UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
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 1-10042
ATMOS ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
TEXAS 75-1743247
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1800 Three Lincoln Centre
5430 LBJ Freeway, Dallas, Texas 75240
(Address of principal executive offices) (Zip Code)
(214) 934-9227
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
Number of shares outstanding of each of the issuer's classes of
common stock, as of January 28, 1994.
Class Shares Outstanding
----- ------------------
No Par Value 10,149,467
<PAGE>
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
ATMOS ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, September 30,
1993 1993
------------ -------------
ASSETS (Unaudited)
Property, plant and equipment $514,024 $501,512
Less accumulated depreciation and
amortization 208,405 202,237
-------- --------
Net property, plant and equipment 305,619 299,275
Current assets
Cash and cash equivalents 2,065 2,286
Accounts receivable, net 76,111 29,200
Inventories 6,005 6,064
Gas stored underground 12,967 17,603
Other current assets 3,105 4,240
-------- --------
Total current assets 100,253 59,393
Deferred charges and other assets 34,938 32,950
-------- --------
$440,810 $391,618
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholders' equity
Common stock outstanding: 10,149,467
shares at 12/31/93 and 9,912,601
shares at 9/30/93 $ 51 $ 50
Additional paid-in capital 101,188 94,303
Retained earnings 49,494 45,076
-------- --------
Total shareholders' equity 150,733 139,429
Long-term debt 98,303 105,853
-------- --------
Total capitalization 249,036 245,282
Current liabilities
Current maturities of long-term debt 7,550 6,300
Notes payable to banks 51,600 35,700
Accounts payable 51,013 27,803
Taxes payable 7,431 3,797
Customers' deposits 8,259 7,862
Other current liabilities 6,446 6,455
-------- --------
Total current liabilities 132,299 87,917
Deferred income taxes 30,086 32,614
Deferred credits and other liabilities 29,389 25,805
-------- --------
$440,810 $391,618
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
2
<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
------------------ -------------------
1993 1992 1993 1992
-------- -------- -------- --------
Operating revenues $145,501 $130,700 $474,443 $408,996
Purchased gas cost 97,080 88,062 305,549 263,042
-------- -------- -------- --------
Gross profit 48,421 42,638 168,894 145,954
Operating expenses
Operation 23,399 19,386 86,197 77,472
Maintenance 1,530 1,417 6,448 5,645
Depreciation and amortization 4,667 4,484 17,616 17,258
Taxes, other than income 4,537 4,332 17,011 16,258
Income taxes 3,986 3,289 10,771 5,541
-------- -------- -------- --------
Total operating expenses 38,119 32,908 138,043 122,174
-------- -------- -------- --------
Operating income 10,302 9,730 30,851 23,780
Other income 88 579 74 1,585
Interest charges, net 3,302 3,544 13,057 13,720
-------- -------- -------- --------
Net income $ 7,088 $ 6,765 $ 17,868 $ 11,645
======== ======== ======== ========
Net income per share $ .71 $ .72 $ 1.84 $ 1.26
======== ======== ======== ========
Cash dividends per share
(See Note 2) $ .33 $ .32 $ 1.29 $ 1.25
======== ======== ======== ========
Average shares outstanding 10,032 9,367 9,726 9,253
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
3
<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Three months ended
December 31,
1993 1992
-------- --------
Cash Flows From Operating Activities
Net income $ 7,088 $ 6,765
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization
Charged to depreciation and
amortization 4,667 4,484
Charged to other accounts 935 1,058
Deferred income taxes (2,528) (1,384)
Other 202 129
-------- --------
10,364 11,052
Net change in operating assets and
liabilities (12,455) (17,286)
-------- --------
Net cash used by operating activities (2,091) (6,234)
Cash Flows From Investing Activities
Retirements of property, plant and
equipment 109 (13)
Capital expenditures (12,055) (9,568)
-------- --------
Net cash used in investing activities (11,946) (9,581)
Cash Flows From Financing Activities
Net increase in notes payable to banks 15,900 22,184
Cash dividends and distributions paid (2,670) (2,257)
Repayment of long-term debt (6,300) (4,800)
Issuance of common stock 6,886 2,121
-------- --------
Net cash provided by financing
activities 13,816 17,248
-------- --------
Net increase (decrease) in cash and cash
equivalents (221) 1,433
Cash and cash equivalents at beginning
of period 2,286 3,144
-------- --------
Cash and cash equivalents at end
of period $ 2,065 $ 4,577
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
4
<PAGE>
ATMOS ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
December 31, 1993
1. Unaudited interim financial information
In the opinion of management, all material adjustments necessary
for a fair presentation have been made to the unaudited interim
period financial statements. Such adjustments consisted only of
normal recurring accruals. Because of seasonal and other
factors, the results of operations for the three month period
ended December 31, 1993 are not indicative of expected results of
operations for the year ending September 30, 1994. These interim
financial statements and notes are condensed as permitted by the
instructions to Form 10-Q, and should be read in conjunction with
the audited consolidated financial statements in the 1993 annual
report to shareholders of Atmos Energy Corporation ("Atmos" or
the "Company").
Deferred charges and other assets - Deferred charges and other
assets at December 31, 1993 and September 30, 1993 include assets
of the Company's qualified defined benefit retirement plans in
excess of the plans' recorded obligations in the amounts of
$13,036,000 and $13,289,000, respectively, and Company assets
related to the Company's nonqualified retirement plans at
December 31, 1993 and September 30, 1993 of $13,253,000 and
$12,758,000, respectively.
Common stock - As of December 31, 1993, the Company had
50,000,000 shares of common stock, no par value (stated at $.005
per share), authorized. During the three months ended December
31, 1993, 2,566,196 shares were issued, including 2,329,330
shares in connection with the merger with Greeley Gas Company
discussed below.
Reclassifications - Certain prior period balances have been
reclassified to be consistent between Atmos and Greeley (see Note
2) and to make prior period classifications consistent with the
1994 presentation.
2. Business Combination
On December 22, 1993, Atmos acquired by means of a merger all of
the assets and liabilities of Greeley Gas Company ("Greeley") in
accordance with the terms and provisions of an Agreement and Plan
of Reorganization dated July 2, 1993. All the shares of
Greeley's common stock were exchanged for a total of 2,329,330
shares of Atmos common stock.
Greeley was a privately owned natural gas utility and is engaged
in the distribution and sale of natural gas to residential,
commercial, industrial, agricultural, and other customers
throughout Colorado, Kansas, and a small portion of Missouri.
5
<PAGE>
This transaction was accounted for as a pooling of interests;
therefore, prior financial statements have been restated to
reflect this merger. Greeley prepared its financial statements
on a December 31 fiscal year end. Greeley's fiscal year has been
changed to September 30 to conform to the Company's year end.
The restated consolidated statements of income and cash flows
presented herein for the three-month and twelve-month periods
ended December 31, 1993 and 1992 include Greeley's operating
results for the full period presented. Results of operations for
the previously separate enterprises for the three months ended
December 31, 1993 and 1992 are summarized as follows:
Three months ended December 31,
1993 1992
---------- ----------
(In thousands)
Operating revenue:
Atmos $ 119,223 $ 112,377
Greeley 26,278 18,323
---------- ----------
$ 145,501 $ 130,700
========== ==========
Net income:
Atmos $ 5,458 $ 5,815
Greeley 1,630 950
---------- ----------
$ 7,088 $ 6,765
========== ==========
Operating revenue and net income included in the Company's
consolidated statements of income for the twelve months ended
December 31, 1993 and 1992 are as follows:
Twelve months ended December 31,
1993 1992
---------- ----------
(In thousands)
Operating revenue:
Atmos $ 395,342 $ 345,760
Greeley 79,101 63,236
---------- ----------
$ 474,443 $ 408,996
========== ==========
Net income:
Atmos $ 14,422 $ 11,110
Greeley 3,446 535
---------- ----------
$ 17,868 $ 11,645
========== ==========
<PAGE>
6
<PAGE>
The dividends per share presentation on the consolidated state-
ment of income reflects historical Atmos dividends per share and
has not been restated under the pooling of interests method of
accounting for the merger. The historical and restated cash
dividends and distributions per share of Atmos are as follows:
Three months ended Twelve months ended
December 31, December 31,
------------------ -------------------
1993 1992 1993 1992
-------- -------- -------- --------
Historical Atmos cash
dividends per share $.33 $.32 $1.29 $1.25
Restated cash dividends and
distributions per share,
including Greeley $.27 $.24 $1.04 $ .98
3. Accounting for income taxes
Effective October 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS No. 109") and, as permitted under the new rules,
prior years' financial statements have not been restated. A
regulatory liability reflecting the expected future rate treat-
ment of approximately $2,673,000 in deferred tax deductions has
been recorded in accordance with SFAS No. 109. It primarily
represents the impact of adjusting deferred taxes to reflect the
decrease in the federal tax rate from 46% to 35%. The effect of
applying the new standard in the first quarter of fiscal 1994 had
no significant effect on net income.
This standard changes the Company's method of accounting for
income taxes from the deferred method (APB 11) to the liability
method. Previously the Company deferred the past tax effects of
timing differences between financial reporting and taxable
income. Under the liability method of SFAS No. 109, deferred tax
assets and liabilities are recognized for the estimated future
tax effects of differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases.
Deferred income taxes reflect the tax effect of differences
between the basis of assets and liabilities for book and tax
purposes. The tax effect of temporary differences that give rise
to significant components of the deferred tax liabilities and
deferred tax assets at the date of adoption of SFAS No. 109 are
presented below (in thousands):
Temporary differences resulting in deferred tax liabilities:
7
<PAGE>
Current Non-current Total
---------- ----------- -----------
Tax and book basis of utility plant $ - $ 31,949 $ 31,949
Prepaid pensions - 5,134 5,134
Other, net 251 314 565
---------- ----------- -----------
Total deferred tax liabilities 251 37,397 37,648
Temporary differences resulting in deferred tax assets:
Current Non-current Total
---------- ----------- -----------
Allowance for bad debts $ 338 $ - $ 338
Other current, net 233 - 233
Restricted stock - 295 295
Book expenses capitalized for tax - 744 744
Nondeductible accruals 245 444 689
Customer advances - 2,128 2,128
Nonqualified benefit plans - 2,740 2,740
Accrued rent - 541 541
---------- ---------- ----------
Total deferred tax assets 816 6,892 7,708
---------- ---------- ----------
Net deferred tax liabilities $ (565) $ 30,505 $ 29,940
========== ========== ==========
SFAS No. 109 deferred accounts for
rate regulated entities (included
in other deferred credits):
Liabilities $ 2,673
==========
4. Other Postretirement Benefits
Effective October 1, 1993, the Company adopted Financial Accounting Standards
No. 106 ("SFAS"), the "Employers' Accounting for Postretirement Benefits Other
Than Pensions". SFAS No. 106 focuses principally on postretirement health
care benefits and will significantly change the current practice of accounting
for postretirement benefits on a pay-as-you-go basis by requiring accrual of
such benefit costs on an actuarial basis over the active service period of
employees to the date of full eligibility for such benefits. The Company is
amortizing on a straight line basis the initial transition obligation of
$33,354,000 over 20 years. The effect of adopting the new rules increased
first quarter net periodic postretirement benefit cost by $663,000 and
decreased net income for the period by $424,000.
Atmos sponsors two defined benefit postretirement plans. One plan provides
medical, dental, vision and life insurance benefits to retired employees of
Greeley Gas Company. The other offers medical benefits to all other Atmos
employees. Both the plan participant and the participant's spouse are
required to contribute under both plans. Neither plan is funded. The Company
anticipates establishing a funding policy regarding the amounts and timing of
possible contributions in fiscal 1994. The amount of funding will ultimately
depend upon the ratemaking treatment allowed in the Company's various rate
jurisdictions. Substantially all of the Company's employees may become
eligible for these benefits if they reach retirement age while working for the
Company and attain 10 consecutive years of service. <PAGE>
8
<PAGE>
The components of net periodic postretirement benefit cost for the three-month
period ended December 31, 1993 are as follows (in thousands):
Service cost $ 454
Interest cost 567
Amortization of transition obligation 417
--------
$ 1,438
========
The following is a reconciliation of the funded status of the plans to the net
postretirement benefits liability on the balance sheet as of December 31, 1993
(in thousands):
Accumulated postretirement benefit obligation
Retirees $(18,237)
Fully eligible employees (8,596)
Other employees (6,521)
--------
$(33,354)
========
Accumulated postretirement benefit obligation
in excess of plan assets $(33,354)
Unrecognized transition obligation 32,937
--------
Accrued postretirement benefits liability $ (417)
========
The assumed health care cost trend rate used to estimate the cost of
postretirement benefits was 10.5% for the 1993-1994 year and is assumed to
decrease gradually to 5.0% for 1999-2000 and remain at that level thereafter.
Similarly, the dental trend rate is 8.0% for the 1993-1994 year and gradually
decreases to 5.0% for 1999-2000 and remains level thereafter. The trend for
vision benefits is assumed to remain level for all years at 4.5%. The effect
of a 1% increase in the assumed health care cost trend rate for each future
year is $410,000 on the annual aggregate of the service and interest cost
components of net periodic postretirement benefit costs and $2,793,000 on the
accumulated postretirement benefit obligation as of September 30, 1993. Other
assumptions used in postretirement benefit accounting are as follows:
Discount rate - rate at which liabilities
could be settled 7.0%
Rate of increase in compensation levels 5.0
The Company is currently allowed to recover other postretirement benefit
("OPEB") costs through its regulated rates on a pay-as-you-go basis in a
majority of its service areas. It is allowed to recover OPEB costs in its
remaining service areas under SFAS No. 106 accrual accounting. The rate
recovery of SFAS No. 106 cost by jurisdiction is discussed below. Management
believes that accrual accounting in accordance with SFAS No. 106 is appropri-
ate and will seek rate recovery of accrual based expenses in all of its
ratemaking jurisdictions. The portion of the additional expense in excess of
the pay-as-you-go amount that will immediately or ultimately be allowed in
9
<PAGE>
rates cannot presently be determined. The degree of regulatory assurance of
future recovery required to recognize any regulatory asset cannot be deter-
mined at this time. The difference of $663,000 between the level of expense
using SFAS No. 106 and that using the prior accounting method for the quarter
ended December 31, 1993 was expensed and no regulatory asset was recorded as
of December 31, 1993.
In its September 1992 rate order to the Trans Louisiana Gas Company ("Trans La
Division"), the Louisiana Public Service Commission ("Louisiana Commission")
directed the Trans La Division to remain on a pay-as-you-go basis for
ratemaking purposes and to defer the difference between the cost to be accrued
under SFAS No. 106 and the pay-as-you-go cost as a regulatory asset. The
deferred cost will be recognized for rate recovery when it is actually paid.
In May 1993, the Louisiana Commission issued an order for all utilities under
its jurisdiction to continue to use the pay-as-you-go accounting method for
rate treatment of SFAS No. 106 costs. Utilities may apply to the Louisiana
Commission for authority to recognize a regulatory asset to be amortized on a
pay-as-you-go basis to bridge the gap between ratemaking and accounting. The
Louisiana Commission retains the flexibility to examine individual companies'
accounting for SFAS No. 106 costs to determine if special exceptions to this
order are warranted. The Company included proposed recovery of SFAS No. 106
costs in its December, 1993 Rate Stabilization Clause filing. This filing is
currently being reviewed by the Louisiana Commission.
In June 1992, the Kentucky Public Service Commission ("Kentucky Commission")
declined a request by a group of utilities to grant a blanket commitment for
the future recovery of SFAS No. 106 costs in excess of pay-as-you-go costs for
all utilities. The Kentucky Commission's order stated that each utility could
file an individual application to seek recovery of such costs. At a rehearing
held in December 1992, the Kentucky Commission affirmed its initial order.
In May 1993, the Company filed rate requests which included SFAS No. 106 costs
in Fritch and Sanford, Texas and for the surrounding environs. The rates for
the environs are subject to the jurisdiction of the Railroad Commission of
Texas ("Railroad Commission"). In its order of August 30, 1993, the Railroad
Commission approved recovery of SFAS No. 106 costs and internal funding.
In September, 1993 Greeley filed a rate request for its Colorado service area
which included SFAS No. 106 costs. This rate request is currently pending
before the Colorado Public Utility Commission.
In its December, 1993 rate order to Greeley, the Kansas Corporation Commission
approved recovery of SFAS No. 106 expenses with the agreement that the
difference between amounts computed as SFAS No. 106 expense and pay-as-you-go
expense shall be remitted quarterly to an external trust fund.
The ultimate impact of the adoption of SFAS No. 106 on the Company's financial
position and results of operations will not be known with certainty until the
regulatory treatment that will be allowed in each of the Company's ratemaking
jurisdictions is determined.
5. Postemployment Benefits
The Company also provides postemployment benefits, primarily workers'
compensation and long-term disability insurance, to former or inactive
10
<PAGE>
employees after employment but before retirement. The Financial Accounting
Standards Board has issued Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits" ("SFAS No. 112"),
which applies to such benefits and will be effective for the Company's 1995
fiscal year. Under SFAS No. 112, employers are required to recognize the
obligation to provide postemployment benefits if certain conditions are met.
