May 15, 1996
Securities and Exchange Commission
Operations Center
6432 General Green Way
Alexandria, VA 22312-2413
Gentlemen:
We are transmitting herewith Indiana Gas Company, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, pursuant to the requirements of Section 13
of the Securities Exchange Act of 1934.
Very truly yours,
Kathleen S. Morris
KSM:rs
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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)
317-926-3351
(Registrant's telephone number, including area code)
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
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common Stock - Without par value 9,080,770 April 30, 1996
Class Number of shares Date
TABLE OF CONTENTS
Page
Numbers
Part I - Financial Information
Consolidated Balance Sheets
at March 31, 1996, and 1995
and September 30, 1995
Consolidated Statements of Income
Three Months Ended March 31, 1996 and 1995,
Six Months Ended March 31, 1996 and 1995,
and Twelve Months Ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows
Six Months Ended March 31, 1996 and 1995,
and Twelve Months Ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Part II - Other Information
Item 1 - Legal Proceedings
Item 4 - Submission of Matters to a Vote of Security
Holders
Item 6 - Exhibits and Reports on Form 8-K
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands - Unaudited)
March 31 September 30
1996 1995 1995
<S> <C> <C> <C>
UTILITY PLANT:
Original cost $896,411 $846,963 $872,287
Less - accumulated depreciation
and amortization 334,684 304,077 316,991
561,727 542,886 555,296
NONUTILITY PLANT - NET 184 389 188
CURRENT ASSETS:
Cash and cash equivalents 36,694 20 20
Accounts receivable, less reserves of
$2,990, $1,511 and $1,662 respectively 60,407 42,252 13,403
Accrued unbilled revenues 33,300 14,460 6,405
Materials and supplies - at average cost 4,178 3,952 3,890
Liquefied petroleum gas - at average cost 527 887 883
Gas in underground storage - at last-in,
first-out cost 10,997 33,727 59,394
Prepayments and other 996 1,071 144
147,099 96,369 84,139
DEFERRED CHARGES:
Unamortized debt discount and expense 6,783 6,708 6,800
Other 9,754 10,069 9,510
16,537 16,777 16,310
$725,547 $656,421 $655,933
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
SHAREHOLDER'S EQUITY AND LIABILITIES
(Thousands - Unaudited)
March 31 September 30
1996 1995 1995
<S> <C> <C> <C>
CAPITALIZATION:
Common stock and paid-in capital $142,995 $142,995 $142,995
Retained earnings 155,417 137,240 125,159
Total common shareholder's equity 298,412 280,235 268,154
Long-term debt 193,693 153,739 173,693
492,105 433,974 441,847
CURRENT LIABILITIES:
Notes payable - 12,100 2,225
Accounts payable 77,708 36,539 59,713
Refundable gas costs 3,563 25,484 4,883
Customer deposits and advance payments 3,638 8,349 20,870
Accrued taxes 24,119 23,765 7,928
Accrued interest 2,875 2,754 2,803
Other current liabilities 25,930 23,222 21,560
137,833 132,213 119,982
DEFERRED CREDITS:
Deferred income taxes 65,787 61,491 65,096
Unamortized investment tax credit 11,639 12,569 12,103
Customer advances for construction 1,358 1,318 1,297
Regulatory income tax liability 3,797 4,787 3,797
Other 13,028 10,069 11,811
95,609 90,234 94,104
COMMITMENTS AND CONTINGENCIES
(see Notes 8 & 9) - - -
$725,547 $656,421 $655,933
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands - Unaudited)
Three Months Six Months
Ended March 31 Ended March 31
1996 1995 1996 1995
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 222,553 $ 150,468 $ 376,862 $ 263,530
COST OF GAS 144,017 82,549 233,214 145,060
MARGIN 78,536 67,919 143,648 118,470
OPERATING EXPENSES:
Other operation and maintenance 23,018 19,282 41,708 37,450
Depreciation and amortization 8,230 7,744 16,348 15,393
Income taxes 14,593 12,693 25,998 19,204
Taxes other than income taxes 5,415 3,533 9,660 7,163
51,256 43,252 93,714 79,210
OPERATING INCOME 27,280 24,667 49,934 39,260
OTHER INCOME - NET 614 325 843 489
INCOME BEFORE INTEREST
AND OTHER CHARGES 27,894 24,992 50,777 39,749
INTEREST 4,088 3,829 8,080 7,823
OTHER (24) 2 (61) (14)
4,064 3,831 8,019 7,809
NET INCOME $ 23,830 $ 21,161 $ 42,758 $ 31,940
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands - Unaudited)
Twelve Months
Ended March 31
1996 1995
<S> <C> <C>
OPERATING REVENUES $ 517,142 $ 391,263
COST OF GAS 306,649 210,563
MARGIN 210,493 180,700
OPERATING EXPENSES
Other operation and maintenance 79,866 76,655
Depreciation and amortization 32,220 30,300
Income taxes 26,010 16,553
Taxes other than income taxes 15,535 13,613
153,631 137,121
OPERATING INCOME 56,862 43,579
OTHER INCOME - NET 1,777 1,607
INCOME BEFORE INTEREST AND OTHER 58,639 45,186
INTEREST 15,787 15,577
OTHER (75) (31)
15,712 15,546
NET INCOME $ 42,927 $ 29,640
</TABLE>
<TABLE>
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands - Unaudited)
Six Months Twelve Months
Ended March 31 Ended March 31
1996 1995 1996 1995
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 42,758 $ 31,940 $ 42,927 $ 29,640
Adjustments to reconcile net income to cash
provided from operating activities -
Depreciation and amortization 16,442 15,487 32,407 30,488
Deferred income taxes 691 1,604 3,081 3,591
Investment tax credit (465) (465) (930) (930)
16,668 16,626 34,558 33,149
Changes in assets and liabilities -
Receivables - net (73,899) (33,270) (36,995) 28,650
Inventories 48,465 30,790 22,864 (12,406)
Accounts payable, customer deposits,
advance payments and other
current liabilities 5,133 6,653 39,166 6,312
Accrued taxes and interest 16,263 3,413 475 (18,030)
Recoverable/refundable gas costs (1,320) (6,111) (21,921) 391
Prepayments (852) (827) 75 (21)
Other - net 1,793 10,397 4,925 12,817
Total adjustments 12,251 27,671 43,147 50,862
Net cash flow from operations 55,009 59,611 86,074 80,502
CASH FLOWS FROM (REQUIRED FOR)
FINANCING ACTIVITIES:
Sale of long-term debt 20,000 - 40,000 -
Reduction in long-term debt - (3,112) (46) (21,162)
Net change in short-term borrowings (2,225) (18,450) (12,100) 12,100
Dividends (12,500) (12,000) (24,750) (23,800)
Net cash flow from (required for) financing activities 5,275 (33,562) 3,104 (32,862)
CASH FLOWS REQUIRED FOR INVESTING ACTIVITIES:
Capital expenditures (23,610) (26,049) (52,504) (55,640)
Net cash flow required for investing activities (23,610) (26,049) (52,504) (55,640)
NET INCREASE (DECREASE) IN CASH 36,674 - 36,674 (8,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20 20 20 8,020
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 36,694 $ 20 $ 36,694 $ 20
</TABLE>
Notes to Consolidated Financial Statements
1. Financial Statements.
Indiana Gas Company, Inc. and its subsidiaries, Terre
Haute Gas Corporation (Terre Haute) and Richmond Gas
Corporation (Richmond) which are doing business as
Indiana Gas Company, Inc. (Indiana Gas), provide natural
gas and transportation services to a diversified base of
customers in 281 communities in 48 of Indiana's 92
counties.
The interim condensed consolidated financial statements
included in this report have been prepared by Indiana
Gas, without audit, as provided in the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
omitted as provided in such rules and regulations.
Indiana Gas believes that the information in this report
reflects all adjustments necessary to fairly state the
results of the interim periods reported, that all such
adjustments are of a normally recurring nature, and the
disclosures are adequate to make the information
presented not misleading. These interim financial
statements should be read in conjunction with the
financial statements and the notes thereto included in
Indiana Gas' latest annual report on Form 10-K.
Because of the seasonal nature of Indiana Gas' gas
distribution operations, the results shown on a
quarterly basis are not necessarily indicative of annual
results.
2. Cash Flow Information.
For the purposes of the Consolidated Statements of Cash
Flows, Indiana Gas 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:
Six Months Ended Twelve Months Ended
March 31 March 31
Thousands 1996 1995 1996 1995
Interest (net of
amount capitalized) $ 7,500 $ 7,353 $14,188 $14,738
Income taxes $12,312 $12,676 $25,842 $25,476
3. Revenues.
To more closely match revenues and expenses, revenues
are recorded for all gas delivered to customers but not
billed at the end of the accounting period.
4. Gas in Underground Storage.
Based on the cost of purchased gas during March 1996,
the cost of replacing the current portion of gas in
underground storage exceeded last-in, first-out cost at
March 31, 1996, by approximately $1,932,000.
5. Refundable or Recoverable Gas Costs.
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 Indiana
Utility Regulatory Commission (IURC).
6. 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 included in "Other Income - Net" and
"Other" on the Consolidated Statements of Income. 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.
<TABLE>
Three Months Ended Six Months Ended Twelve Months Ended
March 31 March 31 March 31
Thousands 1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
AFUDC-Borrowed Funds $ 71 $45 $155 $108 $262 $ 219
AFUDC-Equity Funds 58 37 127 88 215 178
Total AFUDC Capitalized $129 $82 $282 $196 $477 $397
</TABLE>
7. Long-Term Debt.
During December 1995, Indiana Gas issued $20 million in
aggregate principal amount of its Medium-Term Notes,
Series E (Notes) as follows: $5 million of 6.69% Notes
due June 10, 2013, $5 million of 6.69% Notes due
December 21, 2015, and $10 million of 6.69% Notes due
December 29, 2015. The net proceeds from the sale of
the Notes will be used to finance the refunding of
Indiana Gas' 9 3/8% Series M First Mortgage Bonds in
July 1996.
8. Affiliate Transactions.
Indiana Energy Services, Inc. (IES), an indirect wholly-
owned subsidiary of Indiana Energy (Indiana Gas'
parent), provided natural gas and services to Indiana
Gas from January 1, 1996 to March 31, 1996. System
supply gas was provided to Indiana Gas with the
commodity priced at market index. IES' sales to Indiana
Gas for the three-months ended March 31, 1996 totaled
$102.7 million. Effective April 1, 1996, Proliance
Energy, LLC (Proliance) assumed the business of IES (see
Proliance Energy, LLC in Management's Discussion and
Analysis of Results of Operations and Financial
Condition). The sales of gas and provision of other
services to Indiana Gas by Indiana Energy's marketing
affiliates will be subject to regulatory review through
the quarterly gas cost adjustment proceeding currently
pending before the IURC. In addition, another
proceeding has been initiated by a small group of
Indiana Gas' and Citizens Gas' large-volume customers
who contend that the formation and operation of
Proliance should be subject to IURC oversight.
Management expects that these proceedings, to the extent
that they move forward, will be conducted over the
remainder of calendar year 1996.
Indiana Gas also participates in a centralized cash
management program with its parent, affiliated companies
and banks which permits funding of checks as they are
presented.
Amounts borrowed from and accounts payable to affiliated
companies, as well as checks written but not cashed are
reflected in accounts payable. Amounts owed to
affiliates were $57.3 million and $12.0 million at March
31, 1996 and 1995, respectively.
9. 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 20
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 has been negotiating with
PSI to determine PSI's share of responsibility,
although no agreement has been reached between the
parties. 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 $3.5 million is
reflected in Accounts Receivable on the
Consolidated Balance Sheet at March 31, 1996.
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 decision to Indiana Gas' case
was an incorrect application of the law and has
appealed the decision to the Indiana Court of
Appeals. The initial briefs for the appeal were
filed on April 23, 1996, with briefing scheduled to
conclude on June 25, 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 $12.4 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 $13.4
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.
10. Regulatory Assets and Liabilities.
Indiana Gas is subject to the provisions of Statement of
Financial Accounting Standards No. 71, Accounting for
the Effects of Certain Types of Regulation (SFAS 71).
