UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________
to______________________
Commission File Number 1-8353
NUI CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-1869941
(State of incorporation) (IRS employer identification no.)
550 Route 202-206, P. O. Box 760, Bedminster, New Jersey 07921-0760
(Address of principal executive offices, including zip code)
(908) 781-0500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:
Common Stock, No Par Value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 of 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months ( or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days:
X
Indicate by check mark if disclosure of delinquent filers, pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference to Part III
of this Form 10-K or any amendment to the Form 10-K:
X
The aggregate market value of 11,049,105 shares of common stock held
by non-affiliates of the registrant calculated using the $24.625 per
share closing price on November 28, 1997 was $272,084,211.<PAGE>
The number of shares outstanding for each of the registrant's classes
of common stock, as of November 28, 1997:
Common Stock, No Par Value: 12,455,176 shares outstanding.
Documents incorporated by reference: NUI Corporation's definitive
Proxy Statement for the Company's Annual Meeting of Stockholders,
filed with the Securities and Exchange Commission on December 23,
1997.
NUI Corporation
Annual Report on Form 10-K For The
Fiscal Year Ended September 30, 1997
TABLE OF CONTENTS
PART I
Page
Item 1. Business................................................1
Item 2. Properties..............................................9
Item 3. Legal Proceedings.......................................9
Item 4. Submission of Matters to a Vote of Security Holders.....9
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters...........................10
Item 6. Selected Financial Data................................11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................13
Item 8. Financial Statements and Supplementary Data............21
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................21
PART III
Item 10. Directors and Executive Officers of the Registrant....21
Item 11. Executive Compensation................................21
Item 12. Security Ownership of Certain Beneficial
Owners and Management................................21
Item 13. Certain Relationships and Related Transactions........21
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K..................................22
NUI Corporation
Annual Report on Form 10-K for the
Fiscal Year Ended September 30, 1997
PART I
Item 1. Business
NUI Corporation ("NUI" or the "Company") was incorporated in New
Jersey in 1969. NUI is a multi-state energy sales, services and
distribution company. The Company's natural gas utility distribution
operations serve approximately 362,000 customers in six states through
its Northern and Southern operating divisions. These operating
divisions are regulated by the public utility commissions of the
states in which it operates. The Northern Division operates in New
Jersey as Elizabethtown Gas Company. The Southern Division operates in
five states as City Gas Company of Florida, North Carolina Gas, Elkton
Gas (Maryland), Valley Cities Gas (Pennsylvania) and Waverly Gas (New
York). The Company also provides retail gas sales and related services
through it's NUI Energy, Inc. subsidiary; wholesale energy brokerage
and related services through its NUI Energy Brokers, Inc. subsidiary;
customer information systems and services through its Utility Business
Services, Inc. subsidiary; environmental project development
operations through its NUI Environmental Group, Inc. subsidiary; and
sales and marketing outsourcing through its 49% equity interest in TIC
Enterprises, LLC (see Note 2 of the Notes to the Consolidated
Financial Statements).
The principal executive offices of the Company are located at
550 Route 202-206, Box 760, Bedminster, NJ 07921-0760; telephone:
(908) 781-0500.
Territory and Customers Served
See Item 6 - "Selected Financial Data-Summary Consolidated Operating
Data" for summary information by customer class with respect to
operating revenues, gas volumes sold or transported and average
utility customers served. The Company's primary business is its
utility operations which serve approximately 362,000 customers, of
which approximately 67% are in New Jersey and 33% are in the Southern
Division states. Most of the Company's utility customers are
residential and commercial customers that purchase gas primarily for
space heating. The Company's operating revenues for fiscal 1997
amounted to approximately $609 million, of which approximately 52% was
generated by utility operations in the Northern Division, 18% was
generated by utility operations in the Southern Division states and
30% by the Company's unregulated activities. Gas volumes sold or
transported in fiscal 1997 amounted to 148.2 million Mcf, of which
approximately 46% was sold or transported in New Jersey, 12% was sold
or transported in the Southern Division states and 42% represented
unregulated sales. An Mcf is a basic unit of measurement for natural
gas comprising 1,000 cubic feet of gas.
Natural Gas Utility Operations
Northern Division The Company, through its Northern Division, provides
gas service to approximately 241,000 customers in franchised
territories within seven counties in central and northwestern New
Jersey. The Northern Division's 1,300 square-mile service territory
has a total population of approximately 950,000. Most of the Northern
Division's customers are located in densely-populated central
New Jersey, where increases in the number of customers are primarily
from conversions to gas heating from alternative forms of heating.
The Northern Division's gas volumes sold or transported and customers
served for the past three fiscal years were as follows:
Gas Volumes Sold or Transported
(in thousands of Mcf)
1997 1996 1995
Firm Sales:
Residential 19,485 20,862 17,855
Commercial 9,333 11,337 10,275
Industrial 4,085 4,709 4,595
Interruptible Sales 12,886 11,885 15,440
Unregulated Sales 14,753 7,062 1,044
Transportation Sales 22,510 19,793 17,202
------ ------ ------
Total 83,052 75,648 66,411
====== ====== ======
Utility Customers Served (twelve-month average)
1997 1996 1995
Firm Sales:
Residential - Heating 165,305 162,156 159,164
Residential - Non-heating 57,380 58,558 59,586
Commercial 16,922 17,232 17,359
Industrial 262 291 387
Interruptible Sales 72 72 75
Transportation Services 1,373 600 130
------- ------- -------
Total 241,314 238,909 236,701
======= ======= =======
Gas volumes sold to the Company's firm customers are sensitive to the
weather in New Jersey. In fiscal 1997, the weather in New Jersey, as
reported by the National Oceanic and Atmospheric Administration
(NOAA), was very close to normal and 7% warmer than the prior year
thereby decreasing gas sales as compared to 1996. However, these
comparisons were distorted by new temperature measurement equipment
installed by NOAA in late 1996. Data indicates that this new equipment
records colder temperatures then the equipment it replaced. Hence, it
is likely that weather in fiscal 1997 was actually warmer than normal
and more than 7% warmer than 1996. Weather in fiscal 1996 contributed
to higher gas sales as compared with fiscal 1995, as the weather was
7% colder than normal and 23% colder than fiscal 1995.
The Northern Division's tariff contains a weather normalization clause
that is designed to help stabilize the Company's results by increasing
amounts charged to customers when weather has been warmer than normal
and decreasing amounts charged when weather has been colder than
normal. As a result of a stipulation approved by the New Jersey Board
of Public Utilities (NJBPU) on October 22, 1997, the company increased
the amount collectible under this clause by $1.3 in fiscal 1997 to
consider the distortion caused by the change in temperature
measurement equipment. An adjustment factor was also established for
fiscal 1998. For a further discussion on variations in revenues, see
Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations".
The growth in the number of residential heating customers principally
reflects the Company's marketing emphasis to convert residential non-
heating customers to full gas heating service. Approximately 70% of
the residential heating customers added in New Jersey since 1991
represented homes that were converted to gas heating from other forms
of space heating and the remainder consisted of new homes.
Effective January 1, 1995, the NJBPU authorized new tariffs designed
to provide for the unbundling of natural gas transportation and sales
service to commercial and industrial customers. As of September 30,
1997, 1,840 commercial sales customers had switched to transportation-
only service under the new tariff. Despite the transfer to
transportation service, the commercial sales market continues to grow.
In fiscal 1997, 39 schools and 887 businesses converted to gas heating
systems with the Company or switched from interruptible service to
commercial firm service. The Company also has an economic development
program to help spur economic growth and jobs creation which provides
grants and reduced rates for qualifying businesses that start up,
relocate or expand within designated areas.
The Company's industrial customers also have the ability to switch to
transportation service and purchase their gas from other suppliers.
The rate charged to transportation customers is less than the rate
charged to firm industrial and commercial sales customers because the
transportation customer rate does not include any cost of gas
component. However, the operating margins from both rates are
substantially the same.
The Northern Division's "interruptible" customers have alternative
energy sources and use gas on an "as available" basis. Variations in
the volume of gas sold or transported to these customers do not have a
significant effect on the Company's earnings because, in accordance
with New Jersey regulatory requirements, 80% of the margins that
otherwise would be realized on gas sold or transported to
interruptible customers are used to reduce gas costs charged to firm
sales customers. This percentage was changed, effective May 12, 1997
from 90% of sales margins and 95% of transportation margins.
The Company provides gas sales and transportation services comprising
twenty percent of the primary fuel requirements of a 614 megawatt
cogeneration facility that began commercial operation in New Jersey in
July 1992 to supply electric power to New York City. In fiscal 1997,
sales and transportation of gas to this customer accounted for
approximately 8% of the Company's operating revenues and approximately
9% of total gas sold or transported. The Company was authorized by the
NJBPU to retain a total of approximately $2.3 million of the operating
margins realized from these sales. The Company reached this maximum
during fiscal 1995 and, therefore, all margins realized from the sale
of gas to this customer in fiscal 1997 and 1996 were used to reduce
gas costs charged to firm customers.
In order to maximize the value of the Company's gas supply portfolio,
in fiscal 1995 the Company began selling available gas supply and
excess interstate pipeline capacity to other gas service companies and
to customers located outside of the Company's service territories. The
price of gas sold to these customers is not regulated by the NJBPU,
however the NJBPU has authorized the Company to retain 20% of the
margins realized from these sales. The remaining 80% of these margins
is used to reduce gas costs charged to firm customers.
Southern Division
City Gas Company of Florida ("CGF"). CGF is the second largest
natural gas utility in Florida, supplying gas to over 97,000 customers
in Dade and Broward Counties in south Florida, and in Brevard, Indian
River and St. Lucie Counties in central Florida. CGF's service areas
cover approximately 3,000 square miles and have a population of
approximately 1.7 million.
CGF's gas volumes sold or transported and customers served for the
past three fiscal years were as follows:
Gas Volumes Sold or Transported
(in thousands of Mcf)
1997 1996 1995
Firm Sales:
Residential 1,850 2,130 1,982
Commercial 3,944 4,096 4,198
Interruptible Sales 1,162 1,259 1,533
Unregulated Sales 4,124 1,779 --
Transportation Sales 2,277 908 1,313
------ ------ -----
Total 13,357 10,172 9,026
====== ====== =====
Utility Customers Served (twelve-month average)
1997 1996 1995
Firm Sales:
Residential 92,724 92,179 90,960
Commercial 4,706 4,629 4,615
Interruptible Sales 16 19 20
Transportation
Services 51 36 24
------ ------ ------
Total 97,497 96,863 95,619
====== ====== ======
CGF's residential customers purchase gas primarily for water heating,
clothes drying and cooking. Some customers, principally in central
Florida, also purchase gas to provide space heating during the
relatively mild winter season. Year-to-year growth in the average
number of residential customers primarily reflects new construction.
The rate of residential market growth was lower in fiscal 1997 as
compared with fiscal 1996, as build-out commitments from prior year
expansions in the south Florida service areas were concluded. Through
the application of selective investment feasibility standards, CGF is
focusing its principal new residential growth efforts in its central
Florida markets. The volume from the residential market in fiscal 1996
benefited from cooler weather than experienced in fiscal 1997 and in
fiscal 1995. Effective in April 1997, CGF increased the rates it
charges residential customers under its appliance leasing programs,
generating approximately $150,000 per month in additional unregulated
margins.
CGF's commercial business consists primarily of schools, businesses
and public facilities, of which the number of customers tends to
increase concurrently with the continuing growth in population within
its service areas. As with its residential markets, the Company is
seeking to maximize the utilization of its existing mains by
emphasizing marketing efforts toward potential commercial business
along these lines.
CGF's industrial customers and certain commercial customers, are
served under tariffs applicable to "interruptible" customers. Unlike
the Company's Northern Division, CGF's interruptible customers do not
generally have alternative energy sources, although their service is
on an "as available" basis. The Company retains all of the operating
margins from sales to these customers.
Certain commercial and industrial customers have converted their
natural gas service from a sales basis to a transportation basis.
CGF's transportation tariff provides margins on transportation
services that are substantially the same as margins earned on gas
sales. In November 1997, the Florida Public Service Commission (FPSC)
approved CGF's proposal to offer unbundled gas service to certain
small commercial customers, in a manner similar to that currently in
place in the Company's New Jersey service territory.
During fiscal 1996, the Company began selling available gas supply and
excess interstate pipeline capacity to other gas service companies and
to customers located outside of the Company's service territories. The
price of gas sold to these customers is not regulated by the FPSC;
however, the FPSC has ordered that 50% of the margins realized from
these sales be used to reduce gas costs charged to firm customers.
North Carolina Gas Service ("NCGS"). The Company, through NCGS,
provides gas service to approximately 13,400 customers in Rockingham
and Stokes Counties in North Carolina, which territories comprise
approximately 560 square miles. During fiscal 1997, NCGS sold or
transported approximately 4.3 million Mcf of gas as follows: 20% sold
to residential customers, 11% sold to commercial customers, 30% sold
to industrial customers on system, 16% sold to industrial customers
through unregulated off-system sales, and 23% transported to
commercial and industrial customers. The North Carolina Public
Utilities Commission has ordered that 75% of margins realized from
off-system sales be used to reduce gas costs charged to firm
customers.
Elkton Gas Service ("Elkton"). The Company, through Elkton, provides
gas service to approximately 3,500 customers in franchised territories
comprising approximately 14 square miles within Cecil County,
Maryland. During fiscal 1997, Elkton sold approximately 660,000 Mcf of
gas as follows: 30% sold to residential customers, 28% sold to
commercial customers and 42% sold to industrial customers.
Valley Cities Gas Service ("VCGS") and Waverly Gas Service ("WGS").
VCGS and WGS provide gas service to approximately 6,100 customers in
franchised territories comprising 104 square miles within Bradford
County, Pennsylvania and the Village of Waverly, New York and
surrounding areas, respectively. During fiscal 1997, VCGS and WGS sold
or transported approximately 3.9 million Mcf of gas as follows: 15%
sold to residential customers, 8% sold to commercial customers, 5%
sold to industrial customers on system, 8% sold to industrial
customers through unregulated sales off-system, and 64% transported
to commercial and industrial customers.
Gas Supply and Operations
In recent years, the gas industry has been undergoing structural
changes in response to policies of the Federal Energy Regulatory
Commission (FERC) and local regulatory commissions designed to
increase competition. Traditionally, interstate pipelines were
wholesalers of natural gas to local distribution companies and
generally did not provide separate transportation or other services
for specific customers. In 1992, the FERC issued Order No. 636 that,
among other things, mandated the separation or "unbundling" of
interstate pipeline sales, transportation and storage services and
established guidelines for capacity management effective in 1993. In
fiscal 1995, the NJBPU unbundled the services provided and the rates
charged to New Jersey commercial and small industrial customers as
well. The transition to more competitive rates and services has the
effect of increasing the opportunity for local gas distribution
companies, and industrial and commercial customers to purchase natural
gas from alternative sources, while increasing the potential business
and regulatory risk borne by a local gas distribution company with
respect to the acquisition and management of natural gas services.
The Company endeavors to utilize its pipeline capacity efficiently by
matching capacity to its load profile to the extent feasible. To this
end, the Company has had a broad unbundled service tariff for certain
of its customers since 1987. The Company continues to avail itself of
opportunities to improve the utilization of its pipeline capacity by
pursuing broad based customer growth, including off-peak markets and
utilizing capacity release and off-system sales opportunities afforded
by Order No. 636 when operationally feasible.
The Company's gas supply during fiscal 1997 came from the following
sources: approximately 18% from purchases under contracts with primary
pipeline suppliers and additional purchases under their filed tariffs;
approximately 82% from purchases from various producers and gas
marketers, and purchases under long-term contracts with independent
producers and less than 1% from propane and liquefied natural gas
("LNG"). The Company manages its gas supply portfolio to assure a
diverse, reliable and secure supply of natural gas at the lowest
reasonable cost. In fiscal 1997, the Company's largest single supplier
accounted for 11% of the Company's total gas purchases.
The Company has long-term gas delivery contracts with seven interstate
pipeline companies. Under these contracts, the Company has a right to
delivery, on a firm year-round basis, of up to 92.2 million Mcf of
natural gas annually with a maximum of approximately 273,000 Mcf per
day. Both the price and conditions of service under these contracts
are regulated by the FERC.
The Company has long-term gas purchase contracts for the supply of
natural gas for its system with eight suppliers, including two
interstate pipeline companies, three gas marketers and three
independent producers. The Company also has a long-term supply and
delivery contract with an interstate pipeline. Under these contracts,
the Company has a right to purchase, on a firm year-round basis, up to
36.9 million Mcf of natural gas annually with a maximum of
approximately 101,170 Mcf per day. In order to achieve greater supply
flexibility, and to more closely match its gas supply portfolio to
changes in the market it serves, the Company recently allowed a long-
term gas supply contract to expire at the conclusion of its primary
terms. As a result, the Company has reduced its fixed gas cost
obligations. The Company has replaced the supply with both spot market
gas and shorter-term, seasonal firm supply, thus reducing the average
term of its long-term obligations. In addition, the Company has access
to spot market gas through the interstate pipeline system to
supplement or replace, on a short-term basis, portions of its long-
term gas purchase contracts when such actions can reduce overall gas
costs or are necessary to supply interruptible customers. In fiscal
1995, the Company, along with seven other Northeastern and Mid-
Atlantic gas distribution companies, formed the East Coast Natural Gas
Cooperative LLC (the "Co-op"). The Co-op was formed with the goal of
jointly managing certain portions of the members' gas supply
portfolios, to increase reliability and reduce costs of service to
customers, and to improve the competitive position of the member
companies. Participation in and reliance upon certain contractual
arrangements among Co-op members has allowed the Company to reduce
costs associated with winter services.
In order to have available sufficient quantities of gas during the
heating season, the Company stores gas during non-peak periods and
purchases supplemental gas, including propane, LNG and gas available
under contracts with certain large cogeneration customers, as it deems
necessary. The storage contracts provide the Company with an aggregate
of 15.4 million Mcf of natural gas storage capacity and provide the
Company with the right to receive a maximum daily quantity of 176,100
Mcf. The contracts with cogeneration customers provide 35,800 Mcf of
daily gas supply to meet peak loads by allowing the Company to take
back capacity and supply that otherwise is dedicated to serve those
customers.
The Company's peak load facilities in New Jersey include a propane-air
plant with a daily production capacity of 27,400 Mcf, fixed propane
storage totaling 674,000 gallons and rail car sidings capable of
storing an additional 300,000 gallons. The Company has an LNG storage
and vaporization facility with a daily delivery capacity of 24,300 Mcf
and storage capacity of 131,000 Mcf.
The Company's maximum daily sendout in fiscal 1997 was approximately
368,371 Mcf in its Northern Division and 87,717 Mcf in the Southern
Division states combined. The Company maintains sufficient gas supply
and delivery capacity for a maximum daily sendout capacity for the
Northern Division of approximately 398,643 Mcf and approximately
119,800 Mcf for the Southern Division states combined.
Certain of the Company's long-term contracts for the supply, storage
and delivery of natural gas include fixed charges that amount to
approximately $71 million annually. The Company currently recovers,
and expects to continue to recover, such fixed charges through its
purchased gas adjustment clauses. The Company also is committed to
purchase, at market-related prices, minimum quantities of gas that, in
the aggregate, are approximately 10 billion cubic feet per year or to
pay certain costs in the event the minimum quantities are not taken.
The Company expects that minimum demand on its systems for the
duration of these contracts will continue to exceed these minimum
purchase obligations. In certain of these contracts, the Company has
recently negotiated terms with its suppliers which will allow the
Company to reduce its commitment to its suppliers in connection with
changes in the Company's markets that may result from further
unbundling initiatives.
The Company distributes gas through approximately 6,000 miles of
steel, cast iron and plastic mains. The Company has physical
interconnections with five interstate pipelines in New Jersey and one
interstate pipeline in Florida. In addition, the Company has physical
interconnections in North Carolina and Pennsylvania with interstate
pipelines which also connect to the Northern Division. Common
interstate pipelines along the Company's operating system provide the
Company with greater flexibility in managing pipeline capacity and
supply, and thereby optimizing system utilization.
Regulation
The Company is subject to regulation with respect to, among other
matters, rates, service, accounting and the issuance of securities.
The Company is subject to regulation as an operating utility by the
public utility commissions of the states in which it operates. The
Company is also subject to regulation by the United States Department
of Transportation under the Natural Gas Pipeline Safety Act of 1968,
with respect to the design, installation, testing, construction and
maintenance of pipeline facilities. Natural gas purchases,
transportation service and storage service provided to the Company by
interstate pipeline companies are subject to regulation by the FERC
(see "Gas Supply and Operations"). In addition, the Company is
subject to federal and state legislation with respect to water, air
quality, solid waste disposal and employee health and safety matters,
and to environmental regulations issued by the United States
Environmental Protection Agency, the New Jersey Department of
Environmental Protection and other federal and state agencies.
The Company's current rates and tariffs for its Northern Division
reflect a rate case that was settled in October 1991, under which the
Company obtained a weather normalization clause - see "Northern
Division". In December 1994, the NJBPU authorized new tariffs which
are designed to provide for unbundling of natural gas transportation
and sales services for Northern Division commercial and industrial
customers. The new tariffs became effective on January 1, 1995 and are
designed to be neutral as to the operating margins of the Company.
The current rates and tariffs for the Florida operations were
authorized on October 29, 1996. The FPSC voted to authorize the
Company to increase its base rates in Florida by $3.75 million
annually. The rate increase reflected a rate base amounting to $91.9
million, which includes the addition of investments in system
improvements and expansion projects. Under the approval, the allowed
return on equity is 11.3% with an overall after-tax rate of return of
7.87%. The increase became effective on November 28, 1996. The FPSC
order also gives the Company the flexibility to negotiate rates with
certain business customers that have access to other energy sources.
The current rates and tariffs for the North Carolina, Maryland,
Pennsylvania and New York operations were authorized between October
1988 and September 1995. These operations serve approximately 20,000
customers in aggregate. The tariff for NCGS reflects a weather
normalization clause for its temperature sensitive residential and
commercial customers.
The Company's tariffs for each state in which it operates contain
adjustment clauses that enable the Company to recover purchased gas
costs. The adjustment clauses provide for periodic reconciliations of
actual recoverable gas costs with the estimated amounts that have been
billed. Under or over recoveries at the reconciliation date are
recovered from or refunded to customers in subsequent periods.
Seasonal Aspects
Sales of gas to some classes of customers are affected by variations
in demand due to changes in weather conditions, including normal
seasonal variations throughout the year. The demand for gas for
heating purposes is closely related to the severity of the winter
heating season. Seasonal variations affect short-term cash
requirements.
Unregulated Operations
NUI Energy, Inc. (Energy) was formed by the Company in fiscal 1995 to
market gas service to unbundled retail commercial and industrial
customers. Energy's operating margins have increased to $2.4 million
in fiscal 1997 as compared with $1.1 million in fiscal 1996 and $0.3
million in fiscal 1995, reflecting the Company's growth efforts.
However, expenses related to this start-up operation has resulted in
net losses in all three fiscal years. It is expected that Energy will
be profitable in fiscal 1998, as the Company will continue to take
advantage of opportunities that exist in the deregulated market.
NUI Energy Brokers, Inc. (Energy Brokers) was formed by the Company in
fiscal 1996 to provide wholesale energy trading and related services,
primarily to other utilities and energy marketing companies. Energy
Brokers generated margins of $3.6 million in fiscal 1997 as compared
with $1.6 million in fiscal 1996. Energy Brokers minimizes its risks
in this business by limiting its financial and physical positions at
any one time. As in any commodity brokerage activity, however, there
are risks pertaining to market changes and credit exposure that can be
managed but not eliminated. Therefore, the earnings from Energy
Brokers are likely to be more volatile than the Company's utility
distribution business.
Utility Business Services, Inc. (UBS) provides billing and customer
information systems and services to investor-owned and municipal
utilities as well as third-party energy providers. WINS, the premiere
account management product developed and maintained by UBS, is
presently serving almost 20 clients with state-of-the-art computing
capabilities in support of almost 600,000 customers. In addition to
generating over 3 million bills each year, UBS assists clients in
allied areas, such as automatic meter reading, payment processing, and
account recovery.
NUI Environmental Group, Inc. (NUI Environmental) was formed by the
Company in fiscal 1996 to develop a solution to the rapidly decreasing
accessibility of the New York/New Jersey Harbor to international
commercial shipping traffic. To this end, NUI Environmental plans to
jointly develop a permanent sediment processing facility to
decontaminate and process the dredged sediment, thereby providing
environmentally safe disposal or beneficial reuse of the material.
Towards this effort, NUI Environmental has signed a Memorandum of
Understanding with the Department of Energy/Brookhaven National
Laboratories, which leading the decontamination effort on behalf of a
Federal consortium of the Environmental Protection Agency, Army Corps.
of Engineers and Department of Energy which are working towards a
solution to the dredging problem. It is expected that NUI
Environmental will receive public financing to design, construct and
operate the facility in partnership with governmental or public
entities. It is anticipated that phase one operations could begin in
late fiscal 1998.
On May 18, 1997, the Company closed on its acquisition of a 49%
interest in TIC Enterprises, LLC (TIC), a newly formed limited
liability company, for a purchase price of $22 million. The
acquisition was effective as of January 1, 1997 and is being accounted
for under the equity method. TIC engages in the business of
recruiting, training and managing sales professionals and serving as
sales and marketing representatives for various businesses, including
the Company's subsidiary, Energy (see Note 2 of the Notes to the
Consolidated Financial Statements).
Persons Employed
As of September 30, 1997, the Company employed 1,126 persons, of which
291 employees in the Northern Division were represented by the Utility
Workers Union of America (Local 424), 73 employees in Florida and 17
employees in Pennsylvania were represented by The Teamsters Union,
and 44 employees in North Carolina were represented by the
International Brotherhood of Electrical Workers. The current
collective bargaining agreement with the Northern Division's union was
negotiated effective November 20, 1994 and expires on November 20,
1998. The North Carolina union collective bargaining agreement was
negotiated on August 20, 1995, and expires on August 20, 1998. The
collective bargaining agreement in Pennsylvania was negotiated on
November 30, 1997 and expires on September 30, 1999. The collective
bargaining agreement in Florida expires on March 31, 1998.
Competition
The Company competes with distributors of other fuels and forms of
energy, including electricity, fuel oil and propane, in all portions
of the territories in which it has distribution mains. In addition,
in 1992, the FERC issued Order No. 636 (see "Gas Supply and
Operations"). Subsequently, initiatives were sponsored in various
states, the purposes of which were to "unbundle" or separate into
distinct transactions, the purchase of the gas commodity from the
purchase of transportation services for the gas. To that end, as
discussed under "Regulation", New Jersey has unbundled commercial and
industrial gas purchase and transportation rates.
The unbundled sale of gas to customers is subject to competition from
unregulated marketers and brokers, which generally do not bear the
obligations or costs related to operating a regulated utility. Tariffs
for transportation service have generally been designed to provide the
same margins as bundled sales tariffs. Therefore, except for the
regulatory risk of full recovery of gas costs, the Company is
financially indifferent as to whether it transports gas, or sells gas
and transportation together. The Company also faces the risk of loss
of transportation service for large industrial customers which may
have the ability to build connections to interstate gas pipelines and
bypass the Company's distribution system. Gas distributors can also
expect increased competition from electricity as deregulation in that
industry decreases prices and increases supply sources. Alternatively,
opportunities may increase for gas service to fuel generators for
large industrial customers, replacing electric utility service.
The Company believes that in order to compete effectively, it must
offer a greater variety of services at competitive prices. See Item 7
- "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Competition and Outlook" for a discussion of
the Company's preparation for the impact of increased competition.
Franchises
The Company holds non-exclusive municipal franchises and other
consents which enable it to provide natural gas in the territories it
serves. The Company intends to seek to renew these franchises and
consents as they expire.
Environment
Reference is made to Item 7- "Management's Discussion and Analysis of
Financial Condition and Results of Operations- Capital Expenditures
and Commitments" and Note 11, "Commitments and Contingencies" of the
"Notes to the Consolidated Financial Statements" for information
regarding environmental matters affecting the Company.
Year 2000
Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous
results by or at the Year 2000. The Company has undertaken a systems
readiness program which is designed to mitigate the risks associated
with the Year 2000 issue. This program involves an analysis of
systems to determine those that are not presently Year 2000 compliant,
the establishment of a plan to either modify or replace those systems
and the modification and procurement of systems to make them Year 2000
compliant. Although the Company is endeavoring to ensure that the
Year 2000 readiness program is comprehensive, it can make no assurance
that the program will address all Year 2000 compliance issues in a timely
manner. The Company identified, replaced and modified many of these
systems during fiscal year 1997 and currently estimates that the
its remaining cost of the Year 2000 systems readiness program will be
approximately 2 million, of which approximately $0.7 million
is anticipated to be spent in fiscal 1998.
Item 2. Properties
The Company owns approximately 6,000 mile of steel, cast iron and
plastic gas mains, together with gate stations, meters and other gas
equipment. In addition, the Company owns peak shaving plants,
including an LNG storage facility in Elizabeth, New Jersey.
The Company also owns real property in Union, Middlesex, Warren,
Sussex and Hunterdon counties in New Jersey, and in Dade, Broward,
Brevard and St. Lucie counties in Florida, portions of which are under
lease to others. The Company's owned properties include a general
office building in Hialeah, Florida, that serves as the Southern
Division's headquarters; another office facility in Rockledge,
Florida; and office buildings in both Reidsville, North Carolina and
Sayre, Pennsylvania, which serve as operating offices for the North
Carolina and the Pennsylvania and New York operations, respectively.
The Company also owns various service centers in New Jersey, Florida,
North Carolina, Maryland and Pennsylvania from which the Company
dispatches service crews and conducts construction and maintenance
activities.
The Company leases office space in Bedminster, New Jersey, that serves
as its corporate headquarters and leases certain other facilities in
New Jersey and Florida that are operated as customer business offices
or operating offices. The Company also leases approximately 160,000
square feet in an office building in Union, New Jersey, which serves
as the Northern Division's headquarters.
Subject to minor exceptions and encumbrances, all other property
materially important to the Company and all principal plants are owned
in fee simple, except that most of the mains and pipes are installed
in public streets under franchise or statutory rights or are
constructed on rights of way acquired from the apparent owner of the
fee.
Item 3. Legal Proceedings
The Company is involved in various claims and litigation incidental to
its business. In the opinion of management, none of these claims and
litigation will have a material adverse effect on the Company's
results of operations or its financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was presented for submission to a vote of security holders
through the solicitation of proxies or otherwise during the last
quarter of fiscal 1997
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
NUI common stock is listed on the New York Stock Exchange and is
traded under the symbol "NUI". The quarterly cash dividends paid and
the reported high and low closing prices per share of NUI common stock
for the two years ended September 30, 1997 were as follows:
Quarterly
Cash Price Range
Dividend High Low
Fiscal 1997:
First Quarter $0.235 $23.500 $18.875
Second Quarter 0.235 23.625 19.250
Third Quarter 0.235 22.500 19.000
Fourth Quarter 0.235 24.813 19.750
Fiscal 1996:
First Quarter $0.225 $17.750 $15.750
Second Quarter 0.225 19.250 17.125
Third Quarter 0.225 20.000 16.750
Fourth Quarter 0.225 20.000 16.500
There were 6,768 shareholders of record of NUI common stock at
November 28, 1997.
It is the Company's intent to continue to pay quarterly dividends in
the foreseeable future. NUI's dividend policy is reviewed on an
ongoing basis and is dependent upon the Company's expectation of
future earnings, cash flow, financial condition, capital requirements
and other factors. On November 6, 1997, the Company increased its
quarterly dividend to $0.245 per share of common stock. The previous
quarterly rate was $0.235 per share of common stock.
The Company's long-term debt agreements include, among other things,
restrictions as to the payment of cash dividends. Under the most
restrictive of these provisions, the Company is permitted to pay $37
million of cash dividends at September 30, 1997.
