are made through gas cost adjustment (GCA) procedures
established by Indiana law and administered by the Indiana Utility
Regulatory Commission (IURC). The GCA passes through increases and
decreases in the cost of gas to Indiana Gas' customers dollar for
dollar.
In addition, the IURC has applied the statute authorizing the GCA
procedures to reduce rates when necessary so as to limit utility
operating income, after adjusting to normal weather, to the level
authorized in the last general rate order (see Indiana Legislative
Matters).
1996 Settlement Agreement
As provided in the previous year's settlement agreement among
Indiana Gas, the Office of Utility Consumer Counselor (OUCC) and a
group of large-volume users, the OUCC performed an investigation
during fiscal 1995 to consider an increase to Indiana Gas'
authorized utility operating income. These parties then entered a
series of negotiations designed to increase Indiana Gas'
opportunity to earn on its recent capital investments while
avoiding the necessity of a general rate filing. As a result of
these negotiations, the IURC approved on November 9, 1995, a
settlement agreement which provided, among other things, for the
following: (1) an increase in Indiana Gas' authorized utility
operating income from $51.1 million to $54.2 million beginning in
fiscal 1996; (2) with certain specified exceptions, Indiana Gas
may not file a petition to increase its base rates until November
15, 1996; and (3) an agreement to a number of operational and
other service enhancements for large-volume customers.
Environmental Matters
Indiana Gas is currently conducting environmental investigations
and work at certain sites that were the locations of former
manufactured gas plants. It is seeking to recover the costs of the
investigations and work from insurance carriers, other potentially
responsible parties (PRPs) and customers. On May 3, 1995, Indiana
Gas received an order from the IURC in which the Commission
concluded that the costs incurred by Indiana Gas to investigate
and, if necessary, clean-up former manufactured gas plant sites
are not utility operating expenses necessary for the provision of
service and, therefore, are not recoverable as operating expenses
from utility customers. The order is being appealed. The IURC
order has had no immediate impact on Indiana Gas' earnings since
settlements with insurers of $11.9 million exceed Indiana Gas'
share of environmental liability recorded to date. For further
information regarding the status of investigation and remediation
of the sites, PRPs, financial reporting and ratemaking, see Item
8, Note 8.
Federal Energy Regulatory Commission Matters
In accordance with FERC Order No. 636, Indiana Gas' pipeline
service providers have made a number of filings to restructure
services. Indiana Gas' pipeline service providers are seeking from
customers, including Indiana Gas, recovery of certain costs
related to the transition to restructured services.
On April 12, 1995, Indiana Gas received an order from the IURC
allowing full recovery through the quarterly GCA process of all
FERC Order No. 636 transition costs, including those transition
costs previously deferred. Indiana Gas has estimated and recorded
total transition costs of approximately $12 million.
Postretirement Benefits Other Than Pensions
Effective October 1, 1993, Indiana Gas adopted Statement of
Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions (SFAS 106). SFAS 106
requires accounting for the costs of postretirement health care
and life insurance benefits on the accrual basis. This means the
costs of benefits paid in the future are recognized during the
years that an employee provides service to Indiana Gas rather than
the "pay-as-you-go" (cash) basis (see Item 8, Note 6).
On May 3, 1995, the IURC issued an order authorizing Indiana Gas
to recover the costs related to postretirement benefits other than
pensions under the accrual method of accounting consistent with
SFAS 106. Amounts accrued prior to the order have been deferred as
allowed by the IURC. While this order is consistent with the
IURC's rulings for other utilities within the state of Indiana and
with the ratemaking treatment of the majority of regulatory
jurisdictions outside of Indiana, the Office of Utility Consumer
Counselor is appealing the order.
Income Taxes
Effective October 1, 1993, Indiana Gas adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income
Taxes (SFAS 109). Indiana Gas previously used the deferred method
of accounting for income taxes as prescribed by Accounting
Principles Bulletin Opinion No. 11. SFAS 109 requires the use of
the liability method, which effectively results in a reduction in
previously provided deferred income taxes to reflect the current
statutory corporate tax rate.
Due to the effects of regulation, Indiana Gas is not permitted to
recognize the effect of a tax rate change as income but is
required to reduce tariff rates to return the "excess" deferred
income taxes to ratepayers over the remaining life of the
properties that give rise to the taxes. Therefore, the cumulative
effect of a change in accounting principle upon the initial
application of SFAS 109 resulted in no impact on earnings.
Indiana Legislative Matters
On April 26, 1995, the Indiana General Assembly enacted Senate
Enrolled Act No. 637, which provides new flexibility to the IURC
for future regulation of Indiana utilities and modifies the
application of the earnings test.
The new law recognizes that competition is increasing in the
provision of energy services and that flexibility in the
regulation of energy services providers is essential to the well-
being of the state, its economy and its citizens. Under the law,
an energy utility can present to the IURC a broad range of
proposals from performance-based ratemaking to complete
deregulation of a utility's operations. The law gives the IURC the
authority to adopt alternative regulatory practices, procedures,
and mechanisms and establish rates and charges that are in the
public interest, and will enhance or maintain the value of the
energy utility's retail energy services or property. It also
provides authority to the IURC to establish rates and charges
based on market or average prices that use performance-based
rewards or penalties, or which are designed to promote efficiency
in the rendering of retail energy services.
The IURC applies the Indiana statute authorizing the GCA
procedures to reduce rates when necessary so as to limit utility
operating income to the level authorized in the last general rate
order. On a quarterly basis, this earnings test is performed by
comparing Indiana Gas' authorized utility operating income to its
actual utility operating income (weather normalized) for the
previous 12 months. In the past, one-fourth of the amounts over
the authorized utility operating income would be refundable to
Indiana Gas' customers each quarter. The new law revises the
earnings test to provide that no refund be paid to the extent a
utility has not earned its authorized utility operating income
over the previous 60 months (or during the period since the
utility's last rate order, if longer). The revised test provides
Indiana Gas a greater opportunity to earn its authorized utility
operating income over the long term.
New Accounting Standard
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to
be Disposed Of. This statement imposes stricter criteria for
regulatory assets by requiring that such assets be probable of
future recovery at each balance sheet date. Indiana Gas
anticipates adopting this standard on October 1, 1996, and does
not expect that the adoption will have a material impact on its
financial position or results of operations based on the current
regulatory structure in which it operates. This conclusion may
change in the future as competitive factors influence pricing in
this industry.
Liquidity and Capital Resources
New construction to provide service to a growing customer base and
normal system maintenance and improvements will continue to
require substantial capital expenditures. Indiana Gas' goal is to
internally fund approximately 75 percent of its capital
expenditure program. This will help Indiana Gas to maintain its
high creditworthiness. The long-term debt of Indiana Gas is
currently rated Aa3 by Moody's Investors Service and AA- by
Standard & Poor's Corporation. Indiana Gas' ratio of earnings to
fixed charges was 4.1 for 1995 (see Exhibit 12).
Total capital required to fund both capital expenditures and
refinancing requirements for 1994 and 1995, along with estimated
amounts for 1996 through 1998, are as follows:
THOUSANDS 1994 1995 1996 1997 1998
Capital expenditures $57,100 $54,900 $58,800 $60,500 $61,800
Refinancing requirements 28,100 3,200 - 900 35,900
$85,200 $58,100 $58,800 $61,400 $97,700
In 1995, 77 percent of Indiana Gas' capital expenditures was
provided by funds generated internally (net income less dividends
plus charges to net income not requiring funds). In 1994, 75
percent of capital expenditures was provided by funds generated
internally. External funds required for the 1995 construction
program were obtained primarily through Indiana Gas' medium-term
note program as discussed below.
Capitalization objectives for Indiana Gas are 55-65 percent common
equity and preferred stock and 35-45 percent long-term debt.
Indiana Gas' common equity component was 61 percent of total
capitalization at September 30, 1995.
On October 28, 1994, $3 million of the outstanding 9 3/8 % Series
M, First Mortgage Bonds were retired.
On April 5, 1995, Indiana Gas filed with the Securities and
Exchange Commission (SEC) a prospectus supplement for the offering
of its Medium-Term Notes, Series E (Notes) with an aggregate
principal amount of up to $55 million. The Notes were registered
under the existing shelf registration statement filed November 20,
1992, with the SEC with respect to the issuance of up to $90
million in aggregate principal amount of debt securities ($35
million was previously withdrawn from this shelf as a result of
the December 9, 1992, issuance of 6 5/8 %, Series D Notes).
Indiana Gas plans to issue the Notes from time to time through
1997. The Notes, when issued, will be due not less than nine
months and not more than 40 years from the date of issue, and will
bear interest at a fixed or variable rate as negotiated between
the purchaser and Indiana Gas. The net proceeds from the sale of
the Notes will be used to finance, in part, the refunding of long-
term debt, Indiana Gas' continuing construction program and for
other corporate purposes. During June 1995, $20 million in
aggregate principal amount of the Notes were issued as follows: $5
million of 7.15% Notes due March 15, 2015; $5 million of 6.31%
Notes due June 10, 2025; and $10 million of 6.53% Notes due June
27, 2025.
The nature of Indiana Gas' business creates large short-term cash
working capital requirements primarily to finance customer
accounts receivable, unbilled utility revenues resulting from
cycle billing, gas in underground storage and capital expenditures
until permanently financed. Short-term borrowings tend to be
greatest during the heating season when accounts receivable and
unbilled utility revenues are at their highest. Depending on cost,
commercial paper or bank lines of credit are used as sources of
short-term financing. Indiana Gas' commercial paper is rated P-1
by Moody's and A-1+ by Standard & Poor's. Long-term financial
strength and flexibility require maintaining throughput volumes,
controlling costs and, if absolutely necessary, securing timely
increases in rates to recover costs and provide a fair and
reasonable return to shareholders.
Item 8. Financial Statements and Supplementary Data
Management's Responsibility for Financial Statements
The management of the company is responsible for the preparation
of the consolidated financial statements and the related financial
data contained in this report. The financial statements are
prepared in conformity with generally accepted accounting
principles and follow accounting policies and principles
applicable to regulated public utilities.
The integrity and objectivity of the data in this report,
including required estimates and judgements, are the
responsibility of management. Management maintains a system of
internal controls and utilizes an internal auditing program to
provide reasonable assurance of compliance with company policies
and procedures and the safeguard of assets.
The board of directors pursues its responsibility for these
financial statements through its audit committee, which meets
periodically with management, the internal auditors and the
independent auditors, to assure that each is carrying out its
responsibilities. Both the internal auditors and the independent
auditors meet with the audit committee, with and without
management representatives present, to discuss the scope and
results of their audits, their comments on the adequacy of
internal accounting controls and the quality of financial
reporting.
/s/Niel C. Ellerbrook
Niel C. Ellerbrook
Senior Vice President
and Chief Financial Officer
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Indiana Gas Company,
Inc.:
We have audited the accompanying consolidated balance sheets and
schedules of long-term debt of Indiana Gas Company, Inc. (an
Indiana corporation and wholly-owned subsidiary of Indiana Energy,
Inc.) and subsidiary companies as of September 30, 1995, and 1994,
and the related consolidated statements of income, common
shareholder's equity and cash flows for each of the three years in
the period ended September 30, 1995. These financial statements
are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Indiana Gas Company, Inc. and subsidiary companies, as of
September 30, 1995, and 1994, and the results of their operations
and their cash flows for each of the three years in the period
ended September 30, 1995, in conformity with generally accepted
accounting principles.
/s/Arthur Andersen LLP
Arthur Andersen LLP
Indianapolis, Indiana
October 26, 1995
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands)
Year Ended September 30
1995 1994 1993
<S> <C> <C> <C>
OPERATING REVENUES $ 403,810 $ 475,297 $ 499,278
COST OF GAS 218,495 280,988 313,553
MARGIN 185,315 194,309 185,725
OPERATING EXPENSES:
Other operation and maintenance 75,608 81,982 84,302
Depreciation and amortization 31,265 29,177 26,806
Income taxes 19,216 19,467 15,816
Taxes other than income taxes 13,038 15,840 14,528
139,127 146,466 141,452
OPERATING INCOME 46,188 47,843 44,273
OTHER INCOME - NET 1,423 2,629 579
INCOME BEFORE INTEREST AND OTHER 47,611 50,472 44,852
INTEREST AND OTHER CHARGES:
Interest on long-term debt 13,474 14,798 15,304
Interest on notes payable 971 493 447
Allowance for borrowed funds used
during construction (215) (355) (579)
Other interest 1,085 746 889
Other amortization 187 194 257
15,502 15,876 16,318
NET INCOME 32,109 34,596 28,534
DIVIDENDS ON PREFERRED STOCK - - 285
EARNINGS AVAILABLE FOR COMMON STOCK $ 32,109 $ 34,596 $ 28,249
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
Year Ended September 30
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 32,109 $ 34,596 $ 28,534
Adjustments to reconcile net income to cash
provided from operating activities -
Depreciation and amortization 31,452 29,371 27,063
Deferred income taxes 3,994 3,273 2,931
Investment tax credit (930) (930) (1,007)
34,516 31,714 28,987
Changes in assets and liabilities -
Receivables - net 3,634 1,537 (2,849)
Inventories 5,189 (5,093) (10,638)
Accounts payable, customer deposits, advance
payments and other current liabilities 40,686 (7,052) 10,676
Accrued taxes and interest (12,375) (11,815) 10,410
Refundable/recoverable gas costs (26,712) 39,048 (17,123)
Other - net 13,629 5,355 (4,000)
Total adjustments 58,567 53,694 15,463
Net cash flows from operations 90,676 88,290 43,997
CASH FLOWS FROM (REQUIRED FOR) FINANCING ACTIVITIES:
Issuance of common stock - - 40,000
Redemption of preferred stock - - (20,932)
Sale of long-term debt 20,000 - 35,000
Reduction in long-term debt (3,158) (28,050) -
Net change in short-term borrowings (28,325) 20,298 (19,986)
Dividends (24,250) (23,400) (21,336)
Net cash flows from (required for) financing activities (35,733) (31,152) 12,746
CASH FLOWS REQUIRED FOR INVESTING ACTIVITIES:
Capital expenditures (54,943) (57,138) (56,945)
Net cash flows required for investing activities (54,943) (57,138) (56,945)
NET INCREASE (DECREASE) IN CASH - - (202)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20 20 222
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20 $ 20 $ 20
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands)
September 30
1995 1994
<S> <C> <C>
UTILITY PLANT:
Original cost $872,287 $824,839
Less - accumulated depreciation and amortization 316,991 291,823
555,296 533,016
NONUTILITY PLANT - NET 188 393
CURRENT ASSETS:
Cash and cash equivalents 20 20
Accounts receivable, less reserves of
$1,662 and $1,238 respectively 13,403 16,835
Accrued unbilled revenues 6,405 6,607
Materials and supplies - at average cost 3,890 3,663
Liquefied petroleum gas - at average cost 883 940
Gas in underground storage - at last-in,
first-out cost 59,394 64,753
Prepayments and other 144 244
84,139 93,062
DEFERRED CHARGES:
Unamortized debt discount and expense 6,800 6,755
Environmental costs - 9,341
Other 9,510 7,415
16,310 23,511
$655,933 $649,982
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
SHAREHOLDER'S EQUITY AND LIABILITIES
(Thousands)
September 30
1995 1994
<S> <C> <C>
CAPITALIZATION:
Common stock and paid-in capital $142,995 $142,995
Retained earnings 125,159 117,300
Total common shareholder's equity 268,154 260,295
Long-term debt (see schedule) 173,693 156,851
441,847 417,146
CURRENT LIABILITIES:
Notes payable 2,225 30,550
Accounts payable 59,713 34,808
Refundable gas costs 4,883 31,595
Customer deposits and advance payments 20,870 12,594
Accrued taxes 7,928 20,291
Accrued interest 2,803 2,815
Other current liabilities 21,560 14,055
119,982 146,708
DEFERRED CREDITS:
Deferred income taxes 65,096 59,887
Unamortized investment tax credit 12,103 13,033
Regulatory liability 3,797 4,787
Customer advances for construction 1,297 1,162
Other 11,811 7,259
94,104 86,128
COMMITMENTS AND CONTINGENCIES (see Notes 7 and 8) - -
$655,933 $649,982
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER'S EQUITY
(Thousands except shares)
COMMON STOCK AND
PAID-IN CAPITAL RETAINED
SHARES AMOUNT EARNINGS TOTAL
<S> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1992 7,678,737 $102,995 $ 99,838 $202,833
Net Income 28,534 28,534
8.55% Cumulative Preferred Stock
Dividends (285) (285)
Common Stock Dividends
($2.66 per share) (21,051) (21,051)
Common Stock Issuances
to Indiana Energy, Inc. 1,402,033 40,000 40,000
Premium on Redemption
of Preferred Stock (932) (932)
BALANCE AT SEPTEMBER 30, 1993 9,080,770 142,995 106,104 249,099
Net Income 34,596 34,596
Common Stock Dividends
($2.58 per share) (23,400) (23,400)
BALANCE AT SEPTEMBER 30, 1994 9,080,770 142,995 117,300 260,295
Net Income 32,109 32,109
Common Stock Dividends
($2.67 per share) (24,250) (24,250)
BALANCE AT SEPTEMBER 30, 1995 9,080,770 $142,995 $ 125,159 $268,154
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED SCHEDULES OF LONG-TERM DEBT
(Thousands)
September 30
1995 1994
<S> <C> <C>
LONG-TERM DEBT:
First Mortgage Bonds
9 3/8% Series M, due July 15, 2016 $ 18,950 $ 21,950
Unsecured Notes Payable
6 5/8% Series D, due December 1, 1997 35,000 35,000
8.90%, due July 15, 1999 10,000 10,000
7.15%, Series E, due March 15, 2015 5,000 -
9 3/8%, due January 15, 2021 25,000 25,000
9 1/8% Series A, due February 15, 2021 40,000 40,000
8 1/2% Series B Debentures, due September 15, 2021 24,743 24,901
6.31%, Series E, due June 10, 2025 5,000 -
6.53%, Series E, due June 27, 2025 10,000 -
154,743 134,901
173,693 156,851
Less - Maturities and sinking fund requirements - -
$173,693 $156,851
The accompanying notes are an integral part of these statements.
</TABLE>
Notes to Consolidated Financial Statements
Indiana Gas Company, Inc. and Subsidiary Companies
1. Summary of Significant Accounting Practices
A. Consolidation
Indiana Gas Company, Inc. (Indiana Gas) and its subsidiaries,
Terre Haute Gas Corporation (Terre Haute) and Richmond Gas
Corporation (Richmond) which are doing business as Indiana Gas
Company, Inc. (Company), provide natural gas and transportation
services to a diversified base of customers in 281 communities
in 48 of Indiana's 92 counties.
B. Utility Plant and Depreciation
Except as described below, utility plant is stated at the
original cost and includes allocations of payroll-related costs
and administrative and general expenses, as well as an
allowance for the cost of funds used during construction. When
a depreciable unit of property is retired, the cost is credited
to utility plant and charged to accumulated depreciation
together with the cost of removal, less any salvage. No gain or
loss is recognized upon normal retirement.
Provisions for depreciation of utility property are determined
by applying straight-line rates to the original cost of the
various classifications of property. The average depreciation
rate was approximately 4.1 percent for all periods reported.
Cost in excess of underlying book value of acquired gas
distribution companies is reflected as a component of utility
plant and is being amortized primarily over 40 years.
C. Unamortized Debt Discount and Expense
Indiana Gas was authorized as part of an August 17, 1994, order
from the Indiana Utility Regulatory Commission (IURC) to
amortize over a 15-year period the debt discount and expense
related to new debt issues and future premiums paid for debt
reacquired in connection with refinancing. Debt discount and
expense for issues in place prior to this order are being
amortized over the lives of the related issues. Premiums paid
prior to this order for debt reacquired in connection with
refinancing are being amortized over the life of the refunding
issue. Gains or losses realized from reacquisition of debt for
sinking fund purposes are included in "Other Income - Net" on
the Consolidated Statements of Income.
D. Cash Flow Information
For the purposes of the Consolidated Statements of Cash Flows,
the company considers cash investments with an original
maturity of three months or less to be cash equivalents. Cash
paid during the periods reported for interest and income taxes
were as follows:
THOUSANDS 1995 1994 1993
Interest (net of amount capitalized) $14,042 $15,192 $13,994
Income taxes $26,206 $23,880 $11,739
E. Revenues
To more closely match revenues and expenses, Indiana Gas
records revenues for all gas delivered to customers but not
billed at the end of the accounting period.
F. Gas in Underground Storage
Based on the cost of purchased gas during September 1995, the
cost of replacing the current portion of gas in underground
storage was less than last-in, first-out cost at September 30,
1995, by approximately $286,000.
G. Refundable or Recoverable Gas Cost
The cost of gas purchased and refunds from suppliers, which
differ from amounts recovered through rates, are deferred and
are being recovered or refunded in accordance with procedures
approved by the IURC.
H. Allowance For Funds Used During Construction
An allowance for funds used during construction (AFUDC), which
represents the cost of borrowed and equity funds used for
construction purposes, is charged to construction work in
progress during the period of construction and the equity
portion is included in "Other Income - Net" on the Consolidated
Statements of Income. The portion related to borrowed funds is
included in "Interest and Other Charges". An annual AFUDC rate
of 7.5 percent was used for all periods reported.
The table below reflects the total AFUDC capitalized and the
portion of which was computed on borrowed and equity funds for
all periods reported.
THOUSANDS 1995 1994 1993
AFUDC - borrowed funds $215 $355 $ 579
AFUDC - equity funds 176 290 486
Total AFUDC capitalized $391 $645 $1,065
I. Reclassifications
Certain reclassifications have been made in the company's
financial statements of prior years to conform to the current
year presentation. These reclassifications have no impact on
previously reported net income.
J. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. Fair Value of Financial Instruments
The estimated fair values of the company's financial
instruments were as follows:
<TABLE>
September 30, 1995 September 30, 1994
Carrying Fair Carrying Fair
THOUSANDS Amount Value Amount Value
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 20 $ 20 $ 20 $ 20
Notes payable $ 2,225 $ 2,225 $ 30,550 $ 30,550
Long-term debt (includes amounts
due within one year) $173,693 $183,395 $156,851 $160,612
</TABLE>
Certain methods and assumptions must be used to estimate the
fair value of financial instruments. Because of the short
maturity of cash and cash equivalents and notes payable, the
carrying amounts approximate fair values for these financial
instruments. The fair value of the company's long-term debt was
estimated based on the quoted market prices for the same or
similar issues or on the current rates offered to the company
for debt of the same remaining maturities.
Under current regulatory treatment, call premiums on
reacquisition of long-term debt are generally recovered in
customer rates over the life of the refunding issue or over a
15-year period (see Note 1C). Accordingly, any reacquisition
would not be expected to have a material effect on the
company's financial position or results of operations.
3. Short-Term Borrowings
Indiana Gas has board of director approval to borrow up to $100
million under bank lines of credit. Indiana Gas has available
committed lines of credit up to $55 million with approximately
$2 million outstanding at September 30, 1995. These lines of
credit are renewable annually and require fees based on the
amounts of the lines. In addition, Indiana Gas has available
uncommitted lines of credit with similar arrangements which
allow it to borrow up to its board approved amount. Notes
payable to banks bore interest at rates negotiated with the
bank at the time of borrowing.
Bank loans outstanding during the reported periods were as
follows:
<TABLE>
THOUSANDS 1995 1994 1993
<S> <C> <C> <C>
Outstanding at year end $ 2,225 $30,550 $10,252
Weighted average interest rates at year end 6.1% 4.9% 3.6%
Weighted average interest rates during the year 5.7% 3.3% 3.6%
Weighted average total outstanding during the year $16,578 $14,891 $12,533
Maximum total outstanding during the year $50,000 $56,500 $77,379
</TABLE>
4. Long-Term Debt
During the year, the following activity took place with respect
to long-term debt.
On October 28, 1994, $3 million of the outstanding 9 3/8%
Series M, First Mortgage Bonds were retired.
During June 1995, Indiana Gas issued $20 million in aggregate
principal amount of its Medium-Term Notes, Series E (Notes) as
follows: $5 million of 7.15% Notes due March 15, 2015; $5
million of 6.31% Notes due June 10, 2025; and $10 million of
6.53% Notes due June 27, 2025. The net proceeds from the sale
of the Notes will be used to finance, in part, the refunding of
long-term debt, Indiana Gas' continuing construction program
and for other corporate purposes.
Consolidated maturities and sinking fund requirements on long-
term debt subject to mandatory redemption during the five years
following 1995 are none in 1996, $948,000 in 1997, $35,948,000
in 1998, $10,948,000 in 1999 and $948,000 in 2000.
5. Capital Stock
Indiana Gas has authorized 16 million shares of no par value
common stock.
Dividends on the common stock of Indiana Gas are payable out of
the unreserved and unrestricted retained earnings of Indiana
Gas. There are certain provisions in the Indiana Gas Indenture,
under which the first mortgage bonds of Indiana Gas have been
created and issued, restricting the payment of dividends on the
Indiana Gas common stock. Such restrictions could affect
Indiana Gas' ability to pay dividends on its common stock. None
of the retained earnings of Indiana Gas are presently subject
to any such restrictions.
Indiana Gas has authorized and unissued shares of preferred
stock of 4.2 million. On December 1, 1992, Indiana Gas
redeemed all 200,000 shares of its issued and outstanding 8.55%
Cumulative Preferred Stock at $104.66 per share with accrued
dividends. The redemption premium of $932,000 was charged to
retained earnings.
6. Retirement Plans and Other Postretirement Benefits
Effective October 1, 1994, Indiana Gas merged its retirement
savings plan for bargaining employees into its retirement
savings plan for non-bargaining employees. The primary
objective for this action is to reduce the level of resources
required to administer two plans. The combined retirement
savings plan is a defined contribution plan which is qualified
under sections 401(a) and 401(k) of the Internal Revenue Code.
Under the terms of the retirement savings plan, eligible
participants may direct a specified percentage of their
compensation to be invested in shares of Indiana Energy's
common stock or various investment funds. Participants in the
retirement savings plan have, subject to prescribed
limitations, matching company contributions made to the plan on
their behalf, plus a year-end lump sum company contribution.
During 1995, 1994 and 1993, Indiana Gas made contributions of
$2,335,000, $2,386,000 and $2,270,000, respectively.
Indiana Gas also has two non-contributory defined benefit
retirement plans that cover all employees meeting certain
minimum age and service requirements. Benefits are determined
by a formula based on the employee's base earnings (highest
five consecutive years out of the last 10 consecutive years
prior to actual retirement date), years of participation in the
plan and the employee's age at retirement.
Indiana Gas has an unfunded supplemental retirement plan for
certain management employees. Benefits are determined by a
formula based on 65 percent of the participant's average
monthly earnings, less benefits received under the company's
pension and savings plans and the participant's primary Social
Security benefits.
The Indiana Gas defined benefit retirement plan assets are
under custody of trustees and consist of actively managed stock
and bond portfolios, as well as short-term investments. It is
Indiana Gas' funding policy to maintain the pension plans on an
actuarially sound basis. Under this policy, funding was
$143,000 in 1995, $1,110,000 in 1994, and $1,223,000 in 1993.
Funding decreased in 1995 as a result of plan contributions
being restricted by the full funding limitation. As permitted
by the Statement of Financial Accounting Standards No. 71,
Accounting for the Effects of Certain Types of Regulation, the
company recognizes pension expense based on funding as allowed
for ratemaking purposes.
The calculation of pension expense is as follows:
<TABLE>
THOUSANDS 1995 1994 1993
<S> <C> <C> <C>
Pension benefits earned during the period $1,086 $1,436 $1,366
Interest accrued on projected pension benefit obligation 4,554 4,752 4,713
Actual return on pension plan assets (9,632) 9 (3,563)
Net amortization and deferral 3,880 (6,056) (2,392)
SFAS 87 pension expense (112) 141 124
Adjustment to reflect amount included in rates 818 492 1,877
Total pension expense $ 706 $ 633 $2,001
</TABLE>
The following table reconciles the plans' SFAS 87 funded status at
September 30 with amounts recorded in the company's financial
statements. Certain assets and obligations of the plans are deferred
and recognized in the financial statements in subsequent periods.
<TABLE>
THOUSANDS 1995 1994
<S> <C> <C>
Actuarial present value of pension benefits:
Vested benefits $52,734 $52,127
Nonvested benefits 200 248
Effect of future salary increases 7,455 6,751
Projected pension benefit obligation 60,389 59,126
Plan assets at fair value 69,423 64,099
Plan assets in excess of projected
pension benefit obligation at September 30 9,034 4,973
Unrecognized adjusted prior service costs 2,051 2,136
Unrecognized net assets at date of initial application (2,084) (2,393)
Unrecognized net (gain) loss (6,971) (3,007)
Adjustment to reflect amount included in rates (2,623) (1,806)
Prepaid (accrued) pension cost at September 30 $ (593) $ (97)
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the SFAS 87 projected benefit obligation was 8 percent.
The expected long-term rate of return on assets was 9 percent. The
average rate of increase in future compensation levels used ranged
from 5 to 5.5 percent. These rates were used for all years reported.
The average future service of plan participants used to compute
amortization of the net assets existing at the date of initial
application of SFAS 87 is approximately 17 years.
In addition to providing pension benefits, Indiana Gas
presently provides postretirement health care and life
insurance benefits to full-time employees who have completed 10
years of service and retire from the company. The plan pays
stated percentages of most reasonable and necessary medical
expenses incurred by retirees, after subtracting payments by
other providers and after a stated deductible has been met.
These benefits are principally self-insured. Currently, Indiana
Gas does not fund this postretirement plan. During fiscal 1995,
Indiana Gas approved a plan change whereby employees retiring
after January 1, 1996, will be required to make a contribution
toward their retiree medical benefits provided by the plan. The
monthly contribution for retiree medical coverage will be based
on a comparison of the actual increase in Indiana Gas' health
care costs and the Consumer Price Index (CPI). Cost increases
that are higher than the general rate of inflation, as measured
by the CPI, will be paid for by retirees. The impact of this
plan change on the unrecognized transition obligation as of
September 30, 1995, is shown below in the table reconciling the
plan's funded status to the accrued postretirement benefit
cost.
Effective October 1, 1993, Indiana Gas adopted Statement of
Financial Accounting Standards No. 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions (SFAS 106).
SFAS 106 requires accounting for the costs of postretirement
health care and life insurance benefits on the accrual basis.
This means the costs of benefits paid in the future are
recognized during the years that an employee provides service
to Indiana Gas rather than the "pay-as-you-go" (cash) basis.
Indiana Gas has elected to amortize the unfunded transition
obligation as of October 1, 1993, of approximately $55 million
over a period of 20 years.
On May 3, 1995, the IURC issued an order authorizing Indiana
Gas to recover the costs related to postretirement benefits
other than pensions under the accrual method of accounting
consistent with SFAS 106. Amounts accrued prior to the order
have been deferred as allowed by the IURC. While this order is
consistent with the IURC's rulings for other utilities within
the state of Indiana and with the ratemaking treatment of the
majority of regulatory jurisdictions outside of Indiana, the
Office of Utility Consumer Counselor is appealing the order.
Postretirement benefit cost recognized for 1995 and 1994
consisted of the following components:
<TABLE>
THOUSANDS 1995 1994
<S> <C> <C>
Service cost - benefits attributed to service during the period $1,423 $1,490
Interest cost on accumulated postretirement obligation 4,186 3,915
Amortization of transition obligation 2,772 2,772
SFAS 106 postretirement benefit cost 8,381 8,177
Adjustment to reflect amount included in rates (4,543) (5,436)
Postretirement benefit cost recognized $3,838 $2,741
</TABLE>
Prior to fiscal 1994, Indiana Gas recognized postretirement
benefit costs on the pay-as-you-go (cash) basis. Postretirement
benefit cost recognized for fiscal year 1993 was approximately
$2,855,000.