Postemployment benefit costs are currently recorded and recovered in rates on
the pay-as-you-go basis. The rate treatment of SFAS No. 112 accrual based
costs has not been determined at this time. The reduction in future earnings,
if any, that would result from this accrual would be offset to the extent that
it is approved to be recovered in rates. Based on a preliminary actuarial
study, the Company currently estimates the cumulative effect of implementation
of SFAS No. 112 and the increase in future annual costs to be minimal.
6. Contingencies
On March 15, 1991, suit was filed in the 15th Judicial District Court of
Lafayette Parish, Louisiana, by the Lafayette Daily Advertiser and others
against the Trans La Division, Trans Louisiana Industrial Gas Company, Inc.
("TLIG"), a wholly owned subsidiary of the Company, and Louisiana Intrastate
Gas Corporation and certain of its affiliates ("LIG"). LIG is the Company's
primary supplier of natural gas in Louisiana and is not otherwise affiliated
with the Company.
The plaintiffs purported to represent a class consisting of all residential
and commercial gas customers in the Trans La Division's service area. Among
other things, the lawsuit alleged that the defendants violated antitrust laws
of the state of Louisiana by manipulating the cost-of-gas component of the
Trans La Division's gas rate to the purported customer class, thereby causing
such purported class members to pay a higher rate. The plaintiffs made no
specific allegation of an amount of damages.
The defendants brought an appeal to the Louisiana Supreme Court of rulings by
the trial court and the Third Circuit Court of Appeal which denied defendants'
exceptions to the jurisdiction of the trial court. It was the position of the
defendants that the plaintiffs' claims amount to complaints about the level of
gas rates and should be within the exclusive jurisdiction of the Louisiana
Commission.
On January 19, 1993, the Louisiana Supreme Court issued a decision reversing
in part the lower courts' rulings, dismissing all of plaintiffs' claims
against the defendants which seek damages due to alleged overcharges and
further ruling that all such claims are within the exclusive jurisdiction of
the Louisiana Commission. Any claims which seek damages other than over-
charges were remanded to the trial court but were stayed pending the comple-
tion of the Louisiana Commission proceeding referred to below.
The Louisiana Commission has instituted a docketed proceeding for the purpose
of investigating the costs included in the Trans La Division's purchased gas
adjustment component of its rates. Both the Trans La Division and LIG are
parties to the proceeding. Discovery has commenced in this proceeding and a
procedural schedule has been established. The Company believes the allega-
tions as they relate to the Company, whether brought in court or at the
Louisiana Commission, are without merit, and that the chances of a material
adverse outcome are remote. The Company will continue to vigorously protect
11
<PAGE>
its interest in this matter.
From time to time, claims are made and lawsuits are filed against the Company
arising out of the ordinary business of the Company. In the opinion of the
Company's management, liabilities, if any, arising from these actions are
either covered by insurance, adequately reserved for by the Company or would
not have a material adverse effect on the financial condition of the Company.
7. Long-term and short-term debt
During the quarter ended December 31, 1993, the Company paid installments due
of $3,000,000 on its 9.75% Senior Notes, $2,000,000 on its 11.2% Senior Notes,
$1,000,000 on its 13.75% Series I, First Mortgage Bonds, and $300,000 on its
13% Series G, First Mortgage Bonds.
At December 31, 1993, the Company had committed, short-term, unsecured bank
credit facilities totaling $72,000,000, all of which was unused. The Company
also had aggregate uncommitted lines of $112,500,000, of which $60,900,000 was
unused at December 31, 1993.
<PAGE>
12
<PAGE>
8. Statements of cash flows
Supplemental disclosures of cash flow information for the three month periods
ended December 31, 1993 and 1992 are presented below.
Three months ended
December 31,
1993 1992
------ ------
(In thousands)
Cash paid for
Interest $4,728 $5,036
Income taxes 3 472
<PAGE>
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Introduction
The Company distributes and sells natural gas to residential, commercial,
industrial and agricultural customers in six states. Such business is subject
to regulation by state and/or local authorities in each of the states in which
the Company operates. In addition, the Company's business is affected by
seasonal weather patterns, competitive factors within the energy industry, and
economic conditions in the areas that the Company serves.
Revenues and sales volume statistics for the three-month and twelve-month
periods ended December 31, 1993 and 1992 appear on pages 20 and 21.
Rate Activity
The Company filed for a rate increase with the Kentucky Public Service
Commission (the "Kentucky Commission") for its Western Kentucky Gas Company
service area (the "Western Kentucky Division") in February 1990. The proposed
rates would have produced approximately $8.9 million per year in additional
revenues, or an overall increase of approximately 8.0% for the Western
Kentucky Division. On September 13, 1990, the Kentucky Commission issued an
Order establishing rates that would increase annual revenues approximately
$1.0 million, or approximately 1% for the Western Kentucky Division. The
Company implemented the rates in accordance with the Order and filed a motion
for rehearing on certain issues. On May 29, 1991, the Kentucky Commission
issued an Order on Rehearing increasing allowed revenues an additional $2.6
million resulting in a total combined revenue increase of $3.6 million. The
new rates were effective as of the date of the Order. In June 1991, the
Kentucky Attorney General's office and the Company each filed appeals of
certain issues contained in the Kentucky Commission's Order on Rehearing with
the Franklin County, Kentucky Circuit Court. The Attorney General's suit was
dismissed. In June 1993, the Circuit Court affirmed the Kentucky Commission's
Order and denied relief to the Company. The Company's case has been appealed
to the Kentucky Court of Appeals. The Company filed a Notice of Appeal in
July, 1993, and is awaiting action by the court. The Company's appeal in
Kentucky relates solely to the determination of the appropriate effective date
of its last rate increase in Kentucky. The Kentucky Public Service Commission
made the increase effective in May, 1991, while the company believes it should
have become effective in September, 1990. The Company lost the issue at the
trial court level. If the Company is successful, it could recover approxi-
mately $1.0 million in additional revenue; if it is unsuccessful, there would
be no impact on its revenue.
In December, 1993, the Company received an order from the Kentucky Commission
approving a large volume sales program and a revised gas cost adjustment
method. Also in December 1993 the Kentucky Commission issued an order in a
generic proceeding relating to the implications of Order 636 on local
distribution companies ("LDCs"). The order permitted the LDCs to flow through
Order 636 transition costs incurred from their pipeline suppliers.
Effective September 1992, the Louisiana Public Service Commission (the
"Louisiana Commission") granted the Trans La Division an increase of approxi-
mately $1.0 million per year in additional revenues, or an overall increase of
14
<PAGE>
approximately 2.8%. The rate order also allows the Company to collect
franchise taxes as a line item on the Company's bills which will reduce taxes,
other than income taxes, by approximately $800,000 per year. The rate order
also approved a rate stabilization clause for three years that provides for an
annual adjustment to the Company's rates to reflect changes in expenses,
revenues and invested capital following an annual review. The rate stabiliza-
tion clause provides an opportunity for a return on jurisdictional common
equity of between 11.75% and 12.25%. As a result of the Company's first
annual filing under the rate stabilization clause, an increase of $730,000
annually or 2% went into effect on March 1, 1993. In December, 1993, the
Company provided its second annual rate stabilization clause filing which is
pending before the Louisiana Commission.
In February 1992, the Company filed a rate case with the city of Amarillo,
Texas seeking to increase annual revenues by approximately $4.4 million, or
12%. In June 1992, the city denied the Company's request for rate relief and
the Company appealed to the Railroad Commission. The Railroad Commission
granted an interim rate increase of approximately $700,000 on an annual basis,
effective from June 10, 1992, which is when the Company filed its appeal. In
November 1992, the Railroad Commission issued its decision which approved an
additional revenue increase of $1.4 million, resulting in a total annual
increase of $2.1 million. The Company and the city requested rehearing of the
Order. In January 1993, the Railroad Commission denied rehearing to both
parties. In February, 1993, the city appealed the Railroad Commission's rate
order to the District Court of Travis County, Texas. In January 1994, the
District Court denied the city's appeal. The city has indicated an intention
to appeal further.
Greeley filed a request for an increase in annual revenues of $4.5 million or
9.4% with the Colorado Public Utility Commission ("Colorado Commission") in
September, 1993, which case is currently pending.
Effective December 1, 1993, Greeley received an annual rate increase of
approximately $2.1 million or 10.6% in its Kansas service area. The settle-
ment included recovery of SFAS No. 106 costs with external funding and a
moratorium on rate requests in Kansas until December 1, 1996.
In 1992 the Federal Energy Regulatory Commission (FERC) issued an order
("Order 636") which continues past FERC initiatives to substantially restruc-
ture the interstate natural gas pipeline industry by unbundling the availabil-
ity and pricing of interstate pipeline services. The Company actively
participated in the restructuring proceedings of the interstate pipelines that
serve its various service areas. New service agreements for its Western
Kentucky Division became effective in September and November 1993 with
Tennessee Gas and Texas Gas, respectively. Prior to October 1993, Greeley
purchased a portion of its natural gas supplies from interstate pipeline
companies. It now has term commitments for the transportation of natural gas
with the interstate pipelines but must secure that portion of its natural gas
supplies previously purchased from them from other parties. The Company
believes it has restructured its portfolio of natural gas supplies and
pipeline services under Order 636 to replace the traditional pipeline sales
service and enable it to continue to provide adequate and reliable service to
its customers in 1994.
Recently Issued Accounting Standards Not Yet Adopted
15
<PAGE>
The Company has not adopted Statement of Financial Accounting Standards No.
112 "Employers' Accounting for Postemployment Benefits" which is discussed in
Note 5 of notes to consolidated financial statements. The rate treatment of
SFAS No. 112 costs has not been determined at this time. Such costs are
currently recorded and recovered on the pay-as-you-go basis.
FINANCIAL CONDITION
For the three months ended December 31, 1993 net cash used by operating
activities totaled $2.1 million compared with $6.2 million for the three
months ended December 31, 1992. Net operating assets and liabilities
increased $12.5 million for the three months ended December 31, 1993 compared
with an increase of $17.3 million for the three months ended December 31,
1992. Due to the seasonal nature of the natural gas distribution business,
large swings in accounts receivable, accounts payable and inventories of gas
in underground storage will occur when entering and leaving the winter or
heating season.
Major cash flows from investing activities for the three months ended December
31, 1993 included capital expenditures of $12.1 million compared with $9.6
million for the three months ended December 31, 1992. The capital expendi-
tures budget for fiscal year 1994 is currently $50.6 million, as compared with
actual capital expenditures of $44.8 million in fiscal 1993. Capital projects
planned for 1994 include major expenditures for mains, services, meters,
vehicles and computer software. These expenditures will be financed from
internally generated funds and financing activities.
For the three months ended December 31, 1993, cash flows from financing
activities amounted to $13.8 million. During the quarter, notes payable to
banks increased $15.9 million, as compared with $22.2 million in the quarter
ended December 31, 1992, due to seasonal factors and short-term borrowing to
fund payments of long-term debt. Payments of long-term debt consisted of a
$3.0 million installment on the Company's 9.75% Senior Notes due in 1996, a
$2.0 million installment on the 11.2% Senior Notes, a $1.0 million payment on
the 13.75% Series I First Mortgage Bonds and a $.3 million payment on the 13%
Series G First Mortgage Bonds. The Company paid $2.7 million in cash
dividends and distributions during the three months ended December 31, 1993,
compared with $2.3 million paid during the three months ended December 31,
1992. This reflects a $.01 per share increase in the quarterly dividend rate
and an increase in the number of shares outstanding. In the quarter ended
December 31, 1993, the Company issued 2,566,196 shares of common stock. This
included 2,329,330 shares in connection with the merger and 236,866 shares
under its Employee Stock Ownership Plan and its Dividend Reinvestment and
Stock Purchase Plan ("DRSPP") prior to the merger on December 22, 1993. The
Company has not issued additional shares since that time and will not issue
additional shares until it receives required approval from the Colorado,
Kansas and Missouri Commissions. In the quarter ended December 31, 1993, the
Company registered an additional 700,000 shares of common stock with the
Securities and Exchange Commission for future issuance under the DRSPP.
On February 9, 1994, the Board of Directors of Atmos approved a three-for-two
split of its common stock effected in the form of a stock dividend, which will
result in shareholders receiving one new share for every two shares currently
16
<PAGE>
held. Fractional shares will not be issued but will be paid in cash. The
record date for the split is 15 days after regulatory approvals are obtained
in Kentucky, Colorado, Kansas and Missouri for the issuance of the shares.
Shares outstanding will increase from approximately 10 million to slightly
more than 15 million. The quarterly dividend of $.33 per share as declared by
the Board on February 9, 1994 will be adjusted to $.22 per share if the record
date for the stock split occurs prior to the February 25, 1994 record date for
the dividend.
The Company believes that internally generated funds, its short-term credit
facilities and access to the debt and equity capital markets will provide
necessary working capital and liquidity for capital expenditures and other
cash needs for the remainder of fiscal 1994. At December 31, 1993 the Company
had $72.0 million committed short-term credit facilities, all of which was
available for additional borrowing. The committed lines are renewed or
renegotiated at least annually. At December 31, 1993, the Company also had
$112.5 million of uncommitted short-term lines, of which $60.9 million was
unused.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1993 COMPARED WITH THREE MONTHS ENDED DECEMBER
31, 1992
Operating revenues increased from $130.7 million for the three months ended
December 31, 1992 to $145.5 million for the three months ended December 31,
1993. Factors contributing to the increase in operating revenues were colder
weather, increased gas cost, and rate increases in Louisiana, Kansas and
Amarillo, Texas. Changes in cost of gas are reflected in sales prices through
purchased gas adjustment mechanisms. The average sales price per thousand
cubic feet ("Mcf") sold increased $.12 to $4.28 while the average cost of gas
per Mcf sold increased $.09 to $2.98. The increase in the average sales price
reflects the increased gas cost, a $1.0 million annual rate increase,
effective in September 1992 and a $.7 million rate stabilization clause
increase effective in March, 1993 for the Trans La Division, a $2.1 million
annual rate increase implemented partly in June 1992 and partly in November
1992 in Amarillo, Texas and a $2.1 million annual rate increase effective in
December 1993 in the Kansas service area. Volumes sold increased from 30.4
billion cubic feet ("Bcf") to 32.6 Bcf. Transportation revenues increased
$1.7 million due to an increase of $.11 in average transportation revenue per
Mcf, and an increase of 1.4 Bcf in volumes transported.
Gross profit increased by 14% to $48.4 million for the three months ended
December 31, 1993, from $42.6 million for the three months ended December 31,
1992. The primary factor contributing to the increased gross profit was the
increased sales volumes. Operating expenses, excluding income taxes,
increased approximately 15% from $29.6 million for the three months ended
December 31, 1992 to $34.1 million for the three months ended December 31,
1993. Factors contributing to the increase were the merger expenses,
increased activity, higher distribution and administrative and general
expenses. Income taxes increased primarily due to higher pre-tax profits.
Operating income increased for the three months ended December 31, 1993 by 6%
to $10.3 million from $9.7 million for the three months ended December 31,
1992. The increase in operating income primarily resulted from increased
gross profit.
17
<PAGE>
Interest charges decreased slightly due to lower interest rates. The weighted
average short-term interest rate declined for the quarter ended December 31,
1993, as compared with the quarter ended December 31, 1992.
Net income increased for the three months ended December 31, 1993 by 5% to
$7.1 million from $6.8 million for the three months ended December 31, 1992.
This increase primarily resulted from the increase in operating income.
TWELVE MONTHS ENDED DECEMBER 31, 1993 COMPARED WITH TWELVE MONTHS ENDED
DECEMBER 31, 1992
Operating revenues increased to $474.4 million for the 12 months ended
December 31, 1993 from $409.0 million for the 12 months ended December 31,
1992. Total sales and transportation volumes increased 15% from approximately
132.7 Bcf for the 12 months ended December 31, 1992 to approximately 152.9 Bcf
for the 12 months ended December 31, 1993. The Company experienced increased
sales volumes and revenues with all customer types in the twelve months ended
December 31, 1993. Also, transportation volumes and revenues increased for
the 12 months ended December 31, 1993, as compared with the 12 months ended
December 31, 1992. Transportation volumes increased from 32.9 Bcf to 41.2
Bcf, resulting in a $3.4 million increase in transportation revenues. The
average sales price per Mcf sold increased $.14 from $3.92 to $4.06. The
average cost of gas per Mcf sold increased $.10 from $2.64 for the 12 months
ended December 31, 1992 to $2.74 for the 12 months ended December 31, 1993.
Changes in cost of gas are reflected in sales prices through purchased gas
adjustment mechanisms. The company-wide weather for 1993 was 12% colder than
in 1992 and 2.9% colder than 30-year normal temperatures.
Gross profit increased by 16% to $168.9 million from $146.0 million for the 12
months ended December 31, 1992. The increase in gross profits for the 12
months ended December 31, 1993 was due to colder weather, increased volumes,
and rate increases. Operating expenses exclusive of income taxes increased
from $116.6 million for the 12 months ended December 31, 1992 to $127.3
million for the 12 months ended December 31, 1993. Factors contributing to
the increase in operating expenses were increased distribution, customer
accounts, wages, employee welfare, and merger costs. Income taxes increased
$5.2 million for the 12 months ended December 31, 1993, compared with the 12
months ended December 31, 1992. The primary reason was higher pre-tax income.