Item 6. Selected Financial Data
<TABLE>
Selected Consolidated Financial Data
(in thousands, except per share amounts)
<CAPTION>
Fiscal Years Ended September 30,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Operating Revenues $608,596 $469,596 $376,884 $405,240 $367,456
Net Income $ 19,649 $ 14,896 $ 5,517 $ 10,789 $ 13,810
Net Income Per Share $1.75 $1.52 $0.60 $1.25 $1.70
Dividends Paid Per Share $0.94 $0.90 $0.90 $1.60 $1.59
Total Assets $803,665 $677,662 $610,165 $601,648 $483,911
Capital Lease
Obligations $ 9,679 $ 10,503 $ 11,114 $ 11,932 $ 12,290
Long-Term Debt $229,069 $230,100 $222,060 $160,928 $142,090
Common Shareholders'
Equity $218,291 $179,107 $140,912 $142,768 $122,384
Common Shares
Outstanding 12,429 11,086 9,201 9,157 8,201
</TABLE>
_________________________
Notes to the Selected Consolidated Financial Data:
Net Income for fiscal 1995 includes restructuring and other non-
recurring charges amounting to $5.6 million (after tax), or $0.61 per
share.
Net income for fiscal 1994 includes the reversal of $1.8 million of
income tax reserves and restructuring and other non-recurring charges
amounting to $0.6 million (after tax). The effect of these items
increased net income by $1.2 million, or $0.14 per share.
<TABLE>
Summary Consolidated Operating Data
<CAPTION>
Fiscal Years Ended September 30,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Operating Revenues
(Dollars in thousands)
Firm Sales:
Residential $201,757 $194,332 $173,395 $191,297 $172,749
Commercial 106,234 107,067 98,541 110,574 97,966
Industrial 23,263 25,321 20,083 25,809 23,066
Interruptible Sales 55,844 50,539 48,282 53,077 48,254
Unregulated Sales 177,881 55,678 7,498 1,426 1,757
Transportation Services 28,617 23,085 17,696 13,273 12,154
Customer Service,
Appliance
Leasing and Other 15,000 13,477 11,389 9,784 11,510
------ ------ ------ ----- ------
$608,596 $469,499 $376,884 $405,240 $367,456
======= ======= ======= ======= =======
Gas Sold or Transported
(MMcf)
Firm Sales:
Residential 22,956 24,810 21,276 22,558 21,019
Commercial 14,254 16,575 15,455 16,175 14,918
Industrial 4,819 5,407 5,217 5,323 4,781
Interruptible Sales 15,074 16,003 18,365 16,024 13,627
Unregulated Sales 62,819 17,804 3,398 689 904
Transportation Services 28,294 25,051 22,154 17,290 16,439
------ ------ ------ ------ ------
148,216 105,650 85,865 78,059 71,688
======= ======= ====== ====== ======
Average Utility Customers
Served
Firm Sales:
Residential 335,632 332,440 328,644 312,515 297,384
Commercial 24,312 24,484 24,519 22,638 20,995
Industrial 306 338 430 382 377
Interruptible Sales 121 120 118 101 105
Transportation Services 1,460 668 184 137 87
------- ------- ------- ------- -------
361,831 358,050 353,895 335,773 318,948
======= ======= ======= ======= =======
Degree Days in New Jersey
(normal: 4978) 4,772 5,343 4,333 4,944 4,703
Employees (year end) 1,126 1,086 1,079 1,186 1,011
Ratio of Earnings to
Fixed Charges 2.15 2.00 1.37 1.66 2.15
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis refers to NUI Corporation and
all of its operating divisions and subsidiaries (collectively referred
to as the "Company"). The Company is a multi-state energy sales,
services and distribution company. Its natural gas utility operations
distribute natural gas and provide related customer services in six
states through its Northern and Southern utility divisions. The
Northern Division operates in New Jersey as Elizabethtown Gas Company.
The Southern Division operates in five states as City Gas Company of
Florida, North Carolina Gas, Elkton Gas (Maryland), Valley Cities Gas
(Pennsylvania) and Waverly Gas (New York). The Company also provides
retail gas sales and related services through its NUI Energy, Inc.
subsidiary ("Energy"); wholesale energy brokerage and related services
through its NUI Energy Brokers, Inc. subsidiary ("Energy Brokers");
customer information systems and services through its Utility Business
Services, Inc. subsidiary; and sales and marketing outsourcing through
its 49% equity interest in TIC Enterprises, LLC ("TIC") (see Note 2 of
the Notes to the Consolidated Financial Statements).
Results of Operations
Fiscal Years Ended September 30, 1997 and 1996
Net Income. Net income for fiscal 1997 was $19.6 million, or $1.75
per share, as compared with net income of $14.9 million, or $1.52 per
share in fiscal 1996. The increase in the current year was primarily
due to higher operating margins and other income, partially offset by
higher operations and maintenance, depreciation, general taxes and
interest expenses.
Net income per share in the current year was also affected by the
increased average number of outstanding shares of common stock over
the prior year, principally reflecting the full effect of the
Company's issuance of 1.8 million additional shares in May 1996 (see
"Financing Activities and Resources-Common Stock").
Operating Revenues and Operating Margins. The Company's operating
revenues include amounts billed for the cost of purchased gas pursuant
to purchased gas adjustment clauses. Such clauses enable the Company
to pass through to its utility customers, via periodic adjustments to
customers' bills, increased or decreased costs incurred by the Company
for purchased gas without affecting operating margins. Since the
Company's utility operations do not earn a profit on the sale of the
gas commodity, the Company's level of operating revenues is not
necessarily indicative of financial performance. The Company's
operating revenues increased by $139.1 million, or 30%, in fiscal 1997
as compared with fiscal 1996. The increase was principally due to
approximately $122 million of additional revenues generated by the
Company's unregulated operations, the effect of purchased gas
adjustment clauses, a base rate increase in the Company's Florida
service territory, increased customer service and appliance leasing
revenues, and customer growth (see "Regulatory Matters"). These
increases were partially offset by the effect of warmer weather,
mainly in New Jersey where it was 11% warmer than the prior year and
4% warmer than normal.
The Company has taken advantage of the opportunities brought on by
deregulation of the natural gas industry and realized substantial
growth in these unregulated activities in fiscal 1997. The Company's
unregulated operations include its Energy and Energy Brokers
subsidiaries, as well as sales of natural gas by the Company's utility
operations to customers outside of its franchise service territories.
While the prices charged for these utility off-system sales are not
regulated, margins realized are shared with customers of the utility
operations as follows: New Jersey- 80%, Florida- 50% and North
Carolina- 75%. The Company's other utility operations do not currently
have margin sharing arrangements and therefore any off-system sales
are returned 100% to customers.
The Company's operating margins increased by $8.3 million, or 5%, in
fiscal 1997 as compared with fiscal 1996. The increase reflects
approximately $3.6 million of additional margins generated by the
Company's utility distribution operations, approximately $3.1 million
of additional margins on sales by the Company's unregulated operations
and approximately $1.6 million of additional customer service and
appliance leasing revenues. The increase in utility distribution
margins was mainly due to the effect of the rate case in Florida and
customer growth, partially offset by the effect of warmer weather in
the fiscal 1997 period in all of the Company's service territories,
part of which was not fully recovered from customers under weather
normalization clauses, and lower amounts billed to certain of the
Company's Florida customers for its energy conservation program. The
Company is allowed to pass through to its customers costs incurred for
various energy conservation programs. The Company does not earn a
profit on these billings as operations expense is charged or credited
for any difference between amounts billed to customers and amounts
actually incurred. The Company has weather normalization clauses in
its New Jersey and North Carolina tariffs, which are designed to help
stabilize the Company's results by increasing amounts charged to
customers when weather has been warmer than normal and by decreasing
amounts charged when weather has been colder than normal. As a result
of weather normalization clauses, operating margins were approximately
$2.0 million higher in fiscal 1997 than they would have been without
such clauses. In fiscal 1996, operating margins were $2.2 million less
than they would have been without such clauses.
Other Operating Expenses. Operations and maintenance expenses
increased by approximately $0.9 million, or 1%, in fiscal 1997 as
compared with fiscal 1996. The increase was primarily the result of
additional expenses related to the growth in the Company's unregulated
operations and expenses resulting from the consolidation of two of the
Company's New Jersey service facilities. These increases were
partially offset by the capitalization of costs associated with the
development and implementation of new information technology, lower
pension and insurance expenses, lower expenses charged for the
Company's energy conservation programs in Florida and the reversal of
certain reserves which management determined to be no longer required.
Depreciation and amortization increased approximately $1.7 million
over the prior year primarily due to additional plant in service.
The increase in other taxes of approximately $0.8 million in fiscal
1997 was mainly due to higher real estate, sales and payroll-related
taxes.
The increase in income taxes of approximately $1.5 million in fiscal
1997 was the result of higher pre-tax income.
Other Income and (Expense), Net. Pre-tax other income and expense,
net, increased approximately $2.6 million in fiscal 1997 as compared
with fiscal 1996. The increase was primarily due to approximately $1.3
million of net equity earnings in TIC for the period January 1, 1997
through September 30, 1997 (see Note 2 of the Notes to the
Consolidated Financial Statements), the sale of certain marketable
securities resulting in a realized gain of $0.7 million, and the sale
of property in the Southern Division, which resulted in a gain of
approximately $0.7 million.
Interest Expense. Interest expense increased by approximately $0.4
million in fiscal 1997 as compared with fiscal 1996. The increase was
primarily due to an increase in short-term interest expense due to
higher average borrowings, partially offset by lower average long-term
borrowings as a result of the repayment of amounts outstanding under
the Company's $30 million credit agreement in May 1996.
Fiscal Years Ended September 30, 1996 and 1995
Net Income. Net income for fiscal 1996 was $14.9 million, or $1.52 per
share, as compared with net income of $5.5 million, or $0.60 per share
in fiscal 1995. The increase in fiscal 1996 was primarily due to
higher operating margins and approximately $5.6 million of after-tax
non-recurring charges incurred in fiscal 1995. These increases were
partially offset by higher operations and maintenance and depreciation
expenses.
Net income per share in fiscal 1996 was also affected by the increased
average number of outstanding shares of common stock over the prior
year, principally reflecting the Company's issuance of 1.8 million
additional shares in May 1996 (see "Financing Activities and
Resources-Common Stock").
Operating Revenues and Operating Margins. The Company's operating
revenues increased by $92.6 million, or 25%, in fiscal 1996 as
compared with fiscal 1995. The increase principally reflects
approximately $48 million of additional unregulated sales, the effect
of weather in New Jersey that was 7% colder than normal and 23% colder
than the prior year, and additional refunds to Northern Division
customers in fiscal 1995 totaling $11.2 million as a result of lower
than projected gas prices. Operating revenues also increased as a
result of increased revenues from interruptible and industrial
customers primarily as a result of higher gas prices incurred,
increased customer service revenues and customer growth.
The Company's operating margins increased by $11.0 million, or 7%, in
fiscal 1996 as compared with fiscal 1995. The increase principally
reflects approximately $6.1 million of additional margins generated by
the Company's utility distribution operations, approximately $3.2
million of additional margins on sales by the Companies unregulated
operations and approximately $1.7 million of additional customer
service and appliance leasing revenues. The increase in utility
distribution margins was mainly due to an increase in rates for
Florida's energy conservation program, customer growth and the effect
of colder-than-normal weather not fully returned to customers through
the weather normalization clauses. As a result of these weather
normalization clauses, operating margins were approximately $2.2
million less in fiscal 1996 than they would have been without such
clauses. In fiscal 1995, operating margins were approximately $4.5
million higher than they otherwise would have been without such
clauses.
Other Operating Expenses. Operations and maintenance expenses
increased approximately $3.4 million, or 4%, in fiscal 1996 as
compared with fiscal 1995. The increase was primarily due to costs
incurred as a result of the colder weather in New Jersey during the
fiscal 1996 heating season, higher expenses related to the start-up
and growth of the Company's unregulated operations, and higher pension
costs. Fiscal 1995 results included non-recurring pre-tax charges of
$8.6 million (see Note 3 of the Notes to the Consolidated Financial
Statements).
Depreciation and amortization expenses increased by approximately $1.5
million primarily due to additional plant in service.
Income tax expense increased by approximately $4.9 million in fiscal
1996 as compared with fiscal 1995, primarily due to higher pre-tax
income.
Interest Expense. Interest expense decreased by approximately $0.2
million, or 1%, in fiscal 1996 as compared with fiscal 1995. The
decrease was primarily due to lower average short-term debt
outstanding and short-term interest rates, and to approximately $0.6
million of interest recorded in the prior year on the over-collection
of gas costs by the Northern Division. This decrease was partially
offset by higher average long-term interest rates due to the effect of
a full year's inclusion of $70 million of Medium-Term Notes that were
issued in fiscal 1995.
Regulatory Matters
Northern Division
On October 22, 1997, the New Jersey Board of Public Utilities (NJBPU)
approved a petition filed by the Northern Division to revise its
weather normalization clause to reflect an increase in the level of
degree days used to determine margin revenue differences associated
with variations between the actual degree days experienced in the
months of October through April and the degree days that underlie the
Company's base rates. The actual degree days are intended to adjust
for a bias in weather data created by the National Oceanic and
Atmospheric Administration's installation of a device to measure
temperature known as the automatic surface observing system. As a
result of the NJBPU approval, the Company recognized an increase in
its weather normalization margins of approximately $1.3 million in the
fourth quarter of fiscal 1997 to adjust for the effect of the bias in
the new weather measuring device on margins recorded earlier in the
fiscal year.
In July 1997, the State of New Jersey enacted legislation that will
eliminate the current gross receipts and franchise taxes effective
January 1, 1998. These taxes will be replaced with a 6% sales tax on
sales of electricity and natural gas, a corporate business tax
currently paid by all non-utility corporations in the State, and a
third tax called the Transitional Energy Facilities Assessment tax
(TEFA). The legislation was intended, in part, to provide
comparability between utilities that pay gross receipts and franchise
taxes and non-utility energy companies that do not. A key objective of
this legislation was to maintain energy tax revenue neutrality in
1998, seeking to collect approximately the same amount in new taxes as
collected with gross receipts and franchise taxes in 1997. The TEFA
tax is scheduled to be phased out at a rate of approximately 20% per
year starting in 1999. These tax changes are designed to have no
effect on the Company's net income or on overall rates charged to
customers, until the TEFA reductions occur, and will not have a
material effect on working capital. The Company paid approximately $25
million of gross receipts and franchise taxes to the State in 1997.
On November 20, 1997, the Northern Division amended its July 31, 1997
proposal filed with the NJBPU to increase its annual purchased gas
adjustment revenues by approximately $14.7 million and change the way
it recovers gas supply costs from its different classes of customers.
The filing proposes to collect separately the commodity component of
purchased gas and the fixed costs the Company incurs on behalf of its
customers to supply gas service. The filing also includes a request to
incorporate a performance based mechanism whereby Northern Division
customers and the Company would benefit from the Company's ability to
secure gas at rates more favorable than a market index benchmark. The
proposed mechanism would provide an 80/20 sharing, with Northern
Division customers receiving the greater percentage of risk and
opportunity on the difference between a monthly market benchmark and
the actual cost of purchased gas. Action by the NJBPU on the Company's
proposal is expected in 1998.
On May 13, 1997, the NJBPU approved an order (replacing an interim
order dated December 4, 1996) authorizing the Northern Division to
increase its annual purchased gas adjustment revenues by approximately
$22 million. The increase was effective in December 1996 and reflects
higher gas prices incurred in the current year. The increase in
revenues does not affect the operating margins of the Company.
Southern Division
On October 29, 1996, the Florida Public Service Commission (FPSC)
voted to authorize the Company to increase its base rates in Florida
by $3.75 million annually. The rate increase reflects a rate base
amounting to $91.9 million, reflecting the addition of investments in
system improvements and expansion projects. Under the approval, the
allowed return on equity is 11.3% with an overall after-tax rate of
return of 7.9%. The Company had been granted interim rate relief of
$2.2 million effective in September 1996. The permanent rate increase,
which was effective in December 1996, includes the interim adjustment.
Financing Activities and Resources
The Company's net cash provided by operating activities was $40.5
million in fiscal 1997, $22.5 million in fiscal 1996, and $47.9
million in fiscal 1995. The increase in fiscal 1997 as compared with
fiscal 1996 was primarily due to additional collections of gas costs
through the Company's purchased gas adjustment clauses and the timing
of payments to gas suppliers. The decrease in net cash provided by
operating activities in fiscal 1996 as compared with fiscal 1995
principally reflects a higher level of accounts receivable primarily
due to the colder weather and increased activity by the Company's
unregulated businesses, and an under collection of gas costs through
the Company's purchased gas adjustment clauses.
Because the Company's primary business is highly seasonal, short-term
debt is used to meet seasonal working capital requirements. The
Company also borrows under its bank lines of credit to finance
portions of its capital expenditures, pending refinancing through the
issuance of equity or long-term indebtedness at a later date depending
upon prevailing market conditions.
Short-Term Debt. The weighted average daily amounts outstanding of
notes payable to banks and the weighted average interest rates on
those amounts were $66.0 million at 5.5% in fiscal 1997, $39.9 million
at 5.6% in fiscal 1996 and $58.0 million at 5.9% in fiscal 1995. The
weighted average daily amounts of notes payable to banks increased in
fiscal 1997 principally due to borrowings to initially finance the
Company's acquisition of a 49% interest in TIC (see "Common Stock"),
and additional borrowings to finance portions of the Company's
construction expenditures. The weighted average daily amounts of notes
payable to banks decreased in fiscal 1996 as compared with fiscal 1995
primarily due to the full effect of the issuance of $70 million of
Medium-Term Notes issued in fiscal 1995, which were used to repay
short-term debt, and the issuance of an additional 1.8 million shares
of common stock in fiscal 1996, of which part of the proceeds were
used to repay short-term debt. These decreases were partially offset
by borrowings to finance portions of the Company's construction
expenditures.
At September 30, 1997, the Company had outstanding notes payable to
banks amounting to $54.4 million and available unused lines of credit
amounting to $91.6 million.
Long-Term Debt and Funds for Construction Held by Trustee. On July 9,
1997, the Company issued $54.6 million of tax exempt Gas Facilities
Revenue Refunding Bonds at an interest rate of 5.7%. The bonds mature
on June 1, 2032 and were used to refinance previously issued Gas
Facilities Revenue Bonds in the aggregate principal amounts and rates
of $46.2 million at 6.75% and $8.4 million at 6.625% on October 1,
1997. The proceeds from the refunding bonds were invested in temporary
cash investments and were held in trust until the old bonds were
called.
In November 1994, the Company filed a shelf registration statement
with the Securities and Exchange Commission for an aggregate of up to
$100 million of debt and equity securities. As of September 30, 1997,
the Company has issued $70 million of Medium-Term Notes subject to the
shelf registration statement. While the Company has no present
intention to issue additional securities subject to the shelf
registration, such securities may be issued from time to time,
depending upon the Company's needs and prevailing market conditions.
The Company deposits in trust the unexpended portion of the net
proceeds from its Gas Facilities Revenue Bonds until drawn upon for
eligible expenditures. As of September 30, 1997 and 1996, the total
unexpended portions of all of the Company's Gas Facilities Revenue
Bonds were $23.8 million and $42.6 million, respectively, and are
classified on the Company's consolidated balance sheet, including
interest earned thereon, as funds for construction held by trustee.
Common Stock. On September 25, 1997, the Company issued an additional
1,011,400 shares of NUI common stock. The net proceeds from the
offering totaled $22.6 million and were used to reduce outstanding
short-term debt incurred to finance the Company's acquisition of a 49%
interest in TIC and for other general corporate purposes.
On May 20, 1996, the Company issued an additional 1.8 million shares
of NUI common stock. The net proceeds from the offering totaled $31.1
million and were used to reduce outstanding debt.
The Company periodically issues shares of common stock in connection
with NUI Direct, the Company's dividend reinvestment and stock
purchase plan, and various employee benefit plans. The proceeds from
such issuances amounted to approximately $5.7 million, $0.3 million
and $1.0 million in fiscal 1997, 1996 and 1995, respectively, and were
used primarily to reduce outstanding short-term debt. The increase in
proceeds received in fiscal 1997 reflects that the plans commenced
purchasing shares directly from the Company in October 1996. Effective
in December 1994, these plans commenced purchasing shares on the open
market to fulfill the plans' requirements. Under the terms of these
plans, the Company may periodically change the method of purchasing
shares from open market purchases to purchases directly from the
Company, or vice versa.
Dividends. On November 6, 1997, the Company increased its quarterly
dividend to $0.245 per share of common stock. The previous quarterly
rate was $0.235 per share of common stock.
The Company's long-term debt agreements include, among other things,
restrictions as to the payment of cash dividends. Under the most
restrictive of these provisions, the Company is permitted to pay
approximately $37 million of cash dividends at September 30, 1997.
Capital Expenditures and Commitments
Capital expenditures, which consist primarily of expenditures to
expand and upgrade the Company's gas distribution systems, were $52.3
million in fiscal 1997, $37.1 million in fiscal 1996 and $37.9 million
in fiscal 1995. The increase in fiscal 1997 was primarily the result
of planned capital investment related to providing gas or
transportation service to new customers, which is mainly occurring in
the Company's Southern Division, and to the Company's investment in
new information technology designed to enhance productivity in the
long term. The Company's capital expenditures are expected to be
approximately $60 million in fiscal 1998.
The Company owns or previously owned six former manufactured gas plant
(MGP) sites in the Northern Division and ten MGP sites in the Southern
Division. The Company, with the aid of environmental consultants,
regularly assesses the potential future costs associated with
conducting remedial actions, as well as the likelihood of whether such
actions will be necessary. The Company records a reserve if it is
probable that a liability will be incurred and the amount of the
liability is reasonably estimable. Based on the Company's most recent
assessment, the Company has recorded a total reserve for environmental
investigation and remediation costs of approximately $34 million,
which the Company expects it will expend in the next twenty years to
remediate the Company's MGP sites. Of this reserve, approximately $30
million relates to Northern Division MGP sites and approximately $4
million relates to Southern Division MGP sites. However, the Company
believes that it is possible that costs associated with conducting
investigative activities and implementing remedial actions, if
necessary, with respect to all of its MGP sites may exceed the
approximately $34 million reserve by an amount that could range up to
$24 million and be incurred during a future period of time that may
range up to fifty years. Of this $24 million in possible future
expenditures, approximately $12 million relates to the Northern
Division MGP sites and approximately $12 million relates to the
Southern Division MGP sites. As compared with the approximately $34
million reserve discussed above, the Company believes that it is less
likely that this additional $24 million will be incurred and therefore
has not recorded it on its books. The Company believes that all costs
associated with the Northern Division MGP sites will be recoverable in
rates or from insurance carriers. The Company is able to recover
actual MGP expenses over a rolling seven-year period through its MGP
Remediation Adjustment Clause (RAC). The NJBPU approved the Company's
initial RAC rate filing on April 2, 1997 at which time the Company
began recovery of approximately $3.1 million, which represents
environmental costs incurred from inception through June 30, 1996. On
August 5, 1997, the Company submitted a second RAC rate filing to the
NJBPU to recover an additional $0.5 million in environmental costs
incurred from July 1, 1996 through June 30, 1997. Approval by the
NJBPU on this second RAC rate filing is expected in early 1998. With
respect to costs which may be associated with the Southern Division
MGP sites, the Company intends to pursue recovery from ratepayers,
former owners and operators of the sites and from insurance carriers.
However, the Company is not able at this time to express a belief as
to whether any or all of these recovery efforts related to the
Southern Division MGP sites will ultimately be successful. For a
further discussion of environmental matters see Note 11 of the Notes
to the Consolidated Financial Statements.
Certain of the Company's long-term contracts for the supply, storage
and delivery of natural gas include fixed charges that amount to
approximately $71 million annually. The Company currently recovers,
and expects to continue to recover, such fixed charges through its
purchased gas adjustment clauses. The Company also is committed to
purchase, at market-related prices, minimum quantities of gas that, in
the aggregate, are approximately 10 billion cubic feet per year or to
pay certain costs in the event the minimum quantities are not taken.
The Company expects that minimum demand on its systems for the
duration of these contracts will continue to exceed these minimum
purchase obligations.
The Company prepaid $54.6 million of its Gas Facilities Revenue Bonds
in October 1997 with proceeds received from a new bond issuance (see
"Financing Activities and Resources- Long-Term Debt and Funds for
Construction Held by Trustee"). No other long-term debt is scheduled
to be repaid over the next five years.
Purchase of Interest in TIC Enterprises, LLC
On May 18, 1997, the Company closed on its acquisition of a 49%
interest in TIC Enterprises, LLC, a newly formed limited liability
company, for a purchase price of $22 million. The acquisition was
effective as of January 1, 1997 and is being accounted for under the
equity method. Under the terms of an LLC Interest Purchase Agreement
(the "Agreement"), the limited liability company will continue the
business previously conducted by TIC Enterprises, Inc. The Agreement
also includes a provision for an additional incentive payment up to a
maximum of $5.2 million if TIC's calendar 1997 earnings, before
interest and taxes, exceed $5 million. As of September 30, 1997, the
Company has recorded a reserve of approximately $2.2 million for the
additional incentive payment. In addition, NUI has the option, during
the period beginning April 1, 2001 (subject to a one-year extension by
the seller), to purchase the remaining 51% interest in TIC.
TIC engages in the business of recruiting, training and managing sales
professionals and serving as sales and marketing representatives for
various businesses, including the Company's subsidiary, NUI Energy,
Inc. The excess of the purchase price over the Company's share of the
underlying equity in net assets of TIC is estimated on a preliminary
basis to be approximately $22 million, including the reserve for the
additional incentive payment, and is being amortized on a straight
line basis over a 15-year period.
Competition and Outlook
The Company believes that in order to successfully compete in the
deregulated energy markets, it must be able to provide customers with
a broad array of energy and other products and services. In addition
to the transportation and sale of gas, such energy products and
services may include sales and management of electricity and other
energy commodities, energy efficiency and information services, and
new energy technology. The Company may also offer additional non-
energy products and services if such offerings are consistent with the
Company's business plan.
Not all of the products and services described above are currently
provided by the Company. Therefore, the Company intends to acquire the
skills and capabilities to provide some or all of them through various
means, including acquisitions of companies, hiring of experienced
employees, and alliances, partnerships and joint ventures. All of
such products and services would likely be offered through the
coordinated marketing efforts of the Company.
One vehicle the Company will use to offer products and services is the
sales force of TIC Enterprises, LLC (see "Purchase of Interest in TIC
Enterprises, LLC"). TIC's sales force of more than 400 sales
representatives gives NUI access to business customers across 40
states. Also, TIC has existing sales partnerships with several major
companies, allowing NUI to offer a wide range of telecommunications
services and office equipment in addition to energy. TIC will also be
an asset to NUI in the formation of partnerships with other energy
companies trying to find ways to gain access to customers and new
products in the newly deregulated energy markets.
The Company's operations are organized under three primary lines of
business: Distribution Services, Energy Sales and Services, and
Customer Services. The outlook for each is discussed below.
Distribution Services
Distribution Services is the core business of the Company, defined as
the distribution, or transportation, of energy to retail customers.
Such distribution service is regulated as to price, safety and return
by the regulatory commissions of the states in which the Company
operates.
The Company has substantial growth opportunities in its distribution
business. Capital investments for the entire Company are expected to
increase to an estimated $60 million in fiscal 1998 from $52 million
in fiscal 1997, in large part to take advantage of these growth
opportunities. Almost half of the planned capital investment in fiscal
1997 is related to providing gas or transportation service to new
customers. While the Company is confident that these fiscal 1997
investments will earn a return in excess of its cost of capital, there
can be no assurance that the expected margins from each capital
investment will be fully realized.
The natural gas distribution industry is undergoing significant
changes. The sale of gas by utility companies to commercial and
industrial customers has been "unbundled", or separated from the
transportation service component, by several state regulatory
commissions, including the NJBPU. In these states, while the sale of
the gas commodity to commercial and industrial customers is now fully
competitive, the transportation service remains regulated as to price
and returns and subject to various restrictions and franchise
protections. It is anticipated that additional states will unbundle
these services for commercial and industrial customers and that, in
the near term, some states will begin to unbundle these services for
residential customers as well.
The FPSC has approved the Company's proposal to unbundle gas service
to certain small commercial customers, in a manner similar to that
currently in place in the Company's New Jersey service territory.
Tariffs for transportation service have generally been designed to
provide the same margins as bundled sales tariffs. Therefore, except
for the regulatory risk of full recovery of gas costs, the Company is
financially indifferent as to whether it transports gas or sells gas
and transportation together. Unbundling provides the Company with an
opportunity to make additional margins through its unregulated
marketing subsidiary, NUI Energy, Inc., by competing with other
unregulated marketers and brokers for sales of gas.
The Company also faces the risk of loss of transportation service for
large industrial customers who may have the ability to build
connections to interstate gas pipelines and thereby bypass the
Company's distribution system. Gas distributors can also expect
increased competition from electricity as deregulation in that
industry decreases prices and increases supply sources. Alternatively,
opportunities may increase for gas service to fuel generators for
large industrial customers, replacing electric utility service.
Customer Services
The Customer Services unit provides repair and maintenance for
customer-owned gas facilities and appliances, and collects energy
usage data for billing purposes. The Company's strategy for its
Customer Services unit is to provide additional services that
customers value, to charge prices that fully reflect the quality of
those services to its customers, and improve the quality and
timeliness of service.
The Company intends to implement several measures, including the use
of new metering and communications technology, to improve the response
time to customer service requests and to improve the accuracy and
timeliness of billing information.
The Company has reviewed its rate schedules and has imposed new or
increased fees where appropriate for certain customer-initiated
services. NUI may request state regulatory agencies to approve other
service fee increases, thereby providing income to offset the cost of
providing gas service to its general customer base.
Energy Sales and Services
The Company's primary operations in Energy Sales and Services are
composed of three business lines. First, in fiscal 1995 the Company
formed NUI Energy, Inc. (Energy) to market gas service to unbundled
retail commercial and industrial customers. The margins from Energy in
fiscal 1997 were approximately $2.4 million, up from $1.1 million in
fiscal 1996, but the expenses related to this start-up operation
resulted in a slight loss for the year. Energy is expected to be
profitable in fiscal 1998.
The second business line of Energy Sales and Services is wholesale
sales and brokering of energy, primarily to utilities and energy
marketing companies. The Company formed NUI Energy Brokers, Inc.
(Energy Brokers) in fiscal 1996 to perform such activities. Energy
Brokers also is the provider of energy to the Company's retail
marketing subsidiary, Energy. Energy Brokers generated margins of
approximately $3.5 million in fiscal 1997, compared with $1.6 million
in fiscal 1996. The Company minimizes its risks in this business by
limiting its financial and physical positions at any one time. As in
any commodity brokerage activity, however, there are risks pertaining
to market changes and credit exposure that can be managed but not
eliminated. Therefore, the earnings from Energy Brokers are likely to
be more volatile than the Company's distribution business.
The third business line within Energy Sales and Services is in "off-
system sales", or the use of utility-owned gas assets to make sales to
customers outside of NUI's service areas. Such assets include pipeline
capacity and gas storage facilities. These assets are managed
separately from non-utility assets, and their use is monitored and
regulated by state regulatory commissions. Pursuant to regulatory
agreements in some states in which the Company operates, the Company
is able to retain a portion of the margins from these sales in varying
percentages depending on the state in which the assets are owned. The
Company's share of margins from off-system sales were approximately
$0.8 million in fiscal 1997, unchanged from fiscal 1996.
Effects of Inflation
The Company's tariffs provide purchased gas adjustment clauses through
which rates charged to customers are adjusted for changes in the cost
of gas on a reasonably current basis. Increases in other utility
costs and expenses not otherwise offset by increases in revenues or
reductions in other expenses could have an adverse effect on earnings
due to the time lag associated with obtaining regulatory approval to
recover such increased costs and expenses, and the uncertainty of
whether regulatory commissions will allow full recovery of such
increased costs and expenses.