The following table reconciles the plan's funded status to the
accrued postretirement benefit cost as reflected on the balance
sheet as of September 30, 1995, and 1994:
<TABLE>
THOUSANDS 1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees and dependents $25,064 $28,328
Other fully eligible participants 6,561 7,323
Other active participants 10,627 18,113
Total accumulated postretirement benefit obligation 42,252 53,764
Fair value of plan assets - -
Accumulated postretirement benefit obligation in excess of plan assets (42,252) (53,764)
Unrecognized net (gain) loss (10,192) (4,340)
Unrecognized transition obligation 41,045 52,668
Accrued postretirement benefit cost at September 30 $(11,399) $ (5,436)
</TABLE>
The assumed health care cost trend rate for medical gross
eligible charges used in measuring the accumulated postretirement
benefit obligation as of September 30, 1995, was 9.3 percent for
fiscal 1996. This rate is assumed to decrease gradually through
fiscal 2003 to 5.5 percent and remain at that level thereafter.
The assumed CPI rate, relating to the plan's cost sharing provisions
for future retirees, was 3.5 percent. Taking into consideration the
plan's cost sharing provisions which were in place at September
30, 1995, a 1-percent increase in the assumed health care cost
trend rates for each future year produces approximately a $1.6-
million increase in the accumulated postretirement benefit
obligation as of September 30, 1995. A 1-percent increase in
the assumed health care cost trend rates for each future year
produces approximately an $873,000 increase in the annual
aggregate of the service and interest cost components of
postretirement benefit cost. This amount, which is based on
assumptions as of October 1, 1994, has not yet been reduced by
the impact of the plan's cost sharing provisions. The weighted-
average discount rate used in determining the accumulated
postretirement benefit obligation was 8 percent.
7. Commitments
Estimated capital expenditures for 1996 are $58.8 million.
Total lease expense was $2,811,000 in 1995, $2,595,000 in 1994
and $2,846,000 in 1993.
Lease commitments are $2,217,000 in 1996, $1,303,000 in 1997,
$1,213,000 in 1998, $547,000 in 1999, $406,000 in 2000 and
$682,000 in total for all later years. Included in these
amounts is an operating lease between Indiana Gas and Energy
Realty with payments of approximately $464,000 annually that
extends through August 1998. There are no leases that extend
beyond 2002. Indiana Gas has storage and supply contracts that
range from one month to eight years.
8. Environmental Costs
In the past, Indiana Gas and others, including former
affiliates, and/or previous landowners, operated facilities for
the manufacturing of gas and storage of manufactured gas. These
facilities are no longer in operation and have not been
operated for many years. In the manufacture and storage of such
gas, various byproducts were produced, some of which may still
be present at the sites where these manufactured gas plants and
storage facilities were located. Management believes, and the
IURC has found that, those operations were conducted in
accordance with the then-applicable industry standards.
However, under currently applicable environmental laws and
regulations, Indiana Gas, and the others, may now be required
to take remedial action if certain byproducts are found above a
regulatory threshold at these sites.
Indiana Gas has identified the existence, location and certain
general characteristics of 26 gas manufacturing and storage
sites. Removal activities have been conducted at two sites and
a remedial investigation/feasibility study (RI/FS) is nearing
completion at one of the sites under an agreed order between
Indiana Gas and the Indiana Department of Environmental
Management. Indiana Gas and others are assessing, on a site-by-
site basis, whether any of the remaining 24 sites require
remediation, to what extent it is required and the estimated
cost. Preliminary assessments (PAs) have been completed on all
but one of the sites. Site investigations (SIs) have been
completed at 19 sites and supplemental site investigations
(SSIs) have been conducted at 15 sites. Based upon the site
work completed to date, Indiana Gas believes that a level of
contamination that may require some level of remedial activity
may be present at a number of the 24 sites. Indiana Gas is
currently conducting groundwater monitoring at many of the
sites. Indiana Gas has not begun an RI/FS at additional sites,
but expects to conduct further investigation and evaluation in
the future.
Based upon the work performed to date, Indiana Gas has accrued
remediation and related costs for the two sites where remedial
activities are taking place. PA/SI, SSI and groundwater
monitoring costs have been accrued for the remaining sites
where appropriate. Estimated RI/FS costs and the costs of
certain remedial actions that may likely be required have also
been accrued. Costs associated with environmental remedial
activities are accrued when such costs are probable and
reasonably estimable. Indiana Gas does not believe it can
provide an estimate of the reasonably possible total
remediation costs for any site prior to completion of an RI/FS
and the development of some sense of the timing for
implementation of the potential remedial alternatives, to the
extent such remediation is required. Accordingly, the total
costs which may be incurred in connection with the remediation
of all sites, to the extent remediation is necessary, cannot be
determined at this time.
Indiana Gas has been pursuing recovery from three separate
sources for the costs it has incurred and expects to incur
relating to the 26 sites. Those sources are insurance carriers,
potentially responsible parties (PRPs) and recovery through
rates from retail gas customers. On April 14, 1995, Indiana Gas
filed suit against a number of insurance carriers for payment
of claims for investigation and clean-up costs already
incurred, as well as for a determination that those carriers
are obligated to pay these costs in the future. Presently, that
suit is set for trial to begin October 21, 1996, in the United
States District Court for the Northern District of Indiana in
Fort Wayne, Indiana. Indiana Gas has obtained cash settlements
from some of the defendant insurance carriers and, as a result,
those carriers have been dismissed from the suit.
Indiana Gas has also completed the process of identifying PRPs
for each site. PRPs include two financially viable utilities,
PSI Energy, Inc. (PSI) and Northern Indiana Public Service
Company (NIPSCO). PSI has been identified as a PRP at 19 of the
sites. Indiana Gas is presently in negotiations with PSI to
determine PSI's share of responsibility. With the help of
outside counsel, Indiana Gas has prepared estimates of PSI's
and other PRP's share of environmental liabilities which may
exist at each of the sites based on equitable principles
derived from case law or applied by parties in achieving
settlements. NIPSCO has been identified as an additional PRP at
five of these 19 sites. On September 27, 1995, Indiana Gas
reached an agreement with NIPSCO which provides for a
coordination of efforts and a sharing of investigation and
clean-up costs incurred and to be incurred at the five sites in
which they both have an interest. The cost sharing estimates of
PSI and other PRPs, and the NIPSCO agreement, have been
utilized by Indiana Gas to record a receivable from PRPs for
their share of the liability for work performed by Indiana Gas
to date, as well as to accrue Indiana Gas' proportionate share
of the estimated cost related to work not yet performed. The
receivable from PRPs of $3.4 million is reflected in Accounts
Receivable on the Consolidated Balance Sheet at September 30,
1995.
In January 1992, Indiana Gas filed a petition with the IURC
seeking regulatory authority for, among other matters, recovery
through rates of all costs Indiana Gas incurs in complying with
federal, state and local environmental regulations in
connection with past gas manufacturing activities. On May 3,
1995, the IURC concluded that the costs incurred by Indiana Gas
to investigate and, if necessary, clean-up former manufactured
gas plant sites are not utility operating expenses necessary
for the provision of utility service and, therefore, are not
recoverable as operating expenses from utility customers. The
decision was contrary to rulings in other states where utility
regulatory commissions have issued orders on the subject. The
precedent cited by the IURC was a ruling related to a cancelled
nuclear power plant which, unlike manufactured gas plants,
never provided service to the public. Management believes
applying the nuclear power plant issue to Indiana Gas' case was
an incorrect application of the law and has appealed the
decision to the Indiana Court of Appeals. Under the schedule of
the Indiana Court of Appeals, briefing of the issues is
expected to occur during the spring of 1996. The Commission did
indicate that during Indiana Gas' next rate case it would be
appropriate to quantify the effect of the investigation and
clean-up activities as part of the business risk to be
considered by the Commission in establishing the overall rate
of return to be allowed.
Indiana Gas has recorded $11.4 million for its share of
environmental costs to date. As a result of its pursuit of
recovery of costs from PRPs and insurance carriers, Indiana Gas
has secured settlements from insurers of approximately $11.9
million. Amounts recovered in excess of its share of costs to
date have been deferred. The May 3, 1995, order of the IURC has
had no immediate impact on Indiana Gas' earnings since
settlements with insurers exceed Indiana Gas' share of
environmental liability recorded to date.
The impact on Indiana Gas' financial position and results of
operations of complying with federal, state and local
environmental regulations related to former manufactured gas
plant sites is contingent upon several uncertainties. These
include the costs of any compliance activities which may occur
and the timing of the actions taken, the impact of joint and
several liability upon the magnitude of the contingency, the
outcome of proceedings which challenge the IURC ruling on
recovery of costs from customers, as well as any additional
recoveries of environmental and related costs from insurance
carriers. Although there can be no assurance of success, to the
extent possible Indiana Gas will continue to manage the
manufactured gas plant remediation program so that amounts
received from insurance carriers and PRPs will be sufficient to
fund all such costs.
9. Order No. 636 Transition Costs
In accordance with Federal Energy Regulatory Commission (FERC)
Order No. 636, Indiana Gas' pipeline service providers have
made a number of filings to restructure services. Indiana Gas'
pipeline service providers are seeking from customers,
including Indiana Gas, recovery of certain costs related to the
transition to restructured services.
On April 12, 1995, Indiana Gas received an order from the IURC
allowing full recovery through the quarterly GCA process of all
FERC Order No. 636 transition costs, including those transition
costs previously deferred. Indiana Gas has estimated and
recorded total transition costs of approximately $12 million.
10. Income Taxes
Indiana Energy, Inc. and subsidiary companies file a
consolidated federal income tax return. Indiana Gas' current
and deferred tax expense is computed on a separate company
basis. The components of consolidated income tax expense for
Indiana Gas, including amounts in "Other Income - Net" on the
Consolidated Statements of Income, were as follows:
<TABLE>
THOUSANDS 1995 1994 1993
<S> <C> <C> <C>
Current:
Federal $13,367 $13,333 $12,088
State 2,199 2,299 2,018
15,566 15,632 14,106
Deferred:
Federal 3,652 2,987 2,667
State 342 286 264
3,994 3,273 2,931
Amortization of investment tax credits (930) (930) (1,007)
Consolidated income tax expense $18,630 $17,975 $16,030
</TABLE>
Effective income tax rates were 36.72 percent, 34.22 percent
and 35.97 percent of pretax income for 1995, 1994 and 1993,
respectively. This compares with a combined federal and state
income tax statutory rate of 37.93 percent for 1995 and 1994
and 37.69 percent for 1993. Individual components of these rate
differences are not significant except investment tax credit
which amounted to (1.8%) for all periods reported.
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. Deferred income taxes are
provided for taxes not currently payable due to, among other
things, the use of various accelerated depreciation methods,
shorter depreciable lives and the deduction of certain
construction costs for tax purposes. Taxes deferred in prior
years are being charged and income credited as these tax
effects reverse. The provisions for the deferred tax effects
relating to the excess of tax-over-book depreciation amounted
to $4,031,000 in 1995, $2,852,000 in 1994 and $2,073,000 in
1993.
Effective October 1, 1993, Indiana Gas adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income
Taxes (SFAS 109). Indiana Gas previously used the deferred
method of accounting for income taxes as prescribed by
Accounting Principles Bulletin Opinion No. 11. SFAS 109
requires the use of the liability method, which effectively
results in a reduction in previously provided deferred income
taxes to reflect the current statutory corporate tax rate.
Due to the effects of regulation, Indiana Gas is not permitted
to recognize the effect of a tax rate change as income but is
required to reduce tariff rates to return the "excess" deferred
income taxes to ratepayers over the remaining life of the
properties that give rise to the taxes. Therefore, the
cumulative effect of a change in accounting principle upon the
initial application of SFAS 109 resulted in no impact on
earnings. Under SFAS 109, Indiana Gas has recorded a net
regulatory liability for approximately $3.8 million on its
balance sheet as of September 30, 1995, related to deferred
taxes.
Significant components of Indiana Gas' net deferred tax
liability as of September 30, 1995, and 1994 are as follows:
THOUSANDS 1995 1994
Deferred tax liabilities:
Accelerated depreciation $45,902 $41,652
Property basis differences 18,560 18,140
Acquisition adjustment 6,664 6,853
Other (4,791) 2,654
Deferred tax assets:
Deferred investment tax credit (4,590) (4,943)
Regulatory income tax liability (1,440) (1,815)
Less deferred income taxes related
to current assets and liabilities 4,791 (2,654)
Balance as of September 30 $65,096 $59,887
Investment tax credits have been deferred and are being
credited to income over the life of the property giving rise to
the credit. The Tax Reform Act of 1986 eliminated investment
tax credits for property acquired after January 1, 1986.
11. Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed Of. This statement imposes stricter criteria for
regulatory assets by requiring that such assets be probable of
future recovery at each balance sheet date. Indiana Gas
anticipates adopting this standard on October 1, 1996, and does
not expect that the adoption will have a material impact on its
financial position or results of operations based on the
current regulatory structure in which it operates. This
conclusion may change in the future as competitive factors
influence pricing in this industry.
12. Summarized Financial Data (Unaudited)
Summarized quarterly financial data (in thousands of dollars)
for 1995 and 1994 are as follows:
<TABLE>
1995: THREE MONTHS ENDED DEC. 31 MAR. 31 JUNE 30 SEP. 30
<S> <C> <C> <C> <C>
Operating revenues $113,062 $150,468 $ 83,081 $ 57,199
Operating income (loss) 14,593 24,667 7,800 (872)
Earnings (loss) available for
common stock $ 10,779 $ 21,161 $ 4,327 $ (4,158)
1994: THREE MONTHS ENDED DEC. 31 MAR. 31 JUNE 30 SEP. 30
Operating revenues $151,892 $195,672 $ 77,827 $ 49,906
Operating income (loss) 18,894 24,630 5,551 (1,232)
Earnings (loss) available for
common stock $ 15,156 $ 21,740 $ 2,414 $ (4,714)
</TABLE>
Note: Because of the seasonal factors that significantly affect
the companies' operations, the results of operations for
interim periods within fiscal years are not comparable.
Item 9. Changes in and Disagreements with Accountants
None.
Part III
Item 10. Directors and Executive Officers of the
Registrant
Except for the list of the executive officers, which
can be found in Part I, Item 4(a) of this report,
the information required to be shown in this part
for Item 10, Directors and Executive Officers of the
Registrant is incorporated by reference here from
the definitive proxy statement of the registrant's
parent company, Indiana Energy, Inc. That statement
was prepared according to Regulations 14A and S-K
and filed electronically with the Securities and
Exchange Commission on December 7, 1995. The
information is included in the report attached as
Exhibit 99.
Item 11. Executive Compensation
The information required to be shown in this part
for Item 11, Executive Compensation, is incorporated
by reference here from the definitive proxy
statement of the registrant's parent company,
Indiana Energy, Inc. That statement was prepared
according to Regulations 14A and S-K and filed
electronically with the Securities and Exchange
Commission on December 7, 1995. The information is
included in the report attached as Exhibit 99.
Contained in the Indiana Energy proxy statement,
Summary Compensation Table, Column C and Column D,
Salary Amounts and Bonus Amounts, are some
compensation dollars which are allocated to
subsidiaries of Indiana Energy other than Indiana
Gas. The named executives received the following
compensation, including Bonus, for the years ended
September 30, 1995, 1994 and 1993, as it relates to
only Indiana Gas.
1995 1994 1993
Lawrence A. Ferger $460,979 $444,898 $411,455
Paul T. Baker 298,770 285,360 247,197
Niel C. Ellerbrook 215,314 208,999 194,791
Anthony E. Ard 159,667 159,489 145,238
Carl L. Chapman 145,811 142,736 126,979
Item 12. Securities Ownership of Certain Beneficial
Owners and Management
The information required to be shown in this part
for Item 12, Securities Ownership of Certain
Beneficial Owners and Management, is incorporated by
reference here from the definitive proxy statement
of the registrant's parent company, Indiana Energy,
Inc. That statement was prepared according to
Regulations 14A and S-K and filed electronically
with the Securities and Exchange Commission on
December 7, 1995. The information is included in
the report attached as Exhibit 99.
Item 13. Certain Relationships and Related Transactions
The information required to be shown in this part
for Item 13, Certain Relationships and Related
Transactions is incorporated by reference here from
the definitive proxy statement of the registrant's
parent company, Indiana Energy, Inc. That statement
was prepared according to Regulations 14A and S-K
and filed electronically with the Securities and
Exchange Commission on December 7, 1995. The
information is included in the report attached as
Exhibit 99.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
The following documents are filed as part of this
report:
(a)-1 Financial Statements
Location in 10-K
Report of Independent Public Accountants Item 8
Consolidated Statements of Income - 1995,
1994 and 1993 Item 8
Consolidated Statements of Cash Flows - 1995,
1994 and 1993 Item 8
Consolidated Balance Sheets at September 30,
1995 and 1994 Item 8
Consolidated Statements of Common Shareholder's
Equity - 1995, 1994 and 1993 Item 8
Consolidated Schedules of Long-Term Debt
as of September 30, 1995 and 1994 Item 8
Notes to Financial Statements Item 8
(a)-2 Financial Statement Schedules
Report of Independent Public Accountants on Schedules
Schedule II. Valuation and Qualifying
Accounts - 1995, 1994 and 1993
(a)-3 Exhibits
See Exhibit Index
(b) Reports on Form 8-K
None filed during the fourth quarter of fiscal 1995.
EXHIBIT INDEX
Exhibit No. Description Reference
2-A Acquisition Agreement Exhibit 10-N of
dated October 26, Indiana Gas Company,
1990, between Indiana Inc.'s 1990 Annual
Gas and Indiana Report on Form 10-K.
Energy, Inc.
3-A Amended and Restated Exhibit 3-A to Indiana
Articles of Gas Company, Inc.'s
Incorporation. 1993 Annual Report on
Form 10-K.
3-B Code of By-Laws, as Filed herewith.
amended.
4-A Indenture dated as of Indiana Gas Company,
September 1, 1950, Inc.'s Registration
between Indiana Gas No. 2-77620 (pages 6-8
and Merchants of the Prospectus on
National Bank & Trust Form S-16 contained
Company of therein), to
Indianapolis (now Registration No. 2-
National City Bank, 40825 (Exhibit Nos. 2-
Indiana), as trustee A through 2-H), to
("Trustee"), and Registration No. 2-
twelve supplemental 52734 (Exhibit No. 2-
indentures thereto. C), to Registration
No. 2-68469 (Exhibit
No. 2-J), to
Registration No. 2-
77620 (Exhibit No. 4-
0), to Registration
No. 33-1262 (Exhibit
No. 4K), to the 1985
Annual Report on Form
10-K (Exhibit 4) and
to the 1986 Annual
Report on Form 10-K
(Exhibit No. 4-D).
4-B Indenture dated Exhibit 4(a) to
February 1, 1991, Indiana Gas Company,
between Indiana Gas Inc.'s Current Report
and Continental Bank, on Form 8-K dated
National Association. February 1, 1991, and
filed February 15,
1991; First
Supplemental Indenture
thereto dated as of
February 15, 1991,
(incorporated by
reference to Exhibit
4(b) to Indiana Gas
Company, Inc.'s
Current Report on Form
8-K dated February 1,
1991, and filed
February 15, 1991);
Second Supplemental
Indenture thereto
dated as of September
15, 1991,
(incorporated by
reference to Exhibit
4(b) to Indiana Gas
Company, Inc.'s
Current Report on Form
8-K dated September
15, 1991, and filed
September 25, 1991);
Third Supplemental
Indenture thereto
dated as of September
15, 1991 (incorporated
by reference to
Exhibit 4(c) to
Indiana Gas Company,
Inc.'s Current Report
on Form 8-K dated
September 15, 1991 and
filed September 25,
1991);Fourth
Supplemental Indenture
thereto dated as of
December 2, 1992,
(incorporated by
reference
to Exhibit 4(b) to
Indiana
Gas Company, Inc.'s
Current Report on Form
8-K dated December 1,
1992, and filed
December 8, 1992); and
Officers' Certificate
pursuant to dated as
of April 5, 1995,
(incorporated by
reference to Exhibit
4(a) to Indiana Gas
Company, Inc.'s
Current Report on Form
8-K dated and filed
April 5, 1995).
10-A Employment Agreement Exhibit 10-A to
among Indiana Energy, Indiana Energy's 1990
Inc., Indiana Gas Annual Report on Form
Company, Inc., and 10-K.
Lawrence A. Ferger
effective January 1,
1990.
10-B Employment Agreement Exhibit 10-C to
among Indiana Energy, Indiana Energy's 1990
Inc., Indiana Gas Annual Report on Form
Company, Inc., and 10-K.
Niel C. Ellerbrook,
effective
January 1, 1990.
10-C Employment Agreement Exhibit 10-D to
between Indiana Gas Indiana Energy's 1990
Company, Inc., and Annual Report on Form
Paul T. Baker 10-K.
effective January 1,
1990.
10-D Employment Agreement Exhibit 10-E to
between Indiana Gas Indiana Energy's 1990
Company, Inc., and Annual Report on Form
Anthony E. Ard 10-K.
effective January 1,
1990.
10-E Employment Agreement Exhibit 10-F to
among Indiana Energy, Indiana Energy's 1990
Inc., Indiana Gas Annual Report on Form
Company, Inc., and 10-K.
Carl L. Chapman
effective
January 1, 1990.
10-F Termination Benefits Exhibit 10-F to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and Lawrence A.
Ferger.
10-G Termination Benefits Exhibit 10-G to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and
Paul T. Baker.
10-H Termination Benefits Exhibit 10-H to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and Niel C.
Ellerbrook.
10-I Termination Benefits Exhibit 10-I to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and
Anthony E. Ard.
10-J Termination Benefits Exhibit 10-J to
Agreement, dated July Indiana Energy,
29, 1994, among Inc.'s 1994 Annual
Indiana Energy, Inc., Report on Form 10-K.
Indiana Gas Company,
Inc. and
Carl L. Chapman.
10-K Executive Exhibit 10-K to
Compensation Deferral Indiana Energy,
Plan effective Inc.'s 1994 Annual
December 1, 1994. Report on Form 10-K.
10-L Directors Exhibit 10-M to
Compensation Deferral Indiana Energy,
Plan effective Inc.'s 1994 Annual
January 1, 1995. Report on Form 10-K.
10-M Executive Restricted Exhibit A to Indiana
Stock Plan effective Energy's Proxy
October 1, 1987, as Statement filed on
amended. December 4, 1987;
First Amendment to
Indiana Energy, Inc.
Executive Restricted
Stock Plan
(incorporated by
reference to Exhibit
10-A to Indiana
Energy's 1991 Annual
Report on Form 10-K).
10-N Indiana Energy, Inc. Exhibit 10-D to
Annual Management Indiana Energy's 1987
Incentive Plan Annual Report on Form
effective October 1, 10-K.
1987.
10-O Indiana Energy, Inc. Indiana Energy's
Directors' Restricted Definitive Proxy
Stock Plan, as Statement filed on
amended and restated December 6, 1991.
on October 25, 1991.
10-P Exhibit 10-P schedules all material
gas contracts which are in effect
between Indiana Gas Company, Inc.
and the suppliers listed. The gas
contracts within each type are
substantially identical in all
material respects and at least one
of each type of contract has been or
is filed as indicated. The schedule
details all material aspects in
which a contract may differ from the
contract filed.
<TABLE>
Exh Days of Effective Expir.
No. Type of Contract Supplier Contract No. Wthdrwl. MDth/Day Date Date Reference
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/93 Form 10-
Q, File 1-6494:
10-P.1 Firm Transportation Panhandle Eastern P PLT 011715 38,572 5/1/93 3/31/98 Exh. 10-B
10-P.2 Firm Transportation Panhandle Eastern P PLT 011716 51,431 5/1/93 3/31/99 Exh. 10-A
10-P.3 Firm Transportation Panhandle Eastern P PLT 011718 51,431 5/1/93 2/28/97 Exh. 10-C
10-P.4 Firm Transportation Panhandle Eastern P PLT 011721 77,144 5/1/93 3/31/97 Exh. 10-D
10-P.5 Market Area - Panhandle Eastern P PLT 011719 50,000 5/1/93 3/31/97 1993 Form 10-K
Firm Transportation Exhibit 10-I.5,
File 1-6494.
10-P.6 Market Area - Panhandle Eastern P PLT 011720 50,000 5/1/93 3/31/97 See Exhibit 10-P.5.
Firm Transportation
10-P.7 Market Area - Texas Gas T3780 50,000 11/1/93 10/31/98 1993 Form 10-K
Firm Transportation Exhibit 10-I.7,
File 1-6494.
10-P.8 No Notice Service Texas Gas N0420 41,687 11/1/93 10/31/98 1993 Form 10-K,
Exhibit 10-I.8,
File 1-6494.
10-P.9 No Notice Service Texas Gas N0325 56,793 11/1/93 10/31/97 See Exhibit 10-P.8
10-P.10 No Notice Service Texas Gas N0325 56,794 11/1/93 10/31/98 See Exhibit 10-P.8
10-P.11 No Notice Service Texas Gas N0325 56,794 11/1/93 10/31/99 See Exhibit 10-P.8
6/30/93 Form 10-
Q, File 1-6494:
10-P.12 Firm Storage Panhandle Eastern P PLS 011713 100 50,312 5/1/93 3/31/96 Exh. 10-G
10-P.13 Firm Storage Panhandle Eastern P PLS 012044 100 25,000 5/1/93 3/31/96 Exh. 10-E
10-P.14 Firm Storage ANR T,E & S 00087 100 29,000 3/1/73 2/28/96 1991 Form 10-K,
Exh. 10-N,
File 1-6494.
10-P.15 Firm Storage ANR T,E & S 05787 100 100,806 4/1/92 3/31/97 1992 Form 10-K,
Exh. 10-R, File
1-6494.
6/30/93 Form 10-P,
File 1-6494:
10-P.16 Firm Storage-Related Panhandle Eastern P PLT 011714 49,515 5/1/93 3/31/96 Exh. 10-H
Transportation
10-P.17 Firm Storage-Related Panhandle Eastern P PLT 012045 24,604 5/1/93 3/31/96 Exh. 10-F
Transportation
10-P.18 Firm Storage-Related ANR T,E & S 05788 100,000 4/1/92 3/31/97 1992 Form 10-K,
Transportation Exh. 10-S, File
1-6494.
10-P.19 Firm Natural Gas Anadarko NGFSA 9602 50,000 12/1/95 2/29/96 Filed herewith.
Supply
10-P.20 Firm Natural Gas Tenneco NGFSA 9609 20,000 11/1/95 3/31/98 Filed herewith.
Supply Gas Marketing
10-P.21 Firm Natural Gas Tenneco NGFSA 9619 16,000 11/1/95 3/31/98 Filed herewith.
Supply Gas Marketing
10-P.22 Firm Natural Gas Tenneco NGFSA 9620 40,000 12/1/95 2/28/98 Filed herewith.
Supply Gas Marketing
12 Computation of Ratio of Earnings
to Fixed Charges Filed herewith.
21 Subsidiaries of Indiana Gas
Company, Inc. Filed herewith.
23 Consent of Independent Public
Accountants Filed herewith.
27 Financial Data Schedule Filed herewith.
99 Indiana Energy, Inc.'s (parent
company) Definitive Proxy
Statement for Annual Meeting
of Shareholders to be held on
January 26, 1996. Filed herewith.
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Indiana Gas Company, Inc.:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements included
in Item 8, in this Form 10-K, and have issued our report thereon
dated October 26, 1995. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The
schedules listed in Item 14(a)-2 are the responsibility of the
company's management and are presented for purposes of complying
with the Securities and Exchange Commission's rules and are not
part of the basic financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Indianapolis, Indiana
October 26, 1995
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED SEPTEMBER 30, 1995
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2)
For Purposes
Balance at Charged to For Which Balance at
September 30, Costs and Reserves Other September 30,
Description 1994 Expenses Other Were Created Changes 1995
<S> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM APPLICABLE ASSETS:
Reserve for uncollectible accounts $ 1,238 $ 3,690 $ 0 $ 3,266 $ 0 $ 1,662
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED SEPTEMBER 30, 1994
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2)
For Purposes
Balance at Charged to For Which Balance at
September 30, Costs and Reserves Other September 30,
Description 1993 Expenses Other Were Created Changes 1994
<S> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM APPLICABLE ASSETS:
Reserve for uncollectible accounts $ 2,055 $ 3,850 $ 0 $ 4,667 $ 0 $ 1,238
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED SEPTEMBER 30, 1993
(Thousands)
Col. A Col. B Col. C Col. D Col. E Col. F
Additions Deductions
(1) (2)
For Purposes
Balance at Charged to For Which Balance at
September 30, Costs and Reserves Other September 30,
Description 1992 Expenses Other Were Created Changes 1993
<S> <C> <C> <C> <C> <C> <C>
RESERVE DEDUCTED FROM APPLICABLE ASSETS:
Reserve for uncollectible accounts $ 2,299 $ 2,950 $ 0 $ 3,194 $ 0 $ 2,055
</TABLE>
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INDIANA GAS COMPANY, INC.
Dated December 20, 1995 /s/Lawrence A. Ferger
Lawrence A. Ferger, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities
and on the dates indicated.
Signature Title Date
/s/Lawrence A. Ferger President, Chief Executive December 20, 1995
Lawrence A. Ferger Officer and Director
/s/Niel C. Ellerbrook Senior Vice President December 20, 1995
Niel C. Ellerbrook Chief Financial Officer
and Director
/s/Jerome A. Benkert Controller December 20, 1995
Jerome A. Benkert
/s/Duane M. Amundson Chairman of the Board of December 20, 1995
Duane M. Amundson Directors
/s/Paul T. Baker Senior Vice President December 20, 1995
Paul T. Baker Chief Operating Officer and
Director
/s/Gerald L. Bepko Director December 20, 1995
Gerald L. Bepko
/s/Loren K. Evans Director December 20, 1995
Loren K. Evans
/s/Otto N. Frenzel III Director December 20, 1995
Otto N. Frenzel III
/s/Anton H. George Director December 20, 1995
Anton H. George
/s/Don E. Marsh Director December 20, 1995
Don E. Marsh
/s/Richard P. Rechter Director December 20, 1995
Richard P. Rechter
/s/James C. Shook Director December 20, 1995
James C. Shook
CODE OF BY-LAWS
OF
INDIANA GAS COMPANY, INC.
AS AMENDED AND RESTATED
IN FULL ON JULY 1, 1987
AS FURTHER AMENDED OCTOBER 27, 1989
AS FURTHER AMENDED AUGUST 31, 1990
AS FURTHER AMENDED JULY 26, 1991
AS FURTHER AMENDED SEPTEMBER 24, 1993
AS FURTHER AMENDED FEBRUARY 25, 1994
AS FURTHER AMENDED JULY 28, 1995
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office
(the "Principal Office") of INDIANA GAS COMPANY, INC. (the
"Corporation") shall be at the registered office of the
Corporation, or such other place as shall be determined by
resolution of the Board of Directors of the Corporation
(the "Board").
SECTION 2. OTHER OFFICES. The Corporation may have
such other offices at such other places within or without
the State of Indiana as the Board may from time to time
designate, or as the business of the Corporation may
require.
