UNITED STATES OF AMERICA
BEFORE THE SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
-------------------------------------X
:
In the Matter of :
:
NATIONAL FUEL GAS COMPANY : CERTIFICATE
NATIONAL FUEL GAS :
DISTRIBUTION CORPORATION : PURSUANT TO
NATIONAL FUEL GAS SUPPLY CORPORATION : RULE 24
SENECA RESOURCES CORPORATION : -----------
NATIONAL FUEL RESOURCES, INC. :
UTILITY CONSTRUCTORS, INC. :
HORIZON ENERGY DEVELOPMENT, INC. :
:
File No. 70-8541 :
:
(Public Utility Holding Company :
Act of 1935) :
-------------------------------------X
This is to certify, pursuant to Rule 24 under the
Public Utility Holding Company Act of 1935, that the transactions
described below, which were proposed by National Fuel Gas Company
("Company"), National Fuel Gas Distribution Corporation
("Distribution"), National Fuel Gas Supply Corporation
("Supply"), Seneca Resources Corporation ("Seneca"), National
Fuel Resources, Inc., Utility Constructors, Inc. and Horizon
Energy Development, Inc. ("Horizon"), in the above file, have
been carried out in accordance with the terms and conditions of
and for the purposes represented by said joint Application or
Declaration, as amended, and pursuant to the orders of the
Securities and Exchange Commission with respect thereto dated
April 20, 1995, October 19, 1995, March 6, 1996 and June 26,
1996.
On August 7, 1997, the Company obtained an offer to
purchase $100,000,000 aggregate principal amount of the Company's
Medium-Term Notes, Series D ("MTNs") due August 12, 2027 at an
interest rate of 6.214%. On August 7, 1997, the Company accepted
the offer by executing a Terms Agreement with Bear, Stearns & Co.
Inc., one of the Agents named in the Distribution Agreement dated
September 30, 1996.
On August 12, 1997, the Company issued and sold
$100,000,000 aggregate principal amount of its 6.214% non-
redeemable MTNs due August 12, 2027 to Bear, Stearns & Co. Inc.
<PAGE>
The proceeds from the sale of the 6.214% non-redeemable
MTNs due August 12, 2027 were loaned to Distribution, Supply,
Seneca and Horizon in exchange for long-term unsecured notes in
an aggregate principal amount of $30,000,000, $10,000,000,
$50,000,000 and $10,000,000, respectively.
Attached hereto and incorporated by reference are:
Exhibit A-1 - Copy of Pricing Supplement No. 1 used in
connection with the sale of the MTNs.
Exhibit B-1 - Conformed copy of the Terms Agreement
dated August 7, 1997 between the Company and Bear, Stearns & Co.
Inc.
Exhibit C-1(a) - Form S-3 Registration Statement of the
Company under the Securities Act of 1933, as amended (File No.
333-3803).
Exhibit D-1 - Copy of Petition 97-G0496 of Distribution
to the Public Service Commission of New York.
Exhibit D-2 - Copy of the Public Service Commission of
New York's order in connection with Distribution's Petition 97-
G0496, issued and effective July 9, 1997.
Exhibit D-3 - Copy of Securities Certificate
Application of Distribution filed with the Pennsylvania Public
Utility Commission.
Exhibit D-4 - Copy of the Pennsylvania Public Utility
Commission's Securities Certificates Nos. S00970611 and
G00970548.
Exhibit F-1(a) - Post effective opinion of Reid &
Priest LLP.
Exhibit F-2(a) - Post effective opinion of Stryker,
Tams & Dill LLP.
Exhibit F-3(a) - Post effective opinion of Anna Marie
Cellino, Esq.
2
<PAGE>
IN WITNESS WHEREOF, National Fuel Gas Company has
caused this certificate to be executed this 20th day of
August, 1997.
NATIONAL FUEL GAS COMPANY
By /s/ Gerald T. Wehrlin
-----------------------------
Gerald T. Wehrlin
Controller
NATIONAL FUEL GAS
DISTRIBUTION CORPORATION
By /s/ Gerald T. Werhlin
-----------------------------
Gerald T. Wehrlin
Senior Vice President
NATIONAL FUEL GAS SUPPLY
CORPORATION
By /s/ Joseph P. Pawlowski
-----------------------------
Joseph P. Pawlowski
Treasurer
SENECA RESOURCES CORPORATION
By /s/ Gerald T. Werhlin
-----------------------------
Gerald T. Wehrlin
Controller
NATIONAL FUEL RESOURCES, INC.
By /s/ Robert J. Kreppel
-----------------------------
Robert J. Kreppel
President
UTILITY CONSTRUCTORS, INC.
By /s/ Joseph P. Pawlowski
-----------------------------
Joseph P. Pawlowski
Treasurer
HORIZON ENERGY DEVELOPMENT, INC.
By /s/ Gerald T. Werhlin
-----------------------------
Gerald T. Wehrlin
Vice President
3
<PAGE>
EXHIBIT INDEX
Exhibit Description
------- -----------
A-1 Copy of Pricing Supplement No. 1 used in
connection with the sale of the MTNs.
B-1 Conformed copy of the Terms Agreement
dated August 7, 1997 between the Company
and Bear, Stearns & Co. Inc.
C-1(a) Form S-3 Registration Statement of the
Company under the Securities Act of
1933, as amended (File No. 333-3803).
D-1 Copy of Petition 97-G0496 of
Distribution to the Public Service
Commission of New York.
D-2 Copy of the Public Service Commission of
New York's order in connection with
Distribution's Petition 97-G0496, issued
and effective July 9, 1997.
D-3 Copy of Securities Certificate
Application of Distribution filed with
the Pennsylvania Public Utility
Commission.
D-4 Copy of the Pennsylvania Public Utility
Commission's Securities Certificates
Nos. S00970611 and G00970548.
F-1(a) Post effective opinion of Reid & Priest
LLP.
F-2(a) Post effective opinion of Stryker, Tams
& Dill LLP.
F-3(a) Post effective opinion of Anna Marie
Cellino, Esq.
Exhibit A-1
Rule 424(b)(5)
File No. 333-3803
PRICING SUPPLEMENT NO. 1, DATED August 7, 1997
(To Prospectus dated September 30, 1996
and Prospectus Supplement dated September 30, 1996)
NATIONAL FUEL GAS COMPANY
(Medium-Term Notes, Series D)
Trade Date: August 7, 1997
Principal Amount: $100,000,000
Price to Public: At varying prices as described under
"Underwriting" below
Issue Date: August 12, 1997 (the Offered Notes
will bear interest from August 12, 1997)
Maturity Date: August 12, 2027
Interest Rate: 6.214%
Interest Payment Dates: May 1 and November 1, commencing
November 1, 1997
Proceeds to the Company: $99,500,000
Redemption Terms: Not redeemable at the option of the Company
Repayable at the option of holder: Yes x No
----- -----
Repayment Date: August 12, 2002
Repayment Price: 100%
Election Period: June 13, 2002 through July 13, 2002
Other Terms: See "Repayment at Option of Holder"
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE PURCHASER NAMED HEREIN
MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE
AFFECT THE PRICE OF THE OFFERED NOTES, INCLUDING OVER-ALLOTMENT,
STABILIZING AND SHORT-COVERING TRANSACTIONS AND THE IMPOSITION OF
PENALTY BIDS. SEE "UNDERWRITING."
REPAYMENT AT OPTION OF HOLDER
Each Offered Note will be repayable by the Company at the
option of the holder thereof on August 12, 2002 at 100% of its
principal amount, together with interest payable to the date of
repayment. For any Offered Note to be repaid, the Company must
receive such Offered Note at its office or agency in the Borough
of Manhattan, The City of New York (currently the office of the
Trustee), within the period commencing June 13, 2002, and ending
at the close of business on July 13, 2002 (or, if July 13, 2002
shall not be a business day, the next succeeding business day),
together with the form entitled "Option to Elect Repayment" on
the reverse of, or otherwise accompanying, such Offered Note duly
completed. Any such election so received by the Company within
such period shall be irrevocable. The repayment option may be
exercised by the holder of any Offered Note for less than the
entire principal amount of such Offered Note, provided that the
principal amount to be repaid is equal to $1,000 or an integral
multiple of $1,000. All questions as to the validity,
eligibility (including time of receipt) and acceptance of any
Offered Note for repayment will be determined by the Trustee,
whose determination will be final and binding.
So long as the Depositary or the Depositary's nominee is the
holder of the Offered Notes, the Depositary or such nominee, as
the case may be, will be the only entity that can exercise the
repayment option, and repayment will be made in accordance with
the Depositary's repayment procedures in effect at the time. See
"Description of the Offered Notes and the Indenture Book-Entry
System" in the accompanying Prospectus Supplement. In order to
ensure that the Depositary or its nominee will timely exercise a
repayment option with respect to a particular beneficial interest
in the Offered Notes, the Beneficial Owner of such interest must
instruct the broker or other Direct or Indirect Participant
through which it holds such interest to notify the Depositary of
its election to exercise the repayment option. In addition, the
Beneficial Owner must effect delivery of such interest at the
time such notice of election is given to the Depositary by
causing the broker or other Direct or Indirect Participant
through which it holds such interest to transfer such interest on
the Depositary's records to the Trustee. Different firms have
different deadlines for accepting instructions from their
customers and, accordingly, each Beneficial Owner should consult
the broker or other Direct or Indirect Participant through which
it holds an interest in the Offered Notes in order to ascertain
the deadline by which such instruction must be given in order for
timely notice to be delivered to the Depositary.
UNDERWRITING
Subject to the terms and conditions set forth in a
Terms Agreement, dated August 7, 1997, between Bear, Stearns &
Co. Inc. (Purchaser) and the Company (Terms Agreement), the
Purchaser has agreed to purchase from the Company, and the
Company has agreed to sell to the Purchaser, as principal,
$100,000,000 principal amount of the Offered Notes.
The Company has been advised by the Purchaser that it
proposes to offer the Offered Notes to one or more investors or
other purchasers, including other dealers, from time to time in
one or more transactions, including negotiated transactions, at
varying prices related to prevailing market prices at the time of
resale.
Under the terms and conditions of the Terms Agreement,
the Company has agreed that during the period ending on the Issue
Date set forth above, it will not offer for sale, issue or sell,
or enter into any agreement to offer for sale, issue or sell, any
securities of the Company having terms substantially similar to
those of the Offered Notes.
In order to facilitate this offering, the Purchaser may
engage in transactions that stabilize, maintain or otherwise
affect the price of the Offered Notes during and after this
offering. Specifically, the Purchaser may over-allot or
otherwise create a short position in the Offered Notes for its
own account by selling more Offered Notes than have been sold to
it by the Company. The Purchaser may elect to cover any such
short position by purchasing Offered Notes in the open market.
In addition, the Purchaser may stabilize or maintain the price of
the Offered Notes by bidding for or purchasing Offered Notes in
the open market and may impose penalty bids, under which selling
concessions allowed to broker-dealers participating in this
offering are reclaimed if Offered Notes previously distributed in
this offering are repurchased in connection with stabilizing
transactions or otherwise. The effect of these transactions may
be to stabilize or maintain the market price of the Offered Notes
at a level above that which might otherwise prevail in the open
market. The imposition of a penalty bid may also affect the
price of the Offered Notes to the extent that it discourages
resales thereof. No representation is made as to the magnitude
or effect of any such stabilization or other transactions. Such
transactions, if commenced, may be discontinued at any time.
COMPANY UNDERTAKING
The Company undertakes to provide without charge to
each person, including any Beneficial Owner, to whom a copy of
the accompanying Prospectus has been delivered, on the written or
oral request of any such person, a copy of any or all of the
documents referred to therein which have been or may be
incorporated in the accompanying Prospectus by reference, other
than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents).
Requests for such copies should be directed to: Curtis W. Lee,
General Manager - Finance, National Fuel Gas Company, 10
Lafayette Square, Buffalo, New York 14203, telephone (716) 857-
7812.
Exhibit B-1
NATIONAL FUEL GAS COMPANY
Medium-Term Notes, Series D
TERMS AGREEMENT
---------------
August 7, 1997
National Fuel Gas Company
10 Lafayette Square
Buffalo, New York 14203
Dear Ladies and Gentlemen:
Subject to the terms and conditions set forth herein,
Bear, Stearns & Co. Inc. (the "Purchaser") agrees to purchase
from National Fuel Gas Company (the "Company"), and the Company
agrees to sell to the Purchaser, $100,000,000 principal amount of
the Company's Medium-Term Notes, Series D having the terms set
forth below (the "Offered Notes") at a purchase price equal to
99.5% of the principal amount thereof.
Principal Amount: $100,000,000
Interest Rate: 6.214%
Price to Public: See Below
Proceeds to the Company: $99,500,000
Settlement Date: August 12, 1997
Redemption Terms: Not Redeemable at the
option of the Company
Date of Maturity: August 12, 2027
Issue Date: August 12, 1997 (the Offered
Notes will bear interest
from August 12, 1997)
Interest Payment Dates: May 1 and November 1,
commencing November 1,
1997
Repayable at the option
of holder: Yes X No
----- -----
Repayment Date: August 12, 2002
Repayment Price: 100%
Election Period: June 13, 2002 through
July 13, 2002
Payment Terms: Wire transfer of immediately
available funds
Delivery of Offered Notes: Through the facilities of
The Depository Trust Company
Other Terms: The Offered Notes will
have such other terms as
set forth in the Form of
Non-Redeemable Note
approved by the Financing
Committee of the Board of
Directors of the Company
on August 7, 1997
The Purchaser requires that the Company deliver an
Officers' Certificate pursuant to Section 7(d) of the
Distribution Agreement dated September 30, 1996, between the
Company and each of the Purchaser and the other parties named
therein (the "Distribution Agreement").
The Company agrees that during the period ending on the
Settlement Date, it will not offer for sale, issue or sell, or
enter into any agreement to offer for sale, issue or sell, any
securities of the Company having terms substantially similar to
those of the Offered Notes.
The Company has been advised by the Purchaser that it
proposes to offer the Offered Notes to one or more investors or
other purchasers, including other dealers, from time to time in
one or more transactions, including negotiated transactions, at
varying prices related to prevailing market prices at the time of
resale.
The sale of the Offered Notes to the Purchaser is being
made pursuant to the terms of Section 11 of the Distribution
Agreement. The provisions of the Distribution Agreement are
hereby incorporated by reference herein and shall be deemed to be
part of this Terms Agreement to the same extent as if such
provisions had been set forth in full herein.
<PAGE>
Please accept this offer by signing a copy of this
Terms Agreement in the space set forth below and returning the
signed copy to us.
BEAR, STEARNS & CO. INC.
By: /s/ Timothy A. O'Neill
-------------------------------
Name: Timpthy A. O'Neill
Title: Senior Managing Director
Accepted:
NATIONAL FUEL GAS COMPANY
By: /s/ J. P. Pawlowski
----------------------------
Exhibit D-1
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PETITION TO THE NEW YORK STATE PUBLIC
-------------------------------------
SERVICE COMMISSION FOR AUTHORIZATION
------------------------------------
TO ISSUE $200,000,000 OF PROMISSORY NOTES,
------------------------------------------
AND TO ASSUME THE COSTS AND BENEFITS
------------------------------------
OF CERTAIN DERIVATIVE INSTRUMENTS, FOR
--------------------------------------
CALENDAR YEARS 1997-1999
------------------------
<PAGE>
[ ][ ][ ] [ ][ ] [ ][ ] [ ][ ][ ][ ][ ][ ][ ]
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
NOTICE OF PROPOSED AGENCY ACTION
DIRECTIONS: ALL ITEMS MUST BE COMPLETED
Pursuant to the provisions of the State Administrative
Procedure Act, NOTICE is hereby given of the following proposed
agency action:
1. PROPOSED ACTION: Petition of National Fuel Gas Distribution
Corporation ("Distribution") to issue promissory notes in
the aggregate principal amount of not more than
$200,000,000, and enter into agreements concerning
derivative transactions in notional amounts not to exceed
$350,000,000 at any one time outstanding, which petition the
Public Service Commission may approve, reject or modify with
or without public hearings.
2. STATUTORY AUTHORITY UNDER WHICH ACTION IS PROPOSED:
PUBLIC SERVICE LAW SECTION 69
3. SUBJECT MATTER TO WHICH ORDER RELATES: Issuance of
promissory notes and entering into agreements concerning
derivative transactions for a 24-month period beginning with
the date of the order.
4. PURPOSE OF ORDER: To authorize the issuance of the above
notes and the application of the proceeds thereof for
various purposes, including repayment of existing debt,
construction expenditures, and for general corporate
purposes, and to authorize entering into agreements
concerning derivative transactions.
5. TERMS OF PROPOSED AGENCY ACTIONS
CHECK APPLICABLE BOX:
( ) The proposed rule, amendment, suspension, or repeal
contains 2,000 words or less. The original ribbon copy
of the express terms of the proposed action is a part
of this notice and is attached to this form. The
typing for the express terms conforms to the
instructions presented in section 260.2 of Title 19 of
the Official Compilation of Codes, Rules and
Regulations of the State of New York.
( ) The proposed rule, amendment, suspension of repeal
contains more than 2,000 words. The original ribbon
copy of a description of the substance of the proposed
action is a part of this notice and is attached to this
form. The typing for the description of the substance
conforms to the instructions presented in section 260.2
of Title 19 of the Official Compilation of Codes, Rules
and Regulations of the State of New York.
( ) Pursuant to section 202(6)(b) of the State
Administrative Procedure Act, the agency elects to
print a description of the subject, purpose and
substance of the proposed agency action. The
description contains less than 2,000 words. The
original ribbon copy of the description is attached to
this form. The typing for the description conforms to
the instructions presented in section 260.2 of Title 19
of the Official Compilation of Codes, Rules and
Regulations of the State of New York.
<PAGE>
6. NAME OF AGENCY REPRESENTATIVE Hon. John C. Crary
Governor George E. Pataki
Office Address State of New York
Empire State Plaza
Albany, NY 12223
Telephone Number (518) 474-1902
7. Regulatory impact statement (check applicable box):
[ ] A consolidated regulatory impact statement is submitted with
this notice and is being used because:
[ ] The proposed action is one of a series of closely
related and simultaneously proposed rules.
[ ] The proposed action is one of a series of
virtually identical rules proposed during the same
year.
[ ] A regulatory impact statement of 2,000 words or less is
submitted with the notice.
[ ] Because the text of the regulatory impact statement exceeds
2,000 words, a summary is submitted with this notice.
[ ] A regulatory impact statement is not submitted with this
notice and is not required because:
[ ] The proposed action is a technical amendment.
[ ] The action is proposed solely to comply with the
plain language requirement of Executive Order No.
100.
[ ] A regulatory impact statement is not submitted with this
notice because proposed action is subject to a consolidated
regulatory impact statement that was previously printed on
page ___ of issue _________________, Volume _______________,
date ____________ of the State Register.
[ ] A regulatory impact statement is not submitted with this
notice because the proposed action is within the definition
contained in Section 102(2)(a)(ii) of the State
Administrative Procedure Act and was initially proposed by
the regulated entity to which the proposal would apply.
8. Check box and complete as applicable:
[ ] A public hearing is required by law and will be held at
_____ a.m./p.m. on _________________ 19__ at _____________
____________________________________________________________
____________________________________________________________
____________________________.
[ ] A public hearing is not required by law, and a public
hearing has not been scheduled.
[ ] A public hearing is not required by law, but a public
hearing will be held at _____ a.m./p.m. on ________________
19__ at
____________________________________________________________
____________________________________________________________.
9. DATE, VIEWS OR ARGUMENTS MAY BE SUBMITTED TO:
<PAGE>
Name of Agency Representative:
___________________________
Office Address:
___________________________
___________________________
___________________________
Telephone Number:
___________________________
10. ADDITIONAL MATTER REQUIRED BY STATUTE:
[ ] Check box if not applicable.
I have reviewed this form and the information submitted with it.
The information contained in this notice is correct to the best
of my knowledge.
I have reviewed Article 2 of the State Administrative Procedure
Act and Parts 260, 261, 262 and 263 of Title 19 of the Official
Compilation of Codes, Rules and Regulations of the State of New
York, and I hereby certify that this notice complies with all
applicable provisions.
This notice was prepared by:
______________________________________
Signature
Name ____________________________________
Title: ____________________________________
Address: ____________________________________
____________________________________
Dated: ____________________________________
Telephone: ____________________________________
PLEASE READ BEFORE SUBMITTING THIS NOTICE.
One copy of the notice with the original signature plus two other
copies of the notice must be submitted to the State Register,
Department of State, 162 Washington Avenue, Albany, NY 12231.
<PAGE>
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PETITION TO THE NEW YORK STATE PUBLIC
-------------------------------------
SERVICE COMMISSION FOR AUTHORIZATION
------------------------------------
TO ISSUE $200,000,000 OF PROMISSORY NOTES,
------------------------------------------
AND TO ASSUME THE COSTS AND BENEFITS OF
---------------------------------------
CERTAIN DERIVATIVE INSTRUMENTS, FOR
-----------------------------------
CALENDAR YEARS 1997-1999
------------------------
<PAGE>
STATE OF NEW YORK PUBLIC SERVICE COMMISSION
DEPARTMENT OF PUBLIC SERVICE
============================================
In the Matter of the Application : AFFIDAVIT IN
SUPPORT OF
-of- : PETITION
NATIONAL FUEL GAS DISTRIBUTION CORPORATION,:
to the Public Service Commission, for
authorization to issue and sell promissory :
notes in the aggregate principal amount of
not more than $200,000,000, and to assume :
the costs and benefits of certain
derivative instruments. :
============================================
STATE OF NEW YORK )
) ss.
COUNTY OF ERIE )
J. P. PAWLOWSKI, being duly sworn deposes and says:
1. That he is Treasurer and principal accounting officer of
NATIONAL FUEL GAS DISTRIBUTION CORPORATION, the Petitioner named
in the above-entitled Petition, and as the principal accounting
officer of the said corporation is personally familiar with the
accounts, records and matters involved in this proceeding;
2. That he has read the above-entitled Petition, that to the
best of his knowledge, information and belief the averments of
the same are true, and that Schedules A through J annexed to said
Petition are true and correct according to the accounts and
records of National Fuel Gas Distribution Corporation;
3. That the accounts of National Fuel Gas Distribution
Corporation are kept in accordance with the order or orders of
the Commission applicable thereto;
-2-
<PAGE>
4. That he has read the foregoing statement of proposed
expenditures for construction, completion and improvement of
facilities as detailed in Schedule G and that no part of the said
proposed expenditures is, in whole or in part, reasonably
chargeable to Operating Expenses or Income.
/s/ J.P. Pawlowski
___________________________________
Treasurer
Sworn to before me this
7th day of March, 1997
/s/ Delores P. Connors
______________________________
Notary Public in and for the
County of Erie, New York
-3-
<PAGE>
STATE OF NEW YORK PUBLIC SERVICE COMMISSION
DEPARTMENT OF PUBLIC SERVICE
============================================
In the Matter of the Application :
-of- :
PETITION
NATIONAL FUEL GAS DISTRIBUTION CORPORATION,: CASE NO. ___
to the Public Service Commission, for
authorization to issue and sell promissory :
notes in the aggregate principal amount of
not more than $200,000,000, and to assume :
the costs and benefits of certain
derivative instruments. :
============================================
TO THE PUBLIC SERVICE COMMISSION OF THE STATE OF NEW YORK:
The petition of NATIONAL FUEL GAS DISTRIBUTION CORPORATION
respectfully alleges:
1. The name of your petitioner is National Fuel Gas
Distribution Corporation, whose principal place of business is 10
Lafayette Square, Buffalo, New York 14203. (National Fuel Gas
Distribution Corporation is, throughout this Petition and its
exhibits, sometimes referred to as either "Petitioner" or
"Distribution.") We respectfully request all communications and
reports relative to this petition be addressed to Mr. R. J.
Tanski, Vice President and Controller of Distribution, at said
address.
2. Petitioner is a domestic corporation, incorporated on April
11, 1973, as NFG Gas Corporation. The Certificate of Amendment
of its Articles of Incorporation by which its name was changed
<PAGE>
from NFG Gas Corporation to National Fuel Gas Distribution
Corporation was filed with the Secretary of State of the State of
New York on July 3, 1974. A copy of that Certificate of
Amendment was filed in Case 26434.
3. Petitioner is the successor to the gas distribution
operations of Iroquois Gas Corporation, Pennsylvania Gas Company
and United Natural Gas Company pursuant to a corporate
reorganization effective July 1, 1974, approved by this
Commission by order issued June 21, 1974 in Case 26434.
4. A copy of Petitioner's Articles of Incorporation and Bylaws
as amended on March 15, 1974 were filed in Case 26434. Bylaw
amendments dated September 17 and October 15, 1974 were filed in
Case 26978. Bylaw amendments dated May 28, 1976, September 15,
1978, December 21, 1978, December 15, 1980 and September 28, 1981
were filed in Case 28657. Bylaw amendments after September 28,
1981 were filed in Case 29360. Bylaw amendment effective
December 16, 1994 was filed in Case 95G0090. (See Schedule I.)
5. Petitioner has authorized capital stock consisting of 2,000
shares with no par value per share, of which 2,000 shares are now
issued and outstanding.
6. Petitioner is a wholly owned subsidiary of National Fuel Gas
Company ("National"). Petitioner proposes to issue, as part of
this financing, promissory notes to National in the principal
amount of not more than $200,000,000 applying the proceeds from
the sale of such notes to (i) fund, in part, Petitioner's
construction programs for calendar years 1997,1998 and 1999, (ii)
use for general corporate purposes, (iii) decrease short-term
-2-
<PAGE>
debt balances incurred to finance previous years' construction
programs, and (iv) repay notes issued by Petitioner to National
in exchange for loans from National to Petitioner made in
connection with the issue and sale by National of its 6.54%
medium-term notes (MTN's) due November 5, 1997, and its 5.72%
MTN's due March 1, 1999. Petitioner will be required to pay
National $7,000,000 in 1997 and $50,000,000 in 1999, to repay
National's loan to Petitioner using all or some of the proceeds
of such MTN issues.
Distribution's New York Public Service Commission's
current authorization to issue promissory notes expires on April
19, 1997 and the Pennsylvania Public Utility Commission ("PaPUC")
current authorization expires on March 31, 1997. A Securities
Certificate will also be filed with the PaPUC requesting
authorization to issue promissory notes in the aggregate amount
of $200,000,000, for a 24-month period beginning with the date of
the order.
National is authorized by the Securities and Exchange
Commission ("SEC") File No. 70-8541, to issue up to $350,000,000
of debentures and/or MTN's in the aggregate, prior to December
31, 1997. The current unused portion of this authorization is
$150,000,000. A copy of all filings and amendments, and SEC
authorizations, in said file, is enclosed with this petition as
Schedule J. In the fall or summer of 1997, National, along with
Distribution and certain other subsidiaries of National, plan to
seek further SEC authorization to issue up to $500,000,000 of
debentures and/or MTN's in the aggregate. It is currently
anticipated that such authorization, if obtained, would include
the authorization for National to lend up to $200,000,000 of the
proceeds of such issuances to Distribution, and for Distribution
to issue promissory notes to National, through December 31,1999,
or for such other period as the parties may request and the SEC
may authorize.
-3-
<PAGE>
Once requisite orders from the New York Public Service
Commission and the PaPUC have been received, the issuance of
debentures or MTN's by National and promissory notes by
Distribution will occur from time-to-time based upon market
conditions during the 24-month period beginning on the date of
the orders.
7. The following schedules are appended hereto and made a part
hereof:
Schedule A - Statement of the Financial Condition
---------- of Petitioner at September 30, 1996.
Schedule B - Balance Sheets of Petitioner at
---------- September 30, 1994 and September 30, 1996.
