UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5540
PEOPLES ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Illinois 36-2642766
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
24th Floor, 130 East Randolph Drive, Chicago, Illinois 60601-6207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 240-4000
Securities registered pursuant to Section 12(b) of the Act:
Name on each exchange
Title of Each Class on which registered
Common Stock, without par value New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (#229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant:
Approximately $1.29 billion computed on the basis of the
closing market price of $36.625 for a share of Common
Stock on November 28, 1997.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Common Stock, without par value, 35,158,159 shares outstanding at
November 29, 1997.
Documents Incorporated by Reference
Document Part of Form 10-K
Portions of the Company's Notice of Annual Meeting
and Proxy Statement to be filed on or about
December 29, 1997 Part III
CONTENTS
Page
Item No. No
Part I
1. Business 3
2. Properties 8
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 8
Executive Officers of the Company 9
Part II
5. Market for the Company's Common Stock and Related
Stockholder Matters 11
6. Selected Financial Data 12
7. Management's Discussion and Analysis of Results
of Operations and Financial Condition 13
8. Financial Statements and Supplementary Data 19
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 41
Part III
10. Directors and Executive Officers of the Company 42
11. Executive Compensation 42
12. Security Ownership of Certain Beneficial Owners and
Management 42
13. Certain Relationships and Related Transactions 42
Part IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 43
Signatures 45
Exhibit Index 46
Peoples Energy Corporation
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED SEPTEMBER 30, 1997
PART I
ITEM 1. BUSINESS
GENERAL
Peoples Energy Corporation (Company) is solely a holding company and
does not engage directly in any business of its own. Income is derived
principally from the Company's utility subsidiaries, The Peoples Gas Light and
Coke Company (Peoples Gas) and North Shore Gas Company (North Shore Gas).
The Company also derives income from its other subsidiaries, Peoples
District Energy Corporation (Peoples District Energy), Peoples
Energy Services Corporation (Peoples Energy Services), Peoples Energy
Resources Corp. (Peoples Energy Resources), Peoples NGV Corp., and
Peoples Energy Ventures Corporation (Peoples Energy Ventures). The
Company and its subsidiaries had 2,868 employees at September 30, 1997.
The Company was incorporated in 1967 under the Illinois Business
Corporation Act and has its principal executive offices at 130 East
Randolph Drive, Chicago, Illinois 60601-6207 (Telephone 312-240-4000).
Peoples Gas, an operating public utility, is engaged primarily in the
purchase, storage, distribution, sale, and transportation of natural gas.
It has approximately 836,000 residential, commercial, and industrial
retail sales and transportation customers within the City of Chicago
(City).
North Shore Gas, an operating public utility, is engaged primarily in
the purchase, storage, distribution, sale, and transportation of natural
gas. It has about 140,000 residential, commercial, and industrial retail
sales and transportation customers within its service area of
approximately 275 square miles, located in Northeastern Illinois.
Peoples District Energy, a wholly owned subsidiary of the Company, is
a 50 per cent participant in a partnership that provides district energy
services to the McCormick Place Exposition and Convention Center in
Chicago, Illinois (McCormick Place) under a long-term contract with the
Metropolitan Pier and Exposition Authority. Neither the partnership nor
its partners are regulated as a public utility.
Peoples Energy Services provides nonregulated retail energy sales to
commercial, industrial and large residential customers. Peoples Energy
Services also offers energy management services to large-volume gas users
and other energy related products and services to a wide
variety of customers.
Peoples Energy Resources owns and operates a new plant near Chicago
that gasifies liquid propane and ethane to assist utilities and marketers
in meeting peak day demand. The company also is pursuing new
opportunities to expand non-utility supply and storage services.
Peoples NGV Corp. operates a fueling station for natural gas fueled
vehicles, and it is a participant in a partnership that was formed to
develop on-site fueling services for natural gas-powered fleet vehicles.
Neither the partnership nor its partners are regulated as a pubic
utility.
Peoples Energy Ventures will pursue diversified energy-related
investments such as oil and gas exploration and production, electric
power generation, and gas pipelines.
COMPETITION
Peoples Gas and North Shore Gas are authorized by statute and/or
certificates of public convenience and necessity to conduct operations in
the territories they serve. In addition, these subsidiaries operate
under franchises and license agreements granted them by the communities they
serve. Peoples Gas holds a perpetual, non-exclusive franchise from the City.
North Shore Gas' franchises with communities within its service territory
are of various terms and expiration dates.
Absent extraordinary circumstances, potential competitors are barred
from constructing competing gas distribution systems in the utility
subsidiaries' service territories by a judicial doctrine known as the
"first in the field" doctrine. In addition, the high cost of installing
duplicate distribution facilities would render the construction of a
competing system impractical.
Competition in varying degrees exists between natural gas and other
fuels or forms of energy available to consumers in Peoples Gas' and North
Shore Gas' service areas. The capital cost of heating and cooling
facilities in new high-rise buildings is higher for gas than for
electricity. This circumstance, combined with relatively
stagnant high-rise construction activity, has adversely affected the
ability of Peoples Gas to attach commercial high-rise buildings.
On December 16, 1997, the State of Illinois enacted legislation to
restructure the electric market in Illinois. Under the legislation,
approximately one-third of non-residential electric customers,
including customers with very large loads, will be able to purchase
electric power from the supplier of their choice beginning on October
1, 1999. All non-residential customers will have this choice by
December 31, 2000. All residential customers will be given choice on
May 1, 2002. Customers who buy their electricity from a supplier other
than the local electric utility will be required to pay transition charges
to the utility through the year 2006. These charges are intended to
compensate the electric utilities for revenues lost because of customers
buying electricity from other suppliers. The legislation also allows an
electric utility to issue bonds, in aggregate amounts up to 50% of its
Illinois jurisdictional capitalization, to be financed by a specific charge
to its customers. An electric utility also may transfer up to 15% of its
assets to an affiliated or unaffiliated entity without approval from the
Illinois Commerce Commission. In return for these and other benefits,
electric utilities are required to reduce their rates to residential customers.
The state's two largest electric utilities, including the utility that serves
northeastern Illinois, must reduce their residential rates by 15% on
August 1, 1998 and by another 5% on May 1, 2002. The legislation does not
require electric utilities to divest their power generation assets. It is
too early to determine what effects this restructuring of the electric
market will have on the competitive position of the Company's subsidiaries.
In addition to restructuring the electric market, the legislation
provides for additional funding for assistance to low-income energy
users, including customers of the Company's utility subsidiaries. The
legislation creates a fund, financed by charges to electric and gas
customers of public utilities and participating municipal utilities and
electric co-ops, which supplements currently available federal
energy assistance.
A substantial portion of the gas that Peoples Gas and North Shore Gas
deliver to their customers consists of gas that the subsidiaries'
customers purchase directly from producers and marketers rather than from
the subsidiaries. These direct customer purchases have little effect on
net income because the utilities provide transportation service for such
gas volumes and recover margins similar to those applicable to
conventional gas sales.
A pipeline may seek to provide transportation service directly to end-
users. Such direct service by a pipeline to an end-user would bypass the
local distributor's service and reduce the distributor's earnings.
However, none of the subsidiaries' pipeline suppliers has undertaken any
service bypassing the subsidiaries. Both utility subsidiaries have a
bypass rate approved by the Illinois Commerce Commission (Commission)
which allows the utilities to renegotiate rates with customers that are
potential bypass candidates. (See Other Matters - Large Volume Gas
Service Agreements in Item 7.)
SALES AND RATES
Peoples Gas and North Shore Gas sell natural gas having an average
heating value of approximately 1,000 British thermal units (Btu's) per
cubic foot.* Sales are made and service rendered by Peoples Gas and
North Shore Gas pursuant to rate schedules on file with the Commission
containing various service classifications largely reflecting customers'
different uses and levels of consumption. The Gas Charge is determined
in accordance with the provisions in Rider 2, Gas Charge, to recover the
costs incurred by Peoples Gas and North Shore Gas to purchase, transport,
manufacture, and store gas supplies. The level of the Gas Charge under
both subsidiaries' rate schedules is adjusted monthly to reflect
increases or decreases in natural gas supplier charges, purchased storage
service costs, transportation charges, and liquefied petroleum gas costs.
In addition, under the tariffs of Peoples Gas and North Shore Gas, the
difference for any month between costs recoverable through the Gas Charge
and the revenues billed to customers under the Gas Charge is refunded to
or recovered from customers. Consistent with these tariff provisions,
such difference for any month is recorded either as a current liability
or a current asset (with a contra entry to Gas Costs). Peoples Gas and
North Shore Gas have been recovering, through their rates, pipeline
charges billed for transition costs resulting from the implementation of
Federal Energy Regulatory Commission (FERC) Order No. 636. (See Notes
1L, 2A, and 2B of the Notes to Consolidated Financial Statements.)
The business of the Company's utility subsidiaries is influenced by
seasonal weather conditions because a large element of the subsidiaries'
customer load consists of space heating. Weather-related deliveries can,
therefore, have a significant positive or negative impact on net income.
(For discussion of the effect of the seasonal nature of gas revenues on
cash flow, see Liquidity in Item 7.)
The basic marketing plans of Peoples Gas and North Shore Gas are to
maintain their existing shares in all market segments and develop
opportunities emerging from changes in the utility environment and
technological equipment advances for new, expanded, or current natural
gas applications, including cogeneration, prime movers, natural gas-
fueled vehicles, and natural gas air-conditioning.