Item 8. Financial Statements and Supplementary Data
Consolidated financial statements of the Company as of September 30,
1997 and 1996 and for each of the three years in the period ended
September 30, 1997, the auditors' report thereon, and the unaudited
quarterly financial data for the two-year period ended September 30,
1997, are included herewith as indicated on "Index to Financial
Statements and Schedule" on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors and officers of the Company is
included in the definitive Proxy Statement for the Company's Annual
Meeting of Stockholders, which is incorporated herein by reference.
Such Proxy Statement was filed with the Securities and Exchange
Commission on December 23, 1997.
Item 11. Executive Compensation
Information concerning executive compensation is included in the
definitive Proxy Statement for the Company's Annual Meeting of
Stockholders, which is incorporated herein by reference. Such Proxy
Statement was filed with the Securities and Exchange Commission on
December 23, 1997.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information concerning security ownership of certain beneficial owners
and management is included in the definitive Proxy Statement for the
Company's Annual Meeting of Stockholders, which is incorporated herein
by reference. Such Proxy Statement was filed with the Securities and
Exchange Commission on December 23, 1997.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions
is included in the definitive Proxy Statement for the Company's Annual
Meeting of Stockholders, which is incorporated herein by reference.
Such Proxy Statement was filed with the Securities and Exchange
Commission on December 23, 1997.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) (1) Consolidated financial statements of the Company as of
September 30, 1997 and 1996 and for each of the three years in the
period ended September 30, 1997 and the auditors' report thereon, and
the unaudited quarterly financial data for the two-year period ended
September 30, 1997 are included herewith as indicated on the "Index to
Financial Statements and Schedule" on page F-1.
(2) The applicable financial statement schedule for the fiscal
years 1997, 1996 and 1995 is included herewith as indicated on the
"Index to Financial Statements and Schedule" on page F-1.
(3) Exhibits:
Exhibit Description Reference
No.
2(i) Letter Agreement, dated June Incorporated by
29, 1993, by and between NUI reference to Exhibit
Corporation and Pennsylvania 2(i) to Registration
& Southern Gas Company Statement No. 33-
50561
2(ii) Agreement and Plan of Incorporated by
Merger, dated as of July 27, reference to Exhibit
1993, by and between NUI 2(ii) to
Corporation and Pennsylvania Registration
& Southern Gas Company Statement No. 33-
50561
3(i) Certificate of Incorporated by
Incorporation, amended and reference to Exhibit
restated as of December 1, 3(i) of NUI's Form
1995 10-K Report for
Fiscal 1995
3(ii) By-Laws, amended and Filed herewith.
restated as of
September 23, 1997
4(i) Rights Agreement between NUI Incorporated by
Corporation and Mellon reference to NUI's
Securities Trust Company Form 8-K dated
dated November 28, 1995 December 1, 1995
10(i) Service Agreement by and Incorporated by
between Transcontinental Gas reference to Exhibit
Pipe Line Corporation and 10(i) to
Elizabethtown Gas Company Registration
("EGC"), dated February 1, Statement No.33-
1992 (#3686) 50561
10(ii) Service Agreement under Rate Filed herewith.
Schedule GSS by and between
Transcontinental Gas Pipe
Line Corporation and EGC,
dated July 1, 1996
10(iii) Service Agreement under Rate Incorporated by
Schedule LG-A by and between reference to Exhibit
Transcontinental Gas Pipe 10(iii) to
Line Corporation and EGC, Registration
dated January 12, 1971 Statement No. 33-
50561
10(iv) Service Agreement by and Incorporated by
between Transcontinental Gas reference to Exhibit
Pipe Line Corporation and 10(iv) of NUI's Form
EGC, dated November 1, 1995 10-K Report for
(Contract #1.1997) Fiscal 1996
10(v) Service Agreement by and Incorporated by
between Transcontinental Gas reference to Exhibit
Pipe Line Corporation and 10(v) of NUI's Form
EGC, dated November 1, 1995 10-K Report for
(Contract #1.1995) Fiscal 1996
10(vi) Firm Gas Transportation Incorporated by
Agreement by and among reference to Exhibit
Transcontinental Gas Pipe 10(vi) to
Line Corporation, EGC and Registration
National Fuel Gas Supply Statement No. 33-
Corporation, dated 50561
November 1, 1984
10(vii) Service Agreement by and Incorporated by
among Transcontinental Gas reference to Exhibit
Pipe Line Corporation and 10(vii) of NUI's
EGC, dated November 1, 1995 Form 10-K Report for
(Contract #1.1998) Fiscal 1996
10(viii) Service Agreement for Rate Incorporated by
Schedule CDS by and between reference to Exhibit
Texas Eastern Transmission 10(viii) to NUI's
Corporation and EGC, dated Form 10-K Report for
December 1, 1993 (Contract Fiscal 1994
#800361)
10(ix) Service Agreement under Rate Incorporated by
Schedule FTS-7 by and reference to Exhibit
between Texas Eastern 10(ix) to NUI's Form
Transmission Corporation and 10-K Report for
EGC, dated October 25, 1994 Fiscal 1994
(Contract #331720)
10(x) Service Agreement for Rate Filed herewith.
Schedule FTS-5 by and
between Texas Eastern
Transmission Corporation and
EGC, dated March 18, 1996
(Contract #331501)
10(xi) Service Agreement under Rate Incorporated by
Schedule FTS-8 by and reference to Exhibit
between Texas Eastern 10(xi) to NUI's Form
Transmission Corporation and 10-K Report for
EGC, dated June 28, 1994 Fiscal 1994
(Contract #331013)
10(xii) Firm Transportation Service Filed herewith.
Agreement under FTS-2 Rate
Schedule by and between City
Gas and Florida Gas
Transmission, dated August
12, 1993
10(xiii) Service Agreement for Rate Incorporated by
Schedule FTS-2 by and reference to Exhibit
between Texas Eastern 10(xiii) to
Transmission Corporation and Registration
EGC, dated June 1, 1993 Statement No. 33-
(Contract #330788) 50561
10(xiv) Service Agreement under NTS Incorporated by
Rate Schedule by and between reference to Exhibit
Columbia Gas Transmission 10(xiv) to NUI's
Corporation and EGC, dated Form 10-K Report for
November 1, 1993 (Contract Fiscal 1993
#39275)
10(xv) Service Agreement under SST Incorporated by
Rate Schedule by and between reference to Exhibit
Columbia Gas Transmission 10(xv) to NUI's Form
Corporation and EGC, dated 10-K Report for
November 1, 1993 (Contract Fiscal 1993
#38045)
10(xvi) Service Agreement under FTS Incorporated by
Rate Schedule by and between reference to Exhibit
Columbia Gas Transmission 10(xvi) to NUI's
Corporation and EGC, dated Form 10-K Report for
November 1, 1993 (Contract Fiscal 1993
#37882)
10(xvii) Gas Transportation Agreement Incorporated by
under FT-G Rate Schedule by reference to Exhibit
and between Tennessee Gas 10(xvii) to NUI's
Pipeline Company and EGC Form 10-K Report for
(Contract #597), dated Fiscal 1993
September 1, 1993
10(xviii) Gas Transportation Agreement Incorporated by
under FT-G Rate Schedule by reference to Exhibit
and between Tennessee Gas 10(xviii) to NUI's
Pipeline Company and EGC Form 10-K Report for
(Contract #603), dated Fiscal 1993
September 1, 1993
10(xix) Service Agreement by and Incorporated by
between Transcontinental Gas reference to Exhibit
Pipe Line Company and EGC, 10(xix) of NUI's
dated November 1, 1995 Form 10-K Report for
(Contract #3832) Fiscal 1996
10(xx) Firm Transportation Service Incorporated by
Agreement under FTS-1 Rate reference to Exhibit
Schedule by and between City 10(xx) of NUI's Form
Gas and Florida Gas 10-K Report for
Transmission dated October Fiscal 1993
1, 1993 (Contract # 5034)
10(xxi) Lease Agreement between EGC Incorporated by
and Liberty Hall Joint reference to Exhibit
Venture, dated August 17, 10(vi) of EGC's Form
1987 10-K Report for
Fiscal 1987
10(xxii) 1988 Stock Plan Incorporated by
reference to Exhibit
10(viii) to
Registration
Statement No. 33-
21525
10(xxii) First Amendment to 1988 Incorporated by
Stock Plan reference to Exhibit
10(xxxiii) to
Registration
Statement No. 33-
46162
10(xxiii) Form of Termination of Incorporated by
Employment and Change in reference to Exhibit
Control Agreements 10(xxiii) of NUI's
Form 10-K Report for
Fiscal 1995
10(xxiv) Firm Transportation Service Incorporated by
Agreement under FTS-2 Rate reference to Exhibit
Schedule by and between City 10(xxiv) of NUI's
Gas and Florida Gas Form 10-K Report for
Transmission, dated December Fiscal 1994
12, 1991 and Amendment dated
November 12, 1993 (Contract
#3608)
10(xxv) Service Agreement under Rate Incorporated by
Schedule LG-A by and between reference to Exhibit
Transcontinental Gas 10(xxv) of NUI's
Pipeline and North Carolina Form 10-K Report for
Gas Service Division of Fiscal 1994
Pennsylvania & Southern Gas
Company, dated August 5,
1971
10(xxvi) Service Agreement under Rate Filed herewith.
Schedule GSS by and between
Transcontinental Gas
Pipeline and North Carolina
Gas Service, dated July 1,
1996
10(xxvii) 1996 Employee Stock Purchase Incorporated by
Plan reference to Exhibit
10(xxvii) of NUI's
Form 10-K Report for
Fiscal 1996
10(xxviii) Service Agreement under Rate Incorporated by
Schedule FT by and between reference to Exhibit
Transcontinental Gas 10(xxviii) of NUI's
Pipeline and North Carolina Form 10-K Report for
Gas Service Division of Fiscal 1994
Pennsylvania & Southern Gas
Company, dated February 1,
1992 (Contract # 0.3922)
10(xxix) 1996 Directors Stock Incorporated by
Purchase Plan reference to Exhibit
10(xxix) of NUI's
Form 10-K Report for
Fiscal 1996
10(xxx) Gas Storage Contract under Incorporated by
Rate Schedule FS by and reference to Exhibit
between Tennessee Gas 10(xxx) of NUI's
Pipeline Company and Form 10-K Report for
Pennsylvania & Southern Gas Fiscal 1994
Company, dated September 1,
1993 (Contract #2277)
10(xxxi) Gas Transportation Agreement Incorporated by
under Rate Schedule FT-A by reference to Exhibit
and between Tennessee Gas 10(xxxi) of NUI's
Pipeline Co. and Form 10-K Report for
Pennsylvania & Southern Gas Fiscal 1994
Company, dated September 1,
1993 (Contract #935)
10(xxxii) Gas Transportation Agreement Incorporated by
under Rate Schedule FT-A by reference to Exhibit
and between Tennessee Gas 10(xxxii) of NUI's
Pipeline Co. and Form 10-K Report for
Pennsylvania & Southern Gas Fiscal 1994
Company, dated September 1,
1993 (Contract #936)
10(xxxiii) Gas Transportation Agreement Incorporated by
under Rate Schedule FT-A by reference to Exhibit
and between Tennessee Gas 10(xxxiii) of NUI's
Pipeline Co. and Form 10-K Report for
Pennsylvania & Southern Gas Fiscal 1994
Company, dated September 1,
1993 (Contract #959)
10(xxxiv) Gas Transportation Agreement Incorporated by
under Rate Schedule FT-A by reference to Exhibit
and between Tennessee Gas 10(xxxiv) of NUI's
Pipeline Co. and Form 10-K Report for
Pennsylvania & Southern Gas Fiscal 1994
Company, dated September 1,
1993 (Contract #2157)
10(xxxv) Employment Agreement, dated Incorporated by
as of July 29, 1988, between reference to Exhibit
NUI Corporation and Jack 10(xxxv) of NUI's
Langer Form
10-K Report for
Fiscal 1994
10(xxxvi) Service Agreement for Rate Incorporated by
Schedule FT by and reference to Exhibit
between Transcontinental Gas 10(xxxvi) of NUI's
Pipe Line Corporation and Form 10-K Report for
EGC (Contract #1.0431) dated Fiscal 1995
April 1, 1995
10(xxxvii) Service Agreement for Rate Incorporated by
Schedule FT by and reference to Exhibit
between Transcontinental Gas 10(xxxvii) of NUI's
Pipe Line Corporation and Form 10-K Report for
EGC (Contract #1.0445) dated Fiscal 1995
April 1, 1995
10(xxxviii) Service Agreement for Rate Incorporated by
Schedule SS-1 by and between reference to Exhibit
Texas Eastern Transmission 10(xxxviii) of NUI's
Corporation and EGC Form 10-K Report for
(Contract (#400196) dated Fiscal 1995
September 23, 1994
10(xxxix) Gas Storage Agreement under Incorporated by
Rate Schedule FS by and reference to Exhibit
between Tennessee Gas 10(xxxix) of NUI's
Pipeline Company and EGC Form 10-K Report for
(Contract #8703) dated Fiscal 1995
November 1, 1994
10(xl) Consulting Agreement, dated Incorporated by
as of March 24, 1995, reference to Exhibit
between NUI Corporation and 10(xl) of NUI's Form
John Kean 10-K Report for
Fiscal 1995
10(xli) Form of Deferred Incorporated by
Compensation Agreement reference to Exhibit
10(xli) ) of NUI's
Form 10-K Report for
Fiscal 1995
10(xlii) 1996 Stock Option and Stock Incorporated by
Award Plan reference to Exhibit
10(xlii) of NUI's
Form 10-K Report for
Fiscal 1996
10(xliii) Service Agreement under Rate Filed herewith
Schedule FT by and between
Elkton Gas and Eastern Shore
Natural Gas Company, dated
as of November 1, 1997
(Contract #010003)
10(xliv) Service Agreement under Rate Filed herewith
Schedule FT by and between
Elkton Gas and Eastern Shore
Natural Gas Company, dated
as of November 1, 1997
(Contract #010011)
10(xlv) Service Agreement under Rate Filed herewith
Schedule FT by and between
Elkton Gas and Eastern Shore
Natural Gas Company, dated
as of November 1, 1997
(Contract #010012)
10(xlvi) Service Agreement under Rate Filed herewith
Schedule FT by and between
Elkton Gas and Eastern Shore
Natural Gas Company, dated
as of November 1, 1997
(Contract #010013)
10(xlvii) Service Agreement under Rate Filed herewith
Schedule FT by and between
Elkton Gas and Eastern Shore
Natural Gas Company, dated
as of November 1, 1997
(Contract #020003)
10(xlviii) Service Agreement under Rate Filed herewith
Schedule FT by and between
Elkton Gas and Eastern Shore
Natural Gas Company, dated
as of November 1, 1997
(Contract #020005)
12 Consolidated Ratio of Filed herewith
Earnings to Fixed Charges
21 Subsidiaries of NUI Filed herewith
Corporation
23 Consent of Independent Filed herewith
Public Accountants
27 Financial Data Schedule Filed herewith
Exhibits listed above which have heretofore been filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933 or the Securities Exchange Act of 1934, and which were designated
as noted above and have not been amended, are hereby incorporated by
reference and made a part hereof with the same effect as if filed
herewith.
The Company is a party to various agreements with respect to longterm
indebtedness to which the total amount of indebtedness authorized
under each agreement, respectively, does not exceed 10% of the total
assets of the Company on a consolidated basis. The Company hereby
agrees to furnish to the Securities and Exchange Commission copies of
such agreements upon request.
(b) Reports on Form 8-K:
None
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Consolidated Financial Statements of NUI Corporation and Subsidiaries:
Report of Independent Public Accountants.............F-2
Consolidated Financial Statements as of
September 30, 1997 and 1996 and for each
of the Three Years in the Period
Ended September 30, 1997.............................F-3
Unaudited Quarterly Financial Data for
the Two-Year Period Ended September 30, 1997
(Note 12 of the Notes to the Company's Consolidated
Financial Statements)...............................F-18
Financial Statement Schedule of NUI Corporation and Subsidiaries:
Report of Independent Public Accountants.............F-2
Schedule II _ Valuation and Qualifying Accounts
for each of the Three Years in the
Period Ended September 30, 1997.....................F-20
All other schedules are omitted because they are not required, are
inapplicable or the information is otherwise shown in the financial
statements or notes thereto.
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To NUI Corporation:
We have audited the accompanying consolidated balance sheet and
statement of consolidated capitalization of NUI Corporation (a New
Jersey corporation) and Subsidiaries as of September 30, 1997 and
1996, and the related consolidated statements of income, cash flows
and shareholders' equity, for each of the three years in the period
ended September 30, 1997. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of NUI Corporation and Subsidiaries as of September 30, 1997 and 1996,
and the results of their operations and their cash flows for each of
the three years in the period ended September 30, 1997, in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed in
Item 14(a)(2) is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic financial
statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements
and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
November 6, 1997
F-2
NUI Corporation and Subsidiaries
Consolidated Statement of Income
(Dollars in thousands, except per share amounts)
Years Ended September 30,
1997 1996 1995
Operating Margins
Operating revenues $608,596 $469,499 $376,884
Less- Purchased gas and fuel 401,923 268,123 189,510
Gross receipts and
franchise taxes 33,598 36,624 33,669
------- ------- -------
173,075 164,752 153,705
------- ------- -------
Other Operating Expenses
Operations and maintenance 95,276 94,350 90,962
Depreciation and amortization 23,032 21,289 19,750
Restructuring and other non-
recurring charges -- -- 8,591
Other taxes 9,189 8,433 7,657
Income taxes 9,293 7,807 2,886
------- ------- -------
136,790 131,879 129,846
------- ------- -------
Operating Income 36,285 32,873 23,859
------- ------- -------
Other Income and Expense, Net
Equity in Earnings of TIC
Enterprises, LLC, net 1,334 -- --
Other 2,180 897 679
Income taxes (1,230) (337) (240)
------- ------- -------
2,284 560 439
------- ------- -------
Interest Expense 18,920 18,537 18,781
------- ------- -------
Net Income $19,649 $14,896 $ 5,517
======= ======= =======
Net Income Per Share of Common
Stock $ 1.75 $ 1.52 $ .60
======= ======= =======
Dividends Per Share of Common
Stock $ .94 $ .90 $ .90
======= ======= =======
Weighted Average Number of Shares
of Common Stock Outstanding 11,253,513 9,819,431 9,152,837
========== ========= =========
See the notes to the consolidated financial statements.
F-3
NUI Corporation and Subsidiaries
Consolidated Balance Sheet
(Dollars in thousands)
September 30,
1997 1996
ASSETS
Utility Plant
Utility plant, at original cost $680,391 $631,194
Accumulated depreciation and (218,895) (200,456)
amortization
Unamortized plant acquisition 32,327 33,572
adjustments, net
------- -------
493,823 464,310
------- -------
Funds for Construction Held by Trustee 27,648 44,652
------- -------
Investment in TIC Enterprises, LLC 26,069 --
------- -------
Investments in Marketable Securities, at 2,570 4,417
market
------- -------
Current Assets
Cash and cash equivalents 58,793 3,736
Accounts receivable (less allowance for
doubtful 64,499 43,589
accounts of $2,318 in 1997 and $2,288
in 1996)
Fuel inventories, at average cost 31,068 29,191
Unrecovered purchased gas costs 9,602 6,987
Prepayments and other 24,787 18,542
------- -------
188,749 102,045
Other Assets ------- -------
Regulatory assets 54,607 52,439
Deferred assets 10,199 9,799
------- -------
64,806 62,238
------- -------
$803,665 $677,662
======= =======
CAPITALIZATION AND LIABILITIES
Capitalization (See accompanying
statements)
Common shareholders' equity $218,291 $179,107
Preferred stock -- --
Long-term debt 229,069 230,100
------- -------
447,360 409,207
------- -------
Capital Lease Obligations 9,679 10,503
------- -------
Current Liabilities
Notes payable to banks 54,428 54,895
Current portion of long-term debt 54,600 950
Current portion of capital lease
obligations 1,587 1,596
Accounts payable, customer deposits and
accrued liabilities 96,655 66,372
Federal income and other taxes 4,049 2,947
------- -------
211,319 126,760
------- -------
Other Liabilities
Deferred Federal income taxes 62,391 59,328
Unamortized investment tax credits 6,171 6,635
Environmental remediation reserve 33,981 33,981
Regulatory and other liabilities 32,764 31,248
------- -------
135,307 131,192
------- -------
$803,665 $677,662
======= =======
See the notes to the consolidated financial statements
F-4
NUI Corporation and Subsidiaries
Consolidated Statement of Cash Flows
(Dollars in thousands)
Years Ended September 30,
1997 1996 1995
Operating Activities
Net Income $19,649 $14,896 $5,517
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 24,040 22,315 20,932
Deferred Federal income taxes 3,246 7,569 2,005
Non-cash portion of restructuring
and other non-recurring charges -- -- 4,913
Amortization of deferred
investment tax credits (464) (467) (468)
Other 1,020 4,617 4,626
Effects of changes in:
Accounts receivable, net (20,911) (13,371) 7,923
Fuel inventories (1,877) (1,562) 987
Accounts payable, deposits
and accruals 28,133 8,310 7,775
Over (under) recovered
purchased gas costs (2,614) (11,882) 2,949
Other (9,707) (7,895) (9,240)
------ ------ ------
Net cash provided by operating
activities 40,515 22,530 47,919
------ ------ ------
Financing Activities
Proceeds from sales of common stock,
net of treasury stock purchased 28,204 31,371 577
Dividends to shareholders (10,575) (8,700) (8,296)
Proceeds from issuance of long-term
debt 53,569 39,000 70,000
Funds for construction held by
trustee, net 18,784 (29,049) 10,125
Repayments of long-term debt (950) (30,138) (9,902)
Principal payments under capital
lease obligations (1,730) (1,829) (1,844)
Net short-term borrowings (repayments) (467) 16,960 (72,190)
------ ------ ------
Net cash provided by (used for)
financing activities 86,835 17,615 (11,530)
------ ------ ------
Investing Activities
Cash expenditures for utility plant (51,366) (37,053) (37,976)
Investment in TIC Enterprises, LLC (22,584) -- --
Other 1,657 (2,957) (449)
------ ------ ------
Net cash (used for) investing
activities (72,293) (40,010) (38,425)
------ ------ ------
Net Increase (Decrease) in Cash
and Cash Equivalents $55,057 $ 135 $(2,036)
====== ====== ======
Cash and Cash Equivalents
At beginning of period $ 3,736 $ 3,601 $ 5,637
At end of period $58,793 $ 3,736 $ 3,601
Supplemental Disclosures of
Cash Flows
Income taxes paid (refunds
received), net $ 5,008 $ 2,612 $(1,129)
Interest paid $19,760 $18,654 $17,436
See the notes to the consolidated financial statements
F-5
NUI Corporation and Subsidiaries
Consolidated Statement of Capitalization
(Dollars in thousands)
September 30,
1997 1996
Long-Term Debt
Gas facilities revenue bonds
6.625% due October 1, 2021 $ 8,400 $ 8,400
6.75% due October 1, 2021 46,200 46,200
6.35% due October 1, 2022 46,500 46,500
6.40% due October 1, 2024* 20,000 20,000
Variable rate due June 1, 2026* 39,000 39,000
5.70% due June 1, 2032 54,600 --
Medium-term notes
7.125% due August 1, 2002 20,000 20,000
8.35% due February 1, 2005 50,000 50,000
ESOP indebtedness, 6% due May 31, 2002 -- 950
------- -------
284,700 231,050
Current portion of long-term debt (54,600) (950)
Unamortized debt discount (1,031) --
------- -------
229,069 230,100
------- -------
Preferred Stock, 5,000,000 shares
authorized; none issued -- --
Common Shareholders' Equity
Common Stock, no par value; shares
authorized: 30,000,000;shares
outstanding: 12,428,952 in 1997
and 11,085,876 in 1996 201,549 171,968
Shares held in treasury: 98,475
shares in 1997 and 92,731 shares
in 1996 (1,615) (1,564)
Retained earnings 19,260 10,117
Valuation of marketable securities 120 389
Unearned employee compensation (1,023) (1,803)
------- -------
218,291 179,107
------- -------
Total Capitalization $447,360 $409,207
======= =======
* The total unexpended portions of the net proceeds from these bonds,
amounting to $23.8 million and $42.6 million as of September 30, 1997
and September 30, 1996, respectively, are carried on the Company's
consolidated balance sheet as funds for construction held by trustee,
including interest earned thereon, until drawn upon for eligible
construction expenditures.
See the notes to the consolidated financial statements
F-6
<TABLE>
NUI Corporation and Subsidiaries
Consolidated Statement of Shareholders' Equity
(Dollars in thousands)
<CAPTION>
Common Stock
------------------------------ Unrealized
Gain(Loss)- Unearned
Shares Paid-in Held in Retained Marketale Employee
Outstanding Amount Treasury Earnings Securities Compensation Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
September 30, 1994 9,157,095 $138,082 $ (797) $ 6,700 $ -- $ (1,217) $142,768
Common stock
issued* 74,499 1,045 1,045
Treasury stock
purchased (30,357) (468) (468)
Net income 5,517 5,517
Cash dividends (8,296) (8,296)
Unrealized gain 232 232
ESOPtransactions (34) 148 114
--------- ------ ------ ------ ------- ------ ------
Balance,
September 30, 1995 9,201,237 $139,093 $(1,265) $ 3,921 $ 232 $ (1,069) $140,912
Common stock
issued:
Public offering 1,800,000 31,067 31,067
Other* 86,973 1,548 1,548
Treasury stock
transactions (2,334) 260 (299) (39)
Net income 14,896 14,896
Cash dividends (8,700) (8,700)
Unrealized gain 157 157
Unearned
compensation (734) (734)
-------- ------- ------- ------ ------- -------- -------
Balance,
September 30, 1996 11,085,876 $171,968 $(1,564) $10,117 $ 389 $(1,803) $179,107
Common stock
issued:
Public offering 1,011,400 22,610 22,610
Other* 337,420 6,971 6,971
Treasury stock
transactions (5,744) (51) (51)
Net income 19,649 19,649
Cash dividends (10,575) (10,575)
Unrealized (loss) (269) (269)
Unearned
compensation (288) (288)
ESOP transactions 69 1,068 1,137
--------- ------- ------ ------- ----- ------ -------
Balance,
September 30, 1997 12,428,952 $201,549 $(1,615) $ 19,260 $ 120 $(1,023) $218,291
========== ======= ====== ====== ===== ====== =======
</TABLE>
* Represents common stock issued in connection with NUI Direct and
various employee benefit plans.
See the notes to the consolidated financial statements
F-7
NUI Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements
include all operating divisions and subsidiaries of NUI Corporation
(collectively referred to as the "Company"). The Company is a multi-
state energy sales, services and distribution company. Its natural gas
utility operations distribute natural gas and provide related customer
services in six states through its Northern and Southern utility
divisions. The Northern Division operates in New Jersey as
Elizabethtown Gas Company. The Southern Division operates in five
states as City Gas Company of Florida ("CGF"), North Carolina Gas,
Elkton Gas (Maryland), Valley Cities Gas (Pennsylvania) and Waverly
Gas (New York). The Company also provides retail gas sales and related
services through its NUI Energy, Inc. subsidiary ("Energy"); wholesale
energy brokerage and related services through its NUI Energy Brokers,
Inc. subsidiary ("Energy Brokers"); customer information systems and
services through its Utility Business Services, Inc. subsidiary; and
sales and marketing outsourcing through its 49% equity interest in TIC
Enterprises, LLC ("TIC") (see Note 2). All intercompany accounts and
transactions have been eliminated in consolidation.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Certain reclassifications have been made to the prior year financial
statements to conform with the current year presentation.
Regulation. The Company is subject to regulation as an operating
utility by the public utility commissions of the states in which it
operates.
Utility Plant. Utility plant is stated at its original cost.
Depreciation is provided on a straight-line basis over the remaining
estimated lives of depreciable property by applying composite average
annual rates as approved by the state commissions. The composite
average annual depreciation rate was 3% in both fiscal 1997 and fiscal
1996 and 3.2% in fiscal 1995. At the time properties are retired, the
original cost plus the cost of retirement, less salvage, is charged to
accumulated depreciation. Repairs of all utility plant and
replacements and renewals of minor items of property are charged to
maintenance expense as incurred.
The net unamortized plant acquisition adjustments represent the
remaining portion of the excess of the purchase price over the book
value of net assets acquired. The excess is being amortized on a
straight-line basis over thirty years from the date of acquisition.
The results of operations of acquired entities have been included in
the accompanying consolidated financial statements for the periods
subsequent to their acquisition.
Operating Revenues and Purchased Gas and Fuel Costs. Operating
revenues include accrued unbilled revenues through the end of each
accounting period. Operating revenues also reflect adjustments
attributable to weather normalization clauses that are accrued during
the winter heating season and billed or credited to customers in the
following year.
Costs of purchased gas and fuel for the Company's regulated utilities
are recognized as expenses in accordance with the purchased gas
adjustment clause applicable in each state. Such clauses provide for
periodic reconciliations of actual recoverable gas costs and the
estimated amounts that have been billed to customers. Under or over
recoveries are deferred when they arise and are recovered from or
refunded to customers in subsequent periods.
Income Taxes. The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes", which requires the liability method to be used to
account for deferred income taxes. Under this method, deferred income
taxes related to tax and accounting basis differences are recognized
at the statutory income tax rates in effect when the tax is expected
to be paid.
Investment tax credits, which were generated principally in connection
with additions to utility plant made prior to January 1, 1986, are
being amortized over the estimated service lives of the properties
that gave rise to the credits.
Regulatory Assets and Liabilities. The Company's utility operations
follow the accounting for regulated enterprises prescribed by
Statement of Financial Accounting Standards No. 71, "Accounting for
the Effects of Certain Types of Regulation" (SFAS 71). In general,
SFAS 71 requires deferral of certain costs and obligations, based upon
orders received from regulators, to be recovered from or refunded to
customers in future periods. The following represents the Company's
regulatory assets and liabilities deferred in the accompanying
consolidated balance sheet as of September 30, 1997 and 1996 (in
thousands):
1997 1996
Regulatory Assets
Environmental investigation and $34,217 $33,679
remediation costs
Unrecovered gas costs 7,091 6,730
Postretirement and other employee 10,041 8,339
benefits
Deferred piping allowances 2,512 3,010
Other 746 681
------ -----
$54,607 $52,439
====== ======
Regulatory Liabilities
Net overcollection of income taxes $5,250 $5,207
Refunds to customers 2,442 850
Other 272 88
------ ------
$7,964 $6,145
====== =====
Although the gas distribution industry is becoming increasingly
competitive, the Company's utility operations continue to recover
their costs through cost-based rates established by the public utility
commissions. As a result, the Company believes that the accounting
prescribed under SFAS 71 remains appropriate.
Impairment of Long-Lived Assets. During the current year, the Company
adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of" (SFAS 121). SFAS 121 requires the Company to
review such assets for possible impairment whenever circumstances
indicate that the carrying amount of an asset may not be recoverable.
The adoption of SFAS 121 did not have an impact on the results of
operations, financial condition or cash flows of the Company.
Cash Equivalents. Cash equivalents consist of a money market account
which invests in securities with original maturities of three months
or less.
Net Income Per Share of Common Stock. Net income per share of common
stock is based on the weighted average number of shares of NUI common
stock outstanding. The assumed exercise of outstanding employee stock
options would not have a dilutive effect on net income per share of
common stock.
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128, "Earnings
per Share" (SFAS 128). This statement supersedes APB Opinion No. 15,
"Earnings per Share" and simplifies the computation of earnings per
share. SFAS 128 will be effective for financial statements for both
interim and annual periods ending after December 15, 1997. The Company
does not expect the effect of adopting SFAS No. 128 to have a material
effect on its calculation of earnings per share.
New Accounting Standards In June 1997, the FASB issued Statement of
Financial Accounting Standards No. 131 "Disclosures about Segments of
an Enterprise and Related Information" (SFAS 131). SFAS 131 requires
disclosures for each business segment that are similar to current
requirements, with the addition of quarterly disclosures and more
detailed geographic disclosures. The Company is not required to adopt
SFAS 131 until fiscal 1999. SFAS 131 relates solely to disclosure
provisions, and therefore will not have any effect on the results of
operations, financial position and cash flows of the Company.