Operating income increased from the 12 months ended December 31, 1992 by 30%
to $30.9 million for the 12 months ended December 31, 1993. The increase in
operating income was due to increased gross profit.
Net income for the 12 months ended December 31, 1993 was $17.9 million
compared with $11.6 million for the 12 months ended December 31, 1992. The
increase in net income resulted primarily from the increase in operating
income.<PAGE>
18
<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS (1)
December 31,
------------------
1993 1992
Meters in Service ------- -------
Residential 558,275 551,706
Commercial 58,971 58,292
Industrial (including agricultural) 19,898 20,244
Public authority and other 4,889 4,669
------- -------
Total 642,033 634,911
Quarter ended 12 Months ended
December 31, December 31,
------------------ -------------------
1993 1992 1993 1992
Sales Volumes -- MMcf (2) -------- -------- -------- --------
Residential 18,345 16,277 53,831 47,675
Commercial 7,384 6,987 22,269 20,727
Industrial (including
agricultural) 4,873 5,748 30,492 28,001
Public authority and other 2,025 1,375 5,053 3,363
-------- -------- -------- --------
Total 32,627 30,387 111,645 99,766
Transportation Volumes --
MMcf (2) 9,963 8,537 41,208 32,888
-------- -------- -------- --------
Total Volumes Handled 42,590 38,924 152,853 132,654
======== ======== ======== ========
Operating Revenues (000's)
Gas Revenues
Residential $ 83,241 $ 73,667 $247,489 $213,597
Commercial 31,231 29,156 93,325 84,302
Industrial (including
agricultural) 16,600 17,857 91,197 79,056
Public authority and other 8,507 5,785 21,037 13,743
-------- -------- -------- --------
Total gas revenues 139,579 126,465 453,048 390,698
Transportation Revenues 4,863 3,207 16,670 13,288
Other Revenues 1,059 1,028 4,725 5,009
-------- -------- -------- --------
Total Operating Revenues $145,501 $130,700 $474,443 $408,995
======== ======== ======== ========
Average Gas Sales Revenues
per Mcf $ 4.28 $ 4.16 $ 4.06 $ 3.92
Average Transportation
Revenue per Mcf $ .49 $ .38 $ .40 $ .40
Cost of Gas per Mcf Sold $ 2.98 $ 2.89 $ 2.74 $ 2.64
See footnotes on page 21. <PAGE>
19
<PAGE>
ATMOS ENERGY CORPORATION
CONSOLIDATED OPERATING STATISTICS (1)
(Continued)
<TABLE>
HEATING DEGREE DAYS (3)
<CAPTION>
Weather Quarter ended December 31, 12 Months ended December 31,
Service Sensitive -------------------------- ----------------------------
Area Customers % 1993 1992 Normal 1993 1992 Normal
- ------- ----------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Texas (Energas) 47% 1,531 1,457 1,382 3,735 3,282 3,528
Kentucky (WKG) 26% 1,644 1,550 1,576 4,230 3,864 4,376
Louisiana (Trans La) 11% 805 674 676 1,943 1,663 1,760
Colorado, Kansas and
Missouri (Greeley) 16% 2,443 2,578 2,339 6,456 5,923 6,234
----
System Average 100% 1,625 1,573 1,507 4,098 3,674 3,984
<FN>
(1) Consolidated operating statistics have been restated to
include Greeley operations for all periods presented.
(2) Volumes are reported as metered in million cubic feet
("MMcf").
(3) A heating degree day is equivalent to each degree that the
average of the high and the low temperatures for a day is
below 65 degrees. The greater the number of heating degree
days, the colder the climate. Heating degree days are used
in the natural gas industry to measure the coldness of
weather experienced and to compare relative temperatures
between one geographic area and another. Normal heating
degree days are derived from a 30-year average of actual
heating degree days complied by the National Weather Ser-
vice.
</TABLE>
<PAGE>
20 <PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note 6 of notes to consolidated financial statements on pages
11 and 12 herein for a description of legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
At the Special Meeting of Shareholders of Atmos Energy Corpora-
tion held on November 23, 1993, the proposal to issue 2,329,330
shares of Atmos common stock to Greeley Gas Acquisition Corpora-
tion in connection with the merger of Greeley Gas Company with
and into Greeley Gas Acquisition Corporation was approved. This
was the only matter voted upon. Votes were cast as follows:
For Against Abstain Broker Non-Vote
- --------- -------- ------- ---------------
5,706,487 83,134 166,198 0
Item 5. Other Information
Jerry D. Knierim, who served as Executive Vice President,
Corporate Services since February 1990, retired effective
December 1, 1993.
Effective January 1, 1994, the following have been named corpo-
rate officers of Atmos.
Glen A. Blanscet, assistant general counsel for Atmos, has been
named to the additional position of corporate secretary.
O. Carl Brown has been named vice president of financial plan-
ning. Mr. Brown previously was director of financial planning
for Atmos.
Wynn D. McGregor has been named vice president of human re-
sources. Mr. McGregor was director of human resources.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
A list of exhibits required by Item 601 of Regulation
S-K and filed as part of this report is set forth in
the Exhibits Index, which immediately precedes such
exhibits.
(b) Reports on Form 8-K
None
<PAGE>
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ATMOS ENERGY CORPORATION
(Registrant)
Date: February 11, 1994 By: /s/ JAMES F. PURSER
------------------------------
James F. Purser
Executive Vice President
and Chief Financial Officer
Date: February 11, 1994 By: /s/ DAVID L. BICKERSTAFF
------------------------------
David L. Bickerstaff
Vice President and Controller
(Principal Accounting Officer)
<PAGE>
22
<PAGE>
EXHIBITS INDEX
Exhibit Page
Number Description Number
------- ----------- -------
10.1 Gas Transportation Agreement between
Texas Gas Transmission Corporation
("Texas Gas") and Western Kentucky
Gas Company, a division of Atmos
Energy Corporation ("Western Ken-
tucky") dated November 1, 1993 (Con-
tract no. T3817, zone 2)
10.2 Gas Transportation Agreement between
Texas Gas and Western Kentucky dated
November 1, 1993 (Contract no. T3770,
zone 2)
10.3 Gas Transportation Agreement between
Texas Gas and Western Kentucky Gas
dated November 1, 1993 (Contract no.
T3355, zone 3)
10.4 Gas Transportation Agreement between
Texas Gas and Western Kentucky Gas
dated November 1, 1993 (Contract no.
T3819, zone 4)
10.5 Gas Transportation Agreement between
Texas Gas and Western Kentucky Gas
dated November 1, 1993 (Contract no.
N0210, zone 2, Contract no. N0340,
zone 3, Contract no. N0435, zone 4)
23
<PAGE>
Exhibit 10.1
GAS TRANSPORTATION AGREEMENT
BETWEEN
TEXAS GAS TRANSMISSION CORPORATION
AND
WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS ENERGY CORPORATION
DATED NOVEMBER 1, 1993
(Contract No. T3817, zone 2)
<PAGE>
<PAGE>
INDEX
PAGE NO.
ARTICLE I Definitions 1
ARTICLE II Transportation Service 1
ARTICLE III Scheduling and Transportation 2
Limitations
ARTICLE IV Points of Receipt, Delivery, 3
and Supply Lateral Allocation
ARTICLE V Term of Agreement 3
ARTICLE VI Point(s) of Measurement 3
ARTICLE VII Facilities 4
ARTICLE VIII Rates and Charges 4
ARTICLE IX Miscellaneous 5
EXHIBIT "A"
FIRM POINT(S) OF RECEIPT
EXHIBIT "A-I"
SECONDARY POINT(S) OF RECEIPT
EXHIBIT "B"
FIRM POINT(S) OF DELIVERY
EXHIBIT "C"
SUPPLY LATERAL CAPACITY
STANDARD FACILITIES KEY
2 <PAGE>
FIRM TRANSPORTATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of
November, 1993, by and between Texas Gas Transmission Corpora-
tion, a Delaware corporation, hereinafter referred to as "Texas
Gas," and Western Kentucky Gas Company, a Division of Atmos
Energy Corporation, a Texas corporation, hereinafter referred to
as "Customer,"
WITNESSETH:
WHEREAS, Customer has natural gas which cannot be moved into
its system through its existing facilities; and
WHEREAS, Texas Gas has the ability in its pipeline system to
move natural gas for the account of Customer; and
WHEREAS, Customer desires that Texas Gas transport such
natural gas for the account of Customer; and
WHEREAS, Customer and Texas Gas are of the opinion that the
transaction referred to above falls within the provisions of
Section 284.223 of Subpart G of Part 284 of the Federal Energy
Regulatory Commission's (Commission) regulations and the blanket
certificate issued to Texas Gas in Docket No. CP88-686-000, and
can be accomplished without the prior approval of the Commission;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto covenant
and agree as follows:
ARTICLE I
Definitions
1.1 Definition of Terms of the General Terms and Conditions of
Texas Gas's FERC Gas Tariff on file with the Commission is hereby
incorporated by reference and made a part of this Agreement.
ARTICLE II
Transportation Service
2.1 Subject to the terms and provisions of this Agreement,
Customer agrees to deliver or cause to be delivered to Texas Gas,
at the Point(s) of Receipt in Exhibit "A" hereunder, Gas for
3
<PAGE>
Transportation, and Texas Gas agrees to receive, transport, and
redeliver, at the Point(s) of Delivery in Exhibit "B" hereunder,
Equivalent Quantities of Gas to Customer or for the account of
Customer, in accordance with Section 3 of Texas Gas's effective
FT Rate Schedule and the terms and conditions contained herein,
up to 2,500 MMBtu per day during the winter season, and up to
2,500 MMBtu per day during the summer season, which shall be
Customer's Firm Transportation Contract Demand, and up to 377,500
MMBtu during the winter season, and up to 535,000 MMBtu during
the summer season, which shall be Customer's Seasonal Quantity
Levels.
2.2 Customer shall reimburse Texas Gas for the Quantity of Gas
required for fuel, company use, and unaccounted for associated
with the transportation service hereunder in accordance with
Section 16 of the General Terms and Conditions of Texas Gas's
FERC Gas Tariff. The applicable fuel retention percentage(s) is
shown on Exhibit "A". Texas Gas may adjust the fuel retention
percentage as operating circumstances warrant; however, such
change shall not be retroactive. Texas Gas agrees to give
Customer thirty (30) days written notice before changing such
percentage.
2.3 Texas Gas, at its sole option, may, if tendered by Customer,
transport daily quantities in excess of the Transportation
Contract Demand.
2.4 In order to protect its system, the delivery of gas to its
customers and/or the safety of its operations, Texas Gas shall
have the right to vent excess natural gas delivered to Texas Gas
by Customer or Customer's supplier(s) in that part of its system
utilized to transport gas received hereunder. Prior to venting
excess gas, Texas Gas will use its best efforts to contact
Customer or Customer's supplier in an attempt to correct such
excess deliveries to Texas Gas. Texas Gas may vent such excess
gas solely within its reasonable judgment and discretion without
liability to Customer, and a pro rata share of any gas so vented
shall be allocated to Customer. Customer's pro rata share shall
be determined by a fraction, the numerator of which shall be the
quantity of gas delivered to Texas Gas at the Point of Receipt by
Customer or Customer's suppliers in excess of Customer's
confirmed nomination and the denominator of which shall be the
total quantity of gas in excess of total confirmed nominations
flowing in that part of the Texas Gas's system utilized to
transport gas, multiplied by the total quantity of gas vented or
lost hereunder.
2.5 Any gas imbalance between receipts and deliveries of gas,
less fuel and PVR adjustments, if applicable, shall be cleared
each month in accordance with Section 17 of the General Terms and
Conditions in Texas Gas's FERC Gas Tariff. Any imbalance
remaining at the termination of this Agreement shall also be
4
<PAGE>
cashed-out as provided herein.
ARTICLE III
Scheduling
3.1 Customer shall be obligated five (5) working days prior to
the end of each month to furnish Texas Gas with a schedule of the
estimated daily quantity(ies) of gas it desires to be received,
transported, and redelivered for the following month. Such
schedules will show the quantity(ies) of gas Texas Gas will
receive from Customer at the Point(s) of Receipt, along with the
identity of the supplier(s) that is delivering or causing to be
delivered to Texas Gas quantities for Customer's account at each
Point of Receipt for which a nomination has been made.
3.2 Customer shall give Texas Gas, after the first of the month,
at least twenty-four (24) hours notice prior to the commencement
of any day in which Customer desires to change the quantity(ies)
of gas it has scheduled to be delivered to Texas Gas at the
Point(s) of Receipt. If Customer's nomination change does not
require Texas Gas to interrupt service to another Customer, Texas
Gas will agree to waive this 24-hour prior notice and implement
nomination changes requested by Customer to commence in such
lesser time frame subject to Texas Gas's being able to confirm
and verify such nomination change at both Receipt and Delivery
Points, and receive PDAs reflecting this nomination change at
both Receipt and Delivery Points. Texas Gas will use its best
efforts to make the nomination change effective at the time
requested by Customer; however, if Texas Gas is unable to do so,
the nomination change will be implemented as soon as confirmation
is received.
ARTICLE IV
Points of Receipt, Delivery, and Supply Lateral Allocation
4.1 Customer shall deliver or cause to be delivered natural gas
to Texas Gas at the Point(s) of Receipt specified in Exhibit "A"
attached hereto and Texas Gas shall redeliver gas to Customer or
for the account of Customer at the Point(s) of Delivery specified
in Exhibit "B" attached hereto in accordance with Sections 7 and
15 of the General Terms and Conditions of Texas Gas's FERC Gas
Tariff.
4.2 Customer's preferential capacity rights on each of Texas
Gas's supply laterals shall be as set forth in Exhibit "C"
attached hereto, in accordance with Section 34 of the General
Terms and Conditions of Texas Gas's FERC Gas Tariff.
5
<PAGE>
ARTICLE V
Term of Agreement
5.1 This Agreement shall become effective November 1, 1993, and
shall remain in full force and effect for a primary term of three
(3) years ending October 31, 1996, and shall continue for year to
year thereafter unless either party terminates this Agreement at
the expiration of the primary term or any anniversary date
thereof by giving the other party at least 365 days advance
written notice.
ARTICLE VI
Point(s) of Measurement
6.1 The gas shall be delivered by Customer to Texas Gas and
redelivered by Texas Gas to Customer at the Point(s) of Receipt
and Delivery hereunder.
6.2 The gas shall be measured or caused to be measured by
Customer and/or Texas Gas at the Point(s) of Measurement which
shall be as specified in Exhibits A, A-I, and B herein. In the
event of a line loss or leak between the Point of Measurement and
the Point of Receipt, the loss shall be determined in accordance
with the methods described contained in Section 3, "Measuring and
Measuring Equipment," contained in the General Terms and
Conditions of First Revised Volume No. 1 of Texas Gas's FERC Gas
Tariff.
ARTICLE VII
Facilities
7.1 Texas Gas and Customer agree that any facilities required at
the Point(s) of Receipt, Point(s) of Delivery, and Point(s) of
Measurement, shall be installed, owned, and operated as specified
in Exhibits A, A-I, and B herein. Customer may be required to
pay or cause Texas Gas to be paid for the installed cost of any
new facilities required as contained in Sections 1.3, 1.4, and
1.5 of Texas Gas's FT Rate Schedule. Customer shall only be
responsible for the installed cost of any new facilities
described in this Section if agreed to in writing between Texas
Gas and Customer.
ARTICLE VIII
Rates and Charges
6
<PAGE>
8.1 Each month, Customer shall pay Texas Gas for the service
hereunder, an amount determined in accordance with Section 5 of
Texas Gas's FT Rate Schedule contained in Texas Gas's FERC Gas
Tariff and as indicated on Exhibit "A" herein, which Rate
Schedule is by reference made a part of this Agreement. The
maximum rates for such service consist of a monthly reservation
charge multiplied by Customer's firm transportation demand as
specified in Section 2.1 herein. The reservation charge shall be
billed as of the effective date of this Agreement. In addition
to the monthly reservation charge, Customer agrees to pay Texas
Gas each month the maximum commodity charge up to Customer's
Transportation Contract Demand. For any quantities delivered by
Texas Gas in excess of Customer's Transportation Contract Demand,
Customer agrees to pay the maximum FT overrun commodity charge.
In addition, Customer
agrees to pay:
(a) Texas Gas's Fuel Retention percentage(s).
(b) The currently effective GRI funding unit, if applica-
ble, the currently effective FERC Annual Charge
Adjustment unit charge (ACA), the currently effective
Take-or-Pay surcharge, or any other then currently
effective surcharges, including but not limited to
Order Transition Costs.
If Texas Gas declares force majeure which renders it unable to
perform service herein, then Customer shall be relieved of its
obligation to pay demand charges for that part of its FT Contract
Demand affected by such force majeure event until the force
majeure event is remedied.