STATE LEGISLATION AND REGULATION
Peoples Gas and North Shore Gas are subject to the jurisdiction of and
regulation by the Commission, which has general supervisory and
regulatory powers over practically all phases of the public utility
business in Illinois, including rates and charges, issuance of
securities, services and facilities, systems of accounts, investments,
safety standards, transactions with affiliated interests, as defined in
the Illinois Public Utilities Act, and other matters.
In 1994, the Commission entered orders providing for full recovery by
the Company of FERC Order 636 transition costs from the Company's gas
service customers. The Commission's orders have been appealed to the
Illinois Supreme Court. (See Notes 1L, 2A, and 2B of the Notes to
Consolidated Financial Statements.)
On November 8, 1995, the Commission issued orders approving changes in
rates for Peoples Gas and North Shore Gas. (See Note 2A of the Notes to
Consolidated Financial Statements.)
FEDERAL LEGISLATION AND REGULATION
The Company is a holding company as defined in the Public Utility
Holding Company Act of 1935 (Act). By Order entered on December 6, 1968
(Holding Company Act Release No. 16233), the Securities and Exchange
Commission, pursuant to Section 3(a)(1) of the Act, exempted the Company
and its subsidiary companies as such from the provisions of the Act,
other than Section 9(a)(2) thereof.
* All volumes of natural gas set forth in this report are stated on a
1,000 Btu (per cubic foot) billing basis.
(100 cubic feet = 1 therm; 10 therms = 1 Dekatherm - Dth)
Most of the gas distributed by Peoples Gas and North Shore Gas is
transported to the utilities' distribution systems by interstate
pipelines. In their provision of gas sales services (gathering,
transportation and storage services, and gas supply) pipelines are
regulated by the FERC under the Natural Gas Act and the Natural Gas
Policy Act of 1978. (See "Sales and Rates" and "Current Gas Supply" in
Item 1.)
ENVIRONMENTAL MATTERS
The Company and its subsidiaries are subject to federal and state
environmental laws. Peoples Gas and North Shore Gas are conducting
environmental investigations and work at certain sites that were the
location of former manufactured gas plant operations. (See Note 3A of
the Notes to Consolidated Financial Statements.) In addition, North
Shore Gas has received a demand for payment of environmental response
costs at a former mineral processing site in Denver, Colorado. (See Note
3B of the Notes to Consolidated Financial Statements.) Also, North Shore
Gas was informed by the Illinois Environmental Protection Agency (IEPA)
that it was not in compliance with certain provisions of the Illinois
Environmental Protection Act which prohibit water pollution within the
State of Illinois. (See Note 3C of the Notes to Consolidated Financial
Statements.)
CURRENT GAS SUPPLY
Peoples Gas and North Shore Gas have each entered into various long-
term and short-term firm gas supply contracts. When used in conjunction
with contract peaking and contract storage, Peoples Gas' company-owned
storage, and the peak-shaving facilities of the utilities, such supply is
deemed sufficient to meet current and foreseeable peak and annual market
requirements.
Although the Company believes North American supply to be sufficient
to meet U.S. market demands for the foreseeable future, it is unable to
quantify or otherwise make specific representations regarding national
supply availability.
The following tabulation shows the expected design peak-day
availability of gas in thousands of dekatherms (MDth) during the 1997-
1998 heating season for Peoples Gas and North Shore Gas:
<TABLE>
<CAPTION>
Peoples Gas North Shore Gas
Design Peak-Day Year of Design Peak-Day Year of
Availability Contract Availability Contract
Source (MDth) Expiration (MDth) Expiration
<S> <C> <C> <C> <C>
Firm direct purchases (1) 608 1998-2000 90 1998-2000
Liquefied petroleum gas 40 40 (2)
Peaking Service:
Peoples Energy Resources 60 (3)
The Uno-Ven Co. 10 (4)
Storage gas:
Leased (5) 563 1998-2000 165 1998-2000
Peoples-Manlove (6) 993 63 (7)
Customer-owned (8) 260 50
Total expected design
peak-day availability 2,534 408
(1)Consists of firm gas purchases from non-pipeline suppliers delivered
utilizing firm pipeline transportation. The majority of the gas
purchase contracts are negotiated annually. The terms of the
transportation contracts vary, with the longest term being 5 years.
(2)Reflects derating of capacity, as accepted by the Commission Staff in
Docket 91-0581.
(3)The contract with Peoples Energy Resources is for an initial term
expiring November 30, 1999; the contract continues in effect from
year to year thereafter unless canceled by either party upon 12
months' prior notice.
(4)The contract with The Uno-Ven Company was for an initial term ending
September 30, 1997; however, by its terms, the contract continues in
effect for an additional two year term subject to cancellation by
either party any time on or after September 30, 1997 upon one year's
prior notice.
(5)Consists of leased storage services required to meet design day
requirements with contract lengths varying from 3 to 5 years.
(6)Manlove Field, Peoples Gas' underground storage facility located near
Champaign, Illinois, has a seasonal top-gas capacity (excluding
volumes required to support late-season peaking requirements) of
approximately 27,000 MDth, of which approximately 1,566 MDth is
dedicated to North Shore Gas. Peoples Gas also owns a liquefied
natural gas (LNG) plant at Manlove Field for the primary purpose of
supporting late-season deliverability from the storage facility. The
LNG plant has a storage capacity of 2,000 MDth and is capable of
regasifying 300 MDth of gas per day. For the 1997-98 heating season,
Manlove Field complex will have a maximum peak-day delivery
capability of approximately 1,056 MDth (including 63 MDth for the use
of North Shore Gas).
(7)The contract with Peoples Gas was for an initial term expiring May 1,
1990. However, by its terms, the contract continues in effect unless
canceled by either party upon 120 days notice prior to April 30 of
any year thereafter.
(8) Consists of gas supplies purchased directly from producers and
marketers by the utilities' commercial, industrial, and larger
residential customers.
</TABLE>
The sources of gas supply (including gas transported for customers) in
MDth for Peoples Gas and North Shore Gas for the three fiscal years ended
September 30, 1997, 1996 and 1995, were as follows:
<TABLE>
<CAPTION>
Peoples Gas North Shore Gas
1997 1996 1995 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Gas purchases 156,097 174,552 103,476 27,226 27,940 20,250
Synthetic natural gas (SNG) (a) - - 7,622 - - -
Liquefied petroleum gas produced 7 114 14 20 151 9
Customer-owned gas-received 91,476 93,141 93,225 12,618 12,777 12,379
Underground storage-net (3,786) 228 28,352 (123) 468 3,103
Exchange gas-net (39) (4,446) - (151) (104) -
Company use, franchise
requirements, and
unaccounted-for gas (2,071) (3,169) (3,733) (546) (983) (636)
Total (b) 241,684 260,420 228,956 39,044 40,249 35,105
(a) The SNG facility terminated production during fiscal 1995
(b) See "Gas Sold and Transported" in Item 6.
</TABLE>
SYNTHETIC NATURAL GAS SUPPLY
Peoples Gas owned and operated an SNG plant, the McDowell Energy
Center, located near Joliet, Illinois that used refinery fuel gas and a
variety of natural gas liquids, including ethane, naphtha, natural
gasoline, normal butane, propane, and ethane/propane mix as feedstock for
the production of SNG. The SNG facility terminated production in fiscal
1995.
ITEM 2. PROPERTIES
All of the principal plants and properties of Peoples Gas and North
Shore Gas have been maintained in the ordinary course of business and are
believed to be in satisfactory operating condition. The distribution
facilities serve the City and other areas in Northeastern Illinois.
Peoples Gas owns and operates an underground gas storage reservoir and an
LNG plant at Manlove Field located near Champaign, Illinois. Peoples Gas
also owns a transmission system that transports gas from Manlove Field to
Chicago. The underground storage reservoir and LNG plant also serve
North Shore Gas. General properties include a substantial investment in
office and service buildings, garages, repair shops, and motor vehicles,
together with the equipment, tools, and fixtures necessary to conduct
utility business.
Most of the principal plants and properties of Peoples Gas and North
Shore Gas, other than mains, services, meters, regulators, and cushion
gas in underground storage, are located on property owned in fee.
Substantially all gas mains are located under public streets, alleys, and
highways, or under property owned by others under grants of easements.
Meters and house regulators in use and a portion of services are located
on premises being served. Certain storage wells and other facilities of
the Manlove Field storage reservoir, and certain portions of the
transmission system are located on land held pursuant to leases,
easements, or permits.
Substantially all of the physical properties now owned or hereafter
acquired by Peoples Gas and North Shore Gas are subject to (a) the first-
mortgage lien of each Company's mortgage to First Trust, National
Association, as Trustee, to secure the principal amount of each Company's
outstanding first mortgage bonds and (b) in certain cases, other
exceptions and defects that do not interfere with the use of the
property.
ITEM 3. LEGAL PROCEEDINGS
See Notes 2 and 3 of the Notes to Consolidated Financial Statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE COMPANY
The following is a list of the names, ages, and positions of the
executive officers of the Company. Executive officers were elected to
serve for a term of one year or until their successors are duly elected
and qualified, except for Messrs. Luebbers, Morrow, O'Connell, and Ms. Rogers,
who were appointed.
Age at
Name 11/30/97 Position with the Company
Kenneth S. Balaskovits 55 Vice President and Controller (1993) of the
Company. Mr. Balaskovits is also Vice President
and Controller and Director (1993) of Peoples
Gas and North Shore Gas. Mr. Balaskovits has
been an employee of the Company and/or its
subsidiaries since 1967.