2. Purchase of Interest in TIC Enterprises, LLC
On May 18, 1997, the Company closed on its acquisition of a 49%
interest in TIC Enterprises, LLC, a newly formed limited liability
company (LLC), for a purchase price of $22 million. The acquisition
was effective as of January 1, 1997 and is being accounted for under
the equity method. Under the terms of an LLC Interest Purchase
Agreement (the "Agreement"), the limited liability company will
continue the business previously conducted by TIC Enterprises, Inc.
The Agreement also includes a provision for an additional incentive
payment up to a maximum of $5.2 million if TIC's calendar 1997
earnings before interest and taxes, exceed $5 million. As of September
30, 1997, the Company has recorded a reserve of approximately $2.2
million for the additional incentive payment. In addition, NUI has the
option, during the period beginning April 1, 2001 (subject to a one-
year extension by the seller), to purchase the remaining 51% interest
in TIC.
TIC engages in the business of recruiting, training and managing sales
professionals and serving as sales and marketing representatives for
various businesses, including the Company's subsidiary, NUI Energy,
Inc. The excess of the purchase price over the Company's share of the
underlying equity in net assets of TIC is estimated on a preliminary
basis to be approximately $22 million, including the reserve for the
additional incentive payment, and is being amortized on a straight
line basis over a fifteen year period.
3. Restructuring and Other Non-Recurring Charges
In fiscal 1995, the Company incurred approximately $8.6 million of
pre-tax non-recurring charges for, among other things, the
implementation of an early retirement program and the consolidation of
its Florida and Pennsylvania & Southern Gas Service (PSGS) operations.
In November 1994, the Company offered an early retirement program to
certain employees. The program, which became effective on April 1,
1995, was accepted by 95 of the eligible 112 employees. In accordance
with Statement of Financial Accounting Standards No. 88, "Employers'
Accounting for Settlements and Curtailments of Defined Benefit Pension
Plans and for Termination Benefits", the Company recorded a special
termination charge of approximately $4.1 million. In addition, the
Company recorded approximately $0.8 million of other benefit expenses
associated with these employees. The Company also deferred, pending
regulatory recovery, a charge of approximately $0.6 million for
special termination benefits.
Effective April 1, 1995, the Company consolidated its Florida and PSGS
divisions to form a new NUI Southern Division. The Southern Division
is headquartered in Hialeah, Florida. As a result, PSGS headquarters
in Sayre, Pennsylvania were closed effective December 31, 1995. The
Company incurred a charge of approximately $2.6 million for severance
and other expenses associated with the consolidation of the two
divisions.
In addition, during fiscal 1995, the Company incurred a charge of
approximately $0.8 million to write down certain regulatory assets as
a result of a November 1994 settlement of the Company's Florida rate
case.
4.Capitalization
Long-Term Debt. On July 9, 1997, the Company issued $54.6 million of
tax exempt Gas Facilities Revenue Refunding Bonds at an interest rate
of 5.7%. The bonds mature on June 1, 2032 and were used to refinance
previously issued Gas Facilities Revenue Bonds in the aggregate
principal amounts and rates of $46.2 million at 6.75% and $8.4 million
at 6.625%. The proceeds from the refunding bonds were held in trust
until the old bonds were called on October 1, 1997.
The Company prepaid approximately $1 million of long-term debt,
without penalty, associated with its Employee Stock Ownership Plan in
January 1997.
The Company deposits in trust the unexpended portion of the net
proceeds from its Gas Facilities Revenue Bonds until drawn upon for
eligible expenditures. As of September 30, 1997 and 1996, the total
unexpended portions of all of the Company's Gas Facilities Revenue
Bonds were $23.8 million and $42.6 million, respectively, and are
classified on the Company's consolidated balance sheet, including
interest earned thereon, as funds for construction held by trustee.
As of September 30, 1997, the Company is scheduled to repay
approximately $54.6 million of long-term debt in fiscal 1998 as noted
above. No other long-term debt is scheduled to be repaid over the next
five years.
Preferred Stock. The Company has 5,000,000 shares of authorized but
unissued preferred stock. Shares of Series A Junior Participating
Preferred Stock have been reserved for possible future issuance in
connection with the Company's Shareholder Rights Plan described below.
Shareholder Rights Plan. In November 1995, the Company's Board of
Directors adopted a Shareholder Rights Plan under which shareholders
of NUI common stock were issued as a dividend one right to buy one
one-hundredth of a share of Series A Junior Participating Preferred
Stock at a purchase price of $50 (Right) for each share of common
stock held. The Rights initially attach to the shares of NUI common
stock and can be exercised or transferred only if a person or group
(an "Acquirer"), with certain exceptions, acquires, or commences a
tender offer to acquire beneficial ownership of 15% or more of NUI
common stock. Each Right, except those held by the Acquirer, may be
used by the non-acquiring shareholders to purchase, at the Right's
exercise price, shares of NUI common stock having a market value
equivalent to twice the Right's exercise price, thus substantially
reducing the Acquirer's ownership percentage.
The Company may redeem the Rights at $0.001 per Right at any time
prior to the occurrence of any such event. All Rights expire on
November 27, 2005.
Common Stock. On September 25, 1997, the Company issued an additional
1,011,400 million shares of NUI common stock. The net proceeds from
the offering totaled $22.6 million and were used to reduce outstanding
short-term debt incurred to finance the Company's acquisition of a 49%
interest in TIC (see Note 2) and other general corporate purposes.
The Company periodically issues shares of common stock in connection
with NUI Direct, the Company's dividend reinvestment and stock
purchase plan, and various employee benefit plans. Effective in
December 1994, these plans commenced purchasing shares on the open
market to fulfill the plans' requirements rather than purchasing the
shares directly from the Company. Under the terms of these plans, the
Company may change the method of purchasing shares from open market
purchases to purchases directly from the Company, or vice versa.
Effective in October 1996, these plans began purchasing shares
directly from the Company to fulfill the plans' requirements.
At September 30, 1997, shares reserved for issuance under the
Company's common stock plans were: NUI Direct, 103,389; Savings and
Investment Plan, 195,756; 1996 Stock Option and Stock Award Plan,
137,891; 1996 Employee Stock Purchase Plan, 91,022; and the 1996
Director Stock Purchase Plan, 58,542.
Stock Plans. The Company's Board of Directors believes that both
directors' and management's interest should be closely aligned with
that of shareholders. As a result, under the 1996 Stock Option and
Stock Award Plan, the 1996 Director Stock Purchase Plan and the 1988
Stock Plan, the Company has a long-term compensation program for
directors, executive officers and key employees involving shares of
NUI common stock.
Each non-employee director of the Company earns an annual retainer fee
that consists of a grant of shares of NUI common stock which are
deferred until their retirement from the Board. During 1997, such
retainer fee granted was equivalent to a fair market value of $15,000
on the date of grant. In addition, non-employee directors who also
chair committees of the Board receive additional deferred grants with
a fair market value of $2,500 on the date of grant. Deferred stock
grants are increased on each common stock dividend payment date by an
amount equal to the number of shares of NUI common stock which would
have been purchased had all deferred stock grants been issued and the
dividends reinvested in additional shares.
Shares granted as long-term compensation for executive officers and
key employees amounted to 69,800 in fiscal 1997, 65,113 shares in
fiscal 1996 and 17,620 shares in fiscal 1995. As of September 30,
1997, a total of 132,678 shares of restricted stock that have been
granted as long-term compensation are subject to future vesting
requirements, and are restricted from resale.
Executive officers and key employees are eligible to be granted
options for the purchase of NUI common stock at prices equal to the
market price per share on the date of grant. The option must be
exercised within ten years from the date of grant. Transactions during
the last three fiscal years involving stock options were as follows:
Number Option Price per
of Share
Shares
Options outstanding and
exercisable at
September 30, 1994 13,000 $15.77-$17.625
Fiscal 1995
Options canceled (3,200) $15.77
-----
Options outstanding and
exercisable at
September 30, 1997 9,800 $15.77-$17.625
=====
During fiscal 1997, the Company was required to adopt Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123 establishes financial accounting
and reporting standards for stock based compensation plans and
includes all arrangements by which employees receive shares of stock
or other equity instruments of the employer, or by which the employer
incurs liabilities to employees in amounts based on the price of the
employer's stock. Under SFAS 123, the reporting entity is given the
option to either adopt the accounting standards of SFAS 123, or
continue to measure compensation cost in accordance with previous
guidance and provide proforma disclosure of the effect of adopting
SFAS 123. The Company has elected to continue its current accounting
treatment in this area. If the Company had adopted provisions of SFAS
123, there would not have been a material effect on the results of
operations or financial position.
Dividend Restrictions. The Company's long-term debt agreements
include, among other things, restrictions as to the payment of cash
dividends. Under the most restrictive of these provisions, the Company
is permitted to pay approximately $37 million of cash dividends at
September 30, 1997.
5. Notes Payable to Banks
At September 30, 1997, the Company's outstanding notes payable to
banks were $54.4 million with a combined weighted average interest
rate of 6.3%. Unused lines of credit at September 30, 1997 were
approximately $92 million.
The weighted average daily amounts outstanding of notes payable to
banks and the weighted average interest rates on those amounts were
$66.0 million at 5.5% in fiscal 1997, $39.9 million at 5.6% in fiscal
1996 and $58.0 million at 5.9% in fiscal 1995.
6. Leases
Utility plant held under capital leases amounted to $22.9 million at
September 30, 1997 and $23.5 million at September 30, 1996, with
related accumulated amortization of $12.5 million and $11.5 million,
respectively. These properties consist principally of leasehold
improvements and office furniture and fixtures. A summary of future
minimum payments for properties held under capital leases follows (in
thousands):
1998 $ 2,437
1999 2,433
2000 7,267
2001 485
2002 346
2003 and thereafter 172
------
Total future minimum payments 13,140
Amount representing interest (1,874)
Current portion of capital (1,587)
lease obligations
------
Capital lease obligations $9,679
======
Minimum payments under noncancelable operating leases, which relate
principally to office space, are approximately $4.1 million in fiscal
1998, $3.8 million in fiscal 1999, $3.7 million in fiscal 2000, $3.8
million in fiscal 2001 and $3.9 million in fiscal 2002.
Rents charged to operations expense were $5.7 million in fiscal 1997
and $5.3 million in both fiscal 1996 and fiscal 1995.
7. Financial Instruments
Derivatives. The Company engages in risk management activities to
minimize the risk associated with fluctuating natural gas prices. The
Company's unregulated subsidiaries utilize the following financial
instruments to provide competitive energy supplies and hedge its
retail sales: forward contracts, which commit the Company to purchase
or sell natural gas in the future; swap agreements, which require
payments to (or receipt of payments from) counterparties based on the
differential between a fixed price and an index price of natural gas;
natural gas options, which provide the right, but not the requirement,
to buy or sell natural gas at a fixed price; and futures contracts,
bought on the New York Mercantile Exchange (NYMEX), to buy or sell
natural gas at a fixed price.
Energy Brokers accounts for its trading and price risk management
activities by marking to market its various physical transactions and
financial instruments. The values assigned to these transactions
reflect quotes from the NYMEX, established pricing models and price
volatility factors. The Company manages open positions with strict
policies which limit its exposure to market risk and require reporting
potential financial exposure to management on a daily basis.
Margin requirements for natural gas futures contracts are recorded in
other current assets. Realized and unrealized gains and losses are
recorded in the consolidated statement of income under purchased gas
and fuel. At September 30, 1997, Energy Brokers' futures positions
consisted of 565 long contracts and 619 short contracts at prices
ranging from $2.15 to $3.40 per Mcf, none of which extend beyond
August 1998, representing 11,840 MMcf of natural gas. Energy Brokers'
options positions consisted of 30 long contracts and 275 short
contracts with varying strike prices, none of which extend beyond July
1998. Margin deposits with brokers were approximately $1.2 million at
September 30, 1997. In addition, Energy Brokers has forward sales and
purchase commitments associated with contracts totaling approximately
50,000 MMcf of natural gas, with terms extending through October 1998.
Net realized and unrealized gains on derivative trading for fiscal
1997 was $2.4 million, which has been included in income. During
fiscal 1996, Energy Brokers' use of financial instruments was not
significant.
Energy utilizes financial instruments to ensure adequate margins on
its retail and industrial sales. Margin requirements for natural gas
futures contracts are recorded as other current assets. Unrealized
gains and losses on all futures and options contracts are deferred in
the consolidated balance sheet as either a current asset or liability.
Realized gains and losses on futures, forwards and options contracts
are included in the consolidated statement of income under purchased
gas and fuel when the underlying gas commodity hedged is purchased and
sold to its customers. At September 30, 1997, Energy's futures
positions consisted of 362 long contracts and 47 short contracts at
prices ranging from $1.98 to $3.18 per Mcf, none of which extend
beyond July 1999, representing 4,090 MMcf of natural gas. Energy's
options positions consisted of 91 short contracts with varying strike
prices, none of which extend beyond September 1998. During fiscal
1996, Energy's use of financial instruments was not significant.
The Company is exposed to credit risk in the event of default or non-
performance by one of its trading partners. The Company maintains
credit policies that management believes significantly minimize
overall credit risk.
Other Financial Instruments. As of September 30, 1997 and 1996, the
market value of the Company's investments in marketable securities
exceeded their cost by approximately $196,000 and $623,000,
respectively, which unrealized gain is reflected net of deferred
income taxes in the accompanying consolidated balance sheet as a
component of shareholders' equity.
The fair value of the Company's cash equivalents, funds for
construction held by trustee and notes payable to banks are
approximately equivalent to their carrying value. The fair value of
the Company's long-term debt exceeded its carrying value by
approximately $11 million as of September 30, 1997 and 1996. The fair
value of long-term debt was estimated based on quoted market prices
for the same or similar issues.
8. Consolidated Taxes
The provision for Federal and State income taxes was comprised of the
following (in thousands):
1997 1996 1995
Currently payable -
Federal $7,205 $ 647 $ 833
State 595 244 356
Deferred -
Federal 3,246 7,569 2,005
State (59) 151 400
Amortization of investment ( 464) (467) (468)
tax credits
----- ----- -----
Total provision for income $10,523 $8,144 $3,126
====== ===== =====
The components of the Company's net deferred Federal tax liability
(asset) as of September 30, 1997 and 1996 are as follows (in
thousands):
1997 1996
Depreciation and other utility $50,620 $47,700
plant differences
Plant acquisition adjustments 10,544 11,254
Alternative minimum tax credit (3,670) (2,984)
Unamortized investment tax credit (2,144) (2,306)
Deferred charges and regulatory
assets 8,357 8,864
Gross receipts and franchise
taxes 2,375 2,559
Other (3,691) (5,759)
------ ------
$62,391 $59,328
====== ======
The alternative minimum tax credit can be carried forward indefinitely
to reduce the Company's future tax liability.
The Company's effective income tax rates differ from the statutory
Federal income tax rates due to the following (in thousands):
1997 1996 1995
Pre-tax income $30,172 $23,040 $ 8,643
Federal income taxes computed
at Federal statutory tax rate
(35% in both fiscal 1997 and
1996 and 34% in fiscal 1995) 10,560 8,064 3,025
Increase (reduction) resulting
from:
Excess of book over tax 354 360 367
depreciation
Amortization of investment tax (464) (467) (468)
credits
Federal benefit of state tax (188) (138) (257)
provision
Other, net (275) (70) (297)
------ ------ ------
Total provision for Federal income 9,987 7,749 2,370
Provision for State income taxes 536 395 756
------ ------ -----
Total provision for income taxes 10,523 8,144 3,126
(Less) provision included in other
income and expenses (1,230) (337) (240)
------ ------ ------
Provision for income taxes included
in operating expenses $9,293 $7,807 $2,886
===== ===== =====
9. Retirement Benefits
Pension Benefits. The Company has non-contributory defined benefit
retirement plans which cover all of its employees other than the CGF
union employees who participate in a union sponsored multi-employer
plan. The Company funds its plans in accordance with the requirements
of the Employee Retirement Income Security Act of 1974 and makes
contributions to the union sponsored plan in accordance with its
contractual obligations. Benefits paid under the Company's plans are
based on years of service and levels of compensation. The Company's
actuarial calculation of pension expense is based on the projected
unit cost method.
The components of pension expense for the Company's plans were as
follows (in thousands):
1997 1996 1995
Service cost $ 1,849 $ 1,973 $ 2,044
Interest cost 6,480 6,103 5,290
Actual return on plan
assets (36,984) (15,076) (20,072)
Net amortization and
deferral 26,089 6,653 11,949
Special termination
benefits 1,150 -- 4,083
----- ----- -----
Pension (credit)
$(1,416) $ (347) $3,294
===== ===== =====
The status of the Company's funded plans as of September 30 was as
follows (in thousands):
1997 1996
Actuarial present value of
benefit obligations:
Vested benefits $73,154 $67,142
Non-vested benefits 2,791 2,531
------ ------
Accumulated benefit obligations 75,945 69,673
Projected increases in
compensation levels
11,457 11,725
------ ------
Projected benefit obligation 87,402 81,398
Market value of plan assets 137,290 109,952
------ ------
Plan assets in excess of
projected benefit obligation 49,888 28,554
Unrecognized net gain (42,969) (22,756)
Unrecognized prior service cost 658 775
Unrecognized net transition (2,619) (3,272)
asset
------ ------
Pension prepayment $ 4,958 $ 3,301
====== ======
The projected benefit obligation was calculated using a discount rate
of 7.5% in fiscal 1997 and 8% in fiscal 1996 and an assumed annual
increase in compensation levels of 4% in both fiscal 1997 and fiscal
1996. The expected long-term rate of return on assets is 9%. The
assets of the Company's funded plans are invested primarily in
publicly-traded fixed income and equity securities.
Certain key employees also participate in an unfunded supplemental
retirement plan. The projected benefit obligation under this plan was
$4.3 million as of September 30, 1997 and $2.6 million as of
September 30, 1996, and the expense for this plan was approximately
$0.6 million in fiscal 1997 and $0.4 million in both fiscal 1996 and
fiscal 1995.
Postretirement Benefits Other Than Pensions. The Company provides
certain health care benefits to all retirees receiving benefits under
a Company pension plan other than the CGF plan, who reach retirement
age while working for the Company.
The Company accounts for these plans under Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (SFAS 106), which, among
other things, requires companies to accrue the expected cost of
providing other postretirement benefits to employees and their
beneficiaries during the years that eligible employees render the
necessary service. The Company does not currently fund these future
benefits.
The components of postretirement benefit expense other than pensions
for the years ended September 30, 1997 and 1996 were as follows (in
thousands):
1997 1996
Service cost $564 $ 600
Interest cost 2,123 2,096
Amortization of transition obligation 1,028 1,028
Other 26 115
----- -----
Net postretirement expense $3,741 $3,839
===== =====
The status of the Company's postretirement plans other than pensions
as of September 30, 1997 and 1996 was as follows (in thousands):
1997 1996
Accumulated postretirement benefit
obligation:
Retirees $14,790 $19,905
Fully eligible active plan participants 2,019 3,095
Other active plan participants 6,264 6,721
------ ------
Total accumulated postretirement benefit
obligations 23,073 29,721
Unrecognized transition obligation (11,270) (17,475)
Unrecognized net (loss) (1,572) (4,113)
Unrecognized prior service cost -- (426)
------ ------
Accrued postretirement benefit $10,231 $ 7,707
obligation
====== ======
The health care trend rate assumption is 10% in 1998 gradually
decreasing to 5.5% for the year 2006 and later. The discount rate used
to compute the accumulated postretirement benefit obligation was 7.5%
in fiscal 1997 and 8% in fiscal 1996. An increase in the health care
trend rate assumption by one percentage point in all years would
increase the accumulated postretirement benefit obligation by
approximately $4.1 million and the aggregate annual service and
interest costs by approximately $0.5 million.
The Company has received an order from the North Carolina Utilities
Commission to include in rates the amount of postretirement benefit
expense other than pensions computed under SFAS 106. The Company has
also received an order from the New Jersey Board of Public Utilities
(NJBPU) permitting the Northern Division to defer the difference
between the amount of postretirement benefits expense other than
pensions computed as claims are incurred and the amount computed on
the accrual method in accordance with SFAS 106, pending ratemaking
treatment that would be considered in a base rate proceeding. The
consensus issued in 1993 by the Emerging Issues Task Force of the
Financial Accounting Standards Board (EITF) permits rate regulated
companies to defer such expenses for as long as five years when the
ratemaking treatment provides for full recovery within the succeeding
fifteen years.
On January 8, 1997, the NJBPU issued a generic order approving a
stipulation that sets forth mechanisms under which New Jersey
utilities may recover postretirement benefits expenses other than
pensions in accordance with SFAS 106 and the EITF consensus, without
being required to file a base rate case. In accordance with that
order, the Company filed a request with the NJBPU on August 4, 1997
seeking recovery of these costs by means of a discreet adjustment of
base rates. The Company expects NJBPU action on its request in early
1998. The Company will also seek ratemaking treatment consistent with
the EITF consensus from the commissions in the other states in which
it operates.
The Company continually evaluates alternative ways to manage these
benefits and control their costs. Any changes in the plan or
revisions to assumptions that affect the amount of expected future
benefit may have a significant effect on the amount of the reported
obligation and the annual deferral and expense.
10. Business Segment Information
The Company's operations are organized under three primary lines of
business: Distribution, Energy Sales and Services and Customer
Services. The Distribution segment distributes natural gas in six
states through the Company's regulated utility divisions. The Energy
Sales and Services segment reflects the operations of the Company's
Energy and Energy Brokers subsidiaries, as well as utility off-system
sales. The Customer ServiceS segment provides repair and maintenance
of customer-owned gas facilities and appliances and collects energy
usage data for billing purposes.
The following table provides information concerning the major segments
of the Company for each of the three years ended September 30, 1997.
Revenues include intersegment sales to affiliated entities, which are
eliminated in consolidation. Identifiable assets include only those
attributable to the operations of each segment.
(dollars in 1997 1996 1995
thousands)
Revenues:
Distribution $418,426 $403,100 $360,361
Energy Sales & 180,111 60,379 8,710
Services
Customer Services 12,290 10,722 9,025
Intersegment
Revenues (2,231) (4,702) (1,212)
------ ------ ------
Total Revenues $608,596 $469,499 $376,884
======= ======= =======
Operating Margins:
Distribution $154,119 $150,477 $144,377
Energy Sales &
Services 6,666 3,553 303
Customer Services 12,290 10,722 9,025
------- ------- -------
Total $173,075 $164,752 $153,705
======= ======= =======
Pre-Tax Operating
Income:
Distribution $42,579 $39,313 $ 27,580
Energy Sales &
Services 2,592 1,313 103
Customer Services 2,840 2,005 975
Other (2,433) (1,951) (1,913)
------ ------ ------
Total 45,578 40,680 26,745
Income Taxes 9,293 7,807 2,886
------ ------ ------
Total Operating
Income $36,285 $32,873 $ 23,859
====== ====== ======
Depreciation &
Amortization:
Distribution $18,518 $17,287 $ 16,342
Energy Sales &
Services 50 23 6
Customer Services 2,031 2,028 2,030
Other 2,433 1,951 1,372
------ ------ ------
Total Depreciation &
Amortization $23,032 $21,289 $ 19,750
====== ====== ======
Capital
Expenditures:
Distribution $47,378 $35,437 $ 36,491
Energy Sales &
Services 502 315 45
Customer Services 1,403 1,008 1,100
Other 2,996 299 282
------ ------ ------
Total Capital
Expenditures $52,279 $37,059 $ 37,918
====== ====== ======
Identifiable Assets:
Distribution $697,889 $645,247 $586,627
Energy Sales &
Services 28,638 7,415 517
Customer Services 15,458 14,958 13,122
Other 61,680 10,042 9,899
------ ------ ------
Total Identifiable
Assets $803,665 $677,662 $610,165
======= ======= =======
11. Commitments and Contingencies
Commitments. Capital expenditures are expected to be approximately $60
million in fiscal 1998.
Environmental Matters. The Company is subject to federal and state
laws with respect to water, air quality, solid waste disposal and
employee health and safety matters, and to environmental regulations
issued by the United States Environmental Protection Agency (EPA), the
New Jersey Department of Environmental Protection (NJDEP) and other
federal and state agencies.
The Company owns, or previously owned, certain properties on which
manufactured gas plants (MGP) were operated by the Company or by other
parties in the past. Coal tar residues are present on the six MGP
sites located in the Northern Division. The Company has reported the
presence of the six MGP sites to the EPA, the NJDEP and the New Jersey
Board of Public Utilities (NJBPU). In 1991, the NJDEP issued an
Administrative Consent Order for an MGP site located at South Street
in Elizabeth, New Jersey, wherein the Company agreed to conduct a
remedial investigation and to design and implement a remediation plan.
In 1992 and 1993, the Company entered into a Memorandum of Agreement
with the NJDEP for each of the other five Northern Division MGP sites.
Pursuant to the terms and conditions of the Administrative Consent
Order and the Memoranda of Agreement, the Company is conducting
remedial activities at all six sites with oversight from the NJDEP.
The Company owned ten former MGP facilities, only three of which it
currently owns. The former MGP sites are located in the states of
North Carolina, South Carolina, Pennsylvania, New York and Maryland
(the "Southern Division MGP sites"). The Company has joined with other
North Carolina utilities to form the North Carolina Manufactured Gas
Plant Group (the "MGP Group"). The MGP Group has entered into a
Memorandum of Understanding with the North Carolina Department of
Environment, Health and Natural Resources (NCDEHNR) to develop a
uniform program and framework for the investigation and remediation of
MGP sites in North Carolina. The Memorandum of Understanding
contemplates that the actual investigation and remediation of specific
sites will be addressed pursuant to Administrative Consent Orders
between the NCDEHNR and the responsible parties. The NCDEHNR has
recently sought the investigation and remediation of sites owned by
members of the MGP Group and has entered into Administrative Consent
Orders with respect to four such sites. None of these four sites are
currently or were previously owned by the Company.
The Company, with the aid of environmental consultants, regularly
assesses the potential future costs associated with conducting
investigative activities at each of the Company's sites and
implementing appropriate remedial actions, as well as the likelihood
of whether such actions will be necessary. The Company records a
reserve if it is probable that a liability will be incurred and the
amount of the liability is reasonably estimable. Based on the
Company's most recent assessment, the Company has recorded a total
reserve for environmental investigation and remediation costs of
approximately $34 million, which the Company expects to expend during
the next twenty years. The reserve is net of approximately $4 million
which will be borne by a prior owner and operator of two of the
Northern Division sites in accordance with a cost sharing agreement.
Of this approximate $34 million reserve, approximately $30 million
relates to Northern Division MGP sites and approximately $4 million
relates to Southern Division MGP sites. However, the Company believes
that it is possible that costs associated with conducting
investigative activities and implementing remedial activities, if
necessary, with respect to all of its MGP sites may exceed the
approximately $34 million reserve by an amount that could range up to
$24 million and be incurred during a future period of time that may
range up to fifty years. Of this $24 million in additional possible
future expenditures, approximately $12 million relates to the Northern
Division MGP sites and approximately $12 million relates to the
Southern Division MGP sites. As compared with the approximately $34
million reserve discussed above, the Company believes that it is less
likely that this additional $24 million will be incurred and therefore
has not recorded it on its books.
The Company's prudently incurred remediation costs for the Northern
Division MGP sites have been authorized by the NJBPU to be recoverable
in rates. The Company also believes that a portion of such costs may
be recoverable from the Company's insurance carriers. The most recent
base rate order for the Northern Division permits the Company to
utilize full deferred accounting for expenditures related to MGP
sites. The order also provides for the recovery of $130,000 annually
of MGP related expenditures incurred prior to the rate order.
Accordingly, the Company has recorded a regulatory asset of
approximately $34 million as of September 30, 1997, reflecting the
future recovery of environmental remediation liabilities related to
the Northern Division MGP sites. The Company is able to recover actual
MGP expenses over a rolling seven year period through its MGP
Remediation Adjustment Clause (RAC). The NJBPU approved the Company's
initial RAC rate filing on April 2, 1997 at which time the Company
began recovery of approximately $3.1 million, which represents
environmental costs incurred from inception through June 30, 1996. On
August 5, 1997, the Company submitted a second RAC rate filing to the
NJBPU to recover an additional $0.5 million in environmental costs
incurred from July 1, 1996 through June 30, 1997. Approval by the
NJBPU on this second RAC rate filing is expected in early 1998. With
respect to costs associated with the Southern Division MGP sites, the
Company intends to pursue recovery from ratepayers, former owners and
operators, and insurance carriers, although the Company is not able to
express a belief as to whether any or all of these recovery efforts
will be successful. The Company is working with the regulatory
agencies to prudently manage its MGP costs so as to mitigate the
impact of such costs on both ratepayers and shareholders.
Gas Procurement Contracts. Certain of the Company's long-term
contracts for the supply, storage and delivery of natural gas include
fixed charges that amount to approximately $71 million annually. The
Company currently recovers, and expects to continue to recover, such
fixed charges through its purchased gas adjustment clauses. The
Company also is committed to purchase, at market-related prices,
minimum quantities of gas that, in the aggregate, are approximately 10
billion cubic feet per year or to pay certain costs in the event the
minimum quantities are not taken. The Company expects that minimum
demand on its systems for the duration of these contracts will
continue to exceed these minimum purchase obligations.
Other. The Company is involved in various claims and litigation
incidental to its business. In the opinion of management, none of
these claims and litigation will have a material adverse effect on the
Company's results of operations or its financial condition.
12. Unaudited Quarterly Financial Data
The quarterly financial data presented below reflects the seasonal
nature of the Company's operations which normally results in higher
earnings during the heating season which is primarily in the first two
fiscal quarters (in thousands, except per share amounts):
Fiscal Quarters
First Second Third Fourth
1997:
Operating Revenues $151,868 $204,077 $125,175 $127,477
Operating Income 10,767 19,668 5,074 120
Net Income (Loss) 6,773 15,313 1,365 (3,802)
Net Income (Loss) Per
Share 0.61 1.37 0.12 (0.33)
1996:
Operating Revenues $124,767 $170,963 $ 95,517 $ 78,252
Operating Income (Loss) 11,409 19,170 3,340 (1,045)
Net Income (Loss) 6,446 14,456 (1,003) (5,002)
Net Income (Loss) Per
Share 0.70 1.58 (0.10) (0.45)
Quarterly net income (loss) per share in both fiscal 1997 and fiscal
1996 does not total to the annual amounts due to rounding and to
changes in the average common shares outstanding.
<TABLE>
SCHEDULE II
NUI Corporation and Subsidiaries
Valuation and Qualifying Accounts
For each of the Three Years in the
Period Ended September 30, 1997
(Dollars in thousands)
<CAPTION>
Additions
---------------------
Balance, Charged to Balance,
Beginning Costs and End of
Description of Period Expenses Other Deductions Period
<S> <C> <C> <C> <C> <C>
1997
Allowance for doubtful
accounts $2,288 $2,305 $1,088(a) $3,363(b) $ 2,318
Environmental
remediation
reserve(c) $33,981 -- -- -- $ 33,981
1996
Allowance for doubtful
accounts $ 1,689 $3,369 $ 863(a) $3,633(b) $ 2,288
Environmental
remediation
reserve(c) $33,981 -- -- -- $ 33,981
1995
Allowance for doubtful
accounts $ 1,368 $2,449 $1,127(a) $3,255(b) $ 1,689
Environmental
remediation
reserve(c) $32,181 -- $1,800 -- $ 33,981
</TABLE>
(a) Recoveries
(b)Uncollectible amounts written off.