Regulatory assets represent probable future revenue to
Indiana Gas associated with certain costs which will be
recovered from customers through the ratemaking process.
Regulatory liabilities represent probable future
reductions in revenues associated with amounts that are
to be credited to customers through the ratemaking
process. Regulatory assets and liabilities reflected in
the Consolidated Balance Sheets as of March 31 (in
thousands) relate to the following:
<TABLE>
1996 1995
<S> <C> <C>
Regulatory Assets:
Postretirement Benefits Other Than Pensions $ 7,182 $ 7,126
Unamortized Debt Discount and Expense 6,783 6,708
Deferred Acquisition Costs 730 751
Rate Case Costs 187 446
$14,882 $15,031
Regulatory Liabilities:
Gas Costs Due to Customers, Net $ 3,563 $25,484
Amounts Due to Customers - Income Taxes, Net 3,797 4,787
Pension Costs 1,348 585
$ 8,708 $30,856
</TABLE>
It is Indiana Gas' policy to continually assess the
recoverability of costs recognized as regulatory assets
and the ability to continue to account for its
activities in accordance with SFAS 71, based on the
criteria set forth in SFAS 71. Based on current
regulation, Indiana Gas believes that its use of
regulatory accounting is appropriate. If all or part of
Indiana Gas' operations cease to meet the criteria of
SFAS 71, a write-off of related regulatory assets and
liabilities would be required. In addition, Indiana Gas
would be required to determine any impairment to the
carrying costs of deregulated plant and inventory
assets.
11. Reclassifications.
Certain reclassifications have been made to the prior
periods' financial statements to conform to the current
year presentation. These reclassifications have no
impact on net income previously reported.
Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Earnings
Net income for the three-, six- and twelve-month
periods ended March 31, 1996, when compared to the same
periods one year ago are listed below. The increases in
earnings for all periods reflect significantly colder
weather than last year, offset somewhat by higher
operation and maintenance expenses.
Periods Ended March 31
(Millions)
1996 1995
Three Months $23.8 $21.2
Six Months $42.8 $31.9
Twelve Months $42.9 $29.6
The following discussion highlights the factors
contributing to these results.
Margin (Revenues Less Cost of Gas)
Margin for the quarter ended March 31, 1996, increased
$10.6 million compared to the same period last year. The
increase was primarily due to weather 15 percent colder
than the same period last year and 5 percent colder than
normal.
Margin for the six-month period ended March 31, 1996,
increased $25.2 million compared to the same period last
year. The increase reflects weather 26 percent colder
than the same period last year and 7 percent colder than
normal.
Margin for the twelve-month period ended March 31,
1996, increased $29.8 million compared to the same period
last year. The increase reflects weather 23 percent
colder than the same period last year and 7 percent colder
than normal.
Additional residential and commercial customers, as
well as rate recovery (beginning May 1995) of
postretirement benefit costs recognized in accordance with
Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other
Than Pensions (SFAS 106) also contributed to the margin
increases for all periods reported.
Total system throughput (combined sales and
transportation) increased 16 percent (7.0 MMDth) for the
second quarter of fiscal 1996, 21 percent (15.9 MMDth) for
the six-month period and 16 percent (17.5 MMDth) for the
twelve-month period ended March 31, 1996, compared to the
same periods last year. The increases for all periods are
due primarily to increases in residential and commercial
space heating sales caused by colder weather.
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 unit of gas purchased increased
to $3.56 for the three-month period ended March 31, 1996,
compared to $2.70 for the same period one year ago. For
the six-month period, cost of gas per unit increased to
$3.14 in the current period compared to $2.69 for the same
period last year. For the twelve-month period, cost of
gas per unit increased to $2.83 in the current period
compared to $2.62 for the same period last year.
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.
Operating Expenses
Operation and maintenance expenses increased $3.7
million for the second quarter of fiscal 1996, $4.3
million for the six-month period and $3.2 million for the
twelve-month period ended March 31, 1996, when compared to
the same periods one year ago. The increases are
primarily attributable to higher performance-based
compensation, the recognition (beginning May 1995) of
postretirement benefit costs in accordance with SFAS 106,
as well as the intense cost control measures in place
during the prior periods due to very warm weather.
Depreciation and amortization expense increased for
the three-, six- and twelve-month periods ended March 31,
1996, when compared to the same periods one year ago 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 increased for the three-,
six- and twelve-month periods ended March 31, 1996, when
compared to the same periods one year ago due to higher
taxable income.
Taxes other than income taxes increased for the three-,
six- and twelve-month periods ended March 31, 1996, when
compared to the same periods one year ago due primarily to
higher gross receipts tax expense resulting from increased
revenue, and higher property tax expense.
Interest Expense
Interest expense increased for the three- and six-
month periods ended March 31, 1996, when compared to the
same periods one year ago due to an increase in average
debt outstanding slightly offset by a decrease in interest
rates. Interest expense remained approximately the same
for the twelve-month period when compared to the same
period one year ago.
Other Operating Matters
Proliance Energy, LLC
On March 15, 1996, IGC Energy, Inc., an indirect
wholly-owned subsidiary of Indiana Energy (Indiana Gas'
parent), and Citizens By-Products Coal Company, a
wholly-owned subsidiary of Citizens Gas and Coke
Utility (Citizens Gas), formed a jointly- and equally-
owned limited liability corporation to provide natural
gas supply and related marketing services. The new
entity, Proliance Energy, LLC (Proliance), began
providing services to Indiana Gas and Citizens Gas
effective April 1, 1996. Proliance will also market
its products and services to other gas utilities and
customers in Indiana and surrounding states. Proliance
has assumed the business of Indiana Energy Services,
Inc. (IES), Indiana Energy's gas marketing affiliate,
which had provided similar services to other customers
and from January 1, 1996, to March 31, 1996, to Indiana
Gas. System supply gas was provided to Indiana Gas
with the commodity priced at market index.
The sale of gas and provision of other services to
Indiana Gas by Indiana Energy's marketing affiliates
will be subject to regulatory review through the
quarterly gas cost adjustment proceeding currently
pending before the IURC. In addition, another
proceeding has been initiated by a small group of
Indiana Gas' and Citizens Gas' large-volume customers
who contend that the formation and operation of
Proliance should be subject to IURC oversight.
Management expects that these proceedings, to the
extent that they move forward, will be conducted over
the remainder of calendar year 1996.
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 $13.4 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, recovery from insurers,
financial reporting and ratemaking, see Note 9.
Indiana Legislative Matters
On April 26, 1995, the Indiana General Assembly
enacted legislation 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.
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. For the twelve months ended March 31, 1996,
Indiana Gas' capital expenditures totaled $52.5 million.
Of this amount, 100 percent was provided by funds generated
internally (net income less dividends plus charges to net
income not requiring funds). Capital expenditures for
fiscal 1996 were estimated at $58.8 million of which $23.6
million have been expended during the six-month period
ended March 31, 1996.
Indiana Gas' goal is to fund internally approximately
75 percent of its construction program. Capitalization
objectives for Indiana Gas are 55-65 percent common equity
and 35-45 percent long-term debt. 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 5.1 for
the twelve months ended March 31, 1996 (see Exhibit 12).
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 9 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 the 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. During December
1995, an additional $20 million in aggregate principal
amount of the Notes were issued as follows: $5 million of
6.69% Notes due June 10, 2013, $5 million of 6.69% Notes
due December 21, 2015, and $10 million of 6.69% Notes due
December 29, 2015. The net proceeds from the December
issuances will be used to finance the refunding of Indiana
Gas' 9 3/8% Series M First Mortgage Bonds in July 1996.
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 construction 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.
Part II - Other Information
Item 1. Legal Proceedings
See Note 9 of the Notes to Consolidated Financial
Statements 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
At the annual meeting of shareholders of Indiana Gas
Company, Inc. on January 26, 1996, (the "Annual
Meeting"), the shareholders elected the following
directors by the vote specified opposite each
director's name:
<TABLE>
Broker
Director Votes For (1) Votes Withheld Abstentions Non-Vote
<S> <C> <C> <C> <C>
Gerald L. Bepko 9,080,770 - - -
Lawrence A. Ferger 9,080,770 - - -
Anton H. George 9,080,770 - - -
James C. Shook 9,080,770 - - -
(1) All outstanding shares of Indiana Gas'
common stock are held by its parent company,
Indiana Energy, Inc.
</TABLE>
The terms of the other eight board members, Paul T.
Baker, Niel C. Ellerbrook, Loren K. Evans, Otto N.
Frenzel III, Don E. Marsh, Fred A. Poole, Richard P.
Rechter and Jean L. Wojtowicz will expire in January
1997 or January 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10-A Gas Sales and Management Services
Agreement between Indiana Gas Company,
Inc. and Indiana Energy Services,
Inc., effective January 1, 1996, filed
herewith.
10-B Formation Agreement among Indiana
Energy, Inc., Indiana Gas Company,
Inc., IGC Energy, Inc., Indiana
Energy Services, Inc., Citizens
Gas & Coke Utility, Citizens By-
Products Coal Company, Citizens
Energy Services Corporation, and
Proliance Energy, LLC, effective
March 15, 1996. Incorporated by
reference to Exhibit 10-C to the
Quarterly Report on Form 10-Q of
Indiana Energy, Inc. for the
quarterly period ended
March 31, 1996.
10-C Gas Sales and Portfolio Administration
Agreement between Indiana Gas Company,
Inc. and Proliance Energy, LLC,
effective March 15, 1996, for services
to begin April 1, 1996, filed herewith.
12 Computation of Ratio of Earnings to
Fixed Charges, filed herewith.
27 Financial Data Schedule, filed
herewith.
(b) No Current Reports on Form 8-K were filed
during the quarter ended March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
INDIANA GAS COMPANY, INC.
Registrant
Dated May 15, 1996 /s/Niel C. Ellerbrook
Niel C. Ellerbrook
Senior Vice President and
Chief Financial Officer
Dated May 15, 1996 /s/Jerome A. Benkert
Jerome A. Benkert
Vice President and Controller
EXHIBIT 10-A
Indiana Gas Company, Inc. / Indiana Energy Services, Inc.
Gas Sales And Management Services Agreement
January 1, 1996
GAS SALES AND MANAGEMENT SERVICES AGREEMENT
This Gas Sales and Management Services Agreement
("Agreement") is entered and effective the 1st day of
January, 1996, by and between INDIANA GAS COMPANY, INC.
("Buyer") and INDIANA ENERGY SERVICES, INC. ("Seller")
(collectively, the "Parties"). Buyer and Seller agree as
follows:
Recitals:
1. Seller 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.
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 and
covenants pursuant to which Buyer as a purchaser of
natural gas and management services, and Seller as a
merchant of natural gas and management services, shall
perform the transactions described herein.
4. Under this Agreement, Seller agrees to provide
natural gas and management services consistent with the
terms and conditions contained herein.
Definitions:
The following terms shall have the following definitions for
this Agreement and its Appendices:
1. The term "Transporter" shall mean the transporting
pipeline(s) to Buyer, for example, ANR, PEPL, Texas Gas
or TETCO as applicable to the transaction involved.
2. Transporters' names shall include, without
limitation:
The term "ANR" shall mean ANR Pipeline Company.
The term "PEPL" shall mean Panhandle Eastern Pipe
Line Company.
The term "Texas Gas" shall mean Texas Gas
Transmission Corporation.
The term "TETCO" shall mean Texas Eastern
Transmission Corporation.
3. 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 or
Seller'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.
4. The term "Btu" shall mean British thermal unit, as
defined in Transporter's Tariff.
5. The term "Contract Month" shall mean a calendar
month during the effectiveness of this Agreement, as
interpreted in light of Transporter's Tariff.
6. The term "Day" shall be defined as it is defined in
Transporter's Tariff, or as applied by Transporter.
7. "Delivery Points" shall mean the points of delivery
of Gas from Seller to Buyer as specified in Appendix A.
8. The term "Gas" shall mean natural gas.
9. The term "Marketed Quantities" shall mean all
quantities marketed by Seller under Article 4 of this
Agreement.
10. The terms "MMBtu", "Dekatherm" or "DTH" shall mean one
million (1,000,000) Btus.
11. The term "Maximum Daily Quantity" shall mean the
maximum quantity of Gas which Seller shall be obligated
to supply on a firm basis to Buyer's Delivery Points on a
particular day.