ARTICLE II
SEAL
SECTION 1. CORPORATE SEAL. The corporate seal of
the Corporation (the "Seal") shall be circular in form and
shall have inscribed thereon the words "INDIANA GAS
COMPANY, INC. -- CORPORATE SEAL -- INDIANA." Use of the
Seal or an impression thereof shall not be required, and
shall not affect the validity of any instrument
whatsoever.
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETING. Every meeting of the
shareholders of the Corporation (the "Shareholders") shall
be held at the Principal Office, unless a different place
is specified in the notice or waiver of notice of such
meeting or by resolution of the Board or the Shareholders,
in which event such meeting may be held at the place so
specified, either within or without the State of Indiana.
SECTION 2. ANNUAL MEETING. The annual meeting of
the Shareholders (the "Annual Meeting") shall be held each
year at 9:00 o'clock A.M. on the last Friday in January,
or such other time or date determined by resolution of the
board, for the purpose of electing directors of the
Corporation ("Directors") and for the transaction of such
other business as may legally come before the Annual
Meeting. If for any reason the Annual Meeting shall not
be held at the date and time specified or fixed as herein
provided, the business to be transacted at such Annual
Meeting may be transacted at any special meeting of the
Shareholders (a "Special Meeting") called for that
purpose.
SECTION 3. NOTICE OF ANNUAL MEETING. Written or
printed notice of the Annual Meeting, stating the date,
time and place thereof, shall be delivered or mailed by
the Secretary or an Assistant Secretary to each
Shareholder of record entitled to notice of such Meeting,
at such address as appears on the records of the
Corporation, at least ten and not more than sixty days
before the date of such Meeting.
SECTION 4. SPECIAL MEETINGS. Special Meetings, for
any purpose or purposes (unless otherwise prescribed by
law), may be called by the Board or the President, and
shall be called by the President or any Vice President at
(a) the request in writing of a majority of the Board, or
(b) at the written demand, delivered to the Secretary, of
Shareholders holding of record not less than one-fourth of
the voting power of all the shares of the Corporation
("Shares") issued and outstanding and entitled by the
Amended and Restated Articles of Incorporation of the
Corporation, as the same may, from time to time, be
amended (the "Articles"), to vote on the business proposed
to be transacted thereat. All requests or demands for
Special Meetings shall state the purpose or purposes
thereof, and the business transacted at such Meeting shall
be confined to the purposes stated in the call and matters
germane thereto.
SECTION 5. NOTICE OF SPECIAL MEETINGS. Written or
printed notice of all Special Meetings, stating the date,
time, place and purpose or purposes thereof, shall be
delivered or mailed by the Secretary or the President or
the Vice President calling the Meeting to each Shareholder
of record entitled to notice of such Meeting, at such
address as appears on the records of the Corporation, at
least ten and not more than sixty days before the date of
such Meeting. Notice of any Special Meeting called at the
written demand of Shareholders shall be delivered or
mailed within sixty days of the Secretary's receipt of
such demand.
SECTION 6. WAIVER OF NOTICE OF MEETINGS. Notice of
any Annual or Special Meeting (a "Meeting") may be waived
in writing by any Shareholder, before or after the date
and time of the Meeting specified in the notice thereof,
by a written waiver delivered to the Corporation for
inclusion in the minutes or filing with the corporate
records. A Shareholder's attendance at any Meeting in
person or by proxy shall constitute a waiver of (a) notice
of such Meeting, unless the Shareholder at the beginning
of the Meeting objects to the holding of or the
transaction of business at the Meeting, and (b)
consideration at such Meeting of any business that is not
within the purpose or purposes described in the Meeting
notice, unless the Shareholder objects to considering the
matter when it is presented.
SECTION 7. QUORUM. At any Meeting, the holders of a
majority of the voting power of Shares issued and
outstanding and entitled to vote at such Meeting,
represented in person or by proxy, shall constitute a
quorum for the election of Directors or for the
transaction of other business, unless otherwise provided
by law, the Articles or this Code of By-Laws, as the same
may, from time to time, be amended (these "By-Laws"). If,
however, a quorum shall not be present or represented at
any Meeting, the Shareholders entitled to vote thereat,
present in person or represented by proxy, shall have
power to adjourn the Meeting from time to time, without
notice other than announcement at the Meeting of the date,
time and place of the adjourned Meeting, unless the date
of the adjourned Meeting requires that the Board fix a new
record date (the "Record Date") therefor, in which case
notice of the adjourned Meeting shall be given. At such
adjourned Meeting, if a quorum shall be present or
represented, any business may be transacted that might
have been transacted at the Meeting as originally
scheduled.
SECTION 8. VOTING. At each Meeting, every
Shareholder entitled to vote shall have one vote for each
Share standing in his name on the books of the Corporation
as of the Record Date fixed by the Board for such Meeting,
except as otherwise provided by law or the Articles, and
except that no Share shall be voted at any Meeting upon
which any installment is due and unpaid. Voting for
Directors and, upon the demand of any Shareholder, voting
upon any question properly before a Meeting, shall be by
ballot. A plurality vote shall be necessary to elect any
Director, and on all other matters, the action or a
question shall be approved if the number of votes cast
thereon in favor of the action or question exceeds the
number of votes cast opposing the action or question,
except as otherwise provided by law or the Articles.
SECTION 9. SHAREHOLDER LIST. The Secretary shall
prepare before each Meeting a complete list of the
Shareholders entitled to notice of such Meeting, arranged
in alphabetical order by class of Shares (and each series
within a class), and showing the address of, and the
number of Shares entitled to vote held by, each
Shareholder (the "Shareholder List"). Beginning five
business days before the Meeting and continuing throughout
the Meeting, the Shareholder List shall be on file at the
Principal Office or at a place identified in the Meeting
notice in the city where the Meeting will be held, and
shall be available for inspection by any Shareholder
entitled to vote at the Meeting. On written demand, made
in good faith and for a proper purpose and describing with
reasonable particularity the Shareholder's purpose, and if
the Shareholder List is directly connected with the
Shareholder's purpose, a Shareholder (or such
Shareholder's agent or attorney authorized in writing)
shall be entitled to inspect and to copy the Shareholder
List, during regular business hours and at the
Shareholder's expense, during the period the Shareholder
List is available for inspection. The original stock
register or transfer book (the "Stock Book"), or a
duplicate thereof kept in the State of Indiana, shall be
the only evidence as to who are the Shareholders entitled
to examine the Shareholder List, or to notice of or to
vote at any Meeting.
SECTION 10. PROXIES. A Shareholder may vote either
in person or by proxy executed in writing by the
Shareholder or a duly authorized attorney-in-fact. No
proxy shall be valid after eleven months from the date of
its execution, unless a longer time is expressly provided
therein.
SECTION 11. NOTICE OF SHAREHOLDER BUSINESS. At any
meeting of the shareholders, only such business may be
conducted as shall have been properly brought before the
meeting, and as shall have been determined to be lawful
and appropriate for consideration by shareholders at the
meeting. To be properly brought before a meeting,
business must be (a) specified in the notice of meeting
given in accordance with Section 3 or 5 of this Article
III, (b) otherwise properly brought before the meeting by
or at the direction of the board of directors or the chief
executive officer, or (c) otherwise properly brought
before the meeting by a shareholder. For business to be
properly brought before a meeting by a shareholder
pursuant to clause (c) above, the shareholder must have
given timely notice thereof in writing to the secretary of
the Company. To be timely, a shareholder's notice must be
delivered to, or mailed and received at, the principal
office of the Company, not less than fifty days nor more
than ninety days prior to the meeting; provided, however,
that in the event that less than sixty days' notice of the
date of the meeting is given to shareholders, notice by
the shareholder to be timely must be so received not later
than the close of business on the tenth day following the
day on which such notice of the date of the meeting was
given. A shareholder's notice to the secretary shall set
forth as to each matter the shareholder proposes to bring
before the meeting (a) a brief description of the business
desired to be brought before the meeting, (b) the name and
address, as they appear on the Company's stock records, of
the shareholder proposing such business, (c) the class and
number of shares of the Company which are beneficially
owned by the shareholder, and (d) any interest of the
shareholder in such business. Notwithstanding anything in
these by-laws to the contrary, no business shall be
conducted at a meeting except in accordance with the
procedures set forth in this Section 11. The person
presiding at the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the
by-laws, or that business was not lawful or appropriate
for consideration by shareholders at the meeting, and if
he should so determine, he shall so declare to the meeting
and any such business shall not be transacted.
SECTION 12. NOTICE OF SHAREHOLDER NOMINEES.
Nominations of persons for election to the board of
directors of the Company may be made at any meeting of
shareholders by or at the direction of the board of
directors or by any shareholder of the Company entitled to
vote for the election of directors at the meeting.
Shareholder nominations shall be made pursuant to timely
notice given in writing to the secretary of the Company in
accordance with Section 11 of this Article III. Such
shareholder's notice shall set forth, in addition to the
information required by Section 11, as to each person whom
the shareholder proposes to nominate for election or re-
election as a director, (i) the name, age, business
address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii)
the class and number of shares of the Company which are
beneficially owned by such person, (iv) any other
information relating to such person that is required to be
disclosed in solicitation of proxies for election of
directors, or is otherwise required, in each case pursuant
to Regulation 14A under the Securities Exchange Act of
1934, as amended (including, without limitation, such
person's written consent to being named in the proxy
statement as a nominee and to serving as a director, if
elected), and (v) the qualifications of the nominee to
serve as a director of the Company. No shareholder
nomination shall be effective unless made in accordance
with the procedures set forth in this Section 12. The
person presiding at the meeting shall, if the facts
warrant, determine and declare to the meeting that a
shareholder nomination was not made in accordance with the
by-laws, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall
be disregarded.
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1. NUMBER. The business and affairs of the
Corporation shall be managed by a Board of twelve (12)
Directors, divided into three classes as provided in the
Articles. The Board may elect or appoint, from among its
members, a Chairman of the Board (the "Chairman"), who
need not be an Officer or employee of the Corporation.
The Chairman shall preside at all Shareholders Meetings
and Board Meetings and shall have such other powers and
perform such other duties as are incident to such position
and as may be assigned by the Board.
SECTION 2. VACANCIES AND REMOVAL. Any vacancy
occurring in the Board shall be filled as provided in the
Articles. Shareholders shall be notified of any increase
in the number of Directors and the name, principal
occupation and other pertinent information about any
Director elected by the Board to fill any vacancy. Any
Director, or the entire Board, may be removed from office
only as provided in the Articles.
SECTION 3. POWERS AND DUTIES. In addition to the
powers and duties expressly conferred upon it by law, the
Articles or these By-Laws, the Board may exercise all such
powers of the Corporation and do all such lawful acts and
things as are not inconsistent with the law, the Articles
or these By-Laws.
SECTION 4. ANNUAL BOARD MEETING. Unless otherwise
determined by the Board, the Board shall meet each year
immediately after the Annual Meeting, at the place where
such Meeting has been held, for the purpose of
organization, election of Officers of the Corporation (the
"Officers") and consideration of any other business that
may properly be brought before such annual meeting of the
Board (the "Annual Board Meeting"). No notice shall be
necessary for the holding of the Annual Board Meeting. If
the Annual Board Meeting is not held as above provided,
the election of Officers may be held at any subsequent
duly constituted meeting of the Board (a "Board Meeting").
SECTION 5. REGULAR BOARD MEETINGS. Regular meetings
of the Board ("Regular Board Meetings") may be held at
stated times or from time to time, and at such place,
either within or without the State of Indiana, as the
Board may determine, without call and without notice.
SECTION 6. SPECIAL BOARD MEETINGS. Special meetings
of the Board ("Special Board Meetings") may be called at
any time or from time to time, and shall be called on the
written request of at least two Directors, by the Chairman
or the President, by causing the Secretary or any
Assistant Secretary to give to each Director, either
personally or by mail, telephone, telegraph, teletype or
other form of wire or wireless communication at least two
days' notice of the date, time and place of such Meeting.
Special Board Meetings shall be held at the Principal
Office or at such other place, within or without the State
of Indiana, as shall be specified in the respective
notices or waivers of notice thereof.
SECTION 7. WAIVER OF NOTICE AND ASSENT. A Director
may waive notice of any Board Meeting before or after the
date and time of the Board Meeting stated in the notice by
a written waiver signed by the Director and filed with the
minutes or corporate records. A Director's attendance at
or participation in a Board Meeting shall constitute a
waiver of notice of such Meeting and assent to any
corporate action taken at such Meeting, unless (a) the
Director at the beginning of such Meeting (or promptly
upon his arrival) objects to holding of or transacting
business at the Meeting and does not thereafter vote for
or assent to action taken at the Meeting; (b) the
Director's dissent or abstention from the action taken is
entered in the minutes of such Meeting; or (c) the
Director delivers written notice of his dissent or
abstention to the presiding Director at such Meeting
before its adjournment, or to the Secretary immediately
after its adjournment. The right of dissent or abstention
is not available to a Director who votes in favor of the
action taken.
SECTION 8. QUORUM. At all Board Meetings, a
majority of the number of Directors designated for the
full Board (the "Full Board") shall be necessary to
constitute a quorum for the transaction of any business,
except (a) that for the purpose of filling of vacancies a
majority of Directors then in office shall constitute a
quorum, and (b) that a lesser number may adjourn the
Meeting from time to time until a quorum is present. The
act of a majority of the Board present at a Meeting at
which a quorum is present shall be the act of the Board,
unless the act of a greater number is required by law, the
Articles or these By-Laws.
SECTION 9. AUDIT AND OTHER COMMITTEES OF THE BOARD.
The Board shall, by resolution adopted by a majority of
the Full Board, designate an Audit Committee comprised of
two or more Directors, which shall have such authority and
exercise such duties as shall be provided by resolution of
the Board. The Board may, by resolution adopted by such
majority, also designate other regular or special
committees of the Board ("Committees"), in each case
comprised of two or more Directors and to have such powers
and exercise such duties as shall be provided by
resolution of the Board.
SECTION 10. RESIGNATIONS. Any Director may resign
at any time by giving written notice to the Board, the
Chairman, the President or the Secretary. Any such
resignation shall take effect when delivered unless the
notice specifies a later effective date. Unless otherwise
specified in the notice, the acceptance of such
resignation shall not be necessary to make it effective.
ARTICLE V
OFFICERS
SECTION 1. OFFICERS. The Officers shall be the
President, one or more Vice Presidents, the Secretary and
the Treasurer, and may include one or more Assistant
Secretaries, one or more Assistant Treasurers, a
Controller and one or more Assistant Controllers. Any two
or more offices may be held by the same person. The Board
may from time to time elect or appoint such other Officers
as it shall deem necessary, who shall exercise such powers
and perform such duties as may be prescribed from time to
time by these By-Laws or, in the absence of a provision in
these By-Laws in respect thereto, as may be prescribed
from time to time by the Board.
SECTION 2. ELECTION OF OFFICERS. The Officers shall
be elected by the Board at the Annual Board Meeting and
shall hold office for one year or until their respective
successors shall have been duly elected and shall have
qualified; provided, however, that the Board may at any
time elect one or more persons to new or different offices
and/or change the title, designation and duties and
responsibilities of any of the Officers consistent with
the law, the Articles and these By-Laws.
SECTION 3. VACANCIES; REMOVAL. Any vacancy among
the Officers may be filled for the unexpired term by the
Board. Any Officer may be removed at any time by the
affirmative vote of a majority of the Full Board.
SECTION 4. DELEGATION OF DUTIES. In the case of the
absence, disability, death, resignation or removal from
office of any Officer, or for any other reason that the
Board shall deem sufficient, the Board may delegate, for
the time being, any or all of the powers or duties of such
Officer to any other Officer or to any Director.
SECTION 5. PRESIDENT. The President shall be a
Director and, subject to the control of the Board, shall
have general charge of and supervision and authority over
the business and affairs of the Corporation, and shall
have such other powers and perform such other duties as
are incident to this office and as may be assigned to him
by the Board. In the case of the absence or disability of
the Chairman or if no Chairman shall be elected or
appointed by the Board, the President shall preside at all
Shareholders' Meetings and Board Meetings.
SECTION 6. VICE PRESIDENTS. Each of the Vice
Presidents shall have such powers and perform such duties
as may be prescribed for him by the Board or delegated to
him by the President. In the case of the absence,
disability, death, resignation or removal from office of
the President, the powers and duties of the President
shall, for the time being, devolve upon and be exercised
by the Executive Vice President, if there be one, and if
not, then by such one of the Vice Presidents as the Board
or the President may designate, or, if there be but one
Vice President, then upon such Vice President; and he
shall thereupon, during such period, exercise and perform
all of the powers and duties of the President, except as
may be otherwise provided by the Board.
SECTION 7. SECRETARY. The Secretary shall have the
custody and care of the Seal, records, minutes and the
Stock Book of the Corporation; shall attend all
Shareholders' Meetings and Board Meetings, and duly record
and keep the minutes of their proceedings in a book or
books to be kept for that purpose; shall give or cause to
be given notice of all Shareholders' Meetings and Board
Meetings when such notice shall be required; shall file
and take charge of all papers and documents belonging to
the Corporation; and shall have such other powers and
perform such other duties as are incident to the office of
secretary of a business corporation, subject at all times
to the direction and control of the Board and the
President.
SECTION 8. ASSISTANT SECRETARIES. Each of the
Assistant Secretaries shall assist the Secretary in his
duties and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the President. In case of the
absence, disability, death, resignation or removal from
office of the Secretary, his powers and duties shall, for
the time being, devolve upon such one of the Assistant
Secretaries as the Board, the President or the Secretary
may designate, or, if there be but one Assistant
Secretary, then upon such Assistant Secretary; and he
shall thereupon, during such period, exercise and perform
all of the powers and duties of the Secretary, except as
may be otherwise provided by the Board.
SECTION 9. TREASURER. The Treasurer shall have
control over all records of the Corporation pertaining to
moneys and securities belonging to the Corporation; shall
have charge of, and be responsible for, the collection,
receipt, custody and disbursements of funds of the
Corporation; shall have the custody of all securities
belonging to the Corporation; shall keep full and accurate
accounts of receipts and disbursements in books belonging
to the Corporation; and shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper
receipts or making proper vouchers for such disbursements
and preserving the same at all times during his term of
office. When necessary or proper, he shall endorse on
behalf of the Corporation all checks, notes or other
obligations payable to the Corporation or coming into his
possession for or on behalf of the Corporation, and shall
deposit the funds arising therefrom, together with all
other funds and valuable effects of the Corporation coming
into his possession, in the name and the credit of the
Corporation in such depositories as the Board from time to
time shall direct, or in the absence of such action by the
Board, as may be determined by the President or any Vice
President. If the Board has not elected a Controller or
an Assistant Controller, or in the absence or disability
of the Controller and each Assistant Controller or if, for
any reason, a vacancy shall occur in such offices, then
during such period the Treasurer shall have, exercise and
perform all of the powers and duties of the Controller.
The Treasurer shall also have such other powers and
perform such other duties as are incident to the office of
treasurer of a business corporation, subject at all times
to the direction and control of the Board and the
President.
If required by the Board, the Treasurer shall give
the Corporation a bond, in such an amount and with such
surety or sureties as may be ordered by the Board, for the
faithful performance of the duties of his office and for
the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of
whatever kind in his possession or under his control
belonging to the Corporation.
SECTION 10. ASSISTANT TREASURERS. Each of the
Assistant Treasurers shall assist the Treasurer in his
duties, and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the President. In case of the
absence, disability, death, resignation or removal from
office of the Treasurer, his powers and duties shall, for
the time being, devolve upon such one of the Assistant
Treasurers as the Board, the President or the Treasurer
may designate, or, if there be but one Assistant
Treasurer, then upon such Assistant Treasurer; and he
shall thereupon, during such period, exercise and perform
all the powers and duties of the Treasurer except as may
be otherwise provided by the Board. If required by the
Board, each Assistant Treasurer shall likewise give the
Corporation a bond, in such amount and with such surety or
sureties as may be ordered by the Board, for the same
purposes as the bond that may be required to be given by
the Treasurer.
SECTION 11. CONTROLLER. The Controller shall have
direct control over all accounting records of the
Corporation pertaining to moneys, properties, materials
and supplies, including the bookkeeping and accounting
departments; shall have direct supervision over the
accounting records in all other departments pertaining to
moneys, properties, materials and supplies; shall render
to the President and the Board, at Regular Board Meetings
or whenever the same shall be required, an account of all
his transactions as Controller and of the financial
condition of the Corporation; and shall have such other
powers and perform such other duties as are incident to
the office of controller of a business corporation,
subject at all times to the direction and control of the
Board and the President.
SECTION 12. ASSISTANT CONTROLLERS. Each of the
Assistant Controllers shall assist the Controller in his
duties, and shall have such other powers and perform such
other duties as may be prescribed for him by the Board or
delegated to him by the President. In case of the
absence, disability, death, resignation or removal from
office of the Controller, his powers and duties shall, for
the time being, devolve upon such one of the Assistant
Controllers as the Board, the President or the Controller
may designate, or, if there be but one Assistant
Controller, then upon such Assistant Controller; and he
shall thereupon, during such period, exercise and perform
all the powers and duties of the Controller, except as may
be otherwise provided by the Board.
ARTICLE VI
CERTIFICATES FOR SHARES
SECTION 1. CERTIFICATES. Certificates for Shares
("Certificates") shall be in such form, consistent with
law and the Articles, as shall be approved by the Board.
Certificates for each class, or series within a class, of
Shares, shall be numbered consecutively as issued. Each
Certificate shall state the name of the Corporation and
that it is organized under the laws of the State of
Indiana; the name of the registered holder; the number and
class and the designation of the series, if any, of the
Shares represented thereby; and a summary of the
designations, relative rights, preferences and limitations
applicable to such class and, if applicable, the
variations in rights, preferences and limitations
determined for each series and the authority of the Board
to determine such variations for future series; provided,
however, that such summary may be omitted if the
Certificate states conspicuously on its front or back that
the Corporation will furnish the Shareholder such
information upon written request and without charge. Each
Certificate shall be signed (either manually or in
facsimile) by (i) the President or a Vice President and
(ii) the Secretary or an Assistant Secretary, or by any
two or more Officers that may be designated by the Board,
and may have affixed thereto the Seal, which may be a
facsimile, engraved or printed.
SECTION 2. RECORD OF CERTIFICATES. Shares shall be
entered in the Stock Book as they are issued, and shall be
transferable on the Stock Book by the holder thereof in
person, or by his attorney duly authorized thereto in
writing, upon the surrender of the outstanding Certificate
therefor properly endorsed.
SECTION 3. LOST OR DESTROYED CERTIFICATES. Any
person claiming a Certificate to be lost or destroyed
shall make affidavit or affirmation of that fact and, if
the Board or the President shall so require, shall give
the Corporation and/or the transfer agents and registrars,
if they shall so require, a bond of indemnity, in form and
with one or more sureties satisfactory to the Board or the
President and/or the transfer agents and registrars, in
such amount as the Board or the President may direct
and/or the transfer agents and registrars may require,
whereupon a new Certificate may be issued of the same
tenor and for the same number of Shares as the one alleged
to be lost or destroyed.
SECTION 4. SHAREHOLDER ADDRESSES. Every Shareholder
shall furnish the Secretary with an address to which
notices of Meetings and all other notices may be served
upon him or mailed to him, and in default thereof notices
may be addressed to him at his last known address or at
the Principal Office.
ARTICLE VII
CORPORATE BOOKS AND RECORDS
SECTION 1. PLACES OF KEEPING. Except as otherwise
provided by law, the Articles or these By-Laws, the books
and records of the Corporation (including the "Corporate
Records," as defined in the Articles) may be kept at such
place or places, within or without the State of Indiana,
as the Board may from time to time by resolution determine
or, in the absence of such determination by the Board, as
shall be determined by the President.
SECTION 2. STOCK BOOK. The Corporation shall keep
at the Principal Office the original Stock Book or a
duplicate thereof, or, in case the Corporation employs a
stock registrar or transfer agent within or without the
State of Indiana, another record of the Shareholders in a
form that permits preparation of a list of the names and
addresses of all the Shareholders, in alphabetical order
by class of Shares, stating the number and class of Shares
held by each Shareholder (the "Record of Shareholders").
SECTION 3. INSPECTION OF CORPORATE RECORDS. Any
Shareholder (or the Shareholder's agent or attorney
authorized in writing) shall be entitled to inspect and
copy at his expense, after giving the Corporation at least
five business days written notice of his demand to do so,
the following Corporate Records: (1) the Articles; (2)
these By-Laws; (3) minutes of all Shareholders' Meetings
and records of all actions taken by the Shareholders
without a meeting (collectively, "Shareholders Minutes")
for the prior three years; (4) all written communications
by the Corporation to the Shareholders including the
financial statements furnished by the Corporation to the
Shareholders for the prior three years; (5) a list of the
names and business addresses of the current Directors and
the current Officers; and (6) the most recent Annual
Report of the Corporation as filed with the Secretary of
State of Indiana. Any Shareholder (or the Shareholder's
agent or attorney authorized in writing) shall also be
entitled to inspect and copy at his expense, after giving
the Corporation at least five business days written notice
of his demand to do so, the following Corporate Records,
if his demand is made in good faith and for a proper
purpose and describes with reasonable particularity his
purpose and the records he desires to inspect, and the
records are directly connected with his purpose: (1) to
the extent not subject to inspection under the previous
sentence, Shareholders Minutes, excerpts from minutes of
Board Meetings and of Committee meetings, and records of
any actions taken by the Board or any Committee without a
meeting; (2) appropriate accounting records of the
Corporation; and (3) the Record of Shareholders.
SECTION 4. RECORD DATE. The Board may, in its
discretion, fix in advance a Record Date not more than
seventy days before the date (a) of any Shareholders'
Meeting, (b) for the payment of any dividend or the making
of any other distribution, (c) for the allotment of
rights, or (d) when any change or conversion or exchange
of Shares shall go into effect. If the Board fixes a
Record Date, then only Shareholders who are Shareholders
of record on such Record Date shall be entitled (a) to
notice of and/or to vote at any such Meeting, (b) to
receive any such dividend or other distribution, (c) to
receive any such allotment of rights, or (d) to exercise
the rights in respect of any such change, conversion or
exchange of Shares, as the case may be, notwithstanding
any transfer of Shares on the Stock Book after such Record
Date.
SECTION 5. TRANSFER AGENTS; REGISTRARS. The Board
may appoint one or more transfer agents and registrars for
its Shares and may require all Certificates to bear the
signature either of a transfer agent or of a registrar, or
both.
ARTICLE VIII
CHECKS, DRAFTS, DEEDS AND SHARES OF STOCK
SECTION 1. CHECKS, DRAFTS, NOTES, ETC. All checks,
drafts, notes or orders for the payment of money of the
Corporation shall, unless otherwise directed by the Board
or otherwise required by law, be signed by one or more
Officers as authorized in writing by the President. In
addition, the President may authorize any one or more
employees of the Corporation ("Employees") to sign checks,
drafts and orders for the payment of money not to exceed
specific maximum amounts as designated in writing by the
President for any one check, draft or order. When so
authorized by the President, the signature of any such
Officer or Employee may be a facsimile signature.
SECTION 2. DEEDS, NOTES, BONDS, MORTGAGES,
CONTRACTS, ETC. All deeds, notes, bonds and mortgages
made by the Corporation, and all other written contracts
and agreements, other than those executed in the ordinary
course of corporate business, to which the Corporation
shall be a party, shall be executed in its name by the
President, a Vice President or any other Officer so
authorized by the Board and, when necessary or required,
the Secretary or an Assistant Secretary shall attest the
execution thereof. All written contracts and agreements
into which the Corporation enters in the ordinary course
of corporate business shall be executed by any Officer or
by any other Employee designated by the President or a
Vice President to execute such contracts and agreements.
SECTION 3. SALE OR TRANSFER OF STOCK. Subject
always to the further orders and directions of the Board,
any share of stock issued by any corporation and owned by
the Corporation (including reacquired Shares of the
Corporation) may, for sale or transfer, be endorsed in the
name of the Corporation by the President or a Vice
President, and said endorsement shall be duly attested by
the Secretary or an Assistant Secretary either with or
without affixing thereto the Seal.
SECTION 4. VOTING OF STOCK OF OTHER CORPORATIONS.
Subject always to the further orders and directions of the
Board, any share of stock issued by any other corporation
and owned or controlled by the Corporation (an "Investment
Share") may be voted at any shareholders' meeting of such
other corporation by the President or by a Vice President.
Whenever, in the judgment of the President, it is
desirable for the Corporation to execute a proxy or give a
shareholder's consent in respect of any Investment Share,
such proxy or consent shall be executed in the name of the
Corporation, by the President or a Vice President, and,
when necessary or required, shall be attested by the
Secretary or an Assistant Secretary either with or without
affixing thereto the Seal. Any person or persons
designated in the manner above stated as the proxy or
proxies of the Corporation shall have full right, power
and authority to vote an Investment Share the same as such
Investment Share might be voted by the Corporation.
ARTICLE IX
FISCAL YEAR
SECTION 1. FISCAL YEAR. The Corporation's fiscal
year shall begin on October 1 of each year and end on
September 30 of the following year.
ARTICLE X
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be
altered, amended or repealed, in whole or in part, and new
By-Laws may be adopted, at any Board Meeting by the
affirmative vote of a majority of the Full Board.
Contract No. NGFSA9602
NATURAL GAS FIRM SUPPLY AGREEMENT
This Natural Gas Firm Supply Agreement ("Agreement"), is
made, entered into, and effective, as of the 1st day of
December, 1995 by and between ANADARKO TRADING COMPANY
(Seller), and INDIANA GAS COMPANY, INC. (Buyer).
Recitals
1. Seller is a corporation incorporated and existing under
the laws of the State of Delaware with its principal
place of business at 17001 Northchase Drive, Houston,
Texas.
2. Buyer is a corporation incorporated and existing under
the laws of the State of Indiana, with its principal
place of business at 1630 North Meridian Street,
Indianapolis, Indiana.
3. This Agreement contains the mutual promises,
warranties, and covenants pursuant to which Buyer as a
purchaser of natural gas, and Seller as a merchant of
natural gas, shall perform the transactions described
herein.
4. Under this Agreement, Seller agrees to provide natural
gas on a firm basis, consistent with the terms and
conditions contained herein. Seller's ability to
provide natural gas on a firm basis, as represented to
Buyer and as agreed to herein, is a fundamental
inducement to Buyer's decision to enter this Agreement
and forms an essential element of the basis for the
bargained exchanges herein.
Definitions
As used herein, the following words shall
have the following definitions:
A. The term "Transporter" shall mean
Panhandle Eastern Pipe Line Company, or its
successor.
B. The term "Transporter's Tariff"
shall mean the tariff provisions of
Transporter, as approved by the Federal
Energy Regulatory Commission, or any
successor thereto, ("FERC"), including
changes to such tariff made after this
Agreement is effective, and Buyer's
contractual arrangements with Transporter.
If FERC should determine that Transporter's
Tariff shall cease to apply, in whole or in
part, to transactions hereunder, the parties
will promptly meet to determine and negotiate
mutually acceptable replacement guidelines
and standards. In that event, until an
agreement is reached, the most recently effective
Transporter's Tariff shall continue to apply.
C. The term "Btu" shall mean British
thermal unit, as defined in Transporter's
Tariff.
D. The term "Contract Month" shall
mean a calendar month during the
effectiveness of this Agreement, as
interpreted in light of Transporter's tariff.
E. The term "Day" shall be defined as
it is defined in Transporter's Tariff, or as
applied by Transporter.