Emmet P. Cassidy 64 Secretary and Treasurer (1989) of the Company.
Mr. Cassidy is also Secretary and Treasurer
(1989) of Peoples Gas and North Shore Gas.
Prior to that, he was Assistant Secretary and
Assistant Treasurer of the Company and both
subsidiaries (1981-1989). Mr. Cassidy has
been an employee of the Company and/or its
subsidiaries since 1955.
J. Bruce Hasch 59 President and Chief Operating Officer (1990)
and Director (1987) of the Company.
Mr. Hasch is also President and Chief Operating
Officer (1990) and a Director (1986) of Peoples
Gas and North Shore Gas. Prior to becoming
President, Mr. Hasch was Executive Vice President
(1985-1990) of the Company and its
subsidiaries and Vice President (1981-1985) of
both subsidiary companies. Mr. Hasch has been an
employee of the Company and/or its subsidiaries
since 1960, including 16 years with Natural Gas
Pipeline Company of America, a former subsidiary.
James Hinchliff 57 Senior Vice President and General Counsel
(1989) of the Company.
Mr. Hinchliff is also Senior Vice President and
General Counsel (1989) and a Director (1985) of
Peoples Gas and North Shore Gas. Prior to that,
he was Vice President and General Counsel
(1984-1989) of the Company and of both
subsidiaries, and he was Assistant General
Counsel of the Company (1979-1984) and of both
subsidiaries (1981-1984). Mr. Hinchliff has been
an employee of the Company and/or its
subsidiaries since 1972.
Age at
Name 11/30/97 Position with the Company
James M. Luebbers 51 Vice President of the Company. Mr. Luebbers is
also Vice President of Peoples Gas and North
Shore Gas. Mr. Luebbers has been an employee of
the Company and/or its subsidiaries since 1969.
William E. Morrow 41 Vice President of the Company. Mr. Morrow is also
Vice President of Peoples Gas and North Shore
Gas. Mr. Morrow has been an employee of the
Company and/or its subsidiaries since 1979.
Kevin O'Connell 51 Vice President of the Company. Mr. O'Connell is
also Vice President of Peoples Gas and North
Shore Gas. Mr. O'Connell has been an employee of
the Company and/or its subsidiaries since 1997.
Thomas M. Patrick 51 Executive Vice President (1996) of the Company.
Mr. Patrick is also Executive Vice President and
Director (1997) of Peoples Gas and North Shore
Gas. Prior to becoming Executive Vice President,
Mr. Patrick was Vice President (1989-1996) of
both subsidiaries. Mr. Patrick has been an
employee of the Company and/or its subsidiaries
since 1976.
Desiree Rogers 38 Vice President of the Company. Ms. Rogers is also
Vice President of Peoples Gas and North Shore
Gas. Ms. Rogers has been an employee of the
Company and/or its subsidiaries since 1997.
Richard E. Terry 60 Chairman of the Board and Chief Executive
Officer (1990) and Director (1984) of the
Company. Mr. Terry is also Chairman of the Board
and Chief Executive Officer (1990) and a Director
(1982) of Peoples Gas and North Shore Gas. Prior
to becoming Chairman, Mr. Terry was President and
Chief Operating Officer (1987-1990), Executive
Vice President (1984-1987), and Vice President
and General Counsel (1981-1984) of the Company
and its subsidiaries. Mr. Terry has been an
employee of the Company and/or its subsidiaries
since 1972.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The common stock of the Company is listed on the New York, Chicago,
and Pacific Stock Exchanges (trading symbol: PGL). At November 30, 1997,
there were 27,763 registered shareholders.
The common stock price range and dividends declared per common share
by quarters for fiscal 1997 and 1996 were as follows:
Fiscal Stock Price Dividends
Quarters High Low Close Declared
1997
Fourth $39-11/16 $36-5/8 $37-11/16 $0.47
Third 39-7/8 31-1/4 37-7/16 0.47
Second 35-5/8 32-5/8 33-1/8 0.47
First 37-3/8 33 33-7/8 0.46
1996
Fourth $36-1/8 $30-7/8 $34 $0.46
Third 33-1/2 29-5/8 33-1/2 0.46
Second 33-1/4 29-7/8 32-3/8 0.46
First 32 27-1/8 31-3/4 0.45
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA
<S> <C> <C> <C> <C> <C>
For fiscal years ended September 30, 1997 1996 1995 1994 1993
COMMON STOCK INFORMATION
Earnings per share $ 2.81 $ 2.96 $ 1.78 $ 2.13 $ 2.11
Cash dividends declared per share $ 1.87 $ 1.83 $ 1.80 $ 1.795 $ 1.775
Book value per share at year-end $ 20.43 $ 19.48 $ 18.38 $ 18.39 $ 18.05
Average shares outstanding (thousands) 35,000 34,942 34,901 34,854 34,809
OPERATING RESULTS (thousands)
Operating Revenues:
Residential $ 941,557 $ 883,100 $ 752,796 $ 951,037 $ 929,407
Commercial 146,412 141,594 116,113 160,912 156,377
Industrial 28,918 32,075 24,128 41,979 41,354
Transportation (a) 134,086 128,876 122,814 110,128 117,949
Other 23,397 13,032 17,550 15,432 13,854
Total Operating Revenues 1,274,370 1,198,677 1,033,401 1,279,488 1,258,941
Less- Gas costs 615,602 529,875 457,436 669,039 646,351
- Revenue taxes 126,224 121,172 109,720 132,734 131,673
Net Operating Revenues $ 532,544 $ 547,630 $ 466,245 $ 477,715 $ 480,917
Net Income $ 98,404 $ 103,438 $ 62,154 $ 74,399 $ 73,375
ASSETS AT YEAR-END (thousands)
Property, plant and equipment $ 2,117,509 $ 2,046,156 $ 2,088,277 $ 2,019,379 $ 1,950,981
Less - Accumulated depreciation 715,279 665,077 715,208 677,447 632,965
Net Property, Plant and Equipment $ 1,402,230 $ 1,381,079 $ 1,373,069 $ 1,341,932 $ 1,318,016
Total assets $ 1,820,805 $ 1,783,750 $ 1,822,492 $ 1,809,286 $ 1,765,870
Capital expenditures - construction $ 89,404 $ 85,620 $ 95,941 $ 87,218 $ 131,669
CAPITALIZATION AT YEAR-END (thousands)
Common equity $ 716,499 $ 681,185 $ 641,694 $ 641,378 $ 628,451
Long-term debt of subsidiaries 527,004 527,064 621,874 626,075 528,075
Total Capitalization $ 1,243,503 $ 1,208,249 $ 1,263,568 $ 1,267,453 $ 1,156,526
FINANCIAL RATIOS (per cent)
Capitalization at Year-end:
Common equity 58 56 51 51 54
Long-term debt of subsidiaries 42 44 49 49 46
Total Capitalization 100 100 100 100 100
Return on common equity at year-end 13.7 15.2 9.7 11.6 11.7
GAS SOLD AND TRANSPORTED (MDth)
Gas Sales:
Residential 142,836 154,128 130,571 142,876 144,199
Commercial 24,910 27,390 22,079 26,206 26,185
Industrial 5,361 6,803 5,059 7,325 7,623
Transportation (a) 107,621 112,348 106,352 102,023 99,607
Total Gas Sales and Transportation 280,728 300,669 264,061 278,430 277,614
Margin per Dth delivered $ 1.90 $ 1.82 $ 1.77 $ 1.72 $ 1.73
NUMBER OF CUSTOMERS (average)
Residential 910,657 910,236 906,881 905,461 904,316
Commercial 50,914 50,719 50,872 50,955 50,736
Industrial 3,708 3,696 3,783 3,927 4,069
Transportation (a) 10,959 11,348 10,934 10,247 9,734
Total Customers 976,238 975,999 972,470 970,590 968,855
DEGREE DAYS 6,806 7,080 5,897 6,701 6,679
Per cent of normal (6,536) 104 108 90 103 102
(a) Includes commercial, industrial, and larger residential customers.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net Income
Net income decreased $5.0 million, to $98.4 million, in fiscal 1997
from 1996, primarily a result of decreased gas deliveries due to
weather that was four per cent warmer than the previous fiscal year and
conservation. Also hindering this year's comparative results were the
year-ago period's gain on the expiration of gas storage contracts (see
Note 6 of the Notes to Consolidated Financial Statements), increased
computer support services associated with the implementation of a new
customer information system, and increased depreciation and
amortization expense. Partially offsetting these effects were a
decrease in pension expense (see Note 7A of the Notes to Consolidated
Financial Statements), a full year's effect of the utilities' November
1995 rate increases (see Note 2A of the Notes to the Consolidated
Financial Statements), decreased net interest expense and a tax accrual
adjustment.
In 1996, net income increased $41.3 million, to $103.4 million, due
chiefly to weather that was 20 per cent colder than in 1995 and to the
aforementioned rate increases. In addition, net income benefited from
the previously mentioned gain associated with the expiration of certain
natural gas storage contracts and a net credit in pension expense.
These increases were partly offset by the fiscal year's higher
operating costs, primarily the result of the prior year's recognition
of the federal income tax settlement (see Note 8D of the Notes to
Consolidated Financial Statements).