Schedule C - Statement showing the balances in
---------- Operating Property Accounts by Subaccounts
at September 30, 1995 through September
30, 1996.
Schedule D - Analysis of Retirements showing book
---------- cost of each credit to Operating Property
Accounts, debit to Depreciation Reserve or
Other Accounts, Cost of Removal and
Salvage during the twelve-month periods
ended September 30, 1995 and 1996.
-4-
<PAGE>
Schedule E - Analysis of Credits to Depreciation
---------- Reserve for the twelve-month periods ended
September 30, 1995 and 1996.
Schedule F - Reimbursement Margin for the period
---------- September 30, 1994 through September 30,
1996.
Schedule G - Statement of Funds Required and Source of
---------- Funds to meet proposed financing for the
twelve-month periods ended December 31,
1997, 1998 and 1999; Capital Expenditure
Programs for the calendar years 1997, 1998
and 1999.
Schedule H - Agreements between Petitioner and National
---------- Fuel Gas Company including forms of Credit
Agreement, Note and Derivative Agreement.
Schedule I - Bylaw Amendments.
----------
Schedule J - SEC Form U-1 and authorization.
----------
8. The costs incurred by National in issuing debentures and/or
MTN's, the proceeds of which are then lent to Petitioner, are
expected to be incorporated into the interest rate. (See
-5-
<PAGE>
Schedule J for further details.) Debt related expenses other
than interest and underwriters' or agents' commissions are not
expected to exceed $1,200,000.
9. The book cost of Petitioner's utility property represents
the original cost thereof as that term is defined in Section
31.1, subdivision (f), of the Rules of Procedure of the
Commission and does not include any amount for a franchise,
consent or right to operate as a public utility.
10. No franchise or any right to own, operate or enjoy any
franchise or any contract for consolidation or lease is proposed
to be capitalized directly or indirectly in connection with the
transaction herein set forth.
11. National may also from time-to-time enter into or terminate
agreements providing for interest rate swaps, caps, collars and
floors (collectively, "derivative instruments"), during the 24-
month period beginning on the date of the order. For example,
National may enter into an interest rate swap agreement with a
counterparty, whereby National would pay a fixed interest rate
and receive a floating interest rate. Conversely, National may
enter into a swap agreement whereby it would pay a floating rate
and receive a fixed rate. National may also enter into
agreements concerning other derivative instruments in connection
with such swaps or its new or existing debt. The purpose of such
agreements would be, respectively, to "convert" floating rate
interest payments to fixed rate payments, to "convert" fixed rate
interest payments to floating rate payments, or to limit the risk
of interest rate changes.
-6-
<PAGE>
If National enters into any such agreements concerning
derivative instruments, Distribution may enter into agreements
with National by which it would agree to assume the costs and
benefits of National's derivative instruments, and thus
effectively "convert" its floating rate interest payments to
fixed rate payments, "convert" its fixed rate interest payments
to floating rate payments, or limit the risk of interest rate
changes.
The SEC authorization referenced in paragraph 6 of the
Petition also includes SEC authorization to enter into agreements
respecting up to $350,000,000 notional amount of interest rate
swaps, caps, collars and floors. The notional amount of the
derivative instruments that may be obtained by National, and the
costs and benefits of which may be assumed by Distribution, shall
not exceed $350,000,000 at any one time outstanding. The ceiling
on Distribution's assumption of the costs and benefits of such
derivative instruments exceeds the ceiling on the amount of
Distribution's promissory notes because the derivative
instruments may pertain to Distribution's existing debt as well
as future debt that Distribution may incur. The SEC
authorization referenced in Paragraph 6 expires on December 31,
1997. However, National, along with Distribution and certain
other subsidiaries of National, plan to seek further SEC
authorization with respect to the issuance of derivative
instruments not to exceed $500,000,000 at any one time
outstanding, at the same time as they file for authorization
respecting up to $500,000,000 of debentures and/or MTN's in the
aggregate, later in 1997. This authorization, if obtained, would
include the authorizations described in this paragraph 11, and
would exist through December 31, 1999, or for such other period
as the parties may request and the SEC may authorize.
See Schedule H for the form of agreement to be used in
the event National enters into, and Distribution assumes the
costs and benefits of, agreements concerning such derivative
-7-
<PAGE>
instruments. See Schedule J for a more detailed description of
the purposes for which National and Distribution may enter into
such agreements, as well as several examples of how such
transactions work.
Note that Distribution is not, through this Financing
Petition, seeking the recovery in rates of the costs associated
with such derivative instruments. Distribution is only hereby
requesting authorization to assume the costs and benefits of such
derivative instruments in the same manner as approved by the
Commission in Case 95-G-0090.
12. If Distribution assumes the costs and benefits of any
derivative instruments, those costs and benefits will affect its
retained earnings, but from a pure accounting standpoint, the
outstanding notional amount of those derivative instruments will
have no effect on Distribution's capital structure.
WHEREFORE, Petitioner respectfully requests the
Commission to issue an order: (1) authorizing the issuance and
sale by Petitioner from time-to-time, for a 24-month period
beginning on the date of the order, at Petitioner's option, of
$200,000,000 principal amount of promissory notes in accordance
with the terms of the Agreement between Petitioner and National
(Schedule H); (2) authorizing Petitioner from time-to-time, for a
24-month period beginning on the date of the order, to apply not
more than $200,000,000 of the proceeds of the sale of such notes
toward (a) reimbursement of its treasury for equivalent moneys
expended during the above 24-month period, for capital purposes;
(b) repayment of notes issued by Petitioner to National in
exchange for loans from National to Petitioner in connection with
the issue and sale by National of its 6.54% MTN's due November 5,
1997 and its 5.72% MTN's due March 1, 1999 (Petitioner will be
required to pay National $7,000,000 in 1997 and $50,000,000 in
-8-
<PAGE>
1999 to repay National's loans to Petitioner using some of the
proceeds of such MTN issues); (c) payment for gross additions
during calendar years 1997, 1998 and 1999 to utility plant used
and useful in the public service over and above additions
constructed through funds originating from credits to the
depreciation reserve and net salvage; (d) use for other corporate
purposes; and (e) reduction of short-term debt balances incurred
to finance previous years' construction programs; with the
provision that temporary withdrawals of all or a portion of said
$200,000,000 from a special fund may be made during the 24-month
period beginning with the date of the order, provided such
temporary withdrawals are restored to said special fund not later
than 24 months after the date of the order; and (3) authorizing
Petitioner to enter into or terminate agreements with National
whereby Petitioner will assume the costs and benefits of
agreements providing for derivative instruments, during the 24-
month period beginning on the date of the order. The notional
amount of the derivative instruments whose costs and benefits may
be assumed by Petitioner shall not exceed $350,000,000 at any one
time outstanding.
Because of National's anticipated financing schedule,
we respectively request Commission approval of this petition
within sixty days of the filing date.
Dated March 7, 1997 Respectfully Submitted,
National Fuel Gas Distribution
Corporation
By: /s/ P.C. Ackerman
--------------------------
President
-9-
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF ERIE )
P.C. ACKERMAN, being duly sworn, deposes and says that he is
President of NATIONAL FUEL GAS DISTRIBUTION CORPORATION, the
Petitioner named in the foregoing petition; that he has read the
petition and knows the contents thereof; and that the same is
true to the best of his knowledge and belief.
By: /s/ P.C. Ackerman
--------------------------
President
Sworn to before me this
7th day of March, 1997
/s/ Delores P. Connors
----------------------------
Notary Public in and for the
County of Erie, New York
-10-
<PAGE>
SCHEDULE A
Sheet 1 of 8
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
STATEMENT OF FINANCIAL CONDITION AT SEPTEMBER 30, 1996
------------------------------------------------------
PURSUANT TO SECTION 18.1 OF THE RULES OF PROCEDURE OF THE
---------------------------------------------------------
PUBLIC SERVICE COMMISSION
------------------------
(a) Amount and classes of capital stock authorized by
Certificate of Incorporation.
Common Stock No Par Value 2,000 Shares
(b) Capital Stock - authorized by the Public Service Commission.
Case Number Date of Order
----------- -------------
26434 June 21, 1974
(c) Class and amount of stock issued and outstanding:
(1) 2,000 shares common stock:
(a) No par value
(b) $59,170,600 actually paid for such stock
(c) Premium on capital stock $68,500
(d) Not applicable.
(e) Not applicable.
(f) Notes authorized by the Public Service Commission.
Maximum
Principal
Case Number Date of Order Amount
----------- ------------- ------------
26434 June 21, 1974 $108,781,700
26715 September 24, 1974 21,000,000
26847 May 28, 1975 31,000,000
26978 April 28, 1976 26,500,000
27131 March 15, 1977 36,000,000
27329 November 28, 1978 2,318,500
27564 July 19, 1979 35,500,000
28657 December 7, 1983 50,000,000
29360 September 11, 1986 100,000,000
89G047 June 8, 1989 150,000,000
91G0750 January 9, 1992 100,000,000
91G1327 March 12, 1992 150,000,000
93G0154 May 13, 1993 250,000,000
95G0090 May 5, 1995 250,000,000
<PAGE>
SCHEDULE A
Sheet 2 and 8
(g) Not Applicable.
(h) Not Applicable.
(i) Advances from each affiliated interest.
Promissory notes issued by Distribution to National Fuel Gas
Company and currently outstanding as of September 30, 1996:
Principal Amount
----------------
Case Interest
Number Term of Notes Rate Issued Outstanding
------ ------------- -------- ------ -----------
91G0750 $100,000,000
principal amount
matures on
February 1, 2004 7.99% $100,000,000 $100,000,000
91G1327 $7,000,000 principal
amount matures on
November 5, 1997 6.54 7,000,000 7,000,000
$50,000,000 principal
amount matures
February 4, 2000 6.71 50,000,000 50,000,000
$49,000,000 principal
amount matures
March 30, 2023 7.46 49,000,000 49,000,000
93G0154 $20,000,000 principal
amount matures on
July 15, 2024 8.55 20,000,000 20,000,000
95G0090 $50,000,000 principal
amount matures on
June 13, 2025 7.50 50,000,000 50,000,000
$50,000,000 principal
amount matures on 50,000,000 50,000,000
March 1, 1999 5.72 ------------ ------------
$326,000,000 $326,000,000
============ ============
Payable to Associated Companies
- Working Capital Requirements $114,000,000
System Money Pool* ============
Other Indebtedness to each
affiliated interest.
National Fuel Gas Company $ 6,765,191
National Fuel Gas Supply
Corporation 6,739,593
Seneca Resources Corporation 3,392
Data-Track Account Services, 32,404
Inc. ------------
National Fuel Resources, Inc. (970)
------------
$ 13,539,610
============
<PAGE>
SCHEDULE A
Sheet 3 of 8
(j) Other Indebtedness
Other Long-Term Debt $ 430,285
Accounts Payable 39,147,736
Customer Deposits 4,287,077
Taxes Accrued 11,327,244
Tax Collections Payable 1,482,568
Interest Accrued (27,059)
Dividends Declared 9,106,000
Customers' Advances for Construction 1,643,713
Miscellaneous Current and
Accrued Liabilities 26,627,879
-----------
$94,025,443
===========
(k) Interest accrued during the year ended September 30, 1996 at
each of the several rates required by the terms of the
outstanding indebtedness.
Rate Amount
---- ------
Notes Payable 9.03% $ 257,606
Notes Payable 9.03 154,513
Notes Payable 9.00 173,250
Notes Payable 7.99 7,990,000
Notes Payable 6.54 457,800
Notes Payable 6.71 3,355,000
Notes Payable 7.46 3,655,400
Notes Payable 8.55 1,710,000
Notes Payable 7.50 3,750,000
Notes Payable 5.72 1,668,333
System Money Pool* * 3,620,199
Customer Deposits (Pennsylvania) ** 64,807
Customer Deposits (New York) *** 165,604
-----------
$27,022,512
===========
* The System Money Pool is an arrangement whereby National
Fuel Gas Company (National) raises all of the short-term
debt capital needed by certain of its subsidiaries, by
issuing commercial paper and/or bank notes. National then
lends the proceeds therefrom to such subsidiaries, at cost.
In addition, excess funds from participating subsidiaries
may be lent, through the System Money Pool, to other
participating subsidiaries. The subsidiaries participating
in the System Money Pool from time-to-time are National Fuel
Gas Distribution Corporation, National Fuel Gas Supply
Corporation, Seneca Resources Corporation, Highland Land and
Minerals, Inc., Leidy Hub Inc., Data-Track Account Services,
Inc., National Fuel Resources, Inc., and Horizon Energy
Development, Inc. Requests by participating subsidiaries
for short-term loans are met from Money Pool sources in the
following order: (1) surplus funds of any of the
subsidiaries; (2) surplus funds of National; and (3)
proceeds from National's sale of commercial paper and bank
borrowings. The interest rate applicable to all loans of
surplus funds through the Money Pool is the rate for
highgrade and unsecured 30-day commercial paper sold through
dealers by major corporations as quoted in The Wall Street
---------------
Journal. If external funds make up all of the funds
-------
available in the Money Pool, or when both surplus funds from
National and other participating subsidiary companies and
external funds are concurrently borrowed through the Money
Pool, the interest rate applicable to all such borrowings
and payable by borrowing subsidiary companies will be equal
to National's net cost for such external borrowings.
<PAGE>
SCHEDULE A
Sheet 4 of 8
** Residential Rate
October 1, 1994 - April 13, 1995 11.00%
April 14, 1995 - December 31, 1995 5.77%
January 1, 1996 - September 30, 1996 5.24%
Non Residential Rate
October 1, 1994 - September 26, 1995 9.00%
September 27, 1995 - September 30, 1996 6.00%
*** Residential and Non Residential Rates
October 1, 1994 - December 31, 1994 3.70%
January 1, 1995 - December 31, 1995 5.75%
January 1, 1996 - September 30, 1996 4.90%
(l) Rate and amount of dividends declared upon National Fuel Gas
Distribution Corporation Capital Stock and the amount of
dividends paid during the twelve months ending September 30,
1996:
Dividends Declared
------------------
Dividends
Rate Amount Paid
---- ------ ----
Common Stock $18,212 $36,424,000 $35,710,000
(m) (1) Contingent Assets None
Contingent Liabilities None
(2) Unpaid Cumulative Accrued Dividends None
(n) Analysis of Other Paid-In Capital as of
September 30, 1996
Allocated to National Fuel Gas
Distribution Corporation (PSC Case
26434) $ 607,184
Cancellation of Notes Payable to
National Fuel Gas Company 3,500,000
Donation Received from National Fuel Gas 117,492,500
Company ------------
$121,599,684
============
<PAGE>
SCHEDULE A
Sheet 5 of 8
(o) (1) Deferred Debits to be Amortized
Balance at September 30, 1996
NYPSC Assessment $ 674,132
Deferred Gas Costs (1,081,082)
Savings Power (591,442)
ULIEEP (159,345)
Unamortized Debt Expense 15,916,274
Take-or-Pay Charges-NY (3,622)
Take-or-Pay Charges-PA (404,942)
FASB 109 Asset - NY 56,147,452
FASB 109 Asset - PA 27,965,208
OPEB - NY (519,576)
OPEB - PA 66,740
Transition Costs - NY 10,203,371
Transition Costs - PA 4,824,152
Environmental Cleanup 7,696,692
TGX Litigation Payment 545,091
LIRA 31,513
(417,568)
NY Sales/Use Tax and Assessment ------------
$120,893,048
============
(2) Deferred Credits to be Amortized
Balance at September 30, 1996
FASB 109 Liability $20,808,698
Accrued Transition Costs - New York 6,339,911
Accrued Transition Costs - 3,255,837
Pennsylvania
Environmental Cleanup 8,706,243
Satellite Dispatch System Liability 279,398
AM/FM/GIS Liability 210,521
-----------
$39,600,608
===========
<PAGE>
SCHEDULE A
Sheet 6 of 8
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
BALANCE SHEET
-------------
AT SEPTEMBER 30, 1996
---------------------
(p)
Assets and Other Debits
-----------------------
Utility Plant
-------------
Utility Plant (101-107, 114, 117,
118.1, 118.2, 120) $1,138,852,743
Less: Accumulated Provision for
Depreciation, Amortization and
Depletion (108-113, 115, 119.1, (283,771,333)
119.2, 120.5) --------------
855,081,410
Total Net Utility Plant --------------
Other Property and Investments
------------------------------
Non-Utility Property (121) 82,344
Less: Accumulated Provision for
Depreciation and Amortization (122) (2,207)
Other Investments (124) 1,088
9,104,916
Other Special Funds (128) --------------
Total Other Property and 9,186,141
Investments --------------
Current and Accrued Assets
--------------------------
Cash (131) 3,380,521
Working Funds (135) 658,800
Accounts Receivable (142, 143) 71,730,793
Less: Accumulated Provision for
Uncollectible Accounts (144) (6,708,329)
Accounts Receivable from Associated
Companies (146) 9,127,317
Materials and Supplies (150) 7,702,569
Gas Stored Underground-Current (164.1) 34,727,086
Prepayments (165) 17,539,466
Interest and Dividends Receivable
(171) 163,660
20,777,555
Accrued Utility Revenues (173) --------------
159,099,438
Total Current and Accrued Assets --------------
Deferred Debits
---------------
Preliminary Survey and Investigation
Charges (183) 213,429
Clearing Accounts (184) (731,270)
Miscellaneous Deferred Debits (186, 182.3) 140,315,840
Investment in Research and Development
(188) 59,239
31,005
Accumulated Deferred Income Taxes (190) --------------
139,888,243
Total Deferred Debits --------------
$1,163,255,232
Total Assets and Other Debits ==============
<PAGE>
SCHEDULE A
Sheet 7 of 8
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
BALANCE SHEET
-------------
AT SEPTEMBER 30, 1996
---------------------
Liabilities and Other Credits
-----------------------------
Proprietary Capital
-------------------
Common Stock Issued (201) $ 59,170,600
Premium on Capital Stock (207) 68,500
Other Paid-In Capital (208-211) 121,599,684
Retained Earnings (215, 216) 219,745,767
------------
Total Proprietary Capital 400,584,551
------------
Long-Term Debt
--------------
Advances from Associated Companies (223) 326,000,000
Other Long-Term Debt (224) 430,285
------------
Total Long-Term Debt 326,430,285
------------
Current and Accrued Liabilities
-------------------------------
Accounts Payable (232) 39,147,736
Notes Payable to Associated Companies (233) 114,000,000
Accounts Payable to Associated Companies 13,539,610
(234)
Customer Deposits (235) 4,287,077
Taxes Accrued (236) 11,327,244
Interest Accrued (237) (27,059)
Dividends Declared (238) 9,106,000
Tax Collections Payable (241) 1,482,568
Miscellaneous Current and Accrued Liabilities 26,627,879
(242) ------------
Total Current and Accrued Liabilities 219,491,055
------------
Deferred Credits
----------------
Customer Advances for Construction (252) 1,643,713
Other Deferred Credits (253, 254) 44,272,249
Accumulated Deferred Investment Tax 12,310,895
Credits (255)
Accumulated Deferred Income Taxes - 84,032,749
Liberalized Depreciation (282)
Accumulated Deferred Income Taxes-Other 64,155,063
(283) --------------
Total Deferred Credits 206,414,669
--------------
Operating Reserves
------------------
Injury and Damages and OPEB and Pension 4,664,940
Reserves (262)
Pensions and Benefits Reserves (263) 5,669,732
--------------
Total Operating Reserves 10,334,672
--------------
Total Liabilities and Other Credits $1,163,255,232
==============
<PAGE>
SCHEDULE A
Sheet 8 of 8
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
INCOME STATEMENT
----------------
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
----------------------------------------------
Utility Operating Income
------------------------
Operating Revenues (400) $954,325,687
------------------------ ------------
Operating Expenses
------------------
Operating Expense (401) 702,774,493
Maintenance Expense (402) 17,878,602
Depreciation Expense (403) 31,491,117
Taxes Other Than Income Taxes (408.1) 85,947,339
Income Taxes (409.1, 410.1, 411.1, 32,013,962
411.4, 411.8) ------------
Total Operating Expenses 870,105,513
------------
Total Utility Operating Income 84,220,174
------------
Other Income
------------
Income from Merchandising, Jobbing and 45,979
Contract Work (415, 416)
Nonoperating Rental Income (418) 2,100
Interest and Dividend Income (419) 314,276
Allowance for Funds Used During 278,126
Construction (419.1)
Miscellaneous Nonoperating Income (421) 10,869
------------
Total Other Income 651,350
------------
Other Income Deductions
-----------------------
Loss on Disposition of Property (421.2) 676
Miscellaneous Income Deductions (426) 961,800
------------
Total Other Income Deductions 962,476
------------
Taxes - Other Income and Deductions
-----------------------------------
Taxes Other Than Income Taxes (408.2) 14,540
Income Taxes (409.2, 410.2, 411.2, (784,981)
411.5, 420) ------------
Total Taxes-Other Income and (770,441)
Deductions ------------
Net Other Income and Deductions 459,315
------------
Interest Charges
----------------
Amortization of Debt Discount and 1,495,443
Expense (428)
Interest on Debt to Associated 26,794,751
Companies (430)
Other Interest Expense (431) 5,154,194
------------
Total Interest Charges 33,444,388
------------
Net Income $ 51,235,101
---------- ============
<PAGE>
SCHEDULE B
Sheet 1 of 2
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
BALANCE SHEET AT SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1996
----------------------------------------------------------
(ITEM (a) OF SECTION 37.6 OF RULES OF PROCEDURE
-----------------------------------------------
OF THE PUBLIC SERVICE COMMISSION)
---------------------------------
Assets and Other
---------------- September 30, September 30,
Debits 1994 1996
------ ---- ----
Utility Plant
-------------
Utility Plant (101-
107, 114, 117,
118.1, 118.2, 120) $1,036,145,229 $1,138,852,743
Less: Accumulated
Provision for
Depreciation,
Depletion and
Amortization
(108-113, 115,
119.1, 119.2, (248,431,038) (283,771,333)
120.5) -------------- --------------
Total Net Utility 787,714,191 855,081,410
Plant -------------- --------------
Other Property and
------------------
Investments
-----------
Non-Utility
Property (121) 80,137 82,344
Less: Accumulated
Provision for
Depreciation and
Amortization
(122) - (2,207)
Other Investments
(124) 1,088 1,088
Other Special Funds 7,402,579 9,104,916
(128) -------------- --------------
Total Other
Property and 7,483,804 9,186,141
Investments -------------- --------------
Current and Accrued Assets
--------------------------
Cash (131) 2,692,278 3,380,521
Working Funds (135) 839,675 658,800
Accounts Receivable
(142, 143) 64,856,199 71,730,793
Less: Accumulated
Provision for
Uncollectible
Accounts (144) (4,798,159) (6,708,329)
Accounts Receivable
from Assoc.