12. The term "Maximum Seasonal Quantity" shall mean the
maximum quantity of Gas which Seller shall be obligated
to supply on a firm basis to Buyer's Delivery Points in a
summer or winter season.
13. The term "Nominated Daily Quantity" shall mean the
quantity of Gas nominated on a particular day to Buyer's
Delivery Points and to storage for Buyer.
14. The term "Summer" shall mean the summer season
months of April through October, inclusive.
15. The term "Winter" shall mean the winter season
months of November through March, inclusive.
16. The term "Portfolio Contracts" shall mean all
storage and transportation agreements to which Buyer is a
party and which are utilized to provide Gas to Buyer.
Article 1 - Gas Sales
1.1 Seller represents, agrees, and warrants that Seller
can and shall stand ready to provide on a firm basis for
Buyer's purchase at Buyer's Delivery Points the daily and
seasonal quantities of Gas set forth herein.
1.2 During the term of this Agreement, unless Seller is
unable to meet Buyer's Gas requirements, Buyer agrees
Seller shall be its sole supplier of Gas.
1.3 The maximum daily quantities of Gas which Seller
shall be obligated to provide on a firm basis at Buyer's
Delivery Points are Buyer's Maximum Daily Quantities
specified in Appendix B.
1.4 The maximum seasonal quantities which Seller shall
be obligated to provide on a firm basis at Buyer's
Delivery Points are Buyer's Maximum Seasonal Quantities
specified in Appendix B.
1.5 Under this Agreement Seller may fulfill its
obligation to provide Gas sales to Buyer by using both
the Portfolio Contracts and contracts entered into by and
between Seller and third parties, including suppliers,
pipelines and other service providers. Seller shall not
be obligated to enter into commitments with suppliers,
pipelines or other service providers which extend beyond
the term or scope of this Agreement.
Article 2 - Gas Sales Charges
2.1 For all Maximum Daily Quantities specified in
Appendix B, Buyer agrees to pay Seller each Contract
Month the then-applicable transportation and storage
costs to stand ready to deliver Gas to Buyer's Delivery
Points on a firm basis. Appendix C contains the
currently-effective methodology for determining the
applicable storage and transportation costs.
2.2 For all Maximum Seasonal Quantities specified in
Appendix B, Buyer agrees to pay Seller each Contract
Month the applicable supplier reservation costs specified
in Appendix D, as updated from time to time as provided
in Article 7.
2.3 For all commodity quantities, Buyer shall pay to
Seller each Contract Month an amount determined by
multiplying the applicable Nominated Daily Quantities for
the Contract Month, by the applicable price per MMBtu as
determined pursuant to the pricing provisions of Appendix
E. These pricing provisions shall reflect pricing
methods for Gas supply, and all other variable costs
incurred by Seller as provided in Appendix E. The other
variable costs shall include, without limitation,
transportation commodity or usage charges, injection and
withdrawal costs, volumetric surcharges, and fuel as
reflected in each Transporter's Tariff and the applicable
service agreements.
2.4 Buyer will pay taxes, if any, which are imposed with
respect to Gas delivered hereunder and which are not
reflected in the pricing methods in Appendix E.
Article 3 - Portfolio Management Services
3.1 Buyer and Seller agree Seller shall provide all of
Buyer's portfolio management services as necessary to
assure a reliable supply of Gas to meet Buyer's Gas
requirements.
3.2 Seller shall manage all of the Portfolio Contracts.
Services provided shall include Gas acquisition, the
scheduling of receipt and delivery quantities with Gas
suppliers and pipeline transporters, pipeline storage
inventory management, supply and portfolio planning, and
periodic portfolio management reporting.
3.3 The Parties agree to act in a timely manner to
assign, release, or enter into agency agreements for all
of the Portfolio Contracts and Buyer's Gas supply
agreements.
3.4 Seller shall provide Gas supply planning as part of
its portfolio management service. Seller shall prepare
Gas supply plans on a seasonal, monthly and daily basis
for Buyer. Operating procedures shall be agreed to by
the Parties to govern the preparation and implementation
of the supply plans.
3.5 Seller shall provide portfolio planning as part of
its portfolio management service. Seller and Buyer shall
review periodically Buyer's Portfolio Contracts for
potential changes. Seller shall represent Buyer in
negotiations with suppliers and pipelines to effectuate
the portfolio changes.
3.6 Seller agrees to provide Buyer federal regulatory
management services during the term of this Agreement.
Seller shall review all FERC regulatory filings that
could reasonably be expected to impact the Gas sales or
management services provided by Seller to Buyer. Seller
shall inform Buyer on a timely basis of Seller's review
and analysis. Buyer shall timely communicate its
interests to Seller. Seller shall provide for
representation of Buyer's interests in federal regulatory
proceedings. Seller shall provide Buyer with periodic
written reports on the status of federal regulatory
proceedings in which Seller represents Buyer.
Article 4 - Marketing Management Services
4.1 The Parties agree that Seller shall provide all of
Buyer's marketing management services, as provided in
this Article 4, during the term of this Agreement.
4.2 Seller agrees to actively pursue the sale at market
prices of otherwise unutilized storage and transportation
entitlements paid for by Buyer pursuant to this
Agreement. These entitlements may be marketed by Seller
to any retail or resale customer. Seller shall credit to
Buyer all amounts so realized by Seller for these
otherwise unutilized entitlements.
4.3 Seller shall manage the Gas acquisition and pricing
determination portions of Buyer's Interruptible Company-
supplied Gas supply sales pursuant to Buyer's Appendix B
to its I.U.R.C. Tariff for Gas service, as the same may
be in effect from time to time.
Article 5 - Management Services Fees
5.1 For portfolio management services provided under
Article 3 during the term of this Agreement, each
Contract Month Buyer agrees to pay Seller the portfolio
management service fee as specified in Appendix F.
5.2 For marketing management services provided under
Article 4 during the term of this Agreement, each
Contract Month Buyer agrees to pay Seller the marketing
management services fee as specified in Appendix F.
Article 6 - Term
6.1 The initial term of this Agreement shall extend
until October 31, 2000. If neither party terminates this
Agreement by written notice at least two (2) calendar
years prior to expiration of the initial term, the
Agreement will remain in effect for an additional one (1)
year after the original expiration date. Thereafter, the
Agreement will continue year to year unless terminated
with two (2) years prior written notice provided prior to
November 1 of any year.
Article 7 - Changes to Appendices
7.1 The Parties agree to make changes to Appendix A as
necessary to reflect Buyer's pipeline delivery point
changes.
7.2 The Parties agree that Appendix B will be subject to
change upon the provision of prior, timely written notice
from Buyer to Seller of such change, including the basis
for the change, and subject to the terms of this
Agreement. Unless otherwise agreed to by the Parties,
any such change shall be effective no sooner than sixty
(60) days after Buyer's notice. Such changes will be
conditioned on Buyer's agreement to pay applicable costs
associated with the change.
7.3 The Parties agree that Appendices C, D and E will be
subject to change from time to time as provided in those
appendices.
7.4 The Parties agree that changes to Appendices F and H
will occur only upon mutual written agreement.
7.5 The Parties agree that changes in Appendix G can be
made by either party at any time.
Article 8 - Operations
8.1 Buyer and Seller agree to accept for purposes of
this Agreement the applicable quality, delivery pressure,
measurement and other applicable rules, procedures,
guidelines, tariff provisions, contractual arrangements
and policies of suppliers or Transporter, as the same may
change from time to time.
Article 9 - Force Majeure
9.1 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, operational or performance failure or
declaration of force majeure by a supplier, leased
storage field operator, or transporter, operational flow
order(s), 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 notice by
telephone or by telecopy with reasonably full
particulars to the other party at or near the time the
party becomes aware of the force majeure. 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.
9.2 Notice of force majeure must be provided to the
representatives designated in Appendix G for Buyer or
Seller.
Article 10 - Penalties
10.1 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,
cashouts or other costs are caused by Seller's actions
or inaction. 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,
cashouts or other costs are caused by Buyer's actions
or inaction.
Article 11 - Billing and Payment
11.1 Following each Contract Month Seller shall furnish, or
have furnished, an itemized statement to Buyer stating
the amounts due Seller pursuant to this Agreement (the
"Statement"). Following the receipt of Seller's
Statement, Buyer shall make payment by the due date.
Invoice date, due date, and payment method shall be as
specified in Appendix H.
11.2 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.
Article 12 - Remedies
12.1 If Seller fails to deliver scheduled Gas 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. 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 for replacement Gas, including any
additional transportation, fuel and other variable
costs incurred to receive such replacement Gas, and
(ii) the then applicable commodity charge, and (b) the
difference between the scheduled Gas and the quantity
of Gas actually delivered by Seller. Buyer and Seller
agree to act in good faith with respect to purchases of
such replacement Gas so as to minimize Seller's
obligations to Buyer under this Section.
12.2 If Buyer fails to receive the Gas as scheduled and such
inability to receive 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 from a third party purchaser, including any
additional transportation, fuel and other variable
costs incurred to deliver Gas to a third party
purchaser, and (b) the difference between the scheduled
Gas and the quantity of Gas actually received by Buyer.
Seller and Buyer agree to act in good faith with
respect to sales of such Gas to a third party purchaser
so as to minimize Buyer's obligations to Seller under
this Section.
12.3 If the failure of Seller or Buyer under 12.1 or 12.2
above is substantial and is not cured after reasonable
written notice, the non-failing party may, in addition
to the other remedies provided by this Article 12,
elect to terminate this Agreement prospectively.
12.4 The Parties agree that the actual losses incurred by a
party as a result of the other party's failure to
deliver or receive quantities of Gas would be uncertain
and impossible to determine with precision. As a
result, the remedies provided in accordance with this
Article 12 for the failure to deliver or receive
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 remedies
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 receive the scheduled Gas
under this Agreement. The remedies provided pursuant
to this Article are in lieu of and exclude any and all
other liabilities of the failing party as may be
provided by contract, equity, or law for any such
failures or breaches, including, without limitation,
the obligation of either party to deliver or receive
quantities hereunder in relation to the sale or
purchase of Gas to or from other parties.
Article 13 - Correspondence
13.1 Except as provided in Article 9.2, any notice,
statement or bill shall be in writing and shall be
duly delivered when (a) mailed, postage prepaid, by
registered, certified, or first class mail, or (b) sent
by prepaid overnight delivery to the applicable
address, or (c) sent by hand delivery, or (d) sent by
telecopy directed to the appropriate person and
telecopy number with hard copy also delivered as in
(a), (b) or (c) above. Addresses, telephone numbers,
and telecopy numbers are specified in Appendix G.
Buyer or Seller may change the notice information in
Appendix G by providing new designations to the other
party by registered or certified mail.
Article 14 - Renegotiation to Preserve Agreement
14.1 If any provision of this Agreement is declared or
rendered unlawful by a court of law or regulatory
authority with jurisdiction over either of the Parties
or deemed unlawful because of a statutory or other
change in the law, or if either party suffers a
substantial economic detriment due either to a
determination relating to this Agreement by such an
authority, or as a result of fundamental changes in the
market place or other substantial changes in existing
circumstances, the Parties will promptly meet to
determine and negotiate a mutually acceptable agreement
on such replacement provisions necessary to maintain
the benefits and obligations that arise under this
Agreement.
Article 15 - Miscellaneous
15.1 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.
15.2 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.
15.3 Either party may pledge, mortgage or assign its rights
hereunder as security for indebtedness or assign this
Agreement to an affiliate. This Agreement is otherwise
non-assignable except with the prior written consent of
Buyer and Seller.
15.4 This Agreement is conditioned on the continued solvency
of Buyer and Seller. If one party becomes insolvent or
seeks bankruptcy relief, the other party may
prospectively terminate this Agreement on prior written
notice without further obligation other than to pay for
services or Gas previously provided.
15.5 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.
15.6 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.
15.7 The Parties acknowledge that their respective business
records and information are confidential in nature and
may contain proprietary and trade secret information.
Notwithstanding the foregoing, Seller agrees to provide
Buyer access to those records required to verify
Seller's Statements to Buyer. Confidential records and
information in the possession of either party shall not
be divulged to third parties without prior consent of
the other party.