(c)The related cost of the reserve established in fiscal 1991, as well
as $5.6 million of fiscal 1994 additions, was recorded as a regulatory
asset. The remaining fiscal 1994 additions of $1.9 million and all of
fiscal 1995 additions was recorded as an additional utility plant
acquisition adjustment. See "Commitments and Contingencies-
Environmental Matters", Note 11 of the Notes to the Consolidated
Financial Statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the Township of Bedminster, State of New Jersey, on the day of
December
NUI CORPORATION
By: JAMES R. VAN HORN
Vice President, General Counsel
and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
JOHN KEAN, JR. President, Chief December 22, 1997
Executive Officer and
Director (Principal
executive officer)
JOHN KEAN Chairman and Director December 22, 1997
A. MARK ABRAMOVIC Senior Vice President December 22, 1997
and Chief Financial
Officer (Principal
financial and accounting
officer)
C. R. CARVER Director December 22, 1997
DR. VERA KING FARRIS Director December 22, 1997
JAMES J. FORESE Director December 22, 1997
BERNARD S. LEE Director December 22, 1997
R. V. WHISNAND Director December 22, 1997
JOHN WINTHROP Director December 22, 1997
INDEX TO EXHIBITS
Exhibit Description
No.
3(ii) By-Laws, amended and restated as of
September 23, 1997
10(ii) Service Agreement under Rate Schedule GSS by and
between Transcontinental Gas Pipe Line
Corporation and EGC, dated July 1, 1996
10(x) Service Agreement for Rate Schedule FTS-5 by and
between Texas Eastern Transmission Corporation
and EGC, dated March 18, 1996 (Contract #331501)
10(xii) Firm Transportation Service Agreement under FTS-2
Rate Schedule by and between City Gas and Florida
Gas Transmission, dated August 12, 1993
10(xxvi) Service Agreement under Rate Schedule GSS by and
between Transcontinental Gas Pipeline and North
Carolina Gas Service, dated July 1, 1996
10(xliii) Service Agreement under Rate Schedule FT by and
between Elkton Gas and Eastern Shore Natural Gas
Company, dated as of November 1, 1997 (Contract
#010003)
10(xliv) Service Agreement under Rate Schedule FT by and
between Elkton Gas and Eastern Shore Natural Gas
Company, dated as of November 1, 1997 (Contract
#010011)
10(xlv) Service Agreement under Rate Schedule FT by and
between Elkton Gas and Eastern Shore Natural Gas
Company, dated as of November 1, 1997 (Contract
#010012)
10(xlvi) Service Agreement under Rate Schedule FT by and
between Elkton Gas and Eastern Shore Natural Gas
Company, dated as of November 1, 1997 (Contract
#010013)
10(xlvii) Service Agreement under Rate Schedule FT by and
between Elkton Gas and Eastern Shore Natural Gas
Company, dated as of November 1, 1997 (Contract
#020003)
10(xlviii) Service Agreement under Rate Schedule FT by and
between Elkton Gas and Eastern Shore Natural Gas
Company, dated as of November 1, 1997 (Contract
#020005)
12 Consolidated Ratio of Earnings to Fixed Charges
21 Subsidiaries of NUI Corporation
23 Consent of Independent Public Accountants
27 Financial Data Schedule
Exhibit 3(ii)
NUI Corporation
Incorporated Under the Laws of the
State of New Jersey
AMENDED AND RESTATED BY-LAWS
Adopted as of September 23, 1997
ARTICLE I
OFFICES
The principal office of the Company shall be located in the State
of New Jersey. The Board of Directors may change the location of the
principal office of the Company and may from time to time designate
other offices at such other places, either within or without the State
of New Jersey, as the business of the Company may require.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meeting: The Annual Meeting of Shareholders for
the election of Directors and the transaction of any other business as
may properly come before such meeting shall be held at such place as
shall be designated by the Board of Directors, on the fourth Tuesday
of January of each year at the hour of 10:30 A.M., or on such other
day at such time as shall be designated by the Board of Directors. If
said day be a legal holiday, said meeting shall be held at the same
hour on the next succeeding business day.
Section 2. Special Meetings: Special Meetings of the
Shareholders may be called only by the President of the Company or by
the Board of Directors or as otherwise required by law. Special
Meetings shall be held at such time and place as shall from time to
time be designated by the Board of Directors and stated in the notice
of such meeting. At a Special Meeting no business shall be transacted
and no corporate action shall be taken other than that stated in the
notice of the meeting.
Section 3. Notice of Meetings: Written notice of the place, date
and hour of any Shareholders' meeting, whether annual or special, and,
in the case of a special meeting, the purpose or purposes for which
the meeting is called shall be given to each Shareholder entitled to
vote thereat, by mailing the same to the Shareholder at the address of
the Shareholder that appears upon the records of the Company not less
than ten (10) nor more than sixty (60) days prior to the date of such
meeting. Notice of any adjourned meeting need not be given other than
by announcement at the meeting so adjourned, unless otherwise ordered
in connection with such adjournment. Such further notice, if any,
shall be given as may be required by law.
Section 4. Waiver of Notice: A written waiver of notice signed by
the person entitled to notice, whether before or after the meeting,
shall be deemed equivalent to notice. Attendance of a Shareholder at a
meeting shall constitute a waiver of notice of such meeting, except<PAGE>
when a Shareholder attends a meeting and, prior to the conclusion
thereof, objects to the transaction of any business on the grounds
that proper notice of the meeting was not given.
Section 5. Quorum: Any number of Shareholders, together holding
at least a majority of the capital stock of the Company issued and
outstanding and entitled to vote, present in person or represented by
proxy at any meeting duly called, shall constitute a quorum for all
purposes at a meeting of Shareholders except as may otherwise be
provided by law.
Section 6. Adjournment of Meetings: If at the time for which a
meeting of Shareholders has been called less than a quorum is present,
the meeting may be adjourned to another time or place by a majority
vote of the Shareholders present in person or by proxy and entitled to
vote thereat, without notice other than by announcement at the meeting
except as may otherwise be required by law. At any adjourned meeting
at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally called.
Section 7. Voting: Each Shareholder entitled to vote at a meeting
of the Shareholders shall be entitled to one vote for each share of
stock registered in such Shareholder's name on the books of the
Company on the date fixed as the record date for the determination of
its Shareholders entitled to vote. In accordance with the New Jersey
Business Corporation Act, each Shareholder entitled to vote at a
meeting of Shareholders may authorize another person or persons to act
for him by proxy, duly appointed by instrument in writing subscribed
by such Shareholder. Said proxy shall not be valid for more than
eleven (11) months unless a longer time is expressly provided therein.
At all meetings of Shareholders all matters shall be determined by a
majority vote of the Shareholders entitled to vote thereat present in
person or represented by proxy except as otherwise provided by law,
the Certificate of Incorporation or these By-Laws.
Section 8. Notice Of Shareholder Nominations And Proposed
Business:
(1) At any annual meeting of the Shareholders, (i) nominations
for the election of directors and (ii) business to be brought before
any such Shareholders' meeting may only be made or proposed (a)
pursuant to the Company's notice of meeting, (b) by or at the
direction of the Board of Directors or (c) by any Shareholder of the
Company who is a Shareholder of record at the time of giving of the
notice provided for in this By-law, who shall be entitled to vote at
such meeting and who complies with the notice procedures set forth in
this By-law.
(2) Any Shareholder may nominate one or more persons for
election as directors at a Shareholders' meeting or propose business
to be brought before a Shareholders' meeting, or both, pursuant to
clause (c) of paragraph 1 of this By-law, only if the Shareholder has
given timely notice thereof in proper written form to the Secretary of
the Company. To be timely, a Shareholder's notice must be delivered
to or mailed and received at the principal executive offices of the
Company not less than 90 days nor more than 120 days prior to the
Shareholders' meeting; provided, however, that if less than 100 days'
notice or other prior public disclosure of the date of the meeting is
given or made to the Shareholders, notice by the Shareholder to be
timely must be received no later than the close of business on the
10th day following the earlier of the day on which notice of the date
of the meeting was mailed or other public disclosure was made. To be
in proper written form a Shareholder's notice to the Secretary shall
set forth as to each matter the Shareholder proposes to bring before
the meeting:
(a) a brief description of the business proposed and/or
persons nominated, as applicable, and the reasons for proposing such
business or making such nomination;
(b) the name and address, as they appear on the Company's
books, of the Shareholder proposing such business or making such
nomination, and the name and address of the beneficial owner, if any,
on whose behalf the proposal is made;
(c) the class or series and number of shares of the Company
which are owned beneficially and of record by such Shareholder of
record and by the beneficial owner, if any, on whose behalf the
proposal is made;
(d) with respect to any nomination, (i) a description of all
arrangements and understandings between the Shareholder proposing such
nomination and each nominee and any other person or persons (naming
such person or persons) in connection with the nomination or
nominations are to be made, (ii) the name, age, business address and
residence address of such nominee, (iii) the class or series and
number of shares of capital stock of the Company owned beneficially
and of record by such nominee, (iv) the written consent of the
proposed nominee to being named in the solicitation material and to
serving as a director if elected and (v) a representation that such
Shareholder intends to appear in person or by proxy at the meeting to
nominate the persons named in the notice;
(e) with respect to any business to be proposed, (i) a
description of all arrangements or understandings between the
Shareholder proposing such business and any other person or persons
(naming such person or persons) in connection with the proposal of
such business by such Shareholder and any material interest of such
Shareholder in such business and (ii) a representation that such
Shareholder intends to appear in person or by proxy at the meeting to
bring such business before the meeting; and
(f) such other information regarding each nominee or matter
of business to be proposed as would be required to be included in
solicitations of proxies, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended.
(3) Notwithstanding anything in these By-laws to the contrary,
no business shall be conducted at any Shareholders' meeting and no
Shareholder may nominate any person for election at any Shareholders'
meeting except in accordance with the procedures set forth in this By-
law. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that any proposed business and/or
any proposed nomination for election as director was not properly
brought or made before the meeting or made in accordance with the
procedures prescribed by these By-laws, and if he should so determine,
he shall so declare to the meeting and any such proposed business or
proposed nomination for election as director not properly brought
before the meeting or made shall not be transacted or considered.<PAGE>
ARTICLE III
DIRECTORS
Section 1. Qualifications: Directors need not be Shareholders and
need not be citizens of the United States or residents of New Jersey.
Section 2. Duties and Powers: The business and affairs of the
Company shall be managed by or under the direction of the Board of
Directors, and, unless the vote of a greater number is required by
law, the Certificate of Incorporation or these By-Laws, the vote of
the majority of the Directors present at a meeting shall be the act of
the Board of Directors in the transaction of business, provided a
quorum is present. The Directors may exercise all such powers of the
Company and do all such lawful acts and things as they may deem proper
and as are consistent with law, the Certificate of Incorporation and
these By-Laws.
Section 3. Election: Directors shall be elected by the
Shareholders at the Annual Meeting of Shareholders to hold office for
the term elected and until their respective successors are elected and
qualified or until their earlier resignation or removal. If the
election of Directors shall not be held on the day designated by or
pursuant to authority granted in these By-Laws, the Directors shall
cause the same to be held as soon thereafter as may be convenient.
(a) Except as otherwise fixed pursuant to Article VI of the
Certificate of Incorporation relating to the rights of the holders of
any class or series of preferred stock having a preference over the
common stock as to dividends or upon liquidation, or to elect
additional Directors under specified circumstances, the Board of
Directors shall consist of not less than eight (8) nor more than
twenty-five (25) persons; provided, however, that the authorized
number of Directors may be changed to any number between eight (8) and
twenty-five (25) from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the total
number of authorized Directors (whether or not there exist any
vacancies in previously authorized Directorships at the time any such
resolution is presented to the Board for adoption).
(b) The Directors (other than those who may be elected by the
holders of any class or series of preferred stock having a preference
over common stock as to dividends or upon liquidation) shall be
classified, with respect to the time for which they severally hold
office, into three classes, as nearly equal in number as possible, one
class to hold office initially for a term expiring at the annual
meeting of Shareholders to be held in 1992, another class to hold
office initially for a term expiring at the annual meeting of
Shareholders to be held in 1993, and another class to hold office
initially for a term expiring at the annual meeting of Shareholders to
be held in 1994, with the members of each class to hold office until
their successors are elected and qualified. At each annual meeting of
the Shareholders of the Company, the successors to the class of
Directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of Shareholders held
in the third year following the year of their election. The election
of Directors need not be by ballot.
(c) Except as otherwise fixed pursuant to the provisions of
Article VI of the Certificate of Incorporation relating to the rights
of the holders of any class or series of preferred stock having a
preference over the common stock as to dividends or upon liquidation
to elect Directors under specified circumstances, newly created
Directorships resulting from any increase in the authorized number of
Directors or any vacancies in the Board of Directors resulting from
death, resignation, retirement, disqualification, removal from office
or other cause may be filled only by a majority vote of the Directors
then in office, though less than a quorum of the Board of Directors.
If any applicable provision of New Jersey law expressly confers power
on Shareholders to fill such a Directorship at a special meeting of
Shareholders, such a Directorship may be filled at such a meeting only
by the affirmative vote of at least 75 percent of the then-outstanding
shares of the voting stock, voting together as a single class (it
being understood that for all purposes of this Section 3 and
compliance with Article XI of the Certificate of Incorporation, each
share of the voting stock shall have the number of votes granted to it
pursuant to Article VI of the Certificate of Incorporation or any
resolution or resolutions of the Board of Directors pursuant to
authority expressly granted to and vested in it by the provisions of
Article VI of the Certificate of Incorporation). Any Director elected
in accordance with the two preceding sentences shall hold office for
the remainder of the full term of the class of Directors in which the
new Directorship was created or the vacancy occurred and until such
Director's successor shall have been elected and qualified. No
decrease in the number of authorized Directors constituting the entire
Board of Directors shall shorten the term of any incumbent Director.
(d) Subject to the rights of the holders of any class or series
of preferred stock having preference over the common stock as to
dividends or upon liquidation or to elect Directors under specified
circumstances, any Director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least 75 percent of all of the
then-outstanding shares of the voting stock, voting together as a
single class. The Company must notify the Director of the grounds of
his impending removal and the Director shall have an opportunity, at
the expense of the Company, to present his defense to the Shareholders
by a statement which accompanies or precedes the Company's
solicitation of proxies to remove him.
Section 4. Resignation of Directors: Any Director may resign at
any time upon written notice to the Company. Such resignation shall
take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the Chairman of the Board, if
any, the Chief Executive Officer, if any, the President or the
Secretary. The acceptance of a resignation shall not be necessary to
make it effective, unless so specified therein.
Section 5. Meetings: The Board of Directors shall hold an annual
meeting for the purpose of organization and the transaction of any
business immediately after the Annual Meeting of the Shareholders,
provided a quorum is present. Other regular meetings may be held at
such times as may be determined from time to time by resolution of the
Board of Directors. Special meetings of the Board of Directors may be
called at any time by the Chairman of the Board, if any, the Chief
Executive Officer, if any, by the President or by a majority of the
Directors then in office, though less than a quorum of the Board of
Directors.
Section 6. Notice and Place of Meetings: Regular meetings of the
Board of Directors may be held at such time and place as shall be
designated by resolution of the Board of Directors. No notice need be
given of any regular meeting of the Board. Notice of any special
meeting specifying the time and place of such meeting and the business
to be transacted thereat shall be served upon each Director by mail at
his residence or usual place of business at least two (2) days before
the day on which such meeting is to be held, or sent to him at such
place by telegraph, cable, electronic communication or transmitted by
way of a guaranteed overnight courier service, or delivered personally
or by telephone not later than 24 hours prior to the time at which the
meeting is to be held. No notice of the annual meeting shall be
required if held immediately after the annual meeting of the
Shareholders and if a quorum is present. Notice of a meeting need not
be given to any Director who submits a signed waiver of notice before
or after the meeting, nor to any Director who attends the meeting
without protesting, prior to the conclusion thereof, the lack of
notice.
Section 7. Business Transacted at Meetings: Any business may be
transacted and any corporate action may be taken at any regular
meeting of the Board of Directors at which a quorum shall be present,
whether such business or proposed action be stated in the notice of
such meeting or not, unless special notice of such business or
proposed action shall be required by law.
Section 8. Quorum: A majority of the entire Board of Directors
then in office shall be necessary to constitute a quorum for the
transaction of business. If a quorum is not present at a meeting of
the Board of Directors, a majority of the Directors present may
adjourn the meeting to such time and place as they may determine
without notice other than announcement at the meeting until enough
Directors to constitute a quorum shall attend. When a quorum is once
present to organize a meeting, it shall not be broken by the
subsequent withdrawal of any Directors.
Section 9. Loans to and Guarantees for Directors: The Corporation
may lend money to, or guarantee any obligation of, or otherwise
assist, any Officer or other employee of the Corporation or of any
subsidiary who is also a Director of the Corporation whenever, in the
judgment of the Board of Directors, such loan, guarantee or assistance
may reasonably be expected to benefit the Corporation and such loan,
guarantee or other assistance is authorized by a majority of the
entire Board of Directors. The Director who is to be loaned money, or
whose obligation is to be guaranteed, or who is otherwise to be
assisted by the Corporation, shall abstain from voting on such
authorization.
Section 10. Action Without A Meeting: Any action required or
permitted to be taken at any meeting of the Board of Directors or any
committee thereof may be taken without a meeting if all members of the
Board or such committee, as the case may be, consent in writing to the
adoption of a resolution authorizing the action. Such resolutions and
the written consents thereto by the members of the Board or a
committee shall be filed with the minutes of the proceedings of the
Board or such committee as the case may be.
Section 11. Participation By Telephone: Any one or more members
of the Board or any committee thereof may participate in a meeting of
the Board or such committee by means of a conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at a
meeting.
Section 12. Compensation: The Board of Directors may establish by
resolution reasonable compensation of all Directors for services to
the Company as Directors, including a fixed fee, if any, incurred in
attending each meeting. Nothing herein contained shall preclude any
Director from serving the Company in any other capacity, as an
officer, agent or otherwise, and receiving compensation therefor.
ARTICLE IV
COMMITTEES
Section 1. Executive Committee: The Board of Directors, by
resolution passed by a majority of the entire Board then in office,
may designate five (5) or more Directors to constitute an Executive
Committee to hold office at the pleasure of the Board, which Committee
shall, during the intervals between meetings of the Board of
Directors, have and exercise all of the powers of the Board of
Directors in the management of the business and affairs of the
Company, subject only to such restrictions or limitations as the Board
of Directors may from time to time specify, or as limited by the New
Jersey Business Corporation Act, and shall have power to authorize the
seal of the Company to be affixed to all instruments which may require
it. Any member of the Executive Committee may be removed at any time,
with or without cause, by a resolution of a majority of the entire
Board of Directors then in office. Any person ceasing to be a Director
shall ipso facto cease to be a member of the Executive Committee. Any
vacancy in the Executive Committee occurring from any cause whatsoever
may be filled from among the Directors by a resolution of a majority
of the entire Board of Directors then in office.
Section 2. Other Committees: Other committees, whose members are
to be Directors, may be appointed by the Board of Directors, which
members shall hold office for such time and have such powers and
perform such duties as may from time to time be assigned to them by
the Board of Directors. Any member of such a committee may be removed
at any time, with or without cause, by a majority of the Board of
Directors then in office. Any vacancy in a committee occurring from
any cause whatsoever may be filled by a majority of the Board of
Directors then in office.
Section 3. Resignation: Any member of a committee may resign at
any time. Such resignation shall be made in writing and shall take
effect at the time specified therein, or, if no time be specified, at
the time of its receipt by the Chairman of the Board, if any, the
Chief Executive Officer, if any, the President or the Secretary. The
acceptance of a resignation shall not be necessary to make it
effective unless so specified therein.
Section 4. Quorum: A majority of the members of a committee shall
constitute a quorum. The act of a majority of the members of a
committee present at any meeting at which a quorum is present shall be
the act of such committee. The members of a committee shall act only
as a committee, and the individual members thereof shall have no
powers as such.
Section 5. Record of Proceedings: Each committee shall keep a
record of its acts and proceedings and shall report the same to the
Board of Directors at its next meeting following such Committee
meeting.
Section 6. Organization, Meetings. Notices: A committee may hold
its meetings at the principal office of the Company, or at any other
place upon which a majority of the committee may at any time agree.
Each committee may make such rules as it may deem expedient for the
regulation and carrying on of its meetings and proceedings. Notice of
a special meeting of such Committee may be given by the Secretary or
by the chairman of the Committee and shall be sufficiently given if
mailed to each member at his residence or usual place of business at
least five (5) days before the day on which the meeting is to be held,
or if sent to him at such place by telegraph, cable, electronic
communication or delivered personally or by telephone not later than
24 hours prior to the time at which the meeting is to be held.
Section 7. Compensation: The members of any committee shall be
entitled to such compensation as may be allowed them by resolution of
the Board of Directors.
ARTICLE V
OFFICERS
Section 1. Number: The Officers of the Company shall be a
President, a Secretary and a Treasurer and such other officers as may
be appointed in accordance with the provisions of Section 3 of this
Article V. The Board of Directors, in its discretion, may also elect a
Chairman of the Board of Directors or a Chief Executive Officer or
both.
Section 2. Election. Term of Office and Qualifications: The
Officers, except as provided in Section 3 of this Article V, shall be
elected annually by the Board of Directors immediately after the
Annual Meeting of Shareholders. Each such Officer shall, except as
herein otherwise provided, hold office until the election and
qualification of his successor or until his earlier resignation or
removal. Any two or more offices may be held by the same person,
except the offices of the President and Secretary.
Section 3. Other Officers: Other Officers, including, but not
limited to, one or more Vice-Chairmen, divisional Officers, Executive
Vice Presidents, Senior Vice Presidents, Vice Presidents, Assistant
Vice Presidents, Assistant Secretaries and Assistant Treasurers, may
from time to time be appointed by the Board of Directors, which other
officers shall have such powers and perform such duties as may be
assigned to them by the President unless otherwise directed by the
Board. All such Officers shall be corporate Officers of the Company
with the power to bind the Company by acts within the scope of their
authority.<PAGE>
Section 4. Removal of Officers: Any Officer of the Company may be
removed from office, with or without cause, by a vote of a majority of
the Board of Directors then in office. The removal of an Officer shall
be without prejudice to his contract rights, if any. Election or
appointment of an Officer shall not of itself create contract rights.
Section 5. Resignation: Any Officer of the Company may resign at
any time. Such resignation shall be in writing and shall take effect
at the time specified therein, and if no time be specified, at the
time of its receipt by the Secretary. The acceptance of a resignation
shall not be necessary in order to make it effective, unless so
specified therein.
Section 6. Filling of Vacancies: A vacancy in any office shall be
filled by the Board of Directors.
Section 7. Compensation: The compensation of the Officers shall
be fixed by the Board of Directors, or by any committee or Officer
upon whom power in that regard may be conferred by the Board of
Directors.
Section 8. Chairman of the Board of Directors: The Chairman of
the Board of Directors, if one is elected, shall be a Director and
shall preside at all meetings of the Board of Directors and of the
Shareholders at which the Chairman shall be present. In the absence of
the Chairman of the Board, the Director or Officer designated by the
Chairman shall perform and carry out the functions of the Chairman of
the Board.
Section 9. President: The President shall, subject only to the
direction and control of the Board of Directors or the Executive
Committee, have responsibility for the general management of the
business affairs and property of the Company, and of its several
Officers, and shall, subject only as aforesaid, have and exercise all
such powers and discharge such duties as usually pertain to the office
of President. The President shall perform such duties as may be
assigned from time to time by the Board of Directors.
Section 10. Chief Executive Officer: The Chief Executive Officer,
if one is elected, shall have such duties and responsibilities and
shall report to such persons as the Board of Directors shall determine
from time to time.
Section 11. Secretary: The Secretary shall attend all meetings of
the Board of Directors and of the Shareholders and record all votes
and the minutes of all proceedings in a book to be kept for that
purpose, and shall perform like duties for any committee appointed by
the Board. The Secretary shall give or cause to be given notice of all
meetings of Shareholders and special meetings of the Board of
Directors and shall perform such other duties as may be prescribed by
the President or the Board of Directors. The Secretary shall keep in
safe custody the seal of the Company and affix it to any instrument
when so authorized by the Board of Directors. In the absence of a
Secretary, an Assistant Secretary may act in the Secretary's place.
Section 12. Treasurer: The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Company and shall deposit all monies and other valuable effects in the
name and to the credit of the Company in such depositories as may be
designated by the Board of Directors. The Treasurer shall disburse
the funds of the Company as may be ordered by the Board, taking proper
vouchers for such disbursements, and shall render to the President and
Directors at the regular meetings of the Board, or whenever they may
require it, an account of all his transactions as Treasurer and of the
financial condition of the Company. The Treasurer may be required to
give bond for the faithful discharge of his duties. In the absence of
a Treasurer, an Assistant Treasurer may act in his place. The
Treasurer shall perform such other duties as may be prescribed by the
President or the Board of Directors.
ARTICLE VI
CAPITAL STOCK
Section 1. Issue of Certificates of Stock: Certificates of
capital stock shall be in such form as shall be approved by the Board
of Directors. The Board of Directors may also provide that some or all
of the shares of any class or series shall be represented by
uncertificated shares. Certificated shares shall be numbered in the
order of their issue, and shall be signed, either manually or by
facsimile signature, by either the Chairman of the Board or the
President or the Secretary and the seal of the Company or a facsimile
thereof shall be impressed, affixed or reproduced thereon. In case any
Officer or Officers who shall have signed any such certificate or
certificates shall cease to be such Officer or Officers of the
Company, whether because of death, resignation or otherwise, before
such certificate or certificates shall have been delivered by the
Company, such certificate or certificates may nevertheless be adopted
by the Company and be issued and delivered as though the person or
persons who signed such certificate or certificates have not ceased to
be such Officer or Officers of the Company.
Section 2. Registration and Transfer of Shares: The name of each
person owning a share of the capital stock of the Company shall be
entered on the books of the Company together with the number of shares
held by such person, the numbers of the certificates covering such
shares and the dates of issue of such certificates. The shares of
stock of the Company shall be transferable on the books of the Company
by the holders thereof in person, or by their duly authorized
attorneys or legal representatives, on surrender and cancellation of
certificates for a like number of shares, accompanied by an assignment
of power of transfer endorsed thereon or attached thereto, duly
executed, and with such proof of the authenticity of the signature as
the Company or its Agents may reasonably require. A record shall be
made of each transfer.
The Board of Directors may make other and further rules and
regulations concerning the transfer and registration of certificates
of stock.
Section 3. Lost, Destroyed and Mutilated Certificates: The
holder of any stock of the Company shall immediately notify the
Company of any loss, theft, destruction or mutilation of the
certificates thereof. The Company may issue a new certificate of stock
in the place of any certificate theretofore issued by it alleged to
have been lost, stolen or destroyed, and the Board of Directors or its
agent may, in its discretion, require the owner of the lost, stolen or
destroyed certificate, or his legal representatives, to give the
Company a bond, in such sum not exceeding double the value of the
stock and with such surety or sureties as they may require, to
indemnify it against any claim that may be made against it in
connection with the issue of such new certificate.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year: The fiscal year of the Company shall
commence on the first day of October and end on the last day of
September.
Section 2. Corporate Seal: The corporate seal shall be in such
form as approved by the Board of Directors and may be altered at its
pleasure. The corporate seal may be used by causing it or a facsimile
thereof to be impressed, affixed or otherwise reproduced.
Section 3. Notices: Except as otherwise expressly provided, any
notice required by these By-Laws to be given shall be sufficient if
given by depositing the same in a post office or letter box in a
sealed wrapper with first-class postage prepaid thereon and addressed
to the person entitled thereto at his address, as the same appears
upon the books of the Company, or by electronically communicating the
notice to such person at such address or by transmitting the same by
way of a guaranteed overnight courier service; and such notice shall
be deemed to be given at the time it is mailed, electronically
communicated or so transmitted.
Section 4. Contracts, Checks, Drafts: The Board of Directors,
except as may otherwise be required by law, may authorize any Officer
or Officers, Agent or Agents, in the name of and on behalf of the
Company to enter into any contract or execute or deliver any
instrument. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of
the Company, shall be signed by such Officer or Officers, Agent or
Agents of the Company, and in such manner as shall be designated from
time to time by resolution of the Board of Directors.
Section 5. Deposits: All funds of the Company shall be deposited
from time to time to the credit of the Company in such bank or banks,
trust companies or other depositories as the Board of Directors may
select, and, for the purpose of such deposit, checks, drafts, warrants
and other orders for the payment of money which are payable to the
order of the Company, may be endorsed for deposit, assigned and
delivered by any Officer of the Company, or by such Agents of the
Company as the Board of Directors, the Chairman of the Board, if any,
the Chief Executive Officer, if any, or the President may authorize
for that purpose.
Section 6. Voting Stock of Other Companies: Except as otherwise
ordered by the Board of Directors or the Executive Committee, the
Chairman of the Board, if any, the Chief Executive Officer, if any, or
the President shall have full power and authority on behalf of the
Company to attend and to act and to vote at any meeting of the
Shareholders of any corporation of which the Company is a shareholder
and to execute a proxy to any other person to represent the Company at
any such meeting, and at any such meeting the Chairman of the Board,
if any, the Chief Executive Officer, if any, or the President or the
holder of any such proxy, as the case may be, shall possess and may
exercise any and all rights and powers incident to ownership of such
stock and which, as owner thereof, the Company might have possessed
and exercised if present. The Board of Directors or the Executive
Committee may from time to time confer like powers upon any other
person or persons.
ARTICLE VIII
AMENDMENTS
Except as set forth in the final sentence of this ARTICLE VIII,
these By-Laws may be altered, amended or repealed by the affirmative
vote of a majority of the entire Board of Directors then in office.
These By-Laws may also be altered, amended or repealed by the
Shareholders, but only by an affirmative vote of the holders of at
least 75 percent of all the then-outstanding shares of the voting
stock, voting together as a single class. Any By-Law may provide that
it may only be altered, amended or repealed by the affirmative vote of
the holders of at least 75 percent of all the then-outstanding shares
of the voting stock, voting together as a single class, in which event
such By-Law may only be altered, amended or repealed by such vote.<PAGE>
EX-10.2
SERVICE AGREEMENT
between
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
and
NUI CORPORATION
July 1, 1996
SERVICE AGREEMENT UNDER RATE SCHEDULE GSS
THIS AGREEMENT entered into this 1st day of July, 1996, by and
between TRANSCONTINENTAL GAS PIPELINE CORPORATION, a Delaware
corporation, hereinafter referred to as "Seller", first party, and NUI
CORPORATION, Elizabethtown Gas Division, hereinafter referred to as
"Buyer", second party,
WITNESSETH:
WHEREAS, Buyer desires to purchase and Seller desires to sell
natural gas storage service under Seller's Rate Schedule GAS as set
forth herein; and
WHEREAS, pursuant to the terms of the Joint Stipulation and
Settlement Agreement approved by the Federal Energy Regulatory
Commission's ("Commission") Order dated July 16, 1993 in Docket Nos.
RS92-86-003, RP92-108-000, and RP92-137-000 which amended Seller's
Certificate in Docket No. CP61-194, Seller and Buyer agreed to a
twenty year contract through March 31, 2013, as set forth in that
order, for the Storage Demand Quantity and Storage Capacity Quantity
which are supported by service provided by CNG Transmission
Corporation; and
WHEREAS, pursuant to the terms of the Application to Amend
Seller's Certificate, in Docket No. CP61-94, as approved by the
Commission's Order dated June 13, 1996 in docket No. CP96-226-000,
Seller and Buyer agreed to the Storage Demand Quantity and Storage
Capacity Quantity set forth in Article I hereof;
NOW, THEREFORE, Seller and Buyer agree as follows:
ARTICLE I
SERVICE TO BE RENDERED
Subject to the terms and provisions of this agreement and of
Seller's Rate Schedule GSS, Seller agrees to receive from Buyer for
storage, inject into storage for Buyer's account, store, withdraw from
storage (or cause to be injected into storage for Buyer's account,
stored and withdrawn from storage ) and deliver to Buyer, quantities
of natural gas as follows:
To withdraw from storage or cause to be withdrawn from
storage, transport and deliver to buyer at the delivery
points set forth below, the gas stored for Buyer's account
up to a maximum quantity in any day of
26,671 Mcf, during the period beginning on July 1, 1996 and
ending on June 30, 2001, and
14,499 Mcf during the period beginning on July 1, 2001 and
ending on March 31, 2013,
which quantity shall be Buyer's Storage Demand.