Companies (146) 14,217,355 9,127,317
Materials and
Supplies (150) 8,321,871 7,702,569
Gas Stored
Underground
(164.1) 31,899,894 34,727,086
Prepayments (165) 14,412,657 17,539,466
Interest and
Dividends
Receivable (171) 2,332,793 163,660
Accrued Utility 17,310,686 20,777,555
Revenues (173) -------------- --------------
Total Current and 152,085,249 159,099,438
Accrued Assets -------------- --------------
Deferred Debits
---------------
Preliminary Survey
and Investigation
Charges (183) 102,908 213,429
Clearing Accounts
(184) 513,370 (731,270)
Miscellaneous
Deferred Debits
(186, 182.3) 151,995,130 140,315,840
Investment in
Research and 59,239
Development (188) (295,800) --------------
Accumulated
Deferred Income 130,125 31,005
Taxes (190) -------------- --------------
Total Deferred 152,445,733 139,888,243
Debits -------------- --------------
Total Assets and $1,099,728,977 $1,163,255,232
Other Debits ============== ==============
<PAGE>
SCHEDULE B
Sheet 2 of 2
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
BALANCE SHEET AT SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1996
----------------------------------------------------------
(ITEM (a) OF SECTION 37.6 OF RULES OF PROCEDURE
-----------------------------------------------
OF THE PUBLIC SERVICE COMMISSION)
---------------------------------
September 30, September 30
Liabilities and Other Credits 1994 1996
----------------------------- ---- ----
Proprietary Capital
-------------------
Common Stock Issued (201) $ 59,170,600 $ 59,170,600
Premium on Capital Stock (207) 68,500 68,500
Other Paid-In Capital (208,211) 121,599,684 121,599,684
Retained Earnings (215, 216) 206,799,499 219,745,767
------------- -------------
Total Proprietary Capital 387,638,283 400,584,551
------------- -------------
Long-Term Debt
--------------
Advances from Associated Companies
(223) 320,000,000 326,000,000
Other Long-Term Debt (224) 496,805 430,285
------------- -------------
Total Long-Term Debt 320,496,805 326,430,285
------------- -------------
Current and Accrued Liabilities
-------------------------------
Accounts Payable (232) 41,380,871 39,147,736
Notes Payable - Associated
Companies (233) 70,000,000 114,000,000
Accounts Payable to Associated
Companies (234) 19,575,036 13,539,610
Customer Deposits (235) 4,385,656 4,287,077
Taxes Accrued (236) 7,199,707 11,327,244
Interest Accrued (237) 157,707 (27,059)
Dividends Declared (238) 7,468,000 9,106,000
Tax Collections Payable (241) 170,754 1,482,568
Miscellaneous Current and Accrued
Liabilities (242) 23,809,657 26,627,879
------------- -------------
Total Current and Accrued
Liabilities 174,147,388 219,491,055
------------- -------------
Deferred Credits
----------------
Customer Advances for Construction
(252) 1,360,979 1,643,713
Other Deferred Credits (253, 254) 41,113,148 44,272,249
Accumulated Deferred Investment Tax
Credits (255) 13,611,128 12,310,895
Accumulated Deferred Income Taxes -
Liberalized Depreciation (282) 73,465,475 84,032,749
Accumulated Deferred Income Taxes -
Other (283) 82,831,388 64,155,063
------------- -------------
Total Deferred Credits 212,382,118 206,414,669
------------- -------------
Operating Reserves
------------------
Injuries and Damages and OPEB and
Pension
Pension Reserves (262) - 4,664,940
Pensions and Benefits Reserve (263) 5,064,383 5,669,732
------------- -------------
Total Operating Reserves 5,064,383 10,334,672
------------- -------------
Total Liabilities and Other
Credits $1,099,728,977 $1,163,255,232
============= =============
<PAGE>
SCHEDULE C
Sheet 1 of 4
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
STATEMENT SHOWING THE BALANCES IN OPERATING PROPERTY ACCOUNTS
-------------------------------------------------------------
AT SEPTEMBER 30, 1995
---------------------
THE ORIGINAL COST OF PROPERTY ADDED, CREDITS FOR PROPERTY RETIRED,
------------------------------------------------------------------
AND ALL OTHER DEBITS AND CREDITS TO EACH SUB-ACCOUNT FOR THE PERIOD
-------------------------------------------------------------------
SEPTEMBER 30, 1994 TO SEPTEMBER 30, 1995 AND THE BALANCES
---------------------------------------------------------
IN OPERATING PROPERTY AT SEPTEMBER 30, 1995
-------------------------------------------
(ITEMS (b) to (e) RESPECTIVELY OF SECTION 37.6 OF THE RULES OF PROCEDURE
------------------------------------------------------------------------
OF THE PUBLIC SERVICE COMMISSION)
---------------------------------
Minor
Sept. 30, Reclass
1994 10/1/94 Additions
---- ------- ---------
UTILITY PLANT (101, 106)
-------------
Intangible Plant
----------------
301. Organization $ 296,223 $ 0 $ 0
22,858 0 8,422
302. Franchises and Consents ----------- --- -----------
319,081 0 8,422
Total Intangible Plant ----------- --- -----------
Natural Gas Production & Gathering
----------------------------------
Plant
-----
325.2 Producing Leaseholds 184,538 0 0
325.4 Rights of Way 401,676 0 17,439
325.5 Other Land and Land Rights 40,268 0 0
327. Field Compressor Station
Structures 178,880 0 0
328. Field Measuring and
Regulating Station
Structures 25,220 0 0
329. Other Structures 3,317 0 0
330. Producing Gas Wells-Well
Constructions 343,799 0 0
331. Producing Gas Wells-Well
Equipment 66,630 0 0
332. Field Lines 11,391,693 0 843
333. Field Compressor Station
Equipment 1,492,551 0 98,620
334. Field Measuring and
Regulating Station
Equipment 5,637,488 0 206,087
336. Purification Equipment 36,826 0 0
337. Other Equipment 28,336 0 0
338. Unsuccessful Exploration and 1,117,573 0 0
Development Costs ----------- --- -----------
Total Natural Gas
Production and 20,948,795 0 322,989
Gathering Plant ----------- --- -----------
Transmission Plant
------------------
365.1 Land and Land Rights 199,087 0 (40,192)
365.2 Rights of Way 1,019,374 0 (119,785)
366.2 Structures and Improvements 330,921 0 2,947
366.3 Other Structures 4,724 0 0
367. Mains 35,906,503 0 (1,464,976)
369. Measuring and Regulating 5,089,140 0 449,366
Station Equipment ----------- --- -----------
$42,549,749 $ 0 $(1,172,640)
Total Transmission Plant ----------- --- -----------
Adjustments Sept. 30,
Retirements & Transfers 1995
----------- ----------- ---------
UTILITY PLANT (101, 106)
-------------
Intangible Plant
----------------
301. Organization $ 0 $ 0 $ 236,223
0 0 31,280
302. Franchises and Consents --------- --- -----------
0 0 327,503
Total Intangible Plant --------- --- -----------
Natural Gas Production &
------------------------
Gathering Plant
---------------
325.2 Producing Leaseholds 0 0 184,538
325.4 Rights of Way 0 0 419,115
325.5 Other Land and Land
Rights 0 0 40,268
327. Field Compressor Station
Structures 0 0 178,880
328. Field Measuring and
Regulating Station
Structures 0 0 25,220
329. Other Structures 0 0 3,317
330. Producing Gas Wells-Well
Constructions 0 0 343,799
331. Producing Gas Wells-Well
Equipment 0 0 66,630
332. Field Lines (2,472) 0 11,390,064
333. Field Compressor Station
Equipment 0 0 1,591,171
334. Field Measuring and
Regulating Station
Equipment (100,073) 0 5,743,502
336. Purification Equipment 0 0 36,826
337. Other Equipment 0 0 28,336
338. Unsuccessful Exploration 0 0 1,117,573
and Development Costs --------- --- -----------
Total Natural Gas
Production and (102,545) 0 21,169,239
Gathering Plant --------- --- -----------
Transmission Plant
------------------
365.1 Land and Land Rights 0 0 158,895
365.2 Rights of Way 0 0 899,589
366.2 Structures and
Improvements (1,288) 0 332,580
366.3 Other Structures (577) 0 4,147
367. Mains (29,765) 0 34,411,762
369. Measuring and Regulating (110,926) 0 5,427,580
Station Equipment --------- --- -----------
Total Transmission $(142,556) $ 0 $41,234,553
Plant --------- --- -----------
( ) Indicates decrease
<PAGE>
SCHEDULE C
Sheet 2 of 4
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
STATEMENT SHOWING THE BALANCES IN OPERATING PROPERTY ACCOUNTS
-------------------------------------------------------------
AT SEPTEMBER 30, 1995
---------------------
THE ORIGINAL COST OF PROPERTY ADDED, CREDITS FOR PROPERTY RETIRED,
-------------------------------------------------------------------
AND ALL OTHER DEBITS AND CREDITS TO EACH SUB-ACCOUNT FOR THE PERIOD
------------------------------------------------------------------
SEPTEMBER 30, 1994 TO SEPTEMBER 30, 1995 AND THE BALANCES
---------------------------------------------------------
IN OPERATING PROPERTY AT SEPTEMBER 30, 1995
-------------------------------------------
(ITEMS (b) to (e) RESPECTIVELY OF SECTION 37.6 OF THE RULES OF PROCEDURE
------------------------------------------------------------------------
OF THE PUBLIC SERVICE COMMISSION)
---------------------------------
Minor
Sept. 30, Reclass
1994 10/1/94 Additions
---- ------- ---------
Distribution Plant
------------------
374.0 Land and Land Rights $ 8,577,199 $(485) $ 517,219
375.0 Structures and Improvements 6,033,879 0 949,838
376.0 Mains 546,001,669 491 34,698,369
377.0 Compressor Station
Equipment 1,120,777 0 0
378.0 Measuring and Regulating
Station Equipment 13,378,573 0 1,226,508
380.0 Services 275,530,758 0 21,952,458
381.0 Meters 32,156,126 0 1,320,752
382.0 Meter Installations 7,414,192 0 293,517
383.0 House Regulators 720,094 0 (16,583)
384.0 House Regulator
Installations 1,851,975 (6) 79,290
385.0 Industrial Measuring
and Regulating
Station Equipment 12,515,315 0 1,708,839
387.0 Other Equipment 1,086,505 0 0
------------- --- ------------
Total Distribution Plant 906,387,062 0 62,730,207
------------- --- ------------
General Plant
-------------
389.0 Land and Land Rights 1,277,535 0 (151,472)
390.0 Structures and Improvements 28,850,329 0 1,206,187
391.0 Office Furniture and
Equipment 7,666,089 0 275,678
392.0 Transportation Equipment 353,328 0 0
393.0 Stores Equipment 106,110 0 0
394.0 Tools, Shop and Garage
Equipment 9,537,289 0 1,110,692
395.0 Laboratory Equipment 40,878 0 0
396.0 Power Operated Equipment 1,222,727 0 0
397.0 Communication Equipment 3,996,250 0 103,464
398.0 Miscellaneous Equipment 148,911 0 0
Total General Plant 53,199,446 0 2,544,549
-------------- --- -----------
TOTAL GAS PLANT $1,023,404,133 $ 0 $64,433,527
============== === ===========
Adjustments Sept. 30,
Retirements & Transfers 1995
----------- ----------- ----
Distribution Plant
------------------
374.0 Land and Land
Rights $ (6,629) $ 0 $ 9,087,304
375.0 Structures and
Improvements (32,466) 23,162 6,974,413
376.0 Mains (2,457,512) 4,424 578,247,441
377.0 Compressor Station
Equipment 0 0 1,120,777
378.0 Measuring and
Regulating
Station
Equipment (194,825) 3,014 14,413,270
380.0 Services (2,938,877) 0 294,544,339
381.0 Meters (1,607,140) 0 31,869,738
382.0 Meter
Installations (108,962) 0 7,598,747
383.0 House Regulators (1,204) 0 702,307
384.0 House Regulator
Installations (18,731) 0 1,912,528
385.0 Industrial
Measuring and Regulating
Station Equipment (82,521) 0 14,141,633
(25,430) 0 1,061,075
387.0 Other Equipment ----------- ------- --------------
Total
Distribution (7,474,297) 30,600 961,673,572
Plant ----------- ------- --------------
General Plant
-------------
389.0 Land and Land
Rights 0 0 1,126,063
390.0 Structures and
Improvements (912,849) 0 29,143,667
391.0 Office Furniture
and
Equipment (135,700) 0 7,806,067
392.0 Transportation
Equipment (19,981) 0 333,347
393.0 Stores Equipment (705) 0 105,405
394.0 Tools, Shop and
Garage
Equipment (140,271) 0 10,507,710
395.0 Laboratory
Equipment (2,579) 0 38,299
396.0 Power Operated
Equipment (52,217) 0 1,170,510
397.0 Communication
Equipment (13,851) 0 4,085,863
398.0 Miscellaneous (1,821) 0 147,090
Equipment ----------- ------- --------------
Total General (1,279,974) 0 54,464,021
Plant ----------- ------- --------------
$(8,999,372) $30,600 $1,078,868,888
TOTAL GAS PLANT =========== ======= ==============
( ) Indicates decrease.
<PAGE>
SCHEDULE C
Sheet 3 of 4
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
STATEMENT SHOWING THE BALANCES IN OPERATING PROPERTY ACCOUNTS
-------------------------------------------------------------
AT SEPTEMBER 30, 1996
---------------------
THE ORIGINAL COST OF PROPERTY ADDED, CREDITS FOR PROPERTY RETIRED,
------------------------------------------------------------------
AND ALL OTHER DEBITS AND CREDITS TO EACH SUB-ACCOUNT FOR THE PERIOD
-------------------------------------------------------------------
SEPTEMBER 30, 1995 TO SEPTEMBER 30, 1996 AND THE BALANCES IN OPERATING
----------------------------------------------------------------------
PROPERTY AT SEPTEMBER 30, 1996 (ITEMS (b) to (e) RESPECTIVELY OF
----------------------------------------------------------------
SECTION 37.6 OF THE RULES OF PROCEDURE OF THE PUBLIC SERVICE COMMISSION)
------------------------------------------------------------------------
<TABLE>
<CAPTION>
Minor
Sept. 30, Reclass Adjustments Sept. 30,
1995 10/1/95 Additions Retirements & Transfers 1996
---- ------- --------- ----------- ----------- ----
UTILITY PLANT (101, 106)
- -------------
Intangible Plant
- ----------------
<S> <C> <C> <C> <C> <C> <C>
301 Organization $ 296,223 $ 0 $ 0 $ 0 $ 0 $ 296,223
302 Franchises and Consents 31,280 0 0 0 0 31,280
----------- -------- --------- --------- ----------- -----------
Total Intangible Plant 327,503 0 0 0 0 327,503
----------- -------- --------- --------- ----------- -----------
Natural Gas Production & Gathering Plant
- ----------------------------------------
325.2 Producing Leaseholds 184,538 $ 0 0 0 0 184,538
325.4 Rights of Way 419,115 0 0 0 0 419,115
325.5 Other Land and Land Rights 40,268 0 0 0 0 40,268
327 Field Compressor Station Structures 178,880 0 0 0 0 178,880
328 Field Measuring and Regulating Station 25,220 0 2,014 0 0 27,234
329 Other Structures 3,317 0 0 0 0 3,317
330 Producing Gas Wells-Well Construction 343,799 0 0 0 0 343,799
331 Producing Gas Wells-Well Equipment 66,630 0 0 0 0 66,630
332 Field Lines 11,390,064 0 7,791 (23,627) 0 11,374,228
333 Field Compressor Station Equipment 1,591,171 0 14,449 (393,669) 0 1,211,951
334 Field Measuring and Regulating Station Equipment 5,743,502 0 125,771 (254,372) 1,292 5,616,193
336 Purification Equipment 36,826 0 0 0 0 36,826
337 Other Equipment 28,336 0 0 0 0 28,336
338 Unsuccessful Exploration and Development Costs 1,117,573 0 0 0 0 1,117,573
----------- -------- --------- --------- ----------- -----------
Total Natural Gas Production and
Gathering Plant 21,169,239 0 150,025 (671,668) 1,292 20,648,888
----------- -------- --------- --------- ----------- -----------
Transmission Plant
- ------------------
365.1 Land and Land Rights 158,895 0 16,805 0 0 175,700
365.2 Rights of Way 899,589 0 9,305 0 0 908,894
366.2 Structures and Improvements 332,580 0 30,790 (15,762) 0 347,608
366.3 Other Structures 4,147 0 0 0 0 4,147
367 Mains 34,411,762 0 582,476 (66,357) 0 34,927,881
369 Measuring and Regulating Station Equipment 5,427,580 0 153,793 (362,969) 0 5,218,404
----------- -------- --------- --------- ----------- -----------
Total Transmission Plant $41,234,553 $ 0 $ 793,169 $(445,088) $ 0 $41,582,634
----------- -------- --------- --------- ----------- -----------
</TABLE>
( ) Indicates Decrease
<PAGE>
SCHEDULE C
Sheet 4 of 4
<TABLE>
<CAPTION>
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
STATEMENT SHOWING THE BALANCES IN OPERATING PROPERTY ACCOUNTS AT SEPTEMBER 30, 1996
-----------------------------------------------------------------------------------
THE ORIGINAL COST OF PROPERTY ADDED, CREDITS FOR PROPERTY RETIRED, AND ALL OTHER
--------------------------------------------------------------------------------
DEBITS AND CREDITS TO EACH SUB-ACCOUNT FOR THE PERIOD SEPTEMBER 30, 1995 TO SEPTEMBER 30, 1996 AND THE BALANCES
---------------------------------------------------------------------------------------------------------------
IN OPERATING PROPERTY AT SEPTEMBER 30, 1996
-------------------------------------------
(ITEMS (b) to (e) RESPECTIVELY OF SECTION 37.6 OF THE RULES OF PROCEDURE
------------------------------------------------------------------------
OF THE PUBLIC SERVICE COMMISSION)
---------------------------------
Minor
Sept. 30, Reclass
1995 10/1/95 Additions Retirements
---- ------- --------- -----------
Distribution Plant
- ------------------
<S> <C> <C> <C> <C>
374 Land and Land Rights $ 9,087,304 0 584,635 $ (12,828)
375 Structures and Improvements 6,974,413 0 140,114 (8,313)
376 Mains 578,247,441 0 27,555,446 (2,359,825)
377 Compressor Station Equipment 1,120,777 0 133,334 0
378 Measuring and Regulating Station
Equipment 14,413,270 0 1,457,948 (267,597)
380 Services 294,544,339 0 22,451,528 (3,242,254)
381 Meters 31,869,738 0 576,450 (2,371,520)
382 Meter Installations 7,598,747 0 274,942 (109,131)
383 House Regulators 702,307 0 0 (71,570)
384 House Regulator Installations 1,912,528 0 109,029 (14,417)
385 Industrial Measuring and Regulating
Station Equipment 14,141,633 0 1,761,496 (197,433)
387 Other Equipment 1,061,075 0 0 (30,948)
------------ ----------- ------------ ------------
Total Distribution Plant 961,673,572 0 55,044,922 (8,685,836)
------------ ----------- ------------ ------------
389 Land and Land Rights 1,126,063 0 26,130 (71,688)
390 Structures and Improvements 29,143,667 0 1,333,315 (564,235)
391 Office Furniture and Equipment 7,806,067 0 33,974 (193,887)
392 Transportation Equipment 333,347 0 0 0
393 Stores Equipment 105,405 0 0 0
394 Tools, Shop and Garage Equipmen 10,507,710 0 416,614 (52,397)
395 Laboratory Equipment 38,299 0 0 (185)
396 Power Operated Equipment 1,170,510 0 2,995 (3,515)
397 Communication Equipment 4,085,863 0 157,474 (359,391)
398 Miscellaneous Equipment 147,090 0 0 (746)
------------ ----------- ------------ ------------
Total General Plant 54,464,021 0 1,970,502 (1,246,044)
------------ ----------- ------------ ------------
TOTAL GAS PLANT $1,078,868,888 0 $ 57,958,618 $(11,048,636)
============ =========== ============ ============
</TABLE>
Adjustments Sept. 30,
& Transfers 1996
----------- ----
Distribution Plant
- ------------------
374 Land and Land Rights $ 0 $ 9,659,111
375 Structures and Improvements 0 7,106,214
376 Mains 313 603,443,375
377 Compressor Station Equipment 0 1,254,111
378 Measuring and Regulating Station
Equipment 0 15,603,621
380 Services 0 313,753,613
381 Meters 0 30,074,668
382 Meter Installations 0 7,764,558
383 House Regulators 0 630,737
384 House Regulator Installations 0 2,007,140
385 Industrial Measuring and Regulati
Station Equipment 0 15,705,696
387 Other Equipment 0 1,030,127
-------------- --------------
Total Distribution Plant 313 1,008,032,971
-------------- --------------
General Plant
- --------------
389 Land and Land Rights 0 1,080,505
390 Structures and Improvements 0 29,912,747
391 Office Furniture and Equipment 0 7,646,154
392 Transportation Equipment 0 333,347
393 Stores Equipment 0 105,405
394 Tools, Shop and Garage Equipmen 0 10,871,927
395 Laboratory Equipment 0 38,114
396 Power Operated Equipment 0 1,169,990
397 Communication Equipment 0 3,883,946
398 Miscellaneous Equipment 0 146,344
-------------- --------------
Total General Plant 0 55,188,479
-------------- --------------
TOTAL GAS PLANT $ 1,605 $1,125,780,475
============== ==============
( ) Indicates Decrease
<PAGE>
SCHEDULE D
Sheet 1 of 4
NATIONAL FUEL GAS DISTRIBUTION CORPORATION ANALYSIS OF
------------------------------------------------------
RETIREMENTS SHOWING BOOK COST OF EACH CREDIT TO OPERATING
--------------------------------------------------------
PROPERTY ACCOUNTS, DEBIT TO DEPRECIATION RESERVE OR OTHER
---------------------------------------------------------
ACCOUNT, COST OF REMOVAL, AND SALVAGE FOR THE
---------------------------------------------
PERIOD SEPTEMBER 30, 1994 TO SEPTEMBER 30, 1995
-----------------------------------------------
(ITEM (f) OF SECTION 37.6 OF RULES OF PROCEDURE
----------------------------------------------
OF THE PUBLIC SERVICE COMMISSION)
--------------------------------
Book Cost of
Property
Retired
Charged to
Depreciation Cost of
Reserve Removal Salvage
------------ ------- -------
101. Gas Plant in Service
--------------------
Natural Gas Production and
--------------------------
Gathering Plant
---------------
332. Field Lines $ 2,472 $ 347 $ -
334. Field Measuring and
Regulating Station 100,072 27,831 7,334
Equipment ---------- ---------- -------
Total Natural Gas
Production and Gathering 102,544 28,178 7,334
Plant ---------- ---------- -------
Transmission Plant
------------------
366.2 Measuring and Regulating
Station Structures 1,288 - -
366.3 Other Structures 577 - -
367. Mains 29,764 12,657 5,195
369. Measuring and Regulating 110,927 23,298 -
Station Equipment ---------- ---------- -------
Total Transmission Plant 142,556 35,955 5,195
---------- ---------- -------
Distribution Plant
------------------
374. Land and Land Rights 6,629 8,136 11,597
375. Structure and Improvements 32,466 353,130 -
376. Mains 2,457,513 1,075,883 1,422
378. Measuring and Regulating
Station Equipment -
General 194,826 121,821 2,680
380. Services 2,938,877 1,308,809 -
381. Meters 1,607,140 - 3,507
382. Meter Installations 108,963 - -
383. House Regulators 1,204 - -
384. House Regulator
Installations 18,732 - -
385. Industrial Measuring and
Regulating Station
Equipment 82,522 26,397 -
387. Other Equipment 25,430 - -
---------- ---------- -------
Total Distribution Plant $7,474,302 $2,894,176 $19,206
---------- ---------- -------
<PAGE>
SCHEDULE D
Sheet 2 of 4
NATIONAL FUEL GAS DISTRIBUTION CORPORATION ANALYSIS OF
------------------------------------------------------
RETIREMENTS SHOWING BOOK COST OF EACH CREDIT TO OPERATING
--------------------------------------------------------
PROPERTY ACCOUNTS, DEBIT TO DEPRECIATION RESERVE OR OTHER
---------------------------------------------------------
ACCOUNT, COST OF REMOVAL, AND SALVAGE FOR THE
---------------------------------------------
PERIOD SEPTEMBER 30, 1994 TO SEPTEMBER 30, 1995
-----------------------------------------------
(ITEM (f) OF SECTION 37.6 OF RULES OF PROCEDURE
----------------------------------------------
OF THE PUBLIC SERVICE COMMISSION)
--------------------------------
Book Cost of
Property
Retired
Charged to
Depreciation Cost of
Reserve Removal Salvage
------------ -------- --------
101. Gas Plant in Service (continued)
--------------------------------
General Plant
-------------
390. Structures and $912,849 $805 $ -
Improvements
391. Office Furniture and 135,700 - 375
Equipment
392. Transportation Equipment 19,981 - -
393. Stores Equipment 705 - -
394. Tools, Shop and Garage 140,271 440 17,927
Equipment
395. Laboratory Equipment 2,579 - 378
396. Power Operated Equipment 52,217 - -
397. Communication Equipment 13,851 - -
398. Miscellaneous Equipment 1,821 - -
---------- ---------- ------
Total General Plant 1,279,974 1,245 18,680
---------- ---------- ------
Total Gas Plant in $8,999,376 $2,959,554 $50,415
Service ========== ========== =======
<PAGE>
SCHEDULE D
Sheet 3 of 4
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
ANALYSIS OF RETIREMENTS SHOWING BOOK COST OF EACH CREDIT
--------------------------------------------------------
TO OPERATING PROPERTY ACCOUNTS, DEBIT TO DEPRECIATION RESERVE OR
----------------------------------------------------------------
OTHER ACCOUNT, COST OF REMOVAL, AND SALVAGE
-------------------------------------------
FOR THE PERIOD SEPTEMBER 30, 1995 TO SEPTEMBER 30, 1996
--------------------------------------------------------
(ITEM (f) OF SECTION 37.6 OF RULES OF PROCEDURE OF
--------------------------------------------------
THE PUBLIC SERVICE COMMISSION)
------------------------------
Book Cost of
Property
Retired
Charged to
Depreciation Cost of
Reserve Removal Salvage
------------ ------- -------
101. Gas Plant in Service
--------------------
Natural Gas Production and
--------------------------
Gathering Plant
---------------
332. Field Lines $ 23,627 $ 3,783 $ -
333. Field Compressor Station
Equipment 393,669 243 -
334. Field Measuring and
Regulating Station 254,372 96,309 3,187
Equipment ---------- ---------- -------
Total Natural Gas
Production and Gathering 671,668 100,335 3,187
Plant ---------- ---------- -------
Transmission Plant
------------------
366.2 Measuring and Regulating
Station Structures 15,762 - -
367. Mains 66,357 14,794 11,524
369. Measuring and Regulating 362,970 39,601 -
Station Equipment ---------- ---------- -------
Total Transmission Plant 445,089 54,395 11,524
---------- ---------- -------
Distribution Plant
------------------
374. Land and Land Rights 12,828 1,340 14,285
375. Structure and Improvements 8,314 4,879 -
376. Mains 2,359,825 1,054,403 24,722
378. Measuring and Regulating
Station Equipment -
General 267,597 83,644 -
380. Services 3,242,254 1,190,776 -
381. Meters 2,371,520 - 634
382. Meter Installations 109,131 - -
383. House Regulators 71,570 - -
384. House Regulator
Installations 14,417 - -
385. Industrial Measuring and
Regulating Station
Equipment 197,434 85,012 -
387. Other Equipment 30,948 - 2,146
---------- ---------- -------
Total Distribution Plant $8,685,838 $2,420,054 $41,787
---------- ---------- -------
<PAGE>
SCHEDULE D
Sheet 4 of 4
NATIONAL FUEL GAS DISTRIBUTION CORPORATION ANALYSIS OF
------------------------------------------------------
RETIREMENTS SHOWING BOOK COST OF EACH CREDIT TO OPERATING
--------------------------------------------------------
PROPERTY ACCOUNTS, DEBIT TO DEPRECIATION RESERVE OR OTHER
---------------------------------------------------------
ACCOUNT, COST OF REMOVAL, AND SALVAGE FOR THE
---------------------------------------------
PERIOD SEPTEMBER 30, 1995 TO SEPTEMBER 30, 1996
-----------------------------------------------
(ITEM (f) OF SECTION 37.6 OF RULES OF PROCEDURE
----------------------------------------------
OF THE PUBLIC SERVICE COMMISSION)
--------------------------------
Book Cost of
Property
Retired
Charged to
Depreciation Cost of
Reserve Removal Salvage
------------ -------- --------
101. Gas Plant in Service (continued)
--------------------------------
General Plant
-------------
389. Land and Land Rights $ 71,688 $ 1,949 $ 40,000
390. Structures and 564,235 6,119 277,006
Improvements
391. Office Furniture and 193,887 - 50
Equipment
394. Tools, Shop and Garage 52,397 4,466 3,356
Equipment
395. Laboratory Equipment 185 - -
396. Power Operated Equipment 3,515 - 308
397. Communication Equipment 359,391 - -
398. Miscellaneous Equipment 746 - -
---------- ---------- -------
Total General Plant 1,246,044 12,728 320,720
---------- ---------- -------
Total Gas Plant in $11,048,639 $2,587,512 $377,218
Service ========== ========== ========
<PAGE>
SCHEDULE E
Sheet 1 of 1
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
ANALYSIS OF CREDITS TO DEPRECIATION RESERVE AND
-----------------------------------------------
CONTRA CHARGES TO EXPENSE AND OTHER ACCOUNTS
--------------------------------------------
(ITEM (g) OF SECTION 37.6 OF RULES OF PROCEDURE
-----------------------------------------------
OF THE PUBLIC SERVICE COMMISSION)
---------------------------------
Fiscal Two-Year
Year Total
------ --------
ACCRUALS CHARGED TO:
-------------------
403. Depreciation Expense
--------------------
September 30, 1994 - September 30, 1995 $30,053,300
September 30, 1995 - September 30, 1996 31,492,625 $61,545,925
----------- ===========
184. Clearing Accounts
-----------------
September 30, 1994 - September 30, 1995 $ (870)
September 30, 1995 - September 30, 1996 (1,508) $ (2,378)
----------- ===========
OTHER CREDITS:
-------------
Plant Reserve Adjustments
-------------------------
September 30, 1994 - September 30, 1995 $ (30,600)
September 30, 1995 - September 30, 1996 (3,812) $ (34,412)
---------- ==========
<PAGE>
SCHEDULE F
Page 1 of 1
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
REIMBURSEMENT MARGIN
--------------------
FOR THE PERIOD SEPTEMBER 30, 1994 THROUGH SEPTEMBER 30, 1996
------------------------------------------------------------
Case 95-G-0090
--------------
Reimbursement Margin
September 30, 1994 $209,559,397
------------
FUNDS EXPENDED
--------------
Additions to Utility Plant 122,392,145
Net Change in Construction Work in Progress 331,177
Payment and Discharge of Notes
From Associated Companies 94,000,000
Other Long-Term Debt 66,520
----------
Total Funds Expended 216,789,842
------------
SOURCE OF FUNDS
---------------
Depreciation Accruals 61,545,925
Salvage 427,633
Cost of Removal (5,547,066)
Net Change in Retirement Work in Progress (1,082,514)
Net Transfers/Adjustments 12,129
Normalization of Accelerated Depreciation 15,494,720
Normalization of Investment Tax Credit (1,300,233)
Deferred Tax - Premium on Reacquired Debt (1,046,810)