Unless otherwise agreed to in writing by Texas Gas and Customer,
Texas Gas may, from time to time, and at any time selectively
after negotiation, adjust the rate(s) applicable to any individ-
ual Customer; provided, however, that such adjusted rate(s) shall
not exceed the applicable Maximum Rate(s) nor shall they be less
than the Minimum Rate(s) set forth in the currently effective
Sheet No. 10 of this Tariff. If Texas Gas so adjusts any rates
to any Customer, Texas Gas shall file with the Commission any and
all required reports respecting such adjusted rate.
8.2 In the event Customer utilizes a Secondary Point(s) of
Receipt or Delivery for transportation service herein, Customer
will continue to pay the monthly reservation charges as described
in Section 8.1 above. In addition, Customer will pay the maximum
commodity charge applicable to the zone in which gas is received
and redelivered up to Customer's Transportation Contract Demand
and the maximum overrun commodity charge for any quantities
delivered by Texas Gas in excess of Customer's winter season or
summer season Transportation Contract Demand. Customer also
agrees to pay the ACA, Take-or-Pay Surcharge, GRI charges, fuel
7
<PAGE>
retention charge, and any other effective surcharges, if
applicable, as described in Section 8.1 above.
8.3 It is further agreed that Texas Gas may seek authorization
from the Commission and/or other appropriate body for such
changes to any rate(s) and terms set forth herein or in Rate
Schedule FT, as may be found necessary to assure Texas Gas just
and reasonable rates. Nothing herein contained shall be
construed to deny Customer any rights it may have under the
Natural Gas Act, as amended, including the right to participate
fully in rate proceedings by intervention or otherwise to contest
increased rates in whole or in part.
8.4 Customer agrees to fully reimburse Texas Gas for all filing
fees, if any, associated with the service contemplated herein
which Texas Gas is required to pay to the Commission or any
agency having or assuming jurisdiction of the transactions
contemplated herein.
8.5 If applicable, Customer agrees to cooperate in executing or
requesting its supplier or processor execute a separate agreement
with Texas Gas providing for the transportation of any liquids
and/or liquefiables, and agrees to cooperate with Texas Gas in
Texas Gas's efforts to be paid or reimbursed, for any applicable
rates or charges associated with the transportation of such
liquids and/or liquefiables, as specified in Section 24 of the
General Terms and Conditions of Texas Gas's FERC Gas Tariff.
ARTICLE IX
Miscellaneous
9.1 Texas Gas's Transportation Service hereunder shall be subject
to receipt of all requisite regulatory authorizations from the
Commission, or any successor regulatory authority, and any other
necessary governmental authorizations, in a manner and form
acceptable to Texas Gas. The parties agree to furnish each other
with any and all information necessary to comply with any laws,
orders, rules, or regulations.
9.2 Except as may be otherwise provided, any notice, request,
demand, statement, or bill provided for in this Agreement or any
notice which a party may desire to give the other shall be in
writing and mailed by regular mail, or by postpaid registered
mail, effective as of the postmark date, to the post office
address of the party intended to receive the same, as the case
may be, or by facsimile transmission, as follows:
8
<PAGE>
Texas Gas
Texas Gas Transmission Corporation
3800 Frederica Street
Post Office Box 1160
Owensboro, Kentucky 42302
Attention: Gas Revenue Accounting
(Billings and Statements)
Transportation & Exchange (Other Matters)
Nomination & Allocation (Nominations)
Fax (502) 926-8686
Customer
Western Kentucky Gas Company,
a Division of Atmos Energy Corporation
Post Office Box 650205
5430 LBJ Freeway
1800-3 Lincoln Centre
Dallas, Texas 75265-0205
Attention: Mr. John Hack
The address of either party may, from time to time, be changed by
a party mailing, by certified or registered mail, appropriate
notice thereof to the other party. Furthermore, if applicable,
certain notices shall be considered duly delivered when posted to
Texas Gas's Electronic Bulletin Board, as specified in Texas
Gas's tariff.
9.3 This Agreement shall be governed by the laws of the State of
Kentucky.
9.4 Each party agrees to file timely all statements, notices, and
petitions required under the Commission's Regulations or any
other applicable rules or regulations of any governmental
authority having jurisdiction hereunder and to exercise due
diligence to obtain all necessary governmental approvals required
for the implementation of this Transportation Agreement.
9.5 All terms and conditions of Rate Schedule FT and the attached
Exhibits A, A-I, B, and C are hereby incorporated to and made a
part of this Agreement.
9.6 This contract shall be binding upon and inure to the benefit
of the successors, assigns, and legal representatives of the
parties hereto.
9.7 Neither party hereto shall assign this Agreement or any of
its rights or obligations hereunder without the consent in
writing of the other party.
9
<PAGE>
Notwithstanding the foregoing, either party may assign its right,
title and interest in, to and by virtue of this Agreement
including any and all extensions, renewals, amendments, and
supplements thereto, to a trustee or trustees, individual or
corporate, as security for bonds or other obligations or
securities, without such trustee or trustees assuming or becoming
in any respect obligated to perform any of the obligations of the
assignor and, if any such trustee be a corporation, without its
being required by the parties hereto to qualify to do business in
the state in which the performance of this Agreement may occur,
nothing contained herein shall require consent to transfer this
Agreement by virtue of merger or consolidation of a party hereto
or a sale of all or substantially all of the assets of a party
hereto, or any other corporate reorganization of a party hereto.
9.8 This Agreement insofar as it is affected thereby, is subject
to all valid rules, regulations, and orders of all governmental
authorities having jurisdiction.
9.9 No waiver by either party of any one or more defaults by the
other in the performance of any provisions hereunder shall
operate or be construed as a waiver of any future default or
defaults whether of a like or a different character.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective representatives
thereunto duly authorized, on the day and year first above
written.
ATTEST: TEXAS GAS TRANSMISSION CORPORATION
/s/ Beverly H. Griffith By /s/ Kathy Kirk
- ---------------------------- --------------------------------
Asst. Secretary Vice President
WITNESSES: WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS CORPORATION
/s/ Marie Waltz By /s/ Toby A. Priolo
- ---------------------------- -------------------------------
Vice President
/s/ Vicki Krambeck Attest: /s/ Jeanette Jarman
- ---------------------------- ---------------------------
Asst. Secretary
Date of Execution by Customer:
11/1/93
- ----------------------------
10
<PAGE>
Exhibit 10.2
GAS TRANSPORTATION AGREEMENT
BETWEEN
TEXAS GAS TRANSMISSION CORPORATION
AND
WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS ENERGY CORPORATION
DATED NOVEMBER 1, 1993
(Contract No. 3770, zone 2)
<PAGE>
<PAGE>
INDEX
PAGE NO.
ARTICLE I Definitions 1
ARTICLE II Transportation Service 1
ARTICLE III Scheduling and Transportation 2
Limitations
ARTICLE IV Points of Receipt, Delivery, 3
and Supply Lateral Allocation
ARTICLE V Term of Agreement 3
ARTICLE VI Point(s) of Measurement 3
ARTICLE VII Facilities 4
ARTICLE VIII Rates and Charges 4
ARTICLE IX Miscellaneous 5
EXHIBIT "A"
FIRM POINT(S) OF RECEIPT
EXHIBIT "A-I"
SECONDARY POINT(S) OF RECEIPT
EXHIBIT "B"
FIRM POINT(S) OF DELIVERY
EXHIBIT "C"
SUPPLY LATERAL CAPACITY
STANDARD FACILITIES KEY
2
<PAGE>
FIRM TRANSPORTATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of
November, 1993, by and between Texas Gas Transmission Corpora-
tion, a Delaware corporation, hereinafter referred to as "Texas
Gas," and Western Kentucky Gas Company, a Division of Atmos
Energy Corporation, a Texas corporation, hereinafter referred to
as "Customer,"
WITNESSETH:
WHEREAS, Customer has natural gas which cannot be moved into
its system through its existing facilities; and
WHEREAS, Texas Gas has the ability in its pipeline system to
move natural gas for the account of Customer; and
WHEREAS, Customer desires that Texas Gas transport such
natural gas for the account of Customer; and
WHEREAS, Customer and Texas Gas are of the opinion that the
transaction referred to above falls within the provisions of
Section 284.223 of Subpart G of Part 284 of the Federal Energy
Regulatory Commission's (Commission) regulations and the blanket
certificate issued to Texas Gas in Docket No. CP88-686-000, and
can be accomplished without the prior approval of the Commission;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto covenant
and agree as follows:
ARTICLE I
Definitions
1.1 Definition of Terms of the General Terms and Conditions of
Texas Gas's FERC Gas Tariff on file with the Commission is hereby
incorporated by reference and made a part of this Agreement.
ARTICLE II
Transportation Service
2.1 Subject to the terms and provisions of this Agreement,
Customer agrees to deliver or cause to be delivered to Texas Gas,
at the Point(s) of Receipt in Exhibit "A" hereunder, Gas for
Transportation, and Texas Gas agrees to receive, transport, and
redeliver, at the Point(s) of Delivery in Exhibit "B" hereunder,
3
<PAGE>
Equivalent Quantities of Gas to Customer or for the account of
Customer, in accordance with Section 3 of Texas Gas's effective
FT Rate Schedule and the terms and conditions contained herein,
up to 3,000 MMBtu per day during the winter season, and up to
3,000 MMBtu per day during the summer season, which shall be
Customer's Firm Transportation Contract Demand, and up to 453,000
MMBtu during the winter season, and up to 642,000 MMBtu during
the summer season, which shall be Customer's Seasonal Quantity
Levels.
2.2 Customer shall reimburse Texas Gas for the Quantity of Gas
required for fuel, company use, and unaccounted for associated
with the transportation service hereunder in accordance with
Section 16 of the General Terms and Conditions of Texas Gas's
FERC Gas Tariff. The applicable fuel retention percentage(s) is
shown on Exhibit "A". Texas Gas may adjust the fuel retention
percentage as operating circumstances warrant; however, such
change shall not be retroactive. Texas Gas agrees to give
Customer thirty (30) days written notice before changing such
percentage.
2.3 Texas Gas, at its sole option, may, if tendered by Customer,
transport daily quantities in excess of the Transportation
Contract Demand.
2.4 In order to protect its system, the delivery of gas to its
customers and/or the safety of its operations, Texas Gas shall
have the right to vent excess natural gas delivered to Texas Gas
by Customer or Customer's supplier(s) in that part of its system
utilized to transport gas received hereunder. Prior to venting
excess gas, Texas Gas will use its best efforts to contact
Customer or Customer's supplier in an attempt to correct such
excess deliveries to Texas Gas. Texas Gas may vent such excess
gas solely within its reasonable judgment and discretion without
liability to Customer, and a pro rata share of any gas so vented
shall be allocated to Customer. Customer's pro rata share shall
be determined by a fraction, the numerator of which shall be the
quantity of gas delivered to Texas Gas at the Point of Receipt by
Customer or Customer's suppliers in excess of Customer's
confirmed nomination and the denominator of which shall be the
total quantity of gas in excess of total confirmed nominations
flowing in that part of the Texas Gas's system utilized to
transport gas, multiplied by the total quantity of gas vented or
lost hereunder.
2.5 Any gas imbalance between receipts and deliveries of gas,
less fuel and PVR adjustments, if applicable, shall be cleared
each month in accordance with Section 17 of the General Terms and
Conditions in Texas Gas's FERC Gas Tariff. Any imbalance
remaining at the termination of this Agreement shall also be
cashed-out as provided herein.
4
<PAGE>
ARTICLE III
Scheduling
3.1 Customer shall be obligated five (5) working days prior to
the end of each month to furnish Texas Gas with a schedule of the
estimated daily quantity(ies) of gas it desires to be received,
transported, and redelivered for the following month. Such
schedules will show the quantity(ies) of gas Texas Gas will
receive from Customer at the Point(s) of Receipt, along with the
identity of the supplier(s) that is delivering or causing to be
delivered to Texas Gas quantities for Customer's account at each
Point of Receipt for which a nomination has been made.
3.2 Customer shall give Texas Gas, after the first of the
month, at least twenty-four (24) hours notice prior to the
commencement of any day in which Customer desires to change the
quantity(ies) of gas it has scheduled to be delivered to Texas
Gas at the Point(s) of Receipt. If Customer's nomination change
does not require Texas Gas to interrupt service to another
Customer, Texas Gas will agree to waive this 24-hour prior notice
and implement nomination changes requested by Customer to
commence in such lesser time frame subject to Texas Gas's being
able to confirm and verify such nomination change at both Receipt
and Delivery Points, and receive PDAs reflecting this nomination
change at both Receipt and Delivery Points. Texas Gas will use
its best efforts to make the nomination change effective at the
time requested by Customer; however, if Texas Gas is unable to do
so, the nomination change will be implemented as soon as
confirmation is received.
ARTICLE IV
Points of Receipt, Delivery, and Supply Lateral Allocation
4.1 Customer shall deliver or cause to be delivered natural gas
to Texas Gas at the Point(s) of Receipt specified in Exhibit "A"
attached hereto and Texas Gas shall redeliver gas to Customer or
for the account of Customer at the Point(s) of Delivery specified
in Exhibit "B" attached hereto in accordance with Sections 7 and
15 of the General Terms and Conditions of Texas Gas's FERC Gas
Tariff.
4.2 Customer's preferential capacity rights on each of Texas
Gas's supply laterals shall be as set forth in Exhibit "C"
attached hereto, in accordance with Section 34 of the General
Terms and Conditions of Texas Gas's FERC Gas Tariff.
5 <PAGE>
ARTICLE V
Term of Agreement
5.1 This Agreement shall become effective November 1, 1993, and
shall remain in full force and effect for a primary term of three
(3) years ending October 31, 1996, and shall continue year to
year thereafter unless terminated by either party upon 365 days
prior written notice to the other party.
ARTICLE VI
Point(s) of Measurement
6.1 The gas shall be delivered by Customer to Texas Gas and
redelivered by Texas Gas to Customer at the Point(s) of Receipt
and Delivery hereunder.
6.2 The gas shall be measured or caused to be measured by
Customer and/or Texas Gas at the Point(s) of Measurement which
shall be as specified in Exhibits A, A-I, and B herein. In the
event of a line loss or leak between the Point of Measurement and
the Point of Receipt, the loss shall be determined in accordance
with the methods described contained in Section 3, "Measuring and
Measuring Equipment," contained in the General Terms and
Conditions of First Revised Volume No. 1 of Texas Gas's FERC Gas
Tariff.
ARTICLE VII
Facilities
7.1 Texas Gas and Customer agree that any facilities required at
the Point(s) of Receipt, Point(s) of Delivery, and Point(s) of
Measurement, shall be installed, owned, and operated as specified
in Exhibits A, A-I, and B herein. Customer may be required to
pay or cause Texas Gas to be paid for the installed cost of any
new facilities required as contained in Sections 1.3, 1.4, and
1.5 of Texas Gas's FT Rate Schedule. Customer shall only be
responsible for the installed cost of any new facilities
described in this Section if agreed to in writing between Texas
Gas and Customer.
ARTICLE VIII
Rates and Charges
8.1 Each month, Customer shall pay Texas Gas for the service
hereunder, an amount determined in accordance with Section 5 of
Texas Gas's FT Rate Schedule contained in Texas Gas's FERC Gas
6
<PAGE>
Tariff and as indicated on Exhibit "A" herein, which Rate
Schedule is by reference made a part of this Agreement. The
maximum rates for such service consist of a monthly reservation
charge multiplied by Customer's firm transportation demand as
specified in Section 2.1 herein. The reservation charge shall be
billed as of the effective date of this Agreement. In addition
to the monthly reservation charge, Customer agrees to pay Texas
Gas each month the maximum commodity charge up to Customer's
Transportation Contract Demand. For any quantities delivered by
Texas Gas in excess of Customer's Transportation Contract Demand,
Customer agrees to pay the maximum FT overrun commodity charge.
In addition, Customer agrees to pay:
(a) Texas Gas's Fuel Retention percentage(s).
(b) The currently effective GRI funding unit, if applica-
ble, the currently effective FERC Annual Charge
Adjustment unit charge (ACA), the currently effective
Take-or-Pay surcharge, or any other then currently
effective surcharges, including but not limited to
Order 636 Transition Costs.
If Texas Gas declares force majeure which renders it unable to
perform service herein, then Customer shall be relieved of its
obligation to pay demand charges for that part of its FT Contract
Demand affected by such force majeure event until the force
majeure event is remedied.
Unless otherwise agreed to in writing by Texas Gas and Customer,
Texas Gas may, from time to time, and at any time selectively
after negotiation, adjust the rate(s) applicable to any individ-
ual Customer; provided, however, that such adjusted rate(s) shall
not exceed the applicable Maximum Rate(s) nor shall they be less
than the Minimum Rate(s) set forth in the currently effective
Sheet No. 10 of this Tariff. If Texas Gas so adjusts any rates
to any Customer, Texas Gas shall file with the Commission any and
all required reports respecting such adjusted rate.