To receive and store or cause to be stored up to a total
quantity at any one time of
1,700,440 Mcf, during the period beginning on July 1, 1996
and ending on June 30, 2001, and
968,498 Mcf during the period beginning on July 1, 2001 and
ending on March 31, 2013,
which quantity shall be Buyer's Storage Capacity Quantity.
ARTICLE II
POINT(S) OF DELIVERY
The Point of Points of Delivery for all natural gas delivered by
Seller to Buyer under this agreement shall be at or near:
(1) Erie Street Meter Station, located at milepost 1811.25 on
Seller's main transmission line near the junction of Caspian
Street and Third Avenue, in The City of Elizabeth, Union County,
New Jersey.
(2) Cloverleaf Meter Station, located at milepost 1802.79 on Seller's
main transmission line on the southwesterly side of St. George
Avenue between Roanoke Avenue and Port Reading Railroad, in
Woodbridge, Middlesex County, New Jersey.
(3) Grandview Meter Station, located at milepost 1799.62 on Seller's
main transmission line near the junction of U. S. Highway No. 1
and Grandview Avenue, in Edision Township, Middlesex County, New
Jersey.
(4) North Avenue Meter Station, located adjacent to Seller's main
transmission line at the intersection of North Avenue with
Central Railroad of new Jersey in The City of Elizabeth, Union
County, New Jersey.
(5) Ford Motor Company Meter Station, located adjacent to Seller's
main transmission line in Nixon, New Jersey near U. S. Highway
No. 1 where the facilities of Buyer connect with those of Seller.
(6) New Village Meter Station, located at milepost 22.10 on Seller's
Leidy Line, near New Village, Warren County, New Jersey.
(7) Pennington Meter Station, located at milepost 1770.11 on Seller's
main transmission line.
(8) Spruce Run Meter Station located near milepost 15.91 on Seller's
Leidy Line in Hunterdon County.<PAGE>
(9) Clinton Meter Station, located at milepost 12.51 on Seller's
leidy Line, southwest of the City of Clinton, Hunterdon County,
New Jersey.
(10) Sewaren Generating Station, Cliff Road and Smith Creek, Sewaren
Section of Woodbridge Township, New Jersey.
ARTICLE III
DELIVERY PRESSURE
Seller shall deliver natural gas to Buyer at the Point(s) of
Delivery at a pressure(s) of: not less than fifty (50) pounds per
square inch gauge, or at such other pressures as may be agreed upon in
the day-to-day operations of Buyer and Seller.
ARTICLE IV
TERM OF AGREEMENT
This agreement shall be effective July 1, 1996 and shall remain
in force and effect through March 31, 2013.
ARTICLE V
RATE SCHEDULE AND PRICE
Buyer shall pay Seller for natural gas service rendered hereunder
in accordance with Seller's Rate Schedule GSS and the applicable
provisions of the General Terms and Conditions of Seller's FERC Gas
Tariff as filed with the Federal Energy Regulatory Commission, and as
the same may be amended or superseded from time to time at the
initiative of either party. Such rate schedule and General Terms and
Conditions are by this reference made a part hereof.
AFTICLE VI
MISCELLANEOUS
1. The subject headings of the Articles of this agreement are
inserted for the purpose of convenient reference and are not intended
to be a part of this agreement nor to be considered in any
interpretation of the same.
2. This agreement supersedes and cancels as of the effective date
hereof the following contract(s):
Any and all Service Agreements previously entered into between
Buyer and Seller under Seller's Rate Schedule GSS.
3. No waiver by either party of any one or more defaults by the
other in the performance of any provisions of this agreement shall
operate or be construed as a waiver of any future default or defaults,
whether of a like or different character.
4. This agreement shall be interpreted, performed and enforced in
accordance with the laws of the State of North Carolina.
5. This agreement shall be binding upon, and inure to the benefit of
the parties hereto and their respective successors and assigns.<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement
to be signed by their respective Presidents or Vice Presidents
thereunto duly authorized and have caused their respective corporate
seals to be hereunto affixed and attested by their respective
Secretaries or Assistant Secretaries the day and year above written.
TRANSCONTINENTAL GAS PIPELINE
CORPORATION
(Seller)
ATTEST:
[SEAL]
/S/ Randall R. Conklin By: /s/ Frank J. Ferazzi
Assistant Secretary Vice President
Customer Service
NUI CORPORATION
(Buyer)
Elizabethtown Gas Division
ATTEST:
[SEAL]
/S/ James R. Van Horn By: /s/ Thomas E. Smith
Secretary Vice President
Supply and Planning<PAGE>
EX-10.10
Contract #: 331501
SERVICE AGREEMENT
FOR RATE SCHEDULE FTS-5
This Service Agreement, made and entered into this 18thday
of March 1996, by and between TEXAS EASTERN TRANSMISSION CORPORATION,
a Delaware Corporation (herein called "Pipeline") and ELIZABETHTOWN
GAS COMPANY, A DIVISION OF NUI CORPORATION (herein called "Customer",
whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline currently are parties to two
service agreements under Rate Schedule FTS-5 (Pipeline's contract Nos.
330212 and 330917) which specify an MDQ of 10,000 dth and 6,666 dth,
respectively; and
WHEREAS, Customer and Pipeline desire to enter into this Service
Agreement to supersede Customer's existing Rate Schedule FTS-5 service
agreements (Pipeline Contract Nos. 330212 and 330917); and
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof and of
Pipeline's Rate Schedule FTS-5, Pipeline agrees to deliver on a firm
basis for Customer's account quantities of gas up to the following
quantity:
Maximum Daily Quantity (MDQ) 16,666 dth
provided, however, during the period from April 1 of each calendar
year continuing through October 31 of that year, Customer may not
tender, without the consent of Pipeline, a daily quantity in excess of
the product of the Southern Route Summer Capacity Factor multiplied by
16,666 dth (plus Applicable Shrinkage).
Pipeline shall receive for Customer's account, at the Customer
Point(s), for transportation hereunder daily quantities of gas up to
Customer's MDQ, plus Applicable Shrinkage. Pipeline shall transport
and deliver for Customer's account, at the CNG Point(s), such daily
quantities tendered up to such Customer's MDQ.
Pipeline shall receive for Customer's account, at the CNG
Point(s), for transportation hereunder daily quantities of gas up to
Customer's MDQ, plus Applicable Shrinkage. Pipeline shall transport
and deliver for Customer's account, at the Customer Point(s), such
daily quantities tendered up to such Customer's MDQ.
Pipeline shall not be obligated to, but may at its discretion,
receive at any Point of Receipt on any day a quantity of gas in excess
of the applicable Maximum Daily Receipt Obligation (MDRO), plus<PAGE>
Applicable Shrinkage, but shall not receive in the aggregate at all
Points of Receipt on any day a quantity of gas in excess of the
applicable MDQ, plus Applicable Shrinkage, as specified in the
executed service agreement. Pipeline shall not be obligated to, but
may at its discretion, deliver at any Point of Delivery on any day a
quantity of gas in excess of the applicable Maximum Daily Delivery
Obligation (MDDO), but shall not deliver in the aggregate at all
Points of Delivery on any day a quantity of gas in excess of the
applicable MDQ, as specified in the executed service agreement.
ARTICLE II
TERM OF AGREEMENT
This Service Agreement shall become effective on the later of
February 1, 1996, or the first day of the first month following the
executive of this Service Agreement by Customer, and shall continue in
force and effect until March 31, 2012 and from year to year thereafter
unless terminated by either party upon twenty-four months' prior
written notice. In addition to Pipeline rights under Section 22 of
Pipeline's General Terms and Conditions and without prejudice to such
rights, This Service Agreement may be terminated at any time by
Pipeline in the event Customer fails to pay part or all of the amount
of any bill for service hereunder and such failure continues for
thirty (30) days after payment is due; provided, Pipeline gives thirty
(30) days prior written notice to Customer of such termination and
provided further such termination shall not be effective if, prior to
the date of termination, Customer either pays such outstanding bill or
furnishes a good and sufficient surety bond guaranteeing payment to
Pipeline of such outstanding bill. Notwithstanding the foregoing,
service shall not be terminated unless and until Pipeline has received
abandonment authority pursuant to Section 7 of the Natural Gas Act.
Customer shall have the right to oppose Pipeline's application to the
Federal Energy Regulatory Commission, or any successor agency, for
such abandonment authority. For the 120 days following termination of
this Service Agreement, Pipeline shall utilize its best efforts to
provide Customer with such additional interruptible transportation
service, to be provided pursuant to Rate Schedule IT-1 or successor of
Rate Schedule IT-1, as is necessary for Customer to withdraw and
receive delivery of all gas remaining in storage pursuant to CNG's
Rate Schedule GSS-II.
Any portions of this Service Agreement necessary to correct or
cash-out imbalances under this Service Agreement as required by the
General Terms and Conditions of Pipeline's FERC Gas Tariff, Volume
No. 1, shall survive the other parts of this Service Agreement until
such time as such balancing has been accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule FTS-5 and of the
General Terms and Conditions of Pipeline's FERC Gas Tariff on file
with the Federal Energy Regulatory Commission, all of which are by
this reference made a part hereof.
Customer shall pay Pipeline for all services rendered hereunder
and for the availability of such service in the period stated, the<PAGE>
applicable prices established under Pipeline's Rate Schedule FTS-5 as
filed with the Federal Energy Regulatory Commission and as the same
may be hereafter revised or changed.
Customer agrees that Pipeline shall have the unilateral right to
file with the appropriate regulatory authority and make changes
effective in (a) the rates and charges applicable to service pursuant
to Pipeline's Rate Schedule FTS-5, (b) Pipeline's Rate Schedule FTS-5
pursuant to which service hereunder is rendered or (c) any provision
of the General Terms and Conditions applicable to Rate Schedule FTS-5;
provided however, Pipeline shall not have the right without the
consent of Customer to make any filings pursuant to Section 4 of the
Natural Gas Act to change the MDQ specified in Article I, to change
the term of the service agreement as specified in Article II, to
change Customer Point(s) specified in Article IV, to change the CNG
Point(s) specified in Article IV, or to change the firm character of
the service hereunder. Pipeline agrees that Customer may protest or
contest the aforementioned filings, or may seek authorization from
duly constituted regulatory authorities for such adjustment of
Pipeline's existing FERC Gas Tariff as may be found necessary to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE IV
CUSTOMER POINT(S) AND CNG POINT(S)
Natural gas to be received by Pipeline for Customer's account for
service hereunder shall be received on the outlet side of the
measuring station at or near the following designated Customer
Point(s) or CNG Point(s), and natural gas to be delivered by Pipeline
for Customer's account hereunder shall be delivered at the outlet side
of the measuring stations at or near the following designated CNG
Point(s) or Customer Point(s), in accordance with the Maximum Daily
Receipt Obligation (MDRO) plus Applicable Shrinkage, Maximum Daily
Delivery Obligations (MDDO), receipt and delivery pressure obligations
and measurement responsibilities indicated below for each:
Maximum Daily Pressure Measurement
Customer Point Obligation Obligation Responsibilities
1. In Middlesex 16,666 dth 100 PSIG Pipeline
County, New Jersey,
and designated by
Pipeline as Measuring
Station 71075
CNG Maximum Daily Pressure Measurement
Point Obligation Obligation Responsibilities
1. At point of 16,666 dth At any Pipeline
interconnection pressure
between the facilities requested by
of CNG Transmission Pipeline not
Corporation and to exceed
Pipeline at Pipeline's the maximum
30" Line No. 49 in allowable
Fayette County, operating
Pennsylvania pressure
(Pipeline's M&R No.<PAGE>
75821)
provided, however, receipt of gas by Pipeline for Customer's account
at Customer Point(s), shall be accomplished solely by the displacement
of gas quantities otherwise deliverable to Customer by Pipeline
pursuant to other contractual arrangements between Pipeline and
Customer, and which quantities shall be billed by Pipeline and paid by
Customer as if such deliveries in fact occurred pursuant to the
relevant contractual arrangements;
further provided, however, that until changed by a subsequent
Agreement between Pipeline and Customer, Pipeline's aggregate maximum
daily delivery obligation at the Customer's Point(s) of Delivery
described above, including Pipeline's maximum daily delivery
obligation under this and all other Service Agreements existing
between Pipeline and Customer, shall in no event exceed
the following:
Aggregate Maximum Daily
Customer's Point Delivery Obligation
No. 1 37,652 dth
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall
conform to the quality specifications set forth in Section 5 of
Pipeline's General Terms and Conditions. Customer agrees that in the
event Customer tenders for service hereunder and Pipeline agrees to
accept natural gas which does not comply with Pipeline's quality
specifications, as expressly provided for in Section 5 of Pipeline's
General Terms and Conditions, Customer shall pay all costs associated
with processing of such gas as necessary to comply with such quality
specifications.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General
Terms and Conditions of Pipeline's FERC Gas Tariff, any notice,
request, demand, statement, bill or payment provided for in this
Service Agreement, or any notice which any party may desire to give to
the other, shall be in writing and shall be considered as duly
delivered when mailed by registered, certified, or regular mail to the
post office address of the parties hereto, as the case may be, as
follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: Elizabethtown Gas Company
A Division of NUI Corporation
550 Route 202-206
P. O. Box 760
Bedminster, NJ 07921-0760<PAGE>
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled to the
rights and shall be subject to the obligations of its predecessor in
title under this Service Agreement; and either Customer or Pipeline
may assign or pledge this Service Agreement under the provisions of
any mortgage, deed of trust, indenture, bank credit agreement,
assignment, receivable sale, or similar instrument which it has
executed or may execute hereafter; otherwise, neither Customer nor
Pipeline shall assign this Service Agreement or any of its rights
hereunder unless it first shall have obtained the consent thereto in
writing of the other; provided further, however, that neither Customer
nor Pipeline shall be released from its obligations hereunder without
the consent of the other.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas without
recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties are
subject to all present and future valid laws with respect to the
subject matter, State and Federal, and to all valid present and future
orders, rules, and regulations of duly constituted authorities having
jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between the
parties hereto as described below:
Service Agreement dated June 1, 1993, between Pipeline and
Customer under Pipeline's Rate Schedule FTS-5 (Pipeline's
Contract Nos. 330212 and 330917).
IN WITNESS WHEREOF, the parties hereto have caused this Service
Agreement to be signed by their respective Presidents, Vice Presidents
or other duty authorized agents and their respective corporate seals
to be hereto affixed and attested by their respective Secretaries or
Assistant Secretaries, the day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By /S/ Robert B. Ersmus
Vice President<PAGE>
ATTEST:
/S/ Robert W. Reed
Secretary
ELIZABETHTOWN GAS COMPANY
By /S/ Thomas E. Smith
Vice President
Supply and Planning
ATTEST:
/S/ Kenneth G. Ward
Asst. Secretary<PAGE>
EX-10.12
FIRM TRANSPORTATION SERVICE AGREEMENT
RATE SCHEDULE FTS-2
THIS AGREEMENT entered into this 12th day of August, 1993,
by and between Florida Gas Transmission Company, a Corporation of
the State of Delaware ("Transporter"), and City Gas Company of
Florida, a Division of Elizabethtown Gas Company, a New Jersey
corporation ("Shipper").
W I T N E S S E T H :
WHEREAS, Shipper wishes to purchase firm natural gas
transportation service from Transporter and Transporter wishes to
provide firm natural gas transportation service to Shipper and
WHEREAS, Shipper has completed and submitted to Transporter
a valid request for firm transportation service ("Request"), and
WHEREAS, in accordance with such Request, such service will
be provided by Transporter for Shipper in accordance with the
terms hereof.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the sufficiency
of which is hereby acknowledged, Transporter and Shipper do
covenant and agree as follows:
ARTICLE I
Definitions
In addition to the definitions incorporated herein through
Transporter's Rate Schedule FTS-2, the following terms when used
herein shall have the meanings set forth below:
1.1 The term "Gas" shall mean pipeline quality natural gas
which complies with the quality provisions set forth in the
General Terms and Conditions of Transporter's effective FERC Gas
Tariff Volume No. 1, and includes gas remaining after processing
thereof.
1.2 The term "Rate Schedule FTS-2" shall mean Transporter's
Rate Schedule FTS-2 as filed with the FERC as changed and
adjusted from time to time by Transporter in accordance with
Section 3.3 hereof or in compliance with any final FERC order
affecting such rate schedule.
1.3 The term "FERC" shall mean the Federal Energy
Regulatory Commission or any successor regulatory agency or body,
including the Congress, which has authority to regulate the rates
and services of Transporter.<PAGE>
ARTICLE II
Quantity
2.1 The Maximum Daily Transportation Quantity ("MDTQ")
shall be set forth in Exhibit B attached hereto. The applicable
MDTQ shall be the largest daily quantity of gas Shipper may
tender for transportation in the aggregate to all Points of
Receipt, exclusive of Transporter's Fuel if applicable, and
receive at all Point(s) of Delivery as specified on Exhibits A
and B hereto on any day.
2.2 Shipper may tender natural gas for transportation to
Transporter on any day, up to the MDTQ plus Transporter's Fuel.
Transporter agrees to receive the aggregate of the quantities of
natural gas that Shipper tenders for transportation at the
Receipt Points, up to the maximum daily quantity specified for
each such Point on Exhibit A hereto, and to transport and deliver
to Shipper at each Delivery Point specified on Exhibit B, up to
the maximum daily quantity specified for each such point on
Exhibit B, the amount tendered by Shipper less Transporter's Fuel
(as provided in Rate Schedule FTS-2), provided, however, that
Transporter shall never be required to transport and deliver on
any day more than the MDTQ.
ARTICLE III
Rate Schedule
3.1 Upon the commencement of service hereunder, Shipper
shall pay Transporter, for all service rendered hereunder, the
rates established under Transporter's Rate Schedule FTS-2 as
filed with the FERC and as said Rate Schedule may hereafter be
legally amended or superseded.
3.2 This Agreement in all respects shall be and remain
subject to the provisions of said Rate Schedule and of the
applicable provisions of the General Terms and Conditions of
Transporter on file with the FERC (as the same may hereafter be
legally amended or superseded), all of which are made a part
hereof by this reference.
3.3. Transporter shall have the unilateral right to file
with the appropriate regulatory authority and make changes
authorized by such authority in (a) the rates and charges
applicable to its Rate Schedule FTS-2, (b) Rate Schedule FTS-2
pursuant to which this service is rendered; provided, however,
that the firm character of service shall not be subject to change
hereunder, or (c) any provisions of the General Terms and
Conditions applicable to Rate Schedule FTS-2. Transporter agrees
that Shipper may protest or contest the aforementioned filings,
or seek authorization from duly constituted regulatory
authorities for Such adjustment of Transporter's existing FERC
Gas Tariff as may be found necessary in order to assure that the
provisions in (a), (b), or (c) above are just and reasonable.
ARTICLE IV
Term of Agreement
4.1 This Agreement shall be effective upon the in-service
date of the Phase III Facilities, which shall be deemed to be the
first day of the month following the date on which Transporter<PAGE>
gives notice to the Commission that the Phase III Facilities, as
defined in Article X of this Agreement, are in-service, and shall
continue in effect for a primary term of 20 years.
4.2 Termination for Non-Payment. In the event Shipper
fails to pay for service provided pursuant to this Agreement,
Transporter, in addition to any other rights it may have, shall
also have the right to suspend or terminate service as permitted
by the applicable provision of the General Terms and Conditions
to Transporter's FERC Gas Tariff.
ARTICLE V
Point(s) of Receipt and Delivery
and Maximum Daily Quantities
5.1 The Point(s) of Receipt and maximum daily quantity for
each point(s), for all gas delivered by Shipper into
Transporter's pipeline system under this Agreement shall be at
the Point(s) of Receipt on Transporter's pipeline system as set
forth in Exhibit A.
5.2 The Point(s) of Delivery and maximum daily quantity for
each point(s) for all gas delivered by Transporter to Shipper, or
for the account of Shipper, under this Agreement shall be at the
Point(s) of Delivery as set forth in Exhibit B.
ARTICLE VI
Notices
All notices, payments and communications with respect to
this Agreement shall be in writing and sent to the addresses
stated below or at any other such address as may hereafter be
designated in writing:
ADMINISTRATIVE MATTERS
Transporter: Florida Gas Transmission Company
P. 0. Box 1188
Houston, Texas 77251-1188
Attention:Marketing Administration Department
Fax No. 713-853-6756
Shipper: City Gas Company of Florida
955 E. 25th Street
Hialeah, FL 33013
Attention: Jack Langer
cc: Joseph Lachowiec
Elizabethtown Gas Company
One Elizabethtown Plaza
Union, NJ 07083
Fax: (908)289-1370
PAYMENT BY WIRE TRANSFER
Transporter: Florida Gas Transmission Company
Nations Bank ABA No. 053000196
Account No. 001658806
Charlotte, North Carolina<PAGE>
ARTICLE VII
New Facilities
Subsequent to commencement of service under this Agreement,
Transporter, upon Shipper's written request, at its reasonable
discretion, may agree to construct or acquire new facilities, or
expand existing facilities, in order to perform service under
this Agreement. For purposes of this Agreement and Rate Schedule
FTS-2, an expanded facility shall be deemed to be a new facility.
If in Transporter's reasonable judgment it is necessary to
construct or acquire new facilities, or to expand existing
facilities, in order to accommodate a change in service requested
by Shipper and to enable Transporter to receive or deliver
Shipper's MDTQ at the Receipt and Delivery Point(s) as they may
be amended from time to time, and Transporter agrees as provided
herein to construct, acquire, or expand such facilities, then
Transporter shall notify Shipper of the additional cost required.
Upon Shipper's written agreement, such facilities shallr
construed, acquired or expanded, subject to the receipt and
acceptance by Transporter of any necessary authorizations,
permits and approvals. Shipper agrees to reimburse Transporter,
promptly upon receipt of Transporter's invoices, for all costs
and expenses incurred under this Article VII by Transporter for
any pipeline and related facilities, including but not limited to
the cost of any tap, electronic measurement equipment or data
communications equipment for new meters, and appurtenant
equipment and materials, and overhead expenses. To the extent
such reimbursement qualifies as a contribution in aid of
construction under the Tax Reform Act of 1986, P.L. 99-514
(1986), Shipper also shall reimburse Transporter for the income
taxes incurred by Transporter as a direct result of such
contribution in aid of construction by Shipper, as calculated
pursuant to the Commission's order in Transwestern Pipeline
Company, 45 FERC Paragraph 61,116 (1988). Transporter shall have
title to and the exclusive right to operate and maintain all such
facilities.
ARTICLE VIII
Regulatory Authorizations and Approvals
8.1 Transporter's obligation to provide service is
conditioned upon receipt and acceptance of any necessary
regulatory authorization that is acceptable in form and substance
to Transporter to provide Firm Transportation Service to Shipper
in accordance with the terms of Rate Schedule FTS-2, or any
successor thereto which is substantially similar in form and
content, and this Service Agreement. Shipper agrees to reimburse
Transporter for all reporting and/or filing fees incurred by
Transporter in providing service under this Service Agreement.
ARTICLE IX
Pressure
9.1 The quantities of gas delivered or caused to be
delivered by Shipper to Transporter hereunder shall be delivered
into Transporter's pipeline system at a pressure sufficient to
enter Transporter's system, but in no event shall such gas be
delivered at a pressure exceeding the maximum authorized
operating pressure or such other pressure as Transporter permits
at the Point(s) of Receipt.<PAGE>
9.2 Transporter shall have no obligation to provide
compression and/or alter its system operations to effectuate
deliveries at the Point(s) of Delivery hereunder.
ARTICLE X
Other Provisions
10.1 Prior to Transporter's execution of this Agreement,
Shipper must demonstrate creditworthiness satisfactory to
Transporter. In the event Shipper fails to establish
creditworthiness, Transporter shall not execute this Agreement
and this Agreement shall not become effective.
10.2 Service pursuant to this Agreement is expressly subject
to the following conditions:
(a) The issuance, and acceptance by Transporter, of all
necessary authorizations from the FERC pursuant to the Natural
Gas Act or Natural Gas Policy Act permitting Transporter to
construct, own and operate the Phase III facilities as described
in Transporter's certificate application, as it may be amended or
supplemented from time to time, and to effectuate the proposed
service hereunder (hereinafter "Phase III Facilities"). All such
authorizations shall be in form and substance satisfactory to
Transporter, and shall be final before the respective
governmental authority and no longer subject to appeal or
rehearing; provided, however, that Transporter may waive the
condition that such authority be final and/or no longer subject
to appeal or rehearing. Such authorization shall include
approval of a capacity allocation methodology acceptable to
Transporter in the event requests for service for the proposed
Phase III Facilities exceed the availability of the expanded
capacity which Transporter, in its sole discretion, is willing to
build;
(b) Receipt and acceptance by Transporter of all other approvals
required to construct the Phase III Facilities including all
necessary authorizations from federal, state, local, and/or
municipal agencies or other governmental authorities. All such
approvals shall be in form and substance satisfactory to
Transporter, and shall be final before the respective
governmental authority and no longer subject to appeal or
rehearing; provided, however, that Transporter may waive the
condition that such authority be final and/or no longer subject
to appeal or rehearing.<PAGE>
(c) The approval of rates by the FERC for transportation
services provided on the Phase III Facilities that are acceptable
to Transporter, in Transporter's sole opinion. Shipper agrees to
support a levelized rate methodology for the Phase III Facilities
in any proceeding before the Commission during the term of this
Agreement.
(d) The receipt by Transporter of all necessary right-of-way
easements or permits in form and substance acceptable to
Transporter;
(e) The ability of Transporter to obtain financing to construct
the Phase III Facilities that is satisfactory to transporter, in
Transporter's sole opinion. Shipper agrees to provide reasonable
cooperation in Transporter's effort to obtain financing;
(f) In the event that all requisite approvals from the FERC
necessary to effectuate the proposed service hereunder are not
granted in satisfactory form on or before December 31, 1993, then
at such time either party shall have the right to terminate this
Agreement upon sixty days written notice; provided, however, that
if such approvals are obtained prior to the expiration of the
sixty day notice period, such notice shall be of no further force
or effect and this Agreement shall continue in accordance with
the terms herein.
(g) Transporter agrees to make all reasonable efforts to obtain
the necessary authorizations, financing service commitments and
all other approvals necessary to effectuate service under this
Agreement. Shipper agrees to exercise good faith in the
performance of this Agreement by supporting Transporter's efforts
to obtain all necessary authorizations, financing and other
approvals necessary to effectuate service under this Agreement.
By executing this Agreement, Shipper agrees to the resolution on
non-environmental issues in the Phase III proceeding as set forth
in the August 25, 1992 Offer of Settlement filed in Docket No.
CP92-182, et al.
(h) At any time prior to Transporter's acceptance of all
authorizations necessary to construct the Phase III Facilities,
Transporter retains the right to terminate this Agreement, and to
withdraw any requests or applications for regulatory approvals,
and to terminate this project, at any time Transporter determines
in its sole discretion that the project is no longer economical
to pursue.
(i) Shipper is obligated to reimburse Transporter for the
construction of taps, meters, receipt and delivery point
upgrades, construction of supply and delivery laterals not
included in the description of the Phase III Facilities and any
other construction necessary to receive gas into, and deliver gas
from, Transporter's Phase III Facilities. To the extent such
reimbursement qualifies as a contribution in aid of construction
under the Tax Reform Act of 1986, P.L. 99-514 (1986), Shipper
also shall reimburse Transporter for the income taxes incurred by
Transporter as a direct result of such contribution in aid of
construction by Shipper, as calculated pursuant to the
Commission's order in Transwestern Pipeline company, 45 FERC
Paragraph 61,116 (1988). Transporter shall have title to and the
exclusive right to operate and maintain all such facilities.<PAGE>
In the event the conditions set forth in this Article X are
not satisfied, this Agreement shall be deemed null and void upon
written notice by Transporter to Shipper.
ARTICLE XI
Miscellaneous
11.1 This Agreement shall bind and benefit the successors
and assigns of the respective parties hereto; provided, however,
neither party shall assign this Agreement or any of its rights or
obligations hereunder without first obtaining the written consent
of the other party and any other regulatory authorizations deemed
necessary by Transporter.
11.2 No waiver by either party of any one or more defaults
by the other in the performance of any provisions of this
Agreement shall operate or be construed as a waiver of any future
defaults of a like or different character.
11.3 This Agreement contains Exhibits A and B which are
incorporated fully herein.
11.4 This Agreement shall not be binding upon Transporter
until executed by Transporter.
11.5 THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS EXCLUDING ANY
CONFLICT OF LAW RULES WHICH MAY REQUIRE THE APPLICATION OF
ANOTHER JURISDICTION.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers effective as of the
date first written above.
ATTEST: FLORIDA GAS TRANSMISSION COMPANY
By: By: Peter E. Weidler
Title: Vice President
ATTEST: CITY GAS COMPANY OF FLORIDA, A
DIVISION OF ELIZABETHTOWN GAS
COMPANY
By: Jimmie Cromwell By: Jack Langer
Title: President & CEO<PAGE>
EX-10.26
SERVICE AGREEMENT
between
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
and
NORTH CAROLINA GAS SERVICE (an NUI Company)
July 1, 1996
SERVICE AGREEMENT UNDER RATE SCHEDULE GSS
THIS AGREEMENT entered into this 1st day of July, 1996, by and
between TRANSCONTINENTAL GAS PIPELINE CORPORATION, a Delaware
corporation, hereinafter referred to as "Seller", first party, and
NORTH CAROLINA GAS SERVICE (an NUI Company), a Delaware corporation,
(formerly NORTH CAROLINA GAS SERVICE DIVISION OF PENNSYLVANIA &
SOUTHERN GAS COMPANY), hereinafter referred to as "Buyer", second
party,
WITNESSETH:
WHEREAS, Buyer desires to purchase and Seller desires to sell
natural gas storage service under Seller's Rate Schedule GAS as set
forth herein; and
WHEREAS, pursuant to the terms of the Joint Stipulation and
Settlement Agreement approved by the Federal Energy Regulatory
Commission's ("Commission") Order dated July 16, 1993 in Docket Nos.
RS92-86-003, RP92-108-000, and RP92-137-000 which amended Seller's
Certificate in Docket No. CP61-194, Seller and Buyer agreed to a
twenty year contract through March 31, 2013, as set forth in that
order, for the Storage Demand Quantity and Storage Capacity Quantity
which are supported by service provided by CNG Transmission
Corporation; and
WHEREAS, pursuant to the terms of the Application to Amend
Seller's Certificate, in Docket No. CP61-94, as approved by the
Commission's Order dated June 13, 1996 in docket No. CP96-226-000,
Seller and Buyer agreed to the Storage Demand Quantity and Storage
Capacity Quantity set forth in Article I hereof;
NOW, THEREFORE, Seller and Buyer agree as follows:
ARTICLE I
SERVICE TO BE RENDERED
Subject to the terms and provisions of this agreement and of
Seller's Rate Schedule GSS, Seller agrees to receive from Buyer for
storage, inject into storage for Buyer's account, store, withdraw from
storage (or cause to be injected into storage for Buyer's account,
stored and withdrawn from storage ) and deliver to Buyer, quantities
of natural gas as follows:<PAGE>
To withdraw from storage or cause to be withdrawn from
storage, transport and deliver to buyer at the delivery
points set forth below, the gas stored for Buyer's account
up to a maximum quantity in any day of
2,650 Mcf, during the period beginning on July 1, 1996 and
ending on June 30, 2001, and
1,441 Mcf during the period beginning on July 1, 2001 and
ending on March 31, 2013,
which quantity shall be Buyer's Storage Demand.
To receive and store or cause to be stored up to a total
quantity at any one time of
134,229 Mcf, during the period beginning on July 1, 1996 and
ending on June 30, 2001, and
76,451 Mcf during the period beginning on July 1, 2001 and
ending on March 31, 2013,
which quantity shall be Buyer's Storage Capacity Quantity.