Deferred Tax - Uniform Capitalization Adjustment (4,927,446)
Amortization of Premium on Reacquired Debt 2,990,886
Customer Advances for Construction 282,734
Advances from Associated Companies 100,000,000
------------
Total Source of Funds $166,849,958
------------
Reimbursement Margin
September 30, 1996 $259,499,281
============
<PAGE>
SCHEDULE G
Sheet 1 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
FUNDS REQUIRED AND SOURCE OF FUNDS
----------------------------------
CALENDAR YEARS 1997 - 1999
--------------------------
($000 OMITTED)
--------------
1997 1998 1999
---- ---- ----
FUNDS REQUIRED
--------------
Construction Expenditures $ 61,015 $ 57,679 $ 56,391
Other Long-Term Debt 36 40 43
Notes Payable-Associated
Companies
Note Maturing 11/05/97 (6.54%) 7,000 - -
Note Maturing 3/01/99 (5.72%) - - 50,000
Payment and Discharge of
Short-Term
Notes Payable - Associated 102,815 70,312 13,100
Companies -------- -------- --------
$170,866 $128,031 $119,534
Total Funds Required ======== ======== ========
SOURCE OF FUNDS
---------------
Depreciation Accruals $ 34,905 $ 36,564 $ 38,190
Deferred Taxes 4,446 1,607 2,987
Salvage Less Cost of Removal (2,218) (2,285) (2,353)
Net Income and Treasury Funds 33,733 42,145 30,710
Financing 1997 100,000 - -
Financing 1998 - 50,000 -
- - 50,000
Financing 1999 -------- -------- --------
$170,866 $128,031 $119,534
Total Sources of Funds ======== ======== ========
<PAGE>
SCHEDULE G
Sheet 2 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1997
------------------
($000 OMITTED)
--------------
New York Pennsylvania
Division Division Total
-------- -------- -----
NATURAL GAS PRODUCTION PLANT $ 159 $ 104 $ 263
TRANSMISSION PLANT 318 732 1,050
DISTRIBUTION PLANT 41,084 14,662 55,746
GENERAL PLANT 1,675 492 2,167
- 1,789 1,789
OTHER PROJECTS ------- ------- -------
$43,236 $17,779 $61,015
TOTAL ======= ======= =======
<PAGE>
SCHEDULE G
Sheet 3 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
-----------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1997
------------------
($000 OMITTED)
--------------
NATURAL GAS PRODUCTION PLANT
----------------------------
Account 332 - Production Mains
------------------------------
$ 68
Appropriation 120Z Production Mains ----
68
TOTAL ACCOUNT 332 ----
Account 333 - Field Compressor Station Equipment
------------------------------------------------
Appropriation 120X Field Compressor Station
Equipment 25
Appropriation 125X Measurement & Regulator 66
Stations ----
91
TOTAL ACCOUNT 333 ----
$159
TOTAL NATURAL GAS PRODUCTION PLANT ====
<PAGE>
SCHEDULE G
Sheet 4 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
-----------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1997
------------------
($000 OMITTED)
--------------
TRANSMISSION PLANT
------------------
Account 367 - Transmission Pipelines
------------------------------------
Appropriation 314Z Transmission Pipelines $209
----
TOTAL ACCOUNT 367 209
----
Account 369 - Measuring and Regulating Station
----------------------------------------------
Equipment
---------
Appropriation 325X Measuring and Regulating
Equipment 109
----
TOTAL ACCOUNT 369 109
----
TOTAL TRANSMISSION PLANT $318
====
<PAGE>
SCHEDULE G
Sheet 5 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
-----------------------------------------
NEW YORK DIVISION
-----------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1997
------------------
($000 OMITTED)
--------------
DISTRIBUTION PLANT
------------------
Account 372- Land
-----------------
Appropriation 400X Land $ 308
-------
TOTAL ACCOUNT 372 308
-------
Account 375 - Structures & Improvements
---------------------------------------
Appropriation 405X Structures and Improvements 10
-------
TOTAL ACCOUNT 375 10
-------
Account 376 - Distribution Mains
--------------------------------
Appropriations 415Z Distribution Mains 20,535
-------
TOTAL ACCOUNT 376 20,535
-------
Account 378 - Measuring and Regulating Equipment
------------------------------------------------
Appropriation 425Z Measuring and Regulating
Stations 885
-------
TOTAL ACCOUNT 378 885
-------
Account 380 - Services
----------------------
Appropriation 450Z Services 17,483
-------
TOTAL ACCOUNT 380 17,483
-------
Account 381- Service Measuring and Regulating
---------------------------------------------
Equipment
---------
Appropriation 455Z Service Measuring and
Regulating Equipment 944
-------
TOTAL ACCOUNT 381 944
-------
Account 385 - Industrial Measuring and Regulating
-------------------------------------------------
Stations
--------
Appropriation 470Z Industrial Measuring and
Regulating Station 919
-------
TOTAL ACCOUNT 385 919
-------
TOTAL DISTRIBUTION PLANT $41,084
=======
<PAGE>
SCHEDULE G
Sheet 6 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
-----------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1997
------------------
($000 OMITTED)
--------------
GENERAL PLANT
-------------
Account 390 - Structures and Equipment
--------------------------------------
Appropriation 505X Structures and Improvements $ 999
-------
TOTAL ACCOUNT 390 999
-------
Account 391 - Office Furniture and Equipment
--------------------------------------------
Appropriation 550X Office Furniture and
Equipment 100
-------
TOTAL ACCOUNT 391 100
-------
Account 394 - Tools, Shop & Garage Equipment
--------------------------------------------
Appropriation 560X Tools, Shop & Garage
Equipment 149
-------
Appropriation 515X CNG Compressor & Equipment 308
-------
TOTAL ACCOUNT 394 457
-------
Account 397 - Communication Equipment
-------------------------------------
Appropriation 570X Communication Equipment 119
-------
TOTAL ACCOUNT 397 119
-------
TOTAL GENERAL PLANT 1,675
=======
TOTAL NEW YORK DIVISION $43,236
=======
<PAGE>
SCHEDULE G
Sheet 7 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1997
------------------
($000 OMITTED)
--------------
NATURAL GAS PRODUCTION PLANT
----------------------------
Account 325 - Land and Land Rights
----------------------------------
Appropriation 100X Land and Land Rights $ 3
----
TOTAL ACCOUNT 325 3
----
Account 332 - Production Mains
------------------------------
Appropriation 115B Corrosion Replacement 71
----
TOTAL ACCOUNT 332 71
----
Account 334 - Measuring and Regulating Stations
-----------------------------------------------
Appropriation 125X Measuring and Regulating
Stations 30
----
TOTAL ACCOUNT 334 30
----
TOTAL NATURAL GAS PRODUCTION PLANT $104
====
<PAGE>
SCHEDULE G
Sheet 8 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1997
------------------
($000 OMITTED)
--------------
TRANSMISSION PLANT
------------------
Account 365 - Land
------------------
Appropriation 300X Secure Land and Land Rights $ 20
----
TOTAL ACCOUNT 365 20
----
Account 367 - Transmission Lines
--------------------------------
Appropriation 315B Replacements 347
Appropriation 315C System Improvements 30
Appropriation 315E Cathodic Protection 199
----
TOTAL ACCOUNT 367 576
----
Account 369 - Measuring and Regulating Equipment
------------------------------------------------
Appropriation 325X Measuring and Regulating
Equipment 136
----
TOTAL ACCOUNT 369 136
----
TOTAL NATURAL GAS PRODUCTION PLANT $732
====
<PAGE>
SCHEDULE G
Sheet 9 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
----------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1997
------------------
($000 OMITTED)
--------------
DISTRIBUTION PLANT
------------------
Account 374 - Land
------------------
Appropriation 400X Secure Land and Land Rights $ 199
-------
TOTAL ACCOUNT 374 199
-------
Account 375 - Structures and Improvements
-----------------------------------------
Appropriation 405X Structures and Improvements 209
-------
TOTAL ACCOUNT 375 209
-------
Account 376 - Distribution Mains
--------------------------------
Appropriation 415A Customer Extensions 1,092
Appropriation 415B Corrosion Replacement 5,123
Appropriation 415C System Improvements 313
Appropriation 415D Public Improvements 357
Appropriation 415E Cathodic Protection 79
-------
TOTAL ACCOUNT 376 6,964
-------
Account 378 - Metering and Regulating Stations
----------------------------------------------
Appropriation 425X Measuring and Regulating
Stations 209
-------
TOTAL ACCOUNT 378 209
-------
Account 380 - Services
----------------------
Appropriation 450X Services 6,182
-------
TOTAL ACCOUNT 380 6,182
-------
Account 381- Measuring and Regulating Equipment
-----------------------------------------------
Appropriation 455A Automatic Meter Reading
Equipment 199
Appropriation 455X Measuring and Regulating
Equipment 272
-------
TOTAL ACCOUNT 381 471
-------
Account 385 - Industrial Metering & Regulating
----------------------------------------------
Stations
--------
Appropriation 470X Industrial Metering &
Regulating Stations 428
-------
TOTAL ACCOUNT 385 428
-------
TOTAL DISTRIBUTION PLANT $14,662
=======
<PAGE>
SCHEDULE G
Sheet 10 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1997
------------------
($000 OMITTED)
--------------
GENERAL PLANT
-------------
Account 390 - Structures and Improvements
-----------------------------------------
Appropriation 505X Structures and Improvements $ 80
-------
TOTAL ACCOUNT 390 80
-------
Account 391 - Office Furniture and Equipment
--------------------------------------------
Appropriation 550X Office Furniture and
Equipment 10
-------
TOTAL ACCOUNT 391 10
-------
Account 394 - Tools, Shop & Garage Equipment
--------------------------------------------
Appropriation 515X CNG Projects 169
Appropriation 560X Tools, Shop & Garage
Equipment 149
-------
TOTAL ACCOUNT 394 318
-------
Account 396 - Power Operated Equipment
--------------------------------------
Appropriation 565X Purchase of Power Operated
Equipment 21
-------
TOTAL ACCOUNT 396 21
-------
Account 397 - Communication Equipment
-------------------------------------
Appropriation 570X Communication Equipment 63
-------
TOTAL ACCOUNT 397 63
-------
TOTAL GENERAL PLANT 492
=======
OTHER PROJECTS 1,789
-------------- =======
TOTAL PENNSYLVANIA DIVISION $17,779
=======
<PAGE>
SCHEDULE G
Sheet 11 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1998
------------------
($000 OMITTED)
--------------
New York Pennsylvania
Division Division Total
-------- -------- -----
NATURAL GAS PRODUCTION PLANT $ 155 $ 101 $ 256
TRANSMISSION PLANT 311 709 1,020
DISTRIBUTION PLANT 40,089 14,204 54,293
GENERAL PLANT 1,634 476 2,110
------- ------- -------
TOTAL $42,189 $15,490 $57,679
======= ======= =======
<PAGE>
SCHEDULE G
Sheet 12 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1998
------------------
($000 OMITTED)
--------------
NATURAL GAS PRODUCTION PLANT
----------------------------
Account 332 - Production Mains
------------------------------
Appropriation 120Z Production Mains $ 67
----
TOTAL ACCOUNT 332 67
----
Account 333 - Field Compressor Station Equipment
------------------------------------------------
Appropriation 120X Field Compressor Station
Equipment 24
Appropriation 125X Measurement & Regulator
Stations 64
----
TOTAL ACCOUNT 333 88
----
TOTAL NATURAL GAS PRODUCTION PLANT $155
====
<PAGE>
SCHEDULE G
Sheet 13 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
-----------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1998
------------------
($000 OMITTED)
--------------
TRANSMISSION PLANT
------------------
Account 367 - Transmission Pipelines
------------------------------------
Appropriation 314Z Transmission Pipelines $204
----
TOTAL ACCOUNT 367 204
----
Account 369 - Measuring and Regulating Station
----------------------------------------------
Equipment
---------
Appropriation 325X Measuring and Regulating
Equipment 107
----
TOTAL ACCOUNT 369 107
----
TOTAL TRANSMISSION PLANT $311
====
<PAGE>
SCHEDULE G
Sheet 14 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
-----------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1998
------------------
($000 OMITTED)
--------------
DISTRIBUTION PLANT
------------------
Account 372- Land
-----------------
Appropriation 400X Land $ 301
-------
TOTAL ACCOUNT 372 301
-------
Account 375 - Structures & Improvements
---------------------------------------
Appropriation 405X Structures and Improvements 10
-------
TOTAL ACCOUNT 375 10
-------
Account 376 - Distribution Mains
--------------------------------
Appropriations 415Z Distribution Mains 20,037
-------
TOTAL ACCOUNT 376 20,037
-------
Account 378 - Measuring and Regulating Equipment
------------------------------------------------
Appropriation 425Z Measuring and Regulating 863
Stations -------
TOTAL ACCOUNT 378 863
-------
Account 380 - Services
----------------------
Appropriation 450Z Services 17,060
-------
TOTAL ACCOUNT 380 17,060
-------
Account 381- Service Measuring and Regulating
---------------------------------------------
Equipment
---------
Appropriation 455Z Service Measuring and
Regulating Equipment 921
-------
TOTAL ACCOUNT 381 921
-------
Account 385 - Industrial Measuring and Regulating
-------------------------------------------------
Stations
--------
Appropriation 470Z Industrial Measuring and
Regulating Station 897
-------
TOTAL ACCOUNT 385 897
-------
TOTAL DISTRIBUTION PLANT $40,089
=======
<PAGE>
SCHEDULE G
Sheet 15 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
-----------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1998
------------------
($000 OMITTED)
--------------
GENERAL PLANT
-------------
Account 390 - Structures and Equipment
--------------------------------------
Appropriation 505X Structures and Improvements $975
----
TOTAL ACCOUNT 390 975
----
Account 391 - Office Furniture and Equipment
--------------------------------------------
Appropriation 550X Office Furniture and Equipment 97
----
TOTAL ACCOUNT 391 97
----
Account 394 - Tools, Shop & Garage Equipment
--------------------------------------------
Appropriation 560X Tools, Shop & Garage Equipment 145
Appropriation 515X CNG Compressor & Equipment 301
----
TOTAL ACCOUNT 394 446
----
Account 397 - Communication Equipment
-------------------------------------
Appropriation 570X Communication Equipment 116
---
TOTAL ACCOUNT 397 116
---
TOTAL GENERAL PLANT 1,634
=====
TOTAL NEW YORK DIVISION $42,189
=======
<PAGE>
SCHEDULE G
Sheet 16 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
-----------------------------
CALENDAR YEAR 1998
------------------
($000 OMITTED)
--------------
NATURAL GAS PRODUCTION PLANT
----------------------------
Account 325 - Land and Land Rights
----------------------------------
Appropriation 100X Land and Land Rights $ 3
----
TOTAL ACCOUNT 325 $ 3
----
Account 332 - Production Mains
------------------------------
Appropriation 115B Corrosion Replacement 69
----
TOTAL ACCOUNT 332 69
----
Account 334 - Measuring and Regulating Stations
-----------------------------------------------
Appropriation 125X Measuring and Regulating 29
Stations ----
TOTAL ACCOUNT 334 29
----
TOTAL NATURAL GAS PRODUCTION PLANT $101
====
<PAGE>
SCHEDULE G
Sheet 17 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
-----------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1998
-------------------
($000 OMITTED)
--------------
TRANSMISSION PLANT
------------------
Account 365 - Land
------------------
Appropriation 300X Secure Land and Land Rights $ 19
----
TOTAL ACCOUNT 365 19
----
Account 367 - Transmission Lines
--------------------------------
Appropriation 315B Replacements 337
Appropriation 315C System Improvements 29
Appropriation 315E Cathodic Protection 192
----
TOTAL ACCOUNT 367 558
----
Account 369 - Measuring and Regulating Equipment
------------------------------------------------
Appropriation 325X Measuring and Regulating 132
Equipment ----
TOTAL ACCOUNT 369 132
----
TOTAL NATURAL GAS PRODUCTION PLANT $709
====
<PAGE>
SCHEDULE G
Sheet 18 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1998
------------------
($000 OMITTED)
--------------
DISTRIBUTION PLANT
------------------
Account 374 - Land
------------------
Appropriation 400X Secure Land and Land Rights $192
----
TOTAL ACCOUNT 374 192
---
Account 375 - Structures and Improvements
-----------------------------------------
Appropriation 405X Structures and Improvements 202
---
TOTAL ACCOUNT 375 202
---
Account 376 - Distribution Mains
--------------------------------
Appropriation 415A Customer Extensions 1,058
Appropriation 415B Corrosion Replacement 4,964
Appropriation 415C System Improvements 303
Appropriation 415D Public Improvements 346
Appropriation 415E Cathodic Protection 77
----
TOTAL ACCOUNT 376 6,748
-----
Account 378 - Metering and Regulating Stations
----------------------------------------------
Appropriation 425X Measuring and Regulating 202
Stations ---
TOTAL ACCOUNT 378 202
---
Account 380 - Services
----------------------
Appropriation 450X Services 5,989
-----
TOTAL ACCOUNT 380 5,989
-----
Account 381- Measuring and Regulating Equipment
-----------------------------------------------
Appropriation 455A Automatic Meter Reading 192
Equipment
Appropriation 455X Measuring and Regulating 264
Equipment ---
TOTAL ACCOUNT 381 456
---
Account 385 - Industrial Metering & Regulating
----------------------------------------------
Stations
--------
Appropriation 470X Industrial Metering & 415
Regulating Stations ---
TOTAL ACCOUNT 385 415
---
TOTAL DISTRIBUTION PLANT $14,204
=======
<PAGE>
SCHEDULE G
Sheet 19 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1998
------------------
($000 OMITTED)
-------------
GENERAL PLANT
-------------
Account 390 - Structures and Improvements
-----------------------------------------
Appropriation 505X Structures and Improvements $ 78
----
TOTAL ACCOUNT 390 78
----
Account 391 - Office Furniture and Equipment
--------------------------------------------
Appropriation 550X Office Furniture and 10
Equipment ----
TOTAL ACCOUNT 391 10
----
Account 394 - Tools, Shop & Garage Equipment
--------------------------------------------
Appropriation 515X CNG Projects 163
Appropriation 560X Tools, Shop & Garage 144
Equipment ---
TOTAL ACCOUNT 394 307
---
Account 396 - Power Operated Equipment
--------------------------------------
Appropriation 565X Purchase of Power Operated 20
Equipment ----
TOTAL ACCOUNT 396 20
----
Account 397 - Communication Equipment
-------------------------------------
Appropriation 570X Communication Equipment 61
----
TOTAL ACCOUNT 397 61
----
TOTAL GENERAL PLANT 476
===
TOTAL PENNSYLVANIA DIVISION $15,490
=======
<PAGE>
SCHEDULE G
Sheet 20 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
-----------------------------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1999
------------------
($000 OMITTED)
--------------
New York Pennsylvania
Division Division Total
-------- ------------ ------
NATURAL GAS PRODUCTION PLANT $ 151 $ 99 $ 250
TRANSMISSION PLANT 304 693 997
DISTRIBUTION PLANT 39,197 13,883 53,080
GENERAL PLANT 1,598 466 2,064
------- -------- --------
TOTAL $41,250 $15,141 $56,391
======== ======== ========
<PAGE>
SCHEDULE G
Sheet 21 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
-----------------------------------------
NEW YORK DIVISION
-----------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1999
------------------
($000 OMITTED)
--------------
NATURAL GAS PRODUCTION PLANT
----------------------------
Account 332 - Production Mains
------------------------------
Appropriation 120Z Production Mains $65
---
TOTAL ACCOUNT 332 65
---
Account 333 - Field Compressor Station Equipment
------------------------------------------------
Appropriation 120X Field Compressor Station 24
Equipment
Appropriation 125X Measurement & Regulator 62
Stations ---
TOTAL ACCOUNT 333 86
---
TOTAL NATURAL GAS PRODUCTION PLANT $151
====
<PAGE>
SCHEDULE G
Sheet 22 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
------------------
CAPITAL EXPENDITURES PROGRAM
---------------------------
CALENDAR YEAR 1999
------------------
($000 OMITTED)
--------------
TRANSMISSION PLANT
------------------
Account 367 - Transmission Pipelines
------------------------------------
Appropriation 314Z Transmission Pipelines $200
----
TOTAL ACCOUNT 367 200
----
Account 369 - Measuring and Regulating Station
----------------------------------------------
Equipment
---------
Appropriation 325X Measuring and Regulating 104
Equipment ----
TOTAL ACCOUNT 369 104
----
TOTAL TRANSMISSION PLANT $304
====
<PAGE>
SCHEDULE G
Sheet 23 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1999
------------------
($000 OMITTED)
--------------
DISTRIBUTION PLANT
------------------
Account 372- Land
-----------------
Appropriation 400X Land $ 294
-----
TOTAL ACCOUNT 372
294
----
Account 375 - Structures & Improvements
---------------------------------------
Appropriation 405X Structures and Improvements 9
----
TOTAL ACCOUNT 375 9
----
Account 376 - Distribution Mains
--------------------------------
Appropriations 415Z Distribution Mains 19,591
------
TOTAL ACCOUNT 376 19,591
------
Account 378 - Measuring and Regulating Equipment
------------------------------------------------
Appropriation 425Z Measuring and Regulating 844
Stations -----
TOTAL ACCOUNT 378 844
-----
Account 380 - Services
----------------------
Appropriation 450Z Services 16,680
------
TOTAL ACCOUNT 380 16,680
------
Account 381- Service Measuring and Regulating
---------------------------------------------
Equipment
---------
Appropriation 455Z Service Measuring and 901
Regulating Equipment ------
TOTAL ACCOUNT 381 901
-----
Account 385 - Industrial Measuring and Regulating
-------------------------------------------------
Stations
--------
Appropriation 470Z Industrial Measuring and
Regulating Station 878
-----
TOTAL ACCOUNT 385 878
-----
TOTAL DISTRIBUTION PLANT $39,197
=======
<PAGE>
SCHEDULE G
Sheet 24 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
NEW YORK DIVISION
-----------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1999
------------------
($000 OMITTED)
--------------
GENERAL PLANT
-------------
Account 390 - Structures and Equipment
--------------------------------------
Appropriation 505X Structures and Improvements $ 953
-------
TOTAL ACCOUNT 390 953
-------
Account 391 - Office Furniture and Equipment
--------------------------------------------
Appropriation 550X Office Furniture and 95
Equipment -------
TOTAL ACCOUNT 391 95
-------
Account 394 - Tools, Shop & Garage Equipment
--------------------------------------------
Appropriation 560X Tools, Shop & Garage
Equipment 142
Appropriation 515X CNG Compressor & Equipment 294
-------
TOTAL ACCOUNT 394 436
-------
Account 397 - Communication Equipment
-------------------------------------
Appropriation 570X Communication Equipment 114
-------
TOTAL ACCOUNT 397 114
-------
TOTAL GENERAL PLANT 1,598
=======
TOTAL NEW YORK DIVISION $41,250
=======
<PAGE>
SCHEDULE G
Sheet 25 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
-----------------------------
CALENDAR YEAR 1999
------------------
($000 OMITTED)
--------------
NATURAL GAS PRODUCTION PLANT
----------------------------
Account 325 - Land and Land Rights
----------------------------------
Appropriation 100X Land and Land Rights $ 3
----
TOTAL ACCOUNT 325 3
----
Account 332 - Production Mains
------------------------------
Appropriation 115B Corrosion Replacement 68
----
TOTAL ACCOUNT 332 68
----
Account 334 - Measuring and Regulating Stations
-----------------------------------------------
Appropriation 125X Measuring and Regulating 28
Stations ----
TOTAL ACCOUNT 334 28
----
TOTAL NATURAL GAS PRODUCTION PLANT $99
====
<PAGE>
SCHEDULE G
Sheet 26 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1999
------------------
($000 OMITTED)
--------------
TRANSMISSION PLANT
------------------
Account 365 - Land
------------------
Appropriation 300X Secure Land and Land Rights $ 19
-----
TOTAL ACCOUNT 365 19
-----
Account 367 - Transmission Lines
--------------------------------
Appropriation 315B Replacements 329
Appropriation 315C System Improvements 28
Appropriation 315E Cathodic Protection 188
----
TOTAL ACCOUNT 367 545
----
Account 369 - Measuring and Regulating Equipment
------------------------------------------------
Appropriation 325X Measuring and Regulating 129
Equipment ----
TOTAL ACCOUNT 369 129
----
TOTAL NATURAL GAS PRODUCTION PLANT $693
====
<PAGE>
SCHEDULE G
Sheet 27 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1999
------------------
($000 OMITTED)
--------------
DISTRIBUTION PLANT
------------------
Account 374 - Land
------------------
Appropriation 400X Secure Land and Land Rights $ 188
--------
TOTAL ACCOUNT 374 188
--------
Account 375 - Structures and Improvements
-----------------------------------------
Appropriation 405X Structures and Improvements 198
--------
TOTAL ACCOUNT 375 198
--------
Account 376 - Distribution Mains
--------------------------------
Appropriation 415A Customer Extensions 1,034
Appropriation 415B Corrosion Replacement 4,851
Appropriation 415C System Improvements 296
Appropriation 415D Public Improvements 339
Appropriation 415E Cathodic Protection 75
--------
TOTAL ACCOUNT 376 6,595
--------
Account 378 - Metering and Regulating Stations
----------------------------------------------
Appropriation 425X Measuring and Regulating 197
Stations --------
TOTAL ACCOUNT 378 197
--------
Account 380 - Services
----------------------
Appropriation 450X Services 5,854
--------
TOTAL ACCOUNT 380 5,854
--------
Account 381- Measuring and Regulating Equipment
-----------------------------------------------
Appropriation 455A Automatic Meter Reading
Equipment 188
Appropriation 455X Measuring and Regulating 258
Equipment --------
TOTAL ACCOUNT 381 446
--------
Account 385 - Industrial Metering & Regulating
----------------------------------------------
Stations
--------
Appropriation 470X Industrial Metering & 405
Regulating Stations --------
TOTAL ACCOUNT 385 405
--------
TOTAL DISTRIBUTION PLANT $13,883
========
<PAGE>
SCHEDULE G
Sheet 28 of 28
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
PENNSYLVANIA DIVISION
---------------------
CAPITAL EXPENDITURES PROGRAM
----------------------------
CALENDAR YEAR 1999
-------------------
($000 OMITTED)
--------------
GENERAL PLANT
-------------
Account 390 - Structures and Improvements
-----------------------------------------
Appropriation 505X Structures and Improvements $ 77
-------
TOTAL ACCOUNT 390 77
-------
Account 391 - Office Furniture and Equipment
--------------------------------------------
Appropriation 550X Office Furniture and
Equipment 9
-------
TOTAL ACCOUNT 391 9
-------
Account 394 - Tools, Shop & Garage Equipment
--------------------------------------------
Appropriation 515X CNG Projects 160
Appropriation 560X Tools, Shop & Garage 141
Equipment -------
TOTAL ACCOUNT 394 301
-------
Account 396 - Power Operated Equipment
--------------------------------------
Appropriation 565X Purchase of Power Operated
Equipment 20
-------
TOTAL ACCOUNT 396 20
-------
Account 397 - Communication Equipment
-------------------------------------
Appropriation 570X Communication Equipment 59
-------
TOTAL ACCOUNT 397 59
-------
TOTAL GENERAL PLANT 466
=======
TOTAL PENNSYLVANIA DIVISION $15,141
=======
<PAGE>
SCHEDULE H
Sheet 1 of 5
CREDIT AGREEMENT
THIS AGREEMENT dated ; by and between
NATIONAL FUEL GAS COMPANY (hereinafter called "National"), a New
Jersey corporation, and NATIONAL FUEL GAS DISTRIBUTION
CORPORATION (hereinafter called "Distribution Corporation"), a
New York corporation and a wholly owned subsidiary of National.
W I T N E S S E T H:
1. In order to provide funds to Distribution Corporation
for working capital and its construction program, and other
lawful purposes, National agrees to extend credit to Distribution
Corporation from time-to-time, upon mutual consent and upon the
further terms and conditions set forth in this Agreement.
2. Each borrowing made hereunder shall be made against
delivery by Distribution Corporation to National of Distribution
Corporation's promissory note to evidence the amount borrowed
each time. Each promissory note shall be dated as of the date of
issue and shall bear interest payable at such time as provided
for in, and at the effective interest rate or yield to maturity
cost rate of, National's debenture or note or other debt issue
that provides the proceeds from which Distribution Corporation
has borrowed hereunder. Such interest rate or cost shall reflect
the actual underwriters' or agents' fees and commissions paid by
National. The resulting effective annual interest rate shall be
rounded up to the next highest 1/100th of 1%. Each promissory
note shall mature at such time as National's corresponding
debenture, note or other debt issue matures.