F. The term "Gas" shall mean natural
gas, which shall meet the quality
specifications in this Agreement and
Transporter's Tariff.
G. The terms "MMBtu," "Dekatherm" or
"DTH" shall mean one million (1,000,000)
British thermal units.
H. The term "Maximum Daily Quantity"
shall mean the quantity of Gas which Seller
shall stand ready to supply on any Day during
a Contract Month to the extent nominated by
Buyer for purchase as the "Nominated Daily
Quantity".
I. The term "Nominated Daily Quantity"
shall mean the quantity of Gas which Seller
shall deliver to Transporter for the account
of Buyer on a particular Day, which quantity
shall be scheduled by Buyer pursuant to
Paragraph 5, labeled "Scheduling Procedures",
of this Agreement, but not to exceed the
Maximum Daily Quantity.
J. The term "Receipt Point(s)" shall
mean the point or points on Transporter's
system where Gas quantities are delivered
hereunder by Seller to Buyer.
1. Term: The term of this Agreement shall be from
December 1, 1995 through February 29, 1996.
2. Quantity:
(a) Subject to the provisions herein, Seller
represents, agrees, and assures that Seller can
and shall make available on a firm basis, to the
extent scheduled by Buyer as the Nominated Daily
Quantity, the following Maximum Daily Quantities
of Gas for purchase by Buyer in accordance with
the following schedule as to each Contract Month
during the term of this Agreement:
Contract Month Maximum Daily Quantity
December, 1995 - 50,000 MMBtu per day
January, 1996 - 50,000 MMBtu per day
February, 1996 - 50,000 MMBtu per day
(b) No provision of this Agreement shall be
construed to require Buyer to purchase or take any
minimum quantity of Gas, or to pay Commodity
Charges for any minimum quantity not taken except
as set forth in Paragraph 14 (b) hereof.
3. Price: Subject to the terms of this Agreement, Buyer
shall pay to Seller a Commodity Reservation Charge and
a Commodity Charge. Those charges shall be determined
as follows:
(a) Commodity Reservation Charge - Each Contract
Month, Buyer shall pay to Seller an amount
determined by multiplying the applicable Maximum
Daily Quantity set forth in Paragraph 2 above by
the Reservation Rate set forth for that particular
Contract Month in the following schedule times the
number of Days in that particular Contract Month.
Contract Month Reservation Rate
December, 1995 $0.020 per MMBtu
January, 1996 $0.020 per MMBtu
February, 1996 $0.020 per MMBtu
(b) Commodity Charge - Buyer and Seller intend to
apply a method of daily pricing, figured from a
commodity price index, to commodity sales under
this Agreement. Buyer shall pay to Seller each
Contract Month an amount determined by summing all
applicable "Daily Amounts" for the Contract Month.
A "Daily Amount" shall apply to each day during
the Contract Month for which Buyer has nominated
quantities for purchase. The "Daily Amounts"
shall be determined by multiplying i) the
quantities of Gas actually delivered to Buyer
under this Agreement at the Receipt Point(s) for
the particular Day of the Contract Month, up to
Buyer's Nominated Daily Quantity, ii) by a price
per MMBtu determined using the arithmetic average
of the high and low prices in the price range
reported in Gas Daily, in the table "DAILY PRICE
SURVEY", for "PEPL Oklahoma", for the applicable
Day, which price shall be deemed to be a delivered
price to the Receipt Point(s), inclusive of actual
transportation charges (including ACA, GRI, fuel,
all applicable surcharges, gathering costs,
transition costs, and take or pay, or other costs,
if any) from the wellhead to the Receipt Point(s),
and shall include all royalties and all present
and future production, delivery, severance, and
excise taxes, and all other costs of delivery to
the Receipt Point(s). As to any Day for which Gas
Daily for any reason (e.g. holidays and weekends)
does not publish the above referenced prices, the
applicable prices shall be that utilized for the
last prior Day such was published.
If a Receipt Point(s) other than mainline
Receipt Point(s) is used, any gathering,
transportation or other costs imposed on Buyer to
transport the gas to Transporter's mainline shall
be deducted from the Commodity Charge.
(c) Applicable Commodity Charge Index. If at any
time Gas Daily (or any successor publication
selected hereunder) is no longer published, or if
the specific postings referenced in Gas Daily are
no longer published, or no longer reflect the
original posting methodology used at the time of
the execution of this Agreement, the commodity
price shall be temporarily determined by reference
to applicable price postings in NGI's Daily Gas
Price Index and the Parties shall promptly
negotiate a new mutually agreeable method and/or
successor publication from which to determine
commodity pricing.
4. Taxes:
(a) Subject to the terms of this Agreement,
Seller shall pay all taxes imposed with respect to
the Gas delivered to Buyer hereunder prior to
delivery at the Receipt Point(s) and Buyer shall
pay all taxes imposed upon Buyer with respect to
such Gas on and after delivery thereof to Buyer at
the Receipt Point(s).
(b) If any sale of Gas from Seller to Buyer
pursuant to this Agreement shall be subject to
sales, use, or gross receipts tax, such tax shall
be borne by the Buyer. It is expressly understood
that the price mutually agreed to between Seller
and Buyer as provided for in Paragraph 3 above
shall be exclusive of sales, use, or gross
receipts tax related to the sale from Seller to
Buyer under this Agreement. Buyer shall provide
documentation to Seller of Buyer's exemption from
any tax that may otherwise apply under this
Agreement. If documentation is not provided,
Buyer shall reimburse Seller for any taxes paid by
Seller which are attributable to Buyer under this
Agreement.
5. Scheduling Procedures: Scheduling of purchases
hereunder shall be made by Buyer according to the
following procedures:
By 12:00 p.m. (noon), Eastern Standard Time, on the
fourth day preceding the day Transporter designates as
the day on which nomination information must be
submitted in order to ensure timely scheduling of gas
transportation on the first Day of the following
Contract Month (Transporter's Nomination Deadline),
Buyer shall provide written notification to Seller of
the initial Nominated Daily Quantity, not to exceed the
Maximum Daily Quantity, which Seller is to deliver to
Transporter for the account of Buyer on the first Day
of that following Contract Month.
By 12:00 p.m. (noon), Eastern Standard Time, on the Day
immediately preceding Transporter's Nomination
Deadline, Seller shall provide to Buyer, in writing,
all information required pursuant to Transporter's
Tariff, and other pertinent nomination and scheduling
guidelines and procedures (Nomination Information), for
Buyer to make a complete and valid nomination for gas
transportation service to commence on the first Day of
the following Contract Month. Until subsequently
changed by Buyer pursuant to the following, Seller
shall continue to deliver the initial Nominated Daily
Quantity to Transporter, for the account of Buyer, each
Day of the following Contract Month.
In its sole discretion, Buyer may elect to
prospectively change the Nominated Daily Quantity by
providing notice to Seller of the changed Nominated
Daily Quantity and the Day on which the changed
Nominated Daily Quantity is to be effective (the
Effective Date). Such notification shall be provided
by Buyer to Seller via telephone with concurrent
transmission by telefacsimile to Seller's
representative(s) and shall be provided not less than
four (4) hours prior to the time transporter specifies
as the time beyond which Transporter will not accept
and schedule changes to a valid nomination for gas
transportation service to occur on the Effective Date;
which time, specified by Transporter, is the Nomination
Cut-off Time. Not less than two (2) hours prior to the
Nomination Cut-off Time, Seller shall provide to
Buyer's representative(s) all Nomination Information
required to make a complete and valid nomination for
gas transportation service to commence on the Effective
Date. Seller shall continue to deliver to Transporter,
for the account of Buyer, the changed Nominated Daily
Quantity each Day unless and until Buyer elects to
again change the Nominated Daily Quantity pursuant to
the preceding.
Buyer may elect to prospectively change the Nominated
Daily Quantity for any Day of the month.
6. Receipt Point(s): The Receipt Point(s) hereunder shall
be at the ITP-ATC Mainline Pool Point, Meter Station PO
9995 located on Transporter's mainline system, unless
both parties reach prior mutual agreement on the use of
different Receipt Point(s) for a particular Contract
Month or portion thereof. Seller shall have a firm
obligation to deliver the Nominated Daily Quantity to
Buyer at the Receipt Point(s). Buyer shall have the
discretion to waive the requirement that a mainline
receipt point be used, provided, however, that no such
waiver shall constitute a waiver pertaining to any
other or future purchases and any such waiver shall not
prejudice the ability of Buyer to insist on future
mainline deliveries.
7. Operations: Buyer and Seller agree to accept for
purposes of this Agreement the applicable quality,
delivery pressure, measurement requirements and other
applicable rules, procedures, guidelines, tariff
provisions, contractual arrangements and policies of
Transporter, as the same may change from time to time.
8. Gas Quality: Gas delivered hereunder shall comply with
the quality and other specifications of Transporter's
Tariff, and shall be merchantable and free from
impurities that could affect its safe and normal use,
and free from hazardous or toxic substances, wastes, or
other contaminants.
9. Penalties: Seller shall be liable for all penalties,
cashouts, or other costs imposed on Buyer or Seller by
any third parties, including Seller's transporters and
Transporter, to the extent that such penalties are
caused by Seller's actions or inactions. Buyer shall
be liable for all penalties, cashouts, or other costs
imposed on Buyer or Seller by Transporter, to the
extent that such penalties are caused by Buyer's
actions or inactions. Seller agrees to use all
reasonable efforts to acquire operational balancing
agreements with Transporter, or other arrangements to
minimize the possibility of imbalance at the Receipt
Point(s) associated with Buyer's quantities.
10. Measurement: Measurement and determination of the
quantity of Gas delivered to Buyer at the Receipt
Point(s) shall be made in accordance with the
measurement procedures provided in Transporter's
Tariff.
11. Billing and Payment:
(a) On or before the fifteenth (15th) day
following each Contract Month, Seller shall
furnish, or have furnished, one statement to Buyer
stating the quantity of Gas delivered to the
Receipt Point(s) for Buyer's account in the
preceding Contract Month and the total dollar
amount due Seller pursuant to this Agreement (the
"Statement"). Seller's Statement shall reflect
both Commodity Reservation and Commodity Charges
due to Seller for the preceding Contract Month.
As to Commodity Charges, Seller's Statement shall
be based on Buyer's Nominated Daily Quantity for
each Day of such Contract Month, unless actual
information is available indicating Buyer received
less than the Nominated Daily Quantity, in which
event the statement shall be based on the actual
information or best available estimate. On or
before the twenty-fifth (25th) day of the month or
the tenth day following the receipt of Seller's
statement ("Due Date"), whichever is later, Buyer
shall make payment to Seller by wire transfer as
set forth in Paragraph 15 hereof.
(b) Buyer shall have the right to offset amounts
payable by Seller, due from Seller to Buyer, or
costs attributable to Seller against any payments
from Buyer to Seller, provided Buyer first
provides to Seller documentation supporting such
offset amounts.
(c) Interest shall accrue on all late payments
commencing on the applicable Due Date at the then
current prime rate of National City Bank,
Indianapolis, Indiana, or its successor, or the
maximum lawful rate, whichever is lower.
(d) If the Statements above are based on
nominations or estimates of quantities delivered,
Seller shall have the duty to promptly reconcile
such amounts with actual deliveries and remedy the
imbalance in accordance with the procedures
specified in Paragraphs 9 and 14 and as otherwise
provided herein, and in accordance with
Transporter's procedures.
12. Force Majeure: All obligations of the parties to this
Agreement, except for the obligation to make payments
due hereunder, shall be suspended while and only for so
long as compliance is prevented by a cause beyond the
control of the party claiming force majeure, such as an
"Act of God", war, civil disturbance, Federal or State
or local law, or binding order of a court or
governmental agency, provided the suspension shall be
only to the extent performance was prevented by the
event of force majeure and provided the party claiming
force majeure provides immediate notice by telephone
and followed by prompt written notice by telecopy with
reasonably full particulars to the other party at or
near the commencement of such force majeure.
Notwithstanding the foregoing, the events or
occurrences described above shall relieve Seller of its
obligations under this Agreement only to the extent
Seller's performance is prevented and only after Seller
has first curtailed all interruptible sales of Gas
supplies to be delivered to Transporter, and curtailed
on a prorata basis all firm sales of Gas supplies to be
delivered to Transporter. A party claiming force
majeure hereunder shall have the duty to make all
reasonable efforts to remedy the force majeure
condition as promptly as possible.
Nothing in this force majeure provision shall serve to
absolve a party hereto from liability for its own
negligence or failure to exercise reasonable care in
performance of this Agreement.
The term force majeure specifically excludes the
following occurrences or events:
(a) the loss, interruption, or curtailment of
interruptible transportation on either Transporter
or any third party transporter to effect receipt
or delivery of Gas hereunder;
(b) decreases in natural Gas supply due to
allocation or reallocation of production by well
operators, prorationing, or for other reasons;
(c) failure of specific, individual wells or
appurtenant facilities in the absence of a force
majeure event broadly affecting other wells in the
same geographic area.
Notice of force majeure must be sent immediately,
without regard to standard business hours, by telephone
and telecopy, with hard copy sent by overnight mail, to
each of the representatives for Buyer or Seller
designated below.
BUYER: SELLER:
Indiana Gas Company, Inc. Anadarko Trading Company
Attn: John R. Talley Attn: Jake Woodall
Gas Supply Marketing
1630 N. Meridian Street 17001 Northchase Drive
Indianapolis, IN 46202 Houston, TX 77060
Phone: (317) 321-0479 Phone: (713) 874-3263
Telecopy: (317) 921-2760 Telecopy: (713) 874-3354
and and
Indiana Gas Company, Inc. Anadarko Trading Company
Attn: Gas Control Attn: Gas Control
1630 N. Meridian Street 17001 Northchase Drive
Indianapolis, IN 46202 Houston, TX 77060
Phone: (317) 321-0535 Phone: (713)874-3290
Telecopy: (317) 321-0787 After Hours: (800) 206-1659
On Call Gas Controller
Telecopy: (713) 874-1656
13. Possession and Warranty of Title:
(a) As between the parties hereto, Seller shall
be in exclusive control and possession of the Gas
delivered hereunder until the same shall have been
received by Transporter for Buyer's account at the
Receipt Point(s). Upon such delivery and receipt,
control and possession will transfer to
Transporter, provided however, that this provision
does not relieve Seller of its responsibility for
injuries or damage caused if Seller fails to meet
the quality standards of this Agreement, or
Transporter's Tariff. Title to Gas delivered
hereunder shall pass at the Receipt Point(s).
(b) Seller warrants to Buyer that it has good and
marketable title and/or authority to sell all Gas
delivered hereunder and such Gas is free and clear
from all liens, claims, and encumbrances of every
kind. Seller will indemnify and save Buyer
harmless against all losses, damages and expenses
of every character including, but not limited to,
reasonable attorneys' fees, with respect to the
Gas delivered by it to Buyer on account of
royalties, taxes, payments or other charges
applicable before delivery of the Gas hereunder,
as well as any liens, encumbrances and claims of
every kind which relate to control or possession
of the Gas prior to delivery by Seller under this
Agreement.
14. Assurance of Supply:
(a) In the event Seller fails to deliver the
quantities of Gas as agreed herein for any reason
other than force majeure, Seller shall reimburse
Buyer within 15 days of receipt of an invoice and
supporting detail from Buyer for the difference,
if any, between the price per MMBtu which Buyer
would have paid Seller for the deficient portion
of the Nominated Daily Quantity under this
Agreement, and the price per MMBtu for the same
quantity of Gas which Buyer or its agents may
acquire in replacement thereof. Buyer shall use
its reasonable efforts to obtain such replacement
Gas at the lowest price reasonably possible.
Seller shall reimburse Buyer for actual
damages incurred related to the underdelivery,
including incremental costs and expenses incurred
by Buyer related to the underdelivery or to the
replacement of Gas as a result of Seller's failure
to deliver as agreed, and including Transporter's
demand charges incurred without corresponding
benefit to Buyer, reimbursement for all penalties,
imbalances, and cashouts incurred. If the failure
to deliver is substantial, Seller shall forfeit
all Commodity Reservation Charges to otherwise be
paid under this Agreement for that Contract Month.
The amount of reimbursement due pursuant to this
Paragraph shall be Buyer's sole and exclusive
monetary remedy. In addition to the remedies
above, Buyer shall retain the right to terminate
this Agreement. In the event of a force majeure
occasion affecting Seller's deliveries, if Seller
fails to prorata curtail in accordance with
Paragraph 12 of this Agreement, Buyer shall also
have the right to seek specific performance and/or
injunctive relief to seek delivery of Buyer's
proportionate share.
Assurance of Market Demand:
(b) In the event Buyer fails to purchase Buyer's
Nominated Daily Quantity scheduled by Buyer for a
particular Contract Month, for reason other than
as permitted by this Agreement, Buyer shall
reimburse Seller within 15 days of receipt of an
invoice and supporting detail from Seller for
actual damages incurred related to such failure to
purchase, including the difference (if any)
between the price per MMBtu which Seller would
have received from Buyer for the deficient portion
of the Nominated Daily Quantity for the particular
Contract Month under this Agreement, and the price
per MMBtu for the same quantity of Gas which
Seller sells to a third party in replacement
thereof. In addition, Buyer shall reimburse
Seller for actual damages incurred related to such
failure to purchase including incremental costs
and expenses incurred by Seller related to the
replacement sale of the Gas as a result of Buyer's
failure to purchase the Nominated Daily Quantity
as scheduled. Seller shall use its best efforts
to sell such replacement Gas at the highest price
possible, pursuant to arms length negotiation with
a nonaffiliated entity. If or to the extent
Seller is unable to sell any portion of the Gas in
question to a replacement market(s), at Seller's
option, Buyer shall take and pay for an equivalent
amount of Gas in mutually agreeable subsequent
months at the commodity price in effect for the
month in which the deficiency occurred. The
amount of reimbursement due pursuant to this
Paragraph and the applicable Commodity Reservation
Charge shall be Seller's sole and exclusive
remedy.
15. Correspondence: Except as provided in Paragraph 12
above, any notice, statement or bill shall be in
writing and shall be duly delivered when (i) mailed,
postage prepaid, by registered, certified, or first
class mail, or (ii) sent by prepaid overnight delivery
to the applicable address as follows, or (iii) by
telecopy directed to the appropriate person and
telecopy number below with hard copy also delivered as
in (i) or (ii) above:
NOTICES TO BUYER NOTICES TO SELLER
INDIANA GAS COMPANY,INC. ANADARKO TRADING COMPANY
1630 N. Meridian St. 17001 Northchase Drive
Indianapolis, IN 46202 Houston, TX 77060
Attn: John R. Talley Attn: Jake Woodall
Phone: (317) 321-0479 Phone: (713) 874-3263
Telecopy: (317) 921-2760 Telecopy: (713) 874-3354
INVOICES TO BUYER INVOICES TO SELLER
INDIANA GAS COMPANY, INC. ANADARKO TRADING COMPANY
1630 N. Meridian St. 17001 Northchase Drive
Indianapolis, IN 46202 Houston, TX 77060
Attn: Corporate Accounting Attn: Jake Woodall
Phone: (317) 321-0479 Phone: (713) 874-3263
Telecopy: (317) 921-2760 Telecopy: (713) 874-3354
PAYMENTS TO BUYER PAYMENTS TO SELLER
INDIANA GAS COMPANY, INC. ANADARKO TRADING COMPANY
1630 N. Meridian St. Mellon Bank, N.A.
Indianapolis, IN 46202 Pittsburgh, PA
Attn: John R. Talley Account No. 1157237
Phone: (317) 321-0479 ARA No. 043000261
Telecopy: (317) 921-2760 Confirmation of transfer:
Ms. Lanette Chapman
Phone: (713) 874-3364
16. Miscellaneous:
(a) This Agreement is subject to all applicable
laws, orders, rules, and regulations of any State
or Federal governmental body or official having
jurisdiction and both Seller and Buyer agree that
the transactions agreed to hereunder shall be
conditioned upon compliance with all such laws,
orders, rules, and regulations.
(b) Seller and Buyer expressly agree that laws of
the State of Indiana, except the law regarding
conflict of laws, shall govern the validity,
construction, interpretation and effect of this
Agreement. All actions relating to this Agreement
must be commenced and litigated in Indiana. Venue
for any such litigation shall be in the United
States District Court for the Southern District of
Indiana, if jurisdictional requirements are met,
otherwise in a court outside of Buyer's service
area. Seller waives any argument that Seller
lacks the minimum contacts with Indiana sufficient
to permit an Indiana court to exercise lawful
jurisdiction.
(c) Each party shall have the right following the
provision of reasonable notice and at all
reasonable hours to examine the appropriate books
and records of the other party to the extent
necessary to verify compliance with this
Agreement, including the accuracy of any
statement, payment, a force majeure claim or other
claimed excuse of performance. In the event an
error is discovered and communicated to the other
party, such error shall be adjusted promptly.
(d) Buyer shall be entitled to request Seller to
perform such deliverability, quality, or other
tests as may be necessary in Buyer's reasonable
judgment, to confirm Seller's compliance with this
Agreement and Transporter's Tariff. Buyer has the
right to attend and observe such tests, which
shall be performed at Seller's sole expense.
(e) During any month, if the quantities received
by Transporter for Buyer at the Receipt Point(s),
exceed Buyer's nomination for that Contract Month,
with respect to those quantities Buyer shall have,
pursuant to this Agreement, the right at its
discretion to:
(i) if those quantities have not been
cashed-out by Transporter and those
quantities are the result of Seller's
overdeliveries to the Transporter for Buyer's
account, Buyer shall have the right to
Buyer's choice of the following options:
(a) purchase those quantities
from Seller at a mutually agreeable
price, or
(b) require Seller to remove
those quantities from Buyer's account
with Transporter, provided Transporter
is willing to place those quantities on
Seller's account with Transporter.
Moreover, and in that event, Buyer will
have no obligation to Seller with
respect to purchasing those quantities,
and to the extent Buyer has made any
payment to Seller related to those
quantities, Buyer shall be entitled to
reimbursement, which reimbursement will
occur no later than thirty (30) days
from the date Buyer notifies Seller that
those quantities have been removed from
Buyer's account with Transporter and
have been placed on Seller's account
with Transporter.
(ii) If quantities have been cashed-out
by Transporter and said quantities are the
result of Seller's overdeliveries to
Transporter for Buyer's account, Buyer shall
have the right to Buyer's choice of the
following options:
(a) to remit to Seller the
cash-out price per MMBtu which is paid
to Buyer by Transporter, or
(b) if Buyer has paid Seller
for those quantities, Buyer may receive
cash reimbursement equal to the
difference between the cashout price
paid to Buyer by Transporter, and the
price paid by Buyer to Seller for the
cashout quantity; or
(c) if Buyer has paid Seller
for those quantities, Buyer may offset
payments to Seller for the difference
between the cashout price paid to Buyer
by Transporter, and the price paid by
Buyer to Seller for the cashout
quantity.
(iii)In addition to the above remedies,
Seller shall bear the economic burden of any
non-cashout penalties caused by the
overdeliveries.
(f) Either party may pledge, mortgage or assign
its rights hereunder as security for indebtedness.
Either party may assign its rights or obligations
under this Agreement to a corporate affiliate
without the consent of the other party. This
Agreement is otherwise non-assignable except with
the prior written consent of Buyer and Seller. This
Agreement extends to and is binding upon the respective
successors of Buyer and Seller.
(g) If the Federal Energy Regulatory Commission
("FERC") issues a rule, regulation, order or
decision during the effectiveness of this
Agreement which would subject Buyer or Seller to a
detrimental economic effect from continued
performance due to the effectiveness of the new
rules, regulations, or tariff provisions, the
affected party may within ninety (90) days of the
FERC action give written notice to the other party
of any changes to this Agreement it believes are
necessary to maintain the economic bargain. If
Buyer and Seller are unable to mutually agree upon
appropriate modification(s) within thirty (30)
days following the receipt of the above-referenced
written notice, this Agreement shall terminate
effective the next first day of the month
occurring sixty (60) days following receipt of
such written notice. Both parties shall have the
duty to negotiate in good faith with respect to
such modifications. Upon termination, the
obligations of Buyer and Seller under the
Agreement shall cease with the exception of the
obligation to make payments still owing as to
periods prior to the termination date.
(h) The parties contemplate and condition all
obligations hereunder on the ability of Buyer to
recover the entirety of all costs to be paid
hereunder from Buyer's customers. If recovery of
all such costs is prevented or frustrated by an
action or omission of a regulatory or legal
authority, Buyer shall have the right to terminate
this Agreement without further obligation of any
kind to Seller except to pay for Gas already
delivered.
(i) Seller shall have the right, but at no cost,
delay, risk, or expense to Buyer, to extract and
retain liquefiable hydrocarbons and/or helium, or
to have such extracted, through processing the
natural gas delivered hereunder at a point(s)
located on or adjacent to Transporter's system
downstream of the Receipt Point. In the event
Seller elects to process its natural gas pursuant
to this Paragraph, Seller shall not initiate such
processing unless Seller has made arrangements to
keep Buyer whole on an MMBtu basis in terms of i)
the total heating value of the natural gas to be
redelivered to Transporter's system by Seller for
Buyer's account after processing the natural gas
stream as compared to ii) the total heating value
of the natural gas attributable to natural gas
initially sold to Buyer by Seller at the Receipt
Point after reduction for the fuel required to
transport the natural gas to the inlet of the
processing facility so utilized. Further, such
processing arrangements shall not cause Buyer to
incur any accounting or other administrative
duties. All liquefiable hydrocarbons and/or
helium so extracted under this Paragraph shall
become the property of Seller. Seller's option to
commence the processing of natural gas pursuant to
this Paragraph or to decrease or to increase the
extent of such processing can be exercised from
time to time at Seller's discretion. Seller
agrees that it shall indemnify and hold Buyer
harmless from any and all claims which may arise
out of the extraction or sale of liquefiable
hydrocarbons and/or helium from the natural gas
stream sold to Buyer by Seller under this
Agreement including but not limited to royalties
or taxes related thereto.
(j) This Agreement is conditioned on the
continued solvency of Buyer and Seller. Both
parties shall have the right to request reasonable
information from the other so as to verify the
continued solvency of the other party. If
reasonable concerns as to the continued solvency
of one party arise, the other party shall be
entitled to reasonable assurances of the other
party's continued ability to perform. If one
party becomes insolvent or seeks bankruptcy
relief, the other party may prospectively
terminate this Agreement on prior notice without
further obligation other than to pay for Gas
previously delivered.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement in duplicate originals.
"SELLER"
ANADARKO TRADING COMPANY
By: ____________________________
Its: ___________________________
"BUYER"
INDIANA GAS COMPANY, INC.
By: ____________________________
Its:____________________________
State of
County of
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Seller and
acknowledged his authority to sign this contract on behalf
of Seller.
Notary Public
State of Indiana
County of Marion
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Buyer and
acknowledged his authority to sign this contract on behalf
of Buyer.
Notary Public
My Commission Expires:
My County of Residence:
Contract No. NGFSA9609 (Panhandle T-O-R Agreement)
NATURAL GAS FIRM SUPPLY AGREEMENT
This Natural Gas Firm Supply Agreement ("Agreement"), is
made, entered into, and effective, as of the 1st day of
November, 1995 by and between TENNECO GAS MARKETING COMPANY,
and INDIANA GAS COMPANY, INC. (Buyer).
Recitals
1. Seller is a corporation incorporated and existing under
the laws of the State of Kentucky with its principal
place of business at 1100 Louisiana, Houston, Texas
77252-2511.
2. Buyer is a corporation incorporated and existing under
the laws of the State of Indiana, with its principal
place of business at 1630 North Meridian Street,
Indianapolis, Indiana.
3. This Agreement contains the mutual promises,
warranties, and covenants pursuant to which Buyer as a
purchaser of natural gas, and Seller as a merchant of
natural gas, shall perform the transactions described
herein.
4. Under this Agreement, Seller agrees to provide natural
gas on a firm basis, consistent with the terms and
conditions contained herein.
Definitions
As used herein, the following words shall
have the following definitions:
A. The term "Transporter" shall mean Panhandle
Eastern Pipe Line Company, or its successor.
B. The term "Transporter's Tariff"
shall mean the tariff provisions of
Transporter, as approved by the Federal
Energy Regulatory Commission, or any
successor thereto, ("FERC"), including
changes to such tariff made after this
Agreement is effective, and Buyer's
contractual arrangements with Transporter.
If FERC should determine that
Transporter's Tariff shall cease to apply, in
whole or in part, to transactions hereunder,
the parties will promptly meet
to determine and negotiate mutually
acceptable replacement guidelines and standards.
In that event, until an agreement is reached, the
most recently effective Transporter's Tariff shall
continue to apply.
C. The term "Btu" shall mean British
thermal unit, as defined in Transporter's
Tariff.
D. The term "Contract Month" shall
mean a calendar month during the
effectiveness of this Agreement, as
interpreted in light of Transporter's tariff.
E. The term "Day" shall be defined as
it is defined in Transporter's Tariff, or as
applied by Transporter.
F. The term "Gas" shall mean natural
gas, which shall meet the quality
specifications in this Agreement and
Transporter's Tariff.
G. The terms "MMBtu," "Dekatherm" or
"DTH" shall mean one million (1,000,000)
British thermal units.
H. The term "Maximum Daily Quantity"
shall mean the quantity of gas which Seller
shall stand ready to supply as nominated by
Buyer for purchase on a particular day; as
specified in
Section 2 below.
I. The term "Nominated Daily Quantity"
shall mean the quantity of Gas scheduled by
Buyer pursuant to paragraph 2(c), labeled
"Monthly Nomination", of this Agreement.
J. The term "Receipt Point(s)" shall
mean the point or points on Transporter's
system where Gas quantities are delivered
hereunder by Seller to Buyer.
1. Term: The term of this Agreement shall be from
November 1, 1995 through March 31, 1998.
2. Quantity and Nominations:
(a) Purchase Quantity - Subject to the terms and
conditions of this Agreement, Buyer shall purchase
and receive and Seller shall sell and deliver a
quantity of gas equal to the Nominated Daily
Quantity specified by Buyer pursuant to Section
2(c) below, not to exceed the Maximum
Daily Quantity.
(b) Maximum Quantity - Notwithstanding anything to the
contrary herein, the maximum quantity of gas that
Seller is obligated to sell and deliver at the
Delivery Point(s) under this Agreement (herein
referred to as the "Maximum Daily Quantity")
shall be equal to the volumes listed in the table
below.
Month Quantity
November - 10,000 MMBtu per day
December - 20,000 MMBtu per day
January - 20,000 MMBtu per day
February - 20,000 MMBtu per day
March - 10,000 MMBtu per day
April - 0 MMBtu per day
May - 0 MMBtu per day
June - 0 MMBtu per day
July - 0 MMBtu per day
August - 0 MMBtu per day
September - 0 MMBtu per day
October - 0 MMBtu per day
(c) Monthly Nomination - On or before the earlier of
(a) five business days prior to the first day of
of the next month or (b) two business days prior
to Transporter(s) nomination deadline for the
next month, Buyer will provide Seller with a
nomination specifying the natural gas requirements
to be purchased and received under this Agreement
for each day during the next month "Nominated
Daily Quantity").
(d) Manner of Submitting Nominations - Buyer may
provide the nominations set forth above in this
section either orally (including by telephone) or
in writing (including by fax), but an oral
nomination must be followed by written
confirmation within twenty-four (24) hours.