8.2 In the event Customer utilizes a Secondary Point(s) of
Receipt or Delivery for transportation service herein, Customer
will continue to pay the monthly reservation charges as described
in Section 8.1 above. In addition, Customer will pay the maximum
commodity charge applicable to the zone in which gas is received
and redelivered up to Customer's Transportation Contract Demand
and the maximum overrun commodity charge for any quantities
delivered by Texas Gas in excess of Customer's winter season or
summer season Transportation Contract Demand. Customer also
agrees to pay the ACA, Take-or-Pay Surcharge, GRI charges, fuel
retention charge, and any other effective surcharges, if
applicable, as described in Section 8.1 above.
7
<PAGE>
8.3 It is further agreed that Texas Gas may seek authorization
from the Commission and/or other appropriate body for such
changes to any rate(s) and terms set forth herein or in Rate
Schedule FT, as may be found necessary to assure Texas Gas just
and reasonable rates. Nothing herein contained shall be
construed to deny Customer any rights it may have under the
Natural Gas Act, as amended, including the right to participate
fully in rate proceedings by intervention or otherwise to contest
increased rates in whole or in part.
8.4 Customer agrees to fully reimburse Texas Gas for all filing
fees, if any, associated with the service contemplated herein
which Texas Gas is required to pay to the Commission or any
agency having or assuming jurisdiction of the transactions
contemplated herein.
8.5 If applicable, Customer agrees to cooperate in executing or
requesting its supplier or processor execute a separate agreement
with Texas Gas providing for the transportation of any liquids
and/or liquefiables, and agrees to cooperate with Texas Gas in
Texas Gas's efforts to be paid or reimbursed, for any applicable
rates or charges associated with the transportation of such
liquids and/or liquefiables, as specified in Section 24 of the
General Terms and Conditions of Texas Gas's FERC Gas Tariff.
ARTICLE IX
Miscellaneous
9.1 Texas Gas's Transportation Service hereunder shall be
subject to receipt of all requisite regulatory authorizations
from the Commission, or any successor regulatory authority, and
any other necessary governmental authorizations, in a manner and
form acceptable to Texas Gas. The parties agree to furnish each
other with any and all information necessary to comply with any
laws, orders, rules, or regulations.
9.2 Except as may be otherwise provided, any notice, request,
demand, statement, or bill provided for in this Agreement or any
notice which a party may desire to give the other shall be in
writing and mailed by regular mail, or by postpaid registered
mail, effective as of the postmark date, to the post office
address of the party intended to receive the same, as the case
may be, or by facsimile transmission, as follows:
8 <PAGE>
Texas Gas
Texas Gas Transmission Corporation
3800 Frederica Street
Post Office Box 1160
Owensboro, Kentucky 42302
Attention: Gas Revenue Accounting (Billings and Statements)
Transportation & Exchange (Other Matters)
Nomination & Allocation (Nominations)
Fax (502) 926-8686
Customer
Western Kentucky Gas Company,
a Division of Atmos Energy Corporation
Post Office Box 650205
5430 LBJ Freeway
1800-3 Lincoln Centre
Dallas, Texas 75265-0205
Attention: Mr. John Hack
The address of either party may, from time to time, be changed by
a party mailing, by certified or registered mail, appropriate
notice thereof to the other party. Furthermore, if applicable,
certain notices shall be considered duly delivered when posted to
Texas Gas's Electronic Bulletin Board, as specified in Texas
Gas's tariff.
9.3 This Agreement shall be governed by the laws of the State of
Kentucky.
9.4 Each party agrees to file timely all statements, notices,
and petitions required under the Commission's Regulations or any
other applicable rules or regulations of any governmental
authority having jurisdiction hereunder and to exercise due
diligence to obtain all necessary governmental approvals required
for the implementation of this Transportation Agreement.
9.5 All terms and conditions of Rate Schedule FT and the
attached Exhibits A, A-I, B, and C are hereby incorporated to and
made a part of this Agreement.
9.6 This contract shall be binding upon and inure to the benefit
of the successors, assigns, and legal representatives of the
parties hereto.
9.7 Neither party hereto shall assign this Agreement or any of
its rights or obligations hereunder without the consent in
writing of the other party. Notwithstanding the foregoing,
either party may assign its right, title and interest in, to and
9
<PAGE>
by virtue of this Agreement including any and all extensions,
renewals, amendments, and supplements thereto, to a trustee or
trustees, individual or corporate, as security for bonds or other
obligations or securities, without such trustee or trustees
assuming or becoming in any respect obligated to perform any of
the obligations of the assignor and, if any such trustee be a
corporation, without its being required by the parties hereto to
qualify to do business in the state in which the performance of
this Agreement may occur, nothing contained herein shall require
consent to transfer this Agreement by virtue of merger or
consolidation of a party hereto or a sale of all or substantially
all of the assets of a party hereto, or any other corporate
reorganization of a party hereto.
9.8 This Agreement insofar as it is affected thereby, is subject
to all valid rules, regulations, and orders of all governmental
authorities having jurisdiction.
9.9 No waiver by either party of any one or more defaults by the
other in the performance of any provisions hereunder shall
operate or be construed as a waiver of any future default or
defaults whether of a like or a different character.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective representatives
thereunto duly authorized, on the day and year first above
written.
ATTEST: TEXAS GAS TRANSMISSION CORPORATION
/s/ Beverly H. Griffith By /s/ Kathy Kirk
- ---------------------------- --------------------------------
Asst. Secretary Vice President
WITNESSES: WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS CORPORATION
/s/ Marie Waltz By /s/ Toby A. Priolo
- ---------------------------- -------------------------------
Vice President
/s/ Vicki Krambeck Attest: /s/ Jeanette Jarman
- ---------------------------- ---------------------------
Asst. Secretary
Date of Execution by Customer:
11/1/93
- ----------------------------
10
<PAGE>
Exhibit 10.3
GAS TRANSPORTATION AGREEMENT
BETWEEN
TEXAS GAS TRANSMISSION CORPORATION
AND
WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS ENERGY CORPORATION
DATED NOVEMBER 1, 1993
(Contract No. T-3355, zone 3)
<PAGE>
<PAGE>
INDEX
PAGE NO.
ARTICLE I Definitions 1
ARTICLE II Transportation Service 1
ARTICLE III Scheduling and Transportation 2
Limitations
ARTICLE IV Points of Receipt, Delivery, 3
and Supply Lateral Allocation
ARTICLE V Term of Agreement 3
ARTICLE VI Point(s) of Measurement 3
ARTICLE VII Facilities 4
ARTICLE VIII Rates and Charges 4
ARTICLE IX Miscellaneous 5
EXHIBIT "A"
FIRM POINT(S) OF RECEIPT
EXHIBIT "A-I"
SECONDARY POINT(S) OF RECEIPT
EXHIBIT "B"
FIRM POINT(S) OF DELIVERY
EXHIBIT "C"
SUPPLY LATERAL CAPACITY
STANDARD FACILITIES KEY
2 <PAGE>
FIRM TRANSPORTATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of
November, 1993, by and between Texas Gas Transmission
Corporation, a Delaware corporation, hereinafter referred to as
"Texas Gas," and Western Kentucky GasCompany, a Division of Atmos
Energy Corporation, a Texas corporation, hereinafter referred to
as "Customer,"
WITNESSETH:
WHEREAS, Customer has natural gas which cannot be moved
into its system through its existing facilities; and
WHEREAS, Texas Gas has the ability in its pipeline system
to move natural gas for the account of Customer; and
WHEREAS, Customer desires that Texas Gas transport such
natural gas for the account of Customer; and
WHEREAS, Customer and Texas Gas are of the opinion that the
transaction referred to above falls within the provisions of
Section 284.223 of Subpart G of Part 284 of the Federal Energy
Regulatory Commission's (Commission) regulations and the blanket
certificate issued to Texas Gas in Docket No. CP88-686-000, and
can be accomplished without the prior approval of the Commission;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto covenant
and agree as follows:
ARTICLE I
Definitions
1.1 Definition of Terms of the General Terms and Conditions of
Texas Gas's FERC Gas Tariff on file with the Commission is hereby
incorporated by reference and made a part of this Agreement.
ARTICLE II
Transportation Service
2.1 Subject to the terms and provisions of this Agreement,
Customer agrees to deliver or cause to be delivered to Texas Gas,
at the Point(s) of Receipt in Exhibit "A" hereunder, Gas for
3 <PAGE>
Transportation, and Texas Gas agrees to receive, transport, and
redeliver, at the Point(s) of Delivery in Exhibit "B" hereunder,
Equivalent Quantities of Gas to Customer or for the account of
Customer, in accordance with Section 3 of Texas Gas's effective
FT Rate Schedule and the terms and conditions contained herein,
up to 15,000 MMBtu per day during the winter season, and up to
15,000 MMBtu per day during the summer season, which shall be
Customer's Firm Transportation Contract Demand, and up to
2,265,000 MMBtu during the winter season, and up to 3,210,000
MMBtu during the summer season, which shall be Customer's
Seasonal Quantity Levels.
2.2 Customer shall reimburse Texas Gas for the Quantity of Gas
required for fuel, company use, and unaccounted for associated
with the transportation service hereunder in accordance with
Section 16 of the General Terms and Conditions of Texas Gas's
FERC Gas Tariff. The applicable fuel retention percentage(s) is
shown on Exhibit "A". Texas Gas may adjust the fuel retention
percentage as operating circumstances warrant; however, such
change shall not be retroactive. Texas Gas agrees to give
Customer thirty (30) days written notice before changing such
percentage.
2.3 Texas Gas, at its sole option, may, if tendered by
Customer, transport daily quantities in excess of the
Transportation Contract Demand.
2.4 In order to protect its system, the delivery of gas to its
customers and/or the safety of its operations, Texas Gas shall
have the right to vent excess natural gas delivered to Texas Gas
by Customer or Customer's supplier(s) in that part of its system
utilized to transport gas received hereunder. Prior to venting
excess gas, Texas Gas will use its best efforts to contact
Customer or Customer's supplier in an attempt to correct such
excess deliveries to Texas Gas. Texas Gas may vent such excess
gas solely within its reasonable judgment and discretion without
liability to Customer, and a pro rata share of any gas so vented
shall be allocated to Customer. Customer's pro rata share shall
be determined by a fraction, the numerator of which shall be the
quantity of gas delivered to Texas Gas at the Point of Receipt by
Customer or Customer's suppliers in excess of Customer's
confirmed nomination and the denominator of which shall be the
total quantity of gas in excess of total confirmed nominations
flowing in that part of the Texas Gas's system utilized to
transport gas, multiplied by the total quantity of gas vented or
lost hereunder.
2.5 Any gas imbalance between receipts and deliveries of gas,
less fuel and PVR adjustments, if applicable, shall be cleared
each month in accordance with Section 17 of the General Terms and
Conditions in Texas Gas's FERC Gas Tariff. Any imbalance
remaining at the termination of this Agreement shall also be
4 <PAGE>
cashed-out as provided herein.
ARTICLE III
Scheduling
3.1 Customer shall be obligated five (5) working days prior to
the end of each month to furnish Texas Gas with a schedule of the
estimated daily quantity(ies) of gas it desires to be received,
transported, and redelivered for the following month. Such
schedules will show the quantity(ies) of gas Texas Gas will
receive from Customer at the Point(s) of Receipt, along with the
identity of the supplier(s) that is delivering or causing to be
delivered to Texas Gas quantities for Customer's account at each
Point of Receipt for which a nomination has been made.
3.2 Customer shall give Texas Gas, after the first of the
month, at least twenty-four (24) hours notice prior to the
commencement of any day in which Customer desires to change the
quantity(ies) of gas it has scheduled to be delivered to Texas
Gas at the Point(s) of Receipt. If Customer's nomination change
does not require Texas Gas to interrupt service to another
Customer, Texas Gas will agree to waive this 24-hour prior notice
and implement nomination changes requested by Customer to
commence in such lesser time frame subject to Texas Gas's being
able to confirm and verify such nomination change at both Receipt
and Delivery Points, and receive PDAs reflecting this nomination
change at both Receipt and Delivery Points. Texas Gas will use
its best efforts to make the nomination change effective at the
time requested by Customer; however, if Texas Gas is unable to do
so, the nomination change will be implemented as soon as
confirmation is received.
ARTICLE IV
Points of Receipt, Delivery, and Supply Lateral Allocation
4.1 Customer shall deliver or cause to be delivered natural gas
to Texas Gas at the Point(s) of Receipt specified in Exhibit "A"
attached hereto and Texas Gas shall redeliver gas to Customer or
for the account of Customer at the Point(s) of Delivery specified
in Exhibit "B" attached hereto in accordance with Sections 7 and
15 of the General Terms and Conditions of Texas Gas's FERC Gas
Tariff.
4.2 Customer's preferential capacity rights on each of Texas
Gas's supply laterals shall be as set forth in Exhibit "C"
attached hereto, in accordance with Section 34 of the General
Terms and Conditions of Texas Gas's FERC Gas Tariff.
5 <PAGE>
ARTICLE V
Term of Agreement
5.1 This Agreement shall become effective November 1, 1993, and
shall remain in full force and effect for a primary term of three
(3) years ending October 31, 1996, and shall continue for year to
year thereafter unless either party terminates this Agreement at
the expiration of the primary term or any anniversary date
thereof by giving the other party at least 365 days advance
written notice.
ARTICLE VI
Point(s) of Measurement
6.1 The gas shall be delivered by Customer to Texas Gas and
redelivered by Texas Gas to Customer at the Point(s) of Receipt
and Delivery hereunder.
6.2 The gas shall be measured or caused to be measured by
Customer and/or Texas Gas at the Point(s) of Measurement which
shall be as specified in Exhibits A, A-I, and B herein. In the
event of a line loss or leak between the Point of Measurement and
the Point of Receipt, the loss shall be determined in accordance
with the methods described contained in Section 3, "Measuring and
Measuring Equipment," contained in the General Terms and
Conditions of Original Volume No. 50 of Texas Gas's FERC Gas
Tariff.
ARTICLE VII
Facilities
7.1 Texas Gas and Customer agree that any facilities required
at the Point(s) of Receipt, Point(s) of Delivery, and Point(s) of
Measurement, shall be installed, owned, and operated as specified
in Exhibits A, A-I, and B herein. Customer may be required to
pay or cause Texas Gas to be paid for the installed cost of any
new facilities required as contained in Sections 1.3, 1.4, and
1.5 of Texas Gas's FT Rate Schedule. Customer shall only be
responsible for the installed cost of any new facilities
described in this Section if agreed to in writing between Texas
Gas and Customer.
6
<PAGE>
ARTICLE VIII
Rates and Charges
8.1 Each month, Customer shall pay Texas Gas for the service
hereunder, an amount determined in accordance with Section 5 of
Texas Gas's FT Rate Schedule contained in Texas Gas's FERC Gas
Tariff and as indicated on Exhibit "A" herein, which Rate
Schedule is by reference made a part of this Agreement. The
maximum rates for such service consist of a monthly reservation
charge multiplied by Customer's firm transportation demand as
specified in Section 2.1 herein. The reservation charge shall be
billed as of the effective date of this Agreement. In addition
to the monthly reservation charge, Customer agrees to pay Texas
Gas each month the maximum commodity charge up to Customer's
Transportation Contract Demand. For any quantities delivered by
Texas Gas in excess of Customer's Transportation Contract Demand,
Customer agrees to pay the maximum FT overrun commodity charge.
In addition, Customer agrees to pay:
(a) Texas Gas's Fuel Retention percentage(s).
(b) The currently effective GRI funding unit, if
applicable, the currently effective FERC Annual Charge
Adjustment unit charge (ACA), the currently effective
Take-or-Pay surcharge, or any other then currently
effective surcharges, including but not limited to
Order 636 Transition Costs.
If Texas Gas declares force majeure which renders it unable to
perform service herein, then Customer shall be relieved of its
obligation to pay demand charges for that part of its FT Contract
Demand affected by such force majeure event until the force
majeure event is remedied.
Unless otherwise agreed to in writing by Texas Gas and Customer,
Texas Gas may, from time to time, and at any time selectively
after negotiation, adjust the rate(s) applicable to any
individual Customer; provided, however, that such adjusted
rate(s) shall not exceed the applicable Maximum Rate(s) nor shall
they be less than the Minimum Rate(s) set forth in the currently
effective Sheet No. 10 of this Tariff. If Texas Gas so adjusts
any rates to any Customer, Texas Gas shall file with the
Commission any and all required reports respecting such adjusted
rate.
8.2 In the event Customer utilizes a Secondary Point(s) of
Receipt or Delivery for transportation service herein, Customer
will continue to pay the monthly reservation charges as described
in Section 8.1 above. In addition, Customer will pay the maximum
commodity charge applicable to the zone in which gas is received
7 <PAGE>
and redelivered up to Customer's Transportation Contract Demand
and the maximum overrun commodity charge for any quantities
delivered by Texas Gas in excess of Customer's winter season or
summer season Transportation Contract Demand. Customer also
agrees to pay the ACA, Take-or-Pay Surcharge, GRI charges, fuel
retention charge, and any other effective surcharges, if
applicable, as described in Section 8.1 above.
8.3 It is further agreed that Texas Gas may seek authorization
from the Commission and/or other appropriate body for such
changes to any rate(s) and terms set forth herein or in Rate
Schedule FT, as may be found necessary to assure Texas Gas just
and reasonable rates. Nothing herein contained shall be
construed to deny Customer any rights it may have under the
Natural Gas Act, as amended, including the right to participate
fully in rate proceedings by intervention or otherwise to contest
increased rates in whole or in part.