3. It is agreed that if a default occurs with respect to
the punctual payment of any principal or interest due under this,
or any other agreement or note of Distribution Corporation, or if
Distribution Corporation makes an assignment for the benefit of
creditors or files a petition in bankruptcy or is adjudicated
insolvent or bankrupt, or if there is commenced against
Distribution Corporation any such proceeding, then the entire
amount of the principal and interest on all of the notes issued
under this Agreement may be declared by National to be forthwith
due and payable.
4. If the debentures, notes or other debt issued by
National, or the indenture, supplemental indenture or other
documents governing the terms thereof, give National the right or
obligation to early redeem all or part of said debentures, notes
or other debt, and National exercises that right or obligation in
whole or in part, prior to their maturity, or if National tenders
for or otherwise discharges such debentures, notes or other debt
prior to their maturity, or modifies the terms thereof, then
Distribution Corporation shall prepay to National a principal
amount of the note or notes issued hereunder as shall equal the
principal amount of such debentures, notes or other debt of
National that are early redeemed or discharged, together with
accrued interest on the prepaid principal amount of National's
debentures, notes or other debt, together with the premium, if
any, that is paid in connection with any such redemption or
discharge, and together with unrecovered (unamortized) debt
issuance discounts and costs, or Distribution Corporation shall
agree to make payments to National in accordance with such
modified terms, as the case may be.
5. This Agreement shall become effective when approvals
have been obtained from the regulatory commissions having
jurisdiction over this Agreement.
<PAGE>
SCHEDULE H
Sheet 2 of 5
6. This Agreement shall be binding upon the successors and
assigns of the parties hereto. This Agreement shall be construed
and enforced under and in accordance with the laws of the state
of New York. This Agreement may be executed in counterparts,
each one of which, when fully executed, shall be deemed to have
the same dignity, force and effect as the original.
IN WITNESS WHEREOF, the parties hereto have caused their
authorized officers to execute this Agreement and to have their
corporate seals affixed and attested the day and year first above
written.
ATTEST: NATIONAL FUEL GAS COMPANY
---------------------- ----------------------------
Secretary President
ATTEST: NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
--------------------- -------------------------------
Secretary President
<PAGE>
SCHEDULE H
Sheet 3 of 5
Distribution Corporation Note No.
$ ,
For value received, the undersigned NATIONAL FUEL GAS
DISTRIBUTION CORPORATION, a New York corporation (hereinafter
called "Distribution Corporation"), hereby promises to pay on or
before to NATIONAL FUEL GAS COMPANY, a New Jersey
corporation (hereinafter called "National"), or to its order, at
its offices, 10 Lafayette Square, Buffalo, New York, in lawful
money of the United States, the principal sum of
*** ***
and to pay interest on said principal sum or any unpaid balance
thereof semiannually on the 1st day of ________________ and _____
in each year at said office, in like money, from the date hereof
until this note shall become due or shall be paid in full at the
rate of __ % per annum*.
This note is one of the notes of Distribution Corporation
mentioned in a Credit Agreement dated ______________ by and
between Distribution Corporation and National providing for the
issuance of promissory notes by Distribution Corporation to
National to provide funds for Distribution Corporation as
described in and subject to the terms of said Credit Agreement.
Upon the occurrence of an event described in Paragraph 3 or
4 in said Credit Agreement, the principal of this note and the
interest due thereon, or part thereof, may be declared by
National to be forthwith due and payable, without necessity of
demand, notice, presentment or protest.
NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
______________________________
President
______________________________
Vice President and
Controller
*Rate and maturity as provided
in Paragraph 2 of Credit Agreement
dated
<PAGE>
SCHEDULE H
Sheet 4 of 5
FORM OF DERIVATIVE AGREEMENT
THIS AGREEMENT ("Agreement") dated as of ;
is entered into by and between NATIONAL FUEL GAS COMPANY
(hereinafter called "National"), a New Jersey corporation, and
NATIONAL FUEL GAS DISTRIBUTION CORPORATION (hereinafter called
"Distribution Corporation"), a New York corporation and a
subsidiary of National.
W I T N E S S E T H:
1. If National from time-to-time enters into agreements
concerning interest rate swaps, caps, collars, and/or floors
(hereinafter called "derivative instruments"), with banks or
other financial institutions (hereinafter called
"counterparties") and Distribution Corporation desires to obtain
the benefits and pay the costs thereof, this Agreement, together
with any attachments as may be necessary to further describe the
terms of such derivative instruments and the allocation of such
costs and benefits, shall govern the terms of such arrangements.
2.(a) If National desires to enter into, and Distribution
Corporation desires to assume the costs and benefits of, an
interest rate swap whereby National makes fixed rate payments to,
and receives floating rate payments from, a counterparty, in lieu
of: (i) National's issuance of long-term debt and liquidation of
short-term debt, (ii) National's lending of the proceeds from
such issuance of long-term debt to Distribution Corporation,
(iii) Distribution Corporation's liquidation of short-term debt,
and (iv) Distribution Corporation's issuance of a promissory note
to National, National shall pay to Distribution Corporation any
amounts received by National from the counterparty in connection
with such swap, and Distribution Corporation shall pay to
National any amounts that National must pay to the counterparty
in connection with such swap.
(b) If National desires to enter into, and Distribution
Corporation desires to assume the costs and benefits of,
agreements that provide for caps, collars or floors in connection
with such swap, National shall pay to Distribution Corporation
any amounts received by it from the counterparty in connection
therewith, and Distribution Corporation shall pay to National any
amounts that National must pay the counterparty in connection
therewith.
3. If transactions as are described in Paragraph 2 occur,
Distribution Corporation shall continue to pay interest on its
underlying short-term debt.
4. (a) If National desires to enter into, and Distribution
Corporation desires to assume the costs and benefits of, an
interest rate swap whereby National makes floating rate payments
to, and receives fixed rate payments from, a counterparty, in
order to effectively convert, in whole or in part, National's
existing fixed rate interest payments to floating rate payments,
and likewise convert Distribution Corporation's payments pursuant
to its promissory note to National, National shall pay to
Distribution Corporation any amounts received by National from
the counterparty pursuant to such swap, and Distribution
Corporation shall pay to National any amounts that National must
pay to the counterparty in connection with such swap.
(b) If the payments under the interest rate swap are
netted, National shall pay to Distribution Corporation, or
Distribution Corporation shall pay to National any amount that
National shall receive from or pay to the counterparty in
connection with such swap, as the case may be. If National
enters into agreements that provide for caps, collars or floors
in connection with such swap, the provisions set forth in
paragraph 2(b) concerning this matter shall apply.
<PAGE>
SCHEDULE H
Sheet 5 of 5
5. If National desires to enter into, and Distribution
Corporation desires to assume the costs and benefits of,
agreements that provide for caps, collars or floors in connection
with existing floating rate medium-term notes or debentures or
short-term debt of National, the proceeds of which have been
loaned to Distribution Corporation, the provisions set forth in
paragraph 2(b) shall apply.
6. If National terminates or "unwinds" one of the above-
described derivative instruments, and either makes or receives
payments, or assumes or receives other obligations or benefits in
connection therewith, National shall pay to Distribution
Corporation any such receipts, and Distribution Corporation shall
reimburse National for any payments National makes, and
Distribution Corporation shall further assume any ongoing
obligations and receive any ongoing benefits.
7. National and Distribution Corporation shall net the
above payments to the extent practicable.
8. If Distribution Corporation defaults on its obligations
hereunder, National shall have such remedies respecting
Distribution Corporation as National's counterparty would have
respecting National, if National made a similar default vis-a-vis
the counterparty, without necessity of demand, notice,
presentment or protest. Likewise, Distribution Corporation shall
have similar remedies against National, should National default.
9. This Agreement shall become effective when approvals
have been obtained from the regulatory commissions having
jurisdiction over this Agreement. This Agreement shall be
subject to additional terms and conditions as may be set forth in
the application-declaration on Form U-1 in SEC File 70-8541 as
amended, which was filed by National, Distribution Corporation,
and certain other subsidiaries of National and in any subsequent
application-declaration that may be filed in connection with the
subject matter of this agreement, and in the order(s) that may be
issued by the SEC in connection with either such application-
declaration.
10. This Agreement shall be binding upon the successors and
assigns of the parties hereto. This Agreement shall be construed
and enforced under and in accordance with the laws of the state
of New York. This Agreement may be executed in counterparts,
each one of which, when fully executed, shall be deemed to have
the same dignity, force and effect as an original.
IN WITNESS WHEREOF, the parties hereto have caused their
authorized officers to execute this Agreement and to have their
corporate seals affixed and attested the day and year first above
written.
ATTEST: NATIONAL FUEL GAS COMPANY
------------------------------ ------------------------------
Secretary President
ATTEST: NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
------------------------------ ------------------------------
Secretary President
<PAGE>
SCHEDULE I
Sheet 1 of 1
The most current amendment to the Bylaws of National Fuel Gas
Distribution Corporation occurred on December 16, 1994. This
amendment was filed in the previous financing petition (Case No.
95G0090).
<PAGE>
SCHEDULE J
Sheet 1 of 1
An Application-Declaration of Form U-1 filed with the
Securities and Exchange Commission by National Fuel Gas Company,
and certain of its subsidiaries, including National Fuel Gas
Distribution Corporation, as amended, was included with Case No.
95-G-0090 (SEC File No. 70-8541). Such documents, as well as
subsequent amendments, notices and orders in that file, are part
of this Schedule, and are incorporated herein by reference.
Exhibit D-2
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
CASE 97-G-0496 - Petition of National Fuel Gas Distribution
Corporation for Authority to Issue and Sell
not more than $200,000,000 of Promissory
Notes and to assume the costs and benefits of
up to $350 million notional amount of
derivative instruments.
JUL 14 SAPA NO. 97-G-0496SA1
EFFECTIVE DATE OF RULE:
[] DATE OF FILING WITH STATE DEPT.
[X] OTHER: July 9, 1997
I, JOHN C. CRARY, SECRETARY OF THE NEW YORK STATE PUBLIC
SERVICE COMMISSION, HEREBY CERTIFY THAT:
1. The attached Commission action was duly adopted by a
unanimous vote of the Commissioners at a session held in the
City of New York on June 25, 1997 pursuant to authority
vested in the Commission by the Public Service Law, Section
69.
2. Prior notice of the proposed Commission action was published
in the State Register on April 9, 1997.
3. Additional prior notice is not required by the Public
Service Law or other statutes.
DATE: July 9, 1997 s/John C. Crary
-------------------- -------------------------
SECRETARY
<PAGE>
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
At a session of the Public Service
Commission held in the City of
New York on June 25, 1997
COMMISSIONERS PRESENT:
John F. O'Mara, Chairman
Eugene W. Zeltmann
Thomas J. Dunleavy
Maureen O. Helmer
CASE 97-G-0496 - Petition of National Fuel Gas Distribution
Corporation for Authority to Issue and Sell
not More than $200,000,000 of Promissory
Notes and to Assume the Costs and Benefits of
up to $350,000,000 Notional Amount of
Derivative Instruments.
(Issued and Effective July 9, 1997)
By petition filed March 7, 1997, National Fuel Gas
Distribution Corporation (petitioner) has requested Commission
authority to issue and sell not to exceed $200 million of
promissory notes and to enter into up to $350 million of
derivative transactions. An issue of securities and entering into
derivative transactions in the amounts authorized, subject to the
conditions imposed in this Order, is reasonably required for the
purposes we specify and such purposes are not, in whole or in
part, reasonably chargeable to operating expenses or to income.
The Commission orders:
---------------------
1. National Fuel Gas Distribution Corporation is
authorized to issue and sell, not later than two years from the
date of this Order, not to exceed $200 million of promissory
notes. The debt shall be issued under and pursuant to the
documents attached to the petition in this proceeding. No
material supplement to or modification of the said documents
shall be executed without the authority of this Commission. The
debt shall be dated, bear a rate of interest, mature and be
redeemable in the manner specified in the above documents.
2. National Fuel Gas Distribution Corporation is
authorized to enter into up to $350 million of derivative
transactions not later than two years from the date of this
Order. The transactions shall be entered into under and pursuant
to the documents attached to the petition in this proceeding. No
material supplement to or modification of the said documents
shall be executed without the approval of this Commission.
Approval of these transactions is expressly subject to the
understanding that the transactions will be entered into pursuant
to the precautions described in the aforementioned documents.
3. Petitioner shall not enter into any derivative
transactions with a counterparty unless said counterparty has a
credit rating at least as high as that of the petitioner, with a
minimum rating of Baa by Moody's or the equivalent. All
derivative transactions authorized by this Order shall be
directly related to the petitioner's outstanding long- or short
term debt. In addition, the terms of the transaction shall
require that the change in the floating rate portion of the
derivative transaction will be exactly equal to the change in the
underlying short-term debt index.
4. Within ten days after the execution of the
documents entered into for the sale of the authorized securities
petitioner shall file with this Commission verified copies
thereof as executed.
5. The proceeds from the sale of the securities
authorized by this order shall be deposited in a special fund in
a responsible banking institution or institutions. The proceeds
shall be applied solely and exclusively toward reimbursement of
petitioner's treasury for equivalent moneys expended for capital
purposes to December 31, 1996. The reimbursement funds shall be
used toward the payment of outstanding short-term debt, maturing
senior securities and/or sinking fund requirements on the dates
of issuance of the said securities. Any remaining funds are to be
used toward expenditures on or after January 1, 1997, for the
purposes permitted under Public Service Law Section 69 which
shall be over and above the expenditures made for such purposes
-2-
<PAGE>
through funds originating from credits to the accumulated
provisions for depreciation, net salvage and accumulated deferred
income taxes. Withdrawal of a portion or all of the said
reimbursement funds may be made from time to time for other
utility purposes during the period ending July l, 1999, or may be
invested in short-term marketable securities on condition that
such temporary withdrawal, to the extent that the same are not
offset by gross additions less funds originating from credits to
the accumulated provision for depreciation, net salvage and
accumulated deferred income taxes on or after January 1, 1997,
are restored to the special fund not later than July l, 1999. The
entire proceeds from the issuance of the securities authorized by
this Order shall be used for the purposes specified above. In no
instance shall any part of the special fund be used to pay
accrued interest or dividends on the discharged or refunded
obligations.
6. Petitioner shall file annually with the Director
of the Office of Accounting and Finance or his designee a
verified report within 60 days after year end. The report shall
also include the date of withdrawal of any of the deposited funds
as provided in Clause 4 of this Order, the amount withdrawn, and
the purposes for which such withdrawal was made. Petitioner shall
provide this Commission with the same information that will be
supplied to the Securities and Exchange Commission for any
derivative transactions entered into under this Order. In
addition, petitioner shall provide information on what the cost
and terms of traditional debt would have been had it been issued.
If derivative transactions are entered into in order to refinance
existing debt, petitioner shall demonstrate the savings achieved.
7. In rate proceedings, the loss and reward from
entering into derivative transactions shall go only to
petitioner's shareholders. Recovery of interest costs for debt
related to a derivative transaction shall be calculated using
what the rate on traditional debt would have been had the
derivative transaction not occurred.
-3-
<PAGE>
8. If, upon examination of the expenditures made from
withdrawal from the said special fund, it is determined that any
expenditure is not a reasonable and proper capital charge, or has
not been duly authorized by the Commission, or is in violation of
any Order of the Commission or any provision of law, a sum equal
to such expenditure shall, upon Order of the Commission, promptly
be placed in the special fund and said sum shall be subject to
all of the conditions and restrictions of this Order.
9. The total costs and expenses of issuing the
securities authorized by this Order, paid or to be paid by
petitioner and charged to Account 181 - Unamortized Debt Expense,
shall not exceed $1,500,000 unless any additional amount expended
is approved as a proper and reasonable cost of issuance by the
Director of Accounting and Finance or his designee, and
petitioner shall submit a verified report showing in detail all
costs and expenses. Upon approval, the petitioner shall make such
adjustment of the charges to Account 181 - Unamortized Debt
Expense - as determined to be necessary and proper.
10. The total costs and expenses of entering into the
derivative transactions authorized by this Order, paid or to be
paid by petitioner and charged to a sub-account of Account 181 -
Unamortized Debt Expense, shall not exceed $500,000 unless any
additional amount expended is approved as a proper and reasonable
cost of issuance by the Director of Accounting and Finance or his
designee, and petitioner shall submit a verified report showing
in detail all costs and expenses. Upon approval, the petitioner
shall make such adjustment of the charges to the sub-account of
Account 181 - Unamortized Debt Expense - as determined to be
necessary and proper. This sub-account of Account 181 -
Unamortized Debt Expense - shall contain only the costs and
expenses related to the derivative transactions entered into by
the petitioner.
11. The authority granted and the conditions imposed
by this Order shall not be construed as passing upon or otherwise
approving the accuracy of the books, records and accounts of
petitioner.
-4-
<PAGE>
12. The securities authorized by this Order shall not
be issued and the derivative transactions authorized by this
Order shall not be entered into unless and until there has been
filed with this Commission an unconditional acceptance by
petitioner agreeing to obey all terms, conditions and
requirements of this Order. If such acceptance is not so filed
within a period of 30 days from the effective date of this Order,
this Order may be revoked by the Commission without further
notice.
By the Commission,
(SIGNED) JOHN C. CRARY
Secretary
<PAGE>
STATE OF NEW YORK
DEPARTMENT OF PUBLIC SERVICE
June 16, 1997
APPROVED BY THE COMMISSON JUN 25 1997
TO: THE COMMISSION
FROM: OFFICE OF ACCOUNTING & FINANCE
SUBJECT: CASE 97-G-0496 - Petition of National Fuel Gas
Distribution Corporation for Authority to Issue and
Sell not more than $200,000,000 of Promissory Notes and
to assume the costs and benefits of up to $350 million
notional amount of derivative instruments.
* * *
Summary Discussion
------------------
By petition dated March 7, 1997, National Fuel Gas
Distribution Corporation (Distribution or the Company) requests
approval to issue up to $200 million of promissory notes during
the 24-month period beginning on the date of the Commission's
Order. The notes will be issued to Distribution's parent,
National Fuel Gas Company (NFGC or the Parent). NFGC generally
finances all of its subsidiaries, capital requirements at the
parent level, and passes the funds down to its subsidiaries in
exchange for notes payable to the Parent. The effective interest
rate on the notes will be the same effective cost the Parent
incurs in its financing.
The Company also requests authority to enter into
derivative transactions for up to $350 million notional amount
(the amount used to calculate the cash flows of the transaction;
there is no exchange of principal). These transactions would
occur as interest rate swaps, caps, collars, and floors, and
would also take place during the 24-month period beginning on the
date of the Order. Distribution would use these transactions to
lower its overall interest expense.
The proceeds of the promissory notes will be used by
Distribution to finance new construction expenditures, repay
short-term debt incurred to finance previous years' construction
expenditures, and refinance maturing long-term debt.
While the precise terms and expenses of the issue(s)
are not known at this time, as in NFGC's last debt financing, we
do not propose to use the non-abrogation procedure. The issuance
of the securities is being done by the Parent and any concerns
about the terms and issuance expenses can be addressed in
Distribution's next rate proceeding. The expected interest rate
for each issue is a certain spread above the forecasted rate on
treasury notes with the same maturity.
Details of the Proposed Issuance
--------------------------------
The Parent intends to issue up to $500 million of debt,
through a competitive bidding process, on a periodic basis as the
need for funds arises. The ultimate maturities of these issues
will depend on the treasury yields for specific maturities and
the respective spreads above treasury yields which must be paid
by NFGC, as well as the maturity schedule of the Parent's
existing debt. Interest rates will be determined by the market at
the time of the sale, and will generally reflect then current
market spreads above treasury issues of comparable maturity for
similarly-rated companies.
With the proceeds from the new debt issue, the Parent
proposes to lend an amount up to $200 million to Distribution in
exchange for unsecured notes. These promissory notes issued to
NFGC by Distribution will have the same maturities as the
debentures and/or Medium Term Notes (MTNs), and will bear
interest at the effective interest cost of the debentures and/or
MTNs. However, because the debt component of Distribution's rate
of return authorization is derived from the Parent's
capitalization, the Order requires Distribution to provide
statements detailing the costs of the notes issued by the Parent
within one month from the time they are issued, and to submit a
comparison of NFGC's debentures and/or MTNs to similarly-rated
issues during that period.
Use of Proceeds
---------------
Distribution proposes to use the proceeds of the
issuance to refinance maturing long-term debt, to finance future
construction expenditures, and to repay short-term debt. In 1997
Distribution has $7 million of long-term debt maturing, while in
1999 there is $50 million of long-term debt maturing.
-2-
<PAGE>
As illustrated in Appendix A, Distribution estimates
its construction expenditures during calendar years 1997, 1998
and 1999 combined to be approximately $175 million.
Distribution's petition cites the need to repay $186.2 million in
short-term debt during those three years with proceeds of this
issuance. However, Distribution's short-term debt balance as of
March 31, 1997 was only $82.6 million. Since only existing
short-term debt may be used as a need for financing, Distribution
has shown a need to refinance only $82.6 million in short-term
debt. This difference does not affect Distribution's need for the
requested $200 million, however.
A summary of staff's analysis of Distribution's need
for external financing is shown in Appendix B. As Appendix B
shows, Distribution has shown a need for the requested $200
million in external financing. Staff's analysis (Appendix B)
differs from Distribution's analysis (Appendix A) in two ways.
First, as was discussed above, only $82.6 million of short-term
debt is considered in staff's analysis. Second, as is Commission
practice, staff's analysis omits net income as a source of funds.
Reimbursement Margin
--------------------
Distribution claims a revised historical reimbursement
margin of $259.5 million as of September 30, 1996, to which staff
has made minor adjustments. Appendix C shows Distribution's
reimbursement margin calculation and Staff's adjustments to the
historical margin. Staff has calculated a historical
reimbursement margin of $259.2 million, which provides a
sufficient basis for the $200 million financing request.
Costs and Expenses
------------------
We anticipate there will be no costs and expenses
attributable solely to the proposed issue of promissory notes by
Distribution. However, the costs incurred by NFGC in issuing
debentures and/or MTNs (the proceeds of which are then lent to
Distribution) are expected to be incorporated into the interest
rate that Distribution pays to NFGC. The reasonableness of the
costs and expenses will be evaluated in the context of
Distribution's next rate proceeding. Currently, Distribution is
-3-
<PAGE>
subject to a price cap agreement which expires on September 30,
1998.
Financial Statistics
--------------------
Distribution's balance sheet as of September 30, 1996
and income statement for the 12 months ended September 30, 1996
are attached as Appendices D and E, respectively. The market
price of NFGC's common stock at May 26, 1997 was $42.00,
approximately 181% of current book value. Earnings for the twelve
months ended March 31, 1997 were $2.94 per share, for a return on
common equity of 12.9%. The current dividend is $1.68 and the
payout ratio is 57%.
NFGC's senior debt is rated "A-" by Standard & Poor's
Corporation and "A2" by Moody's Investor Service. Based on NFGC's
earnings for the 12 months ended September 30, 1996, pretax
interest coverage is approximately 2.5 times.
Derivative Transactions
-----------------------
Distribution has requested authority to enter into up
to $350 million of derivative transactions. These transactions
would take place during the 24-month period beginning on the date
of this Order. This request is identical to the request approved
in Case 95-G-OO90.
Derivative transactions are so named because their
value is derived from an underlying asset or index. For example,
one type of derivative transaction is where Distribution might
agree to pay another party (the "counterparty") a fixed amount
every six months in exchange for the counterparty paying
Distribution an amount that changes in relation to a U.S.
treasury bill index. Such a transaction, called an interest rate
swap, would allow Distribution to turn existing floating rate
debt into fixed rate debt (by paying the fixed amount to the
counterparty and passing along the variable amount received from
the counterparty on to the holders of the variable rate debt).
Distribution would enter into such a transaction if it thought
that interest costs could be lowered in this way.
The provisions of Distribution's derivatives include
several precautions to prevent the transactions from causing
-4-
<PAGE>
extensive losses. For instance, the transactions must be directly
related to Distribution's debt and they may be entered into only
with banks with a certain minimum credit rating. Despite these
safeguards, there are certain risks involved (for instance, the
default of a counterparty). Distribution's petition has
stipulated that the gain or loss due to derivative transactions
will be borne by shareholders. Staff agrees with this
stipulation, especially given that the company is inexperienced
with derivatives.
While this treatment for handling derivative
transactions will produce a slightly more complicated method of
calculating debt cost, it allows Distribution the flexibility
they desire and allows management to gain experience in
derivative transactions while simultaneously protecting
ratepayers from any missteps of management.
For additional background on derivatives, Appendix F
provides a detailed description of the reasons for using
derivative transactions, the precautions found in Distribution's
petition, a description of interest rate swaps and the risks
involved in derivative transactions, and the proposed rate
treatment of the derivative transactions.
Conclusion and Recommendation
-----------------------------
The Company has shown both a need for the proceeds of
the promissory notes and a basis for the financing. We recommend,
therefore, that Distribution be authorized to issue up to $200
million in promissory notes, subject to the conditions of the
Order.
Distribution has sufficiently demonstrated the value of
being allowed to assume the costs and benefits of the derivative
transactions outlined in its petition. The petition strikes a
balance between granting management flexibility in controlling
interest rate cost and risk, while taking precautions to ensure
that significant losses are not likely to occur. Although these
transactions carry with them risks that are beyond those of
traditional debt, ratepayers will be safeguarded by ascribing
both the loss and benefit of such transactions to Distribution's
-5-
<PAGE>
shareholders. Therefore, we recommend that Distribution be
authorized to enter into these transactions, subject to the
conditions of the Order.