<TABLE>
<CAPTION>
A summary of variations affecting income between years is presented
below, with explanations of significant differences following:
Fiscal 1997 Fiscal 1996
over 1996 over 1995
Amount Amount
(000's) Per Cent (000's) Per Cent
<S> <C> <C> <C> <C>
Net operating revenues (a) $(15,086) (2.8) $81,385 17.5
Operation and maintenance expenses (16,925) (6.4) 25,134 10.4
Depreciation and amortization expens 3,439 4.9 4,227 6.4
Income taxes (2,025) (3.6) 27,895 97.1
Other income and deductions (6,163) (21.3) 17,456 37.6
Net income (5,034) (4.9) 41,284 66.4
(a) Operating revenues, net of gas costs and revenue taxes.
</TABLE>
Net Operating Revenues
Gross revenues of Peoples Gas and North Shore Gas are affected by
changes in the unit cost of the utilities' gas purchases and do not
include the cost of gas supplies for customers who purchase gas
directly from producers and marketers rather than from the utilities.
The direct customer purchases have little effect on net income because
the utilities provide transportation service for such gas volumes and
recover margins similar to those applicable to conventional gas sales.
Except for the effect of customer conservation that may result from
substantial increases in the commodity cost of gas supplies, changes in
the unit cost of gas do not significantly affect net income because the
utilities' tariffs provide for dollar-for-dollar recovery of gas costs.
(See Note 1L of the Notes to Consolidated Financial Statements.) The
utilities' tariffs also provide for dollar-for-dollar recovery of the
cost of revenue taxes imposed by the state and various municipalities.
Since income is not significantly affected by changes in revenue
from customers' gas purchases from producers or marketers rather than
from the subsidiaries, changes in gas costs (except for the effect of
customer conservation that may result from substantial increases in the
commodity cost of gas supplies), or changes in revenue taxes, the
discussion below pertains to "net operating revenues" (operating
revenues, net of gas costs and revenue taxes). The Company considers
net operating revenues to be a more pertinent measure of operating
results than gross revenues.
Net operating revenues decreased $15.1 million, to $532.5 million,
in 1997. Natural gas deliveries decreased 20.0 bcf, to 280.7 bcf,
primarily due to weather that was four per cent warmer than in 1996 and
conservation. Net operating revenues decreased approximately $24.2
million ($14.6 million after income taxes) as a result of customer
conservation measures and warmer weather. However, a full year's
effect of the utilities' rate increases improved net operating revenues
by approximately $4.5 million ($2.7 million after income taxes).
In 1996, net operating revenues increased $81.4 million, to $547.6
million. Natural gas deliveries increased 36.6 bcf, to 300.7 bcf, due
to weather that was 20 per cent colder than in 1995 and over eight per
cent colder than normal. Net operating revenues increased
approximately $29 million ($17.5 million after income taxes) as a
result of the colder weather. Also, the aforementioned rate increases
for the Company's utility subsidiaries improved net operating revenues
by about $34.7 million ($20.9 million after income taxes).
See Other Matters - Operating Statistics for details of selected
financial and operating information by gas service classification.
Operation and Maintenance Expenses
Operation and maintenance expenses decreased $16.9 million, to
$249.0 million, in 1997, due chiefly to an $18.6 million decrease in
pension expense caused by changes in settlement accounting attributed
to employees choosing early retirement and actuarial assumptions (see
Note 7A of the Notes to Consolidated Financial Statements), lower
reengineering expenses ($2.5 million), and reductions in costs
associated with liability insurance premiums and claim settlements
($2.3 million) and group insurance expense ($1.7 million). These
decreases were partially offset by an increase in payments for outside
services ($3.7 million) and higher administrative and general expenses.
In 1996, operation and maintenance expenses increased $25.1 million,
to $266.0 million, due principally to the reduction of expense from the
prior year's recognition of about $14 million for an IRS settlement.
(See Note 8D of the Notes to Consolidated Financial Statements.) Also,
the provision for uncollectible accounts increased ($5.4 million), due
largely to greater sales revenue attributable to the colder weather and
higher rates. In addition, increases between years resulted from
greater labor costs ($4.1 million), outside services ($2.4 million),
distribution system expenses ($3.1 million), and environmental costs
recovered through rates ($3.3 million). These increases were offset,
in part, by decreased pension costs ($12.9 million).
Depreciation and Amortization Expense
Depreciation and amortization expense increased $3.4 million, to
$74.1 million, in 1997, due chiefly to depreciable property additions.
In 1996, depreciation and amortization expense increased $4.2
million, to $70.6 million, due mainly to depreciable property additions
and the amortization of costs associated with the closing of the
synthetic natural gas-making plant.
Income Taxes
Income taxes, exclusive of the $1.8 million included in other income
and deductions, declined $2.0 million, to $54.6 million, in 1997, due
to a tax accrual adjustment.
In 1996, income taxes, exclusive of the $5.8 million included in
other income and deductions, increased $27.9 million, to $56.6 million,
due principally to higher pre-tax income.
Other Income and Deductions
Other income and deductions increased $6.2 million from the prior
year, due primarily to the prior period's gain associated with the
expiration of natural gas storage contracts. (See Note 6 of the Notes
to Consolidated Financial Statements.) Partially offsetting this
increase were reductions in interest expense on long-term debt,
resulting from the utility subsidiaries' early redemption of first
mortgage bonds (see Note 13B of the Notes to Consolidated Financial
Statements), and on amounts refunded to customers.
In 1996, other income and deductions decreased $17.5 million from
the prior year, due largely to the gain of $8.9 million, after income
taxes, associated with the expiration of certain natural gas storage
contracts. Additionally, fiscal year 1996 included lower interest on
long-term debt. These decreases were offset, in part, by decreased
interest income reflecting lower cash balances.
Other Matters
Effect of Weather. Weather variations affect the volumes of gas
delivered for heating purposes and, therefore, can have a significant
positive or negative impact on net income, cash position, and coverage
ratios.
Accounting Standards. In February 1997, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share". This statement
simplifies the calculation of earnings per share (EPS) and increases
conformity to international standards. Under SFAS No. 128, primary EPS
is replaced by "basic" EPS, which excludes the effects of any dilution.
It is calculated by dividing net income available to common
shareholders by the weighted-average number of common shares
outstanding for the period. "Diluted" EPS, which is computed similarly
to fully diluted EPS, reflects the potential dilution that could occur
if securities or other contracts to issue common stock were exercised
or converted into common stock.
The Company is required to adopt the new standard for its fiscal
1998 financial statements (including interim financial statements).
Early adoption is not permitted. Pro forma EPS, as if the Company
adopted SFAS No. 128 as of October 1 of each period presented, are as
follows:
Fiscal Years 1997 1996 1995
Basic EPS $2.81 $2.96 $1.78
Diluted EPS $2.80 $2.95 $1.78
FERC Order 636 Costs. The Commission entered orders providing for full
recovery by Peoples Gas and North Shore Gas of FERC Order 636
transition costs from the utilities' respective gas service customers.
The Commission's orders have been appealed to the Illinois Supreme
Court. (See Notes 1L, 2A, and 2B of the Notes to Consolidated
Financial Statements.)
Large Volume Gas Service Agreements. Peoples Gas and North Shore Gas
have entered into gas service contracts with certain large volume
customers under specific rate schedules approved by the Commission.
These contracts were negotiated to overcome the potential threat of
bypassing the utilities' distribution systems. The contracts will not
have a material adverse effect on the financial position or results of
operations of Peoples Gas or North Shore Gas.
Small-Volume Transportation Service. On June 25, 1997, the Commission
allowed Riders SVT and AGG to go into effect for Peoples Gas, which
will initiate a two year pilot program designed to provide
transportation service to certain small-volume industrial and
commercial customers of the utility as well as to some of its large
residential customers. The Commission also ordered a concurrent
investigation of the program to ascertain if program adjustments or
revisions are required.
Operating Statistics. The following table represents gas distribution
margin components:
For fiscal years ended September 30, 1997 1996 1995
Operating Revenues (thousands):
Gas sales
Residential $ 941,557 $ 883,100 $ 752,796
Commercial 146,412 141,594 116,113
Industrial 28,918 32,075 24,128
1,116,887 1,056,769 893,037
Transportation
Residential 36,812 37,133 37,850
Commercial 48,108 51,251 50,318
Industrial 31,018 36,059 34,646
Contract Pooling 17,742 4,433 -
Other 406 - -
134,086 128,876 122,814
Other 23,397 13,032 17,550
Total Operating Revenues 1,274,370 1,198,677 1,033,401
Less- Gas Costs 615,602 529,875 457,436
- Revenues Taxes 126,224 121,172 109,720
Net Operating Revenues $ 532,544 $ 547,630 $ 466,245
Deliveries (MDth):
Gas Sales
Residential 142,836 154,128 130,571
Commercial 24,910 27,390 22,079
Industrial 5,361 6,803 5,059
173,107 188,321 157,709
Transportation (a)
Residential 27,910 26,521 24,811
Commercial 40,564 42,461 41,648
Industrial 38,913 43,366 39,893
Other 234 - -
107,621 112,348 106,352
Total Gas Sales and Transportation 280,728 300,669 264,061
Margin per Dth delivered $ 1.90 $ 1.82 $ 1.77
(a) Volumes associated with contract pooling service are included in
the respective customer classes.
INVESTMENT IN NON-UTILITY SUBSIDIARIES
The Company intends to increase its investment in nonregulated energy
businesses through investments in its non-utility subsidiaries (see Liquidity-
Credit Lines and Debt Ratings; Capital Resources - Capital Spending).