15.8 In interpretation and construction of this Agreement,
no presumption shall be made against any party on
grounds such party drafted the Agreement or any
provision thereof.
15.9 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.
15.10 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.
15.11 Each party represents that it 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"
INDIANA ENERGY SERVICES, INC.
By: /s/Carl L. Chapman
(Signature)
Carl L. Chapman
(Name)
Its: President
(Title)
"BUYER"
INDIANA GAS COMPANY, INC.
By: /s/Jerrold L. Ulrey
(Signature)
Jerrold L. Ulrey
(Name)
Its: Vice President - Gas Supply and Rates
(Title)
Indiana Gas Company, Inc. / Indiana Energy Services, Inc.
Gas Sales And Management Services Agreement
APPENDICES INDEX
Appendix Title
A Buyer's Delivery Points
B Buyer's Maximum Quantities
C Storage and Transportation Costs
D Supplier Reservation Costs
E Commodity Purchases
a. Gas Supply Charges
b. Other Variable Costs
F Management Services Fees
a. Portfolio Management Fee
b. Marketing Management Fee
G Notices
H Invoice/Payment Data
APPENDIX A - Buyer's Delivery Points
North/East System
Delivery Point
2509 Dana
2510 Danville
2515 Elwood
2516 Fairmont
2530 Noblesville
2531 North Salem
2535 Richmond
2538 Tipton
2576 Huntington
2597 Crawfordsville
2605 Upland
2684 Unionport
2751 Montpelier
2754 Sheridan
2757 Bloomingdale
2772 Newport
2780 Lebanon
2795 Anderson
2796 Zionsville
2812 Carpentersville
2822 Fowlerton
2823 Richmond
5233 Anderson 121N Rural
5530 Cent. Ind. Rurals
5531 West of Zions
5532 North of Zions
5534 East of King
5864 King
010530010 East Hancock School
010530030 Hope
010530070 Dunkirk
APPENDIX A - Buyer's Delivery Points
Central/Terre Haute System
Delivery Point
14411 Bedford
14412 Bedford
14421 Cloverdale
14431 Columbus
14432 Columbus
14433 Columbus
14441 Martinsville
14451 Greencastle
14452 Greencastle
14461 Bargersville
14463 Bargersville
14481 Mitchell
14482 Mitchell
14491 Needmore
14492 Needmore
14493 Needmore
14501 Seymour
14511 Waynesville
14512 Waynesville
14521 Rural (Mitchell)
14522 Rural (Martinsville)
14523 Rural (Terre Haute)
14531 Crane
14533 Crane
18411 Clay City
18412 Clay City
18413 Clay City
18414 Clay City
18421 Sand Cut
18422 Sand Cut
18423 Sand Cut
18424 Sand Cut
APPENDIX A - Buyer's Delivery Points
Central/Terre Haute System (Continued)
Delivery Point
18431 Brazil
18432 Brazil
18441 Center Point
18442 Center Point
18443 Center Point
18444 Center Point
18451 Clinton
18452 Clinton
18461 Hercules Clinton
18462 Hercules Clinton
18491 Terre Haute-2
18492 Terre Haute-2
18501 Terre Haute-3
18502 Terre Haute-3
18511 Terre Haute-4
18521 Stuckey Rd.
18522 Stuckey Rd.
18523 Stuckey Rd.
18531 Rural Ind.
18541 Terre Haute-6
18542 Terre Haute-6
18571 Magaret (Terre Haute)
18573 Magaret (Terre Haute)
037047100 West Shelbyville
APPENDIX A - Buyer's Delivery Points
South System
Delivery Point
17031 Locust, KY
17032 Locust, KY
17251 Crestwood, KY
17252 Crestwood, KY
Greensburg System
Delivery Point
70017 Greensburg
70940 Westport
Amendment
Seller and Buyer agree that this Appendix A may be
amended as provided in this Agreement, which amendment
ultimately will be memorialized in a revised Appendix A.
INDIANA ENERGY SERVICES, INC. INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX B - Buyer's Maximum Quantities
Maximum Daily Quantities (in Dth)
Central/
Month North/East Terre Haute South Greensburg
January 500,263 225,760 67,050 8,126
February 489,004 238,600 63,421 7,645
March 406,915 190,327 49,525 6,040
April 279,473 128,138 28,020 3,690
May 224,802 102,132 17,295 2,622
June 154,174 70,537 14,837 2,654
July 121,590 52,664 9,527 2,049
August 121,305 52,524 9,498 2,044
September 185,179 87,589 19,957 3,234
October 276,079 109,178 35,351 5,121
November 381,044 187,126 46,140 5,834
December 498,411 224,778 65,571 7,896
Maximum Seasonal Quantities (in Dth)
Central/
Month North/East Terre Haute South Greensburg
Summer 14,864,954 9,033,530 1,818,879 341,116
Winter 37,679,047 20,333,923 5,513,673 697,711
APPENDIX B - Buyer's Maximum Quantities
Amendment
Seller and Buyer agree that this Appendix B may be
amended as provided in this Agreement, which amendment
ultimately will be memorialized in a revised Appendix B.
INDIANA ENERGY SERVICES, INC. INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
Appendix C - Storage and Transportation Costs
The transportation and storage costs shall be
determined based upon the rates and charges applicable under
each Transporter's Tariff, including the sheets identified
below, as well as other applicable sheets, as all of those
sheets may be in effect from time to time, and costs arising
under applicable agreements, including the agreements
identified below, as well as this Agreement. While Seller
and Buyer agree that the identified tariff sheets and
agreements are intended to be a complete listing of the
applicable tariff sheets and applicable agreements, they
further agree that the omission of the reference of one or
more sheets or agreements from that list will not affect
Buyer's obligation to Seller for rates, charges and costs
incurred thereunder.
North/East System
PEPL
Contract No. Tariff Sheet No.
11713 Sheet No. 11
11714 Sheet No. 5
11715 Sheet No. 5
11716 Sheet No. 5
11718 Sheet No. 5
11719 Discounted Rate Agreement
11720 Discounted Rate Agreement
11721 Sheet No. 5
12044 Sheet No. 11
12045 Sheet No. 5
APPENDIX C - Storage and Transportation Costs
North/East System (continued)
ANR
Contract No. Tariff Sheet No.
X-22 Sheet No. 16
Sheet No. 14
Sheet No. 15
19100 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
20250 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
20300 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
32300 Sheet No. 10
33050 Sheet No. 10
70300 Sheet No. 68G
TBD-1 Discount Agreement
ANR Storage Company
Contract No. Tariff Sheet No.
TBD-2 Discount Agreement
Appendix C - Storage and Transportation Costs
Central/Terre Haute System
Texas Gas G-3
Contract No. Tariff Sheet No.
N0325 Sheet No. 10
Sheet No. 226
Sheet No. 226F
Sheet No. 226L
T3780 Sheet No. 11
Sheet No. 226
Sheet No. 226F
Sheet No. 226L
TBD-3 Discount Rate Agreement
South System
Texas Gas G-4
Contract No. Tariff Sheet No.
N0420 Sheet No. 10
Sheet No. 226
Sheet No. 226F
Sheet No. 226L
T3739 Sheet No. 11
Sheet No. 226
Sheet No. 226F
Sheet No. 226L
Greensburg System
Texas Eastern
Contract No. Tariff Sheet No.
800171 Sheet No. 35
400109 Sheet No. 43
TBD-4 Discount Rate Agreement
Trunkline
Contract No. Tariff Sheet No.
TBD-5 Discount Rate Agreement
Amendment
Seller and Buyer agree that this Appendix C may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix C.
INDIANA ENERGY SERVICES, INC. INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX D - Supplier Reservation Costs
Supplier Reservation Costs
January 1, 1996 to March 31, 1996
System Winter Summer
North/East $441,529 0
South /Central/Terre Haute $279,235 0
Greensburg $ 6,212 0
Amendment
Seller and Buyer agree that this Appendix D may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix D.
INDIANA ENERGY SERVICES, INC. INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
Appendix E- Commodity Purchases
This Appendix E addresses the gas supply and other
variable costs applicable to Nominated Daily Quantities, as
identified below.
For Monthly Baseload Purchases:
Buyer shall pay to Seller each Contract Month an amount
determined by multiplying the monthly baseload quantities of
Gas scheduled for Buyer's purchase under this Agreement
during the Contract Month, by a price per MMBtu determined
using the first monthly index for Inside FERC's GAS MARKET
REPORT, in the table "PRICES OF SPOT GAS DELIVERED TO
INTERSTATE PIPELINES" for the applicable zone, specified
below, for the applicable month. In addition, all other
applicable variable costs as identified below shall apply.
For Daily Swing Purchases:
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 be calculated for
each day during the Contract Month for which Buyer has
scheduled daily swing quantities of Gas for purchase. The
"Daily Amounts" shall be determined by multiplying (a) the
swing quantities of gas scheduled for the particular day of
the Contract Month, by (b) 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 the applicable zone, specified below, for
the applicable day. 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 is published. In
addition, all other applicable variable costs as identified
below shall apply.
For Other Purchases:
For any purchases not covered by a specified pricing
method, pricing shall be as negotiated and mutually agreed
to in writing by the Parties.
For Summer Storage Refill:
For summer refill of leased storage, Buyer shall pay to
Seller an amount based on averaging the seven Summer monthly
indices as defined above for Monthly Baseload Purchases, for
the applicable supply area, and based upon presuming storage
refill quantities to be equally split between the summer
months. For summer refill of company storage, the parties
will agree on the extent to which an index average method
will be used, after consideration of the operational
scheduling needs of company storage. In addition, all other
applicable variable costs as identified below shall apply.
For Storage Withdrawals:
For quantities of storage withdrawals for which Buyer
has previously paid for commodity, all applicable other
variable costs as identified below shall apply.
Appendix E- Commodity Purchases
System Applicable Monthly Indices
North/East PEPL - Texas, Oklahoma
ANR - Louisiana
Central/Terre Haute Texas Gas - Zone 1
Texas Gas - Zone SL
South Texas Gas - Zone 1
Texas Gas - Zone SL
Greensburg/Westport TETCO - East Louisiana
TETCO - West Louisiana
TETCO - East Texas
TETCO - South Texas
Trunkline - Field Zone (Texas, La.)
System Applicable Daily Indices
North/East PEPL - Oklahoma
ANR - Louisiana-Onshore South
Central/Terre Haute Texas Gas SL - Louisiana-Onshore
South
Texas Gas (entire Z1) - East Texas-North
La. Area
South Texas Gas SL - Louisiana-Onshore
South
Texas Gas (entire Z1) - East Texas-North
La. Area
Greensburg/Westport TETCO (ELA) - Louisiana-Onshore
South
TETCO (WLA) - Louisiana-Onshore South
TETCO (ETX) - East Texas - North La.
Area
TETCO (STX) - South - Corpus Christi
Trunkline - East - Houston - Katy
Trunkline - South - Corpus Christi
Trunkline - Louisiana - Onshore South
APPENDIX E- Commodity Purchases - Other Variable Costs
The other variable costs shall be determined based upon
the rates and charges applicable under each Transporter's
Tariff, including the sheets identified below, as well as
other applicable sheets, as all of those sheets may be in
effect from time to time, and costs arising under applicable
agreements, including the agreements identified below, as
well as this Agreement.
North/East
PEPL
Contract No. Tariff Sheet No.
11713 Sheet No. 11
11714 Sheet No. 5
11715 Sheet No. 5
11716 Sheet No. 5
11717 Sheet No. 5
11719 Discounted Rate Agreement
11720 Discounted Rate Agreement
11721 Sheet No. 5
12044 Sheet No. 11
12045 Sheet No. 5
APPENDIX E - Commodity Purchases - Other Variable Costs
North/East
ANR
Contract No. Tariff Sheet No.
X-22 Sheet No. 16
Sheet No. 14
Sheet No. 15
Sheet No. 19
19100 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
20250 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
20300 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
32300 Sheet No. 10
Sheet No. 19
33050 Sheet No. 10
Sheet No. 19
70300 Sheet No. 68G
APPENDIX E - Commodity Purchases - Other Variable Costs
Central/Terre Haute System
Texas Gas G-3
Contract No. Tariff Sheet No.