(e) No Minimum Nomination and Take Requirement -
Except as otherwise provided in this Agreement
concerning the Nominated Daily Quantity, no
provision of this Agreement shall be construed
to require Buyer to purchase or take any minimum
quantity of Gas, or to pay commodity charges for
any minimum quantity not taken.
3. Price: Subject to the terms of this Agreement, Buyer
shall pay to Seller a Reservation Charge and a
Commodity Charge. Those charges shall be determined as
follows:
(a) Reservation Charge - Each Contract Month,
Buyer shall pay to Seller an amount determined by
multiplying the applicable Maximum Daily
Quantity set forth in Paragraph 2 above by the
Reservation Rate set forth for that particular
Contract Month in the following schedule:
Contract Month Reservation Rate
November $0.020 Per MMBtu
December $0.020 Per MMBtu
January $0.020 Per MMBtu
February $0.020 Per MMBtu
March $0.020 Per MMBtu
April $0.000 Per MMBtu
May $0.000 Per MMBtu
June $0.000 Per MMBtu
July $0.000 Per MMBtu
August $0.000 Per MMBtu
September $0.000 Per MMBtu
October $0.000 Per MMBtu
(b) Commodity Charge - Buyer shall pay to Seller
each Contract Month an amount determined by
multiplying the quantities of gas actually
delivered to Buyer under this Agreement at the
Receipt Point(s) during the Contract Month, up to
the quantity nominated by Buyer, by a price per
MMBtu determined using the first monthly index for
Inside FERC's GAS MARKET REPORT, for "PEPL
Oklahoma", for the applicable month, which price
shall be deemed to be a delivered price to the
Receipt Point(s), inclusive of actual
transportation charges (including ACA, GRI, fuel,
all applicable surcharges, gathering costs,
transition costs, and take or pay, or other costs,
if any) from the wellhead to the Receipt Point(s),
and shall include all royalties and all present
and future production, delivery, severance, excise
taxes, and all other costs of delivery to the
Receipt Point(s).
If a Receipt Point(s) other than mainline Receipt
Point(s) is used, any gathering, transportation or
other costs imposed on Buyer to transport the Gas
to Transporter's mainline shall be deducted from
the Commodity Charge.
(c) Applicable Commodity Charge Index. If at any
time INSIDE FERC's GAS MARKET REPORT (or any
successor publication selected hereunder) is no
longer published, or if the specific postings
referenced in INSIDE FERC's GAS MARKET REPORT are
no longer published, or no longer reflect the
original posting methodology used at the time of
the execution of this Agreement, the commodity
price shall be temporarily determined by reference
to applicable postings in Natural Gas Intelligence
Gas Price Index and the Parties shall promptly
negotiate a new mutually agreeable method and/or
successor publication from which to determine
commodity pricing.
(d) All prices and charges paid hereunder shall be
computed on a "dry" Btu basis.
4. Taxes: Subject to the terms of this Agreement, Seller
shall pay all taxes imposed with respect to the Gas
delivered to Buyer hereunder prior to delivery at the
Receipt Point(s) and Buyer shall pay all taxes imposed
upon Buyer with respect to such Gas on and after
delivery thereof to Buyer at the Receipt Point(s).
5. Transportation Arrangements: Seller shall be
responsible for contracting with and paying for
transportation upstream of the Receipt Point and Buyer
shall be responsible to contracting with and paying for
transportation downstream of the Receipt Point. Buyer
and Seller shall cooperate to ensure that nominations
(including any necessary adjustments thereto) are made
timely and that such nominations reflect the actual
expected deliveries and receipts. Seller shall be
responsible for nominations with Seller's transporter
upstream of the Receipt Point and Buyer shall be
responsible for nominations with Transporter downstream
from the Receipt Point.
6. Receipt Point(s): The Receipt Point under this
Agreement shall be Seller's pool point on Transporter,
Pool 4563. Alternate receipt point(s) hereunder shall
be at mutually agreeable points of receipt on the
mainline system of Transporter. In the event of a
prospective curtailment by Transporter of gas tendered
by Seller to Buyer from Seller's pool, Seller shall be
obligated to deliver gas to Buyer at one or more of the
following primary receipt points:
Meter No. Receipt Point
006204 CIG Lakin
009900 GPM Hansford
040524 Maxus Sunray
Seller shall have a firm obligation to deliver gas to
Buyer at the Receipt Point(s) and Buyer shall have a
firm obligation to take gas as nominated by Buyer at
the Receipt Point(s). Buyer shall have the discretion
to waive the requirement that a mainline receipt point
be used, provided, however, that no such waiver shall
constitute a waiver pertaining to any other or future
purchases and any such waiver shall not prejudice the
ability of Buyer to insist on future mainline
deliveries.
7. Operations: Buyer and Seller agree to accept for
purposes of this Agreement the applicable quality,
delivery pressure, measurement requirements and other
applicable rules, procedures, guidelines, tariff
provisions, contractual arrangements and policies
of Transporter, as the same may change from time to
time.
8. Gas Quality: Gas delivered hereunder shall comply with
the quality and other specifications of Transporter's
Tariff, and shall be merchantable and free from
impurities that could affect its safe and normal use,
and free from hazardous or toxic substances, wastes, or
other contaminants.
9. Penalties: Seller shall be liable for all penalties,
cashouts, or other costs imposed on Buyer or Seller by
any third parties, including Seller's transporters and
Transporter, to the extent that such penalties are
caused by Seller's actions or inactions. Buyer shall
be liable for all penalties, cashouts, or other costs
imposed on Buyer or Seller by any third parties
including Seller's transporters and Transporter, to the
extent that such penalties are caused by Buyer's
actions or inactions. Seller agrees to use all
reasonable efforts to minimize the possibility of
imbalance at the Receipt Point(s) associated with
Buyer's quantities.
10. Measurement: Measurement and determination of the
quantity of Gas delivered to Buyer at the Delivery
Point(s) shall be made in accordance with the
measurement procedures provided in Transporter's
Tariff.
11. Billing and Payment:
(a) On or before the tenth (10th) day following
each Contract Month, Seller shall furnish, or have
furnished, one statement to Buyer stating the
quantity of Gas delivered to the Receipt Point(s)
for Buyer in the preceding month and the total
dollar amount due Seller pursuant to this
Agreement (the "Statement"). Seller's Statement
shall reflect both Reservation and Commodity
Charges due to Seller for the preceding Contract
Month. As to Commodity Charges, Seller's
Statement shall be based on the quantity of Gas
nominated by Buyer in such month, unless actual
information is available indicating Buyer received
less than the nominated quantity, in which event
the statement shall be based on the actual
information or best available estimate. On or
before the twenty fifth day of the month or the
tenth day following the receipt of Seller's
statement ("Due Date"), whichever is later, Buyer
shall make wire transfer to the account stated on
the invoice.
(b) Buyer shall have the right to offset amounts
payable by Seller, due from Seller to Buyer, or
costs attributable to Seller against any payments
from Buyer to Seller under this Agreement.
(c) Interest shall accrue on all late payments
commencing on the applicable Due Date at the then
current prime rate of National City Bank,
Indianapolis, Indiana, or its successor, or the
maximum lawful rate, whichever is lower.
(d) If the Statements above are based on
nominations or estimates of quantities delivered,
Seller shall have the duty to promptly reconcile
such amounts with actual deliveries and remedy the
imbalance in accordance with the procedures
specified in Paragraphs 9 and 14 and as otherwise
provided herein, and in accordance with
Transporter's procedures.
12. Force Majeure: All obligations of the parties to this
Agreement shall be suspended while and only for so long
as compliance is prevented by a cause beyond the
control of the party claiming force majeure, such as an
"Act of God", war, civil disturbance, Federal or State
or local law, or binding order of a court or
governmental agency, provided the suspension shall be
only to the extent performance was prevented by the
event of force majeure and provided the party claiming
force majeure provides immediate notice by telephone
and followed by prompt written notice by telecopy with
reasonably full particulars to the other party at or
near the commencement of such force majeure.
Notwithstanding the foregoing, the events or
occurrences described above shall relieve Seller of its
obligations under this Agreement only to the extent
Seller's performance is prevented and only after Seller
has first curtailed all interruptible sales of Gas
supplies to be delivered to Transporter's System.
Seller agrees to provide Buyer with no less than
Buyer's pro-rata share of Seller's available firm
supply on Transporter. A party claiming force majeure
hereunder shall have the duty to make all reasonable
efforts to remedy the force majeure condition as
promptly as possible.
Nothing in this force majeure provision shall serve to
absolve a party hereto from liability for its own
negligence or failure to exercise reasonable care in
performance of this Agreement.
The term force majeure specifically excludes the
following occurrences or events:
(a) the loss, interruption, or curtailment of
interruptible transportation on either Transporter
or any third party transporter to effect receipt
or delivery of Gas hereunder;
(b) decreases in natural Gas supply due to
allocation or reallocation of production by well
operators, prorationing, or for other reasons; or
(c) failure of specific, individual wells or
appurtenant facilities in the absence of a force
majeure event broadly affecting other wells in the
same geographic area.
(d) the ability or inability of a party to recover the
costs to be paid hereunder from its customers, or
the issuance of a rule, regulation, order or
decision by a state or federal governmental agency
which would subject either party to a detrimental
economic effect from continued performance due to
the effectiveness of the new rules, regulations,
or tariff provisions.
Notice of force majeure must be sent immediately,
without regard to standard business hours, by telephone
and telecopy, with hard copy sent by overnight mail, to
each of the representatives for Buyer or Seller
designated below.
BUYER: SELLER:
Indiana Gas Company, Inc. TENNECO GAS MARKETING COMPANY
Attn: John R. Talley Attn: Eddie Clancy
Gas Supply 1010 Milam (IFP 10th Floor)
1630 N. Meridian Street Houston, TX 77252-2511
Indianapolis, IN 46202 Phone: (713) 757-6715
Phone: (317) 321-0479 Pager: (800) 593-7786
Telecopy: (317) 921-2760 Telecopy: (713) 757-6356
and
Indiana Gas Company, Inc.
Attn: Gas Control
1630 N. Meridian Street
Indianapolis, IN 46202
Phone: (317) 321-0535
Telecopy: (317) 321-0787
13. Possession and Warranty of Title:
(a) As between the parties hereto, Seller shall
be in exclusive control and possession of the Gas
delivered hereunder until the same shall have been
received by Transporter for Buyer's account at the
Receipt Point(s). Upon such delivery and receipt,
control and possession will transfer to
Transporter, provided however, that this provision
does not relieve Seller of its responsibility for
injuries or damage caused if Seller fails to meet
the quality standards of this Agreement, or
Transporter's Tariff. Title to Gas delivered
hereunder shall pass at the Receipt Point(s).
(b) Seller warrants to Buyer that it has good and
marketable title and/or authority to sell all Gas
delivered hereunder and such Gas is free and clear
from all liens, claims, and encumbrances of every
kind. Seller will indemnify and save Buyer
harmless against all losses, damages and expenses
of every character including, but not limited to,
reasonable attorneys' fees, with respect to the
Gas delivered by it to Buyer on account of
royalties, taxes, payments or other charges
applicable prior to delivery of the Gas hereunder,
as well as any liens, encumbrances and claims of
every kind.
14. Failure To Deliver or Take:
(a) If Seller fails to deliver the Nominated Daily
Quantity during any Month and such inability to
deliver is not excused under this Agreement, then
Seller shall reimburse Buyer for the amount of
increased cost to Buyer of acquiring replacement
gas during the same Month. The amount owed by
Seller to Buyer hereunder shall be calculated as
the product of (A) the difference, if positive,
between (i) the increased price paid by Buyer for
replacement gas, including any additional
transportation and fuel costs incurred by Buyer to
receive such replacement gas and (ii) the then
applicable Commodity Charge and (B) the difference
between the Nominated Daily Quantity and the
quantity of gas actually delivered by Seller.
Buyer agrees to act in good faith in purchasing
such replacement gas so as to minimize Seller's
obligations to Buyer under this Section.
(b) If Buyer fails to purchase the Nominated Daily
Quantity during any Month and such inability to
purchase is not excused under this Agreement, then
Buyer shall reimburse Seller for the loss
resulting therefrom. The amount owed by Buyer to
Seller hereunder shall be calculated as the
product of (A) the difference, if positive,
between (i) the then applicable Commodity Charge
and (ii) the lesser price received by Seller from
a third party purchaser, including any additional
transportation and fuel costs incurred by Seller
to deliver gas to a third party purchaser and (B)
the difference between the Nominated Daily
Quantity and the quantity of gas actually
purchased by Buyer. Seller agrees to act in good
faith in selling such gas to a third party
purchaser so as to minimize Buyer's obligations to
Seller under this Section.
(c) The parties agree that the actual losses incurred
by a party as a result of the other party's
failure to deliver or purchase quantities would be
uncertain and impossible to determine with
precision. As a result, payment by Seller and
Buyer in accordance with Subsections 14(a) and
14(b) for their failure to deliver or purchase
certain quantities of gas, respectively, shall be
the failing party's entire and sole liability to
the non-failing party, and the right to recover
such payment shall be the non-failing party's sole
and exclusive remedy, for the failing party's
failure or breach of its obligation to deliver or
purchase the Nominated Daily Quantity set forth in
this Agreement. Payment by Seller or Buyer
pursuant to this Section 14 is reasonable
compensation for such failures and shall be in
lieu of and exclude any and all other liabilities
of the failing party. Such payment shall not,
however, prevent termination of this Agreement by
the non-failing party if the failure to purchase
or deliver substantially impairs the value of this
Agreement to the non-failing party.
15. Correspondence: Except as provided in Paragraph 12 above,
any notice, statement or bill shall be in writing and shall
be duly delivered when (i) mailed, postage prepaid, by
registered, certified, or first class mail, or (ii) sent by
prepaid overnight delivery to the applicable address as
follows, or (iii) by telecopy directed to the appropriate
person and telecopy number below with hard copy also
delivered as in (i) or (ii) above:
NOTICES NOTICES
BUYER: INDIANA GAS COMPANY,INC. SELLER: TENNECO GAS MARKETING COMPANY
Post Office Box 2511
1630 N. Meridian St. 1010 Milam (IFP 7th Floor)
Indianapolis, IN 46202 Houston, TX 77252-2511
Attn: John R. Talley Attn: Dan Dettmer
(317) 321-0479 Phone: (713) 757-8677
Telecopy: (317) 921-2760 Telecopy: (713) 757-6356
INVOICES INVOICES
BUYER: INDIANA GAS COMPANY, INC. SELLER: TENNECO GAS MARKETING COMPANY
1630 N. Meridian St. Post Office Box 2511
Indianapolis, IN 46202 1010 Milam (IFP 7th Floor)
Attn: Sharon W. Reeves Houston, TX 77252-2511
Phone: (317) 321-0428 Attn: Accounting
Telecopy: (317) 921-2760 Phone: (713) 757-8677
Telecopy: (713) 757-6356
PAYMENTS PAYMENTS
BUYER: INDIANA GAS COMPANY, INC. SELLER: TENNECO GAS MARKETING COMPANY
1630 N. Meridian St. Melon Bank, N.A.
Indianapolis, IN 46202 Pittsburgh, PA
Attn: Sharon W. Reeves Account #199-8802
Phone: (317) 321-0428 ABA 043000261
Telecopy: (317) 921-2760
16. Miscellaneous:
(a) This Agreement is subject to all applicable laws,
orders, rules, and regulations of any State or Federal
governmental body or official having jurisdiction and
both Seller and Buyer agree that the transactions
agreed to hereunder shall be conditioned upon
compliance with all such laws, orders, rules, and
regulations.
(b) Seller and Buyer expressly agree that laws of the
State of Indiana shall govern the validity,
construction, interpretation and effect of this
Agreement, without regard to principles of conflicts of
law.
(c) Each party shall have the right following the
provision of reasonable notice and at all reasonable
hours to examine the appropriate books and records of
the other party to the extent necessary to verify
compliance with this Agreement, including the accuracy
of any statement, payment, a force majeure claim or
other claimed excuse of performance. In the event an
error is discovered and communicated to the other
party, such error shall be adjusted promptly.
(d) During any month, if the quantities of Gas
received by Transporter for Buyer at the Receipt
Point(s) exceed Buyer's nomination for that month,
Seller shall bear the economic burden of any costs
incurred by Buyer related to the overdelivery, and
with respect to the quantities over Buyer's
nomination, Buyer shall have, in addition to any
other rights it may have, the right at its
discretion to:
(i) purchase those quantities at a mutually
agreeable price; or
(ii) require Seller to remove those
quantities from Buyer's account with Transporter.
Moreover, and in that event, Buyer will have no
obligation to Seller with respect to those
quantities, and to the extent Buyer has made any
payment related to those quantities, Buyer shall
be entitled to reimbursement,
which reimbursement will occur no later than
thirty (30) days from the date the overdelivery is
discovered. Buyer shall be entitled to interest
on this amount, which shall be computed in
accordance with Paragraph 11 (c) of this Agreement
and shall accrue commencing with the payment by Buyer.
(e) Either party may pledge, mortgage or assign its
rights hereunder as security for indebtedness. Either
party may assign its rights or obligations under this
Agreement to a corporate affiliate without the consent
of the other party. This Agreement is otherwise
non-assignable except with the prior written consent of
Buyer and Seller.
(f) This Agreement is conditioned on the continued
solvency of Buyer and Seller. Both parties shall have
the right to request reasonable information from the
other so as to verify the continued solvency of the
other party. If reasonable concerns as to the
continued solvency of one party arise, the other party
shall be entitled to reasonable assurances of the other
party's continued ability to perform. If one party
becomes insolvent or seeks bankruptcy relief, the other
party may prospectively terminate this Agreement on
prior notice without further obligation other than to
pay for Gas previously delivered.
(g) No incidental, consequential or punitive damages -
NOTWITHSTANDING ANY OTHER PROVISIONS HEREIN, THE
PARTIES HERETO WAIVE ANY AND ALL RIGHTS, CLAIMS,
OR CAUSES OF ACTION ARISING UNDER THIS AGREEMENT
FOR INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.
(h) Third Party Beneficiaries - Neither Buyer nor
Seller intend for the provisions of this Agreement
to benefit any third party. No third party shall
have any right to enforce the terms of this
Agreement against Buyer or Seller.
(i) Interpretation - In interpretation and
construction of this Agreement, no presumption
shall be made against any Party on grounds such
Party drafted the Agreement of any provision
thereof.
(j) Waiver of Default - No waiver by either Party of
one or more defaults or breaches by the other in
performance of any of the terms or provisions of
this Agreement shall operate or be construed as a
waiver of any future default or breach, whether of
a like or of a different character.
(k) Entire Agreement - The terms and conditions
contained herein constitute the full and complete
agreement between the Parties and any change to be
made must be submitted in writing and executed by
both Parties.
(l) Severability - Except as otherwise stated herein,
any section declared or rendered unlawful by a
court of law or regulatory authority with
jurisdiction over the parties or deemed unlawful
because of a statutory change will not otherwise
affect the lawful obligations that arise under
this Agreement.
(m) Enforceability - Each Party represents that is has
all necessary power and authority to enter into
and perform its obligations under this Agreement
and that this Agreement constitutes a legal, valid
and binding obligation of that Party enforceable
against it in accordance with its terms, except as
such enforceability may be affected by any
bankruptcy law or the application of principles of
equity.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in duplicate originals.
"SELLER"
TENNECO GAS MARKETING COMPANY
By: ____________________________
Its: ___________________________
"BUYER"
INDIANA GAS COMPANY, INC.
By: ____________________________
Its:____________________________
State of
County of
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Seller and
acknowledged his authority to sign this contract on behalf
of Seller.
Notary Public
State of Indiana
County of Marion
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Buyer and
acknowledged his authority to sign this contract on behalf
of Buyer.
Notary Public
My Commission Expires:
My County of Residence:
Contract No. NGFSA9619 (Texas Gas T-O-R Agreement)
NATURAL GAS FIRM SUPPLY AGREEMENT
This Natural Gas Firm Supply Agreement ("Agreement"), is
made, entered into, and effective, as of the 1st day of
November, 1995 by and between TENNECO GAS MARKETING COMPANY,
(Seller) and INDIANA GAS COMPANY, INC. (Buyer).
Recitals
1. Seller is a corporation incorporated and existing under
the laws of the State of Kentucky with its principal
place of business at 1100 Louisiana, Houston, Texas
77252-2511.
2. Buyer is a corporation incorporated and existing under
the laws of the State of Indiana, with its principal
place of business at 1630 North Meridian Street,
Indianapolis, Indiana.
3. This Agreement contains the mutual promises,
warranties, and covenants pursuant to which Buyer as a
purchaser of natural gas, and Seller as a merchant of
natural gas, shall perform the transactions described
herein.
4. Under this Agreement, Seller agrees to provide natural
gas on a firm basis, consistent with the terms and
conditions contained herein.
Definitions
As used herein, the following words shall
have the following definitions:
A. The term "Transporter" shall mean Texas Gas
Transmission Corporation, or its successor.
B. The term "Transporter's Tariff"
shall mean the tariff provisions of
Transporter, as approved by the Federal
Energy Regulatory Commission, or any
successor thereto, ("FERC"), including
changes to such tariff made after this
Agreement is effective, and Buyer's
contractual arrangements with Transporter.
If FERC should determine that
Transporter's Tariff shall cease to apply, in
whole or in part, to transactions hereunder,
the parties will promptly meet
to determine and negotiate mutually acceptable
replacement guidelines and standards. In that event,
until an agreement is reached, the most
recently effective Transporter's Tariff shall
continue to apply.
C. The term "Btu" shall mean British
thermal unit, as defined in Transporter's
Tariff.
D. The term "Contract Month" shall
mean a calendar month during the
effectiveness of this Agreement, as
interpreted in light of Transporter's tariff.
E. The term "Day" shall be defined as
it is defined in Transporter's Tariff, or as
applied by Transporter.
F. The term "Gas" shall mean natural
gas, which shall meet the quality
specifications in this Agreement and
Transporter's Tariff.
G. The terms "MMBtu," "Dekatherm" or
"DTH" shall mean one million (1,000,000)
British thermal units.
H. The term "Maximum Daily Quantity"
shall mean the quantity of gas which Seller
shall stand ready to supply as nominated by
Buyer for purchase on a particular day; as
specified in
Section 2 below.
I. The term "Nominated Daily Quantity"
shall mean the quantity of Gas scheduled by
Buyer pursuant to paragraph 2(c), labeled
"Monthly Nominations".
J. The term "Receipt Point(s)" shall
mean the point or points on Transporter's
system where Gas quantities are delivered
hereunder by Seller to Buyer.
1. Term: The term of this Agreement shall be from
November 1, 1995 through March 31, 1998.
2. Quantity and Nominations:
(a) Purchase Quantity - Subject to the terms and
conditions of this Agreement, Buyer shall purchase
and receive and Seller shall sell and deliver a
quantity of gas equal to the Nominated Daily
Quantity specified by Buyer pursuant to Section
2(c) below, not to exceed the Maximum
Daily Quantity.
(b) Maximum Quantity - Notwithstanding anything to the
contrary herein, the maximum quantity of gas that
Seller is obligated to sell and deliver at the
Delivery Point(s) under this Agreement (herein
referred to as the "Maximum Daily Quantity")
shall be equal to the volumes listed in the table
below.
Month Quantity
November - 8,000 MMBtu per day
December - 16,000 MMBtu per day
January - 16,000 MMBtu per day
February - 16,000 MMBtu per day
March - 8,000 MMBtu per day
April - 0 MMBtu per day
May - 0 MMBtu per day
June - 0 MMBtu per day
July - 0 MMBtu per day
August - 0 MMBtu per day
September - 0 MMBtu per day
October - 0 MMBtu per day
(c) Monthly Nomination - On or before the earlier of
(a) five business days prior to the first day of
of the next month or (b) two business days prior
to Transporter(s) nomination deadline for the
next month, Buyer will provide Seller with a
nomination specifying the natural gas requirements
to be purchased and received under this Agreement
for each day during the next month "Nominated
Daily Quantity").
(d) Manner of Submitting Nominations - Buyer may
provide the nominations set forth above in this
section either orally (including by telephone) or
in writing (including by fax), but an oral
nomination must be followed by written
confirmation within twenty-four (24) hours.
(e) No Minimum Nomination and Take Requirement -
Except as otherwise provided in this Agreement
concerning the Nominated Daily Quantity, no
provision of this Agreement shall be construed
to require Buyer to purchase or take any minimum
quantity of Gas, or to pay commodity charges for
any minimum quantity not taken.
3. Price: Subject to the terms of this Agreement, Buyer
shall pay to Seller a Reservation Charge and a
Commodity Charge. Those charges shall be determined as
follows:
(a) Reservation Charge - Each Contract Month,
Buyer shall pay to Seller an amount determined by
multiplying the applicable Maximum Daily Quantity
set forth in Paragraph 2 above by the Reservation
Rate set forth for that particular Contract Month
in the following schedule:
Contract Month Reservation Rate
November $0.025 Per MMBtu
December $0.025 Per MMBtu
January $0.025 Per MMBtu
February $0.025 Per MMBtu
March $0.025 Per MMBtu
April $0.000 Per MMBtu
May $0.000 Per MMBtu
June $0.000 Per MMBtu
July $0.000 Per MMBtu
August $0.000 Per MMBtu
September $0.000 Per MMBtu
October $0.000 Per MMBtu
(b) Commodity Charge - Buyer shall pay to Seller
each Contract Month an amount determined by
multiplying the quantities of gas actually
delivered to Buyer under this Agreement at the
Receipt Point(s) during the Contract Month, up to
the quantity nominated by Buyer, by a price per
MMBtu determined using the first monthly index for
Inside FERC's GAS MARKET REPORT, for Texas Gas
Zone SL, for the applicable month, which price
shall be deemed to be a delivered price to the
Receipt Point(s), inclusive of actual
transportation charges (including ACA, GRI, fuel,
all applicable surcharges, gathering costs,
transition costs, and take or pay, or other costs,
if any) from the wellhead to the Receipt Point(s),
and shall include all royalties and all present
and future production, delivery, severance, excise
taxes, and all other costs of delivery to the
Receipt Point(s).
If a Receipt Point(s) other than mainline Receipt
Point(s) is used, any gathering, transportation or
other costs imposed on Buyer to transport the Gas
to Transporter's mainline shall be deducted from
the Commodity Charge.
(c) Applicable Commodity Charge Index. If at any
time INSIDE FERC's GAS MARKET REPORT (or any
successor publication selected hereunder) is no
longer published, or if the specific postings
referenced in INSIDE FERC's GAS MARKET REPORT are
no longer published, or no longer reflect the
original posting methodology used at the time of
the execution of this Agreement, the commodity
price shall be temporarily determined by reference
to applicable postings in Natural Gas Intelligence
Gas Price Index and the Parties shall promptly
negotiate a new mutually agreeable method and/or
successor publication from which to determine
commodity pricing.
(d) All prices and charges paid hereunder shall be
computed on a "dry" Btu basis.
4. Taxes: Subject to the terms of this Agreement, Seller
shall pay all taxes imposed with respect to the Gas
delivered to Buyer hereunder prior to delivery at the
Receipt Point(s) and Buyer shall pay all taxes imposed
upon Buyer with respect to such Gas on and after
delivery thereof to Buyer at the Receipt Point(s).
5. Transportation Arrangements: Seller shall be
responsible for contracting with and paying for
transportation upstream of the Receipt Point and Buyer
shall be responsible to contracting with and paying for
transportation downstream of the Receipt Point. Buyer
and Seller shall cooperate to ensure that nominations
(including any necessary adjustments thereto) are made
timely and that such nominations reflect the actual
expected deliveries and receipts. Seller shall be
responsible for nominations with Seller's transporter
upstream of the Receipt Point and Buyer shall be
responsible for nominations with Transporter downstream
from the Receipt Point.
6. Receipt Point(s): The Receipt Point under this
Agreement shall be Seller's pool point on Transporter,
Point P9926. Alternate receipt point(s) hereunder
shall be at mutually agreeable points of receipt on the
mainline system of Transporter. In the event of a
prospective curtailment by Transporter of gas tendered
by Seller to Buyer from Seller's pool, Seller shall be
obligated to deliver gas to Buyer at one or more of the
following primary receipt points:
Meter No. Receipt Point Volume
2790 Henry Hub 5,000
2845 Lake Pagie 5,000
9003 Egan 10,000
Seller shall have a firm obligation to deliver gas to
Buyer at the Receipt Point(s) and Buyer shall have a
firm obligation to take gas as nominated by Buyer at
the Receipt Point(s). Buyer shall have the discretion
to waive the requirement that a mainline receipt point
be used, provided, however, that no such waiver shall
constitute a waiver pertaining to any other or future
purchases and any such waiver shall not prejudice the
ability of Buyer to insist on future mainline
deliveries.
7. Operations: Buyer and Seller agree to accept for
purposes of this Agreement the applicable quality,
delivery pressure, measurement requirements and other
applicable rules, procedures, guidelines, tariff
provisions, contractual arrangements and policies
of Transporter, as the same may change from time to
time.
8. Gas Quality: Gas delivered hereunder shall comply with
the quality and other specifications of Transporter's
Tariff, and shall be merchantable and free from
impurities that could affect its safe and normal use,
and free from hazardous or toxic substances, wastes, or
other contaminants.
9. Penalties: Seller shall be liable for all penalties,
cashouts, or other costs imposed on Buyer or Seller by
any third parties, including Seller's transporters and
Transporter, to the extent that such penalties are
caused by Seller's actions or inactions. Buyer shall
be liable for all penalties, cashouts, or other costs
imposed on Buyer or Seller by any third parties
including Seller's transporters and Transporter, to the
extent that such penalties are caused by Buyer's
actions or inactions. Seller agrees to use all
reasonable efforts to minimize the possibility of
imbalance at the Receipt Point(s) associated with
Buyer's quantities.
10. Measurement: Measurement and determination of the
quantity of Gas delivered to Buyer at the Delivery
Point(s) shall be made in accordance with the
measurement procedures provided in Transporter's
Tariff.
11. Billing and Payment:
(a) On or before the tenth (10th) day following
each Contract Month, Seller shall furnish, or have
furnished, one statement to Buyer stating the
quantity of Gas delivered to the Receipt Point(s)
for Buyer in the preceding month and the total
dollar amount due Seller pursuant to this
Agreement (the "Statement"). Seller's Statement
shall reflect both Reservation and Commodity
Charges due to Seller for the preceding Contract
Month. As to Commodity Charges, Seller's
Statement shall be based on the quantity of Gas
nominated by Buyer in such month, unless actual
information is available indicating Buyer received
less than the nominated quantity, in which event
the statement shall be based on the actual
information or best available estimate. On or
before the twenty fifth day of the month or the
tenth day following the receipt of Seller's
statement ("Due Date"), whichever is later, Buyer
shall make wire transfer to the account stated on
the invoice.
(b) Buyer shall have the right to offset amounts
payable by Seller, due from Seller to Buyer, or
costs attributable to Seller against any payments
from Buyer to Seller under this Agreement.
(c) Interest shall accrue on all late payments
commencing on the applicable Due Date at the then
current prime rate of National City Bank,
Indianapolis, Indiana, or its successor, or the
maximum lawful rate, whichever is lower.
(d) If the Statements above are based on
nominations or estimates of quantities delivered,
Seller shall have the duty to promptly reconcile
such amounts with actual deliveries and remedy the
imbalance in accordance with the procedures
specified in Paragraphs 9 and 14 and as otherwise
provided herein, and in accordance with
Transporter's procedures.