Respectfully submitted,
/s/ Jeffrey S. Hogan
--------------------------------
JEFFREY S. HOGAN
Senior Utility Financial Analyst
Approved:
/s/ Charles M. Dickson
------------------------
CHARLES M. DICKSON
Chief, Accounting and Finance
-6-
<PAGE>
CASE 97-G-0496
Appendix A
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
FUNDS REQUIRED AND SOURCE OF FUNDS
----------------------------------
CALENDAR YEARS 1997-1999
------------------------
($000 OMITTED)
--------------
1997 1998
---- ----
FUNDS REQUIRED
--------------
Construction Expenditures $ 61,015 $ 57,679
Other Long-Term Debt 36 40
Notes Payable-Associated Companies
Note Maturing 11/05/97 (6.54%) 7,000 -
Note Maturing 3/01/99 (5.72%) - -
Payment and Discharge of Short-Term 102,815 70,312
Notes Payable-Associated Companies -------- --------
Total Funds Required $170,866 $128,031
======== ========
SOURCE OF FUNDS
---------------
Depreciation Accruals $ 34,905 $ 36,564
Deferred Taxes 4,446 1,607
Salvage Less Cost of Removal (2,218) (2,285)
Net Income and Treasury Funds 33,733 42,145
Financing 1997 100,000 -
Financing 1998 - 50,000
Financing 1999 - -
-------- --------
Total Sources of Funds $170,866 $128,031
======== ========
1997-1999
1999 Total
---- ---------
FUNDS REQUIRED
--------------
Construction Expenditures $ 56,391 $175,085
Other Long-Term Debt 43 119
Notes Payable-Associated Companies
Note Maturing 11/05/97 (6.54%) - 7,000
Note Maturing 3/01/99 (5.72%) 50,000 50,000
Payment and Discharge of Short-
Term Notes Payable-Associated 13,100 186,227
Companies -------- --------
Total Funds Required $119,534 $418,431
======== ========
SOURCE OF FUNDS
---------------
Depreciation Accruals $38,190 $109,659
Deferred Taxes 2,987 9,040
Salvage Less Cost of Removal (2,353) (6,856)
Net Income and Treasury Funds 30,710 106,588
Financing 1997 - 100,000
Financing 1998 - 50,000
Financing 1999 50,000 50,000
-------- --------
Total Sources of Funds $119,534 $418,431
======== ========
<PAGE>
CASE 97-G-0496
Appendix B
National Fuel Gas Distribution Corporation
Staff Needs Analysis (1997-1999)
($000 Omitted)
3/31/97 Short-Term Debt Balance: $ 82,600
Funds Required:
--------------
1997
----
Construction Expenditures 61,015
Other Long-Term Debt 36
Notes Payable 7,000
-------
Total 1997 Funds Required 68,051
1998
----
Construction Expenditures 57,679
Other Long-Term Debt 40
-------
Total 1998 Funds Required 57,719
1999
----
Construction Expenditures 56,391
Other Long-Term Debt 43
Notes Payable 50,000
-------
Total 1999 Funds Required 106,434
Funds Required (1997-1999) 232,204
--------
Short-Term Debt and Funds Required $314,804
Less Internally Generated Funds:
1997
----
Depreciation Accruals $ 34,905
Deferred Taxes 4,446
Salvage Less Cost of Removal (2,218)
--------
Total 1997 Internally Generated Funds 37,133
1998
----
Depreciation Accruals 36,564
Deferred Taxes 1,607
Salvage Less Cost of Removal (2,285)
--------
Total 1998 Internally Generated Funds 35,886
1999
----
Depreciation Accruals 38,190
Deferred Taxes 2,987
Salvage Less Cost of Removal (2,353)
--------
Total 1999 Internally Generated Funds 38,824
Total Internally Generated Funds $111,843
--------
External Financing Needs:
(ST Debt + Funds Required - Internally $202,961
Gen. Funds) ========
<PAGE>
CASE 97-G-0496
Appendix C
National Fuel Gas Distribution Corporation
Reimbursement Margin
Through September 30, 1996
Company Adj. Staff Staff
Margin No. Adjustment Margin
------- --- ----------- ------
Reimbursement Margin- $209,559,397 (1) ($312,603) $209,246,794
Case 95-G-0090
September 30, 1994
FUNDS EXPENDED
--------------
Additions to 122,392,145 0 122,392,145
Utility Plant
Net Change in CWIP 331,177 0 331,177
Payment and Discharge
of Notes:
From Associated 0 0 0
Companies
Other Long-Term Debt 66,520 0 66,520
Redemption of Notes 94,000,000 0 94,000,000
Payable
Premium on Redemption 0 0 0
of Notes Payable ----------- -------- ------------
Total Funds 216,789,842 0 216,789,842
Expended ------------ ------------
SOURCE OF FUNDS
---------------
Depreciation Accruals 61,545,925 0 61,545,925
Salvage 427,633 0 427,633
Cost of Removal (5,547,066) 0 (5,547,066)
Net Change in RWIP (1,082,514) 0 (1,082,514)
Net Transfers/ 12,129 0 12,129
Adjustments
Normalization of Accel 15,494,720 0 15,494,720
Deprec
Normal of ITC (1,300,233) 0 (1,300,233)
Def. Tax - Premium on (1,046,810) 0 (1,046,810)
Reacquired Debt
Def. Tax - Uniform (4,927,446) 0 (4,927,446)
Cap. Adj.
Amort of Premium on 2,990,886 0 2,990,886
Reacq. Debt
Customer Advances for 282,734 0 282,734
Construction
Advances from 100,000,000 0 100,000,000
Associated Companies ------------ -------- ------------
Total Source of 166,849,958 0 166,849,958
Funds ------------ -------- ------------
Reimbs. Margin at $259,499,281 ($312,603) $259,186,678
September 30, 1996 ============ ======== ============
<PAGE>
CASE 97-G-0496
Appendix D
Page 1 of 2
National Fuel Gas Distribution Corporation
Reimbursement Margin
Through September 30, 1996
ASSETS AND OTHER DEBITS
-----------------------
Utility Plant
-------------
Utility Plant $1,138,852,743
Less: Accumulated Provision for Depreciation,
Amortization and Depletion (283,771,333)
--------------
Total Net Utility Plant 855,081,410
--------------
Other Property and Investments
------------------------------
Non-Utility Property 82,344
Less: Accumulated Provision for Depreciation, (2,207)
and Amortization
Other Investments 1,088
Other Special Funds 9,104,916
--------------
Total Other Property and Investments 9,186,141
--------------
Current and Accrued Assets
--------------------------
Cash 3,380,521
Working Funds 658,800
Accounts Receivable 71,730,793
Less: Accumulated Provision for Uncollectable (6,708,329)
Accounts
Accounts Receivable from Associated Companies 9,127,317
Materials and Supplies 7,702,569
Gas Stored Underground-Current 34,727,086
Prepayments 17,539,466
Interest and Dividends Receivable 163,660
Accrued Utility Revenues 20,777,555
--------------
Total Current and Accrued Assets 159,099,438
--------------
Deferred Debits
---------------
Preliminary Survey and Investigation Charges 213,429
Clearing Accounts (731,270)
Miscellaneous Deferred Debits 140,315,840
Investment in Research and Development 59,239
Accumulated Deferred Income Taxes 31,005
--------------
Total Deferred Debits 139,888,243
--------------
Total Assets and Other Debits $1,163,255,232
==============
<PAGE>
LIABILITIES AND OTHER CREDITS
-----------------------------
Proprietary Capital
-------------------
Common Stock Issued 59,170,600
Premium on Capital Stock 68,500
Other Paid-ln Capital 121,599,684
Retained Earnings 219,745,767
------------
Total Proprietary Capital 400,584,551
------------
Long-Term Debt
--------------
Advances from Associated Companies 326,000,000
Other Long-Term Debt 430,285
-----------
Total Long-Term Debt 326,430,285
Current and Accrued Liabilities
-------------------------------
Accounts Payable 39,147,736
Notes Payable to Associated Companies 114,000,000
Accounts Payable to Associated Companies 13,539,610
Customer Deposits 4,287,077
Taxes Accrued 11,327,244
Interest Accrued (27,059)
Dividends Declared 9,106,000
Tax Collections Payable 1,482,568
Miscellaneous Current and Accrued Liabilities 26,627,879
------------
Total Current and Accrued Liabilities 219,491,055
------------
DEFERRED CREDITS
----------------
Customer Advances for Construction 1,643,713
Other Deferred Credits 44,272,249
Accumulated Deferred Investment Tax Credits 12,310,895
Accumulated Deferred Income Taxes - Liberalized 84,032,749
Depreciation
Accumulated Deferred Income Taxes - Other 64,155,063
------------
Total Deferred Credits 206,414,669
------------
OPERATING RESERVES
------------------
Injury and Damages and OPEB and Pension Reserves 4,664,940
Pensions and Benefits Reserves 5,669,732
--------------
Total Operating Reserves 10,334,672
--------------
Total Liabilities and Other Credits $1,163,255,232
==============
<PAGE>
Appendix E
Page 2 of 2
National Fuel Gas Distribution Corporation
Income Statement
For the Twelve Months Ended September 30, 1996
Utility Operating Income
------------------------
Operating Revenues $954,325,687
------------------ ------------
Operating Expenses
------------------
Operating Expense 702,774,493
Maintenance Expense 17,878,602
Depreciation Expense 31,491,117
Taxes Other Than Income Taxes 85,947,339
Income Taxes 32,013,962
------------
Total Operation Expenses 870,105,513
------------
Total Utility Operating Income 84,220,174
------------
Other Income
------------
Income from Merchandising, Jobbing and Contract 45,979
Work
Nonoperating Rental Income 2,100
Interest and Dividend Income 314,276
Allowance for Funds Used During Construction 278,126
Miscellaneous Nonoperating Income 10,869
---------
Total Other Income 651,350
---------
Other Income Deductions
-----------------------
Loss on Disposition of Property 676
Miscellaneous Income Deductions 961,800
-----------
Total Other Income Deductions 962,476
-----------
Taxes - Other Income and Deductions
-----------------------------------
Taxes Other Than Income Taxes 14,540
Income Taxes (784,981)
----------
Total Taxes - Other Income and Deductions (770,441)
----------
Net Other Income and Deductions 459,315
Interest Charges
----------------
Amortization of Debt Discount and Expense 1,495,443
Interest on Debt to Associated Companies 26,794,751
Other Interest Expense 5,154,194
------------
Total Interest Charges 33,444,388
------------
Net Income $51,235,101
---------- ============
<PAGE>
CASE 97-G-0496 APPENDIX F
Page 1 of 6
Reasons for the Derivative Transactions
---------------------------------------
One type of derivative product commonly used in the financial
world today is interest rate swaps. Interest rate swaps can
produce interest cost savings by exchanging variable rate debt
for fixed rate debt and/or fixed rate debt for variable rate
debt. Distribution claims that having authority to enter into
these transactions will allow its management new tools for
reducing interest costs, as well as the ability to manage
interest rate risk. Such financial instruments allow management
to take immediate advantage of opportunities arising in the
credit market, rather than having to await regulatory approvals.
In addition, Distribution may also have the opportunity to
refund debt in a more cost efficient manner, even effectively
refunding debt before such debt is callable. For instance, in
1994, Orange and Rockland Utilities, Inc. used an interest rate
swap in conjunction with variable rate bonds to obtain fixed rate
debt on favorable terms to refinance outstanding debt.
Precautions of the Derivative Transactions
------------------------------------------
While there are varied types of derivative transactions, the
type of contracts proposed in Distribution's supplemental
petition and outlined more fully in NFGC's Form U-l filing with
the Securities and Exchange Commission (SEC) (Schedule J in
Distribution's petition) are straightforward and relatively safe.
Distribution has built precautions into its proposal which are
meant to avoid the possibility that there could be large-scale
losses due to the derivative transactions.
First, Distribution has pledged that its derivative
transactions will not be "leveraged". This simply means that what
the parties of the contract are required to pay will not change
any faster than the precise change in the short-term debt index
specified in the-contract. This prevents a modest change in
interest rates from causing an unexpectedly large payment.
Second, Distribution has stated that all of the derivative
transactions will be "hedged". In other words, the transactions
will be directly related to Distribution's outstanding long- or
<PAGE>
short-term debt and will not be used as speculative bets on the
direction of interest rates.
In addition to the above precautions, NFGC will not enter into
any swap transaction with a party unless that party meets minimum
credit rating requirements. This provides some assurance against
a counterparty, for instance a bank, defaulting on its end of the
contract. Further, the derivative transactions are
non-assignable, meaning that the counterparty can not later
assign its obligation under the derivative contact to another
party.
Furthermore, staff will be monitoring all swap transactions.
We recommend that the Order require Distribution to supply the
Department with the same information NFGC must supply to the
Securities and Exchange Commission (SEC) for any transaction
entered into under this Order. Distribution will also provide
information on what the cost of "traditional" debt would have
been if not for the derivative transaction. This hypothetical
debt rate will be used in the ratemaking process to determine
what interest costs will be recovered in rates.
Finally, if the derivative transactions are used to refinance
existing debt, Distribution will be required to demonstrate these
savings, as our current practice requires. While staff will be
reviewing the savings of any refinancing after the refinancing
has taken place, this will allow Distribution to respond rapidly
to changes in the credit market. Staff will maintain its
oversight of such transactions, and if necessary address any
concerns in a rate proceeding.
Description of Interest Rate Swaps
----------------------------------
Interest rate swaps are relatively straightforward
instruments. In Distribution's case, there is a contract between
NFGC and a bank to exchange interest payments for a set amount of
time. One party pays a fixed amount while the other pays a
floating rate based on a short-term debt index. No additional
debt is created, and no principal is exchanged. Distribution
would still have "traditional" debt outstanding. The "notional"
amount of the derivative transactions will be equal to the amount
<PAGE>
of debt to which the derivative is directly related. This allows
Distribution to change a variable rate note into a fixed rate one
and change a fixed rate note into a variable rate one.
For instance, NFGC might issue a floating rate note whose
interest rate fluctuates in accordance with some index, such as
Treasury bills. NFGC could then enter into a contract in which a
counterparty agrees to pay NFGC an amount exactly equal to the
sum NFGC pays on the variable debt. In exchange, NFGC would pay
the bank a fixed amount each period. In this way, NFGC has
created virtual fixed rate debt. Depending on the length of the
swap agreement, NFGC could convert its floating rate debt into
fixed rate debt for all or part of the term of the underlying
variable rate debt. Distribution has stated that it would assume
the responsibility of such a transaction from NFGC if there is a
sufficient interest cost savings relative to a traditional fixed
rate debt issue. Such savings are occasionally possible when
market differences between short term and long term debt rates
can be exploited.
NFGC could also use interest rate swaps to convert fixed-rate
debt to floating rate debt by agreeing to receive a fixed payment
from the bank equal to its debt cost for a particular fixed-rate
debt issue and paying the bank a variable amount. While
Distribution has historically relied on fixed-rate medium- and
long-term debt, such an interest rate swap would be
considered by Distribution's management.
Distribution has also requested approval to enter into
derivative transactions called "caps" and "floors". These common
transactions allow management to guard against the risks
associated with variable rate debt by creating maximum and
minimum possible interest rates.
Risks and Rate Treatment of the Transactions
--------------------------------------------
While the derivative transactions are structured to minimize
potential losses, there are risks attendant with these
transactions which are beyond those associated with traditional
debt. However, these risks are an unavoidable trade-off for the
<PAGE>
opportunity to garner lower interest costs. For instance, under
some possible derivative transactions, a change in NFGC's credit
rating could result in higher fixed interest costs for
outstanding debt issues. In addition, unexpected interest rate
changes may lead Distribution to terminate its derivative
contract. The costs of such a move could be substantial.
Staff has conducted an analysis of what the possible costs and
benefits of these transactions might be. While it is difficult to
quantify the possible costs of interest rate swaps because of the
fact that they are dependent on such things as future interest
rate movements, some conclusions can be drawn.
In situations where Distribution is paying the fixed-rate
portion of a swap, the benefit of such a transaction is the
difference between what Distribution's overall fixed cost is
compared to what the fixed cost of a traditional debt issue would
have been. This will typically be anywhere from a few basis
points to perhaps 20 basis points. One cost of such a transaction
would be the amount Distribution would have to pay to terminate
the swap contract. It is not expected that such costs would be
substantially higher than the cost of call premiums on
traditional debt, perhaps equal to as much as 10 percent of the
outstanding principal of the underlying debt issue.
As for interest rate swaps where Distribution is paying the
floating-rate, the costs to terminate the swap could be
extensive. The amount would depend on how high the floating rate
is, the outlook for interest rates, and the term remaining on the
swap contract. While the "worst case" scenario would be
Distribution having a substantial amount of long-term, floating-
rate debt when interest rates spike upwards unexpectedly, this
scenario is very unlikely. In addition, such a capital structure
would be imprudent for a utility. Distribution's management has
stated that it would most likely use this strategy with a maximum
term of a few years and when the yield curve is conducive to such
a strategy. In addition, Distribution could use the
<PAGE>
"caps" and "floors" mentioned earlier to limit interest rate
risk. In such scenarios, it can be expected that termination
costs will not greatly exceed standard call premiums.
Though these risks are acceptable for Distribution to take if
management feels they are outweighed by the interest cost
savings, such risks should not fall on ratepayers. Therefore,
the Order requires the additional risk to be filtered out during
the ratemaking process by having NFGC's shareholders assume both
the benefits and the costs of these transactions.
This protection of ratepayers will be achieved in future rate
proceedings by applying a debt cost rate which is equal to what
the "traditional" debt cost would have been (as reported by
Distribution at the commencement of the transactions and reviewed
by staff). Currently, the Commission approves the authority of
Distribution to issue debt. The terms of this debt are then
reviewed by staff after it has been issued. Any concerns with
such terms can be raised in the next rate proceeding. In rate
proceedings, staff uses actual debt costs for fixed-rate debt and
forecasted rates for variable-rate debt to calculate what level
of interest costs will be recovered in rates. With derivative
transactions, staff will continue to monitor what debt is issued
and will review the swaps which are entered into. However, in
rate cases, staff will impute what the rate on traditional debt
would have been had Distribution not used derivatives rather than
the overall interest cost which is actually paid through the
derivative transaction.
In addition to applying what the interest rate would have been
with traditional debt in a rate proceeding, staff will also
assume that reasonable call provisions would have been built into
the traditional debt. If, at a later date, such debt would have
been reasonably refinanced, staff will impute such a refinancing
in a rate proceeding. In this way, ratepayers are insulated from
the affect of Distribution's use of derivatives.
Exhibit D-3
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
__________________________________________
SECURITIES CERTIFICATE TO THE PENNSYLVANIA PUBLIC
___________________________________________________
UTILITY COMMISSION FOR AUTHORIZATION
____________________________________
TO ISSUE $200,000,000 OF PROMISSORY NOTES, AND TO
________________________________________________
ASSUME THE COSTS AND BENEFITS OF
________________________________
CERTAIN DERIVATIVE INSTRUCTIONS, FOR
____________________________________
CALENDAR YEARS 1997-1999, AND
_____________________________
APPLICATION FOR APPROVAL OF CREDIT AND DERIVATIVE AGREEMENTS
____________________________________________________________
<PAGE>
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
___________________________________________
SECURITIES CERTIFICATE TO THE PENNSYLVANIA PUBLIC
__________________________________________________
UTILITY COMMISSION FOR AUTHORIZATION
____________________________________
TO ISSUE $200,000,000 OF PROMISSORY NOTES, AND TO
_________________________________________________
ASSUME THE COSTS AND BENEFITS OF
________________________________
CERTAIN DERIVATIVE INSTRUMENTS, FOR
___________________________________
CALENDAR YEARS 1997-1999
________________________
<PAGE>
BEFORE
PENNSYLVANIA PUBLIC UTILITY COMMISSION
=================================================
In re: Securities Certificate of NATIONAL : Securities
FUEL GAS DISTRIBUTION CORPORATION : Certificate
for authorization to issue and : No._______
sell promissory notes in the : 1997
aggregate principal amount of
not more than $200,000,000, and
to assume the costs and benefits of
certain derivative instruments.
=================================================
TO PENNSYLVANIA PUBLIC UTILITY COMMISSION:
National Fuel Gas Distribution Corporation ("Distribution")
files this Securities Certificate and requests the Pennsylvania
Public Utility Commission to register such certificate. In
support thereof, Distribution represents as follows:
(1) The name and address of the public utility filing this
Securities Certificate is: National Fuel Gas Distribution
Corporation, 10 Lafayette Square, Buffalo, New York 14203.
(2) The name and address of the General Counsel of
Distribution is: Paula M. Ciprich, 10 Lafayette Square, Buffalo,
New York 14203.
(3) Distribution is a gas corporation duly organized and
existing under Section 3 of the Transportation Corporations Law
of the State of New York, having its principal business office at
10 Lafayette Square, Buffalo, New York 14203. Distribution
provides gas service, and activities incidental thereto, to
retail customers located in the western portion of the State of
New York, and in the counties of Armstrong, Butler, Cameron,
Clarion, Clearfield, Crawford, Elk, Erie, Forest, Jefferson,
McKean, Mercer, Venango and Warren, all situated within the
Commonwealth of Pennsylvania. Service within the Commonwealth of
Pennsylvania is pursuant to a certificate of public convenience,
-1-
<PAGE>
dated August 17, 1973, issued by the Pennsylvania Public Utility
Commission and docketed at A-97939.
Distribution is the successor to Iroquois Gas Corporation,
Pennsylvania Gas Company and United Natural Gas Company pursuant
to a corporate reorganization effective as of July 1, 1974, which
also was approved by the Commission's order dated August 17,
1973, at A-97939.
In compliance with requirements of the Business Corporation
Law (Act of May 5, 1933, P.L. 364, as amended), Distribution
secured, from the Commonwealth of Pennsylvania, authority to do
business within the Commonwealth of Pennsylvania as foreign
corporation. The Application for a Certificate of Authority and
the Certificate of Authority are filed among the records of the
Secretary of the Commonwealth of Pennsylvania in Volume 73.57, at
pages 335 et seq., and in Volume 74.30, at pages 523 et seq.
Distribution is a wholly-owned subsidiary of National Fuel
Gas Company ("National"), a publicly-held corporation with its
common stock traded on the New York Stock Exchange. National
maintains its principal office at 10 Lafayette Square, Buffalo,
New York 14203 and is a registered public utility holding company
under the Public Utility Holding Company Act of 1935, as amended.
National also holds all the common stock of National Fuel Gas
Supply Corporation, Seneca Resources Corporation, Leidy Hub,
Inc., Highland Land & Minerals, Inc., Data-Track Account
Services, Inc-, National Fuel Resources, Inc. and Horizon Energy
Development, Inc. Neither National nor any of its subsidiaries
has outstanding preferred stock. Distribution is subject to the
regulatory jurisdiction of the Pennsylvania Public Utility
Commission ("PaPUC") and the Public Service Commission of the
State of New York ("PSC").
-2-
<PAGE>
(4) Distribution is controlled by:
(a) National;
(b) through its ownership of all of the outstanding
shares of the caoftal stock of Distribution;
(c) to the extent of 100%, and
(d) control is direct.
(5) National is the source of capital for Distribution and
National meets such capital requirements by issuing securities to
the public. Distribution may issue promissory notes, as
described herein, to National in order to secure debt capital for
purposes explained in Paragraph No. 7, below. The interest rates
and the maturity dates of Distribution's promissory notes, as
explained below, would be governed by the maturity dates and
interest rates of, and if applicable, sinking fund requirements
for, debentures or notes that would be issued to the public by
National.
It is National's current intention to redeem, at their
maturity, debentures and medium-term notes ("MTN's") issued by
National to the holders thereof. Two of National's MTN'S, some
of the proceeds of which were lent to Distribution, mature within
the next twenty-four months. Accordingly, within the next
twenty-four months, National will require Distribution to pay
sums due on the promissory notes issued by Distribution to
National in exchange for loans from National to Distribution, in
connection with Distribution's 6.54% promissory notes due
November 5, 1997 and its 5.72% promissory notes due March 1,
1999.
Distribution has no authority to issue promissory notes
after March 31, 1997 and will continue to lack such authority
until it receives the necessary PAPUC and PSC orders.
-3-
<PAGE>
Distribution is currently seeking such authorization from the
PSC, for a twenty-four month period beginning on the day of the
PSC order. National, Distribution and certain other subsidiaries
of National are authorized by the Securities and Exchange
Commission ("SEC') File No. 70-8541, to issue up to $350,000,000
of debentures and/or MTN's in the aggregate, prior to December
31, 1997. The current unused portion of this authorization is
$150,000,000. In the summer or fall of 1997, National, along
with Distribution and certain other subsidiaries of National,
plan to seek further SEC authorization to issue up to
$500,000,000 of debentures and/or MTN's in the aggregate. It is
currently anticipated that such authorization, if obtained, would
include the authorization for National to lend up to $200,000,000
of the proceeds of such issuances to Distribution, and for
Distribution to issue promissory notes to National, through
December 31, 1999, or for such other period as the parties may
request and the SEC may authorize.
Once requisite orders from the PAPUC and the PSC have been
received, the issuance of debentures and/or MTN's by National and
promissory notes by Distribution will occur from time-to-time
based upon market conditions and Distribution's requirements
during the twenty-four month period beginning with the date of
the orders. Therefore, Distribution is seeking authorization as
part of this Securities Certificate, consistent with such other
filings, to issue promissory notes in the principal amount of not
more than $200,000,000 for a twenty-four month period beginning
with the date of the order.
The promissory notes that Distribution may issue would have
the following characteristics:
-4-
<PAGE>
(a) Title of securities: Promissory Notes.
(b) Aggregate principal amount of promissory notes will not
exceed $200,000,000.
(c) National may issue debentures or MTN's to the public
which may or may not have sinking fund obligations, call
provisions and/or other terms, conditions and features, and the
proceeds from such public issuance would be the source of cash
delivered to Distribution by National in exchange for promissory
notes. The actual effective annual interest rate cannot be known
until National's debentures or MTN's have been sold to the
public.
Promissory notes which Distribution may issue would bear
interest pursuant to the provisions of the Credit Agreement and
Promissory Note, filed along with this Security Certificate as
Appendix "A." Each promissory note will be dated as of the date
of issuance by Distribution and each promissory note will be sold
at face value. Interest will be payable at such time as the
interest payments on National's debentures or MTN's become due.
If National issues sinking fund debentures or MTN'S, each
promissory note may have a different maturity date, with such
maturity date to be governed by the sinking fund requirements for
National's debentures or MTN'S. If National's debentures or
MTN's have no sinking fund obligations, the promissory notes will
have a final maturity date which is the same as the maturity date
of National's debentures or MTN'S.
-5-
<PAGE>
The full terms and conditions concerning Distribution's
possible borrowings from National are set forth in the Credit
Agreement and Promissory Note, filed along with this Securities
Certificate. The Credit Agreement between National and
Distribution provides, in Paragraph No. 2, in pertinent part, as
follows:
"Each promissory note shall be dated as of the date of
issue and shall bear interest payable at such time as
provided for in, and at the effective interest rate or
yield to maturity cost rate of, National's debenture
or note or other debt issue that provides the proceeds
from which Distribution Corporation has borrowed
hereunder. Such interest rate or cost shall reflect
the actual underwriters' or agents' fees and
commissions paid by National. The resulting effective
annual interest rate shall be rounded up to the next
highest 1/100th of 1%. Each promissory note shall
mature at such time as National's corresponding
debenture, note or other debt issue matures."
The promissory notes, if issued, would be subject to
prepayment, prior to maturity, under certain circumstances. The
Credit Agreement provides in Paragraph No. 4, as follows.
"If the debentures, notes or other debt issued by
National, or the indenture, supplemental indenture or
other documents governing the terms thereof, give
National the right or obligation to early redeem all or
part of said debentures, notes or other debt, and
National exercises that right or obligation, in whole
or in part, prior to their maturity, or if National
tenders for or otherwise discharges such debentures,
notes or other debt prior to their maturity, or
-6-
<PAGE>
modifies the terms thereof, then Distribution
Corporation shall prepay to National a principal
amount of the note or notes issued hereunder as shall
equal the principal amount of such debentures, notes or
other debt of National that are early redeemed or
discharged, together with accrued interest on the
prepaid principal amount of National's debentures,
notes or other debt, together with the premium, if any,
that is paid in connection with any such redemption or
discharge, and together with unrecovered (unamortized)
debt issuance discounts and costs, or Distribution
Corporation shall agree to make payments to National in
accordance with such modified terms, as the case may
be."
The promissory notes, if issued, would not be subject to
call, maintenance, Depreciation, sinking fund or other similar
provisions, except as recited above.
Any taxes on the promissory notes will be paid by National.
There will be no trustee with regard to the promissory
notes. (Bank of New York is indenture trustee respecting
National's debentures and MTN's.)
The Credit Agreement and promissory notes will be
substantially in the form as set forth in Appendix 'A,' filed
along with this Securities Certificate.
(6) Distribution will issue the promissory notes to
National after Distribution and National received all required
regulatory approvals with regard to issuance and acquisition of
the promissory notes, and after National issues its debentures or
MTN's to the public.
(7) National proposes to redeem, at their maturity,
debentures and MTN's issued by National Many of National's MTN'S,
some of the proceeds of which were lent to Distribution, mature
-7-
<PAGE>
within the next twenty-four months. At the same time, National
Will require Distribution to pay sums due on promissory notes
issued by Distribution to National in exchange for loans from
National to Distribution, in connection with Distribution's 6.54%
promissory notes due November 5. 1997 and its 5.72% promissory
notes due March 1, 1999.