N0325 Sheet No. 10
Sheet No. 14
T3780 Sheet No. 11
Sheet No. 11A
Sheet No. 14
South System
Texas Gas G-4
Contract No. Tariff Sheet No.
N0420 Sheet No. 10
Sheet No. 14
T3739 Sheet No. 11
Sheet No. 11A
Sheet No. 14
APPENDIX E - Commodity Purchases - Other Variable Costs
Greensburg System
Texas Eastern
Contract No. Tariff Sheet No.
800171 Sheet No. 36
Sheet No. 126
Sheet No. 127
Sheet No. 128
Sheet No. 129
400109 Sheet No. 43
Sheet No. 126
Sheet No. 127
Sheet No. 128
Sheet No. 129
While Seller and Buyer agree that the identified tariff
sheets and agreements are intended to be a complete listing
of the applicable tariff sheets and applicable agreements,
they further agree that the omission of the reference of one
or more sheets or agreements from that list will not affect
Buyer's obligation to Seller for rates, charges and costs
incurred thereunder.
Amendment
Seller and Buyer agree that this Appendix E may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix E.
INDIANA ENERGY SERVICES, INC. INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX F - Management Services Fees
Portfolio Management Service Fee
Buyer shall pay to Seller a portfolio management
service fee derived as follows: In each month of year one
of the initial term of this Agreement, Buyer shall pay to
Seller a fee equal to one-twelfth of Buyer's annual costs,
projected for the twelve months ended December 31, 1996, to
otherwise perform the gas supply function (the "Base Year
Amount"). In year two, the Base Year Amount shall be
adjusted to reflect the annual effect of the application of
the Consumer Price Index for the preceding year, minus a
productivity factor of one percent, provided that, in no
event shall the adjustment be a negative number. The Base
Year Amount shall be similarly adjusted each year during the
term of the Agreement, each annual adjustment being
cumulative of all prior adjustments.
The Parties agree that in the event there occurs a
material change in the circumstances which resulted in the
execution of this Agreement, i.e., fundamental changes in
the natural gas market place or a significant change in the
nature or extent of the services to be provided or received
hereunder, and which materially impacts the portfolio
management service costs, the Parties will negotiate in good
faith to account for that material change in the
circumstances and to adjust the portfolio management service
fee accordingly.
Marketing Management Service Fee
Per Dth of Marketed Quantities
Fee Market Price Achieved
$0.01 $0.01-0.0599
$0.02 $0.06-0.0999
$0.03 $0.10-0.1399
$0.04 $0.14-0.1799
$0.05 $0.18-0.2199
$0.06 $0.22-0.2599
$0.07 $0.26-0.2999
$0.08 $0.30-0.3399
$0.09 $0.34-9.3799
$0.10 $0.38-0.4199
$0.11 $0.42-0.4599
$0.12 $0.46-0.4999
$0.13 $0.50-0.5399
$0.14 $0.54-0.5799
$0.15 $0.58-0.6199
$0.16 $0.62-0.6599
APPENDIX F - Management Services Fees
(Continued)
Amendment
Seller and Buyer agree that this Appendix F may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix F.
INDIANA ENERGY SERVICES, INC. INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX G- Notices
Invoice Information:
Buyer: Seller:
Indiana Gas Company, Inc. Brad McHenry
Corporate Accounting Indiana Energy Services, Inc.
Attn.: Judy Shular 1630 North Meridian Street
1630 North Meridian Street Indianapolis, IN 46202
Indianapolis, IN 46202 (317) 321-0353
(317) 321-0461
Payments:
Buyer: Seller:
National City Bank National City Bank
For the Account of: For the Account of:
Indiana Gas Company, Inc. Indiana Energy Services, Inc.
Supply Plans/Operational/Force Majeure:
Buyer: Seller:
Supply Plans Supply Plans
Mark Classick - (317) 321-0605 Brian Azman - (317) 321-0422
Operational Operational
Randy Gary - (317) 321-0507 Curt Hribernik - (317) 321-0610
Force Majeure Force Majeure
Randy Gary (317) 321-0507 Brian Azman - (317) 321-0422
Frank Lindsey (317) 321-0334 Curt Hribernik - (317) 321-0610
Gas Controller on Duty (317) 321-0535 John Talley - (317) 321-0479
Indiana Gas Company, Inc. Indiana Energy Services, Inc.
1630 North Meridian Street 1630 North Meridian Street
Indianapolis, IN 46202 Indianapolis, IN 46202
(317) 321-0787 (Telecopy) (317) 921-2760 (Telecopy)
All Other Notices:
Buyer: Seller:
Gas Control Department John R. Talley
Attn.: Randy Gary Indiana Energy Services, Inc.
1630 North Meridian Street 1630 North Meridian Street
Indianapolis, IN 46202 Indianapolis, IN 46202
APPENDIX G- Notices
(Continued)
Amendment
Seller and Buyer agree that this Appendix G may be
amended from time to time as provided in this Agreement,
which amendment ultimately will be memorialized in a revised
Appendix G.
INDIANA ENERGY SERVICES, INC. INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX H - Invoice/Payment Data
Invoice Date - On or before the tenth (10th) day after the Contract Month.
Due Date - Five (5) days after Receipt of Invoice.
Payment Method - By wire transfer to account specified on invoice.
Amendment
Seller and Buyer agree that this Appendix H may be
amended from time to time by mutual agreement of the
Parties, which amendment ultimately will be memorialized in
a revised Appendix H.
INDIANA ENERGY SERVICES, INC. INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
EXHIBIT 10-C
GAS SALES AND PORTFOLIO ADMINISTRATION AGREEMENT
THIS GAS SALES AND PORTFOLIO ADMINISTRATION AGREEMENT
("Agreement") is entered and effective the 15th day of March,
1996, for services to begin April 1, 1996, by and between INDIANA
GAS COMPANY, INC. ("Buyer") and PROLIANCE ENERGY, LLC ("Seller")
(collectively, the "Parties" or individually "Party"). Buyer and
Seller agree as follows:
RECITALS
1. Seller is a limited liability company created and
existing under the laws of the State of Indiana, with its
registered office at One North Capitol Avenue, Indianapolis,
Indiana.
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 and
covenants pursuant to which Buyer as a purchaser of natural gas
and portfolio administration services, and Seller as a merchant
of natural gas and portfolio administration services, shall
perform the transactions described herein.
4. Under this Agreement, Seller agrees to provide natural
gas and portfolio administration services consistent with the
terms and conditions contained herein.
DEFINITIONS
The following terms shall have the following definitions for
this Agreement and its Appendices:
1. The term "ANR" shall mean ANR Pipeline Company.
2. The term "Balancing Quantities" shall mean the quantity
of Gas which satisfies the difference between the Gas quantities
scheduled for delivery to Buyer's Delivery Points and the actual
physical flow of Gas taken by Buyer at the Delivery Points.
3. The term "Btu" shall mean British thermal unit, as
defined in Transporter's Tariff.
4. The term "Contract Month" shall mean a calendar month
during the effectiveness of this Agreement, as interpreted in
light of Transporter's Tariff.
5. The term "Contract Rates" shall be the demand rates as
described in Appendix C.
6. The term "Day" shall be defined as it is defined in
"Transporter's Tariff," or as applied by "Transporter."
7. The term "Delivery Points" shall mean the points of
delivery of Gas from Seller to Buyer as specified in Appendix A.
8. The term "FERC" shall mean the Federal Energy
Regulatory Commission.
9. The term "Gas" shall mean natural gas.
10. The term "Maximum Daily Quantities" or "MDQ" shall mean
the maximum quantity of Gas which Seller shall be obligated to
supply on a firm basis to Buyer's Delivery Points on a particular
day.
11. The term "Maximum Portfolio Entitlement" shall mean the
maximum deliverability that Buyer is entitled to under the
contracts identified on Appendix C.
12. The term "Maximum Seasonal Quantities" or "MSQ" shall
mean the maximum quantity of Gas which Seller shall be obligated
to supply on a firm basis to Buyer's Delivery Points in a Summer
or Winter.
13. The terms "MMBtu," "Dekatherm" or "DTH" shall mean one
million (1,000,000) Btus.
14. The term "Nominated Daily Quantities" shall mean the
quantity of Gas nominated on a particular day for delivery to
Buyer's Delivery Points, including deliveries to storage for
Buyer.
15. The term "PEPL" shall mean Panhandle Eastern Pipe
Line Company.
16. The term "Portfolio Contracts" shall mean all of the
contracts that may be utilized to provide Gas to Buyer, except as
provided in Section 1.2, and which are identified on Appendix C.
17. The term "Summer" shall mean the summer season months
of April through October, inclusive.
18. The term "TETCO" shall mean Texas Eastern
Transmission Corporation.
19. The term "Texas Gas" shall mean Texas Gas
Transmission Corporation.
20. The term "Transportation Credit" shall mean the Gas
cost credit specified in Appendix C.
21. The term "Transporter" shall mean the transporting
pipeline(s) interconnected with Buyer, including without
limitation ANR, PEPL, TETCO or Texas Gas, as applicable to the
transaction involved.
22. The term "Transporter's Tariff" shall mean the tariff
provisions of Transporter, as approved by the FERC, or any
successor thereto, and Buyer's or Seller's contractual
arrangements with Transporter, including changes to such tariff
and arrangements made after this Agreement is effective.
23. The term "Winter" shall mean the winter season months
of November through March, inclusive.
ARTICLE 1 - GAS SALES
1.1. Seller represents, agrees and warrants that Seller can
and shall stand ready to provide on a firm basis for Buyer's
purchase at Buyer's Delivery Points the daily and seasonal
quantities of Gas set forth herein.
1.2. During the term of this Agreement, unless Seller is
unable to meet Buyer's Gas requirements, Buyer agrees that Seller
shall be its sole supplier of Gas. However, Buyer shall have and
maintain the right to produce, utilize, purchase or sell any and
all:
(a) Gas produced in Indiana which Buyer may be
required to purchase under Ind. Code 8-1-2-87.6 or
any successor provision thereto of the Indiana Code, or
(b) propane.
1.3. The Maximum Daily Quantities which Seller shall be
obligated to provide on a firm basis at Buyer's Delivery Points
are specified in Appendix B.
1.4. The Maximum Seasonal Quantities during Winter or Summer
which Seller shall be obligated to provide on a firm basis at the
Delivery Points are specified in Appendix B.
1.5. Buyer shall assign or release, or cause to be assigned
or released, to Seller, and Seller shall accept, subject to the
terms and conditions of the applicable assignment, release or
agency contract (as set forth below), all of the Portfolio
Contracts. In the event a third party consent for the assignment
or release of any Portfolio Contract cannot be obtained or an
assignment or release would not be economically desirable or
timely, Seller is hereby appointed as agent for all purposes to
administer such contracts until such time as such an assignment
or release is effected. Under this Agreement, Seller may fulfill
its obligation to provide Gas to Buyer by using both the
Portfolio Contracts and contracts entered into by and between
Seller and third parties, including suppliers, pipelines and
other service providers. Seller shall not be obligated to enter
into commitments with suppliers, pipelines or other service
providers which extend beyond the term or scope of this
Agreement.
1.6. 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 for all purposes under this Agreement. Upon acceptance of
the replacement guidelines and standards, Buyer and Seller agree
to apply the replacement guidelines and standards retroactively
to the cessation date of Transporter's Tariff. Any resolution
shall be implemented within thirty (30) days of the acceptance of
the replacement guidelines and standards.
ARTICLE 2 - GAS SALES CHARGES
2.1. For all Maximum Portfolio Entitlements, Buyer shall pay
Seller each Contract Month the then-applicable Contract Rates
specified in Appendix C in order for Seller to stand ready to
deliver Gas to Buyer's Delivery Points on a firm basis. Seller
shall provide Buyer the Transportation Credit specified in
Appendix C.
2.2. Buyer shall pay Seller each Contract Month the
applicable supplier reservation costs specified in Appendix D, as
updated from time to time as provided in Article 6.