12. Force Majeure: All obligations of the parties to this
Agreement shall be suspended while and only for so long
as compliance is prevented by a cause beyond the
control of the party claiming force majeure, such as an
"Act of God", war, civil disturbance, Federal or State
or local law, or binding order of a court or
governmental agency, provided the suspension shall be
only to the extent performance was prevented by the
event of force majeure and provided the party claiming
force majeure provides immediate notice by telephone
and followed by prompt written notice by telecopy with
reasonably full particulars to the other party at or
near the commencement of such force majeure.
Notwithstanding the foregoing, the events of
occurrences described above shall relieve Seller of its
obligations under this Agreement only to the extent
Seller's performance is prevented and only after Seller
has first curtailed all interruptible sales of Gas
supplies to be delivered to Transporter's system.
Seller agrees to provide Buyer with no less than
Buyer's pro-rata share of Seller's available firm
supply on Transporter. A party claiming force majeure
hereunder shall have the duty to make all reasonable
efforts to remedy the force majeure condition as
promptly as possible.
Nothing in this force majeure provision shall serve to
absolve a party hereto from liability for its own
negligence or failure to exercise reasonable care in
performance of this Agreement.
The term force majeure specifically excludes the
following occurrences or events:
(a) the loss, interruption, or curtailment of
interruptible transportation on either Transporter
or any third party transporter to effect receipt
or delivery of Gas hereunder;
(b) decreases in natural Gas supply due to
allocation or reallocation of production by well
operators, prorationing, or for other reasons; or
(c) failure of specific, individual wells or
appurtenant facilities in the absence of a force
majeure event broadly affecting other wells in the
same geographic area.
(d) the ability or inability of a party to recover the
costs to be paid hereunder from its customers, or
the issuance of a rule, regulation, order or
decision by a state or federal governmental agency
which would subject either party to a detrimental
economic effect from continued performance due to
the effectiveness of the new rules, regulations,
or tariff provisions.
Notice of force majeure must be sent immediately,
without regard to standard business hours, by telephone
and telecopy, with hard copy sent by overnight mail, to
each of the representatives for Buyer or Seller
designated below.
BUYER: SELLER:
Indiana Gas Company, Inc. TENNECO GAS MARKETING COMPANY
Attn: John R. Talley Attn: John Greehey
Gas Supply 1010 Milam (IFP 10th Floor)
1630 N. Meridian Street Houston, TX 77252-2511
Indianapolis, IN 46202 Phone: (713) 757-6285
Phone: (317) 321-0479 Pager: (800) 517-4950
Telecopy: (317) 921-2760 Telecopy: (713) 757-6356
and
Indiana Gas Company, Inc.
Attn: Gas Control
1630 N. Meridian Street
Indianapolis, IN 46202
Phone: (317) 321-0535
Telecopy: (317) 321-0787
13. Possession and Warranty of Title:
(a) As between the parties hereto, Seller shall
be in exclusive control and possession of the Gas
delivered hereunder until the same shall have been
received by Transporter for Buyer's account at the
Receipt Point(s). Upon such delivery and receipt,
control and possession will transfer to
Transporter, provided however, that this provision
does not relieve Seller of its responsibility for
injuries or damage caused if Seller fails to meet
the quality standards of this Agreement, or
Transporter's Tariff. Title to Gas delivered
hereunder shall pass at the Receipt Point(s).
(b) Seller warrants to Buyer that it has good and
marketable title and/or authority to sell all Gas
delivered hereunder and such Gas is free and clear
from all liens, claims, and encumbrances of every
kind. Seller will indemnify and save Buyer
harmless against all losses, damages and expenses
of every character including, but not limited to,
reasonable attorneys' fees, with respect to the
Gas delivered by it to Buyer on account of
royalties, taxes, payments or other charges
applicable prior to delivery of the Gas hereunder,
as well as any liens, encumbrances and claims of
every kind.
14. Failure To Deliver or Take:
(a) If Seller fails to deliver the Nominated Daily
Quantity during any Month and such inability to
deliver is not excused under this Agreement, then
Seller shall reimburse Buyer for the amount of
increased cost to Buyer of acquiring replacement
gas during the same Month. The amount owed by
Seller to Buyer hereunder shall be calculated as
the product of (A) the difference, if positive,
between (i) the increased price paid by Buyer for
replacement gas, including any additional
transportation and fuel costs incurred by Buyer to
receive such replacement gas and (ii) the then
applicable Commodity Charge and (B) the difference
between the Nominated Daily Quantity and the
quantity of gas actually delivered by Seller.
Buyer agrees to act in good faith in purchasing
such replacement gas so as to minimize Seller's
obligations to Buyer under this Section.
(b) If Buyer fails to purchase the Nominated Daily
Quantity during any Month and such inability to
purchase is not excused under this Agreement, then
Buyer shall reimburse Seller for the loss
resulting therefrom. The amount owed by Buyer to
Seller hereunder shall be calculated as the
product of (A) the difference, if positive,
between (i) the then applicable Commodity Charge
and (ii) the lesser price received by Seller from
a third party purchaser, including any additional
transportation and fuel costs incurred by Seller
to deliver gas to a third party purchaser and (B)
the difference between the Nominated Daily
Quantity and the quantity of gas actually
purchased by Buyer. Seller agrees to act in good
faith in selling such gas to a third party
purchaser so as to minimize Buyer's obligations to
Seller under this Section.
(c) The parties agree that the actual losses incurred
by a party as a result of the other party's
failure to deliver or purchase quantities would be
uncertain and impossible to determine with
precision. As a result, payment by Seller and
Buyer in accordance with Subsections 14(a) and
14(b) for their failure to deliver or purchase
certain quantities of gas, respectively, shall be
the failing party's entire and sole liability to
the non-failing party, and the right to recover
such payment shall be the non-failing party's sole
and exclusive remedy, for the failing party's
failure or breach of its obligation to deliver or
purchase the Nominated Daily Quantity set forth in
this Agreement. Payment by Seller or Buyer
pursuant to this Section 14 is reasonable
compensation for such failures and shall be in
lieu of and exclude any and all other liabilities
of the failing party. Such payment shall not,
however, prevent termination of this Agreement by
the non-failing party if the failure to purchase
or deliver substantially impairs the value of this
Agreement to the non-failing party.
15. Correspondence: Except as provided in Paragraph 12 above,
any notice, statement or bill shall be in writing and shall
be duly delivered when (i) mailed, postage prepaid, by
registered, certified, or first class mail, or (ii) sent by
prepaid overnight delivery to the applicable address as
follows, or (iii) by telecopy directed to the appropriate
person and telecopy number below with hard copy also
delivered as in (i) or (ii) above:
NOTICES NOTICES
BUYER: INDIANA GAS COMPANY,INC. SELLER: TENNECO GAS MARKETING COMPANY
Post Office Box 2511
1630 N. Meridian St. 1010 Milam (IFP 7th Floor)
Indianapolis, IN 46202 Houston, TX 77252-2511
Attn: John R. Talley Attn: Dan Dettmer
(317) 321-0479 Phone: (713) 757-8677
Telecopy: (317) 921-2760 Telecopy: (713) 757-6356
INVOICES INVOICES
BUYER: INDIANA GAS COMPANY, INC. SELLER: TENNECO GAS MARKETING COMPANY
1630 N. Meridian St. Post Office Box 2511
Indianapolis, IN 46202 1010 Milam (IFP 7th Floor)
Attn: Sharon W. Reeves Houston, TX 77252-2511
Phone: (317) 321-0428 Attn: Accounting
Telecopy: (317) 921-2760 Phone: (713) 757-8677
Telecopy: (713) 757-6356
PAYMENTS PAYMENTS
BUYER: INDIANA GAS COMPANY, INC. SELLER: TENNECO GAS MARKETING COMPANY
1630 N. Meridian St. Melon Bank, N.A.
Indianapolis, IN 46202 Pittsburgh, PA
Attn: Sharon W. Reeves Account #199-8802
Phone: (317) 321-0428 ABA 043000261
Telecopy: (317) 921-2760
16. Miscellaneous:
(a) This Agreement is subject to all applicable
laws, orders, rules, and regulations of any State
or Federal governmental body or official having
jurisdiction and both Seller and Buyer agree that
the transactions agreed to hereunder shall be
conditioned upon compliance with all such laws,
orders, rules, and regulations.
(b) Seller and Buyer expressly agree that laws of
the State of Indiana shall govern the validity,
construction, interpretation and effect of this
Agreement, without regard to principles of
conflicts of law.
(c) Each party shall have the right following the
provision of reasonable notice and at all
reasonable hours to examine the appropriate books
and records of the other party to the extent
necessary to verify compliance with this
Agreement, including the accuracy of any
statement, payment, a force majeure claim or other
claimed excuse of performance. In the event an
error is discovered and communicated to the other
party, such error shall be adjusted promptly.
(d) During any month, if the quantities of Gas
received by Transporter for Buyer at the Receipt
Point(s) exceed Buyer's nomination for that month,
Seller shall bear the economic burden of any costs
incurred by Buyer related to the overdelivery, and
with respect to the quantities over Buyer's
nomination, Buyer shall have, in addition to any
other rights it may have, the right at its
discretion to:
(i) purchase those quantities at a
mutually agreeable price; or
(ii) require Seller to remove those
quantities from Buyer's account with
Transporter. Moreover, and in that event,
Buyer will have no obligation to Seller with
respect to those quantities, and to the
extent Buyer has made any payment related to
those quantities, Buyer shall be entitled to
reimbursement, which reimbursement will occur
no later than thirty (30) days from the date the
overdelivery is discovered. Buyer shall be entitled
to interest on this amount, which shall be computed in
accordance with Paragraph 11 (c) of this Agreement
and shall accrue commencing with the payment by
Buyer.
(e) Either party may pledge, mortgage or assign its
rights hereunder as security for indebtedness.
Either party may assign its rights or obligations
under this Agreement to a corporate affiliate
without the consent of the other party. This
Agreement is otherwise non-assignable except with
the prior written consent of Buyer and Seller.
(f) This Agreement is conditioned on the continued
solvency of Buyer and Seller. Both parties shall
have the right to request reasonable information
from the other so as to verify the continued
solvency of the other party. If reasonable
concerns as to the continued solvency of one party
arise, the other party shall be entitled to
reasonable assurances of the other party's
continued ability to perform. If one party
becomes insolvent or seeks bankruptcy relief, the
other party may prospectively terminate this
Agreement on prior notice without further
obligation other than to pay for Gas previously
delivered.
(g) NO INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES -
NOTWITHSTANDING ANY OTHER PROVISIONS HEREIN, THE
PARTIES HERETO WAIVE ANY AND ALL RIGHTS, CLAIMS,
OR CAUSES OF ACTION ARISING UNDER THIS AGREEMENT
FOR INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.
(h) Third Party Beneficiaries - Neither Buyer nor
Seller intend for the provisions of this Agreement
to benefit any third party. No third party shall
have any right to enforce the terms of this
Agreement against Buyer or Seller.
(i) Interpretation - In interpretation and
construction of this Agreement, no presumption
shall be made against any Party on grounds such
Party drafted the Agreement of any provision
thereof.
(j) Waiver of Default - No waiver by either Party of
one or more defaults or breaches by the other in
performance of any of the terms or provisions of
this Agreement shall operate or be construed as a
waiver of any future default or breach, whether of
a like or of a different character.
(k) Entire Agreement - The terms and conditions
contained herein constitute the full and complete
agreement between the Parties and any change to be
made must be submitted in writing and executed by
both Parties.
(l) Severability - Except as otherwise stated herein,
any section declared or rendered unlawful by a
court of law or regulatory authority with
jurisdiction over the parties or deemed unlawful
because of a statutory change will not otherwise
affect the lawful obligations that arise under
this Agreement.
(m) Enforceability - Each Party represents that is has
all necessary power and authority to enter into
and perform its obligations under this Agreement
and that this Agreement constitutes a legal, valid
and binding obligation of that Party enforceable
against it in accordance with its terms, except as
such enforceability may be affected by any
bankruptcy law or the application of principles of
equity.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement in duplicate originals.
"SELLER"
TENNECO GAS MARKETING COMPANY
By: ____________________________
Its: ___________________________
"BUYER"
INDIANA GAS COMPANY, INC.
By: ____________________________
Its:____________________________
State of
County of
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Seller and
acknowledged his authority to sign this contract on behalf
of Seller.
Notary Public
State of Indiana
County of Marion
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Buyer and
acknowledged his authority to sign this contract on behalf
of Buyer.
Notary Public
My Commission Expires:
My County of Residence:
Contract No. NGFSA9620 (Texas Gas Swing Agreement)
NATURAL GAS FIRM SUPPLY AGREEMENT
This Natural Gas Firm Supply Agreement ("Agreement"), is
made, entered into, and effective, as of the 1st day of
December, 1995 by and between TENNECO GAS MARKETING COMPANY,
and INDIANA GAS COMPANY, INC. (Buyer).
Recitals
1. Seller is a corporation incorporated and existing under
the laws of the State of Kentucky with its principal
place of business at 1100 Louisiana, Houston, Texas
77252-2511.
2. Buyer is a corporation incorporated and existing under
the laws of the State of Indiana, with its principal
place of business at 1630 North Meridian Street,
Indianapolis, Indiana.
3. This Agreement contains the mutual promises,
warranties, and covenants pursuant to which Buyer as a
purchaser of natural gas, and Seller as a merchant of
natural gas, shall perform the transactions described
herein.
4. Under this Agreement, Seller agrees to provide natural
gas on a firm basis, consistent with the terms and
conditions contained herein.
Definitions
As used herein, the following words shall
have the following definitions:
A. The term "Transporter" shall mean Texas Gas
Transmission Corporation, or its successor.
B. The term "Transporter's Tariff"
shall mean the tariff provisions of
Transporter, as approved by the Federal
Energy Regulatory Commission, or any
successor thereto, ("FERC"), including
changes to such tariff made after this
Agreement is effective, and Buyer's
contractual arrangements with Transporter.
If FERC should determine that
Transporter's Tariff shall cease to apply, in
whole or in part, to transactions hereunder,
the parties will promptly meet
to determine and negotiate mutually acceptable replacement
guidelines and standards. In that event,
until an agreement is reached, the most
recently effective Transporter's Tariff shall
continue to apply.
C. The term "Btu" shall mean British
thermal unit, as defined in Transporter's
Tariff.
D. The term "Contract Month" shall
mean a calendar month during the
effectiveness of this Agreement, as
interpreted in light of Transporter's tariff.
E. The term "Day" shall be defined as
it is defined in Transporter's Tariff, or as
applied by Transporter.
F. The term "Gas" shall mean natural
gas, which shall meet the quality
specifications in this Agreement and
Transporter's Tariff.
G. The terms "MMBtu," "Dekatherm" or
"DTH" shall mean one million (1,000,000)
British thermal units.
H. The term "Maximum Daily Quantity"
shall mean the quantity of gas which Seller
shall stand ready to supply as nominated by
Buyer for purchase on a particular day; as
specified in Section 2 below.
I. The term "Nominated Daily Quantity"
shall mean the quantity of Gas scheduled by
Buyer pursuant to paragraph 2 of this
Agreement.
J. The term "Receipt Point(s)" shall
mean the point or points on Transporter's
system where Gas quantities are delivered
hereunder by Seller to Buyer.
1. Term: The term of this Agreement shall be from
December 1, 1995 through February 28, 1998.
2. Quantity and Nominations:
(a) Purchase Quantity - Subject to the terms and
conditions of this Agreement, Buyer shall purchase
and receive and Seller shall sell and deliver a
quantity of gas equal to the Nominated Daily
Quantity specified by Buyer pursuant to Section
2(c) below, not to exceed the Maximum Daily
Quantity.
(b) Maximum Quantity - The maximum quantity of gas
that Seller is obligated to sell and deliver and
that Buyer is entitled to nominate and purchase
under this Agreement (herein referred to as the
"Maximum Daily Quantity") shall be equal to the
volumes listed in the table below.
Month Quantity
November - 0 MMBtu per day
December - 40,000 MMBtu per day
January - 40,000 MMBtu per day
February - 40,000 MMBtu per day
March - 0 MMBtu per day
April - 0 MMBtu per day
May - 0 MMBtu per day
June - 0 MMBtu per day
July - 0 MMBtu per day
August - 0 MMBtu per day
September - 0 MMBtu per day
October - 0 MMBtu per day
(c) Nominated Daily Quantity - On or before
twenty-four (24) hours prior to Transporter's
nomination deadline, Buyer will provide Seller
with a nomination specifying the quantity of gas
to be purchased and received ("Nominated Daily
Quantity"). The Nominated Daily Quantity
nominated by Buyer may range from 0% to 100% of
the Maximum Daily Quantity by providing Seller
notice of the change on or before twenty-four (24)
hours prior to Transporter's nomination deadline.
(d) Manner of Submitting Nominations - Buyer may
provide the nominations set forth above in this
section either orally (including by telephone) or
in writing (including by fax), but an oral
nomination must be followed by written
confirmation within twenty-four (24) hours.
(e) No Minimum Nomination and Take Requirement -
Except as otherwise provided in this Agreement
concerning the Nominated Daily Quantity, no
provision of this Agreement shall be construed
to require Buyer to purchase or take any minimum
quantity of Gas, or to pay commodity charges for
any minimum quantity not taken.
3. Price: Subject to the terms of this Agreement, Buyer
shall pay to Seller a Reservation Charge and a
Commodity Charge. Those charges shall be determined as
follows:
(a) Reservation Charge - Each Contract Month,
Buyer shall pay to Seller an amount determined by
multiplying the applicable Maximum Daily
Quantity set forth in Paragraph 2 above by the
Reservation Rate set forth for that particular
Contract Month in the following schedule:
Contract Month Reservation Rate
November $0.000 Per MMBtu
December $0.035 Per MMBtu
January $0.035 Per MMBtu
February $0.035 Per MMBtu
March $0.000 Per MMBtu
April $0.000 Per MMBtu
May $0.000 Per MMBtu
June $0.000 Per MMBtu
July $0.000 Per MMBtu
August $0.000 Per MMBtu
September $0.000 Per MMBtu
October $0.000 Per MMBtu
(b) Commodity Charge - Buyer and Seller intend to
apply a method of daily pricing, figured from a
commodity price index, to commodity sales under
this Agreement. Buyer shall pay to Seller each
Contract Month an amount determined by summing all
applicable "Daily Amounts" for the Contract Month.
A "Daily Amount" shall apply to each day during
the Contract Month for which Buyer has nominated
quantities for purchase. The "Daily Amounts"
shall be determined by multiplying i) the
quantities of Gas actually delivered to Buyer
under this Agreement at the Receipt Point(s) for
the particular Day of the Contract Month, up to
Buyer's Nominated Daily Quantity, ii) by a price
per MMBtu determined using the arithmetic average
of the high and low prices in the price range
reported in Gas Daily, in the table "DAILY PRICE
SURVEY", for "Louisiana--Onshore South, Texas
Gas", for the applicable Day, which price shall be
deemed to be a delivered price to the Receipt
Point(s), inclusive of actual transportation
charges (including ACA, GRI, fuel, all applicable
surcharges, gathering costs, transition costs, and
take or pay, or other costs, if any) from the
wellhead to the Receipt Point(s), and shall
include all royalties and all present and future
production, delivery, severance, and excise taxes,
and all other costs of delivery to the Receipt
Point(s). As to any Day for which Gas Daily for
any reason (e.g. holidays and weekends) does not
publish the above referenced prices, the
applicable prices shall be that utilized for the
last prior Day such as published.
If a Receipt Point(s) other than mainline
Receipt Point(s) is used, any gathering,
transportation or other costs imposed on Buyer to
transport the gas to Transporter's mainline shall
be deducted from the Commodity Charge.
(c) Applicable Commodity Charge Index. If at any
time Gas Daily (or any successor publication
selected hereunder) is no longer published, or if
the specific postings referenced in Gas Daily are
no longer published, or no longer reflect the
original posting methodology used at the time of
the execution of this Agreement, the commodity
price shall be temporarily determined by reference
to applicable price postings in NGI's Daily Gas
Price Index and the Parties shall promptly
negotiate a new mutually agreeable method and/or
successor publication from which to determine
commodity pricing.
4. Taxes: Subject to the terms of this Agreement, Seller
shall pay all taxes imposed with respect to the Gas
delivered to Buyer hereunder prior to delivery at the
Receipt Point(s) and Buyer shall pay all taxes imposed
upon Buyer with respect to such Gas on and after
delivery thereof to Buyer at the Receipt Point(s).
5. Transportation Arrangements: Seller shall be
responsible for contracting with and paying for
transportation upstream of the Receipt Point and Buyer
shall be responsible to contracting with and paying for
transportation downstream of the Receipt Point. Buyer
and Seller shall cooperate to ensure that nominations
(including any necessary adjustments thereto) are made
timely and that such nominations reflect the actual
expected deliveries and receipts. Seller shall be
responsible for nominations with Seller's transporter
upstream of the Receipt Point and Buyer shall be
responsible for nominations with Transporter downstream
from the Receipt Point.
6. Receipt Point(s): The Receipt Point under this
Agreement shall be at Seller's Pool Point on
Transporter, Point Zone SL (4563) or Zone 1 (4562).
Alternate Receipt Point(s) hereunder shall be at
mutually agreeable points of receipt on the mainline
system of Transporter. Seller shall have a firm
obligation to deliver Gas to Buyer at the Receipt
Point(s). Buyer shall have the discretion to waive the
requirement that a mainline receipt point be used,
provided, however, that no such waiver shall constitute
a waiver pertaining to any other or future purchases
and any such waiver shall not prejudice the ability of
Buyer to insist on future mainline deliveries.
7. Operations: Buyer and Seller agree to accept for
purposes of this Agreement the applicable quality,
delivery pressure, measurement requirements and other
applicable rules, procedures, guidelines, tariff
provisions, contractual arrangements and policies of
Transporter, as the same may change from time to time.
8. Gas Quality: Gas delivered hereunder shall comply with
the quality and other specifications of Transporter's
Tariff, and shall be merchantable and free from
impurities that could affect its safe and normal use,
and free from hazardous or toxic substances, wastes, or
other contaminants.
9. Penalties: Seller shall be liable for all penalties,
cashouts, or other costs imposed on Buyer or Seller by
any third parties, including Seller's transporters and
Transporter, to the extent that such penalties are
caused by Seller's actions or inactions. Buyer shall
be liable for all penalties, cashouts, or other costs
imposed on Buyer or Seller by any third parties
including Seller's transporters and Transporter, to the
extent that such penalties are caused by Buyer's
actions or inactions. Seller agrees to use all
reasonable efforts to minimize the possibility of
imbalance at the Receipt Point(s) associated with
Buyer's quantities.
10. Measurement: Measurement and determination of the
quantity of Gas delivered to Buyer at the Delivery
Point(s) shall be made in accordance with the
measurement procedures provided in Transporter's
Tariff.
11. Billing and Payment:
(a) On or before the tenth (10th) day following
each Contract Month, Seller shall furnish, or have
furnished, one statement to Buyer stating the
quantity of Gas delivered to the Receipt Point(s)
for Buyer in the preceding month and the total
dollar amount due Seller pursuant to this
Agreement (the "Statement"). Seller's Statement
shall reflect both Reservation and Commodity
Charges due to Seller for the preceding Contract
Month. As to Commodity Charges, Seller's
Statement shall be based on the quantity of Gas
nominated by Buyer in such month, unless actual
information is available indicating Buyer received
less than the nominated quantity, in which event
the statement shall be based on the actual
information or best available estimate. On or
before the twenty fifth day of the month or the
tenth day following the receipt of Seller's
statement ("Due Date"), whichever is later,
Buyer shall make wire transfer to the account
stated on the invoice.
(b) Buyer shall have the right to offset amounts
payable by Seller, due from Seller to Buyer, or
costs attributable to Seller against any payments
from Buyer to Seller under this Agreement.
(c) Interest shall accrue on all late payments
commencing on the applicable Due Date at the then
current prime rate of National City Bank,
Indianapolis, Indiana, or its successor, or the
maximum lawful rate, whichever is lower.
(d) If the Statements above are based on
nominations or estimates of quantities delivered,
Seller shall have the duty to promptly reconcile
such amounts with actual deliveries and remedy the
imbalance in accordance with the procedures
specified in Paragraphs 9 and 14 and as otherwise
provided herein, and in accordance with
Transporter's procedures.
12. Force Majeure: All obligations of the parties to this
Agreement shall be suspended while and only for so long
as compliance is prevented by a cause beyond the
control of the party claiming force majeure, such as an
"Act of God", war, civil disturbance, Federal or State
or local law, or binding order of a court or
governmental agency, provided the suspension shall be
only to the extent performance was prevented by the
event of force majeure and provided the party claiming
force majeure provides immediate notice by telephone
and followed by prompt written notice by telecopy with
reasonably full particulars to the other party at or
near the commencement of such force majeure.
Notwithstanding the foregoing, the events of
occurrences described above shall relieve Seller of its
obligations under this Agreement only to the extent
Seller's performance is prevented and only after Seller
has first curtailed all interruptible sales of Gas
supplies to be delivered to Transporter's system.
Seller agrees to provide Buyer with no less than
Buyer's pro-rata share of Seller's available firm
supply on Transporter. A party claiming force majeure
hereunder shall have the duty to make all reasonable
efforts to remedy the force majeure condition as
promptly as possible.
Nothing in this force majeure provision shall serve to
absolve a party hereto from liability for its own
negligence or failure to exercise reasonable care in
performance of this Agreement.
The term force majeure specifically excludes the
following occurrences or events:
(a) the loss, interruption, or curtailment of
interruptible transportation on either Transporter
or any third party transporter to effect receipt
or delivery of Gas hereunder;
(b) decreases in natural Gas supply due to
allocation or reallocation of production by well
operators, prorationing, or for other reasons; or
(c) failure of specific, individual wells or
appurtenant facilities in the absence of a force
majeure event broadly affecting other wells in the
same geographic area.
(d) the ability or inability of a party to recover the
costs to be paid hereunder from its customers, or
the issuance of a rule, regulation, order or
decision by a state or federal governmental agency
which would subject either party to a detrimental
economic effect from continued performance due to
the effectiveness of the new rules, regulations,
or tariff provisions.
Notice of force majeure must be sent immediately,
without regard to standard business hours, by telephone
and telecopy, with hard copy sent by overnight mail, to
each of the representatives for Buyer or Seller
designated below.
BUYER: SELLER:
Indiana Gas Company, Inc. TENNECO GAS MARKETING COMPANY
Attn: John R. Talley Attn: John Greehey
Gas Supply 1010 Milam (IFP 10th Floor)
1630 N. Meridian Street Houston, TX 77252-2511
Indianapolis, IN 46202 Phone: (713) 757-6285
Phone: (317) 321-0479 Pager: (800) 562-4950
Telecopy: (317) 921-2760 Telecopy: (713) 757-6356
and
Indiana Gas Company, Inc.
Attn: Gas Control
1630 N. Meridian Street
Indianapolis, IN 46202
Phone: (317) 321-0535
Telecopy: (317) 321-0787
13. Possession and Warranty of Title:
(a) As between the parties hereto, Seller shall
be in exclusive control and possession of the Gas
delivered hereunder until the same shall have been
received by Transporter for Buyer's account at the
Receipt Point(s). Upon such delivery and receipt,
control and possession will transfer to
Transporter, provided however, that this provision
does not relieve Seller of its responsibility for
injuries or damage caused if Seller fails to meet
the quality standards of this Agreement, or
Transporter's Tariff. Title to Gas
delivered hereunder shall pass at the Receipt
Point(s).
(b) Seller warrants to Buyer that it has good and
marketable title and/or authority to sell all Gas
delivered hereunder and such Gas is free and clear
from all liens, claims, and encumbrances of every
kind. Seller will indemnify and save Buyer
harmless against all losses, damages and expenses
of every character including, but not limited to,
reasonable attorneys' fees, with respect to the
Gas delivered by it to Buyer on account of
royalties, taxes, payments or other charges
applicable prior to delivery of the Gas hereunder,
as well as any liens, encumbrances and claims of
every kind.
14. Failure To Deliver or Take:
(a) If Seller fails to deliver the Nominated Daily
Quantity during any Month and such inability to
deliver is not excused under this Agreement, then
Seller shall reimburse Buyer for the amount of
increased cost to Buyer of acquiring replacement
gas during the same Month. The amount owed by
Seller to Buyer hereunder shall be calculated as
the product of (A) the difference, if positive,
between (i) the increased price paid by Buyer for
replacement gas, including any additional
transportation and fuel costs incurred by Buyer to
receive such replacement gas and (ii) the then
applicable Commodity Charge and (B) the difference
between the Nominated Daily Quantity and the
quantity of gas actually delivered by Seller.
Buyer agrees to act in good faith in purchasing
such replacement gas so as to minimize Seller's
obligations to Buyer under this Section.
(b) If Buyer fails to purchase the Nominated Daily
Quantity during any Month and such inability to
purchase is not excused under this Agreement, then
Buyer shall reimburse Seller for the loss
resulting therefrom. The amount owed by Buyer to
Seller hereunder shall be calculated as the
product of (A) the difference, if positive,
between (i) the then applicable Commodity Charge
and (ii) the lesser price received by Seller from
a third party purchaser, including any additional
transportation and fuel costs incurred by Seller
to deliver gas to a third party purchaser and (B)
the difference between the Nominated Daily
Quantity and the quantity of gas actually
purchased by Buyer. Seller agrees to act in good
faith in selling such gas to a third party
purchaser so as to minimize Buyer's obligations to
Seller under this Section.
(c) The parties agree that the actual losses incurred
by a party as a result of the other party's
failure to deliver or purchase quantities would be
uncertain and impossible to determine with
precision. As a result, payment by Seller and
Buyer in accordance with Subsections 14(a) and
14(b) for their failure to deliver or purchase
certain quantities of gas, respectively, shall be
the failing party's entire and sole liability to
the non-failing party, and the right to recover
such payment shall be the non-failing party's sole
and exclusive remedy, for the failing party's
failure or breach of its obligation to deliver or
purchase the Nominated Daily Quantity set forth in
this Agreement. Payment by Seller or Buyer
pursuant to this Section 14 is reasonable
compensation for such failures and shall be in
lieu of and exclude any and all other liabilities
of the failing party. Such payment shall not,
however, prevent termination of this Agreement by
the non-failing party if the failure to purchase
or deliver substantially impairs the value of this
Agreement to the non-failing party.
15. Correspondence: Except as provided in Paragraph 12 above,
any notice, statement or bill shall be in writing and shall
be duly delivered when (i) mailed, postage prepaid, by
registered, certified, or first class mail, or (ii) sent by
prepaid overnight delivery to the applicable address as
follows, or (iii) by telecopy directed to the appropriate
person and telecopy number below with hard copy also
delivered as in (i) or (ii) above:
NOTICES NOTICES
BUYER: INDIANA GAS COMPANY,INC. SELLER: TENNECO GAS MARKETING COMPANY
Post Office Box 2511
1630 N. Meridian St. 1010 Milam (IFP 7th Floor)
Indianapolis, IN 46202 Houston, TX 77252-2511
Attn: John R. Talley Attn: Dan Dettmer
(317) 321-0479 Phone: (713) 757-8677
Telecopy: (317) 921-2760 Telecopy: (713) 757-6356
INVOICES INVOICES
BUYER: INDIANA GAS COMPANY, INC. SELLER: TENNECO GAS MARKETING COMPANY
1630 N. Meridian St. Post Office Box 2511
Indianapolis, IN 46202 1010 Milam (IFP 7th Floor)
Attn: Sharon W. Reeves Houston, TX 77252-2511
Phone: (317) 321-0428 Attn: Accounting
Telecopy: (317) 921-2760 Phone: (713) 757-8677
Telecopy: (713) 757-6356
PAYMENTS PAYMENTS
BUYER: INDIANA GAS COMPANY, INC. SELLER: TENNECO GAS MARKETING COMPANY
1630 N. Meridian St. Melon Bank, N.A.
Indianapolis, IN 46202 Pittsburgh, PA
Attn: Sharon W. Reeves Account #199-8802
Phone: (317) 321-0428 ABA 043000261
Telecopy: (317) 921-2760
16. Miscellaneous:
(a) This Agreement is subject to all applicable
laws, orders, rules, and regulations of any State
or Federal governmental body or official having
jurisdiction and both Seller and Buyer agree that
the transactions agreed to hereunder shall be
conditioned upon compliance with all such laws,
orders, rules, and regulations.