LIQUIDITY
Source of Funds. The Company has access to outside capital markets and
to internal sources of funds that together provide sufficient resources
to meet capital requirements. It does not anticipate any changes that
would materially alter its current liquidity position.
Due to the seasonal nature of gas usage, a major portion of cash
collections occurs between December and May. Because of timing
differences in the receipt and disbursement of cash and the level of
construction requirements, the utility subsidiaries may borrow on a
short-term basis. Short-term borrowings are repaid with cash from
operations, other short-term borrowings, or refinanced on a permanent
basis with debt or equity, depending on capital market conditions and
capital structure considerations.
Credit Lines. At September 30, 1997, the Company had in place a bank
line of credit of $20 million, of which $19.9 million was available.
In connection with plans to make equity investments in one or more of
its non-utility subsidiaries, the Company is in the process of establishing
a $150 million commercial paper program. If this financing vehicle is
utilized, the Company will enter into credit agreements with commercial
banks to provide 100% back-up lines of credit to support this commercial
paper program.
The utility subsidiaries have lines of credit of $129.4 million. At
September 30, 1997, the utility subsidiaries had unused credit
available from banks of $126.5 million. (See Note 12 of the Notes to
Consolidated Financial Statements.)
Cash Flow Activities. Net cash provided by operating activities in
1997 increased by $69.1 million, due chiefly to changes in other
assets, gas costs refundable, and net receivables. Partially
offsetting these items were changes in accounts payable and gas in
storage.
In 1996, net cash provided by operating activities declined by
$128.0 million, due principally to changes related to gas sales revenue
refundable, net receivables, and other assets. Such items were
partially offset by increases from net income, due mainly to colder
weather and the rate increases, and from accounts payable. In 1995,
net cash provided by operating activities increased by $22.9 million,
due primarily to changes related to gas in storage, other assets, and
deferred income taxes. These items were offset, in part, by changes in
gas costs recoverable and net receivables.
Net cash used in investing activities for 1997, 1996, and 1995
largely represents the level of capital expenditures in the respective
years.
Net cash used in financing activities in 1997 reflects dividends
paid to common stockholders and the issuance of new shares of common
stock through the direct purchase and investment plan.
In 1996, net cash used in financing activities reflects the
redemption of previously issued debt. (See Note 13B of the Notes to
Consolidated Financial Statements.) Net cash used in financing
activities in 1995 includes drawdowns from the trust fund associated
with prior financing for utility construction activities.
Indenture Restrictions. North Shore Gas' indenture relating to its
first mortgage bonds contains provisions and covenants restricting the
payment of cash dividends and the purchase or redemption of capital
stock. At September 30, 1997, such restrictions amounted to $11.6
million out of North Shore Gas' total retained earnings of $67.9
million. (See Note 4 of the Notes to Consolidated Financial
Statements.)
District Energy. Peoples District Energy is a 50 per cent participant
in a partnership, Trigen-Peoples District Energy Company, that provides
district energy services to the McCormick Place exposition and
convention center in Chicago, Illinois. In May 1998 the partnership
will begin providing district energy services to the adjacent Hyatt
Regency McCormick Place Hotel. Neither the partnership nor its
partners are regulated as a public utility. The Company and Trigen
Energy Corporation have each provided a joint and several limited
guarantee to the owner and operator of McCormick Place and also have
certain limited obligations to the partnership's lender under a
Sponsors Support and Equity Contribution Agreement.
Interest Coverage. The fixed charges coverage ratios for Peoples Gas
for fiscal 1997, 1996, and 1995 were 5.01, 4.84, and 2.76,
respectively. The corresponding coverage ratios for North Shore Gas
for the same periods were 5.74, 5.62, and 2.93, respectively. The
increase in the ratio in the current fiscal year for each Company is
due to lower interest expense on amounts refundable to customers and on
long-term debt. The increase in the ratio for fiscal year 1996 for
each Company reflects the redemption of long-term debt and higher pre-
tax income resulting from colder weather and the Commission-approved
rate increases. (See Results of Operations - Net Income.) The ratios
for fiscal year 1995 for both utility subsidiaries include the
recording of an IRS settlement in income. (See Note 8D of the Notes to
Consolidated Financial Statements.)
Debt Ratings. In connection with its proposed $150 million commercial
paper program, the Company requested Moody's Investors Service and
Standard and Poor's Ratings Group to establish credit ratings on the
Company's securities. On November 25, 1997, Moody's Investors Service
assigned the Company a long-term debt rating of A2 and a short-term
debt rating of P-1. On the same date Standard and Poor's assigned the
Company a long-term debt rating of A+ and a short-term rating of A-1.
The long-term debt of Peoples Gas and North Shore Gas had been rated
Aa3 by Moody's Investors Service and AA- by Standard & Poor's since
fiscal 1985. On November 25, 1997, Moody's raised the long-term debt
rating of both utilities to Aa2. The commercial paper of both
utilities has the top rating from both agencies.
Environmental Matters. The Company's utility subsidiaries are
conducting environmental investigations and work at certain sites that
were the location of former manufactured gas operations. (See Note 3A
of the Notes to Consolidated Financial Statements.)
In 1994, North Shore Gas received a demand from a responsible party
under the Comprehensive Environ-mental Response, Compensation and
Liability Act of 1980, as amended (CERCLA), for reimbursement,
indemnification, and contribution for response costs incurred at a
former mineral processing site in Denver, Colorado. North Shore Gas
filed a declaratory judgment action asking the court to declare that
North Shore Gas is not liable for response costs relating to the site.
Salomon filed a counterclaim for costs to be incurred by Salomon and
Shattuck with respect to the site. On March 7, 1997, the District
Court granted North Shore Gas' motion for summary judgment, declaring
that North Shore Gas is not liable for any response costs in connection
with the Denver site. Salomon has appealed the ruling of the District
Court to the United States Court of Appeals, Seventh Circuit. (See
Note 3B of the Notes to Consolidated Financial Statements.)
On November 14, 1995, the Illinois Attorney General filed a
complaint in the Circuit Court of Cook County naming North Shore Gas
and four other parties as defendants. The complaint alleges violations
arising out of a gasoline release that occurred in Wheeling, Illinois,
in June 1992, when a contractor who was installing a pipeline for North
Shore Gas accidentally struck a gasoline pipeline owned by West Shore
Pipeline Company. North Shore Gas is contesting this suit. (See Note
3C of the Notes to Consolidated Financial Statements.)
Regulatory Actions. On November 8, 1995, the Commission issued orders
approving changes in rates of Peoples Gas and North Shore Gas. (See
Note 2A of the Notes to Consolidated Financial Statements.)
Year 2000. The Company is modifying all of its computer programs to be
year 2000 compatible. The Company does not believe that the amount of
expenditures it will incur in connection with its year 2000
modification will have a material adverse effect on the financial
position or results of operations of the Company.
CAPITAL RESOURCES
Capital Spending. Capital expenditures for additions, replacements,
and improvements to the utility plant were $89.4 million in 1997, $85.6
million in 1996, and $95.9 million in 1995.
Expenditures in fiscal 1997 increased $3.8 million from 1996,
resulting from an increase of $12.5 million for a new customer
information system, partially offset by the continuation of a cost
containment program.
In fiscal 1996, expenditures decreased $10.3 million from 1995,
reflecting the continuation of a cost containment program.
Capital expenditures for fiscal 1998 are expected to be about $115.6
million, an increase of $26.2 million from the 1997 level. The
estimate of expenditures for 1998 includes $26.0 million for Peoples
Gas' customer information system and $13.5 million for its remote
automatic meter reading project.
There are no sinking fund requirements for long-term debt due in
fiscal 1998. (See Note 13C of the Notes to Consolidated Financial
Statements.)
The Company anticipates that the utilities' future cash needs for
capital expenditures and sinking fund requirements and maturities will
be met through internally generated funds, intercompany loans from the
Company, borrowing arrangements with banks and/or the issuance of
commercial paper on an interim basis, and periodic long-term financing
involving equity or the utilities' first mortgage bonds.
The capital needs of the Company's non-utility subsidiaries have
been met with periodic equity infusions. The Company intends to
increase its investment in nonregulated energy businesses. It is
anticipated that future capital needs for such investments will be met
through additional equity investments by the Company in or through
loans from the Company to its non-utility subsidiaries. To fund such
potential investments, the Company currently is in the process of
establishing a $150 million commercial paper program.
Bonds Redeemed. On December 29, 1995, Peoples Gas redeemed, from
general corporate funds, approximately $87 million aggregate principal
amount of the City of Joliet's 1984 Gas Supply Revenue Bonds, Series A
and B, which were secured by Peoples Gas' Series U and V First and
Refunding Mortgage Bonds. (See Note 13B of the Notes to Consolidated
Financial Statements.)
On February 1, 1996, North Shore Gas redeemed $8 million aggregate
principal amount of its Series I First Mortgage Bonds, using the
proceeds of a short-term bank loan as well as other monies of North
Shore Gas. (See Note 13B of the Notes to Consolidated Financial
Statements.)