2.3. For all commodity quantities, Buyer shall pay Seller
each Contract Month an amount determined by multiplying the
applicable Nominated Daily Quantities and Balancing Quantities
for the Contract Month, by the applicable price per MMBtu as
determined pursuant to the commodity pricing provisions of
Appendix E. These pricing provisions shall reflect pricing
methods for Gas supply, and all other variable costs incurred by
Seller as provided in Appendix E. The other variable costs shall
include all applicable costs, including without limitation,
transportation commodity or usage charges, injection and
withdrawal costs, volumetric surcharges, and fuel as reflected in
each Transporter's Tariff and the applicable service agreements.
2.4. Buyer will pay taxes, if any, which are imposed with
respect to Gas delivered hereunder and which are not reflected in
the pricing methods in Appendix E; provided, however, Buyer shall
have no obligation to pay any sales or use taxes for which it
delivers to Seller an appropriate exemption certificate.
ARTICLE 3 - BALANCING
3.1. Seller shall provide Buyer with Balancing Quantities as
part of its gas sales and portfolio administration services.
Balancing procedures shall be agreed to by the Parties.
ARTICLE 4 - PORTFOLIO ADMINISTRATION SERVICES
4.1. Buyer and Seller agree that during the term of this
Agreement Seller shall provide all of Buyer's portfolio
administration services.
4.2. Seller's portfolio administration services shall
include without limitation Gas acquisition, scheduling receipt
and delivery quantities with Gas suppliers and pipeline
transporters, scheduling pipeline storage inventory quantities,
providing delivered Gas supplies, supply and portfolio planning,
and periodic portfolio reporting. Buyer shall retain complete
unilateral control of its physical Gas delivery, distribution,
transportation and storage facilities.
4.3. Seller shall provide Gas supply planning to Buyer as
part of its portfolio administration services. Supply
planning/gas control procedures shall be agreed to by the Parties
to govern the preparation and implementation of the supply plans.
4.4. Seller shall provide portfolio planning as part of its
portfolio administration services. Seller and Buyer shall review
periodically Buyer's supply requirements for potential changes.
Any portfolio entitlement changes are subject to Buyer's prior
approval. Seller shall represent Buyer in negotiations with
suppliers and pipelines to effectuate the portfolio changes.
Seller agrees that it will maintain for Buyer's benefit firm
contracts for transportation and other delivery services
(specifying Buyer's primary Delivery Points) and Gas supply that
will fully meet the MDQ and MSQ of Buyer as set forth in the
agreed upon supply plans.
4.5. During the term of this Agreement, Seller shall review
all FERC regulatory filings that could reasonably be expected to
impact the Gas supply or portfolio administration services
provided by Seller to Buyer. Seller shall inform Buyer on a
timely basis of Seller's review and analysis. Buyer shall timely
communicate its interests to Seller. Seller shall provide for
representation to protect the Parties' interests in FERC
proceedings and related appeals and notify Buyer promptly
concerning any conflict of interest it may identify. In the
event Seller's interests conflict with those of Buyer, Buyer and
Seller shall be free to represent their interests directly.
Seller shall provide Buyer with periodic written reports on the
status of such proceedings in which Seller represents Buyer.
4.6. During the term of this Agreement, Buyer agrees to
pay Seller the portfolio administration service fee specified in
Appendix F.
ARTICLE 5 - TERM
5.1. The initial term of this Agreement shall be through
October 31, 2000. If neither Party terminates this Agreement by
written notice at least twenty-four (24) months prior to
expiration of the initial term, the Agreement will remain in
effect for an additional one (1) year after the original
expiration date. Thereafter, the Agreement will continue year to
year unless terminated by written notice given at least twenty-
four (24) months prior to the expiration date of the then current
Agreement.
5.2. Notwithstanding the provisions of Section 5.1, this
Agreement shall not remain in effect beyond, and shall terminate
upon, the expiration of the wind-up period specified in Section
6.03 of Seller's Fundamental Operating Agreement. During the
course of any such wind-up of Seller's affairs, the sole supplier
requirements established in Sections 1.2 and 4.1 of this
Agreement shall be waived with respect to any Gas or related
services under any Portfolio Contracts assigned or transferred to
Buyer or its designee, or released from any agency established
under this Agreement, pursuant to Section 6.05 of the above-
referenced Fundamental Operating Agreement. Any minimum purchase
requirements imposed on Buyer under this Agreement shall be
reduced accordingly. The portfolio administration service fee
during the wind-up period shall be reduced to the extent
reductions in actual portfolio administration costs occur.
ARTICLE 6 - CHANGES TO APPENDICES
6.1. The Parties agree to make changes to Appendix A as
necessary to reflect changes in Buyer's Delivery Points.
6.2 The Parties agree to make changes, after timely
notice, to Appendix B as necessary to reflect changes in Buyer's
MDQ and MSQ. Buyer agrees to pay any appropriate cost increases
resulting from these changes.
6.3. The Parties agree that Appendices C, D, E, F and I
will be subject to change from time to time as provided in those
Appendices.
6.4. The Parties agree that changes in Appendix G can be
made by either party at any time. Buyer or Seller may change the
notice information in Appendix G by providing new designations to
the other Party by registered or certified mail.
6.5. The Parties agree that changes to Appendix H will
occur only upon mutual written agreement.
ARTICLE 7 - OPERATIONS
7.1. Buyer and Seller agree to accept for purposes of this
Agreement the applicable quality, delivery pressure, measurement
and other applicable rules, procedures, guidelines, tariff
provisions, contractual arrangements and policies of suppliers or
Transporter, as the same may change from time to time.
ARTICLE 8 - FORCE MAJEURE
8.1. 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,
operational or performance failure or declaration of force
majeure by a supplier, leased storage field operator,
transporter, or other service provider, operational flow
order(s), 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 notice by telephone or by telecopy with reasonably full
particulars to the other Party at or near the time the Party
becomes aware of the force majeure, with written confirmation
sent within seventy-two (72) hours. 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.
8.2. Notice of force majeure must be provided to the
representatives for Buyer or Seller designated in Appendix G.
ARTICLE 9 - PENALTIES
9.1. Seller shall be liable for all imbalance or other
penalties, cash-outs, or other costs imposed on Buyer or Seller
by any third party, including without limitation Seller's
upstream or other transporters and Transporters, to the extent
that such penalties, cash-outs or other costs are caused by
Seller's actions or inaction. Buyer shall be liable for all
imbalance or other penalties, cash-outs, or other costs imposed
on Buyer or Seller by any third parties, including without
limitation Seller's upstream or other transporters and
Transporters, to the extent that such penalties, cash-outs or
other costs are caused by Buyer's actions or inaction.
ARTICLE 10 - BILLING AND PAYMENT
10.1. Following each Contract Month, Seller shall furnish,
or have furnished, an itemized statement to Buyer stating the
amounts due Seller pursuant to this Agreement (the "Statement").
Following the receipt of Seller's Statement, Buyer shall make
payment by the due date. Invoice date, due date, and payment
method shall be as specified in Appendix H.
10.2. 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.
ARTICLE 11 - REMEDIES
11.1. If Seller fails to deliver scheduled Gas and such
failure 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. The amount owed by Seller to
Buyer hereunder shall be calculated as the product of (a) the
difference, if positive, between (i) the price paid for
replacement Gas, including any additional transportation, fuel
and other variable costs incurred to receive such replacement
Gas, and (ii) the then applicable commodity charge, and (b) the
difference between the scheduled Gas and the quantity of Gas
actually delivered by Seller. Buyer and Seller agree to act in
good faith with respect to purchases of such replacement Gas so
as to minimize Seller's obligations to Buyer under this Section.
11.2. If Buyer fails to receive scheduled Gas and such
failure to receive is not excused under this Agreement, then
Buyer shall reimburse Seller in an amount calculated as the
product of (a) the difference, if positive, between (i) the then
applicable commodity charge and (ii) the price received from a
third party purchaser, including any additional transportation,
fuel and other variable costs incurred to deliver Gas to a third
party purchaser, and (b) the difference between the scheduled Gas
and the quantity of Gas actually received by Buyer. Seller and
Buyer agree to act in good faith with respect to sales of such
Gas to a third party purchaser so as to minimize Buyer's
obligations to Seller under this Section.
11.3. The Parties agree that the actual losses incurred by
a Party as a result of the other Party's failure to deliver or
receive quantities of Gas would be uncertain and impossible to
determine with precision. As a result, the remedies provided in
Article 11 for the failure to deliver or receive 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 remedies 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 receive the scheduled Gas under this
Agreement. The remedies provided pursuant to this Article are in
lieu of and exclude any and all other liabilities of the failing
Party as may be provided by contract, equity, or law for any such
failures or breaches, including, without limitation, the
obligation of either Party to deliver or receive quantities
hereunder in relation to the sale or purchase of Gas to or from
other parties.
ARTICLE 12 - CORRESPONDENCE
12.1. Except as provided in Section 8.2, any notice,
statement or bill shall be in writing and shall be duly delivered
when (a) mailed, postage prepaid, by registered, certified, or
first-class mail, or (b) sent by prepaid overnight delivery to
the applicable address, or (c) sent by hand delivery, or (d) sent
by telecopy directed to the appropriate person and telecopy
number with hard copy also delivered as in (a), (b) or (c) above.
Addresses, telephone numbers, and telecopy numbers are specified
in Appendix G.
ARTICLE 13 - RENEGOTIATION TO PRESERVE AGREEMENT
13.1. If any provision of this Agreement is declared or
rendered unlawful by a court of law or regulatory authority with
jurisdiction over either of the parties or deemed unlawful
because of a statutory or other change in the law, or if either
Party suffers a substantial economic detriment due either to a
determination relating to this Agreement by such an authority, or
as a result of fundamental changes in the marketplace or other
substantial changes in existing circumstances, the Parties will
promptly meet to determine and negotiate a mutually acceptable
agreement on such replacement provisions necessary to maintain
the benefits and obligations that arise under this Agreement.
ARTICLE 14 - MISCELLANEOUS
14.1. 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.
14.2. Seller and Buyer expressly agree that laws of the
State of Indiana shall govern the validity, construction,
interpretation and effect of this Agreement.
14.3. Either Party may pledge, mortgage or assign its
rights hereunder as security for indebtedness. This Agreement is
otherwise non-assignable except with the prior written consent of
Buyer and Seller.
14.4. This Agreement is conditioned on the continued
solvency of Buyer and Seller. If one Party becomes insolvent or
seeks bankruptcy relief, the other party may prospectively
terminate this Agreement on prior written notice without further
obligation other than to pay for services or Gas previously
provided. In the event of such termination, in order to ensure
the continued reliable provision of gas supply service to Buyer's
customers, the wind-up provisions of Section 6.05 of the
Fundamental Operating Agreement shall apply.
14.5. 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.
14.6. Neither Buyer nor Seller intends 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.
14.7. The Parties acknowledge that their respective
business records and information are confidential in nature and
may contain proprietary and trade secret information.
Notwithstanding the foregoing, Seller agrees to provide Buyer
access to those records required to verify Seller's Statements to
Buyer. Confidential records and information in the possession of
either Party shall not be divulged to third parties without prior
consent of the other Party.
14.8. In interpretation and construction of this Agreement,
no presumption shall be made against any Party on grounds such
Party drafted the Agreement or any provision thereof.
14.9. 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.
14.10. The terms and conditions contained in this Agreement
and its Appendices 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.
14.11. Each Party represents that it 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.
14.12. Seller agrees that there shall be no pattern of
adverse distinction and no pattern of undue discrimination in
carrying out its obligations under this Agreement relating to
Buyer as compared to other parties to whom Seller furnishes Gas
supply and portfolio administration services.
14.13. In the event any of the terms, covenants or
conditions of this Agreement, or any amendment hereto, or the
application of any such terms, covenants or conditions shall be
held invalid as to any Party or circumstance by any court having
jurisdiction, all other terms, covenants, or conditions of this
Agreement, or any amendment hereto, and their application, shall
not be affected thereby and shall remain in full force and
effect.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement in duplicate originals.
"SELLER"
PROLIANCE ENERGY, LLC
By: /s/Carl L. Chapman
Carl L. Chapman
President
"BUYER"
INDIANA GAS COMPANY, INC.