(b) Seller and Buyer expressly agree that laws of
the State of Indiana shall govern the validity,
construction, interpretation and effect of this
Agreement, without regard to principles of
conflicts of law.
(c) Each party shall have the right following the
provision of reasonable notice and at all
reasonable hours to examine the appropriate books
and records of the other party to the extent
necessary to verify compliance with this
Agreement, including the accuracy of any
statement, payment, a force majeure claim or other
claimed excuse of performance. In the event an
error is discovered and communicated to the other
party, such error shall be adjusted promptly.
(d) During any month, if the quantities of Gas
received by Transporter for Buyer at the Receipt
Point(s) exceed Buyer's nomination for that month,
Seller shall bear the economic burden of any costs
incurred by Buyer related to the overdelivery, and
with respect to the quantities over Buyer's
nomination, Buyer shall have, in addition to any
other rights it may have, the right at its
discretion to:
(i) purchase those quantities at a
mutually agreeable price; or
(iii) require Seller to remove those
quantities from Buyer's account with
Transporter. Moreover, and in that event,
Buyer will have no obligation to Seller with
respect to those quantities, and to the
extent Buyer has made any payment related to
those quantities, Buyer shall be entitled to
reimbursement,
which reimbursement will occur no later than
thirty (30) days from the date the overdelivery is
discovered. Buyer shall be entitled to interest
on this amount, which shall be computed in
accordance with Paragraph 11 (c) of this Agreement
and shall accrue commencing with the payment by
Buyer.
(e) Either party may pledge, mortgage or assign
its rights hereunder as security for indebtedness.
Either party may assign its rights or obligations
under this Agreement to a corporate affiliate
without the consent of the other party. This
Agreement is otherwise non-assignable except with
the prior written consent of Buyer and Seller.
(f) This Agreement is conditioned on the
continued solvency of Buyer and Seller. Both
parties shall have the right to request reasonable
information from the other so as to verify the
continued solvency of the other party. If
reasonable concerns as to the continued solvency
of one party arise, the other party shall be
entitled to reasonable assurances of the other
party's continued ability to perform. If one
party becomes insolvent or seeks bankruptcy
relief, the other party may prospectively
terminate this Agreement on prior notice without
further obligation other than to pay for Gas
previously delivered.
(g) NO INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES -
NOTWITHSTANDING ANY OTHER PROVISIONS HEREIN, THE
PARTIES HERETO WAIVE ANY AND ALL RIGHTS, CLAIMS,
OR CAUSES OF ACTION ARISING UNDER THIS AGREEMENT
FOR INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.
(h) Third Party Beneficiaries - Neither Buyer nor
Seller intend for the provisions of this Agreement
to benefit any third party. No third party shall
have any right to enforce the terms of this
Agreement against Buyer or Seller.
(i) Interpretation - In interpretation and
construction of this Agreement, no presumption
shall be made against any Party on grounds such
Party drafted the Agreement of any provision
thereof.
(j) Waiver of Default - No waiver by either Party of
one or more defaults or breaches by the other in
performance of any of the terms or provisions of
this Agreement shall operate or be construed as a
waiver of any future default or breach, whether of
a like or of a different character.
(k) Entire Agreement - The terms and conditions
contained herein constitute the full and complete
agreement between the Parties and any change to be
made must be submitted in writing and executed by
both Parties.
(l) Severability - Except as otherwise stated herein,
any section declared or rendered unlawful by a
court of law or regulatory authority with
jurisdiction over the parties or deemed unlawful
because of a statutory change will not otherwise
affect the lawful obligations that arise under
this Agreement.
(m) Enforceability - Each Party represents that is has
all necessary power and authority to enter into
and perform its obligations under this Agreement
and that this Agreement constitutes a legal, valid
and binding obligation of that Party enforceable
against it in accordance with its terms, except as
such enforceability may be affected by any
bankruptcy law or the application of principles of
equity.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement in duplicate originals.
"SELLER"
TENNECO
By: ____________________________
Its: ___________________________
"BUYER"
INDIANA GAS COMPANY, INC.
By: ____________________________
Its:____________________________
State of
County of
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Seller and
acknowledged his authority to sign this contract on behalf
of Seller.
Notary Public
State of Indiana
County of Marion
NOTARIZATION
Before me appeared , who after being
duly sworn, executed this Agreement on behalf of Buyer and
acknowledged his authority to sign this contract on behalf
of Buyer.
Notary Public
My Commission Expires:
My County of Residence:
<TABLE>
EXHIBIT 12
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands, Except Ratios)
Fiscal Year Ended September 30
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Earnings:
Net income $32,109 $34,596 $28,534 $25,743 $23,286
Adjustments:
Income taxes 18,630 17,977 16,030 12,800 11,665
Fixed charges (see below) 16,395 16,986 17,556 15,642 15,482
Total adjusted earnings $67,134 $69,559 $62,120 $54,185 $50,433
Fixed charges:
Total interest expense $15,530 $16,037 $16,640 $14,556 $14,411
Interest component of rents 865 949 916 1,086 1,071
Total fixed charges $16,395 $16,986 $17,556 $15,642 $15,482
Ratio of earnings to fixed charges 4.1 4.1 3.5 3.5 3.3
</TABLE>
EXHIBIT 21
State of Incorporation
Subsidiaries of Indiana Gas Company, Inc. (Parent) -
Richmond Gas Corporation Indiana
Terre Haute Gas Corporation Indiana
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent
to the incorporation of our reports included in this Form
10-K into Indiana Gas Company, Inc.'s previously filed
Registration Statement File No. 33-54820.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Indianapolis, Indiana
December 20, 1995
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Indiana Gas
Company, Inc.'s consolidated financial statements as of September 30, 1995, and
for the fiscal year then ended and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 555,296
<OTHER-PROPERTY-AND-INVEST> 188
<TOTAL-CURRENT-ASSETS> 84,139
<TOTAL-DEFERRED-CHARGES> 16,310
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 655,933
<COMMON> 142,995
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 125,159
<TOTAL-COMMON-STOCKHOLDERS-EQ> 268,154
0
0
<LONG-TERM-DEBT-NET> 173,693
<SHORT-TERM-NOTES> 2,225
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 211,861
<TOT-CAPITALIZATION-AND-LIAB> 655,933
<GROSS-OPERATING-REVENUE> 403,810
<INCOME-TAX-EXPENSE> 19,216
<OTHER-OPERATING-EXPENSES> 338,406
<TOTAL-OPERATING-EXPENSES> 357,622
<OPERATING-INCOME-LOSS> 46,188
<OTHER-INCOME-NET> 1,451
<INCOME-BEFORE-INTEREST-EXPEN> 47,639
<TOTAL-INTEREST-EXPENSE> 15,530
<NET-INCOME> 32,109
0
<EARNINGS-AVAILABLE-FOR-COMM> 32,109
<COMMON-STOCK-DIVIDENDS> 24,250
<TOTAL-INTEREST-ON-BONDS> 13,474
<CASH-FLOW-OPERATIONS> 90,676
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
IEI
INDIANA ENERGY, INC.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 26, 1996
TO THE SHAREHOLDERS OF INDIANA ENERGY, INC.
The annual meeting of shareholders of Indiana Energy, Inc.
(Company), will be held at the principal office of the Company,
1630 North Meridian Street, Indianapolis, Indiana 46202 on
Friday, January 26, 1996, at 10:30 a.m. (Eastern Standard
Time), for the following purposes:
1. To elect four directors of the Company to serve for a
term of three years or until their successors are duly elected
and qualified; and
2. To transact such other business as may properly come
before the meeting, or any adjournment of the meeting.
As allowed by the code of by-laws, the board of directors
has fixed the close of business on November 20, 1995, as the
record date for determining the shareholders entitled to notice
of and to vote at the meeting and at any adjournment of the
meeting.
It is important that your stock be represented at this
meeting to assure a quorum. Whether or not you now expect to
be present at the meeting, please fill in, date and sign the
enclosed proxy and return it promptly to the Company in the
accompanying addressed envelope. No stamp is required if
mailed in the United States. You have the unconditional right
to revoke your proxy at any time before the authority granted
by it is exercised.
By order of the board of directors.
INDIANA ENERGY, INC.
By RONALD E. CHRISTIAN
Secretary
Indianapolis, Indiana
December 8, 1995
CONTENTS
PURPOSES OF MEETING
VOTING SECURITIES
ELECTION OF DIRECTORS
COMMON STOCK OWNERSHIP BY DIRECTORS
AND EXECUTIVE OFFICERS
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
DIRECTORS' COMPENSATION
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION COMMITTEE REPORT
A. Executive Compensation Policy.
B. Components of Executive Compensation.
C. Chief Executive Officer Compensation.
D. Miscellaneous.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
COMPENSATION
Summary Compensation Table
CORPORATE PERFORMANCE
Total Return to Shareholders
Return on Equity
RETIREMENT SAVINGS PLAN
RETIREMENT PLANS
EMPLOYMENT AND TERMINATION BENEFITS AGREEMENTS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
COST AND METHOD OF SOLICITATION
ANNUAL REPORT
REVOCATION RIGHTS
SHAREHOLDERS' PROPOSALS FOR 1997 ANNUAL MEETING
INDIANA ENERGY, INC.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
(317) 926-3351
PROXY STATEMENT
The following information is furnished in connection with
the solicitation of the enclosed proxy by and on behalf of the
board of directors of the Company. The proxy will be used at
the annual meeting of shareholders to be held at the principal
office of the Company, 1630 North Meridian Street,
Indianapolis, Indiana, on Friday, January 26, 1996, at 10:30
o'clock A.M. (Eastern Standard Time), and at any adjournment
of the meeting for the matters to be acted upon under its
authority. The day and time for the annual meeting have been
changed from prior years, when the annual meeting was held on
the second Monday in January commencing at 11:00 o'clock A.M.
(Eastern Standard Time). The proxy and this proxy statement
were first mailed to the shareholders on or about December 8,
1995.
PURPOSES OF MEETING
As of this date, the only known business to be presented
at the 1996 annual meeting of shareholders is the election of
four directors of the Company to serve for a term of three
years or until their successors are duly elected and
qualified. However, the enclosed proxy authorizes the proxy
holders to vote on all other matters that may properly come
before the meeting, and it is the intention of the proxy
holders to take any such action utilizing their best judgment.
VOTING SECURITIES
The Company has one class of capital stock outstanding,
consisting as of September 30, 1995, of 22,561,605 shares of
common stock without par value. The holders of the outstanding
shares of common stock are entitled to one vote for each share
held of record on each matter presented to a vote of the
shareholders at the meeting. Only shareholders of record at
the close of business on November 20, 1995, will be entitled to
vote at the meeting or at any adjournment of the meeting.
In connection with the Company's acquisition of Richmond
Gas Corporation ("Richmond") and Terre Haute Gas Corporation
("Terre Haute"), shares of common stock of the Company were
issued to certain members of the Anton Hulman, Jr. family,
certain corporations controlled by them, certain trusts
established for their benefit and certain other persons with
personal or business relationships with the family
(collectively, the "Hulman Interests"). At September 30,
1995, the Hulman Interests beneficially owned an aggregate of
2,749,122 shares of the Company which comprised 12.18 percent
of the outstanding common stock of the Company. At September
30, 1995, the following beneficial owners held more than 5
percent of the outstanding common stock of the Company, the
only class of voting securities outstanding:
<TABLE>
Nature of
Name and Number of Shares Beneficial Percent
Title of Class Address of Beneficially Ownership of
Beneficial Owned Class
Owner
<S> <C> <C> <C> <C>
Common Hulman & 1,622,435 Voting & 7.19%
Company Investment
900 Wabash
Avenue
Terre Haute,
Indiana 47807
</TABLE>
As a result of the attribution to certain persons of shares
held by Hulman & Company, the following persons are deemed to
be beneficial owners of more than 5 percent of the outstanding
common stock of the Company:
<TABLE>
Name of Number of Shares
Title of Beneficial Owner Beneficially Percent of
Class Owned Class
<S> <C> <C> <C>
Common Mary F. Hulman 1,966,920 8.72%
Common Mari H. George 2,055,631 9.11%
Common Anton H. George 1,848,338 8.19%
Common Katherine M. 1,629,084 7.22%
George
Common Laura K. George 1,848,338 8.19%
Common Nancy L. George 1,629,888 7.22%
Common M. Josephine 1,627,383 7.21%
George
</TABLE>
The number of shares held beneficially by Mary F. Hulman, Mari
H. George, Anton H. George, Katherine M. George, Nancy L.
George and M. Josephine George each includes 1,622,435 shares
held by Hulman & Company as to which each, as a director of
Hulman & Company, may be deemed to share voting power and
investment power. The number of shares held beneficially by
Mary F. Hulman, Mari H. George and Anton H. George each
includes 217,398 shares held by Rose-Hulman Institute of
Technology ("Rose-Hulman") as to which Mary F. Hulman and
Anton H. George, as members of the Investment Management
Committee of the Board of Managers of Rose-Hulman, and as to
which Mari H. George, as a member of the Board of Managers,
may be deemed to share voting power and investment power, and
as to which each disclaims beneficial ownership. Laura K.
George is the wife of Anton H. George, and the shares listed
for her are those beneficially owned by Mr. George. Laura K.
George disclaims beneficial ownership of all such shares. The
information furnished here regarding beneficial ownership is
derived from the Schedule 13D, as amended most recently on
June 29, 1994, filed by the Hulman Interests with the
Securities and Exchange Commission, and Forms 3, 4 and 5 filed
through September 30, 1995. The filing of the Schedule 13D by
the Hulman Interests did not affirm the existence of a "group"
within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934 or the regulations promulgated under it.
ELECTION OF DIRECTORS
In connection with the Company's acquisition of Richmond
and Terre Haute, the Company entered into a standstill
agreement with the Hulman Interests. Under this agreement,
the Company agreed to cause one designee of the Hulman
Interests to be elected to the board of directors of the
Company and, until the termination of the standstill agreement
(which is dependent upon the occurrence of certain events
specified in the agreement), to include a designee of the
Hulman Interests in the slate of nominees recommended by the
board at the annual meeting of shareholders at which the term
of the original designee expires. At a regular meeting held
on August 31, 1990, the board of directors of the Company
elected Anton H. George to the board and he currently serves
as a member of the board.
The board of directors of the Company consists of twelve
directors divided into three classes as follows: Gerald L.
Bepko, Lawrence A. Ferger, Anton H. George and James C. Shook,
who are nominees for election with terms expiring in 1999;
Paul T. Baker, Otto N. Frenzel III, Don E. Marsh and Richard
P. Rechter, whose terms expire in 1998; and Duane M. Amundson,
Howard J. Cofield* , Niel C. Ellerbrook and Loren K. Evans,
whose terms expire in 1997. Indiana Energy, Inc. is a holding
company, and each of its directors also serves as a director
of Indiana Gas Company, Inc. ("Indiana Gas"), its principal
subsidiary.
At each annual meeting of shareholders, directors are
elected to succeed those whose terms then expire for a term of
three years or until their successors are duly elected and
qualified. Accordingly, four directors are to be elected by a
plurality of votes cast at the annual meeting of shareholders
to be held on January 26, 1996.
The board of directors intends that the enclosed proxy
will be voted by the proxy holders in favor of the election of
the nominees named below for the office of director of the
Company to hold office for a term of three years or until
their respective successors are duly elected and qualified.
Each of such nominees is now serving as a director of the
Company and has signified the willingness to serve if elected.
Directors are elected by a plurality of the votes cast.
Plurality means that the individuals who receive the largest
number of votes cast are elected up to the maximum number of
directors to be chosen at the meeting. Abstentions, broker
non-votes, and instructions on the accompanying proxy card to
withhold authority to vote for one or more of the nominees
might result in some nominees receiving fewer votes. However,
the number of votes otherwise received by the nominee will not
be reduced by such action. If, however, any situation should
arise under which any nominee should be unable to serve, the
authority granted in the enclosed proxy may be exercised by
the proxy holders for the purpose of voting for a substitute
nominee. Certain information concerning the nominees and the
other directors of the Company is set forth below and under
the caption "Meetings and Committees of the Board of
Directors." Unless otherwise indicated, each nominee and
director has sole investment and voting power with respect to
the shares of common stock of the Company shown as
beneficially owned by him.
* On October 16, 1995, Mr. Howard J. Cofield passed away.
Presently, his seat on the board is vacant. Pursuant to the
Company's Articles of Incorporation and Code of By-Laws the
remaining members of the board are empowered to fill this
vacancy for the remainder of Mr. Cofield's term. Because this
Proxy Statement was required to be finalized in mid-November,
and the next board meeting will not be held until January 26,
1996, at this time Mr. Cofield's successor has not been
selected and elected to fill the remainder of his term.
Accordingly, references herein to Mr. Cofield reflect
circumstances existing as of the end of fiscal year 1995.
<TABLE>
Principal Occupation During Has been a Director
Name and Business the Past 5 Years and Other of Indiana Gas or
Location Age Information (1) the
Company Since
<S> <C> <C> <C>
Nominees For Election Whose Terms Will Expire in 1999
GERALD L. BEPKO 55 Vice President, Indiana 1990
Indianapolis, University and Chancellor
Indiana of Indiana University-
Purdue University at
Indianapolis since 1986. He
is also a Director of First
Indiana, Inc. and Circle
Income Shares, Inc.
LAWRENCE A. FERGER 61 President and Chief 1984
Indianapolis, Executive Officer of the
Indiana Company and Indiana Gas
since 1987. He is also
Director of National City
Bank, Indiana.
ANTON H. GEORGE 36 President since December 1990
Indianapolis, 1989 and a Director of
Indiana Indianapolis Motor Speedway
Corporation (auto racing);
President since January,
1994, and prior to that
time Executive Vice
President since June 1989,
and a Director of Hulman &
Company (manufacturer and
distributor of baking
powder). He is also a
Director of First Financial
Corporation.
JAMES C. SHOOK 64 President, the Shook 1983
Lafayette, Indiana Agency, Inc. (residential,
commercial and industrial
real estate brokerage). He
is also Director of NBD
Bank, N.A. (multi-bank
holding company), Lafayette
Life Insurance Company, and
Crossman Communities, Inc.
Principal Occupation Has been a Director
Name and Business During the of
Location Age Past 5 Years and Other Indiana Gas or the
Information (1) Company Since
Directors Continuing In Office Whose Terms Will Expire 1998
PAUL T. BAKER 54 Senior Vice President 1991
Indianapolis, and Chief Operating
Indiana Officer of Indiana Gas;
prior to 1991, Senior
Vice President of Gas
Supply & Customer
Services.
OTTO N. FRENZEL 65 Chairman of the Board 1967
III of National City Bank,
Indianapolis, Indiana. He is also a
Indiana Director of National
City Corporation,
American United Life
Insurance Company,
Baldwin & Lyons, Inc.
(insurance brokerage
firm), Indianapolis
Power and Light Company
and IPALCO Enterprises,
Inc., IWC Resources
Corporation and
Indianapolis Water
Company.
DON E. MARSH 57 Chairman, President and 1986
Indianapolis, Chief Executive Officer
Indiana and Director of Marsh
Supermarkets, Inc. He
is also a Director of
National City Bank,
Indiana and Nash-Finch
Company.
RICHARD P. 56 Chairman of the Board 1984
RECHTER of Rogers Group, Inc.,
Bloomington, President and Chief
Indiana Executive Officer and
Director of Rogers
Management, Inc., and
President and Chief
Executive Officer and
Director, Mid-South
Stone, Inc. He is also
a Director of Monroe
County Bank and Monroe
Bancorp.
Principal Occupation Has been a
Name and Business During the Director of
Location Age Past 5 Years and Other Indiana Gas or the
Information (1) Company Since
Directors Continuing In Office Whose Terms Will Expire 1997
DUANE M. AMUNDSON 70 Chairman of the Board of 1978
Indianapolis, Directors of the Company
Indiana and Chairman of the Board
of Directors of Indiana
Gas.
HOWARD J. COFIELD 69 Of counsel to the law 1984
Indianapolis, firm of Barnes &
Indiana Thornburg since January
1, 1993, and prior to
that a partner.
NIEL C. 46 Vice President and 1991
ELLERBROOK Treasurer and Chief
Indianapolis, Financial Officer of the
Indiana Company since 1986;
Senior Vice President and
Chief Financial Officer
of Indiana Gas since
1987. He is also a
Director of Fifth Third
Bank of Central Indiana.
LOREN K. EVANS 67 Retired. Before 1993, 1988
Columbus, Indiana Vice Chairman since 1991
and Director of Arvin
Industries, Inc. (an
Indiana company serving
global markets in more
than 100 countries);
President and Chief
Operating Officer from
1987. He was also a
Director of Irwin
Financial Corporation,
Columbus, Indiana until
April, 1994.
</TABLE>
Other executive officers of the Company are Anthony E. Ard,
age 54, and Carl L. Chapman, age 40. In 1995, Mr. Ard was
made Senior Vice President of Corporate Affairs for Indiana
Gas. Prior to 1995 and since 1993, he was Vice President of
Corporate Affairs for Indiana Gas. Prior to 1993, and since
1988, Mr. Ard was Vice President and Secretary for Indiana Gas
and Secretary for the Company. In 1995, Mr. Chapman was made
Senior Vice President of Corporate Development for Indiana
Gas. Since 1986, he has been the Assistant Treasurer for the
Company, and prior to 1995 he was Vice President of Planning
for Indiana Gas.
(1) Includes, but is not limited to, directorships in
corporations with a class of securities registered pursuant
to Section 12 of the Securities Exchange Act of 1934 or which
are subject to the requirements of Section 15(d) of that Act
or in a company registered as an investment company under the
Investment Company Act of 1940.
COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of
common stock of the Company beneficially owned by the
directors, the chief executive officer, the four named
executive officers, and all directors and executive officers
as a group, as of September 30, 1995:
Name of Individuals or Shares Owned
Identity of Group Beneficially (1)
DUANE M. AMUNDSON
Indianapolis, Indiana 16,181 (2)(4)(7)
ANTHONY E. ARD
Indianapolis, Indiana 15,302 (3)
PAUL T. BAKER
Indianapolis, Indiana 22,204 (3)
GERALD L. BEPKO
Indianapolis, Indiana 1,693 (2)(7)
CARL L. CHAPMAN
Indianapolis, Indiana 12,438 (3)
HOWARD J. COFIELD
Indianapolis, Indiana 7,704 (7)
NIEL C. ELLERBROOK
Indianapolis, Indiana 22,573 (3)
LOREN K. EVANS
Columbus, Indiana 3,343 (2)(7)
LAWRENCE A. FERGER
Indianapolis, Indiana 67,251 (3)(5)
OTTO N. FRENZEL III
Indianapolis, Indiana 17,974 (7)(8)
ANTON H. GEORGE
Indianapolis, Indiana 1,848,338 (1)(7)
DON E. MARSH
Indianapolis, Indiana 4,435 (7)
RICHARD P. RECHTER
Bloomington, Indiana 6,813 (2)(7)
JAMES C. SHOOK
Lafayette, Indiana 39,552 (6)(7)
All directors and executive
officers as a group (14 2,085,801 (1)
persons)
(1) Except for Anton H. George, no director or executive
officer owned beneficially as of September 30, 1995, more than
.30 percent of common stock of the Company. Excluding Anton
H. George, all directors and executive officers owned
beneficially an aggregate of 237,463 shares or 1.05 percent of
common stock of the Company outstanding as of that date. The
beneficial ownership by Anton H. George of 1,848,338 shares or
8.19 percent of common stock of the Company is discussed
above in "Voting Securities."
(2) Some or all of the shares owned by Messrs. Amundson,
Bepko, Evans and Rechter are owned jointly with their wives.
(3) Includes shares awarded to Messrs. Ard, Baker, Chapman,
Ellerbrook and Ferger under the Company's executive restricted
stock plan which are subject to certain transferability
restrictions and forfeiture provisions.
(4) Includes 11,521 shares held in a trust, of which Mr.
Amundson's wife is trustee, and he disclaims beneficial
interest therein.
(5) Includes 3,981 shares held by Mr. Ferger's wife, and he
disclaims beneficial interest therein.
(6) Includes 1,500 shares held by Mr. Shook's wife, and he
disclaims beneficial interest therein.
(7) Includes shares granted under the directors restricted
stock plan, some of which shares are subject to certain
transferability restrictions and forfeiture provisions.
(8) Includes 3,774 shares held in a trust, of which Mr.
Frenzel is a co-trustee, and he disclaims beneficial interest
therein.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has the following standing committees of the
board of directors:
1. The Audit Committee. The members of this committee
are Loren K. Evans, chair, Gerald L. Bepko, Howard J. Cofield,
and Anton H. George. The committee makes recommendations to
the board as to the selection and retention of the independent
accountants, reviews the scope, conduct and results of audits
performed, and makes inquiry as to the differences of views,
if any, between such independent accountants and officers and
employees of the Company and subsidiaries with respect to the
financial statements and records and accounting policies,
principles, methods and systems. It further determines that
services performed by the independent accountants in addition
to the annual audit examination do not impair such
accountants' independence in performing the audit examination.
Finally, the committee reviews the policies and guidelines of
the Company and subsidiaries designed to ensure the proper use
and accounting for corporate assets, and the activities of the
Internal Audit department of Indiana Gas. There were two
meetings of the committee during the past fiscal year.
2. The Compensation Committee. The members of this
committee are Otto N. Frenzel III, chair, Duane M. Amundson
and Richard P. Rechter. None of the members is an officer or
employee of the Company. The committee has the responsibility
of formulating recommendations to the board as to the
compensation to be paid the officers of the Company and its
subsidiaries. It also administers the annual management
incentive plan, the executive restricted stock plan, and the
directors restricted stock plan of the Company. There were
two meetings of the committee during the past fiscal year.
3. The Nominating Committee. The members of this
committee are Lawrence A. Ferger, chair, Don E. Marsh and
James C. Shook. The duties and powers of the committee are to
search for, evaluate and make recommendations to the board of
directors as to nominees to be submitted annually to the
shareholders for election to the board as well as to fill
vacancies occurring from time to time on the board. In that
connection, the committee is authorized to act on behalf of
the Company and the board in receiving, giving consideration
to and making recommendations to the board respecting
communications submitted to the Company from shareholders
relating to nominees for directors. Such communications must
be in writing and with respect to the next annual election
must be received by the Company, addressed to the secretary,
no later than August 9, 1996. There were two meetings of the
committee during the past fiscal year.
Nominations of persons for election to the board of
directors of the Company may be made by any shareholder of the
Company entitled to vote for the election of directors at a
shareholders' meeting. Pursuant to the Company's Code of By-
Laws, any such nominations must be made pursuant to notice
delivered to, or mailed and received at, the principal office
of the Company, not less than 50 days nor more than 90 days
prior to the meeting. However, in the event that less than 60
days notice of the meeting is given, the shareholder's notice
must be received not later than the tenth day following the
date of notice of the meeting. Such shareholder's notice must
set forth, in addition to the name and address of the
shareholder submitting the nomination, as to each person whom
the shareholder proposes to nominate for election or re-
election as a director, (i) the name, age, business address
and residence address of such person, (ii) the principal
occupation or employment of such person, (iii) the class and
number of shares of the Company which are beneficially owned
by such person, (iv) any other information relating to such
person that is required to be disclosed in solicitation of
proxies for election of directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including, without
limitation, such person's written consent to be named in the
proxy statement as a nominee and to serving as a director, if
elected), and (v) the qualifications of the nominee to serve
as a director of the Company.
4. The Public and Environmental Affairs Committee. The
members of this committee are Richard P. Rechter, chair,
Howard J. Cofield and James C. Shook. The duties and powers
of the committee are to review current policies, programs,
procedures and processes of the Company and its subsidiaries
affected by public policy and affecting the environment. It
also reviews reports from Company management on public policy
and environmental matters and monitors compliance with, and
trends and emerging policy developments in, business and
environmental regulation. In addition, the committee reports
to the Board on public policy and environmental issues
affecting the Company and its subsidiaries. There were two
meetings of the committee during the past fiscal year.
The board of directors of the Company had five meetings
during the last fiscal year. All directors attended at least
75 percent of the aggregate of board meetings and meetings of
committees of the board of which they are members.
DIRECTORS' COMPENSATION
Non-employee directors of the Company and of Indiana Gas
receive combined fees totaling $15,000 per year for service on
the boards of both companies. The fees are paid under the
directors' restricted stock plan approved by the shareholders
at their January 13, 1992, meeting. Under the plan, $5,000 of
the combined directors' fees paid by the Company and Indiana
Gas to non-employee directors' is paid in restricted shares of
the Company. The restricted shares are issued to each non-
employee director at the beginning of their three-year term,
and the number of restricted shares is determined by dividing
$15,000 ($5,000 for each year) by the per share market price
of the Company's stock during the period specified in the
plan. Directors may elect to receive the remaining $10,000 in
unrestricted shares or in cash. To receive the restricted
shares, a director must consent to the restrictions in
writing. To elect to receive unrestricted shares instead of
cash, a director must provide an irrevocable written election
to the secretary of the Company before the July 1 immediately
preceding the calendar year for which the election relates.
Restricted shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than
by will or by the laws of descent and distribution until the
first to occur of: (1) the expiration of the director's term
of office for which the grant relates; (2) the grantee's death
or disability; (3) the grantee's termination of his status as
a director pursuant to the mandatory retirement policy for
directors; (4) the involuntary termination of the grantee's
status as a director; (5) approval by a majority of the other
directors of the grantee's voluntary termination of his status
as director because of his relocation of his principal place
of residence outside of Indiana; or (6) a change in control of
the Company. In no event, however, are the restricted shares
transferable and free of restrictions before the expiration of
a six-month period beginning the first day of the director's
term of office or, if later, the date of issuance of the
shares.
All restricted shares bear a legend citing the
restrictions contained in the plan. When the restrictions
lapse, the grantee is entitled to have the legend removed from
any shares or certificates. Restrictions are lifted
automatically upon the expiration of the period to which the
restrictions apply. If a director voluntarily terminates his
status as such before the expiration of the period of
restriction, any shares still subject to restriction are
immediately forfeited.
The Company has reserved 71,172 shares for grant under
the plan. As of September 30, 1995, 55,046 shares remain in
reserve. Those shares may consist of authorized but unissued
shares or shares reacquired by the Company including shares
purchased in the open market. If any shares subject to the
grants are forfeited, the forfeited shares become available
for reissuance under the plan.
The board may amend, modify, alter or terminate the plan
at any time. The plan may not, however, be amended more
frequently than once every six months. Amendments,
modifications or alterations which would (1) increase the
number of shares reserved for issuance under the plan, (2)
materially modify the class of individuals to whom grants of
shares may be made, (3) change the manner in which shares are
granted, or (4) materially increase the benefits accruing to
grantees under the plan, must be approved by the Company's
shareholders.