8.4 Customer agrees to fully reimburse Texas Gas for all filing
fees, if any, associated with the service contemplated herein
which Texas Gas is required to pay to the Commission or any
agency having or assuming jurisdiction of the transactions
contemplated herein.
8.5 Customer agrees to execute or cause its supplier or
processor to execute a separate agreement with Texas Gas
providing for the transportation of any liquids and/or
liquefiables, and agrees to pay or reimburse Texas Gas, or cause
Texas Gas to be paid or reimbursed, for any applicable rates or
charges associated with the transportation of such liquids and/or
liquefiables, as specified in Section 24 of the General Terms
andConditions of Texas Gas' FERC Gas Tariff.
ARTICLE IX
Miscellaneous
9.1 Texas Gas's Transportation Service hereunder shall be
subject to receipt of all requisite regulatory authorizations
from the Commission, or any successor regulatory authority, and
any other necessary governmental authorizations, in a manner and
form acceptable to Texas Gas. The parties agree to furnish each
other with any and all information necessary to comply with any
laws, orders, rules, or regulations.
9.2 Except as may be otherwise provided, any notice, request,
demand, statement, or bill provided for in this Agreement or any
notice which a party may desire to give the other shall be in
writing and mailed by regular mail, or by postpaid registered
mail, effective as of the postmark date, to the post office
8 <PAGE>
address of the party intended to receive the same, as the case
may be, or by facsimile transmission, as follows:
Texas Gas
Texas Gas Transmission Corporation
3800 Frederica Street
Post Office Box 1160
Owensboro, Kentucky 42302
Attention: Gas Revenue Accounting (Billings and Statements)
Transportation & Exchange (Other Matters)
Nomination & Allocation (Nominations)
Fax (502) 926-8686
Customer
Western Kentucky Gas Company,
a Division of Atmos Energy Corporation
Post Office Box 650205
5430 LBJ Freeway
1800-3 Lincoln Centre
Dallas, Texas 75265-0205
Attention: Mr. John Hack
The address of either party may, from time to time, be changed by
a party mailing, by certified or registered mail, appropriate
notice thereof to the other party. Furthermore, if applicable,
certain notices shall be considered duly delivered when posted to
Texas Gas's Electronic Bulletin Board, as specified in Texas
Gas's tariff.
9.3 This Agreement shall be governed by the laws of the State
of Kentucky.
9.4 Each party agrees to file timely all statements, notices,
and petitions required under the Commission's Regulations or any
other applicable rules or regulations of any governmental
authority having jurisdiction hereunder and to exercise due
diligence to obtain all necessary governmental approvals required
for the implementation of this Transportation Agreement.
9.5 All terms and conditions of Rate Schedule FT and the
attached Exhibits A, A-I, B, and C are hereby incorporated to and
made a part of this Agreement.
9.6 This contract shall be binding upon and inure to the
benefit of the successors, assigns, and legal representatives of
the parties hereto.
9.7 Neither party hereto shall assign this Agreement or any of
9 <PAGE>
its rights or obligations hereunder without the consent in
writing of the other party.
Notwithstanding the foregoing, either party may assign its right,
title and interest in, to and by virtue of this Agreement
including any and all extensions, renewals, amendments, and
supplements thereto, to a trustee or trustees, individual or
corporate, as security for bonds or other obligations or
securities, without such trustee or trustees assuming or becoming
in any respect obligated to perform any of the obligations of the
assignor and, if any such trustee be a corporation, without its
being required by the parties hereto to qualify to do business in
the state in which the performance of this Agreement may occur,
nothing contained herein shall require consent to transfer this
Agreement by virtue of merger or consolidation of a party hereto
or a sale of all or substantially all of the assets of a party
hereto, or any other corporate reorganization of a party hereto.
9.8 This Agreement insofar as it is affected thereby, is
subject to all valid rules, regulations, and orders of all
governmental authorities having jurisdiction.
9.9 No waiver by either party of any one or more defaults by
the other in the performance of any provisions hereunder shall
operate or be construed as a waiver of any future default or
defaults whether of a like or a different character.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective representatives
thereunto duly authorized, on the day and year first above
written.
ATTEST: TEXAS GAS TRANSMISSION CORPORATION
/s/ Beverly H. Griffith By /s/ Kathy Kirk
- ---------------------------- --------------------------------
Asst. Secretary Vice President
WITNESSES: WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS CORPORATION
/s/ Marie Waltz By /s/ Toby A. Priolo
- ---------------------------- -------------------------------
Vice President
/s/ Vicki Krambeck Attest: /s/ Jeanette Jarman
- ---------------------------- ---------------------------
Asst. Secretary
Date of Execution by Customer:
11/1/93
- ----------------------------
10
<PAGE>
Exhibit 10.4
GAS TRANSPORTATION AGREEMENT
BETWEEN
TEXAS GAS TRANSMISSION CORPORATION
AND
WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS ENERGY CORPORATION
DATED NOVEMBER 1, 1993
(Contract No. T-3819, zone 4)
<PAGE>
<PAGE>
INDEX
PAGE NO.
ARTICLE I Definitions 1
ARTICLE II Transportation Service 1
ARTICLE III Scheduling and Transportation 2
Limitations
ARTICLE IV Points of Receipt, Delivery, 3
and Supply Lateral Allocation
ARTICLE V Term of Agreement 3
ARTICLE VI Point(s) of Measurement 3
ARTICLE VII Facilities 4
ARTICLE VIII Rates and Charges 4
ARTICLE IX Miscellaneous 5
EXHIBIT "A"
FIRM POINT(S) OF RECEIPT
EXHIBIT "A-I"
SECONDARY POINT(S) OF RECEIPT
EXHIBIT "B"
FIRM POINT(S) OF DELIVERY
EXHIBIT "C"
SUPPLY LATERAL CAPACITY
STANDARD FACILITIES KEY
2 <PAGE>
FIRM TRANSPORTATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of
November, 1993, by and between Texas Gas Transmission Corpora-
tion, a Delaware corporation, hereinafter referred to as "Texas
Gas," and Western Kentucky Gas Company, a Division of Atmos
Energy Corporation, a Texas corporation, hereinafter referred to
as "Customer,"
WITNESSETH:
WHEREAS, Customer has natural gas which cannot be moved
into its system through its existing facilities; and
WHEREAS, Texas Gas has the ability in its pipeline system
to move natural gas for the account of Customer; and
WHEREAS, Customer desires that Texas Gas transport such
natural gas for the account of Customer; and
WHEREAS, Customer and Texas Gas are of the opinion that the
transaction referred to above falls within the provisions of
Section 284.223 of Subpart G of Part 284 of the Federal Energy
Regulatory Commission's (Commission) regulations and the blanket
certificate issued to Texas Gas in Docket No. CP88-686-000, and
can be accomplished without the prior approval of the Commission;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto covenant
and agree as follows:
ARTICLE I
Definitions
1.1 Definition of Terms of the General Terms and Conditions of
Texas Gas's FERC Gas Tariff on file with the Commission is hereby
incorporated by reference and made a part of this Agreement.
ARTICLE II
Transportation Service
2.1 Subject to the terms and provisions of this Agreement,
Customer agrees to deliver or cause to be delivered to Texas Gas,
at the Point(s) of Receipt in Exhibit "A" hereunder, Gas for
3
<PAGE>
Transportation, and Texas Gas agrees to receive, transport, and
redeliver, at the Point(s) of Delivery in Exhibit "B" hereunder,
Equivalent Quantities of Gas to Customer or for the account of
Customer, in accordance with Section 3 of Texas Gas's effective
FT Rate Schedule and the terms and conditions contained herein,
up to 3,500 MMBtu per day during the winter season, and up to
3,500 MMBtu per day during the summer season, which shall be
Customer's Firm Transportation Contract Demand, and up to 528,500
MMBtu during the winter season, and up to 749,000 MMBtu during
the summer season, which shall be Customer's Seasonal Quantity
Levels.
2.2 Customer shall reimburse Texas Gas for the Quantity of Gas
required for fuel, company use, and unaccounted for associated
with the transportation service hereunder in accordance with
Section 16 of the General Terms and Conditions of Texas Gas's
FERC Gas Tariff. The applicable fuel retention percentage(s) is
shown on Exhibit "A". Texas Gas may adjust the fuel retention
percentage as operating circumstances warrant; however, such
change shall not be retroactive. Texas Gas agrees to give
Customer thirty (30) days written notice before changing such
percentage.
2.3 Texas Gas, at its sole option, may, if tendered by
Customer, transport daily quantities in excess of the Transporta-
tion Contract Demand.
2.4 In order to protect its system, the delivery of gas to its
customers and/or the safety of its operations, Texas Gas shall
have the right to vent excess natural gas delivered to Texas Gas
by Customer or Customer's supplier(s) in that part of its system
utilized to transport gas received hereunder. Prior to venting
excess gas, Texas Gas will use its best efforts to contact
Customer or Customer's supplier in an attempt to correct such
excess deliveries to Texas Gas. Texas Gas may vent such excess
gas solely within its reasonable judgment and discretion without
liability to Customer, and a pro rata share of any gas so vented
shall be allocated to Customer. Customer's pro rata share shall
be determined by a fraction, the numerator of which shall be the
quantity of gas delivered to Texas Gas at the Point of Receipt by
Customer or Customer's suppliers in excess of Customer's
confirmed nomination and the denominator of which shall be the
total quantity of gas in excess of total confirmed nominations
flowing in that part of the Texas Gas's system utilized to
transport gas, multiplied by the total quantity of gas vented or
lost hereunder.
2.5 Any gas imbalance between receipts and deliveries of gas,
less fuel and PVR adjustments, if applicable, shall be cleared
each month in accordance with Section 17 of the General Terms and
Conditions in Texas Gas's FERC Gas Tariff. Any imbalance
remaining at the termination of this Agreement shall also be
4
<PAGE>
cashed-out as provided herein.
ARTICLE III
Scheduling
3.1 Customer shall be obligated five (5) working days prior to
the end of each month to furnish Texas Gas with a schedule of the
estimated daily quantity(ies) of gas it desires to be received,
transported, and redelivered for the following month. Such
schedules will show the quantity(ies) of gas Texas Gas will
receive from Customer at the Point(s) of Receipt, along with the
identity of the supplier(s) that is delivering or causing to be
delivered to Texas Gas quantities for Customer's account at each
Point of Receipt for which a nomination has been made.
3.2 Customer shall give Texas Gas, after the first of the
month, at least twenty-four (24) hours notice prior to the
commencement of any day in which Customer desires to change the
quantity(ies) of gas it has scheduled to be delivered to Texas
Gas at the Point(s) of Receipt. If Customer's nomination change
does not require Texas Gas to interrupt service to another
Customer, Texas Gas will agree to waive this 24-hour prior notice
and implement nomination changes requested by Customer to
commence in such lesser time frame subject to Texas Gas's being
able to confirm and verify such nomination change at both Receipt
and Delivery Points, and receive PDAs reflecting this nomination
change at both Receipt and Delivery Points. Texas Gas will use
its best efforts to make the nomination change effective at the
time requested by Customer; however, if Texas Gas is unable to do
so, the nomination change will be implemented as soon as
confirmation is received.
ARTICLE IV
Points of Receipt, Delivery, and Supply Lateral Allocation
4.1 Customer shall deliver or cause to be delivered natural gas
to Texas Gas at the Point(s) of Receipt specified in Exhibit "A"
attached hereto and Texas Gas shall redeliver gas to Customer or
for the account of Customer at the Point(s) of Delivery specified
in Exhibit "B" attached hereto in accordance with Sections 7 and
15 of the General Terms and Conditions of Texas Gas's FERC Gas
Tariff.
4.2 Customer's preferential capacity rights on each of Texas
Gas's supply laterals shall be as set forth in Exhibit "C"
attached hereto, in accordance with Section 34 of the General
Terms and Conditions of Texas Gas's FERC Gas Tariff.
5
<PAGE>
ARTICLE V
Term of Agreement
5.1 This Agreement shall become effective November 1, 1993, and
shall remain in full force and effect for a primary term of five
(5) years ending October 31, 1998. At the end of such primary
term, or any subsequent rollover term, this Agreement shall
automatically be extended for an additional roll-over term of
five (5) years, unless Customer terminates this Agreement at the
end of such primary or roll-over term by giving Texas Gas at
least 365 days advance written notice prior to the expiration of
the primary term or any subsequent roll-over term.
ARTICLE VI
Point(s) of Measurement
6.1 The gas shall be delivered by Customer to Texas Gas and
redelivered by Texas Gas to Customer at the Point(s) of Receipt
and Delivery hereunder.
6.2 The gas shall be measured or caused to be measured by
Customer and/or Texas Gas at the Point(s) of Measurement which
shall be as specified in Exhibits A, A-I, and B herein. In the
event of a line loss or leak between the Point of Measurement and
the Point of Receipt, the loss shall be determined in accordance
with the methods described contained in Section 3, "Measuring and
Measuring Equipment," contained in the General Terms and
Conditions of First Revised Volume No. 1 of Texas Gas's FERC Gas
Tariff.
ARTICLE VII
Facilities
7.1 Texas Gas and Customer agree that any facilities required
at the Point(s) of Receipt, Point(s) of Delivery, and Point(s) of
Measurement, shall be installed, owned, and operated as specified
in Exhibits A, A-I, and B herein. Customer may be required to
pay or cause Texas Gas to be paid for the installed cost of any
new facilities required as contained in Sections 1.3, 1.4, and
1.5 of Texas Gas's FT Rate Schedule. Customer shall only be
responsible for the installed cost of any new facilities
described in this Section if agreed to in writing between Texas
Gas and Customer.
6
<PAGE>
ARTICLE VIII
Rates and Charges
8.1 Each month, Customer shall pay Texas Gas for the service
hereunder, an amount determined in accordance with Section 5 of
Texas Gas's FT Rate Schedule contained in Texas Gas's FERC Gas
Tariff and as indicated on Exhibit "A" herein, which Rate
Schedule is by reference made a part of this Agreement. The
maximum rates for such service consist of a monthly reservation
charge multiplied by Customer's firm transportation demand as
specified in Section 2.1 herein. The reservation charge shall be
billed as of the effective date of this Agreement. In addition
to the monthly reservation charge, Customer agrees to pay Texas
Gas each month the maximum commodity charge up to Customer's
Transportation Contract Demand. For any quantities delivered by
Texas Gas in excess of Customer's Transportation Contract Demand,
Customer agrees to pay the maximum FT overrun commodity charge.
In addition, Customer agrees to pay:
(a) Texas Gas's Fuel Retention percentage(s).
(b) The currently effective GRI funding unit, if applica-
ble, the currently effective FERC Annual Charge
Adjustment unit charge (ACA), the currently effective
Take-or-Pay surcharge, or any other then currently
effective surcharges, including but not limited to
Order 636 Transition Costs.
If Texas Gas declares force majeure which renders it unable to
perform service herein, then Customer shall be relieved of its
obligation to pay demand charges for that part of its FT Contract
Demand affected by such force majeure event until the force
majeure event is remedied.
Unless otherwise agreed to in writing by Texas Gas and Customer,
Texas Gas may, from time to time, and at any time selectively
after negotiation, adjust the rate(s) applicable to any individ-
ual Customer; provided, however, that such adjusted rate(s) shall
not exceed the applicable Maximum Rate(s) nor shall they be less
than the Minimum Rate(s) set forth in the currently effective
Sheet No. 10 of this Tariff. If Texas Gas so adjusts any rates
to any Customer, Texas Gas shall file with the Commission any and
all required reports respecting such adjusted rate.
8.2 In the event Customer utilizes a Secondary Point(s) of
Receipt or Delivery for transportation service herein, Customer
will continue to pay the monthly reservation charges as described
in Section 8.1 above. In addition, Customer will pay the maximum
commodity charge applicable to the zone in which gas is received
and redelivered up to Customer's Transportation Contract Demand
and the maximum overrun commodity charge for any quantities
7
<PAGE>
delivered by Texas Gas in excess of Customer's winter season or
summer season Transportation Contract Demand. Customer also
agrees to pay the ACA, Take-or-Pay Surcharge, GRI charges, fuel
retention charge, and any other effective surcharges, if
applicable, as described in Section 8.1 above.
8.3 It is further agreed that Texas Gas may seek authorization
from the Commission and/or other appropriate body for such
changes to any rate(s) and terms set forth herein or in Rate
Schedule FT, as may be found necessary to assure Texas Gas just
and reasonable rates. Nothing herein contained shall be
construed to deny Customer any rights it may have under the
Natural Gas Act, as amended, including the right to participate
fully in rate proceedings by intervention or otherwise to contest
increased rates in whole or in part.
8.4 Customer agrees to fully reimburse Texas Gas for all filing
fees, if any, associated with the service contemplated herein
which Texas Gas is required to pay to the Commission or any
agency having or assuming jurisdiction of the transactions
contemplated herein.