By: /s/Jerrold L. Ulrey
Jerrold L. Ulrey
Vice President
INDEX TO APPENDICES
APPENDIX A - Buyer's Delivery Points
APPENDIX B - Buyer's Maximum Quantities
APPENDIX C - Portfolio Information
APPENDIX D - Supplier Reservation Costs
APPENDIX E - Commodity Purchases
APPENDIX F - Portfolio Administration Service Fee
APPENDIX G - Notices
APPENDIX H - Invoice/Payment Data
Gas Sales And Portfolio Administration Agreement
APPENDICES INDEX
Appendix Title
A Buyer's Primary Delivery Points
B Buyer's Maximum Quantities
C Portfolio Information
D Supplier Reservation Costs
E Commodity Purchases
F Portfolio Administration Service Fees
G Notices
H Invoice/Payment Data
I Diversion of Entitlements
APPENDIX A - Buyer's Primary Delivery Points
North/East System
Delivery Point Delivery Point
2509 Dana 010530070 Dunkirk
2510 Danville 032150100 Muncie
2515 Elwood 037045550 ANR Storage
Facilities
2516 Fairmount ANRX22 Storage Injection
Points
2530 Noblesville PEPL IND GAS-INJ
2531 North Salem CGCU Points of Interconnection
2535 Richmond with Citizens Gas &
2538 Tipton Coke Utility
2576 Huntington
2597 Crawfordsville
2605 Upland
2684 Unionport
2751 Montpelier
2754 Sheridan
2757 Bloomingdale
2772 Newport
2780 Lebanon
2795 Anderson
2796 Zionsville
2812 Carpentersville
2822 Fowlerton
2823 Richmond
5233 Anderson 121N Rural
5530 Cent. Ind. Rurals
5531 West of Zionsville
5532 North of Zionsville
5534 East of King
5864 King
010530010 East Hancock School
010530030 Hope
APPENDIX A - Buyer's Primary Delivery Points
Central/Terre Haute System
Delivery Point
14411 Bedford
14412 Bedford
14431 Columbus
14432 Columbus
14433 Columbus
14461 Bargersville
14463 Bargersville
14481 Mitchell
14482 Mitchell
14491 Needmore
14492 Needmore
14493 Needmore
14501 Seymour
14511 Waynesville
14512 Waynesville
14521 Rural (Mitchell)
14522 Rural (Martinsville)
14523 Rural (Terre Haute)
14531 Crane
14533 Crane
18421 Sand Cut
18422 Sand Cut
18423 Sand Cut
18424 Sand Cut
APPENDIX A - Buyer's Primary Delivery Points
Central/Terre Haute System (Continued)
Delivery Point
18451 Clinton
18452 Clinton
18461 Hercules Clinton
18462 Hercules Clinton
18491 Terre Haute-2
18492 Terre Haute-2
18501 Terre Haute-3
18502 Terre Haute-3
18511 Terre Haute-4
18521 Stuckey Rd.
18522 Stuckey Rd.
18523 Stuckey Rd.
18531 Rural Ind.
18541 Terre Haute-6
18542 Terre Haute-6
18571 Magaret (Terre Haute)
18573 Magaret (Terre Haute)
037047100 West Shelbyville
CGCU Points of Interconnection with Citizens Gas & Coke Utility
APPENDIX A - Buyer's Primary Delivery Points
South System
Delivery Point
17031 Locust, KY
17032 Locust, KY
17251 Crestwood, KY
17252 Crestwood, KY
Greensburg System
Delivery Point
70017 Greensburg
70940 Westport
TETCO TETCO Storage Facilities
Amendment
Seller and Buyer agree that this Appendix A may be
amended as provided in this Agreement, which amendment
ultimately will be memorialized in a revised Appendix A.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX B - Buyer's Maximum Quantities
Maximum Daily Quantities (in Dth)
Central/
Month North/East Terre Haute South Greensburg
April 257,000 125,000 31,500 3,420
May 206,000 94,900 20,100 2,610
June 152,000 70,800 15,400 2,630
July 94,100 38,900 5,530 1,550
August 119,000 52,800 9,890 2,020
September183,000 88,200 20,900 3,220
October 251,000 112,000 37,600 5,060
November 366,000 180,000 46,700 5,590
December 482,000 217,000 66,700 7,330
January 505,000 220,000 72,400 7,330
February 469,000 220,000 63,900 7,300
March 395,000 186,000 50,800 5,860
Maximum Seasonal Quantities (in Dth)
Central/
Month North/East Terre Haute South Greensburg
Summer 1996 11,202,130 5,850,260 1,676,840 267,145
Winter 1996-97 38,579,050 21,473,920 5,513,670 697,710
APPENDIX B - Buyer's Maximum Quantities
Amendment
Seller and Buyer agree that this Appendix B may be
amended as provided in this Agreement, which amendment
ultimately will be memorialized in a revised Appendix B.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
Appendix C - Portfolio Information
I. Contracts and Contract Rates
The applicable demand costs shall be determined based
upon the rates and charges specified in each Transporter's
Tariff, including any applicable direct bills, surcharges,
or as other costs specified by the sheets identified below,
or other applicable sheets, as all of those sheets may be in
effect from time to time, and costs arising under applicable
agreements, including the agreements identified below, as
well as this Agreement. While Seller and Buyer agree that
the identified tariff sheets and agreements are intended to
be a complete listing of the applicable tariff sheets and
applicable agreements, they further agree that the omission
of the reference of one or more sheets or agreements from
that list will not affect Buyer's obligation to Seller for
rates, charges and costs incurred thereunder. Seller shall
provide to Buyer all Transporter refunds which are received
by Seller relative to Contracts or Contract Rates referenced
below or relative to any agreements referencing the
contracts below.
Contract No. Contract Rate
11713 Sheet No. 11
11714 Sheet No. 5
11715 Sheet No. 5
11716 Sheet No. 5
11718 Sheet No. 5
11719 Tariff Letter
11720 Tariff Letter
11721 Sheet No. 5
12044 Sheet No. 11
12045 Sheet No. 5
X-22 Sheet No. 16
Sheet No. 14
Sheet No. 15
19100 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
Appendix C - Portfolio Information
Contract No. Contract Rate
20250 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
20300 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 18
32300 Sheet No. 10
33050 Sheet No. 10
70300 Sheet No. 68G
N0325 Sheet No. 10
Sheet No. 10
T3780 Sheet No. 11
Sheet No. 11
N0420 Sheet No. 10
Sheet No. 10
T3739 Sheet No. 11
Sheet No. 11
800171 Sheet No. 35
400109 Sheet No. 43
WSS Appendix I
PSS Appendix I
Appendix C - Portfolio Information
II. Transportation Credit
1. Seller shall provide to Buyer, as a credit against the
Contract Rates, a Transportation Credit ("TC") for the sale
from the Buyer to Seller of projected available annual
portfolio entitlements.
2. The Transportation Credit shall be calculated from time
to time to reflect changes in projected available annual
entitlements, based on the following formula:
TC = Base TC x Projected Available Annual Entitlements
Base Available Annual Entitlements
Where: a. Base TC = $1,864,000
b. Base Available Annual Entitlements = 35,913,000 Dth
c. Projected Available Annual Entitlements =
Total Entitlements - Normal Demand
(i) Total Entitlements are the sum of the
quantities of longhaul pipeline
transportation entitlements reserved by
Buyer.
(ii) Normal Demand is the projected normal
weather quantity of Buyer's firm longhaul
pipeline deliveries for firm customers.
3. The TC shall be divided among months based upon the
projected available monthly entitlements.
Amendment
Seller and Buyer agree that this Appendix C may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix C.
PROLIANCE ENERGY LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX D - Supplier Reservation Costs
Supplier Reservation Costs
April 1, 1996 to October 31, 1996
I. Reserved Commodity Quantities
a. Monthly Baseload Reserved Quantity (dth)
System
Central/
Month North/East Terre Greensburg South
Haute
April 110,424 39,136 2,927 9,914
May 86,222 25,047 2,764 3,914
June 73,595 25,047 2,493 2,087
July 68,830 22,556 1,680 2,087
August 70,438 25,047 2,190 2,087
September 72,542 25,047 2,493 2,087
October 88,326 35,483 1,689 2,087
APPENDIX D - Supplier Reservation Costs
b. Daily Swing Reserved Quantity (dth)
System
Central/
Month North/East Terre Greensburg South
Haute
April 124,774 8,179 1,061 12,071
May 145,894 10,787 65 17,063
June 87,216 0 358 13,985
July 0 0 0 3,684
August 36,708 0 0 8,234
September 116,746 22,268 997 19,724
October 136,038 11,832 1,222 16,415
II. Applicable Reservation Rates (dth/day)
System Winter Months April, 1996**
Monthly Daily Monthly Daily
Index Index Index Index
Reserved Reserved Reserved Reserved
Quantity Quantity Quantity Quantity
North/East * * $0.023 $0.0315
Central/Terre Haute * * $0.01636 $0.00606
Greensburg * * $0.025 $0.045
South * * $0.01636 $0.00606
*To be determined.
**October prices are to be determined, other Summer 1996
months are $0.00.
APPENDIX D - Supplier Reservation Costs
Assignment/Agency Administration of Supply Agreements
Buyer and Seller agree that quantities reserved under
supply reservation contracts entered into by Buyer prior to
April 1, 1996, and for which Seller has accepted assignment
or agency administration duties, shall be included in the
Reserved Commodity Quantities with Applicable Reservation
Rates as set forth in the original supply reservation
contracts.
Amendment
Seller and Buyer agree that this Appendix D may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix D.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
Appendix E- Commodity Purchases
This Appendix E addresses the gas supply and other
variable costs applicable to Nominated Daily Quantities and
Balancing Quantities as identified below.
For Monthly Baseload Purchases:
Buyer shall pay to Seller each Contract Month an amount
determined by multiplying the monthly baseload quantities of
Gas scheduled for Buyer's purchase under this Agreement
during the Contract Month, by a price per MMBtu determined
using the first monthly index from Inside FERC's GAS MARKET
REPORT, in the table "PRICES OF SPOT GAS DELIVERED TO
INTERSTATE PIPELINES" for the applicable zone, specified
below, for the applicable month, plus all other applicable
variable costs as identified below shall apply.
For Daily Swing Purchases:
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 be calculated for
each day during the Contract Month for which daily swing
quantities of Gas have been confirmed for purchase. The
"Daily Amounts" shall be determined by multiplying (a) the
confirmed swing quantities of gas scheduled for the
particular day of the Contract Month, by (b) 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 the applicable zone,
specified below, for the applicable day. 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 is
published. In addition all other applicable variable costs
as identified below shall apply.
For Other Purchases:
For any purchases not covered by a specified pricing
method, pricing shall be as negotiated and mutually agreed
to in writing by the Parties.
For Summer Storage Refill:
For summer refill of leased storage, Buyer shall pay to
Seller an amount based on averaging the seven summer monthly
indices for the applicable supply area, and based upon
presuming storage refill quantities to be equally split
between the summer months. For summer refill of company
storage, the parties will agree on the extent to which an
index average method will be used, after consideration of
the operational scheduling needs of company storage. In
addition, all other applicable variable costs as identified
below shall apply.
Appendix E- Commodity Purchases
For Storage Withdrawals:
For quantities of storage withdrawals for which Buyer
has previously paid for commodity, applicable storage
withdrawal variable costs as identified below shall apply.
For Applicable Indices:
System Applicable Monthly Indices
North/East PEPL - Texas, Oklahoma
ANR - Louisiana
Central/Terre Haute Texas Gas - Zone 1
Texas Gas - Zone SL
South Texas Gas - Zone 1
Texas Gas - Zone SL
Greensburg TETCO - East Louisiana
TETCO - West Louisiana
TETCO - East Texas
TETCO - South Texas
North/East PEPL - Oklahoma
ANR - Louisiana-Onshore South
Central/Terre Haute Texas Gas SL
South Texas Gas SL
Greensburg TETCO (ELA) - Louisiana-Onshore
South
TETCO (WLA) - Louisiana-Onshore South
TETCO (ETX) - East Texas - North La.