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Statement of Management's Responsibility 20
Report of Independent Public Accountants 21
Consolidated Statements of Income for fiscal years ended
September 30, 1997, 1996, and 1995 22
Consolidated Statements of Retained Earnings for fiscal
years ended September 30, 1997, 1996, and 1995 22
Consolidated Balance Sheets at September 30, 1997 and 1996 23
Consolidated Capitalization Statements at September 30, 1997
and 1996 24
Consolidated Statements of Cash Flows for fiscal years ended
September 30, 1997, 1996, and 1995 25
Notes to Consolidated Financial Statements 26
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
The financial statements and other financial information included in
this report were prepared by management, who is responsible for the
integrity and objectivity of presented data. The consolidated
financial statements of the Company and its subsidiaries were prepared
in conformity with generally accepted accounting principles and
necessarily include some amounts that are based on the best estimates
and judgments of management.
The Company maintains internal accounting systems and related
administrative controls, along with internal audit programs, that are
designed to provide reasonable assurance that the accounting records
are accurate and assets are safeguarded from loss or unauthorized use.
Consequently, management believes that the accounting records and
controls are adequate to produce reliable financial statements.
Arthur Andersen LLP, the Company's independent public accountants
approved by the shareholders, as a part of its audit of the financial
statements, selectively reviews and tests certain aspects of internal
accounting controls solely to determine the nature, timing, and extent
of its audit tests. Management has made available to Arthur Andersen
LLP all of the Company's financial records and related data and
believes that all representations made to the independent public
accountants during its audit were valid and appropriate.
The Audit Committee of the Board of Directors, comprised of six
outside directors, meets periodically with management, the internal
auditors, and Arthur Andersen LLP, jointly and separately, to ensure
that appropriate responsibilities are discharged. These meetings
include discussion and review of accounting principles and practices,
internal accounting controls, audit results, and the presentation of
financial information in the annual report.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Shareholders of Peoples Energy Corporation:
We have audited the accompanying consolidated balance sheets and
consolidated capitalization statements of Peoples Energy Corporation
(an Illinois corporation) and subsidiary companies at
September 30, 1997 and 1996, and the related consolidated statements of
income, retained earnings, and cash flows for each of the three years
in the period ended September 30, 1997. These financial statements
and the schedule referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Peoples
Energy Corporation and subsidiary companies at September 30, 1997 and
1996, and the results of their operations and their cash flows for each
of the three years in the period ended September 30, 1997, in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The financial statement
schedule listed in Item 14(a)2 is presented for purposes of complying
with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. The financial statement schedule has
been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, fairly states, in all
material respects, the financial data required to be set forth therein
in relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
October 31, 1997
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Peoples Energy Corporation
For fiscal years ended September 30, 1997 1996 1995
(Thousands, except per-share amounts)
<S> <C> <C> <C> <C>
Operating Revenues:
Gas sales $ 1,116,887 $ 1,056,769 $ 893,037
Transportation 134,086 128,876 122,814
Other 23,397 13,032 17,550
Total Operating Revenues 1,274,370 1,198,677 1,033,401
Operating Expenss:
Gas costs 615,602 529,875 457,436
Operation 201,409 220,318 199,095
Maintenance 47,626 45,642 41,731
Depreciation and amortization 74,074 70,635 66,408
Taxes- Income 54,595 56,620 28,725
- State and local revenue 126,224 121,172 109,720
- Other 21,297 22,001 21,700
Total Operating Expenses 1,140,827 1,066,263 924,815
Operating Income 133,543 132,414 108,586
Other Income and (Deductions):
Interest income 5,410 5,397 10,066
Allowance for funds used during construction 267 23 -
Interest on long-term debt of subsidiaries (35,722) (37,826) (46,413)
Other interest expense (2,753) (5,114) (7,457)
Income taxes (1,840) (5,839) (3,831)
Miscellaneous - net (see Note 10) (501) 14,383 1,203
Total Other Income and Deductions (35,139) (28,976) (46,432)
Net Income $ 98,404 $ 103,438 $ 62,154
Average Shares of Common Stock Outstanding 35,000 34,942 34,901
Earnings Per Share of Common Stock $ 2.81 $ 2.96 $ 1.78
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
Peoples Energy Corporation
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
<S> <C> <C> <C>
Balance at Beginning of Year $ 403,304 $ 364,581 $ 365,258
Add - Net Income 98,404 103,438 62,154
Deduct- Dividends declared on common stock of $1.87
$1.83, and $1.80 per share, respectively 65,460 63,954 62,831
- Additional minimum liability for
non-qualified pension plan, net of tax 1,596 761 -
Balance at End of Year $ 434,652 $ 403,304 $ 364,581
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
Peoples Energy Corporation
At September 30, 1997 1996
(Thousands)
<S> <C> <C>
Properties and Other Assets
Capital Investments:
Property, plant and equipment, at original cost $2,117,509 $2,046,156
Less - Accumulated depreciation 715,279 665,077
Net property, plant and equipment 1,402,230 1,381,079
Other investments 16,305 12,348
Total Capital Investments - Net 1,418,535 1,393,427
Current Assets:
Cash and cash equivalents 33,298 37,770
Temporary cash investments 15,900 900
Receivables -
Customers, net of allowance for uncollectible
accounts of $29,895 and $26,211, respectively 72,290 68,675
Other 39,182 32,399
Accrued unbilled revenues 22,742 29,314
Materials and supplies, at average cost 19,386 16,128
Gas in storage, at last-in, first-out cost 77,843 65,502
Gas costs recoverable through rate adjustments 5,164 19,920
Prepayments 42,902 12,287
Total Current Assets 328,707 282,895
Other Assets:
Regulatory assets of subsidiaries (see Note 1H) 54,136 91,498
Deferred charges 19,427 15,930
Total Other Assets 73,563 107,428
Total Properties and Other Assets $1,820,805 $1,783,750
Capitalization and Liabilities
Capitalization (see Consolidated Capitalization Statements) $1,243,503 $1,208,249
Current Liabilities:
Interim loans of subsidiaries 2,810 2,625
Accounts payable 134,813 147,972
Dividends payable on common stock 16,479 16,082
Customer gas service and credit deposits 45,386 42,390
Accrued taxes 20,645 32,821
Gas sales revenue refundable through rate adjustments 14,951 13,921
Accrued interest 10,800 10,796
Total Current Liabilities 245,884 266,607
Deferred Credits and Other Liabilities:
Deferred income taxes - primarily accelerated depreciation (see Note 8C) 249,178 230,948
Investment tax credits being amortized over
the average lives of related property 33,942 35,439
Other 48,298 42,507
Total Deferred Credits and Other Liabilities 331,418 308,894
Total Capitalization and Liabilities $1,820,805 $1,783,750
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED CAPITALIZATION STATEMENTS
Peoples Energy Corporation
At September 30, 1997 1996
(Thousands, except number of shares)
<S> <C> <C>
Common Stockholders' Equity:
Common stock, without par value -
Authorized 60,000,000 shares
Outstanding 35,069,517 and 34,960,399 shares,respectively $ 281,847 $ 277,881
Retained earnings (see Consolidated Statements
of Retained Earnings) 434,652 403,304
Total Common Stockholders' Equity 716,499 681,185
Long-Term Debt:
Exclusive of sinking fund payments and maturities
due within one year
The Peoples Gas Light and Coke Company
First and Refunding Mortgage Bonds -
Adjustable-Rate Series W (3.95% and 4% through
September 30, 1997 and September 30, 1996, respectively),
due October 1, 1999 (see Note 13A) 10,400 10,400
6.875% Series X, due March 1, 2015 50,000 50,000
7.50% Series Y, due March 1, 2015 50,000 50,000
7.50% Series Z, due March 1, 2015 50,000 50,000
8.10% Series BB, due May 1, 2020 75,000 75,000
6.37% Series CC, due May 1, 2003 75,000 75,000
5-3/4% Series DD, due December 1, 2023 75,000 75,000
Adjustable-Rate Series EE (3.70% and 3.85% through
November 30, 1997 and November 30, 1996, respectively),
due December 1, 2023 (see Note 13A) 27,000 27,000
6.10% Series FF, due June 1, 2025 50,000 50,000
North Shore Gas Company
First Mortgage Bonds -
8% Series J, due November 1, 2020 24,699 24,734
6-3/8% Series K, due October 1, 2022 24,905 24,930
6.37% Series L, due May 1, 2003 15,000 15,000
Total Long-Term Debt 527,004 527,064
Total Capitalization $ 1,243,503 $ 1,208,249
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Peoples Energy Corporation
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
<S> <C> <C> <C>
Operating Activities:
Net Income $ 98,404 $ 103,438 $ 62,154
Adjustments to reconcile net income to net cash:
Depreciation and amortization 74,074 70,635 66,408
Deferred income taxes and investment tax credits - net 16,463 13,669 10,556
Change in deferred credits and other liabilities 6,061 20,324 (9,522)
Change in other assets 28,251 (56,853) (1,607)
Other - 85 63
Change in current assets and liabilities:
Receivables - net (10,398) (41,766) 16,875
Accrued unbilled revenues 6,572 (8,147) (1,245)
Materials and supplies (3,258) 338 7,389
Gas in storage (12,341) 35,044 50,458
Gas costs recoverable 14,756 (13,715) 8,221
Prepayments (30,615) (9,985) (251)
Accounts payable (13,159) 45,595 (6,758)
Customer gas service and credit deposits 2,996 1,813 (4,843)
Accrued taxes (12,176) 4,661 (776)
Gas sales revenue refundable 1,030 (65,581) 28,559
Accrued interest 4 (2,001) (146)
Net Cash Provided by Operating Activities 166,664 97,554 225,535
Investing Activities:
Capital expenditures of subsidiaries - construction (89,404) (85,620) (95,941)
Other assets 584 11,887 (1,603)
Other capital investments (6,344) (2,827) (123)
Other temporary cash investments (15,000) 200 (100)
Other long-term cash investments - - 5,982
Net Cash Used in Investing Activities (110,164) (76,360) (91,785)
Financing Activities:
Interim loans of subsidiaries - net 185 1,725 -
Issuance of long-term debt of subsidiaries - - 50,000
Trust fuutility construction - - 31,493
- bond redemption - 237 (237)
Retirement of long-term debt of subsidiaries (60) (98,810) (54,201)
Dividends paid on common stock (65,063) (63,583) (62,810)
Proceeds from issuance of common stock 3,966 768 993
Net Cash Used in Financing Activities (60,972) (159,663) (34,762)
Net Increase (Decrease) in Cash and Cash Equivalents (4,472) (138,469) 98,988
Cash and Cash Equivalents at Beginning of Year 37,770 176,239 77,251
Cash and Cash Equivalents at End of Year $ 33,298 $ 37,770 $ 176,239
The Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
Peoples Energy Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1A Principles of Consolidation
All subsidiaries are included in the consolidated
financial statements. All significant intercompany
transactions have been eliminated in consolidation. Certain
items previously reported for years prior to 1997 have been
reclassified to conform with the current-year presentation.