8.5 If applicable, Customer agrees to cooperate in executing or
requesting its supplier or processor execute a separate agreement
with Texas Gas providing for the transportation of any liquids
and/or liquefiables, and agrees to cooperate with Texas Gas in
Texas Gas's efforts to be paid or reimbursed, for any applicable
rates or charges associated with the transportation of such
liquids and/or liquefiables, as specified in Section 24 of the
General Terms and Conditions of Texas Gas's FERC Gas Tariff.
ARTICLE IX
Miscellaneous
9.1 Texas Gas's Transportation Service hereunder shall be
subject to receipt of all requisite regulatory authorizations
from the Commission, or any successor regulatory authority, and
any other necessary governmental authorizations, in a manner and
form acceptable to Texas Gas. The parties agree to furnish each
other with any and all information necessary to comply with any
laws, orders, rules, or regulations.
9.2 Except as may be otherwise provided, any notice, request,
demand, statement, or bill provided for in this Agreement or any
notice which a party may desire to give the other shall be in
writing and mailed by regular mail, or by postpaid registered
mail, effective as of the postmark date, to the post office
address of the party intended to receive the same, as the case
may be, or by facsimile transmission, as follows:
8
<PAGE>
Texas Gas
Texas Gas Transmission Corporation
3800 Frederica Street
Post Office Box 1160
Owensboro, Kentucky 42302
Attention: Gas Revenue Accounting (Billings and Statements)
Transportation & Exchange (Other Matters)
Nomination & Allocation (Nominations)
Fax (502) 926-8686
Customer
Western Kentucky Gas Company,
a Division of Atmos Energy Corporation
Post Office Box 650205
5430 LBJ Freeway
1800-3 Lincoln Centre
Dallas, Texas 75265-0205
Attention: Mr. John Hack
The address of either party may, from time to time, be changed by
a party mailing, by certified or registered mail, appropriate
notice thereof to the other party. Furthermore, if applicable,
certain notices shall be considered duly delivered when posted to
Texas Gas's Electronic Bulletin Board, as specified in Texas
Gas's tariff.
9.3 This Agreement shall be governed by the laws of the State
of Kentucky.
9.4 Each party agrees to file timely all statements, notices,
and petitions required under the Commission's Regulations or any
other applicable rules or regulations of any governmental
authority having jurisdiction hereunder and to exercise due
diligence to obtain all necessary governmental approvals required
for the implementation of this Transportation Agreement.
9.5 All terms and conditions of Rate Schedule FT and the
attached Exhibits A, A-I, B, and C are hereby incorporated to and
made a part of this Agreement.
9.6 This contract shall be binding upon and inure to the
benefit of the successors, assigns, and legal representatives of
the parties hereto.
9.7 Neither party hereto shall assign this Agreement or any of
its rights or obligations hereunder without the consent in
writing of the other party.
9
<PAGE>
Notwithstanding the foregoing, either party may assign its right,
title and interest in, to and by virtue of this Agreement
including any and all extensions, renewals, amendments, and
supplements thereto, to a trustee or trustees, individual or
corporate, as security for bonds or other obligations or
securities, without such trustee or trustees assuming or becoming
in any respect obligated to perform any of the obligations of the
assignor and, if any such trustee be a corporation, without its
being required by the parties hereto to qualify to do business in
the state in which the performance of this Agreement may occur,
nothing contained herein shall require consent to transfer this
Agreement by virtue of merger or consolidation of a party hereto
or a sale of all or substantially all of the assets of a party
hereto, or any other corporate reorganization of a party hereto.
9.8 This Agreement insofar as it is affected thereby, is
subject to all valid rules, regulations, and orders of all
governmental authorities having jurisdiction.
9.9 No waiver by either party of any one or more defaults by
the other in the performance of any provisions hereunder shall
operate or be construed as a waiver of any future default or
defaults whether of a like or a different character.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective representatives
thereunto duly authorized, on the day and year first above
written.
ATTEST: TEXAS GAS TRANSMISSION
CORPORATION
/s/ Beverly H. Griffith By /s/ Kathy Kirk
- ---------------------------- --------------------------------
Asst. Secretary Vice President
WITNESSES: WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS CORPORATION
/s/ Marie Waltz By /s/ Toby A. Priolo
- ---------------------------- -------------------------------
Vice President
/s/ Vicki Krambeck Attest: /s/ Jeanette Jarman
- ---------------------------- ---------------------------
Asst. Secretary
Date of Execution by Customer:
11/1/93
- ----------------------------
10
<PAGE>
Exhibit 10.5
FIRM NO NOTICE TRANSPORTATION AGREEMENT
between
TEXAS GAS TRANSMISSION CORPORATION
and
WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS ENERGY CORPORATION
Effective
November 1, 1993
(Contract No. N0210, zone 2)
(Contract No. N0340, zone 3)
(Contract No. N0435, zone 4)
<PAGE>
<PAGE>
FIRM NO NOTICE TRANSPORTATION AGREEMENT
Rate Schedule NNS
THIS AGREEMENT, made and entered into this 1st day of
November, 1993, by and between Texas Gas Transmission Corpora-
tion, a Delaware corporation, hereinafter referred to as "Texas
Gas," and Western Kentucky Gas Company, A Division of Atmos
Energy Corporation, a Texas corporation, herinafter referred to
as "Customer,"
WITNESSETH:
WHEREAS, Customer was receiving a firm, bundled city-gate
sales service from Texas Gas on May 18, 1992, under provisions of
a sales service agreement dated November 1, 1991; and
WHEREAS, Customer desires to continue receiving the
equivalent transportation service formerly embedded in its
bundled sales service, or portion thereof, as no-notice service;
and
WHEREAS, Texas Gas desires to provide and Customer desires
to receive such no-notice service under its NNS Rate Schedule on
the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto covenant
and agree as follows:
ARTICLE I. DEFINITIONS
1.1 The definitions in Section 3 of Rate Schedule NNS, as well
as Section 1 of the General Terms and Conditions of Texas Gas's
FERC Gas Tariff, are hereby incorporated by reference and made a
part of this Agreement.
ARTICLE II. QUANTITY
2.1 Pursuant to Texas Gas's Rate Schedule NNS and subject to the
terms and provisions of this Agreement, Customer agrees to
deliver or cause to be delivered to Texas Gas at the Point(s) of
Receipt in Exhibit "A" hereunder, gas for transportation and
Texas Gas agrees to receive, transport, and redeliver to Customer
at the Point(s) of Delivery in Exhibit "B" hereunder, the daily
and seasonal quantities of gas set forth herein. The parties
agree that the transportation service provided hereunder shall be
a firm service provided by combining pipeline capacity (the
"Nominated" portion of the service) and storage capacity (the
"Unnominated" portion of the service) into a single transporta-
tion service.
2
<PAGE>
2.2 The maximum daily quantity of gas which Texas Gas shall be
obligated to transport and redeliver to Customer, and which
Customer shall be obligated to receive, is Customer's applicable
Contract Demand expressed on a seasonal basis as set forth below:
ZONE 2
Daily
Contract Demand MMBtu/d
Winter 45,500
Summer 22,292
Shoulder Month (April) 36,367
Shoulder Month (October) 40,177
ZONE 3
Daily
Contract Demand MMBtu/d
Winter 81,000
Summer 67,375
Shoulder Month (April) 81,000
Shoulder Month (October) 81,000
ZONE 4
Daily
Contract Demand MMBtu/d
Winter 13,500
Summer 4,625
Shoulder Month (April) 8,838
Shoulder Month (October) 9,984
2.3 The above Contract Demands consist of a Nominated Daily
Quantity, for which Customer is responsible for scheduling the
delivery of gas supplies into Texas Gas's system, and an
Unnominated Daily Quantity, which is automatically delivered from
storage by Texas Gas to meet Customer's requirements. Those
quantities, expressed on a seasonal basis, are set forth below:
ZONE 2
Nominated Daily Quantity MMBtu/d
Winter 26,450
Summer 22,292
3 <PAGE>
ZONE 2 continued
Unnominated Daily Quantity MMBtu/d
Winter 19,050
Shoulder Month (April) 9,525
Shoulder Month (October) 13,335
ZONE 3
Nominated Daily Quantity MMBtu/d
Winter 64,717
Summer 67,375
Unnominated Daily Quantity MMBtu/d
Winter 16,283
Shoulder Month (April) 8,142
Shoulder Month (October) 11,398
ZONE 4
Nominated Daily Quantity MMBtu/d
Winter 7,773
Summer 4,625
Unnominated Daily Quantity MMBtu/d
Winter 5,727
Shoulder Month (April) 2,864
Shoulder Month (October) 4,009
2.4 Customer's Excess Unnominated Daily Quantity shall be 4,550
MMBtu per day for Zone 2; and 8,100 MMBtu per day for Zone 3; and
1,350 MMBtu per day for Zone 4; which is ten percent (10%) of its
Winter Contract Demand.
2.5 The maximum seasonal quantities of gas which Texas Gas shall
be obligated to transport and deliver to Customer, and which
Customer shall be obligated to receive, are Customer's Seasonal
Quantity Entitlements as set forth below:
ZONE 2
Seasonal
Quantity Entitlement MMBtu
4
<PAGE>
Winter 5,358,950
Summer 3,405,488
ZONE 3
Seasonal
Quantity Entitlement MMBtu
Winter 11,872,267
Summer 12,318,250
ZONE 4
Seasonal
Quantity Entitlement MMBtu
Winter 1,247,871
Summer 613,600
2.6 A portion of Customer's Winter Quantity Entitlement consists
of unnominated quantities of gas delivered by Texas Gas from
storage. The maximum net quantity of gas Texas Gas is obligated
to deliver to Customer from storage during any Winter Season is
Customer's Unnominated Seasonal Quantity, which is 1,365,000
MMBtu for Zone 2; 2,100,000 MMBtu for Zone 3; and 376,150 MMBtu
for Zone 4. In addition to scheduling the receipt of Customer's
Summer Quantity Entitlement, Customer is also responsible for the
redelivery each summer of that portion of Customer's Unnominated
Seasonal Quantity actually used the prior winter, as more fully
set forth herein.
2.7 Customer shall reimburse Texas Gas for the Quantity of Gas
required for fuel, company use, and unaccounted for associated
with the transportation service hereunder in accordance with
Section 16 of the General Terms and Conditions of Texas Gas's
FERC Gas Tariff. Texas Gas may adjust the fuel retention
percentage as operating circumstances warrant; however, such
change shall not be retroactive. Texas Gas agrees to give
Customer thirty (30) days written notice before changing such
percentage.
2.8 Texas Gas, at its sole option, may, if tendered by Customer,
transport daily quantities in excess of Customer's Contract
Demand.
2.9 In order to protect its system, the delivery of gas to its
customers and/or the safety of its operations, Texas Gas shall
have the right to vent excess natural gas delivered to Texas Gas
by Customer or Customer's supplier(s) in that part of its system
utilized to transport gas received hereunder. Prior to venting
5
<PAGE>
excess gas, Texas Gas will use its best efforts to contact
Customer or Customer's supplier in an attempt to correct such
excess deliveries to Texas Gas. Texas Gas may vent such excess
gas solely within its reasonable judgment and discretion without
liability to Customer, and a pro rata share of any gas so vented
shall be allocated to Customer. Customer's pro rata share shall
be determined by a fraction, the numerator of which shall be the
quantity of gas delivered to Texas Gas at the Point of Receipt by
Customer or Customer's suppliers in excess of Customer's
confirmed nomination and the denominator of which shall be the
total quantity of gas in excess of total confirmed nominations
flowing in that part of the Texas Gas's system utilized to
transport gas, multiplied by the total quantity of gas vented or
lost hereunder.
2.10 If Customer has an impending demand on its system above its
Daily Contract Demand in a particular zone, such Customer,
provided Texas Gas's prior consent is obtained, may simulta-
neously take receipts above Customer's Contract Demand in such
zone equivalent to receipts not taken below Customer's Contract
Demand in another zone. Texas Gas will grant Customer's request
so long as the allowance of receipts above Customer's Contract
Demand can be made, in Texas Gas's reasonable judgment, without
the impairment of scheduled or anticipated firm deliveries to
other of Texas Gas's customers and is compatible with Texas Gas's
general system operation requirements. Nothing contained herein
in intended to increase Customer's Contract Demand in individual
zones. Customer will be billed for such deliveries above
Customer's Contract Demand in a particular zone as if the natural
gas constituting such deliveries had been delivered within
Customer's Contract Demand for that zone.
Furthermore, unless advised otherwise in writing by Texas
Gas due to operational problems, Customer may exceed its
available Unnominated Daily Storage Quantity in any particular
zone or on any day, as long as the total unnominated quantities
delivered that day do not exceed the sum of the Unnominated Daily
Quantities for all three zones.
2.11 Customer shall have the right to elect to reduce its Daily
Contract Demand for a quantity not to exceed 10,000 MMBtu/d over
the life of this agreement by an amount up to the Daily Contract
Demand which was contracted for by Customer to serve any firm
end-use customers of Customer subject to the following provi-
sions:
a) If a firm end-use customer bypasses to Texas Gas
pursuant to a firm, permanent agreement, the reduction
right shall be effective on the day on which such
end-use customer commences receipt of direct or
indirect deliveries of natural gas from Texas Gas,
providing that Customer gives thirty (30) days prior
6
<PAGE>
written notice. Texas Gas shall adjust any Order 636
transition costs billed to Customer to reflect Cus-
tomer's loss of such firm end-use customer load.
b) If a firm end-use customer bypasses to Texas Gas
pursuant to an interruptible transportation agreement
the right to reduce the end-use customer's firm
contract quantities shall correspond to the effective
date of any general rate filing pursuant to Section
4(e) of the Natural Gas Act (NGA) made by Texas Gas
during the life of this agreement. However, if Texas
Gas does not file a general rate filing within 12
months of the bypass, Customer shall have the right to
reduce its Contract Demand by the amount of the end-use
customer's firm contract quantities providing Customer
gives Texas Gas 45 days written notice.
c) If end-use customer bypasses Customer by: 1) a bypass
that is effectuated from operation of the Texas Gas
Capacity Release program, or; 2) a bypass that connects
end-use customer to a third party and shifts quantities
of gas from both Customer and Texas Gas, the right to
reduce the end-use customer's firm contract quantities
shall correspond to the effective date of any general
rate filing pursuant to Section 4(e) of the Natural Gas
Act (NGA) made by Texas Gas or the effective date of an
NGA Section 5 Order of the FERC directed to Texas Gas
to revise its rates during the life of this agreement.
Customer agrees to provide notice of its intent to
exercise this reduction right within 45 days after
Texas Gas provides written notice of the effective date
of rates to be proposed in any such NGA Section 4(e)
general rate filing. Pursuant to this Section (c),
customer shall remain responsible for any Order 636
transition costs ssociated with these above-mentioned
reductions.
If Customer recommences service to any such end-use customer
in whole or in part, Customer's Daily Contract Demand may be
increased, at Customer's request, by an amount up to the prior
such reduction made for that particular end-use customer, subject
to the availability of capacity and FERC authorization, if
applicable.
ARTICLE III. SCHEDULING OF
CUSTOMER'S NOMINATED DAILY QUANTITY
3.1 This Article III only applies to the scheduling of the
Nominated Daily Quantity portion of Customer's Contract Demand
and not to the Unnominated Daily Quantity of Unnominated Seasonal
Quantity delivered from storage.
7
<PAGE>
3.2 Customer shall be obligated five (5) working days prior to
the end of each month to furnish Texas Gas with a schedule of the
estimated daily quantity(ies) of gas it desires to be received,
transported, and redelivered for the following month. Such
schedules will show the quantity(ies) of gas Texas Gas will
receive from Customer at the Point(s) of Receipt, along with the
identity of the supplier(s) that is delivering or causing to be
delivered to Texas Gas quantities for Customer's account at each
Point of Receipt for which a nomination has been made.
3.3 Customer shall give Texas Gas, after the first of the month,
twenty-four (24) hours notice prior to the commencement of any
day in which Customer desires to change the quantity(ies) of gas
it has scheduled to be delivered to Texas Gas at the Point(s) of
Receipt. If Customer's nomination change does not require Texas
Gas to interrupt service to another customer, Texas Gas will
agree to waive this 24-hour prior notice and implement nomination
changes requested by customer to commence in such lesser time
frame subject to Texas Gas's being able to confirm and verify
such nomination change at both receipt and delivery points, and
receive PDA's reflecting this nomination change at both receipt
and delivery points. Texas Gas will use its best efforts to make
the nomination change effective at the time requested by
customer; however, if Texas Gas is unable to do so, the nomina-
tion change will be implemented as soon as confirmation is
received.
ARTICLE IV. POINTS OF RECEIPT AND DELIVERY
AND SUPPLY LATERAL ALLOCATION
4.1 Customer shall deliver or cause to be delivered natural gas
to Texas Gas at the Point(s) of Receipt specified in Exhibit "A"
attached hereto and Texas Gas shall redeliver gas to Customer or
for the account of Customer at the Point(s) of Delivery specified
in Exhibit "B" attached hereto, in accordance with Sections 7 and
15 of the General Terms and Conditions of Texas Gas's FERC Gas
Tariff.