The amounts of the debt issuances by National, and the
portions thereof that were lent by National to Distribution, with
regard to the above-described debt, are as follows:
Related
Medium-Term
Amount Lent Note
to Issuance
Distribution by National
____________ ___________
6.54% Promissory Notes due 11/05197 $ 7,000,000 $ 50,000,000
5.72% Promissory Notes due 3/01/99 $50,000,000 $100,000,000
Distribution, a wholly-owned subsidiary of National,
proposes to issue, as part of the financing discussed herein,
promissory notes to National, in the principal amount of not more
than $200,000,000, applying the proceeds from the sale of such
notes to (i) fund, in part, Distribution's construction programs
for the calendar years 1997, 1998 and 1999, (ii) use for general
corporate purposes, (iii) decrease short-term debt balances
incurred to finance previous years' construction programs, and
(iv) repay notes issued by Distribution to National in exchange
for loans from National to Distribution: the 6-54% promissory
notes due November 5, 1997 and the 5.72% promissory notes due
March 1, 1999.
Once all requisite orders have been received, the proposed
issuance of debentures or MTN's by National and promissory notes
by Distribution would occur from time-to-time based upon market
-8-
<PAGE>
conditions and Distribution's requirements during the twenty-four
month period beginning with the date of the order. Therefore,
Distribution requests that the PAPUC register the Securities
Certificate for Distribution's issuance of promissory notes
within the twenty-four month time period beginning with the date
of the order. If Distribution issues $200,000,000 of promissory
notes during such period and wishes to issue more, Distribution
will request registration of a new Securities Certificate.
Further, Distribution anticipates filing an additional Securities
Certificate at approximately the same time as, or shortly after,
this Securities Certificate expires.
As of September 30, 1996, Distribution had $114,000,000 in
short-term debt obligations outstanding. Such amount was payable
to National (Exhibit C, Sheet 2 of 2). Distribution's estimated
cost of constructing plant facilities during the calendar years
1997, 1998 and 1999 amounts to $61,015,000, $57,679,000 and
$56,391,000, respectively (Exhibit F, Sheet 1 of 1).
(8) National, pursuant to the Public Utility Holding
Company Act of 1935, as amended, has authority from the SEC to
issue and sell up to $350,000,000 of Debentures and/or MTN's in
the aggregate, prior to December 31, 1997, and to lend up to
$250,000,000 of the proceeds thereof to Distribution, among other
things. The current unused portion of this authorization is
$150,000,000. Refer to Exhibit E, Sheet 1 of 1, for the status of
the filing (on Form U-1) with the SEC concerning this financing.
(9) National and Distribution respectively, may also from
time-to-time, enter into and assume the costs and benefits of
agreements providing for interest rate swaps, caps, collars and
floors (collectively, "derivative instruments"), during the
twenty-four month period beginning on the date of the order. The
notional amount of such derivative instruments that may be
-9-
<PAGE>
obtained by National, and the costs of which may be assumed by
Distribution, shall not exceed $350,000,000 at any one time
outstanding.
National may enter into an interest rate swap agreement with
a counterparty, whereby National would pay a fixed interest rate
and receive a floating interest rate. Conversely, National may
enter into a swap agreement whereby it would pay a floating rate
and receive a fixed rate. National may also enter into agreements
concerning other derivative instruments in connection with such
swaps or its new or existing debt. The purpose of such swaps
would be, respectively, to "convert" floating rate interest
payments to fixed rate payments, and to "convert" fixed rate
interest payments to floating rate payments.
See the Derivative Agreement (Appendix 'B'), filed along
with this Securities Certificate, for the form of agreement to be
used in the event National enters into, and Distribution assumes
the costs and benefits of, agreements concerning such derivative
instruments. See Exhibit E, Sheet 1 of 1, as it refers to a more
detailed description of the purposes for which National and
Distribution may enter into such arrangements, as well as several
examples of how such transactions work.
Note that Distribution is not, through this Securities
Certificate, seeking the recovery in rates of the costs
associated with such derivative instruments. Distribution is
only hereby requesting authorization to assume the costs and
benefits of such derivative agreements.
(10) Appendix "A" and Appendix "B" hereto constitute
affiliated interest agreements. These agreements have no
expiration date.
-10-
<PAGE>
(11) Distribution requests a waiver of the general provision
requiring that financial statements be filed relating to periods
ending no more than ninety days prior to the date of filing.
(12) The following exhibits are appended hereto and are made
a part hereof:
A. Balance Sheet of National Fuel Gas Distribution
Corporation at September 30, 1996.
B. Statement of Income and Earned Surplus of National
Fuel Gas Distribution Corporation for the Twelve
Months Ended September 30, 1996.
C. Statement Showing Status of the Funded Debt of
National Fuel Gas Distribution Corporation at
September 30, 1996.
D. Statement Showing Status of Outstanding Capital
Stock of National Fuel Gas Distribution
Corporation at September 30, 1996.
E. Statement regarding the Securities and Exchange
Commission Order with Respect to the Possible
Increase of Indebtedness.
F. Statement of Funds Required and Source of Funds by
National Fuel Gas Distribution Corporation for the
Twelve Month Periods ended December 31, 1997, 1998
and 1999.
-11-
<PAGE>
WHEREFORE, Distribution respectfully requests the
Pennsylvania Public Utility Commission to register this
Securities Certificate, by April 30, 1997 pursuant to Article VI
of the Public Utility Law, as amended.
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
By /s/ Joseph P. Pawlowski
-------------------------------------------
Joseph P. Pawlowski
Sr. Vice President and Treasurer
-12-
<PAGE>
AFFIDAVIT
Joseph P. Pawlowski, being duly sworn according to Law,
deposes and says: that he is the Senior Vice President and
Treasurer of National Fuel Gas Distribution Corporation; that he
is authorized to and does make this affidavit for it; and that
the facts set forth above are true and correct.
/s/ Joseph P. Pawlowski
--------------------------
Joseph P. Pawlowski
Sworn and subscribed before
me this 31st day of March, 1997
/s/ Paula Ann Dubreville
---------------------------
Notary Public
<PAGE>
EXHIBIT A
Sheet 1 of 2
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
-----------------------------------------
BALANCE SHEET
-------------
AT SEPTEMBER 30, 1996
---------------------
Assets and Other Debits
-----------------------
Utility Plant
-------------
Utility Plant (101-107, 114, 117, 118.1, 118.2,
120) $1,138,852,743
Less: Accumulated Provision for Depreciation,
Amortization and Depletion (108-113, 115, (283,771,333)
119.1, 119.2, 120.5) --------------
855,081,410
Total Net Utility Plant --------------
Other Property and Investments
------------------------------
Non-Utility Property (121) 82,344
Less: Accumulated Provision for Depreciation
and Amortization (122) (2,207)
Other Investments (124) 1,088
9,104,916
Other Special Funds (128) --------------
9,186,141
Total Other Property and Investments --------------
Current and Accrued Assets
--------------------------
Cash (131) 3,380,521
Working Funds (135) 658,800
Accounts Receivable (142, 143) 71,730,793
Less: Accumulated Provision for Uncollectible
Accounts (144) (6,708,329)
Accounts Receivable from Associated Companies
(146) 9,127,317
Materials and Supplies (150) 7,702,569
Gas Stored Underground-Current (164.1) 34,727,086
Prepayments (165) 17,539,466
Interest and Dividends Receivable (171) 163,660
20,777,555
Accrued Utility Revenues (173) --------------
159,099,438
Total Current and Accrued Assets --------------
Deferred Debits
---------------
Preliminary Survey and Investigation Charges
(183) 213,429
Clearing Accounts (184) (731,270)
Miscellaneous Deferred Debits (186, 182.3) 140,315,840
Investment in Research and Development (188) 59,239
31,005
Accumulated Deferred Income Taxes (190) --------------
139,888,243
Total Deferred Debits --------------
$1,163,255,232
Total Assets and Other Debits ==============
<PAGE>
EXHIBIT A
Sheet 2 of 2
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
------------------------------------------
BALANCE SHEET
-------------
AT SEPTEMBER 30, 1996
---------------------
Liabilities and Other Credits
-----------------------------
Proprietary Capital
-------------------
Common Stock Issued (201) $ 59,170,600
Premium on Capital Stock (207) 68,500
Other Paid-In Capital (208-211) 121,599,684
219,745,767
Retained Earnings (215, 216) --------------
400,584,551
Total Proprietary Capital --------------
Long-Term Debt
--------------
Advances from Associated Companies (223) 326,000,000
430,285
Other Long-Term Debt (224) --------------
326,430,285
Total Long-Term Debt --------------
Current and Accrued Liabilities
-------------------------------
Accounts Payable (232) 39,147,736
Notes Payable to Associated Companies (233) 114,000,000
Accounts Payable to Associated Companies (234) 13,539,610
Customer Deposits (235) 4,287,077
Taxes Accrued (236) 11,327,244
Interest Accrued (237) (27,059)
Dividends Declared (238) 9,106,000
Tax Collections Payable (241) 1,482,568
Miscellaneous Current and Accrued Liabilities 26,627,879
(242) --------------
219,491,055
Total Current and Accrued Liabilities --------------
Deferred Credits
----------------
Customer Advances for Construction (252) 1,643,713
Other Deferred Credits (253, 254) 44,272,249
Accumulated Deferred Investment Tax Credits
(255) 12,310,895
Accumulated Deferred Income Taxes - Liberalized
Depreciation (282) 84,032,749
64,155,063
Accumulated Deferred Income Taxes-Other (283) --------------
206,414,669
Total Deferred Credits --------------
Operating Reserves
------------------
Injury and Damages and OPEB and Pension
Reserves (262) 4,664,940
5,669,732
Pensions and Benefits Reserves (263) --------------
10,334,672
Total Operating Reserves --------------
$1,163,255,232
Total Liabilities and Other Credits ==============
<PAGE>
EXHIBIT B
Sheet 1 of 2
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
___________________________________________
INCOME STATEMENT
________________
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
________________________________________________
Utility Operating
_________________
Operating Revenues (400) $954,325,687
________________________ ____________
Operating Expenses
__________________
Operating Expense (401) 702,774,493
Maintenance Expense (402) 17,878,602
Depreciation Expense (403) 31,491,117
Taxes Other Than Income Taxes (408.1) 85,947,339
Income Taxes (409.1, 410.1, 411.1, 411.4, 32,013,962
411.8) ___________
Total Operating Expenses 870,105,513
___________
Total Utility Operating Income 84,220,174
__________
Other Income
____________
Income from Merchandising, Jobbing and
Contract Work (415, 416) 45,979
Nonoperating Rental Income (418) 2,100
Interest and Dividend Income (419) 314,276
Allowance for Funds Used During Construction 278,126
(419.1)
Miscellaneous Nonoperating Income (421) 10,869
_______
Total Other Income 651,350
________
Other Income Deductions
_______________________
Loss on Disposition of Property (421.2) 676
Miscellaneous Income Deductions (426) 961,800
________
Total Other Income Deductions 962,476
________
Taxes Other Income and Deductions
_________________________________
Taxes Other Than Income Taxes (408.2) 14,540
Income Taxes (409.2, 410.2, 411.2, 411.5, (784,981)
420) _________
Total Taxes-Other Income and (770,441)
Deductions _________
Net Other Income and Deductions 459,315
________
Interest Charges
________________
Amortization of Debt Discount and Expense 1,495,443
(428)
Interest on Debt to Associated Companies 26,794,751
(430)
Other Interest Expense (431) 5,154,194
__________
Total Interest Charges 33,444,388
__________
Net Income $51,235,101
__________ ===========
<PAGE>
EXHIBIT B
Sheet 2 of 2
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
__________________________________________
STATEMENT OF EARNED SURPLUS
___________________________
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1996
_______________________________________________
Unappropriated Earned Surplus at September 30, $204,934,666
1995 (216)
Balance Transferred from Income (433) 51,235,101
Dividends Declared - Common Stock (483) (36,424,000)
___________
Unappropriated Earned Surplus at September 30, $219,745,767
1996 (216) ============
<PAGE>
EXHIBIT C
Sheet 1 of 2
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
__________________________________________
STATEMENT SHOWING STATUS OF THE FUNDED DEBT
__________________________________________
AT SEPTEMBER 30, 1996
_____________________
(g) Advances from Associated Companies
----------------------------------
Interest
Name & --------------
Description Date Dtae of
of Obligation Rate Payable Maturity Amount Held By
------------- ---- ------- -------- ------ -------------
Promissory
Note #92-1 7.99% 02/01 & 02/01/2004 $100,000,000 National Fuel
08/01 Gas Company
Promissory
Note #92-5 6.54% 05/01 & 11/05/1997 7,000,000 National Fuel
11/01 Gas Company
Promissory
Note #93-1 6.71% 05/01 & 02/04/2000 50,000,000 National Fuel
11/01 Gas Company
Promissory
Note #93-2 7.46% 05/01 & 03/30/2023 49,000,000 National Fuel
11/01 Gas Company
Promissory
Note #94-1 8.55% 08/01 & 07/15/2024 20,000,000 National Fuel
02/01 Gas Company
Promissory
Note #95-1 7.50% 02/01 & 06/13/2025 50,000,000 National Fuel
08/01 Gas Company
Promissory
Note #96-1 5.72% 02/01 & 03/01/1999 50,000,000 National Fuel
08/01 ---------- Gas Company
$326,000,000
============
<PAGE>
EXHIBIT C
Sheet 2 of 2
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
__________________________________________
STATEMENT SHOWING STATUS OF THE FUNDED DEBT
___________________________________________
AT SEPTEMBER 30, 1996
_____________________
(h) Advances from Associated Companies
----------------------------------
Interest
Name & --------------
Description Date Date of
of Obligation Rate Payable Maturity Amount Held By
------------- ---- ------- -------- ------ -------------
Notes
Payable 5.60%* Monthly N/A $114,000,000 National Fuel
Gas Company
* Represents Weighted Average Interest Rate at September 30, 1996.
<PAGE>
EXHIBIT D
Sheet 1 of 1
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
__________________________________________
STATEMENT SHOWING STATUS OF OUTSTANDING CAPITAL STOCK
________________________________________________________
AT SEPTEMBER 30, 1996
_____________________
------------------------------------------
Designation
of Kind No. Of Shares Par Value
and Class Authorized Per Share
(a) (b) (c)
------------ ------------- ------------
Common 2,000 No Par Value
Preferred None None
------------ ------------- ------------
Totals 2,000 2,000
------------- ------------- -------------
--------------------------------------------------------------------------
Total Par Value, or Number of
Shares if Without Par Value
--------------------------------------------------------
Held by the Public Utility
----------------------------------------------
Stated Book Value
Number of Shares of Outstanding
Outstanding In Stock Having No
of Reacquired Sinking Par Value as of
Amount (not held by the and Held in or Other Date of
Amortized Public Utility) Treasury Pledged Funds Balance Sheet
(d) (e) (f) (g) (h) (j)
--------------------------------------------------------------------------
2,000 2,000 None None None $59,170,600
None None None None None -0-
--------------------------------------------------------------------------
2,000 2,000 None None None $59,170,600
--------------------------------------------------------------------------
Note: All shares outstanding are issued to National Fuel Gas Company.
<PAGE>
EXHIBIT E
Sheet 1 of 1
NATIONAL FUEL GAS COMPANY
_________________________
STATEMENT REGARDING
___________________
THE SECURITIES AND EXCHANGE COMMISSION ORDER WITH
__________________________________________________
RESPECT TO THE PROPOSED INCREASE OF INDEBTEDNESS
_______________________________________________
AND THE PROPOSED ISSUANCE OF DERIVATIVE INSTRUMENTS
____________________________________________________
An Application-Declaration of Form U-1, as amended (File No. 70-
8541), filed with the Securities and Exchange Commission ("SEC")
by National Fuel Gas Company and National Fuel Gas Distribution
Corporation, was included with Case No. S-00950489.
In the above file, the SEC has granted authorization (i)
permitting National to issue up to $350 million of indebtedness,
and to loan up to $250 million of such amounts to Distribution
($150 million of such authorization currently remains
outstanding), and (ii) permitting National to enter into
derivative instruments having an aggregate notional amount of up
to $350 million at any one time outstanding, and permitting
Distribution to assume the costs and benefits thereof.
<PAGE>
EXHIBIT F
Sheet 1 of 1
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
__________________________________________
STATEMENT OF FUNDS REQUIRED AND SOURCE OF FUNDS
______________________________________________
TO MEET PROPOSED FINANCING FOR THE PERIODS
__________________________________________
JANUARY 1 THROUGH DECEMBER 31, 1997, 1998 AND 1999
___________________________________________________
1997 1998
---- ----
FUNDS REQUIRED
--------------
Construction Expenditures $ 61,015,000 $ 57,679,000
Other Long-Term Debt 36,000 40,000
Notes Payable-Associated Companies
Note Maturing 11/05/97 (6.54%) 7,000,000 -
Note Maturing 3/01/99 (5.72%) - -
Payment and Discharge of Short-Term
Notes Payable Associated Companies 102,815,000 70,312,000
------------ ------------
Total Funds Required $170,866,000 $128,031,000
============ ============
SOURCE OF FUNDS
---------------
Depreciation Accruals $ 34,905,000 $ 36,564,000
Deferred Taxes 4,446,000 1,607,000
Salvage Less Cost of Removal (2,218,000) (2,285,000)
Net Income and Treasury Funds 33,733,000 42,145,000
Financing 1997 100,000,000 -
Financing 1998 - 50,000,000
Financing 1999 - -
------------ ------------
Total Sources of Funds $170,866,000 $128,031,000
============ ============
1999
----
FUNDS REQUIRED
--------------
Construction Expenditures $ 56,391,000
Other Long-Term Debt 43,000
Notes Payable-Associated Companies
Note Maturing 11/05/97 (6.54%) -
Note Maturing 3/01/99 (5.72%) 50,000,000
Payment and Discharge of Short-Term
Notes Payable Associated Companies 13,100,000
------------
Total Funds Required $119,534,000
============
SOURCE OF FUNDS
---------------
Depreciation Accruals $ 38,190,000
Deferred Taxes 2,987,000
Salvage Less Cost of Removal (2,353,000)
Net Income and Treasury Funds 30,710,000
Financing 1997 -
Financing 1998 -
Financing 1999 50,000,000
------------
Total Sources of Funds $119,534,000
============
<PAGE>
APPLICATION FOR APPROVAL
________________________
OF CREDIT AND DERIVATIVE AGREEMENTS BETWEEN
___________________________________________
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
__________________________________________
AND NATIONAL FUEL GAS COMPANY
______________________________
<PAGE>
BEFORE
------
PENNSYLVANIA PUBLIC UTILITY COMMISSION
--------------------------------------
================================================================
Application for Approval of Credit and Derivative Agreements
between National Fuel Gas Distribution Corporation
and National Fuel Gas Company
================================================================
APPLICATION FOR APPROVAL
_________________________
OF CREDIT AND DERIVATIVE AGREEMENTS BETWEEN
___________________________________________
AFFILIATED INTERESTS
____________________
National Fuel Gas Distribution Corporation ("Distribution")
files this Application pursuant to Section 2102 of the Public
Utility Code, 66 Pa.C.S.A. Section 2102, and requests the
Pennsylvania Public Utility Commission ("Commission") to enter an
order approving the proposed Credit Agreement and Derivative
Agreement between Distribution and National Fuel Gas Company
("National") that are attached hereto as Appendix "A" and "B"
respectively. In support of this Application, Distribution
represents as follows:
1. Distribution is a public utility providing gas service
to customers located in fourteen counties in northwestern
Pennsylvania and in portions of New York. Distribution is
subject to the regulatory jurisdiction of the Commission.
2. National is a corporation organized and existing under
the laws of the State of New Jersey. National owns 100% of the
voting securities of Distribution. Distribution and National are
affiliated interests as defined by Section 2101 of the Public
Utility Code, 66 Pa.C.S.A. Section 2101.
-1-
<PAGE>
3. National also owns 100% of the voting securities of
National Fuel Gas Supply Corporation, Seneca Resources
Corporation, Leidy Hub, Inc., Highland Land & Minerals, Inc.,
Data-Track Account Services, Inc., National Fuel Resources, Inc.,
and Horizon Energy Development, Inc. National is a registered
public utility holding company under the Public Utility Holding
Act of 1935, as amended. National's stock is publicly traded on
the New York Stock Exchange.
4. National is able to issue debentures and medium-term
notes at lower cost, including lower interest rates, than could
be obtained by Distribution. Accordingly, National provides
Distribution with all of its debt capital.
5. In order to meet the capital requirements of
Distribution and National's other subsidiaries, National may from
time-to-time issue and sell debentures and/or medium-term notes
(MTN's). National may also enter into or terminate interest rate
swaps, caps, collars and floors from time-to-time, and pass
through the costs and benefits thereof to Distribution, in order
to limit or define interest rate risk, or change the character or
terms of new and existing long-term debt. National is authorized
by the Securities and Exchange Commission ("SEC") File No. 70-
8541, to issue up to $350,000,000 of debentures and/or MTN's in
the aggregate, to lend up to $250,000,000 of the proceeds thereof
to Distribution in exchange for promissory notes, and to enter
into agreements respecting interest rate swaps, caps, collars and
floors in aggregate notional amounts of up to $350,000,000 at any
one time outstanding. This authority expires on December
31,1997. The current unused portion of the SEC authority related
to indebtedness is $150,000,000. In the summer or fall of 1997,
National, along with Distribution and certain other subsidiaries
of National, plan to seek further SEC authorization to issue up
to $500,000,000 of debentures and/or MTN's in the aggregate, and
to enter into agreements concerning interest rate swaps, caps,
collars and floors, in aggregate principal amounts not to exceed
-2-
<PAGE>
$500,000,000 at any one time outstanding. It is currently
anticipated that such authorization, if obtained, would include
the authorization for National to lend up to $200,000,000 of the
proceeds of such issuances to Distribution and for Distribution
to issue promissory notes to National, through December 31, 1999,
or for such other period as the parties may request and the SEC
may authorize. Therefore, National will lend to Distribution up
to $200,000,000 of funds obtained by National from the issue and
sale of its debentures and/or MTN's, and will pass on to
Distribution the costs and benefits of up to $350,000,000
notional amount of such swaps and other derivative instruments.
Refer to Exhibit E, Sheet 1 of 1, attached to the Securities
Certificate for information regarding SEC File No. 70-8541
concerning the financing that is the subject of this Application.
Once all requisite orders have been received, the proposed
issuance of debentures and/or MTN's by National and promissory
notes by Distribution, and the proposed entry into agreements
concerning interest rate swaps and other derivative instruments,
may occur from time-to-time based upon favorable market
conditions and Distribution's requirements during the twenty-four
month period beginning with the date of the order hereby sought
from the Commission.
6. The full terms of such borrowings and the form of the
promissory notes that may be issued by Distribution to National
are provided in the proposed "Credit Agreement", between
Distribution and National, that is attached to this Application
as Appendix "A". If National enters into agreements concerning
interest rate swaps or other derivative instruments, and if
Distribution agrees to assume the costs and benefits thereof, the
terms thereof and the form of such agreement are set forth herein
as Appendix "B". Appendix "A" and Appendix "B" hereto constitute
affiliated interest agreements. These agreements have no
expiration dates.
-3-
<PAGE>
7. Promissory notes, if any, will bear interest pursuant
to the provisions of the Credit Agreement. Interest would be
payable as set forth in the documents applicable to National's
issue and sale of MTN's or debentures. Each of Distribution's
promissory notes may have a different maturity date, with such
maturity date to be governed by sinking fund and maturity
requirements for National's debentures or MTN's, or by the
maturity dates of such debentures or MTN's if there are no
sinking fund obligations. The full terms and conditions
concerning Distribution's possible borrowings from National are
set forth in or incorporated into the Credit Agreement and in the
form of promissory notes attached hereto as Appendix "A". The
Credit Agreement (Appendix "A") between National and Distribution
provides, in Paragraph No. 2, in pertinent part as follows:
"Each promissory note shall be dated as of the date of issue
and shall bear interest payable at such time as provided for
in, and at the effective interest rate or yield to maturity
cost rate of, National's debenture or note or other debt
issue that provides the proceeds from which Distribution
Corporation has borrowed hereunder. Such interest rate or
cost shall reflect the actual underwriters' or agents' fees
and commissions, paid by National. The resulting effective
annual interest rate shall be rounded up to the next highest
1/100th of 1%. Each promissory note shall mature at such
time as National's corresponding debenture, note or other
debt issue matures."
The promissory notes, if issued, would be subject to
prepayment, prior to maturity, under certain circumstances. The
Credit Agreement (Appendix "A") provides in Paragraph No. 4 as
follows:
"If the debentures, notes or other debt issued by National,
or the indenture, supplemental indenture or other documents
governing the terms thereof, give National the right or
obligation to early redeem all or part of said debentures,
notes or other debt, and National exercises that right or
obligation, in whole or in part, prior to their maturity, or
if National tenders for or otherwise discharges such
debentures, notes or other debt prior to their maturity, or
modifies the terms thereof, then Distribution Corporation
shall prepay to National a principal amount of the note or
-4-
<PAGE>
notes issued hereunder as shall equal the principal amount
of such debentures, notes or other debt of National that are
early redeemed or discharged, together with accrued interest
on the prepaid principal amount of National's debentures,
notes or other debt, together with the premium, if any, that
is paid in connection with any such redemption or discharge,
and together with unrecovered (unamortized) debt issuance
discounts and costs, or Distribution Corporation shall agree
to make payments to National in accordance with such
modified terms, as the case may be."
The promissory notes, if issued, would not be subject to
call, maintenance, depreciation, sinking fund or other similar
provisions, except as described herein.
WHEREFORE, Distribution requests that the Pennsylvania
Public Utility Commission enter an order approving the Credit
Agreement and Derivative Agreement attached hereto as Appendices
"A" and "B" respectively.
Respectfully submitted,
NATIONAL FUEL GAS
DISTRIBUTION CORPORATION
/s/ Joseph P. Pawlowski
________________________________
Joseph P. Pawlowski
Sr. Vice President and Treasurer
-5-
<PAGE>
APPENDIX "A"
Attached is the Credit Agreement and Note, Sheets 1 through 3.
<PAGE>
Sheet 1 of 3
CREDIT AGREEMENT
THIS AGREEMENT dated ; by and between
NATIONAL FUEL GAS COMPANY (hereinafter called "National"), a New
Jersey corporation, and NATIONAL FUEL GAS DISTRIBUTION
CORPORATION (hereinafter called "Distribution Corporation"), a
New York corporation and a wholly owned subsidiary of National.
W I T N E S S E T H:
1. In order to provide funds to Distribution Corporation
for working capital and its construction program, and other
lawful purposes, National agrees to extend credit to Distribution
Corporation from time-to-time, upon mutual consent and upon the
further terms and conditions set forth in this Agreement.
2. Each borrowing made hereunder shall be made against
delivery by Distribution Corporation to National of Distribution
Corporation's promissory note to evidence the amount borrowed
each time. Each promissory note shall be dated as of the date of
issue and shall bear interest payable at such time as provided
for in, and at the effective interest rate or yield to maturity
cost rate of, National's debenture or note or other debt issue
that provides the proceeds from which Distribution Corporation
has borrowed hereunder. Such interest rate or cost shall reflect
the actual underwriters' or agents' fees and commissions paid by
National. The resulting effective annual interest rate shall be
rounded up to the next highest 1/100th of 1%. Each promissory
note shall mature at such time as National's corresponding
debenture, note or other debt issue matures.
3. It is agreed that if a default occurs with respect to
the punctual payment of any principal or interest due under this,
or any other agreement or note of Distribution Corporation, or if
Distribution Corporation makes an assignment for the benefit of
creditors or files a petition in bankruptcy or is adjudicated
insolvent or bankrupt, or if there is commenced against
Distribution Corporation any such proceeding, then the entire
amount of the principal and interest on all of the notes issued
under this Agreement may be declared by National to be forthwith
due and payable.