Non-employee directors also receive a fee of $375 for
each meeting of the board of directors of the Company attended
and $375 for each meeting of the board of directors of Indiana
Gas attended. Each non-employee member of a committee of the
board is paid a fee of $600 for each meeting of the committee
attended, and each non-employee chair of a committee is paid
an additional fee of $150 for each meeting attended.
During the fiscal year ended September 30, 1995, Duane M.
Amundson was also paid $45,000 for his services as chair of
the board of the Company and $45,000 for his services as chair
of the board of Indiana Gas.
There are two unfunded plans that have been adopted by
the board of directors under which non-employee directors may
defer all or any part of fees received in cash until the
occurrence of certain conditions specified in each of the
plans. Under the first plan, which has been in place since
1981, amounts deferred earn a return each year equal to the
average commercial prime interest rate in effect for the
preceding calendar year. Under the second plan, which became
effective during fiscal year 1995, amounts deferred are
considered for accounting purposes to be invested in Company
stock. These amounts are tracked as phantom units of Company
stock and the value of amounts deferred change with the
receipt of dividends, as well as with fluctuations in the
price of Company stock.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION COMMITTEE REPORT
The Compensation Committee is responsible for reviewing
and approving all elements of the total compensation program
for officers of the Company and its affiliates and serves as
the administrator of the Company's Annual Management Incentive
Compensation Plan ("Incentive Plan") and the Executive
Restricted Stock Plan ("Stock Plan"). The Committee is also
responsible for monitoring the Company's executive
compensation programs to ensure that they are aligned with the
Company's business strategies and financial goals.
A. Executive Compensation Policy.
The Company's total compensation program for officers
includes base salaries, annual incentive payments, and
restricted stock grants. The Committee's primary objective is
to achieve above-average performance by providing the
opportunity to earn above-average total compensation (base
salary, at-risk annual and long-term incentives) for above-
average performance. Each element of total compensation is
designed to work in concert. The total program is designed to
attract, motivate, reward and retain the broad-based
management talent required to serve customer, employee, and
shareholder interests. The Company believes that the program
also motivates the Company's officers to acquire and retain
appropriate levels of stock ownership and is competitive with
programs offered by the companies that are selected by the
Company's investment bankers and comprise the peer group
("Peer Group") included in the performance graph on page 18.
It is the opinion of the Committee that the total compensation
earned by Company officers in fiscal year 1995 achieves these
objectives and is fair and reasonable. Each aspect of the
total compensation program is discussed in greater detail
below.
B. Components of Executive Compensation.
Annual Compensation. The annual compensation program
consists of two components, base salary and an at-risk
incentive payment. Individual salaries are set within ranges
based on comparisons to actual pay for comparable positions
within the Peer Group, and industry in general. In
determining actual salaries within these ranges, the Committee
takes into consideration individual performance, experience,
potential, and changes in executive responsibilities.
Establishing industry based salary ranges provides an
objective standard by which to judge the reasonableness of the
Company's salaries, maintains the Company's ability to compete
for and retain qualified executives, and ensures that internal
responsibilities are properly rewarded.
All of the Company's officers, but particularly the five
highest paid officers, have a significant portion of their
total compensation at risk. Participation in the Incentive
Plan, which includes the chief executive officer, is extended
to those positions that play key roles in achieving annual
financial and operating objectives. Annual incentive
opportunities are also based on periodic reviews of prevailing
Peer Group practices for comparable positions. The potential
incentive award is determined annually by non-employee
directors and is based upon a percentage of each participant's
base salary. Incentive opportunities for executive officers,
excluding the chief executive officer, ranged from thirty to
forty percent of salary.
Prior to the start of the fiscal year the Committee
recommends to the board, and the board (excluding Company and
Indiana Gas employees) determines, minimum, target, and
maximum corporate performance levels. The performance that is
measured is the Company's financial performance, as determined
by the Company's consolidated return on equity, relative to
the average return on equity of companies in the Peer Group.
Target performance levels are set in excess of Peer Group
performance in order to ensure the linkage between financial
performance and executive rewards. Depending upon the
Company's financial performance, the size of this component
can range from zero to the maximum level established for each
participant in the Incentive Plan. In determining the cash
payment that was received by executive officers for the past
fiscal year, the Company's consolidated return on equity
exceeded the target performance level but was less than
maximum as determined by the board. Incentive payouts
correspondingly exceeded target but were less than maximum.
The second and smaller performance component is based
upon each executive's achievement of individual goals, which
are consistent with the Company's overall objectives and which
are established prior to the beginning of the fiscal year.
Individual performance is monitored and evaluated subjectively
throughout the fiscal year. Overall performance is measured
after the end of the fiscal year by the chief executive
officer. Among the executive officers, no person has more
than one-third of their total potential incentive under the
Incentive Plan dependent upon the attainment of individual
objectives.
Long-Term Incentive. The purpose of the Stock Plan is to
retain and motivate the Company's principal officers and to
increase their incentive to work toward the attainment of the
Company's long-term growth and profit objectives by providing
them with a means of acquiring or increasing a proprietary
interest. Under the Stock Plan, the Committee recommends to
the board, and the board (excluding Company and Indiana Gas
employees) determines, the executive officers, as well as
other principal officers, to whom grants will be made and the
percentage of each officer's base salary to be used for
determining the number of shares to be granted. Among the
executive officers, excluding the chief executive officer, the
percentages of each officer's base salary range from twenty
percent to thirty percent. Like the potential cash payment
that may be received under the Incentive Plan, this component
of total compensation is also performance driven and totally
at-risk.
The Stock Plan provides for a grant to eligible officers
at the outset of each measuring period and also provides for
grants of shares to be made to newly eligible principal
officers during a measuring period. The measuring periods are
consecutively running three-year periods. Shares were
allocated under the stock plan effective October 1, 1987, for
the "First Measuring Period," October 1, 1990, for the "Second
Measuring Period," and October 1, 1993, for the "Third
Measuring Period."
To be eligible for a grant, a principal must consent in
writing to observe the restrictions imposed on the shares.
The shares may not be sold, transferred, pledged, or assigned
until such restrictions are lifted. The restrictions are
lifted in 33 1/3 percent increments on the fourth, fifth, and
sixth anniversaries of the calendar day immediately preceding
the first calendar day of the measuring period.
The granting of additional shares, if any, and the
application of forfeiture provisions, depends upon two primary
criteria: (i) certain measurements of the total return to the
Company's shareholders in comparison to the total return of
shareholders of the companies in the Peer Group; and (ii) the
continued employment of the officer during the period of
restriction.
For each three-year measuring period under the Stock
Plan, depending upon the total return provided to the
Company's shareholders relative to the total return provided
by each of the companies in the Peer Group, there are three
possible outcomes. If the Company's total return places it in
the bottom quartile, all of the shares are forfeited. If the
Company's total return places it in the second or third
quartiles, the original grant is vested, subject to continuing
employment by the officers during the remaining period of
restriction. If the Company's total return places it in the
top quartile, the original grant is doubled and vested,
subject to continuing employment by the officers during the
remaining period of restriction.
For the First Measuring Period ended September 30, 1990,
and for the Second Measuring Period ended September 30, 1993,
the number of shares originally granted were doubled under the
Stock Plan because the Company's total return to shareholders
placed it in the top quartile compared to the total return
performance of the Peer Group companies. Among all of the
companies in the Peer Group, the Company was the sole Peer
Group member to perform in the top quartile for both measuring
periods.
It is the opinion of the Committee that the Stock Plan
meets its objective of providing executive officers, as well
as other principal officers, with the appropriate long-term
interest in maximizing shareholder value. A participant's
increased level of equity in the Company is contingent upon
the additional enhancement of shareholder value relative to
the performance of companies in the Peer Group. In addition,
the vesting restrictions provide an incentive for all plan
participants to remain with the Company.
C. Chief Executive Officer Compensation.
The compensation of Lawrence A. Ferger, President and
Chief Executive Officer, consists of the same components as
for other executive officers, namely base salary, an at-risk
payment under the Incentive Plan, and an at-risk grant of
restricted stock under the Stock Plan.
In establishing Mr. Ferger's total compensation for
fiscal year 1995, the Committee considered the total
compensation of other chief executive officers in the Peer
Group, the financial and business performance of the Company,
and a subjective evaluation of the leadership role provided by
Mr. Ferger.
Mr. Ferger's payment received under the Incentive Plan
during fiscal year 1995 was based entirely upon the financial
performance of the Company as measured by its consolidated
return on equity relative to the average return on equity of
companies in the Peer Group. This method of measurement
ensures the linkage of this aspect of Mr. Ferger's
compensation to Company performance. Under the Incentive
Plan, the maximum award Mr. Ferger was eligible to receive was
an amount equal to fifty percent of his base salary. As
discussed above with respect to other executive officers,
during the past fiscal year the Company's consolidated return
on equity exceeded the target performance level but was less
than maximum as determined by the board. Incentive payouts
correspondingly exceeded target but were less than maximum.
Mr. Ferger's receipt of restricted shares under the Stock
Plan is likewise directly linked to the Company's performance.
Whether stock is received and, if so, in what amount, will
depend upon the measurement of the total return provided to
the Company's shareholders in comparison to the total return
provided to the shareholders of companies in the Peer Group.
As discussed above with respect to the other executive
officers, fiscal year 1995 is the second year of the three
year measuring period presently in effect under the Stock
Plan. Depending upon the Company's total return performance
to be measured at the conclusion of the Third Measuring Period
ending September 30, 1996, that stock may be forfeited, vested
as conditionally granted, subject to Mr. Ferger's continued
employment during the remaining period of restriction, or
doubled in amount and vested, again subject to Mr. Ferger's
continued employment during the remaining period of
restriction.
For the same reasons expressed above with respect to the
conclusion regarding the appropriateness of the total
compensation provided other executive officers, it is the
opinion of the Committee that Mr. Ferger's total compensation
is reasonable and appropriate.
D. Miscellaneous.
To assist the Committee, the services of an independent
compensation consultant are utilized. The consultant assists
by evaluating the total compensation system relative to the
compensation systems employed by companies in the Peer Group.
The consultant also provides an additional measure of
assurance that the system is a reasonable and appropriate
means to achieve the Company's objectives.
As described below on page 21 under the heading
"EMPLOYMENT AND TERMINATION BENEFIT AGREEMENTS," the Company
and Indiana Gas have entered into such agreements with each of
the executive officers. Neither form of agreement affects in
any manner the recommendations of the Committee and the
determinations by the board (excluding Company and Indiana Gas
employees) with respect to the total compensation provided the
executive officers.
In 1993, Congress enacted Section 162(m) of the Internal
Revenue Code that disallows corporate deductibility for
"compensation" paid in excess of One Million Dollars to the
individual executives named in the Summary Compensation Table,
unless the compensation is payable solely on account of
achievement of an objective performance goal. The Committee
does not anticipate that the compensation paid to executive
officers in the form of base salaries and incentive
compensation will exceed One Million Dollars in the near
future. However, as part of its ongoing responsibilities with
respect to executive compensation, the Committee will monitor
this issue to determine what actions, if any, should be taken
as a result of the limitation on deductibility.
Otto N. Frenzel III, Chair
Duane M. Amundson
Richard P. Rechter
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Lawrence A. Ferger is a director of National City Bank,
Indiana. Otto N. Frenzel III, chair of the Company's
compensation committee, is chairman of the board of directors
and an executive officer of National City Bank, Indiana.
During the past fiscal year, Indiana Gas had a bank line of
credit agreement with National City Bank, Indiana for
borrowing by Indiana Gas not to exceed $25,000,000 at any one
time. At September 30, 1995, there was $2,250,000 outstanding
under such line. The interest on borrowing under such line of
credit has been at a rate not to exceed the prime lending rate
at such bank which in the opinion of the board of directors is
fair. Similar bank lines of credit agreements have been in
effect between Indiana Gas and the bank in the normal course
of business for many years. Moreover, as of September 30,
1995, Energy Realty, Inc., an indirect subsidiary of the
Company, had two loans outstanding in an aggregate amount of
$5,857,817 from National City Bank, Indiana at variable rates
of interest tied to commercially-recognized benchmarks, which
in the opinion of the board of directors are fair. Finally,
on July 31, 1995, Energy Realty, Inc. and National City Bank,
Indiana each invested $806,250 in the Lebanon Housing
Partnership, L.P. As a result of these investments, each
company owns 37.125% of the partnership.
None of the Company's executive officers is a member of
the Compensation Committee. Prior to his retirement in 1987,
Duane M. Amundson served as the chief executive officer for
the Company and Indiana Gas.
COMPENSATION
The following tabulation shows for the fiscal years ended
September 30, 1993, 1994 and 1995, the compensation paid by
the Company and its subsidiaries to each of the five most
highly compensated executive officers of the Company
(considering for this purpose Mr. Ard and Mr. Baker, executive
officers of Indiana Gas, to be executive officers of the
Company) in all capacities in which they served.
<TABLE>
<CAPTION>
Summary Compensation Table
(a) (b) (c) (d) (e) (h) (i)
Long-Term
Compensation All Other
Annual Compensation Payouts Compensation
Other Annual
Name and Principal Compensation LTIP Payouts
Position in Group Year Salary Bonus (1) (2) (3) (4)
<S> <C> <C> <C> <C> <C> <C>
Lawrence A. Ferger, 1993 $294,257 $138,573 $19,300 $132,939 $15,971
President and Chief 1994 321,769 147,129 43,780 182,313 17,028
Executive Officer 1995 347,615 139,439 35,665 198,336 15,790
Paul T. Baker, 1993 193,923 63,249 6,666 72,094 12,457
Sr. V.P. and Chief 1994 222,308 74,552 12,647 48,257 13,939
Operating Officer, 1995 236,077 75,093 10,541 52,506 13,050
Indiana Gas
Niel C. Ellerbrook, 1993 151,782 55,359 9,197 84,122 10,485
V.P. and Treasurer 1994 165,769 58,605 17,635 75,207 11,708
and Chief Financial 1995 175,885 56,179 14,271 81,829 11,700
Officer
Anthony E. Ard, 1993 115,781 31,457 5,079 41,530 5,123
Sr. V.P. of Corp. 1994 125,977 33,962 9,906 44,301 9,419
Affairs, Indiana 1995 133,962 32,755 7,905 48,202 10,926
Gas
Carl. L. Chapman, 1993 107,166 27,313 4,097 33,040 8,398
Assistant Treasurer 1994 117,489 31,197 9,837 35,994 9,470
and Sr. V.P. of 1995 125,096 29,765 8,281 39,163 9,614
Corp. Development,
Indiana Gas
</TABLE>
(1) The amounts shown in this column are payments under the
annual Incentive Plan, which was discussed above in Parts B
and C of the Compensation Committee Report relating to "Annual
Compensation". Amounts paid in any fiscal year are
attributable to the Company's performance in the prior fiscal
year. Payments earned in fiscal year 1995 have not been
determined and approved for distribution by the Company's
compensation committee. The Company's performance over the
last five years is depicted on page 18.
(2) The amounts shown in this column are dividends paid on
restricted shares issued under the Stock Plan, which was
discussed above in Parts B and C of the Compensation Committee
Report relating to "Long-Term Incentive Compensation".
(3) The amounts shown in this column represent the value of
shares issued under the Stock Plan and for which restrictions
were lifted in each of those fiscal years. For instance, the
amounts shown for fiscal year 1995 represent the value of one-
third of the Second Measuring Period shares issued under the
Stock Plan and for which restrictions were lifted as of
September 30, 1995. After the lifting of those restrictions,
the executive officers, as a group, held 52,222 restricted
shares, with an aggregate market value of those shares as of
that date of $1,129,300. Those shares continue to be subject
to restrictions imposed by the Stock Plan, and they represent
the remaining one-third of the Second Measuring Period shares
and all of the Third Measuring Period shares. The number and
value of restricted shares held by each executive officer on
September 30, 1995 was as follows: Lawrence A. Ferger-24,159
shares, $522,438; Paul T. Baker-7,423 shares, $160,522; Niel
C. Ellerbrook-9,553 shares, $206,584; Anthony E. Ard-5,159
shares, $111,563 and Carl L. Chapman-5,928 shares, $128,193.
(4) The amounts shown in this column are Company
contributions to the Retirement Savings Plan and for fiscal
year 1995 the dollar value of insurance premiums paid by, or
on behalf of, Indiana Gas with respect to term life insurance
for the benefit of executive officers.
During fiscal year 1995, there were no awards under the
Stock Plan, which is considered to be a long-term incentive
plan. Accordingly, in this Proxy Statement there is no table
reflecting the Long-Term Annual Incentive Plan Award in Last
Fiscal Year.
CORPORATE PERFORMANCE
The following Total Return to Shareholders graph compares
the performance of Indiana Energy, Inc., with that of the S&P
500 Composite, the S&P Utilities Index and a group of peer gas
distribution companies, with the return weighted based on
market capitalization. The Return on Equity graph compares
the performance of Indiana Energy, Inc. with the same peer
group. For fiscal year 1995, companies in the peer group are
as follows: Atlanta Gas Light Co., Atmos Energy Corp., Bay
State Gas Co., Brooklyn Union Gas, Cascade Natural Gas Corp.,
CMS Energy Corp., Connecticut Natural Gas Corp., Energen
Corp., Laclede Gas Co., MCN Corp., National Fuel Gas Co., New
Jersey Resources Corp., NICOR, Inc., Northwest Natural Gas
Co., NUI Corp., Pacific Enterprises, Pennsylvania Enterprises,
Inc., Peoples Energy Corp., Piedmont Natural Gas Co., Inc.,
Public Service Co. of North Carolina, Inc., South Jersey
Industries, Inc., Southeastern Michigan Gas Enterprises, Inc.,
Southern Union Co., Southwestern Gas Corp., Southwestern
Energy Co., UGI Corp., Washington Energy Co., Washington Gas
Light Co., and WICOR, Inc. The companies to be included in
the peer group were determined by the Company's investment
bankers and approved by the Compensation Committee.
From year to year, the Company's investment bankers
review the composition of the peer group to ensure
comparability among the member companies. If in their
judgment a company is determined not to be comparable, it will
be removed from the peer group, and, if possible, replaced
with a comparable company. Companies can also be removed if
they are acquired or merged out of existence. For instance,
in 1994, based upon an assessment of the comparability of the
existing peer group, the Company's investment bankers changed
the peer group used for fiscal year 1993 (the "1993 Peer
Group") by deleting Equitable Resources, Inc. and ONEOK, Inc.
and replacing them with CMS Energy Corp. and Southeastern
Michigan Gas Enterprises, Inc. This peer group, as revised,
was used in the Company's Proxy Statement last year, and the
same group was used during fiscal year 1995 ("1995 Peer
Group"). The following graphs reflect comparisons of total
return for the 1995 Peer Group, the 1993 Peer Group, the S&P
500 and the S&P Utilities.
<TABLE>
Total Return To Shareholders (1)
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
IEI 0.00% 34.85% 56.32% 95.07% 74.08% 100.20%
1995 PEERS 0.00% 1.41% 14.08% 59.34% 42.33% 61.29%
1993 PEERS (1) 0.00% 7.78% 23.53% 66.57% 47.01% 66.59%
S&P 500 0.00% 31.17% 45.66% 64.60% 70.67% 121.43%
S&P UTILITIES 0.00% 15.87% 32.52% 64.89% 43.29% 82.82%
</TABLE>
(1) The total return on investment (change in the year end
stock price plus reinvested dividends) for each of the periods
for the Company, the respective peer groups, the S&P 500
Composite and the S&P Utilities Index is based on the stock
price or composite index at the end of fiscal 1990.
<TABLE>
Return on Equity
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
INDIANA ENERGY 15.22% 11.32% 11.46% 14.68% 13.00%
PEER GROUP 10.87% 9.79% 9.45% 10.34% 11.40%
</TABLE>
(1) Under the annual Incentive Plan, payments are awarded on
the basis of the Company's average return on equity compared
to that of the peer group in any fiscal year and are paid in
the first quarter of the succeeding fiscal year. Accordingly,
payments paid to executive officers in the first quarter of
fiscal year 1995 were based on the Company's comparative
return on equity during the fiscal year 1994, and so on, back
to 1988, the first year in which payments were made.
(2) Return on equity for fiscal year 1990 shown above for the
Company excludes the effects of the acquisition in July 1990
of Terre Haute and Richmond. For purposes of the plan,
average return on equity for both the Company and the peer
group has been computed using the simple average of beginning
and ending common equity as of September 30.
(3) The peer group return on equity by fiscal year reflects
the peer group for each of those years as determined by the
Company's investment bankers and approved by the Compensation
Committee. See the discussion above under "Corporate
Performance".
RETIREMENT SAVINGS PLAN
As of October 1, 1994, Indiana Gas merged its Retirement
Savings Plan for bargaining employees (Bargaining Savings
Plan) into its Retirement Savings Plan for non-bargaining
employees (Savings Plan). The primary objective for this
action is to reduce the level of resources required to
administer two plans. In general, the Savings Plan permits
participants to elect to have not more than 15 percent of
their qualified compensation (subject to certain maximums
imposed on highly compensated employees by the Internal
Revenue Code) invested on a tax-deferred basis in shares of
the Company's common stock, or various investment funds. Non-
bargaining participants in the Savings Plan have matching
company contributions made to the plan on their behalf equal
to 100 percent of their contributions not in excess of 3
percent of their individual redirected compensation, and 50
percent of their contributions in excess of 3 percent but not
in excess of 8 percent of their individual redirected
compensation. Also, a 2.5 percent lump sum company
contribution is made to the Savings Plan for all eligible non-
bargaining employees at the end of each year.
The Summary Compensation Table shows the value of Indiana
Gas contributions made to the plan for executive officers in
the column marked "All Other Compensation."
RETIREMENT PLANS
Indiana Gas has two defined benefit pension plans
covering full-time employees of the Company and certain of its
subsidiaries who meet certain age and service requirements.
One such plan covers salaried employees, including executive
officers, and provides fixed benefits at normal retirement age
based upon compensation and length of service, the costs of
which are fully paid by the employers and are computed on an
actuarial basis. The pension plan also provides for benefits
upon death, disability and early retirement under conditions
specified therein. The remuneration covered by this plan
includes all compensation for regular work periods (excluding
overtime, bonuses and other forms of additional compensation).
Effective July 1, 1991, the retirement plans maintained by
Terre Haute and Richmond were merged into, and became part of,
the Indiana Gas defined benefit pension plans.
Indiana Gas has a supplemental pension plan covering the
principal officers of Indiana Gas. The supplemental pension
plan provides fixed benefits at normal retirement age based
upon compensation and is computed on an actuarial basis. The
supplemental pension plan also provides for benefits upon
death, disability and early retirement under conditions
specified therein, including service requirements. This
supplemental pension plan also provides a reduced benefit to a
participant who voluntarily terminates his employment with
Indiana Gas before normal retirement age (65) but following a
change in control of the Company. The remuneration covered by
the supplemental pension plan includes all compensation for
regular work periods (including bonuses and other forms of
additional compensation).
Upon retirement at or after age 65, any participant in
the supplemental pension plan will, in general, be entitled to
an annual pension for life which, when added to primary Social
Security benefits, benefits paid under the Indiana Gas defined
benefit pension plan described above and benefits under the
Retirement Savings Plan attributable to Indiana Gas
contributions, will equal approximately 65 percent of the
participant's average annual compensation during the 60
consecutive calendar months immediately preceding the
participant's retirement date. The amounts paid under the
supplemental pension plan are unfunded and are paid from the
general assets of Indiana Gas.
The following table illustrates the estimated normal
annual retirement benefits payable to a covered participant
retiring at age 65 under the supplemental pension plan and
under the Indiana Gas defined benefit plan based on the
specified remuneration and under the Retirement Savings Plan
attributable to Indiana Gas contributions. The compensation
included in the Summary Compensation Table under salary and
payments under the annual Incentive Plan qualifies as
remuneration for purposes of these plans. The amounts shown
do not reflect reductions, which would result from joint and
survivor elections.
Pension Table
15 or More Years of Service (1)
Remuneration Level Amount of Benefits
(2)
$125,000 $ 81,250
150,000 97,500
175,000 113,750
200,000 130,000
225,000 146,250
250,000 162,500
300,000 195,000
350,000 227,500
400,000 260,000
450,000 292,500
500,000 325,000
(1) The compensation covered by the plans includes the
salary and incentive payments shown on the Summary
Compensation Table. Years of service are not used in
calculating the benefit amount under the Supplemental
Executive Retirement Plan. The amounts shown above are offset
by Social Security and benefits under the Retirement Savings
Plan attributable to Indiana Gas contributions.
(2) Although the benefit attributable to the Savings Plan
will be paid in a single lump sum payment, it has been
converted to an annual benefit for purposes of this table.
The estimated aggregate annual pension plan benefit may be
greater than the amounts in the table to the extent that the
Savings Plan benefit, after conversion to an annual benefit
and when added to the annual benefit under the applicable
Indiana Gas defined benefit plan, exceeds the amount specified
in the table. Since the Savings Plan has only been in effect
for a few years, it is unlikely in the near future that the
aggregated Savings Plan benefit and defined benefit plan
benefits will exceed the amount specified in the table.
EMPLOYMENT AND TERMINATION BENEFITS AGREEMENTS
The Company and Indiana Gas, with approval of their
boards of directors, have entered into employment agreements
with the executive officers listed in the Summary Compensation
Table. Each agreement continues unless notice of termination
is given by either party, in which event the agreement will
terminate three years from the date of the notice. The period
between notice and termination is defined as an "employment
period" under each agreement. Each officer is entitled to
compensation consisting of the annual aggregate base salary or
salaries, and such additional compensation as the board
determines throughout the employment period. Each agreement
is also subject to termination in the event of disability,
death, or voluntary retirement by the individual or his
termination for cause.
The Company and Indiana Gas, with approval of their
boards of directors, have entered into termination benefits
agreements with each of the executive officers listed in the
Summary Compensation Table. The agreements provide that if
there is an acquisition of control of the Company (as defined
in the agreements), the Company and Indiana Gas are obligated
to pay the termination benefits under the following
conditions:
bullet Within three years the Company terminates the employment
of the executive for any reason (other than cause, death, the
executive's attainment of age 65, or the executive's total and
permanent disability); or
bullet Within three years the executive voluntarily terminates
his employment for good reason (i.e., certain material changes
in the terms of the executive's employment); or
bullet The executive voluntarily terminates his employment
without reason during the 30-day period immediately following
the first anniversary of the acquisition of control.
The termination benefits payment is the executive's average
annual compensation for the most recent five calendar years
multiplied by 299.99%. The initial term of the agreements
expires on October 1, 1999 and shall be automatically extended
for one year periods unless the Company notifies the executive
prior to October 1 of each succeeding year that the Agreement
will terminate at the end of the five year period that begins
with October 1 following the date of such written notice.
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
Arthur Andersen, L.L.P., Indianapolis, has been selected
by the board of directors as the independent public
accountants of the Company and its subsidiaries for fiscal
year 1996. The selection was made upon the recommendation of
the Audit Committee of the board of directors. See "Meetings
and Committees of the Board of Directors." Arthur Andersen,
L.L.P. has served as auditors for the Company since 1986 and
for Indiana Gas since its organization in 1945. A
representative of that firm will be present at the annual
meeting, will have the opportunity to make a statement and
will be available to respond to questions.
COST AND METHOD OF SOLICITATION
The cost of preparing, assembling, printing and mailing
this proxy statement, the enclosed proxy and any other
material which may be furnished to shareholders in connection
with the solicitation of proxies for the meeting will be borne
by the Company. The Company has retained Corporate Investor
Communications, Inc. to assist in soliciting proxies from
shareholders, including brokers' accounts, at an estimated fee
of $5,000 plus reasonable out-of-pocket expenses. In
addition, some of the officers and regular employees of the
Company, who will receive no compensation therefor in addition
to their regular salaries, may solicit proxies by telephone,
telegraph or personal visits, and it is estimated that the
cost of such additional solicitation, if any, will not exceed
$500, and will be borne by the Company. The Company expects
to reimburse banks, brokerage houses and other custodians of
stock for their reasonable charges and expenses in forwarding
proxy material to beneficial owners.
ANNUAL REPORT
A copy of the Company's annual report, including
consolidated financial statements for the fiscal year ended
September 30, 1995, was mailed to shareholders on or about
December 8, 1995.
REVOCATION RIGHTS
A shareholder executing and delivering the enclosed proxy
may revoke it by written notice delivered to the secretary of
the Company, or in person at the annual meeting, at any time
before the authority granted by it is exercised.
SHAREHOLDERS' PROPOSALS FOR 1997 ANNUAL MEETING
Under Rule 14a-8 under the Securities Exchange Act of
1934, shareholders of the Company may present proper proposals
for inclusion in the Company's proxy statement and for
consideration at the 1997 annual meeting of its shareholders
by submitting their proposals to the Company in a timely
manner. In order to be so included for the 1997 annual
meeting, shareholder proposals must be received at the
Company's principal office, 1630 North Meridian Street,
Indianapolis, Indiana 46202-1496, Attention: Corporate
Secretary, no later than August 9, 1996, and must otherwise
comply with the requirements of Rule 14a-8.
By order of the board of directors.
Indianapolis, Indiana
December 8, 1995
INDIANA ENERGY, INC.
By RONALD E. CHRISTIAN
Secretary
Please fill in, date and sign the enclosed proxy and
return it in the accompanying addressed envelope. No further
postage is required if mailed in the United States. If you
attend the annual meeting and wish to vote your shares in
person, you may do so. Your cooperation in giving this matter
your prompt attention will be appreciated.
[SIDE 1]
INDIANA ENERGY, INC. PROXY/VOTING INSTRUCTION CARD
COMMON STOCK
This proxy is solicited on behalf of the Board of Directors for the
Annual Meeting on January 26, 1996.
ANTHONY E. ARD, CARL L. CHAPMAN, and RONALD E. CHRISTIAN and each of
them, are hereby appointed proxies of the undersigned, with power of
substitution, to vote all of the shares of Common Stock of INDIANA
ENERGY, INC., owned by the undersigned, at the Annual Meeting of
Shareholders to be held on January 26, 1996, and at any adjournments
thereof, on the matters and in the manner specified on the reverse
side of this proxy.
Receipt of Notice of Annual Meeting of Shareholders, dated December 8,
1995, and Proxy Statement attached thereto is hereby acknowledged.
This proxy will be voted as directed. If no direction is given, this
proxy will be voted FOR the proposal.
Election of Directors (three-year term):
Nominees: Gerald L. Bepko, Lawrence A. Ferger, Anton H. George, and
James C. Shook.
You are encouraged to specify your choices by marking the appropriate
box on the reverse side.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL PROMPTLY IN THE
ENCLOSED ENVELOPE.
[SIDE 2]
x
Please mark your votes as in this example.
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder(s). If no
direction is made, this proxy will be voted FOR the proposal.
The Board of Directors recommends a vote FOR the Election of Directors.
FOR WITHHELD authority for all Nominees
1. Election of To withhold authority to vote
Directors. _____ _____ for any specific nominee(s), mark the
"WITHHELD" box and write the
name of each nominee for whom you
are withholding authority to vote on
the line provided below.
________________________
2. In their discretion, the proxies are authorized to vote upon such
business as may properly come before the meeting.
Please sign exactly as your name(s)
appears hereon. All joint tenants
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, give full title as such. If
a corporation, sign the full corporate
name by an authorized officer. If a
partnership, sign in partnership name
by authorized person.
_______________________________________
_______________________________________
Signature(s) Date