ARTICLE II
POINT(S) OF DELIVERY
The Point of Points of Delivery for all natural gas delivered by
Seller to Buyer under this agreement shall be at or near:
(1) Reidsville Meter and Regulator Station, located at milepost
1377.73 on Seller's main transmission line on the northeasterly
side of State Highway No. 87, approximately 6.5 miles
northwesterly from the City of Reidsville, Rockingham County,
North Carolina.
(2) Draper Meter and Regulator Station, located at milepost 1386.34
on Seller's main transmission line on the southeasterly side of
State Highway No. 770, approximately 7 miles easterly of the City
of Leaksville, Rockingham County, North Carolina.
(3) Bethany Meter and Regulator Station, located at milepost 1365.98
on Seller's main transmission line adjacent to North Carolina
State Highway No. 65 (approximately 3.2 miles southwest from
Seller's compressor Station No. 160), Rockingham County, North
Carolina.
(4) Spray Meter Station, located at milepost 1382.53 on Seller's main
transmission line adjacent to Transco's Dan River Meter Station,
approximately 0.5 miles south of Dan River, Rockingham County,
North Carolina.
ARTICLE III
DELIVERY PRESSURE
Seller shall deliver natural gas to Buyer at the Point(s) of
Delivery at a pressure(s) of: not less than fifty (50) pounds per
square inch gauge, or at such other pressures as may be agreed upon in
the day-to-day operations of Buyer and Seller.<PAGE>
ARTICLE IV
TERM OF AGREEMENT
This agreement shall be effective July 1, 1996 and shall remain
in force and effect through March 31, 2013.
ARTICLE V
RATE SCHEDULE AND PRICE
Buyer shall pay Seller for natural gas service rendered hereunder
in accordance with Seller's Rate Schedule GSS and the applicable
provisions of the General Terms and Conditions of Seller's FERC Gas
Tariff as filed with the Federal Energy Regulatory Commission, and as
the same may be amended or superseded from time to time at the
initiative of either party. Such rate schedule and General Terms and
Conditions are by this reference made a part hereof.
AFTICLE VI
MISCELLANEOUS
1. The subject headings of the Articles of this agreement are
inserted for the purpose of convenient reference and are not intended
to be a part of this agreement nor to be considered in any
interpretation of the same.
2. This agreement supersedes and cancels as of the effective date
hereof the following contract(s):
Any and all Service Agreements previously entered into between
Buyer and Seller under Seller's Rate Schedule GSS.
3. No waiver by either party of any one or more defaults by the
other in the performance of any provisions of this agreement shall
operate or be construed as a waiver of any future default or defaults,
whether of a like or different character.
4. This agreement shall be interpreted, performed and enforced in
accordance with the laws of the State of North Carolina.
5. This agreement shall be binding upon, and inure to the benefit of
the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this agreement
to be signed by their respective Presidents or Vice Presidents
thereunto duly authorized and have caused their respective corporate
seals to be hereunto affixed and attested by their respective
Secretaries or Assistant Secretaries the day and year above written.
TRANSCONTINENTAL GAS PIPELINE
CORPORATION
(Seller)
ATTEST:
[SEAL]
/S/ Randall R. Conklin By: /s/ Frank J. Ferazzi
Assistant Secretary Vice President
Customer Service<PAGE>
NORTH CAROLINA GAS SERVICE (an NUI Company)
(Buyer)
ATTEST:
[SEAL]
/S/ James R. Van Horn By: /s/ Thomas E. Smith
Secretary Vice President
Supply and Planning<PAGE>
EX-10.43
Contract No.010003
FT SERVICE AGREEMENT
THIS AGREEMENT entered into this 1st day of November, 1997,
by and between Eastern Shore Natural Gas Company, a corporation of
the State of Delaware (herein called "Seller"), and Elkton Gas
Division of NUI Corporation (herein called "Buyer").
WITNESSETH
WHEREAS, Buyer desires to obtain Firm Transportation Service
from Seller and Seller is willing to provide Firm Transportation
Service for Buyer; and
WHEREAS, such service will be provided by Seller for Buyer in
accordance with the terms hereof.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the sufficiency
of which is hereby acknowledged, Seller and Buyer do covenant and
agree as follows:
ARTICLE I
Definitions
In addition to the definitions incorporated herein through
Seller's Rate Schedule FT, the following terms when used herein
shall have the meanings set forth below:
1.1 The term "FERC" shall mean the Federal Energy Regulatory
Commission or any successor regulatory agency or body which has
authority to regulate the rates and/or services of Seller.
1.2 The term "Rate Schedule FT" shall mean Seller's Rate
Schedule FT and the General Terms and Conditions of Seller's FERC
Gas Tariff, as filed with the FERC and as changed and adjusted
from time to time by Seller in accordance with Section 4.2 hereof
or in compliance with any final FERC order affecting such Rate
Schedule and/or General Terms and Conditions.
ARTICLE II
Quantity
2.1 The Maximum Daily Transportation Quantity ("MDTQ") shall
be set forth on Exhibit "B" attached hereto. The applicable MDTQ
shall be the largest daily quantity of gas, expressed in
dekatherms ("dt"), that Seller is obligated to transport and make
available for delivery for the account of Buyer under this Service
Agreement on any one Gas Day.<PAGE>
2.2 Buyer may tender natural gas for transportation to Seller
on any Gas Day up to the MDTQ, plus the Fuel Retention Quantity as
defined in Section 31 of the General Terms and Conditions of
Seller's FERC Gas Tariff. Seller agrees to receive the aggregate
of the quantities of natural gas that Buyer tenders for
transportation, plus the Fuel Retention Quantity, at the Point(s)
of Receipt, up to the Maximum Daily Receipt Obligation ("MDRO")
specified for each Point of Receipt as set forth on Exhibit "A"
attached hereto, and to transport and make available for delivery
for the account of Buyer at each Delivery Point Area ("DPA")
specified on Exhibit "B" attached hereto, quantities of natural
gas up to the amount scheduled by Seller, less the Fuel Retention
Quantity, and Buyer agrees to accept or cause acceptance of such
delivery by Seller.
ARTICLE III
Payment and Rights of Termination
3.1 Upon the commencement of service hereunder, Buyer shall
pay Seller, for all service rendered hereunder, the rates
established under Buyer's Rate Schedule FT as filed with the FERC
and as said Rate Schedule may hereafter be legally amended or
superseded.
3.2 In the event Buyer fails to pay for the service provided
under this Agreement or otherwise fails to meet Seller's standards
for creditworthiness, Seller shall have the right to terminate
this Agreement pursuant to the conditions set forth in Section 11,
Section 18 and Section 19 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
3.3 In the event Buyer and Seller mutually agree to a
negotiated rate(s) and/or terms of service hereunder (if
authorized by the Commission), provisions governing such
negotiated rate (including surcharges) and terms shall be set
forth on Exhibit C to this Agreement.
ARTICLE IV
Rights to Amend Rates and Terms and Conditions of Service
4.1 This Agreement in all respects shall be and remain
subject to the provisions of said Rate Schedule FT and the
provisions of the General Terms and Conditions of Seller's FERC
Gas Tariff (as the same may hereafter be legally amended or
superseded), all of which are made a part hereof by this
reference.
4.2 Seller shall have the unilateral right to file with the
appropriate regulatory authority and seek to make changes in: (a)
the rates and charges applicable to its Rate Schedule FT; (b) Rate
Schedule FT including the Form of Service Agreement and the
existing Service Agreement pursuant to which this service is
rendered; and/or (c) any provisions of the General Terms and<PAGE>
Conditions of Seller's FERC Gas Tariff applicable to Rate Schedule
FT, provided however, Seller shall not have the right, without the
consent of Buyer, unless required to do so pursuant to applicable
laws or regulations, to make any filing pursuant to Section 4 of
the Natural Gas Act to reduce the firm nature of the service
provided under said Rate Schedule or the provisions of Exhibits
"A", "B" and "C". Seller agrees that Buyer may protest or contest
the aforementioned filings, or seek authorization from duly
constituted regulatory authorities for such adjustment of Seller's
existing FERC Gas Tariff as may be found necessary in order to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE V
Term of Agreement and Commencement of Service
5.1 The primary term of this Agreement shall commence on
November 1, 1997 and shall continue in effect until March 31,
2005. Termination or renewal of this Agreement shall occur in
accordance with the provisions of Section 13 of the General Terms
and Conditions of Seller's FERC Gas Tariff.
5.2 Any portion of this Agreement necessary to correct or
"cash out" imbalances under this Agreement, pursuant to the
General Terms and Conditions of Seller's FERC Gas Tariff, shall
survive the other parts of this Agreement until such time as such
balancing has been accomplished.
ARTICLE VI
Point(s) of Receipt and Delivery and Maximum Daily Quantities
6.1 The Primary Point(s) of Receipt and MDRO for each
Primary Point of Receipt, for all gas delivered for the account of
Buyer into Seller's pipeline system under this Agreement, shall be
at the Point(s) of Receipt on Seller's pipeline system as set
forth on Exhibit "A" attached hereto.
6.2 The Primary Delivery Point Area(s) ("DPA") and Maximum
Daily Delivery Obligation ("MDDO") for each DPA for all gas made
available for delivery by Seller to Buyer, or for the account of
Buyer, under this Agreement shall be as set forth on Exhibit "B"
attached hereto. Exhibit "B" also includes the Maximum Hourly
Quantity ("MHQ") for each DPA as defined in Section 20 of the
General Terms and Conditions of Seller's FERC Gas Tariff.
ARTICLE VII
Notices and Payments
7.1 All notices and communications with respect to this
Agreement shall be in writing and shall be considered as duly<PAGE>
conveyed when sent to the addresses stated below or at any other
such address as either Seller or 8uyer may hereafter designate in
writing in accordance with the applicable provisions of Section 8
of the General Terms and Conditions of Seller's FERC Gas Tariff.
Seller: Eastern Shore Natural Gas Company
Post Office Box 1769
Dover, Delaware 19903-1769
Attention: Director of Customer Services
Buyer: Elkton Gas Division of NUI Corporation
550 Route 202-206
P.O. Box 760
Bedminster, New Jersey 07921-0760
Attention: Laura DiBenedetto
7.2 All payments for service provided under this Agreement
shall be by wire transfer of funds and shall be directed to the
address stated below:
Eastern Shore Natural Gas Company
PNC Bank - Wilmington, DE
Account No. 5684278110
ABA No. 031100089
ARTICLE VIII
Facilities
8.1 To the extent that construction of facilities is
necessary to provide service under this Service Agreement, such
construction, including payment for the facilities, shall occur in
accordance with Section 12 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
ARTICLE IX
Regulatory Authorizations and Approvals
9.1 Seller's obligation to provide service is conditioned
upon receipt and acceptance of any necessary regulatory
authorization to provide Firm Transportation Service for Buyer in
accordance with the terms of Rate Schedule FT, this Service
Agreement and the General Terms and Conditions of Seller's FERC
Gas Tariff. Buyer agrees to reimburse Seller for all reporting
and/or filing fees incurred by Seller in providing service under
this Service Agreement.
ARTICLE X
Pressures<PAGE>
10.1 The quantities of gas delivered or caused to be
delivered by Buyer to Seller hereunder shall be delivered into
Seller's pipeline system at a pressure sufficient to enter
Seller's system, but in no event shall such gas be delivered at a
pressure exceeding the maximum authorized operating pressure or
such other pressure as Seller permits at the Point(s) of Receipt.
ARTICLE XI
Miscellaneous
11.1 This Agreement shall bind and benefit the successors and
assigns of the respective parties hereto; provided however,
neither party shall assign this Agreement or any of its rights or
obligations hereunder without first obtaining the written consent
of the other party.
11.2 No waiver by either party of any one or more defaults by
the other in the performance of any provisions of this Agreement
shall operate or be construed as a waiver of any future defaults
of a like or different character.
11.3 This Agreement includes Exhibits "A", "B" and "C", which
are incorporated fully herein and made a part hereof.
11.4 Modifications to this Agreement shall not become
effective except by execution of an amendment thereto.
11.5 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without
recourse to the law governing conflicts of laws, and to all
present and future valid laws with respect to the subject matter,
including present and future orders, rules and regulations of duly
constituted governmental authorities.
ARTICLE XII
Superseding Prior Service Agreements
12.1 This Agreement, on its effective date, supersedes and
cancels the following Service Agreement(s) between Seller and
Buyer: None
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers or
representatives effective as of the date first written above.
SELLER BUYER
EASTERN SHORE NATURAL GAS COMPANY ELKTON GAS DIVISION OF
NUI CORPORATION
By: /S/ STEPHEN C. THOMPSON By: /S/ THOMAS E. SMITH
Title: President Title: Vice President<PAGE>
Supply & Planning
(To be attested by the Corporate Secretary
if not signed by an officer of the company)
Attested By: Attested By:
Title: Title:
Date: Date:<PAGE>
EX-10.44
Contract No.010011
FT SERVICE AGREEMENT
THIS AGREEMENT entered into this 1st day of November, 1997,
by and between Eastern Shore Natural Gas Company, a corporation of
the State of Delaware (herein called "Seller"), and Elkton Gas
Division of NUI Corporation (herein called "Buyer").
WITNESSETH
WHEREAS, Buyer desires to obtain Firm Transportation Service
from Seller and Seller is willing to provide Firm Transportation
Service for Buyer; and
WHEREAS, such service will be provided by Seller for Buyer in
accordance with the terms hereof.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the sufficiency
of which is hereby acknowledged, Seller and Buyer do covenant and
agree as follows:
ARTICLE I
Definitions
In addition to the definitions incorporated herein through
Seller's Rate Schedule FT, the following terms when used herein
shall have the meanings set forth below:
1.1 The term "FERC" shall mean the Federal Energy Regulatory
Commission or any successor regulatory agency or body which has
authority to regulate the rates and/or services of Seller.
1.2 The term "Rate Schedule FT" shall mean Seller's Rate
Schedule FT and the General Terms and Conditions of Seller's FERC
Gas Tariff, as filed with the FERC and as changed and adjusted
from time to time by Seller in accordance with Section 4.2 hereof
or in compliance with any final FERC order affecting such Rate
Schedule and/or General Terms and Conditions.
ARTICLE II
Quantity
2.1 The Maximum Daily Transportation Quantity ("MDTQ") shall
be set forth on Exhibit "B" attached hereto. The applicable MDTQ
shall be the largest daily quantity of gas, expressed in
dekatherms ("dt"), that Seller is obligated to transport and make
available for delivery for the account of Buyer under this Service
Agreement on any one Gas Day.<PAGE>
2.2 Buyer may tender natural gas for transportation to Seller
on any Gas Day up to the MDTQ, plus the Fuel Retention Quantity as
defined in Section 31 of the General Terms and Conditions of
Seller's FERC Gas Tariff. Seller agrees to receive the aggregate
of the quantities of natural gas that Buyer tenders for
transportation, plus the Fuel Retention Quantity, at the Point(s)
of Receipt, up to the Maximum Daily Receipt Obligation ("MDRO")
specified for each Point of Receipt as set forth on Exhibit "A"
attached hereto, and to transport and make available for delivery
for the account of Buyer at each Delivery Point Area ("DPA")
specified on Exhibit "B" attached hereto, quantities of natural
gas up to the amount scheduled by Seller, less the Fuel Retention
Quantity, and Buyer agrees to accept or cause acceptance of such
delivery by Seller.
ARTICLE III
Payment and Rights of Termination
3.1 Upon the commencement of service hereunder, Buyer shall
pay Seller, for all service rendered hereunder, the rates
established under Buyer's Rate Schedule FT as filed with the FERC
and as said Rate Schedule may hereafter be legally amended or
superseded.
3.2 In the event Buyer fails to pay for the service provided
under this Agreement or otherwise fails to meet Seller's standards
for creditworthiness, Seller shall have the right to terminate
this Agreement pursuant to the conditions set forth in Section 11,
Section 18 and Section 19 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
3.3 In the event Buyer and Seller mutually agree to a
negotiated rate(s) and/or terms of service hereunder (if
authorized by the Commission), provisions governing such
negotiated rate (including surcharges) and terms shall be set
forth on Exhibit C to this Agreement.
ARTICLE IV
Rights to Amend Rates and Terms and Conditions of Service
4.1 This Agreement in all respects shall be and remain
subject to the provisions of said Rate Schedule FT and the
provisions of the General Terms and Conditions of Seller's FERC
Gas Tariff (as the same may hereafter be legally amended or
superseded), all of which are made a part hereof by this
reference.
4.2 Seller shall have the unilateral right to file with the
appropriate regulatory authority and seek to make changes in: (a)
the rates and charges applicable to its Rate Schedule FT; (b) Rate
Schedule FT including the Form of Service Agreement and the
existing Service Agreement pursuant to which this service is
rendered; and/or (c) any provisions of the General Terms and<PAGE>
Conditions of Seller's FERC Gas Tariff applicable to Rate Schedule
FT, provided however, Seller shall not have the right, without the
consent of Buyer, unless required to do so pursuant to applicable
laws or regulations, to make any filing pursuant to Section 4 of
the Natural Gas Act to reduce the firm nature of the service
provided under said Rate Schedule or the provisions of Exhibits
"A", "B" and "C". Seller agrees that Buyer may protest or contest
the aforementioned filings, or seek authorization from duly
constituted regulatory authorities for such adjustment of Seller's
existing FERC Gas Tariff as may be found necessary in order to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE V
Term of Agreement and Commencement of Service
5.1 The primary term of this Agreement shall commence on
November 1, 1997 and shall continue in effect until August 31,
2003. Termination or renewal of this Agreement shall occur in
accordance with the provisions of Section 13 of the General Terms
and Conditions of Seller's FERC Gas Tariff.
5.2 Any portion of this Agreement necessary to correct or
"cash out" imbalances under this Agreement, pursuant to the
General Terms and Conditions of Seller's FERC Gas Tariff, shall
survive the other parts of this Agreement until such time as such
balancing has been accomplished.
ARTICLE VI
Point(s) of Receipt and Delivery and Maximum Daily Quantities
6.1 The Primary Point(s) of Receipt and MDRO for each
Primary Point of Receipt, for all gas delivered for the account of
Buyer into Seller's pipeline system under this Agreement, shall be
at the Point(s) of Receipt on Seller's pipeline system as set
forth on Exhibit "A" attached hereto.
6.2 The Primary Delivery Point Area(s) ("DPA") and Maximum
Daily Delivery Obligation ("MDDO") for each DPA for all gas made
available for delivery by Seller to Buyer, or for the account of
Buyer, under this Agreement shall be as set forth on Exhibit "B"
attached hereto. Exhibit "B" also includes the Maximum Hourly
Quantity ("MHQ") for each DPA as defined in Section 20 of the
General Terms and Conditions of Seller's FERC Gas Tariff.
ARTICLE VII
Notices and Payments
7.1 All notices and communications with respect to this
Agreement shall be in writing and shall be considered as duly<PAGE>
conveyed when sent to the addresses stated below or at any other
such address as either Seller or 8uyer may hereafter designate in
writing in accordance with the applicable provisions of Section 8
of the General Terms and Conditions of Seller's FERC Gas Tariff.
Seller: Eastern Shore Natural Gas Company
Post Office Box 1769
Dover, Delaware 19903-1769
Attention: Director of Customer Services
Buyer: Elkton Gas Division of NUI Corporation
550 Route 202-206
P.O. Box 760
Bedminster, New Jersey 07921-0760
Attention: Laura DiBenedetto
7.2 All payments for service provided under this Agreement
shall be by wire transfer of funds and shall be directed to the
address stated below:
Eastern Shore Natural Gas Company
PNC Bank - Wilmington, DE
Account No. 5684278110
ABA No. 031100089
ARTICLE VIII
Facilities
8.1 To the extent that construction of facilities is
necessary to provide service under this Service Agreement, such
construction, including payment for the facilities, shall occur in
accordance with Section 12 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
ARTICLE IX
Regulatory Authorizations and Approvals
9.1 Seller's obligation to provide service is conditioned
upon receipt and acceptance of any necessary regulatory
authorization to provide Firm Transportation Service for Buyer in
accordance with the terms of Rate Schedule FT, this Service
Agreement and the General Terms and Conditions of Seller's FERC
Gas Tariff. Buyer agrees to reimburse Seller for all reporting
and/or filing fees incurred by Seller in providing service under
this Service Agreement.
ARTICLE X
Pressures<PAGE>
10.1 The quantities of gas delivered or caused to be
delivered by Buyer to Seller hereunder shall be delivered into
Seller's pipeline system at a pressure sufficient to enter
Seller's system, but in no event shall such gas be delivered at a
pressure exceeding the maximum authorized operating pressure or
such other pressure as Seller permits at the Point(s) of Receipt.
ARTICLE XI
Miscellaneous
11.1 This Agreement shall bind and benefit the successors and
assigns of the respective parties hereto; provided however,
neither party shall assign this Agreement or any of its rights or
obligations hereunder without first obtaining the written consent
of the other party.
11.2 No waiver by either party of any one or more defaults by
the other in the performance of any provisions of this Agreement
shall operate or be construed as a waiver of any future defaults
of a like or different character.
11.3 This Agreement includes Exhibits "A", "B" and "C", which
are incorporated fully herein and made a part hereof.
11.4 Modifications to this Agreement shall not become
effective except by execution of an amendment thereto.
11.5 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without
recourse to the law governing conflicts of laws, and to all
present and future valid laws with respect to the subject matter,
including present and future orders, rules and regulations of duly
constituted governmental authorities.
ARTICLE XII
Superseding Prior Service Agreements
12.1 This Agreement, on its effective date, supersedes and
cancels the following Service Agreement(s) between Seller and
Buyer: None
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers or
representatives effective as of the date first written above.
SELLER BUYER
EASTERN SHORE NATURAL GAS COMPANY ELKTON GAS DIVISION OF
NUI CORPORATION
By: /S/ STEPHEN C. THOMPSON By: /S/ THOMAS E. SMITH
Title: President Title: Vice President<PAGE>
Supply & Planning
(To be attested by the Corporate Secretary
if not signed by an officer of the company)
Attested By: Attested By:
Title: Title:
Date: Date:<PAGE>
EX-10.45
Contract No.010012
FT SERVICE AGREEMENT
THIS AGREEMENT entered into this 1st day of November, 1997,
by and between Eastern Shore Natural Gas Company, a corporation of
the State of Delaware (herein called "Seller"), and Elkton Gas
Division of NUI Corporation (herein called "Buyer").
WITNESSETH
WHEREAS, Buyer desires to obtain Firm Transportation Service
from Seller and Seller is willing to provide Firm Transportation
Service for Buyer; and
WHEREAS, such service will be provided by Seller for Buyer in
accordance with the terms hereof.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the sufficiency
of which is hereby acknowledged, Seller and Buyer do covenant and
agree as follows:
ARTICLE I
Definitions
In addition to the definitions incorporated herein through
Seller's Rate Schedule FT, the following terms when used herein
shall have the meanings set forth below:
1.1 The term "FERC" shall mean the Federal Energy Regulatory
Commission or any successor regulatory agency or body which has
authority to regulate the rates and/or services of Seller.
1.2 The term "Rate Schedule FT" shall mean Seller's Rate
Schedule FT and the General Terms and Conditions of Seller's FERC
Gas Tariff, as filed with the FERC and as changed and adjusted
from time to time by Seller in accordance with Section 4.2 hereof
or in compliance with any final FERC order affecting such Rate
Schedule and/or General Terms and Conditions.
ARTICLE II
Quantity
2.1 The Maximum Daily Transportation Quantity ("MDTQ") shall
be set forth on Exhibit "B" attached hereto. The applicable MDTQ
shall be the largest daily quantity of gas, expressed in
dekatherms ("dt"), that Seller is obligated to transport and make
available for delivery for the account of Buyer under this Service
Agreement on any one Gas Day.<PAGE>
2.2 Buyer may tender natural gas for transportation to Seller
on any Gas Day up to the MDTQ, plus the Fuel Retention Quantity as
defined in Section 31 of the General Terms and Conditions of
Seller's FERC Gas Tariff. Seller agrees to receive the aggregate
of the quantities of natural gas that Buyer tenders for
transportation, plus the Fuel Retention Quantity, at the Point(s)
of Receipt, up to the Maximum Daily Receipt Obligation ("MDRO")
specified for each Point of Receipt as set forth on Exhibit "A"
attached hereto, and to transport and make available for delivery
for the account of Buyer at each Delivery Point Area ("DPA")
specified on Exhibit "B" attached hereto, quantities of natural
gas up to the amount scheduled by Seller, less the Fuel Retention
Quantity, and Buyer agrees to accept or cause acceptance of such
delivery by Seller.
ARTICLE III
Payment and Rights of Termination
3.1 Upon the commencement of service hereunder, Buyer shall
pay Seller, for all service rendered hereunder, the rates
established under Buyer's Rate Schedule FT as filed with the FERC
and as said Rate Schedule may hereafter be legally amended or
superseded.
3.2 In the event Buyer fails to pay for the service provided
under this Agreement or otherwise fails to meet Seller's standards
for creditworthiness, Seller shall have the right to terminate
this Agreement pursuant to the conditions set forth in Section 11,
Section 18 and Section 19 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
3.3 In the event Buyer and Seller mutually agree to a
negotiated rate(s) and/or terms of service hereunder (if
authorized by the Commission), provisions governing such
negotiated rate (including surcharges) and terms shall be set
forth on Exhibit C to this Agreement.
ARTICLE IV
Rights to Amend Rates and Terms and Conditions of Service
4.1 This Agreement in all respects shall be and remain
subject to the provisions of said Rate Schedule FT and the
provisions of the General Terms and Conditions of Seller's FERC
Gas Tariff (as the same may hereafter be legally amended or
superseded), all of which are made a part hereof by this
reference.
4.2 Seller shall have the unilateral right to file with the
appropriate regulatory authority and seek to make changes in: (a)
the rates and charges applicable to its Rate Schedule FT; (b) Rate
Schedule FT including the Form of Service Agreement and the
existing Service Agreement pursuant to which this service is
rendered; and/or (c) any provisions of the General Terms and<PAGE>
Conditions of Seller's FERC Gas Tariff applicable to Rate Schedule
FT, provided however, Seller shall not have the right, without the
consent of Buyer, unless required to do so pursuant to applicable
laws or regulations, to make any filing pursuant to Section 4 of
the Natural Gas Act to reduce the firm nature of the service
provided under said Rate Schedule or the provisions of Exhibits
"A", "B" and "C". Seller agrees that Buyer may protest or contest
the aforementioned filings, or seek authorization from duly
constituted regulatory authorities for such adjustment of Seller's
existing FERC Gas Tariff as may be found necessary in order to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE V
Term of Agreement and Commencement of Service
5.1 The primary term of this Agreement shall commence on
November 1, 1997 and shall continue in effect until October 31,
2006. Termination or renewal of this Agreement shall occur in
accordance with the provisions of Section 13 of the General Terms
and Conditions of Seller's FERC Gas Tariff.
5.2 Any portion of this Agreement necessary to correct or
"cash out" imbalances under this Agreement, pursuant to the
General Terms and Conditions of Seller's FERC Gas Tariff, shall
survive the other parts of this Agreement until such time as such
balancing has been accomplished.
ARTICLE VI
Point(s) of Receipt and Delivery and Maximum Daily Quantities
6.1 The Primary Point(s) of Receipt and MDRO for each
Primary Point of Receipt, for all gas delivered for the account of
Buyer into Seller's pipeline system under this Agreement, shall be
at the Point(s) of Receipt on Seller's pipeline system as set
forth on Exhibit "A" attached hereto.
6.2 The Primary Delivery Point Area(s) ("DPA") and Maximum
Daily Delivery Obligation ("MDDO") for each DPA for all gas made
available for delivery by Seller to Buyer, or for the account of
Buyer, under this Agreement shall be as set forth on Exhibit "B"
attached hereto. Exhibit "B" also includes the Maximum Hourly
Quantity ("MHQ") for each DPA as defined in Section 20 of the
General Terms and Conditions of Seller's FERC Gas Tariff.
ARTICLE VII
Notices and Payments
7.1 All notices and communications with respect to this
Agreement shall be in writing and shall be considered as duly<PAGE>
conveyed when sent to the addresses stated below or at any other
such address as either Seller or 8uyer may hereafter designate in
writing in accordance with the applicable provisions of Section 8
of the General Terms and Conditions of Seller's FERC Gas Tariff.
Seller: Eastern Shore Natural Gas Company
Post Office Box 1769
Dover, Delaware 19903-1769
Attention: Director of Customer Services
Buyer: Elkton Gas Division of NUI Corporation
550 Route 202-206
P.O. Box 760
Bedminster, New Jersey 07921-0760
Attention: Laura DiBenedetto
7.2 All payments for service provided under this Agreement
shall be by wire transfer of funds and shall be directed to the
address stated below:
Eastern Shore Natural Gas Company
PNC Bank - Wilmington, DE
Account No. 5684278110
ABA No. 031100089
ARTICLE VIII
Facilities
8.1 To the extent that construction of facilities is
necessary to provide service under this Service Agreement, such
construction, including payment for the facilities, shall occur in
accordance with Section 12 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
ARTICLE IX
Regulatory Authorizations and Approvals
9.1 Seller's obligation to provide service is conditioned
upon receipt and acceptance of any necessary regulatory
authorization to provide Firm Transportation Service for Buyer in
accordance with the terms of Rate Schedule FT, this Service
Agreement and the General Terms and Conditions of Seller's FERC
Gas Tariff. Buyer agrees to reimburse Seller for all reporting
and/or filing fees incurred by Seller in providing service under
this Service Agreement.
ARTICLE X
Pressures<PAGE>
10.1 The quantities of gas delivered or caused to be
delivered by Buyer to Seller hereunder shall be delivered into
Seller's pipeline system at a pressure sufficient to enter
Seller's system, but in no event shall such gas be delivered at a
pressure exceeding the maximum authorized operating pressure or
such other pressure as Seller permits at the Point(s) of Receipt.
ARTICLE XI
Miscellaneous
11.1 This Agreement shall bind and benefit the successors and
assigns of the respective parties hereto; provided however,
neither party shall assign this Agreement or any of its rights or
obligations hereunder without first obtaining the written consent
of the other party.
11.2 No waiver by either party of any one or more defaults by
the other in the performance of any provisions of this Agreement
shall operate or be construed as a waiver of any future defaults
of a like or different character.
11.3 This Agreement includes Exhibits "A", "B" and "C", which
are incorporated fully herein and made a part hereof.
11.4 Modifications to this Agreement shall not become
effective except by execution of an amendment thereto.
11.5 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without
recourse to the law governing conflicts of laws, and to all
present and future valid laws with respect to the subject matter,
including present and future orders, rules and regulations of duly
constituted governmental authorities.
ARTICLE XII
Superseding Prior Service Agreements
12.1 This Agreement, on its effective date, supersedes and
cancels the following Service Agreement(s) between Seller and
Buyer: None
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers or
representatives effective as of the date first written above.
SELLER BUYER
EASTERN SHORE NATURAL GAS COMPANY ELKTON GAS DIVISION OF
NUI CORPORATION
By: /S/ STEPHEN C. THOMPSON By: /S/ THOMAS E. SMITH
Title: President Title: Vice President<PAGE>
Supply & Planning
(To be attested by the Corporate Secretary
if not signed by an officer of the company)
Attested By: Attested By:
Title: Title:
Date: Date:<PAGE>
EX-10.46
Contract No.010013
FT SERVICE AGREEMENT
THIS AGREEMENT entered into this 1st day of November, 1997,
by and between Eastern Shore Natural Gas Company, a corporation of
the State of Delaware (herein called "Seller"), and Elkton Gas
Division of NUI Corporation (herein called "Buyer").
WITNESSETH
WHEREAS, Buyer desires to obtain Firm Transportation Service
from Seller and Seller is willing to provide Firm Transportation
Service for Buyer; and
WHEREAS, such service will be provided by Seller for Buyer in
accordance with the terms hereof.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the sufficiency
of which is hereby acknowledged, Seller and Buyer do covenant and
agree as follows:
ARTICLE I
Definitions
In addition to the definitions incorporated herein through
Seller's Rate Schedule FT, the following terms when used herein
shall have the meanings set forth below:
1.1 The term "FERC" shall mean the Federal Energy Regulatory
Commission or any successor regulatory agency or body which has
authority to regulate the rates and/or services of Seller.