4. If the debentures, notes or other debt issued by
National, or the indenture, supplemental indenture or other
documents governing the terms thereof, give National the right or
obligation to early redeem all or part of said debentures, notes
or other debt, and National exercises that right or obligation in
whole or in part, prior to their maturity, or if National tenders
for or otherwise discharges such debentures, notes or other debt
prior to their maturity, or modifies the terms thereof, then
Distribution Corporation shall prepay to National a principal
amount of the note or notes issued hereunder as shall equal the
principal amount of such debentures, notes or other debt of
National that are early redeemed or discharged, together with
accrued interest on the prepaid principal amount of National's
debentures, notes or other debt, together with the premium, if
any, that is paid in connection with any such redemption or
discharge, and together with unrecovered (unamortized) debt
issuance discounts and costs, or Distribution Corporation shall
agree to make payments to National in accordance with such
modified terms, as the case may be.
5. This Agreement shall become effective when approvals
have been obtained from the regulatory commissions having
jurisdiction over this Agreement.
<PAGE>
Sheet 2 of 3
6. This Agreement shall be binding upon the successors and
assigns of the parties hereto. This Agreement shall be construed
and enforced under and in accordance with the laws of the state
of New York. This Agreement may be executed in counterparts,
each one of which, when fully executed, shall be deemed to have
the same dignity, force and effect as the original.
IN WITNESS WHEREOF, the parties hereto have caused their
authorized officers to execute this Agreement and to have their
corporate seals affixed and attested the day and year first above
written.
ATTEST: NATIONAL FUEL GAS COMPANY
_______________________ ___________________________
Secretary President
ATTEST: NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
_______________________ __________________________
Secretary President
<PAGE>
Sheet 3 of 3
Distribution Corporation Note No.
$ ,
For value received, the undersigned NATIONAL FUEL GAS
DISTRIBUTION CORPORATION, a New York corporation (hereinafter
called "Distribution Corporation"), hereby promises to pay on or
before to NATIONAL FUEL GAS COMPANY, a New Jersey
corporation (hereinafter called "National"), or to its order, at
its offices, 10 Lafayette Square, Buffalo, New York, in lawful
money of the United States, the principal sum of
***
***
and to pay interest on said principal sum or any unpaid balance
thereof semiannually on the 1st day of ________________
and _____ in each year at said office, in like money, from the
date hereof until this note shall become due or shall be paid in
full at the rate of __ % per annum*.
This note is one of the notes of Distribution Corporation
mentioned in a Credit Agreement dated ___________________________
by and between Distribution Corporation and National providing
for the issuance of promissory notes by Distribution Corporation
to National to provide funds for Distribution Corporation as
described in and subject to the terms of said Credit Agreement.
Upon the occurrence of an event described in Paragraph 3 or
4 in said Credit Agreement, the principal of this note and the
interest due thereon, or part thereof, may be declared by
National to be forthwith due and payable, without necessity of
demand, notice, presentment or protest.
NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
______________________________
President
______________________________
Vice President and Controller
*Rate and maturity as provided
in Paragraph 2 of Credit Agreement
dated
<PAGE>
APPENDIX "B"
Attached is the Derivative Agreement, Sheets 1 and 2.
<PAGE>
Sheet 1 of 2
FORM OF DERIVATIVE AGREEMENT
THIS AGREEMENT ("Agreement") dated as of ;
is entered into by and between NATIONAL FUEL GAS COMPANY
(hereinafter called "National"), a New Jersey corporation, and
NATIONAL FUEL GAS DISTRIBUTION CORPORATION (hereinafter called
"Distribution Corporation"), a New York corporation and a
subsidiary of National.
W I T N E S S E T H:
1. If National from time-to-time enters into agreements
concerning interest rate swaps, caps, collars, and/or floors
(hereinafter called "derivative instruments"), with banks or
other financial institutions (hereinafter called
"counterparties") and Distribution Corporation desires to obtain
the benefits and pay the costs thereof, this Agreement, together
with any attachments as may be necessary to further describe the
terms of such derivative instruments and the allocation of such
costs and benefits, shall govern the terms of such arrangements.
2.(a) If National desires to enter into, and
Distribution Corporation desires to assume the costs and benefits
of, an interest rate swap whereby National makes fixed rate
payments to, and receives floating rate payments from, a
counterparty, in lieu of: (i) National's issuance of long-term
debt and liquidation of short-term debt, (ii) National's lending
of the proceeds from such issuance of long-term debt to
Distribution Corporation, (iii) Distribution Corporation's
liquidation of short-term debt, and (iv) Distribution
Corporation's issuance of a promissory note to National, National
shall pay to Distribution Corporation any amounts received by
National from the counterparty in connection with such swap, and
Distribution Corporation shall pay to National any amounts that
National must pay to the counterparty in connection with such
swap.
(b) If National desires to enter into, and Distribution
Corporation desires to assume the costs and benefits of,
agreements that provide for caps, collars or floors in connection
with such swap, National shall pay to Distribution Corporation
any amounts received by it from the counterparty in connection
therewith, and Distribution Corporation shall pay to National any
amounts that National must pay the counterparty in connection
therewith.
3. If transactions as are described in Paragraph 2 occur,
Distribution Corporation shall continue to pay interest on its
underlying short-term debt.
4. (a) If National desires to enter into, and
Distribution Corporation desires to assume the costs and benefits
of, an interest rate swap whereby National makes floating rate
payments to, and receives fixed rate payments from, a
counterparty, in order to effectively convert, in whole or in
part, National's existing fixed rate interest payments to
floating rate payments, and likewise convert Distribution
Corporation's payments pursuant to its promissory note to
National, National shall pay to Distribution Corporation any
amounts received by National from the counterparty pursuant to
such swap, and Distribution Corporation shall pay to National any
amounts that National must pay to the counterparty in connection
with such swap.
(b) If the payments under the interest rate swap are
netted, National shall pay to Distribution Corporation, or
Distribution Corporation shall pay to National any amount that
National shall receive from or pay to the counterparty in
connection with such swap, as the case may be. If National
enters into agreements that provide for caps, collars or floors
in connection with such swap, the provisions set forth in
paragraph 2(b) concerning this matter shall apply.
<PAGE>
Sheet 2 of 2
5. If National desires to enter into, and Distribution
Corporation desires to assume the costs and benefits of,
agreements that provide for caps, collars or floors in connection
with existing floating rate medium-term notes or debentures or
short-term debt of National, the proceeds of which have been
loaned to Distribution Corporation, the provisions set forth in
paragraph 2(b) shall apply.
6. If National terminates or "unwinds" one of the above-
described derivative instruments, and either makes or receives
payments, or assumes or receives other obligations or benefits in
connection therewith, National shall pay to Distribution
Corporation any such receipts, and Distribution Corporation shall
reimburse National for any payments National makes, and
Distribution Corporation shall further assume any ongoing
obligations and receive any ongoing benefits.
7. National and Distribution Corporation shall net the
above payments to the extent practicable.
8. If Distribution Corporation defaults on its obligations
hereunder, National shall have such remedies respecting
Distribution Corporation as National's counterparty would have
respecting National, if National made a similar default vis-a-vis
the counterparty, without necessity of demand, notice,
presentment or protest. Likewise, Distribution Corporation shall
have similar remedies against National, should National default.
9. This Agreement shall become effective when approvals
have been obtained from the regulatory commissions having
jurisdiction over this Agreement. This Agreement shall be
subject to additional terms and conditions as may be set forth in
the application-declaration on Form U-1 in SEC File 70-8541 as
amended, which was filed by National, Distribution Corporation,
and certain other subsidiaries of National and in any subsequent
application-declaration that may be filed in connection with the
subject matter of this agreement, and in the order(s) that may be
issued by the SEC in connection with either such application-
declaration.
10. This Agreement shall be binding upon the successors and
assigns of the parties hereto. This Agreement shall be construed
and enforced under and in accordance with the laws of the state
of New York. This Agreement may be executed in counterparts,
each one of which, when fully executed, shall be deemed to have
the same dignity, force and effect as an original.
IN WITNESS WHEREOF, the parties hereto have caused their
authorized officers to execute this Agreement and to have their
corporate seals affixed and attested the day and year first above
written.
ATTEST: NATIONAL FUEL GAS COMPANY
_______________________ _____________________________
Secretary President
ATTEST: NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
_______________________ ______________________________
Secretary President
Exhibit D-4
COMMONWEALTH OF PENNSYLVANIA
PENNSYLVANIA PUBLIC SERVICE COMMISSION
P. P. BOX 3265, HARRISBURG, PA 17105-3265
MAY 22, 1997
Refer to our File
S-00970611
DOLORES CONNORS
NATIONAL FUEL GAS DIST CORP
l0 LAFAYETTE SQUARE
BUFFALO NY 14203
Securities Certificate of National Fuel Gas Distribution
Corporation for the issuance of promissory notes to its parent,
not in excess of $200 mullion.
To Whom It May Concern:
This is to advise you that an Opinion and Order has been
adopted by the Commission in Public Meeting on May 22, 1997, in
the above titled proceeding.
An Opinion and Order has been enclosed for your records.
Very truly yours,
/s/ John G. Alford
John G. Alford,
Secretary
<PAGE>
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
HARRISBURG, PA 17105-3265
Public Meeting held May 22, 1997
Commissioners Present:
John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
John Hanger
David W. Rolka
Nora Mead Brownell
Securities Certificate of National Fuel S-00970611
Gas Distribution Corporation for the
issuance of promissory notes to its
parent, not in excess of $200 million.
OPINION AND ORDER
BY THE COMMISSION:
On March 31, 1997, National Fuel Gas Distribution
Corporation (NFGDC) filed for registration pursuant to Chapter l9
of the Pennsylvania Public Utility Code, 66 Pa. C.S. Section 1901
et seq., a Securities Certificate for the issuance of promissory
-- ---
notes to its parent, National Fuel Gas Company (National), not in
excess of $200 million. On April 30, 1997 NFGDC agreed to a
request to extend the consideration period for the agreement to
May 23, 1997.
NFGDC filed concurrently with S-00970611, an Affiliated
Interest Agreement docketed at G-00970548 concerning certain
credit transactions between NFGDC and National. The instant
Securities Certificate is directly affected by the terms of the
credit transaction between NFGDC and National and has been
considered in conjunction with G-00970548.
<PAGE>
NFGDC, a Pennsylvania jurisdictional utility, proposes to
issue notes in one or more series prior to December 31, 1999 to
its parent National Fuel Gas Company, a registered public utility
holding company. National is proposing to issue notes or
debentures and lend up to $200 million of the proceeds to NFGDC.
NFGDC will in turn issue promissory notes to National to secure
the funds that National has obtained through the issuance of
long-term debt. The terms on the promissory notes issued by NFGDC
would be substantially similar to the terms on the corresponding
debt issued by National.
Proceeds from the issuance will be used for the early
redemption of one or more higher-costs notes previously issued to
the parent; to fund NFGDC's construction program; to decrease
short-term debt balances; and for general corporate purposes.
We have examined NFGDC'S instant Securities Certificate and
have determined that the proposed issuance of promissory notes
appears to be necessary or proper for the present and probable
future capital needs of the utility, and as a result the
Securities Certificate should be registered; THEREFORE,
-2-
<PAGE>
IT IS ORDERED:
That the Securities Certificate filed on March 31, 1997 by
National Fuel Gas Distribution Corporation for the issuance of
promissory notes not in excess of the principal amount of $200
million is hereby registered.
BY THE COMMISSION,
/s/ John G. Alford
John G. Alford
Secretary
(SEAL)
ORDER ADOPTED : May 22, 1997
ORDER ENTERED: MAY 22 1997
-3-
<PAGE>
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
HARRISBURG, PA 17105-3265
Public meeting held May 22, 1991
Commissioners Present:
John M. Quain, Chairman
Robert K. Bloom, Vice Chairman
John Hanger
David W. Rolka
Mora Mead Brownell
Affiliated Interest Agreement Concerning G-00970548
Credit Transactions between National Fuel
Gas Distribution Corporation and National
Fuel Gas Company.
CORRECTED OPINION AND ORDER
BY THE COMMISSION:
On March 31, 1997, National Fuel Gas Distribution
Corporation (NFGDC) filed for approval pursuant to Chapter 21 of
the Pennsylvania Public Utility Code, 66 Pa. C.S. Section 2101 et
--
seq., an Affiliated Interest Agreement concerning credit
---
transactions between NFGDC and its parent, National Fuel Gas
Company (National). On April 30, 1997, NFGDC agreed to a request
to extend the consideration period for the agreement to May 23,
1997.
NFGDC filed concurrently with G-00970548, a Securities
Certificate docketed at S-00970611 for the issuance of promissory
notes to its parent, not in excess of $200 million. The instant
Affiliated Interest Agreement has been considered in conjunction
with S-00970611.
<PAGE>
National issues publicly its own notes and debentures and
lends proceeds from the issuance to NFGDC. The proposed
Affiliated Interest Agreement is intended to govern the
relationship between notes issued by NFGDC and the related debt
securities issued by National. The Agreement will apply both to
the notes to be issued pursuant to the concurrently filed
Securities Certificate and those to be issued in future years.
The agreement amends and replaces an agreement docketed at
G-00950434 and approved by Commission Order entered on March 16,
1995.
NFGDC is also requesting approval of its assumption of the
costs and benefits of up to $350 million of certain derivative
transactions which National may enter into in conjunction with
debt that National issues and in turn lends the proceeds thereof
to NFGDC. The derivative transactions could pertain to NFGDC'S
existing debt as well as future debt NFGDC may incur.
NFGDC states that the herein Affiliated Interest Agreement
does not have any expiration date.
NFGDC is also requesting Commission approval to waive the
provision requiring it to file financial statements relating to a
period ending no more than ninety days prior to the date of
filing. The Commission has examined the instant Affiliated
Interest Agreement concerning credit transactions between the
affiliated interests and has determined that the terms and
conditions, appear to be reasonable and consistent with the
public interest and should approved; THEREFORE,
-2-
<PAGE>
IT IS ORDERED:
1. That the Affiliated Interest Agreement between National
Fuel Gas Distribution Corporation and National Fuel Gas Company
is hereby approved.
2. That the request to waive the filing of its financial
statements within a period of ninety days of its filing date is
hereby approved.
BY THE COMMISSION,
/s/ John G. Alford
John G. Alford
Secretary
(SEAL)
ORDER ADOPTED: May 22, 1997
ORDER ENTERED: MAY 23 1997
-3-
Exhibit F-1(a)
Reid & Priest LLP
A New York Registered Limited Liability Partnership
40 West 57th Street
New York, New York 10019
New York, New York
August 20, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Fuel Gas Company
National Fuel Gas Distribution Corporation
National Fuel Gas Supply Corporation
Seneca Resources Corporation
National Fuel Resources, Inc.
Utility Constructors, Inc.
Horizon Energy Development, Inc.
File No. 70-8541
------------------------------------------
Ladies and Gentlemen:
With reference to the joint application or declaration
on Form U-1, as amended, filed on December 29, 1994 by National
Fuel Gas Company ("National") and National Fuel Gas Distribution
Corporation ("Distribution"), National Fuel Gas Supply
Corporation, Seneca Resources Corporation ("Seneca"), National
Fuel Resources, Inc., Utility Constructors, Inc. and Horizon
Energy Development, Inc. ("Horizon"), wholly-owned subsidiaries
of National, and, in connection therewith, (i) the issuance and
sale by National of $100,000,000 in aggregate principal amount of
its non-redeemable 6.214% Medium-Term Notes, Series D, due August
12, 2027 (the "MTNs"), and (ii) the acquisition by National of
$30,000,000 in long-term unsecured notes issued by Distribution,
$10,000,000 in long-term unsecured notes issued by Supply,
$50,000,000 in long-term unsecured notes issued by Seneca and
$10,000,000 in long-term unsecured notes issued by Horizon
(collectively, the "Transactions"), we are of the opinion that:
1. National is a corporation duly organized and
validly existing under the laws of the State of
New Jersey.
2. The above-described Transactions have been
consummated in accordance with the joint
application or declaration, as amended, the orders
of the Securities and Exchange Commission thereon
and, with respect to the issuance and sale of the
MTNs, the registration statements filed as
exhibits to such application or declaration.
3. All state laws applicable to the Transactions
(other than so-called "blue-sky" laws or similar
laws, upon which we do not pass herein) have been
complied with.
4. The MTNs are valid and binding obligations of
National enforceable in accordance with their
terms, except as limited by (i) bankruptcy,
insolvency, reorganization, fraudulent transfer,
fraudulent conveyance, moratorium or other similar
laws of general application relating to or
affecting creditors' rights and remedies, and (ii)
general principles of equity (whether such
enforceability is considered in a proceeding in
equity or at law), including, without limitation
(x) the possible unavailability of specific
performance, injunctive relief or any other
equitable remedy, and (y) concepts of materiality,
commercial reasonableness, good faith, fair
dealing and equitable subordination.
5. The legal rights of the holders of any securities
issued by National have not been violated by the
Transactions.
We are members of the New York Bar and do not hold
ourselves out as experts on the laws of any other state.
Accordingly, in giving this opinion, we have relied, as to all
matters governed by the law of the State of New Jersey, upon the
opinion of Stryker, Tams & Dill LLP, New Jersey Counsel for
National, which is to be filed as an exhibit to the Certificate
pursuant to Rule 24.
We hereby consent to the use and filing of this opinion
in connection with and/or as an exhibit to National's Certificate
pursuant to Rule 24.
Very truly yours,
/s/ Reid & Priest LLP
REID & PRIEST LLP
Exhibit F-2(a)
Stryker, Tams & Dill LLP
Two Penn Plaza East
Newark, New Jersey 07105
August 20, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Fuel Gas Company
National Fuel Gas Distribution Corporation
National Fuel Gas Supply Corporation
Seneca Resources Corporation
National Fuel Resources, Inc.
Utility Constructors, Inc.
Horizon Energy Development, Inc.
File No. 70-8541
------------------------------------------
Ladies and Gentlemen:
With reference to the above-referenced joint
application or declaration on Form U-1, as amended (the
"APPLICATION-DECLARATION"), filed on December 29, 1994 by
National Fuel Gas Company ("NATIONAL") and its subsidiary
corporations, National Fuel Gas Distribution Corporation
("DISTRIBUTION"), National Fuel Gas Supply Corporation
("Supply"), Seneca Resources Corporation ("SENECA"), National
Fuel Resources, Inc., Utility Constructors, Inc. and Horizon
Energy Development, Inc. ("HORIZON"), and, in connection
therewith, (i) the issuance and sale by National of $100,000,000
in aggregate principal amount of its non-redeemable 6.214%
Medium-Term Notes, Series D, due August 12, 2027 (the "MTNS"),
and (ii) the acquisition by National of $30,000,000 in long-term
unsecured notes issued by Distribution (the "DISTRIBUTION
NOTES"), $10,000,000 in long-term unsecured notes issued by
Supply (the "SUPPLY NOTES"), $50,000,000 in long-term unsecured
notes issued by Seneca (the "SENECA NOTES") and $10,000,000 in
long-term unsecured notes issued by Horizon (the "HORIZON
NOTES"), we are of the opinion that:
1. National is a corporation duly organized and validly
existing under the laws of the State of New Jersey.
2. The above-described transactions have been consummated
in accordance with the Application-Declaration, the orders of the
Securities and Exchange Commission thereon, and with respect to
the issuance and sale of the MTNs, the registration statements of
National on Form S-3 relating thereto (Nos. 33-49401 and 333-
3803), filed as exhibits to the Application-Declaration.
3. All laws of the State of New Jersey applicable to the
above-described transactions (other than the New Jersey Uniform
Securities Law, as amended, upon which we do not opine herein)
have been complied with.
4. Insofar as New Jersey law is applicable, the MTNs are
valid and binding obligations of National, enforceable against
National in accordance with their terms, except as limited by (i)
bankruptcy, insolvency, reorganization, fraudulent transfer,
fraudulent conveyance, moratorium or other similar laws of
general application relating to or affecting creditors' rights
and remedies, and (ii) general principles of equity (whether such
enforceability is considered in a proceeding in equity or at
law), including, without limitation (x) the possible
unavailability of specific performance, injunctive relief or any
other equitable remedy, and (y) the concepts of materiality,
commercial reasonableness, good faith, fair dealing and equitable
subordination.
5. Insofar as New Jersey law is applicable, National has
legally acquired the Distribution Notes, the Supply Notes, the
Seneca Notes and the Horizon Notes.
6. The legal rights of the holders of any securities
issued by National have not been violated.
In rendering the opinions expressed in paragraphs 2, 4 and 6
hereof, we have assumed that the MTNs were duly authenticated and
delivered by The Bank of New York (formerly "Irving Trust
Company"), as Trustee (the "TRUSTEE"), in accordance with the
provisions of that certain Indenture, dated as of October 15,
1974, between National and the Trustee, as amended and
supplemented, pursuant to which the MTNs were issued. We have
further assumed in this connection that the agreed upon
consideration for the MTNs was paid by the purchaser, as
contemplated by (i) the Distribution Agreement, dated
September 30, 1996, between National and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear, Stearns
& Co. Inc., Chase Securities Inc., Goldman, Sachs & Co., Lehman
Brothers Inc. and PaineWebber Incorporated, as Agents, and (ii)
the Terms Agreement, dated August 7, 1997, between National and
Bear, Stearns & Co. Inc.
In rendering the opinion expressed in paragraph 5 hereof, we
have assumed that the Distribution Notes, the Supply Notes, the
Seneca Notes and the Horizon Notes were lawfully issued by
Distribution, Supply, Seneca and Horizon, respectively; that all
authorizations and approvals (corporate, governmental and
otherwise) required in connection with the issuance and sale of
the Distribution Notes, the Supply Notes, the Seneca Notes and
the Horizon Notes have been duly obtained by Distribution,
Supply, Seneca and Horizon, respectively; and that the
Distribution Notes, the Supply Notes, the Seneca Notes and the
Horizon Notes have been duly issued and delivered for the
consideration contemplated and constitute the legal, valid,
binding and enforceable obligations of Distribution, Supply,
Seneca and Horizon, respectively.
We have also received and, in connection with the opinions
expressed in paragraphs 5 and 6 hereof, have relied upon the
representations set forth in the letter of Curtis W. Lee, Esq.,
General Manager - Finance, of National, dated August 20, 1997, a
copy of which is attached hereto; and those opinions are
qualified accordingly.
We consent to the use and filing of this opinion in
connection with or as an exhibit to National's Certificate
pursuant to Rule 24.
Reid & Priest LLP is hereby authorized to rely upon this
opinion as to matters governed by New Jersey law to the same
extent as if it were addressed to them.
Very truly yours,
/s/ Stryker, Tams & Dill LLP
STRYKER, TAMS & DILL LLP
Attachment
<PAGE>
National Fuel Gas Company
10 Lafayette Square
Buffalo, New York 14203
August 20, 1997
Stryker, Tams & Dill LLP
Two Penn Plaza East
Newark, New Jersey 07105
Att: Charles H. Friedrich, III, Esq.
RE: National Fuel Gas Company
National Fuel Gas Distribution Corporation
National Fuel Gas Supply Corporation
Seneca Resources Corporation
National Fuel Resources, Inc.
Utility Constructors, Inc.
Horizon Energy Development, Inc.
SEC File No. 70-8541
------------------------------------------
Dear Sirs:
In connection with the above-referenced application or
declaration on Form U-1, as amended, filed with the Securities
and Exchange Commission, and the Medium-Term Note, Series D,
financing, we confirm the following.
1. The capital stock of National Fuel Gas Company
("National") issued and outstanding on the date of this
letter consists solely of common stock.
2. Stryker, Tams & Dill LLP has participated in obtaining
the authorizations for the issuance of all outstanding
debentures of National.
3. Stryker, Tams & Dill LLP has participated in obtaining
the authorizations for the issuance by National of all
commercial paper, short-term notes, and/or long-term
notes outstanding at the date of this letter.
4. The securities set forth in paragraph 1, 2, and 3
herein, respectively comprise all of the securities
of National outstanding at the date of this letter.
5. The issuance and sale by National of $100,000,000 in
aggregate principal amount of its non-redeemable 6.214%
Medium-Term Notes, Series D due August 12, 2027, was in
compliance with Section 6.05 of the Indenture dated as
of October 15, 1974 from National to The Bank of
New York (formerly Irving Trust Company), as Trustee,
as amended and supplemented to date.
Very truly yours,
/s/ Curtis W. Lee
----------------------------
Curtis W. Lee
General Manager, Finance
cc. Reid & Priest LLP
Exhibit F-3(a)
National Fuel Gas Company
10 Lafayette Square
Buffalo, New York 14203
Anna Marie Cellino
Secretary
August 20, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Fuel Gas Company
National Fuel Gas Distribution Corporation
National Fuel Gas Supply Corporation
Seneca Resources Corporation
National Fuel Resources, Inc.
Utility Constructors, Inc.
Horizon Energy Development, Inc.
File No. 70-8541
------------------------------------------
Ladies and Gentlemen:
This opinion relates to the joint application or
declaration on Form U-1, as amended, filed on December 29, 1994
by National Fuel Gas Company ("National"), National Fuel Gas
Distribution Corporation ("Distribution"), National Fuel Gas
Supply Corporation ("Supply"), Seneca Resources Corporation
("Seneca"), National Fuel Resources, Inc. ("NFR"), Utility
Constructors, Inc. ("Utility Constructors") and Horizon Energy
Development, Inc. ("Horizon") and the acquisition by National of
$30,000,000 in long-term unsecured notes issued by Distribution
(the "Distribution Notes"), $10,000,000 in long-term unsecured
notes issued by Supply (the "Supply Notes"), $50,000,000 in long-
term unsecured notes issued by Seneca (the "Seneca Notes") and
$10,000,000 in long-term unsecured notes issued by Horizon (the
"Horizon Notes").
I am of the opinion that:
1. Distribution and Horizon are corporations validly
organized and duly existing under the laws of the
State of New York.
2. Supply and Seneca are corporations validly
organized and duly existing under the laws of the
Commonwealth of Pennsylvania.
3. The foregoing transactions have been consummated
in accordance with the application or declaration,
as amended, and the orders of the Securities and
Exchange Commission thereon.
4. All state laws applicable to the transactions
have been complied with.
5. The Distribution Notes, the Supply Notes, the
Seneca Notes and the Horizon Notes are valid and
binding obligations of Distribution, Supply,
Seneca and Horizon, respectively, enforceable in
accordance with their terms, except as limited by
(i) bankruptcy, insolvency, reorganization,
fraudulent transfer, fraudulent conveyance,
moratorium or other similar laws of general
application relating to or affecting creditors'
rights and remedies, and (ii) general principles
of equity (whether such enforceability is
considered in a proceeding in equity or at law),
including, without limitation (x) the possible
unavailability of specific performance, injunctive
relief or any other equitable remedy, and (y)
concepts of materiality, commercial
reasonableness, good faith, fair dealing and
equitable subordination.
6. National has legally acquired each of the
Distribution Notes, the Supply Notes, the Seneca
Notes and the Horizon Notes.
7. The legal rights of the holders of any securities
issued by National, Distribution, Supply, Seneca,
NFR, Utility Constructors and Horizon have not
been violated by the transactions.
I am a member of the Bar of the State of New York and
do not hold myself out as an expert of the laws of any other
state. Although I am not a member of the Bar of the State of
Pennsylvania, I have studied the relevant laws of that state in
order to render certain of the opinions set forth above.
Accordingly, this opinion is expressly limited to the laws of
such jurisdictions as they relate to the matters covered herein.
I hereby consent to the use of this opinion as an
exhibit to the Certificate pursuant to Rule 24.
Very truly yours,
/s/ Anna Marie Cellino
-----------------------------
Anna Marie Cellino