1B Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ
from those estimates.
1C Concentration of Credit Risk
Peoples Gas provides natural gas service to approximately
836,000 customers within the City of Chicago. North Shore
Gas provides natural gas service to about 140,000 customers
within approximately 275 square miles in Northeastern
Illinois. Credit risk for each utility is spread over a
diversified base of residential, commercial, and industrial
retail sales and transportation customers.
Peoples Gas and North Shore Gas encourage customers to
participate in their long-standing budget payment programs,
which allow the cost of higher gas consumption levels
associated with the heating season to be spread over a 12-
month billing cycle. Customers' payment records are
continually monitored and credit deposits are required, when
appropriate, to minimize uncollectible write-offs.
1D Revenue Recognition
Gas sales revenues are recorded on the accrual basis for
all gas delivered during the month, including an estimate
for gas delivered but unbilled at the end of each month.
1E Property, Plant and Equipment
Property, plant and equipment is stated at original cost
and includes appropriate amounts of capitalized labor costs,
payroll taxes, employee benefit costs, administrative costs,
and an allowance for funds used during construction.
1F Accounts Payable
The Company utilizes controlled disbursement banking
arrangements under which certain bank accounts have negative
book balances due to checks in transit. The negative
balances are classified as Accounts Payable.
1G Maintenance and Depreciation
The Company's utility subsidiaries charge the cost of
maintenance and repairs of property and minor renewals and
improvements of property to maintenance expense. When
depreciable property is retired, its original cost is
charged to the accumulated provision for depreciation.
The provision for depreciation substantially reflects the
systematic amortization of the original cost of depreciable
property over estimated useful lives on the straight-line
method. Additionally, actual dismantling cost, net of
salvage, is included in the provision for depreciation in
the month incurred. The amounts provided are designed to
cover not only losses due to wear and tear that are not
restored by maintenance, but also losses due to obsolescence
and inadequacy.
The provision for depreciation, expressed as an annual
percentage of original cost of depreciable property, is as
follows:
For fiscal years ended 1997 1996 1995
September 30,
Peoples Gas 3.7% 3.6% 3.6%
North Shore Gas 3.1 3.1 3.1
Consolidated 3.6 3.5 3.5
1H Regulated Operations
Peoples Gas' and North Shore Gas' utility operations are
subject to regulation by the Commission. Regulated
operations are accounted for in accordance with SFAS No. 71,
"Accounting for the Effects of Certain Types of Regulation."
This standard controls the application of generally accepted
accounting principles for companies whose rates are
determined by an independent regulator such as the
Commission. Regulatory assets represent certain costs that
are expected to be recovered from customers through the
ratemaking process. When incurred, such costs are deferred
as assets in the balance sheet and subsequently recorded as
expenses when those same amounts are reflected in rates.
The following regulatory assets of subsidiaries were
reflected in Other Assets in the Consolidated Balance Sheets
at September 30, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
(Thousands)
<S> <C> <C>
Environmental costs, net of recoveries (see Note 3A) $ 17,720 $ 19,384
Transition costs from pipeline supplier (see Note 2B) 8,343 40,438
Regulatory income tax assets (see Note 1I) 7,146 4,339
Discount, premium, expenses, and loss on reacquired bonds 3,022 3,483
SNG plant - decommissioning 17,543 23,156
Other 362 698
Total regulatory assets of subsidiaries $ 54,136 $ 91,498
</TABLE>
1I Income Taxes
The Company follows the liability method of accounting
for deferred income taxes. Under the liability method,
deferred income taxes have been recorded using currently
enacted tax rates for the differences between the tax basis
of assets and liabilities and the basis reported in the
financial statements. Due to the effects of regulation on
Peoples Gas and North Shore Gas, certain adjustments made to
deferred income taxes are, in turn, debited or credited to
regulatory assets or liabilities. (See Note 8C.)
Each utility subsidiary within the consolidated group
nets its income tax-related regulatory assets and
liabilities. At September 30, 1997 and 1996, net regulatory
income tax assets recorded in Other Assets amounted to $7.1
million and $4.3 million, respectively, while net regulatory
income tax liabilities recorded in Other Liabilities equaled
$5.2 million and $5.5 million, respectively.
Investment tax credits have been deferred and are being
amortized through credits to income over the book lives of
related property.
The preceding deferred-tax and tax-credit accounting
conforms with regulations of the Commission.
1J Gas in Storage
Storage injections are priced at the fiscal-year average
of costs of supply. Withdrawals from storage are priced on
the last-in, first-out (LIFO) cost method. The estimated
current replacement cost of gas in inventory at September
30, 1997 and 1996 exceeded the LIFO cost by approximately
$104 million and $91 million, respectively.
1K Statement of Cash Flows
For purposes of the balance sheet and the statement of
cash flows, the Company considers all short-term liquid
investments with maturities of three months or less to be
cash equivalents.
Income taxes and interest paid (excluding capitalized
interest) were as follows:
For fiscal years ended 1997 1996 1995
September 30,
(Thousands)
Income taxes paid $55,037 $44,187 $16,448
Interest paid 36,906 41,386 47,732
1L Recovery of Gas Costs, Including Charges for Transition
Costs
Under the tariffs of Peoples Gas and North Shore Gas, the
difference for any month between costs recoverable through
the Gas Charge and revenues billed to customers under the
Gas Charge is refunded to or recovered from customers.
Consistent with these tariff provisions, such difference for
any month is recorded either as a current liability or as a
current asset (with a contra entry to Gas Costs).
For each gas utility, the Commission conducts annual
proceedings regarding the reconciliation of revenues from
the Gas Charge and related costs incurred for gas. In such
proceedings, costs recovered by a utility through the Gas
Charge are subject to challenge. Such proceedings,
regarding Peoples Gas and North Shore Gas for fiscal years
1996 and 1997, are currently pending before the Commission.
Pursuant to FERC Order No. 636 and successor orders,
pipelines are allowed to recover transition costs from their
customers. These costs arise from the restructuring of
pipeline service obligations required by the 636 Orders.
The utilities are currently recovering pipeline charges for
transition costs through the Gas Charge. (See Notes 2A and 2B.)
1M Recovery of Costs of Environmental Activities Relating to
Former Manufactured Gas Operations
Peoples Gas and North Shore Gas are recovering the costs
of environmental activities relating to the utilities'
former manufactured gas operations, including carrying
charges on the unrecovered balances, under rate mechanisms
approved by the Commission. For each utility with such a
rate mechanism, the Commission conducts annual proceedings
regarding the reconciliation of revenues from the rate
mechanism and related costs. In such proceedings, costs
recovered by a utility through the rate mechanism are
subject to challenge. Such proceedings, regarding Peoples
Gas and North Shore Gas for fiscal years 1994 through 1996
are currently pending before the Commission. (See Note 3A.)
2. RATES AND REGULATION
2A Utility Rate Proceedings
Peoples Gas' Rate Order. On November 8, 1995, the
Commission issued an order approving changes in rates of
Peoples Gas that were designed to increase annual revenues
by approximately $30.8 million, exclusive of additional
charges for revenue taxes. Peoples Gas was allowed a rate
of return on original-cost rate base of 9.19 per cent, which
reflected an 11.10 per cent cost of common equity. The new
rates were implemented on November 14, 1995.
North Shore Gas' Rate Order. On November 8, 1995, the
Commission issued an order approving changes in rates of
North Shore Gas that were designed to increase annual
revenues by approximately $5.6 million, exclusive of
additional charges for revenue taxes. North Shore Gas was
allowed a rate of return on original-cost rate base of 9.75
per cent, which reflected an 11.30 per cent cost of common
equity. The new rates were implemented on November 14,
1995.
FERC Order 636 Cost Recovery. In 1994, the Commission
issued orders concluding its investigation into the
appropriate means of recovery by Illinois gas utilities of
pipeline charges for FERC Order 636 transition costs. The
orders provided for the full recovery of transition costs
from Peoples Gas' and North Shore Gas' gas service
customers. The Commission directed that gas supply
realignment (GSR) costs (one of the four categories of
transition costs) be recovered on a uniform volumetric basis
from all transportation and sales customers. A group of
industrial transportation customers has filed a petition
with the Illinois Supreme Court appealing the Commission's
orders. If the Illinois Supreme Court accepts the appeal,
any changes made by it to the Commission's orders would have
a prospective effect only. (See Notes 1L and 2B.)