1.2 The term "Rate Schedule FT" shall mean Seller's Rate
Schedule FT and the General Terms and Conditions of Seller's FERC
Gas Tariff, as filed with the FERC and as changed and adjusted
from time to time by Seller in accordance with Section 4.2 hereof
or in compliance with any final FERC order affecting such Rate
Schedule and/or General Terms and Conditions.
ARTICLE II
Quantity
2.1 The Maximum Daily Transportation Quantity ("MDTQ") shall
be set forth on Exhibit "B" attached hereto. The applicable MDTQ
shall be the largest daily quantity of gas, expressed in
dekatherms ("dt"), that Seller is obligated to transport and make
available for delivery for the account of Buyer under this Service
Agreement on any one Gas Day.<PAGE>
2.2 Buyer may tender natural gas for transportation to Seller
on any Gas Day up to the MDTQ, plus the Fuel Retention Quantity as
defined in Section 31 of the General Terms and Conditions of
Seller's FERC Gas Tariff. Seller agrees to receive the aggregate
of the quantities of natural gas that Buyer tenders for
transportation, plus the Fuel Retention Quantity, at the Point(s)
of Receipt, up to the Maximum Daily Receipt Obligation ("MDRO")
specified for each Point of Receipt as set forth on Exhibit "A"
attached hereto, and to transport and make available for delivery
for the account of Buyer at each Delivery Point Area ("DPA")
specified on Exhibit "B" attached hereto, quantities of natural
gas up to the amount scheduled by Seller, less the Fuel Retention
Quantity, and Buyer agrees to accept or cause acceptance of such
delivery by Seller.
ARTICLE III
Payment and Rights of Termination
3.1 Upon the commencement of service hereunder, Buyer shall
pay Seller, for all service rendered hereunder, the rates
established under Buyer's Rate Schedule FT as filed with the FERC
and as said Rate Schedule may hereafter be legally amended or
superseded.
3.2 In the event Buyer fails to pay for the service provided
under this Agreement or otherwise fails to meet Seller's standards
for creditworthiness, Seller shall have the right to terminate
this Agreement pursuant to the conditions set forth in Section 11,
Section 18 and Section 19 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
3.3 In the event Buyer and Seller mutually agree to a
negotiated rate(s) and/or terms of service hereunder (if
authorized by the Commission), provisions governing such
negotiated rate (including surcharges) and terms shall be set
forth on Exhibit C to this Agreement.
ARTICLE IV
Rights to Amend Rates and Terms and Conditions of Service
4.1 This Agreement in all respects shall be and remain
subject to the provisions of said Rate Schedule FT and the
provisions of the General Terms and Conditions of Seller's FERC
Gas Tariff (as the same may hereafter be legally amended or
superseded), all of which are made a part hereof by this
reference.
4.2 Seller shall have the unilateral right to file with the
appropriate regulatory authority and seek to make changes in: (a)
the rates and charges applicable to its Rate Schedule FT; (b) Rate
Schedule FT including the Form of Service Agreement and the
existing Service Agreement pursuant to which this service is
rendered; and/or (c) any provisions of the General Terms and<PAGE>
Conditions of Seller's FERC Gas Tariff applicable to Rate Schedule
FT, provided however, Seller shall not have the right, without the
consent of Buyer, unless required to do so pursuant to applicable
laws or regulations, to make any filing pursuant to Section 4 of
the Natural Gas Act to reduce the firm nature of the service
provided under said Rate Schedule or the provisions of Exhibits
"A", "B" and "C". Seller agrees that Buyer may protest or contest
the aforementioned filings, or seek authorization from duly
constituted regulatory authorities for such adjustment of Seller's
existing FERC Gas Tariff as may be found necessary in order to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE V
Term of Agreement and Commencement of Service
5.1 The primary term of this Agreement shall commence on
November 1, 1997 and shall continue in effect until October 31,
2007. Termination or renewal of this Agreement shall occur in
accordance with the provisions of Section 13 of the General Terms
and Conditions of Seller's FERC Gas Tariff.
5.2 Any portion of this Agreement necessary to correct or
"cash out" imbalances under this Agreement, pursuant to the
General Terms and Conditions of Seller's FERC Gas Tariff, shall
survive the other parts of this Agreement until such time as such
balancing has been accomplished.
ARTICLE VI
Point(s) of Receipt and Delivery and Maximum Daily Quantities
6.1 The Primary Point(s) of Receipt and MDRO for each
Primary Point of Receipt, for all gas delivered for the account of
Buyer into Seller's pipeline system under this Agreement, shall be
at the Point(s) of Receipt on Seller's pipeline system as set
forth on Exhibit "A" attached hereto.
6.2 The Primary Delivery Point Area(s) ("DPA") and Maximum
Daily Delivery Obligation ("MDDO") for each DPA for all gas made
available for delivery by Seller to Buyer, or for the account of
Buyer, under this Agreement shall be as set forth on Exhibit "B"
attached hereto. Exhibit "B" also includes the Maximum Hourly
Quantity ("MHQ") for each DPA as defined in Section 20 of the
General Terms and Conditions of Seller's FERC Gas Tariff.
ARTICLE VII
Notices and Payments
7.1 All notices and communications with respect to this
Agreement shall be in writing and shall be considered as duly<PAGE>
conveyed when sent to the addresses stated below or at any other
such address as either Seller or 8uyer may hereafter designate in
writing in accordance with the applicable provisions of Section 8
of the General Terms and Conditions of Seller's FERC Gas Tariff.
Seller: Eastern Shore Natural Gas Company
Post Office Box 1769
Dover, Delaware 19903-1769
Attention: Director of Customer Services
Buyer: Elkton Gas Division of NUI Corporation
550 Route 202-206
P.O. Box 760
Bedminster, New Jersey 07921-0760
Attention: Laura DiBenedetto
7.2 All payments for service provided under this Agreement
shall be by wire transfer of funds and shall be directed to the
address stated below:
Eastern Shore Natural Gas Company
PNC Bank - Wilmington, DE
Account No. 5684278110
ABA No. 031100089
ARTICLE VIII
Facilities
8.1 To the extent that construction of facilities is
necessary to provide service under this Service Agreement, such
construction, including payment for the facilities, shall occur in
accordance with Section 12 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
ARTICLE IX
Regulatory Authorizations and Approvals
9.1 Seller's obligation to provide service is conditioned
upon receipt and acceptance of any necessary regulatory
authorization to provide Firm Transportation Service for Buyer in
accordance with the terms of Rate Schedule FT, this Service
Agreement and the General Terms and Conditions of Seller's FERC
Gas Tariff. Buyer agrees to reimburse Seller for all reporting
and/or filing fees incurred by Seller in providing service under
this Service Agreement.
ARTICLE X
Pressures<PAGE>
10.1 The quantities of gas delivered or caused to be
delivered by Buyer to Seller hereunder shall be delivered into
Seller's pipeline system at a pressure sufficient to enter
Seller's system, but in no event shall such gas be delivered at a
pressure exceeding the maximum authorized operating pressure or
such other pressure as Seller permits at the Point(s) of Receipt.
ARTICLE XI
Miscellaneous
11.1 This Agreement shall bind and benefit the successors and
assigns of the respective parties hereto; provided however,
neither party shall assign this Agreement or any of its rights or
obligations hereunder without first obtaining the written consent
of the other party.
11.2 No waiver by either party of any one or more defaults by
the other in the performance of any provisions of this Agreement
shall operate or be construed as a waiver of any future defaults
of a like or different character.
11.3 This Agreement includes Exhibits "A", "B" and "C", which
are incorporated fully herein and made a part hereof.
11.4 Modifications to this Agreement shall not become
effective except by execution of an amendment thereto.
11.5 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without
recourse to the law governing conflicts of laws, and to all
present and future valid laws with respect to the subject matter,
including present and future orders, rules and regulations of duly
constituted governmental authorities.
ARTICLE XII
Superseding Prior Service Agreements
12.1 This Agreement, on its effective date, supersedes and
cancels the following Service Agreement(s) between Seller and
Buyer: None
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers or
representatives effective as of the date first written above.
SELLER BUYER
EASTERN SHORE NATURAL GAS COMPANY ELKTON GAS DIVISION OF
NUI CORPORATION
By: /S/ STEPHEN C. THOMPSON By: /S/ THOMAS E. SMITH
Title: President Title: Vice President<PAGE>
Supply & Planning
(To be attested by the Corporate Secretary
if not signed by an officer of the company)
Attested By: Attested By:
Title: Title:
Date: Date:<PAGE>
EX-10.47
Contract No.020003
ST SERVICE AGREEMENT
THIS AGREEMENT entered into this 1st day of November, 1997,
by and between Eastern Shore Natural Gas Company, a corporation of
the State of Delaware (herein called "Seller"), and Elkton Gas
Division of NUI Corporation (herein called "Buyer").
WITNESSETH
WHEREAS, Buyer desires to obtain Swing Transportation Service
from Seller and Seller is willing to provide Swing Transportation
Service for Buyer; and
WHEREAS, such service will be provided by Seller for Buyer in
accordance with the terms hereof.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the sufficiency
of which is hereby acknowledged, Seller and Buyer do covenant and
agree as follows:
ARTICLE I
Definitions
In addition to the definitions incorporated herein through
Seller's Rate Schedule ST, the following terms when used herein
shall have the meanings set forth below:
1.1 The term "FERC" shall mean the Federal Energy Regulatory
Commission or any successor regulatory agency or body which has
authority to regulate the rates and/or services of Seller.
1.2 The term "Rate Schedule ST" shall mean Seller's Rate
Schedule ST and the General Terms and Conditions of Seller's FERC
Gas Tariff, as filed with the FERC and as changed and adjusted
from time to time by Seller in accordance with Section 5.2 hereof
or in compliance with any final FERC order affecting such Rate
Schedule and/or General Terms and Conditions.
ARTICLE II
Quantity
2.1 The Maximum Daily Swing Transportation Quantity ("MDSTQ")
shall be set forth on Exhibit "B" attached hereto. The applicable
MDSTQ shall be the largest daily quantity of gas, expressed in
dekatherms ("dt"), that Seller is obligated to transport and make
available for delivery for the account of Buyer under this Service
Agreement on any one Gas Day.<PAGE>
2.2 Buyer may tender natural gas for transportation to Seller
on any Gas Day up to the MDSTQ, plus the Fuel Retention Quantity
as defined in Section 31 of the General Terms and Conditions of
Seller's FERC Gas Tariff. Seller agrees to receive the aggregate
of the quantities of natural gas that Buyer tenders for
transportation, plus the Fuel Retention Quantity, at the Point(s)
of Receipt, up to the Maximum Daily Receipt Obligation ("MDRO")
specified for each Point of Receipt as set forth on Exhibit "A"
attached hereto, and to transport and make available for delivery
for the account of Buyer at each Delivery Point Area ("DPA")
specified on Exhibit "B" attached hereto, quantities of natural
gas up to the amount scheduled by Seller, less the Fuel Retention
Quantity, and Buyer agrees to accept or cause acceptance of such
delivery by Seller.
ARTICLE III
Upstream Capacity Retained by Seller
3.1 To facilitate transportation of Buyer's swing supply from
Point(s) of Receipt on Transcontinental Gas Pipe Line
Corporation's (Transco) pipeline system to Seller's system, Seller
shall retain firm transportation capacity on Transco. The Transco
capacity that Seller has retained on Buyer's behalf is set forth
on Exhibit "C" attached hereto.
ARTICLE IV
Payment and Rights of Termination
4.1 Upon the commencement of service hereunder, Buyer shall
pay Seller, for all service rendered hereunder, the rates
established under Buyer's Rate Schedule ST as filed with the FERC
and as said Rate Schedule may hereafter be legally amended or
superseded.
4.2 In the event Buyer fails to pay for the service provided
under this Agreement or otherwise fails to meet Seller's standards
for creditworthiness, Seller shall have the right to terminate
this Agreement pursuant to the conditions set forth in Section 11,
Section 18 and Section 19 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
4.3 In the event Buyer and Seller mutually agree to a
negotiated rate(s) and/or terms of service hereunder (if
authorized by the Commission), provisions governing such
negotiated rate (including surcharges) and terms shall be set
forth on Exhibit D to this Agreement.
ARTICLE V
Rights to Amend Rates and Terms and Conditions of Service<PAGE>
5.1 This Agreement in all respects shall be and remain
subject to the provisions of said Rate Schedule ST and the
provisions of the General Terms and Conditions of Seller's FERC
Gas Tariff (as the same may hereafter be legally amended or
superseded), all of which are made a part hereof by this
reference.
5.2 Seller shall have the unilateral right to file with the
appropriate regulatory authority and seek to make changes in: (a)
the rates and charges applicable to its Rate Schedule ST; (b) Rate
Schedule ST including the Form of Service Agreement and the
existing Service Agreement pursuant to which this service is
rendered; and/or (c) any provisions of the General Terms and
Conditions of Seller's FERC Gas Tariff applicable to Rate Schedule
ST, provided however, Seller shall not have the right, without the
consent of Buyer, unless required to do so pursuant to applicable
laws or regulations, to make any filing pursuant to Section 4 of
the Natural Gas Act to reduce the firm nature of the service
provided under said Rate Schedule or the provisions of Exhibits
"A", "B", "C" and "D". Seller agrees that Buyer may protest or
contest the aforementioned filings, or seek authorization from
duly constituted regulatory authorities for such adjustment of
Seller's existing FERC Gas Tariff as may be found necessary in
order to assure that the provisions in (a), (b), or (c) above are
just and reasonable.
ARTICLE VI
Term of Agreement and Commencement of Service
6.1 The primary term of this Agreement shall commence on
November 1, 1997 and shall continue in effect until March 31,
2013.
6.2 Any portion of this Agreement necessary to correct or
"cash out" imbalances under this Agreement, pursuant to the
General Terms and Conditions of Seller's FERC Gas Tariff, shall
survive the other parts of this Agreement until such time as such
balancing has been accomplished.
ARTICLE VII
Point(s) of Receipt and Delivery and Maximum Daily Quantities
7.1 The Primary Point(s) of Receipt and MDRO for each
Primary Point of Receipt, for all gas delivered for the account of
Buyer into Seller's pipeline system under this Agreement, shall be
at the Point(s) of Receipt on Seller's pipeline system as set
forth on Exhibit "A" attached hereto.
7.2 The Primary Delivery Point Area(s) ("DPA") and Maximum
Daily Delivery Obligation ("MDDO") for each DPA for all gas made
available for delivery by Seller to Buyer, or for the account of
Buyer, under this Agreement shall be as set forth on Exhibit "B"
attached hereto. Exhibit "B" also includes the Maximum Hourly<PAGE>
Quantity ("MHQ") for each DPA as defined in Section 20 of the
General Terms and Conditions of Seller's FERC Gas Tariff.
ARTICLE VIII
Notices and Payments
8.1 All notices and communications with respect to this
Agreement shall be in writing and shall be considered as duly
conveyed when sent to the addresses stated below or at any other
such address as either Seller or 8uyer may hereafter designate in
writing in accordance with the applicable provisions of Section 8
of the General Terms and Conditions of Seller's FERC Gas Tariff.
Seller: Eastern Shore Natural Gas Company
Post Office Box 1769
Dover, Delaware 19903-1769
Attention: Director of Customer Services
Buyer: Elkton Gas Division of NUI Corporation
550 Route 202-206
P.O. Box 760
Bedminster, New Jersey 07921-0760
Attention: Laura DiBenedetto
8.2 All payments for service provided under this Agreement
shall be by wire transfer of funds and shall be directed to the
address stated below:
Eastern Shore Natural Gas Company
PNC Bank - Wilmington, DE
Account No. 5684278110
ABA No. 031100089
ARTICLE IX
Facilities
9.1 To the extent that construction of facilities is
necessary to provide service under this Service Agreement, such
construction, including payment for the facilities, shall occur in
accordance with Section 12 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
ARTICLE X
Regulatory Authorizations and Approvals
10.1 Seller's obligation to provide service is conditioned
upon receipt and acceptance of any necessary regulatory
authorization to provide Firm Transportation Service for Buyer in
accordance with the terms of Rate Schedule ST, this Service
Agreement and the General Terms and Conditions of Seller's FERC<PAGE>
Gas Tariff. Buyer agrees to reimburse Seller for all reporting
and/or filing fees incurred by Seller in providing service under
this Service Agreement.
ARTICLE XI
Pressures
11.1 The quantities of gas delivered or caused to be
delivered by Buyer to Seller hereunder shall be delivered into
Seller's pipeline system at a pressure sufficient to enter
Seller's system, but in no event shall such gas be delivered at a
pressure exceeding the maximum authorized operating pressure or
such other pressure as Seller permits at the Point(s) of Receipt.
ARTICLE XII
Miscellaneous
12.1 This Agreement shall bind and benefit the successors and
assigns of the respective parties hereto; provided however,
neither party shall assign this Agreement or any of its rights or
obligations hereunder without first obtaining the written consent
of the other party.
12.2 No waiver by either party of any one or more defaults by
the other in the performance of any provisions of this Agreement
shall operate or be construed as a waiver of any future defaults
of a like or different character.
12.3 This Agreement includes Exhibits "A", "B" and "C", which
are incorporated fully herein and made a part hereof.
12.4 Modifications to this Agreement shall not become
effective except by execution of an amendment thereto.
12.5 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without
recourse to the law governing conflicts of laws, and to all
present and future valid laws with respect to the subject matter,
including present and future orders, rules and regulations of duly
constituted governmental authorities.
ARTICLE XIII
Superseding Prior Service Agreements
13.1 This Agreement, on its effective date, supersedes and
cancels the following Service Agreement(s) between Seller and
Buyer: None<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers or
representatives effective as of the date first written above.
SELLER BUYER
EASTERN SHORE NATURAL GAS COMPANY ELKTON GAS DIVISION OF
NUI CORPORATION
By: /S/ STEPHEN C. THOMPSON By: /S/ THOMAS E. SMITH
Title: President Title: Vice President
Supply & Planning
(To be attested by the Corporate Secretary
if not signed by an officer of the company)
Attested By: Attested By:
Title: Title:
Date: Date:<PAGE>
EX-10.48
Contract No.020005
ST SERVICE AGREEMENT
THIS AGREEMENT entered into this 1st day of November, 1997,
by and between Eastern Shore Natural Gas Company, a corporation of
the State of Delaware (herein called "Seller"), and Elkton Gas
Division of NUI Corporation (herein called "Buyer").
WITNESSETH
WHEREAS, Buyer desires to obtain Swing Transportation Service
from Seller and Seller is willing to provide Swing Transportation
Service for Buyer; and
WHEREAS, such service will be provided by Seller for Buyer in
accordance with the terms hereof.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the sufficiency
of which is hereby acknowledged, Seller and Buyer do covenant and
agree as follows:
ARTICLE I
Definitions
In addition to the definitions incorporated herein through
Seller's Rate Schedule ST, the following terms when used herein
shall have the meanings set forth below:
1.1 The term "FERC" shall mean the Federal Energy Regulatory
Commission or any successor regulatory agency or body which has
authority to regulate the rates and/or services of Seller.
1.2 The term "Rate Schedule ST" shall mean Seller's Rate
Schedule ST and the General Terms and Conditions of Seller's FERC
Gas Tariff, as filed with the FERC and as changed and adjusted
from time to time by Seller in accordance with Section 5.2 hereof
or in compliance with any final FERC order affecting such Rate
Schedule and/or General Terms and Conditions.
ARTICLE II
Quantity
2.1 The Maximum Daily Swing Transportation Quantity ("MDSTQ")
shall be set forth on Exhibit "B" attached hereto. The applicable
MDSTQ shall be the largest daily quantity of gas, expressed in
dekatherms ("dt"), that Seller is obligated to transport and make
available for delivery for the account of Buyer under this Service
Agreement on any one Gas Day.<PAGE>
2.2 Buyer may tender natural gas for transportation to Seller
on any Gas Day up to the MDSTQ, plus the Fuel Retention Quantity
as defined in Section 31 of the General Terms and Conditions of
Seller's FERC Gas Tariff. Seller agrees to receive the aggregate
of the quantities of natural gas that Buyer tenders for
transportation, plus the Fuel Retention Quantity, at the Point(s)
of Receipt, up to the Maximum Daily Receipt Obligation ("MDRO")
specified for each Point of Receipt as set forth on Exhibit "A"
attached hereto, and to transport and make available for delivery
for the account of Buyer at each Delivery Point Area ("DPA")
specified on Exhibit "B" attached hereto, quantities of natural
gas up to the amount scheduled by Seller, less the Fuel Retention
Quantity, and Buyer agrees to accept or cause acceptance of such
delivery by Seller.
ARTICLE III
Upstream Capacity Retained by Seller
3.1 To facilitate transportation of Buyer's swing supply from
Point(s) of Receipt on Transcontinental Gas Pipe Line
Corporation's (Transco) pipeline system to Seller's system, Seller
shall retain firm transportation capacity on Transco. The Transco
capacity that Seller has retained on Buyer's behalf is set forth
on Exhibit "C" attached hereto.
ARTICLE IV
Payment and Rights of Termination
4.1 Upon the commencement of service hereunder, Buyer shall
pay Seller, for all service rendered hereunder, the rates
established under Buyer's Rate Schedule ST as filed with the FERC
and as said Rate Schedule may hereafter be legally amended or
superseded.
4.2 In the event Buyer fails to pay for the service provided
under this Agreement or otherwise fails to meet Seller's standards
for creditworthiness, Seller shall have the right to terminate
this Agreement pursuant to the conditions set forth in Section 11,
Section 18 and Section 19 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
4.3 In the event Buyer and Seller mutually agree to a
negotiated rate(s) and/or terms of service hereunder (if
authorized by the Commission), provisions governing such
negotiated rate (including surcharges) and terms shall be set
forth on Exhibit D to this Agreement.
ARTICLE V
Rights to Amend Rates and Terms and Conditions of Service<PAGE>
5.1 This Agreement in all respects shall be and remain
subject to the provisions of said Rate Schedule ST and the
provisions of the General Terms and Conditions of Seller's FERC
Gas Tariff (as the same may hereafter be legally amended or
superseded), all of which are made a part hereof by this
reference.
5.2 Seller shall have the unilateral right to file with the
appropriate regulatory authority and seek to make changes in: (a)
the rates and charges applicable to its Rate Schedule ST; (b) Rate
Schedule ST including the Form of Service Agreement and the
existing Service Agreement pursuant to which this service is
rendered; and/or (c) any provisions of the General Terms and
Conditions of Seller's FERC Gas Tariff applicable to Rate Schedule
ST, provided however, Seller shall not have the right, without the
consent of Buyer, unless required to do so pursuant to applicable
laws or regulations, to make any filing pursuant to Section 4 of
the Natural Gas Act to reduce the firm nature of the service
provided under said Rate Schedule or the provisions of Exhibits
"A", "B", "C" and "D". Seller agrees that Buyer may protest or
contest the aforementioned filings, or seek authorization from
duly constituted regulatory authorities for such adjustment of
Seller's existing FERC Gas Tariff as may be found necessary in
order to assure that the provisions in (a), (b), or (c) above are
just and reasonable.
ARTICLE VI
Term of Agreement and Commencement of Service
6.1 The primary term of this Agreement shall commence on
November 1, 1997 and shall continue in effect until October 31,
2004.
6.2 Any portion of this Agreement necessary to correct or
"cash out" imbalances under this Agreement, pursuant to the
General Terms and Conditions of Seller's FERC Gas Tariff, shall
survive the other parts of this Agreement until such time as such
balancing has been accomplished.
ARTICLE VII
Point(s) of Receipt and Delivery and Maximum Daily Quantities
7.1 The Primary Point(s) of Receipt and MDRO for each
Primary Point of Receipt, for all gas delivered for the account of
Buyer into Seller's pipeline system under this Agreement, shall be
at the Point(s) of Receipt on Seller's pipeline system as set
forth on Exhibit "A" attached hereto.
7.2 The Primary Delivery Point Area(s) ("DPA") and Maximum
Daily Delivery Obligation ("MDDO") for each DPA for all gas made
available for delivery by Seller to Buyer, or for the account of
Buyer, under this Agreement shall be as set forth on Exhibit "B"
attached hereto. Exhibit "B" also includes the Maximum Hourly<PAGE>
Quantity ("MHQ") for each DPA as defined in Section 20 of the
General Terms and Conditions of Seller's FERC Gas Tariff.
ARTICLE VIII
Notices and Payments
8.1 All notices and communications with respect to this
Agreement shall be in writing and shall be considered as duly
conveyed when sent to the addresses stated below or at any other
such address as either Seller or 8uyer may hereafter designate in
writing in accordance with the applicable provisions of Section 8
of the General Terms and Conditions of Seller's FERC Gas Tariff.
Seller: Eastern Shore Natural Gas Company
Post Office Box 1769
Dover, Delaware 19903-1769
Attention: Director of Customer Services
Buyer: Elkton Gas Division of NUI Corporation
550 Route 202-206
P.O. Box 760
Bedminster, New Jersey 07921-0760
Attention: Laura DiBenedetto
8.2 All payments for service provided under this Agreement
shall be by wire transfer of funds and shall be directed to the
address stated below:
Eastern Shore Natural Gas Company
PNC Bank - Wilmington, DE
Account No. 5684278110
ABA No. 031100089
ARTICLE IX
Facilities
9.1 To the extent that construction of facilities is
necessary to provide service under this Service Agreement, such
construction, including payment for the facilities, shall occur in
accordance with Section 12 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
ARTICLE X
Regulatory Authorizations and Approvals
10.1 Seller's obligation to provide service is conditioned
upon receipt and acceptance of any necessary regulatory
authorization to provide Firm Transportation Service for Buyer in
accordance with the terms of Rate Schedule ST, this Service
Agreement and the General Terms and Conditions of Seller's FERC<PAGE>
Gas Tariff. Buyer agrees to reimburse Seller for all reporting
and/or filing fees incurred by Seller in providing service under
this Service Agreement.
ARTICLE XI
Pressures
11.1 The quantities of gas delivered or caused to be
delivered by Buyer to Seller hereunder shall be delivered into
Seller's pipeline system at a pressure sufficient to enter
Seller's system, but in no event shall such gas be delivered at a
pressure exceeding the maximum authorized operating pressure or
such other pressure as Seller permits at the Point(s) of Receipt.
ARTICLE XII
Miscellaneous
12.1 This Agreement shall bind and benefit the successors and
assigns of the respective parties hereto; provided however,
neither party shall assign this Agreement or any of its rights or
obligations hereunder without first obtaining the written consent
of the other party.
12.2 No waiver by either party of any one or more defaults by
the other in the performance of any provisions of this Agreement
shall operate or be construed as a waiver of any future defaults
of a like or different character.
12.3 This Agreement includes Exhibits "A", "B" and "C", which
are incorporated fully herein and made a part hereof.
12.4 Modifications to this Agreement shall not become
effective except by execution of an amendment thereto.
12.5 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without
recourse to the law governing conflicts of laws, and to all
present and future valid laws with respect to the subject matter,
including present and future orders, rules and regulations of duly
constituted governmental authorities.
ARTICLE XIII
Superseding Prior Service Agreements
13.1 This Agreement, on its effective date, supersedes and
cancels the following Service Agreement(s) between Seller and
Buyer: None<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers or
representatives effective as of the date first written above.
SELLER BUYER
EASTERN SHORE NATURAL GAS COMPANY ELKTON GAS DIVISION OF
NUI CORPORATION
By: /S/ STEPHEN C. THOMPSON By: /S/ THOMAS E. SMITH
Title: President Title: Vice President
Supply & Planning
(To be attested by the Corporate Secretary
if not signed by an officer of the company)
Attested By: Attested By:
Title: Title:
Date: Date:<PAGE>
EXHIBIT NO. 21
SUBSIDIARIES OF NUI CORPORATION
NUI Capital Corp. (a Florida corporation) is a wholly-
owned subsidiary of NUI Corporation.
NUI Energy, Inc. (a Delaware Corporation), NUI Energy
Brokers, Inc. (a Delaware Corporation), Utility Business
Services, Inc. (a New Jersey Corporation), NUI Environmental
Group, Inc. (a New Jersey Corporation), NUI Energy Solutions
Inc. (a New Jersey Corporation) and NUI Sales Management,
Inc. (a Delaware Corporation) are wholly-owned subsidiaries
of NUI Capital Corp.<PAGE>
EXHIBIT 12
NUI CORPORATION AND SUBSIDIARIES
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(000's)
Year Ended September 30,
1997 1996 1995 1994 1993
Income from continuing
operations before
income taxes $30,172 $23,044 $8,664 $12,883 $20,837
Less-Adjustment related
to equity investments (1,334) -- -- -- --
Add:
Interest element of
rentals charged to
income (a) 3,299 2,930 3,220 3,173 3,156
Interest expense 21,374 19,808 20,032 16,443 14,966
------ ------ ------ ------ ------
Earnings as defined $53,511 $45,782 $31,896 $32,449 $38,959
====== ====== ====== ====== ======
Interest expense 21,374 19,808 19,814 16,323 14,844
Capitalized interest 186 150 218 120 122
Interest element of
rentals charged to
income (a) 3,299 2,930 3,220 3,173 3,156
------ ------ ------ ------ ------
Fixed charges as
defined $24,859 $22,888 $23,252 $19,616 $18,122
====== ====== ====== ====== ======
CONSOLIDATED RATIO OF
EARNINGS TO FIXED
CHARGES 2.15 2.00 1.37 1.66 2.15
------ ------ ------ ------ ------
(a)Includes the interest element of rentals where determinable plus
1/3 of rental expense where no readily defined interest element can be
determined.<PAGE>
EXHIBIT NO. 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated November 6,
1997, included in the Form 10-K, into the Company's
previously filed Registration Statements File No. 33-56509
relating to Amendment No. 1 to Form S-3 Registration
Statement, File No. 33-51459 relating to NUI Direct, File
No. 33-57183 relating to the Savings and Investment Plan,
File No. 33-24169 relating to the 1988 Stock Plan, File No.
333-02425 relating to the 1996 Stock Option and Stock Award
Plan, File No. 333-02421 relating to the Employee Stock
Purchase Plan, and File No. 333-02423 relating to the 1996
Director Stock Purchase Plan.
ARTHUR ANDERSEN LLP
New York, New York
December 24, 1997<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 493,823
<OTHER-PROPERTY-AND-INVEST> 56,287
<TOTAL-CURRENT-ASSETS> 188,749
<TOTAL-DEFERRED-CHARGES> 64,806
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 803,665
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 201,549
<RETAINED-EARNINGS> 19,260
<TOTAL-COMMON-STOCKHOLDERS-EQ> 218,291
0
0
<LONG-TERM-DEBT-NET> 229,069
<SHORT-TERM-NOTES> 54,428
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 54,600
0
<CAPITAL-LEASE-OBLIGATIONS> 9,679
<LEASES-CURRENT> 1,587
<OTHER-ITEMS-CAPITAL-AND-LIAB> 236,011
<TOT-CAPITALIZATION-AND-LIAB> 803,665
<GROSS-OPERATING-REVENUE> 608,596
<INCOME-TAX-EXPENSE> 10,523
<OTHER-OPERATING-EXPENSES> 127,497
<TOTAL-OPERATING-EXPENSES> 136,790
<OPERATING-INCOME-LOSS> 36,285
<OTHER-INCOME-NET> 2,284
<INCOME-BEFORE-INTEREST-EXPEN> 38,569
<TOTAL-INTEREST-EXPENSE> 18,920
<NET-INCOME> 19,649
0
<EARNINGS-AVAILABLE-FOR-COMM> 19,649
<COMMON-STOCK-DIVIDENDS> 10,575
<TOTAL-INTEREST-ON-BONDS> 7,494
<CASH-FLOW-OPERATIONS> 40,515
<EPS-PRIMARY> $1.75
<EPS-DILUTED> $1.75
</TABLE>