4.2 Customer's preferential capacity rights on each of Texas
Gas's supply laterals shall be as set forth in Exhibit "C"
attached hereto, in accordance with Section 34 of the General
Terms and Conditions of Texas Gas's FERC Gas Tariff.
ARTICLE V. TERM OF AGREEMENT
5.1 This Agreement shall become effective November 1, 1993, and
shall remain in full force and effect for a primary term of five
(5) years ending October 31, 1998. At the end of such primary
term, or any subsequent rollover term, this Agreement shall
automatically be extended for an additional rollover term of five
8
<PAGE>
(5) years, unless Customer terminates this Agreement at the end
of such primary or rollover term by giving Texas Gas at least 365
days advance written notice prior to the expiration of the
primary term or any subsequent rollover term.
ARTICLE VI. POINT OF MEASUREMENT
6.1 The gas shall be measured or caused to be measured by
Customer and/or Texas Gas at the Point(s) of Measurement which
shall be as specified in Exhibits A, A-I, and B herein. In the
event of a line loss or leak between the Point of Measurement and
the Point of Receipt, the loss shall be determined in accordance
with the methods described in Section 3, "Measuring and Measuring
Equipment," contained in the General Terms and Conditions of
First Revised Volume No. 1 of Texas Gas's FERC Gas Tariff.
ARTICLE VII. FACILITIES
7.1 Texas Gas and Customer agree that any facilities required at
the Point(s) of Receipt, Point(s) of Delivery, and Point(s) of
Measurement, shall be installed, owned, and operated as specified
in Exhibits A, A-I, and B herein. Customer may be required to
pay or cause Texas Gas to be paid for the installed cost of any
new facilities required as contained in Sections 1.3, 1.4 and 1.5
of Texas Gas's FT Rate Schedule. Customer shall only be
responsible for the installed cost of any new facilities
described in this Section if agreed to in writing between Texas
Gas and Customer.
ARTICLE VIII. RATES AND CHARGES
8.1 Unless otherwise agreed to in writing by Texas Gas and
Customer, Customer shall pay to Texas Gas each month a Reserva-
tion Charge which shall consist of the applicable Contract Demand
as specified in this Agreement multiplied by the applicable
demand rate per MMBtu. The Reservation Charge shall be billed as
of the effective date of this Agreement. Unless otherwise agreed
to in writing by Texas Gas and Customer, Customer shall also pay
Texas Gas the Maximum Commodity Rate per MMBtu of gas delivered
by Texas Gas for no-notice transportation services rendered to
Customer up to Customer's applicable Contract Demand. For all
gas quantities delivered in excess of Customer's applicable
Contract Demand on any day, Customer shall pay the NNS Overrun
Rate per MMBtu, as described in the NNS Rate Schedule. In
addition, Customer shall pay any and all currently effective
demand or commodity surcharges, including but not limited to, the
GRI Funding Unit, the FERC ACA Unit Charge, Texas Gas's Take-or-
Pay surcharge, and Order 636 Transition Costs surcharge.
If Texas Gas declares force majeure which renders it unable
to perform service for Customer under this Agreement either in
9
<PAGE>
whole or part, then Customer shall be relieved of its obligation
to pay NNS demand charges for that part of its NNS contract
demand affected by such force majeure event until the force
majeure event is remedied.
Unless otherwise agreed to in writing by Texas Gas and
Customer, Texas Gas may, from time to time, and at any time
selectively after negotiation, adjust the rate(s) applicable to
any individual Customer; provided, however, that such adjusted
rate(s) shall not exceed the applicable Maximum Rate(s) nor shall
they be less than the Minimum Rate(s) set forth in the currently
effective Sheet No. 10 of Texas Gas' FERC Gas Tariff. If Texas
Gas so adjusts any rates to any Customer, Texas Gas shall file
with the Commission any and all required reports respecting such
adjusted rate.
8.2 In the event Customer utilizes a Secondary Point(s) of
Delivery for transportation service herein, Customer will
continue to pay the monthly reservation charges as described in
Section 8.1 above. In addition, Customer will pay the maximum
commodity charge applicable to the zone in which gas is delivered
up to Customer's applicable Contract Demand and the maximum
overrun commodity charge for any quantities delivered by Texas
Gas in excess of Customer's Seasonal Quantity Entitlement.
Customer also agrees to pay the ACA, Take-or-Pay Surcharge, GRI
charges, fuel retention charge, and any other effective sur-
charges, if applicable, as described in Section 8.1 above.
8.3 It is further agreed that Texas Gas may seek authorization
from the Commission and/or other appropriate body for such
changes to any rate(s) and terms set forth herein or in Texas
Gas' tariff, as may be found necessary to assure Texas Gas just
and reasonable rates. Nothing herein contained shall be
construed to deny Customer any rights it may have under the
Natural Gas Act, as amended, including the right to participate
fully in rate proceedings by intervention or otherwise to contest
increased rates in whole or in part.
8.4 Customer agrees to fully reimburse Texas Gas for all fees,
if any, associated with the service contemplated herein which
Texas Gas is required to pay to the Commission or any agency
having or assuming jurisdiction of the transactions contemplated
herein.
8.5 If applicable, Customer agrees to cooperate in executing or
requesting that its supplier or processor execute a separate
agreement with Texas Gas providing for the transportation of any
liquids and/or liquefiables, and agrees to cooperate with Texas
Gas in Texas Gas's efforts to be paid or reimbursed, for any
applicable rates or charges associated with the transportation of
such liquids and/or liquefiables, as specified in Section 24 of
the General Terms and Conditions of Texas Gas's FERC Gas Tariff.
10
<PAGE>
ARTICLE IX. WINTER SERVICE
9.1 Customer will only be required to nominate into Texas Gas's
system a quantity of gas up to the Nominated Daily Quantity.
9.2 In addition to the Nominated Daily Quantity actually
scheduled by Customer, Texas Gas will adjust deliveries from
storage up to Customer's Unnominated Daily Quantity to meet
Customer's city-gate requirements up to Customer's Winter
Contract Demand.
9.3 In addition, Customer may exceed its Unnominated Daily
Quantity by a quantity equal to its Excess Unnominated Daily
Quantity (i.e. 10% of its Winter Contract Demand) for up to two
consecutive gas days without a penalty; however, total deliveries
to the Customer may not exceed the Customer's Winter Contract
Demand, except as provided in Section 2.10. Texas Gas will
notify the Customer within four (4) hours of the end of the gas
day in which Customer has exceeded its Unnominated Daily
Quantity. If the Customer does not cease taking such Excess
Unnominated Daily Quantity from Texas Gas's storage after two
consecutive gas days, then pipeline may assess a penalty of $15
per MMBtu of such excess gas taken and may issue an operational
flow order requiring Customer to immediately inject additional
gas supply and/or reduce city-gate deliveries so that the
customer is no longer exceeding his Unnominated Daily Quantity.
9.4 Monthly Maximum Withdrawal: No more than 50% of Customer's
Unnominated Seasonal Quantity shall be withdrawn in any consecu-
tive thirty (30) day period.
9.5 Seasonal Minimum and Maximum Withdrawal: No more than 105%
of Customer's Unnominated Seasonal Quantity shall be withdrawn by
March 1; provided further, that no less than 68% and no more than
100% of Customer's Unnominated Seasonal Quantity shall be
withdrawn by April 1 (the end of the Winter Season).
9.6 Adjusted Unnominated Daily Quantity: As Customer's
Unnominated Seasonal Quantity (USQ) is withdrawn, that portion of
Customer's Unnominated Daily Quantity (UDQ) available to Customer
shall be adjusted. Customer's Adjusted Unnominated Daily
Quantity (UDQ) shall be equal to the greater of its average
winter daily unnominated quantity (i.e., Customer's USQ divided
by the total number of Winter days the UDQ is available) or the
applicable percentage of its Unnominated Daily Quantity (UDQ) as
set forth in the following table:
11
<PAGE>
% USQ Withdrawn % UDQ Available
75% 90%
80% 85%
85% 80%
90% 75%
9.7 During the Winter Season, Texas Gas will also inject gas
into storage on a best efforts basis as part of NNS service.
Although such injections will be done on a best efforts basis,
Texas Gas will be presumed, unless it gives notice to the
contrary, to be able to inject into storage such quantities of
gas as to take into account routine variations in no-notice
deliveries. If Texas Gas is unable to make such best efforts
injections, it will advise Customer by posting on its electronic
bulletin board. However, no presumption will exist for non-
routine situations (e.g. injections in excess of 15% of Cus-
tomer's Winter Contract Demand or sustained injections of more
than five days) and Customer must give 24 hours advance written
notice to Texas Gas of quantities it desires to inject into
storage, so that Texas Gas can determine the extent to which it
can make such injections and adjust its operations accordingly.
ARTICLE X. SUMMER SERVICE
10.1 Texas Gas shall deliver to Customer at the city-gate during
each Summer Season up to the Customer's Summer Contract Demand
and Summer Quantity Entitlement as nominated by Customer.
10.2 Pursuant to the provisions set forth below, Customer shall
deliver in kind to Texas Gas during each Summer Season a quantity
of gas equal to that portion of Customer's Unnominated Seasonal
Quantity actually utilized by Customer (including any in-field
transfers pursuant to Section 25.8(c) of the General Terms and
Conditions of this tariff) during the prior Winter Season (as
well as any Shoulder Month quantities delivered to customer
during the Summer Season). Customer shall reserve and utilize
such portion of its Summer Contract Demand as necessary to
redeliver such volumes into storage.
10.3 Maximum Daily Injection Quantity: To protect the storage
formations and allow uniform filling of the storage reservoirs,
Customer will be required to adhere to certain injection limits
(calculated as a percentage of the Unnominated Seasonal Quan-
tity), throughout the summer injection period. During the Summer
Season Customer may, on a daily basis, inject according to the
following table:
12
<PAGE>
% of Unnominated Maximum Available
Seasonal Quantity Injection Rate
Injected (% of USQ)
0% - 65% 1.3%
65% - 90% 1.1%
>90% 0.6%
10.4 Inventory verification tests will be conducted on a
semiannual basis. These tests require the temporary suspension
of individual storage field activities (injections and withdraw-
als) for a period of approximately two weeks. If conditions will
not permit the full maximum daily injection or withdrawal
quantity, Texas Gas may temporarily adjust the limit and allow
make-up quantities on succeeding days. Texas Gas will provide at
least 45 days prior notice in regard to the scheduling of these
shut-in periods.
10.5 During the Summer Season (except as provided in Section 11
below), Texas Gas will also withdraw gas from storage on a best
efforts basis as part of the NNS service. Although such
withdrawals will be done on a best efforts basis, Texas Gas will
be presumed, unless it gives notice to the contrary, to be able
to withdraw from storage such quantities of gas as to take into
account routine variations in no-notice services. If Texas Gas
is unable to make such best efforts withdrawals, it will advise
Customer by posting on its electronic bulletin board. However,
no presumption will exist for non-routine situations (e.g.
withdrawals in excess of 10% of Customer's Winter Contract Demand
or sustained withdrawals of more than five days) and Customer
must give 24 hours advance written notice to Texas Gas of
quantities it desires to withdraw from storage, so that Texas Gas
can determine the extent to which it can make such withdrawals
and adjust its operations accordingly.
10.6 To assist Texas Gas's operational and maintenance scheduling
through the Summer Season, Customer will notify Texas Gas by
April 1 of each year, with updates monthly, of the quantities it
intends to inject monthly during the immediately upcoming Summer
Season; such injection schedule provided by Customer is a best
efforts estimate and may be revised as necessary. Texas Gas will
use its reasonable efforts to coordinate its test, maintenance,
alteration and repair activities during such Summer Season to
accommodate Customer's request.
ARTICLE XI. SHOULDER MONTH FLEXIBILITY
11.1 During the Shoulder Months of April and October, Texas Gas
will deliver to Customer at the city-gate the Customer's Shoulder
Month Contract Demand, which shall, unless otherwise agreed, be
the sum of Customer's Summer Contract Demand, Customer's Excess
13
<PAGE>
Unnominated Quantity and the applicable percentage as set forth
below of Customer's Unnominated Daily Quantity for the Winter
Season:
Shoulder Month Percent of Unnominated Daily Quantity
April 50%
October 70%
In the event that Customer's Unnominated Seasonal Quantity
is available in quantities sufficient to support additional
access to Customer's Unnominated Daily Quantity the applicable
percentage available to Customer during such Shoulder Month will
be as follows:
% of Unnominated % of Unnominated
Shoulder Seasonal Daily
Month Quantity Withdrawn Quantity Available
April/October 75% 90%
80% 85%
85% 80%
90% 75%
95% 70%
Although such Shoulder Month Contract Demand shall be
available during any day of the Shoulder Month, it shall only be
available for a maximum of fifteen (15) gas days during such
month.
11.2 In the event that Customer's Unnominated Seasonal Quantity
has been exhausted prior to the April Shoulder Month period,
Customer shall retain access to fifty (50) percent of its
Unnominated Daily Quantity up to an aggregate monthly total
equivalent to ten (10) percent of Customer's Unnominated Seasonal
Quantity, as set forth above from that date until April 30.
ARTICLE XII. MISCELLANEOUS
12.1 Texas Gas's Transportation Service hereunder shall be
subject to receipt of all requisite regulatory authorizations
from the Commission, or any successor regulatory authority, and
any other necessary governmental authorizations, in a manner and
form acceptable to Texas Gas. The parties agree to furnish each
other with any and all information necessary to comply with any
laws, orders, rules, or regulations.
12.2 Except as may be otherwise provided, any notice, request,
demand, statement, or bill provided for in this Agreement or any
notice which a party may desire to give the other shall be in
writing and mailed by regular mail,
14
<PAGE>
or by postpaid registered mail, effective as of the postmark
date, to the post office address of the party intended to receive
the same, as the case may be, or by facsimile transmission, as
follows:
Texas Gas
Texas Gas Transmission Corporation
3800 Frederica Street
Post Office Box 1160
Owensboro, Kentucky 42302
Attention: Gas Revenue Accounting (Billings and Statements)
Nomination & Allocation (Nominations)
Transportation & Exchange (Contractual Matters)
Marketing Services (Other Matters)
Fax #: 502/926-8686
Customer
Western Kentucky Gas Company
A Division of Atmos Energy Corporation
Post Office Box 650205
5430 LBJ Freeway, 1800 Three Lincoln Centre
Dallas, Texas 75265-0205
Attention: Mr. John Hack
The address of either party may, from time to time, be
changed by a party mailing, by certified or registered mail,
appropriate notice thereof to the other party. Furthermore, if
applicable, certain notices shall be considered duly delivered
when posted to Texas Gas's Electronic Bulletin Board, as
specified in Texas Gas's Tariff.
12.3 This Agreement shall be governed by the laws of the State of
Kentucky.
12.4 Each party agrees to file timely all statements, notices,
and petitions required under the Commission's Regulations or any
other applicable rules or regulations of any governmental
authority having jurisdiction hereunder and to exercise due
diligence to obtain all necessary governmental approvals required
for the implementation of this Transportation Agreement.
12.5 All terms and conditions of Rate Schedule NNS and the
attached Exhibits A, A-I, B, and C are hereby incorporated to and
made a part of this Agreement.
12.6 This contract shall be binding upon and inure to the benefit
of the successors, assigns, and legal representatives of the
parties hereto.
15
<PAGE>
12.7 Neither party hereto shall assign this Agreement or any of
its rights or obligations hereunder without the consent in
writing of the other party. Notwithstanding the foregoing,
either party may assign its right, title and interest in, to and
by virtue of this Agreement including any and all extensions,
renewals, amendments, and supplements thereto, to a trustee or
trustees, individual or corporate, as security for bonds or other
obligations or securities, without such trustee or trustees
assuming or becoming in any respect obligated to perform any of
the obligations of the assignor and, if any such trustee be a
corporation, without its being required by the parties hereto to
qualify to do business in the state in which the performance of
this Agreement may occur, nothing contained herein shall require
consent to transfer this Agreement by virtue of merger or
consolidation of a party hereto or a sale of all or substantially
all of the assets of a party hereto, or any other corporate
reorganization of a party hereto.
12.8 This Agreement insofar as it is affected thereby, is subject
to all valid rules, regulations, and orders of all governmental
authorities having jurisdiction.
12.9 No waiver by either party of any one or more defaults by the
other in the performance of any provisions hereunder shall
operate or be construed as a waiver of any future default or
defaults whether of a like or a different character.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective representatives
thereunto duly authorized, on the day and year first above
written.
ATTEST: TEXAS GAS TRANSMISSION CORPORATION
/s/ Patrick C. Hayden By /s/ Kathy Kirk
- ---------------------------- --------------------------------
Asst. Secretary Vice President
WITNESSES: WESTERN KENTUCKY GAS COMPANY,
A DIVISION OF ATMOS CORPORATION
/s/ Marie Waltz By /s/ Toby A. Priolo
- ---------------------------- -------------------------------
Vice President
/s/ Vicki Krambeck Attest: /s/ Jeanette Jarman
- ---------------------------- ---------------------------
Asst. Secretary
Date of Execution by Customer:
11/1/93
- ----------------------------
16
<PAGE>