Area
TETCO (STX) - South - Corpus Christi
APPENDIX E- Commodity Purchases
(Continued)
System Applicable Monthly Indices
North PEPL - Texas, Oklahoma (mainline)
South Texas Gas - Zone 1
Texas Gas - Zone 2
Natural Gas Intelligence Gas Price Index
Texas Panhandle/Anadarko Basin/Oklahoma
System Applicable Daily Indices
North/East PEPL - Oklahoma
ANR - Louisiana - Onshore South
Central/Terre Haute Texas Gas SL - Louisiana - Onshore South
Texas Gas (entire Z1) - East Texas - North La. Area
South Texas Gas SL - Louisiana - Onshore South
Texas Gas (entire Z1) - East Texas - North
La. Area
Greensburg/Westport TETCO (ELA) - Louisiana - Onshore South
TETCO (WLA) - Louisiana - Onshore South
TETCO (ETX) - East Texas - North La. Area
TETCO (STX) - South - Corpus Christi
Trunkline - East - Houston - Katy
Trunkline - South - Corpus Christi
Trunkline - Louisiana - Onshore South
APPENDIX E- Commodity Purchases - Other Variable Costs
The other variable costs applicable to Nominated Daily
Quantities and Balancing Quantities shall be determined
based upon the rates and charges applicable under each
transporter's tariff, including the sheets identified below,
as well as other applicable sheets, as all of those sheets
may be in effect from time to time, and costs arising under
applicable agreements, including the agreements identified
below, as well as this Agreement.
North/East
PEPL
Contract No. Contract Rate
11713 Sheet No. 11
11714 Sheet No. 5
11715 Sheet No. 5
11716 Sheet No. 5
11717 Sheet No. 5
11719 Tariff Letter
11720 Tariff Letter
11721 Sheet No. 5
12044 Sheet No. 11
12045 Sheet No. 5
APPENDIX E - Commodity Purchases - Other Variable Costs
North/East
ANR
Contract No. Contract Rate
X-22 Sheet No. 16
Sheet No. 14
Sheet No. 15
Sheet No. 19
19100 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
20250 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
20300 Sheet No. 7
Sheet No. 17
Sheet No. 17A
Sheet No. 19
32300 Sheet No. 10
Sheet No. 19
33050 Sheet No. 10
Sheet No. 19
70300 Sheet No. 68G
APPENDIX E - Commodity Purchases - Other Variable Costs
Central/Terre Haute System
Texas Gas G-3
Contract No. Contract Rate
N0325 Sheet No. 10
Sheet No. 10
Sheet No. 14
T3780 Sheet No. 11
Sheet No. 11
Sheet No. 14
South System
Texas Gas G-4
Contract No. Contract Rate
N0420 Sheet No. 10
Sheet No. 10
T3739 Sheet No. 11
Sheet No. 11
APPENDIX E - Commodity Purchases - Other Variable Costs
Greensburg System
Texas Eastern
Contract No. Contract Rate
800171 Sheet No. 36
Sheet No. 126
Sheet No. 127
Sheet No. 128
Sheet No. 129
400109 Sheet No. 43
Sheet No. 126
Sheet No. 127
Sheet No. 128
Sheet No. 129
While Seller and Buyer agree that the identified tariff
sheets and agreements are intended to be a complete listing
of the applicable tariff sheets and applicable agreements,
they further agree that the omission of the reference of one
or more sheets or agreements from that list will not affect
Buyer's obligation to Seller for rates, charges and costs
incurred thereunder.
Amendment
Seller and Buyer agree that this Appendix E may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix E.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX F - Portfolio Administration Service Fees
Portfolio Administration Service Fee
In each month of year one of the initial term of this
Agreement, Buyer shall pay to Seller a fee equal to one-
twelfth of Buyer's annual costs, to otherwise perform the
gas supply function (the "Base Year Amount"). The Base Year
Amount shall be $1,354,739. For purposes of this Appendix
F, year one shall be the twelve month period beginning April
1, 1996. In year two, the Base Year Amount shall be
adjusted to reflect the annual effect of the application of
the Consumer Price Index for the preceding year, minus a
productivity factor of one percent, provided that, in no
event shall the adjustment be a negative number. The Base
Year Amount shall be similarly adjusted each year during the
initial term of the Agreement, each annual adjustment being
cumulative of all prior adjustments.
The Parties agree that in the event there occurs a
material change in the circumstances which resulted in the
execution of this Agreement, e.g., fundamental change in the
natural gas market place or a significant change in the
nature or extent of the services to be provided or received
hereunder, and which materially impacts the portfolio
administration service costs, the Parties will negotiate in
good faith to account for that material change in the
circumstances and to adjust the portfolio administration
service fee accordingly.
Amendment
Seller and Buyer agree that this Appendix F may be
amended from time to time by mutual agreement of the
Parties, which ultimately will be memorialized in a revised
Appendix F.
PROLIANCE ENERGY LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX G- Notices
Invoice Information:
Buyer: Seller:
Indiana Gas Company, Inc. J. Groth
Corporate Accounting Proliance Energy, LLC
Attn.: Judy Shular 1630 North Meridian Street
1630 North Meridian Street Indianapolis, IN 46202
Indianapolis, IN 46202 (317) 321-0353
(317) 321-0461
Payments:
Buyer: Seller:
National City Bank Bank One
For the Account of: For the Account of:
Indiana Gas Company, Inc. Proliance Energy, LLC
Supply Plans/Operational/Force Majeure:
Buyer: Seller:
Supply Plans Supply Plans
Chris Kershner Brian Azman
(317) 321-0583 (317) 321-0422
Operational Operational
Randy Gary Curt Hribernik
(317) 321-0507 (317) 321-0610
Force Majeure Force Majeure
Randy Gary (317) 321-0507 Brian Azman - (317) 321-0422
Frank Lindsey (317) 321-0334 Curt Hribernik - (317) 321-0610
Gas Controller on Duty (317) 321-0535 John Talley - (317) 321-0479
Indiana Gas Company, Inc. Proliance Energy, LLC
1630 North Meridian Street 1630 North Meridian Street
Indianapolis, IN 46202 Indianapolis, IN 46202
(317) 321-0787 (Telecopy) (317) 921-2760 (Telecopy)
All Other Notices:
Buyer: Seller:
Gas Control Department Proliance Energy , LLC
Attn.: Randy Gary Attn: John R. Talley
1630 North Meridian Street 1630 North Meridian Street
Indianapolis, IN 46202 Indianapolis, IN 46202
APPENDIX G- Notices
(Continued)
Amendment
Seller and Buyer agree that this Appendix G may be
amended from time to time as provided in this Agreement,
which amendment ultimately will be memorialized in a revised
Appendix G.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX H - Invoice/Payment Data
Invoice Date - On or before the tenth (10th) day after the Contract Month.
Due Date - Ten (10) days after receipt of invoice.
Payment Method - By wire transfer to account specified on invoice.
Amendment
Seller and Buyer agree that this Appendix H may be
amended from time to time by mutual agreement of the
Parties, which amendment ultimately will be memorialized in
a revised Appendix H.
PROLIANCE ENERGY, LLC INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President-Gas Supply & Rates
APPENDIX I- Diversion of Entitlements
I. Diversion of Delivered Gas Sales Entitlements From Buyer
Seller shall have the right to schedule entitlements of
Buyer to Citizens Gas & Coke Utility, provided that:
A. Seller shall reimburse Buyer for applicable
variable costs Buyer incurs in replacing diverted
supply with its own on system gas sources.
B. If such diversion causes Buyer to incur gas
costs related to on system gas sources, Seller shall
reimburse Buyer or otherwise assure Buyer suffers no
economic detriment from such incurrence of gas costs.
C. The "Shoulder Month Season" shall be the
consecutive months of October, November, December,
January, February, March and April during the term of
this Agreement. Unless otherwise agreed, the maximum
diversion quantity shall not exceed 70,000 Dth on any
day, nor 1,500,000 Dth for any Shoulder Month Season.
D. Seller shall administer Buyer's gas supply
portfolio such that any diversion will not endanger
Buyer's ability to meet system demands.
II. Diversion of Entitlements to Buyer
Buyer shall have the right to entitlements from Seller, as
follows:
A. Delivered Peaking Sales Service ("PSS")
1. Seller shall provide Buyer PSS with the following
entitlements:
Contract Month Maximum Daily PSS Maximum Annual PSS
December 50,000 Dth/day 500,000 Dth during any
January 50,000 Dth/day December, January,
February 50,000 Dth/day February period
2. Buyer shall pay Seller a demand cost of $2.88
per Dth multiplied by the Maximum Annual PSS and a
variable cost of $0.60 for each Dth of PSS nominated
for Buyer. Demand costs shall be divided equally
among December, January and February invoices.
Variable costs shall be invoiced for the month
nominated.
3. For PSS nominated for Buyer, Buyer shall pay
Seller the Gas Daily index average for Texas Gas
Zone SL for the applicable day.
APPENDIX I- Diversion of Entitlements
B. Delivered Winter Sales Services ("WSS")
1. Seller shall provide Buyer with WSS with the
following entitlements:
Contract Month Maximum Daily WSS Maximum Annual WSS
November 75,000 Dth/day 2,250,000 Dth during
December 75,000 Dth/day any winter period.
January 75,000 Dth/day
February 75,000 Dth/day
March 75,000 Dth/day
2. Buyer shall pay Seller as follows:
a. For WSS Commodity:
The applicable PEPL Gas Daily index average
commodity price under this Agreement
b. For WSS Variable Costs:
$0.30 per Dth utilized.
c. For WSS Demand Costs:
$3.45 per Dth per year for each Dth of Maximum
Annual WSS, billed in equal monthly amounts commencing
for April, 1996, and ending for March, 2000.
Amendment
Seller and Buyer agree that this Appendix I may be
amended from time to time by mutual agreement of the
Parties, which amendment ultimately will be memorialized in
a revised Appendix I.
PROLIANCE ENERGY, LLC. INDIANA GAS COMPANY, INC.
By: /s/Carl L. Chapman By: /s/Jerrold L. Ulrey
Carl L. Chapman Jerrold L. Ulrey
Its: President Its: Vice President
<TABLE>
EXHIBIT 12
INDIANA GAS COMPANY, INC.
AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands, Except Ratios)
Twelve Mos.
Ended Fiscal Year Ended September 30
3/31/96 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Net income $42,927 $32,109 $34,596 $28,534 $25,743 $23,286
Adjustments:
Income taxes 25,696 18,630 17,977 16,030 12,800 11,665
Fixed charges (see below) 16,724 16,395 16,986 17,556 15,642 15,482
Total adjusted earnings $85,347 $67,134 $69,559 $62,120 $54,185 $50,433
Fixed charges:
Total interest expense $15,787 $15,530 $16,037 $16,640 $14,556 $14,411
Interest component of rents 937 865 949 916 1,086 1,071
Total fixed charges $16,724 $16,395 $16,986 $17,556 $15,642 $15,482
Ratio of earnings to fixed charges 5.1 4.1 4.1 3.5 3.5 3.3
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Indiana Gas
Company, Inc.'s consolidated financial statements as of March 31, 1996, and for
the six months then ended and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 561,727
<OTHER-PROPERTY-AND-INVEST> 184
<TOTAL-CURRENT-ASSETS> 147,099
<TOTAL-DEFERRED-CHARGES> 16,537
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 725,547
<COMMON> 142,995
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 155,417
<TOTAL-COMMON-STOCKHOLDERS-EQ> 298,412
0
0
<LONG-TERM-DEBT-NET> 193,693
<SHORT-TERM-NOTES> 0
<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> 233,442
<TOT-CAPITALIZATION-AND-LIAB> 725,547
<GROSS-OPERATING-REVENUE> 376,862
<INCOME-TAX-EXPENSE> 25,998
<OTHER-OPERATING-EXPENSES> 300,930
<TOTAL-OPERATING-EXPENSES> 326,928
<OPERATING-INCOME-LOSS> 49,934
<OTHER-INCOME-NET> 904
<INCOME-BEFORE-INTEREST-EXPEN> 50,838
<TOTAL-INTEREST-EXPENSE> 8,080
<NET-INCOME> 42,758
0
<EARNINGS-AVAILABLE-FOR-COMM> 42,758
<COMMON-STOCK-DIVIDENDS> 12,500
<TOTAL-INTEREST-ON-BONDS> 7,468
<CASH-FLOW-OPERATIONS> 55,009
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