2B FERC Orders 636, 636-A, and 636-B
FERC Order 636 and successor orders require pipelines to
make separate rate filings to recover transition costs.
Under a Stipulation and Agreement filed by Natural Gas
Pipeline Company of America (Natural) and approved by FERC,
Natural's charges to the utilities for GSR transition costs
(the largest category of such costs for Peoples Gas and
North Shore Gas) are subject to a cap of approximately $103
million for Peoples Gas and $25 million for North Shore Gas.
Peoples Gas and North Shore Gas are currently recovering
transition costs through the Gas Charge. At September 30,
1997, Peoples Gas and North Shore Gas had made payments of
$96.1 million and $23.6 million, respectively, and had
accrued an additional $6.9 million and $1.4 million,
respectively, toward the caps.
The 636 Orders are not expected to have a material effect
on financial position or results of operations of the
Company or its subsidiaries. (See Notes 1L and 2A.)
3. ENVIRONMENTAL MATTERS
3A Former Manufactured Gas Plant Operations
The Company's utility subsidiaries, their predecessors,
and certain former affiliates operated facilities in the
past at multiple sites for the purpose of manufacturing gas
and storing manufactured gas (Manufactured Gas Sites). In
connection with manufacturing and storing gas, various by-
products and waste materials were produced, some of which
might have been disposed of rather than sold. Under certain
laws and regulations relating to the protection of the
environment, the subsidiaries might be required to undertake
remedial action with respect to some of these materials.
Three of the Manufactured Gas Sites are discussed in more
detail below. Peoples Gas and North Shore Gas, under the
supervision of the Illinois Environmental Protection Agency
(IEPA), are conducting investigations of an additional 29
Manufactured Gas Sites. These investigations may require
the utility subsidiaries to perform additional investigation
and remediation. The investigations are in a preliminary
stage and are expected to occur over an extended period of
time.
In 1990, North Shore Gas entered into an Administrative
Order on Consent (AOC) with the United States Environmental
Protection Agency (EPA) and the IEPA to implement and
conduct a remedial investigation/feasibility study (RI/FS)
of a Manufactured Gas Site located in Waukegan, Illinois,
where manufactured gas and coking operations were formerly
conducted (Waukegan Site). The RI/FS is comprised of an
investigation to determine the nature and extent of
contamination at the Waukegan Site and a feasibility study
to develop and evaluate possible remedial actions. North
Shore Gas entered into the AOC after being notified by the
EPA that North Shore Gas, General Motors Corporation (GMC),
and Outboard Marine Corporation were each a potentially
responsible party (PRP) under CERCLA with respect to the
Waukegan Site. A PRP is potentially liable for the cost of
any investigative and/or remedial work that the EPA
determines is necessary. Other parties identified as PRPs
did not enter into the AOC.
Under the terms of the AOC, North Shore Gas is
responsible for the cost of the RI/FS. North Shore Gas
believes, however, that it will recover a significant
portion of the costs of the RI/FS from other entities. GMC
has agreed to share equally with North Shore Gas in funding
of the RI/FS cost, without prejudice to GMC's or North Shore
Gas' right to seek a lesser cost responsibility at a later
date.
Peoples Gas has observed what appear to be gas
purification wastes on a Manufactured Gas Site in Chicago,
formerly called the 110th Street Station, and property
contiguous thereto (110th Street Station Site). Peoples Gas
has fenced the 110th Street Station Site and is conducting a
study under the supervision of the IEPA to determine the
feasibility of a limited removal action.
The current owner of a site in Chicago, formerly called
Pitney Court Station, filed suit against Peoples Gas in
federal district court under CERCLA. The suit seeks
recovery of the past and future costs of investigating and
remediating the site. Peoples Gas is contesting this suit.
The utility subsidiaries are accruing and deferring the
costs they incur in connection with all of the Manufactured
Gas Sites, including related legal expenses, pending
recovery through rates or from insurance carriers or other
entities. At September 30, 1997, the total of the costs
deferred by the subsidiaries, net of recoveries and amounts
billed to other entities, was $17.7 million. This amount
includes an estimate of the costs of completing the studies
required by the EPA at the Waukegan Site and the
investigations being conducted under the supervision of the
IEPA referred to above. The amount also includes an
estimate of the costs of remediation at the Waukegan Site
and at the 110th Street Station Site in Chicago, at the
minimum amount of the current estimated range of such costs.
The costs of remediation at the other sites cannot be
determined at this time. While each subsidiary intends to
seek contribution from other entities for the costs incurred
at the sites, the full extent of such contributions cannot
be determined at this time.
Peoples Gas and North Shore Gas have filed suit against a
number of insurance carriers for the recovery of
environmental costs relating to the utilities' former
manufactured gas operations. The suit asks the court to
declare that the insurers are liable under policies in
effect between 1937 and 1986 for costs incurred or to be
incurred by the utilities in connection with five of their
Manufactured Gas Sites in Chicago and Waukegan. The
utilities are also asking the court to award damages
stemming from the insurers' breach of their contractual
obligation to defend and indemnify the utilities against
these costs. At this time, management cannot determine the
timing and extent of the subsidiaries' recovery of costs
from their insurance carriers. Accordingly, the costs
deferred at September 30, 1997 have not been reduced to
reflect recoveries from insurance carriers.
The Company believes that the costs incurred by Peoples
Gas and by North Shore Gas for environmental activities
relating to former manufactured gas operations are
recoverable from insurance carriers or other entities or
through rates for utility service. Accordingly, management
believes that the costs incurred by the subsidiaries in
connection with former manufactured gas operations will not
have a material adverse effect on the financial position or
results of operations of the utilities. Peoples Gas and
North Shore Gas are recovering the costs of environmental
activities relating to the utilities' former manufactured
gas operations, including carrying charges on the
unrecovered balances, under rate mechanisms approved by the
Commission. At September 30, 1997, the subsidiaries had
recovered $12.0 million of such costs through rates.
3B Former Mineral Processing Site in Denver, Colorado
In 1994, North Shore Gas received a demand from the S.W.
Shattuck Chemical Company, Inc. (Shattuck), a responsible
party under CERCLA, for reimbursement, indemnification, and
contribution for response costs incurred at a former mineral
processing site in Denver, Colorado. Shattuck is a wholly
owned subsidiary of Salomon, Inc. (Salomon). The demand
alleges that North Shore Gas is a successor-in-interest to
certain companies that were allegedly responsible during the
period 1934-1941 for the disposal of mineral processing
wastes containing radium and other hazardous substances at
the site. The cost of the remedy at the site has been
estimated by Shattuck to be approximately $31 million.
Salomon has provided financial assurance for the performance
of the remediation at the site.
North Shore Gas filed a declaratory judgment action
against Salomon in the District Court for the Northern
District of Illinois. The suit asks the court to declare
that North Shore Gas is not liable for response costs
incurred or to be incurred at the Denver site. Salomon
filed a counterclaim for costs to be incurred by Salomon and
Shattuck with respect to the site. On March 7, 1997, the
District Court granted North Shore Gas' motion for summary
judgment, declaring that North Shore Gas is not liable for
any response costs in connection with the Denver site.
Salomon has appealed the ruling of the District Court to the
United States Court of Appeals, Seventh Circuit.
North Shore Gas does not believe that it has liability
for the response costs, but cannot determine the matter with
certainty. At this time, North Shore Gas cannot reasonably
estimate what range of loss, if any, may occur. In the
event that North Shore Gas incurred liability, it would
pursue reimbursement from insurance carriers, other
responsible parties, if any, and through its rates for
utility service.
3C Gasoline Release in Wheeling, Illinois
In June 1995, North Shore Gas received a letter from the
IEPA informing North Shore Gas that it was not in compliance
with certain provisions of the Illinois Environmental
Protection Act which prohibit water pollution within the
State of Illinois. On November 14, 1995, the Illinois
Attorney General filed a complaint in the Circuit Court of
Cook County naming North Shore Gas and four other parties as
defendants. The complaint alleges that the violations are
the result of a gasoline release that occurred in Wheeling,
Illinois, in June 1992, when a contractor who was installing
a pipeline for North Shore Gas accidentally struck a
gasoline pipeline owned by West Shore Pipeline Company.
North Shore Gas is contesting this suit. Management does
not believe the outcome of this suit will have a material
adverse effect on financial position or results of
operations of the Company or North Shore Gas.
4. COVENANTS REGARDING RETAINED EARNINGS
North Shore Gas' indenture relating to its first mortgage
bonds contains provisions and covenants restricting the
payment of cash dividends and the purchase or redemption of
capital stock. At September 30, 1997, such restrictions
amounted to $11.6 million out of North Shore Gas' total
retained earnings of $67.9 million.
5. LONG-TERM LEASE
In October 1993, Peoples Gas entered into a 15-year
operating lease for its headquarters office.
The rental obligation consists of a base rent of $2.3
million plus operating expenses and taxes. The base rent
escalates by 2 per cent each year through the 10th year.
Base rent in the 11th year is approximately $3.6 million
with annual increases of 2 per cent each year through the
15th year.
Rental expenses for the headquarters office were $6.4
million, $6.5 million, and $6.4 million for fiscal years
1997, 1996, and 1995, respectively.
6. EXPIRATION OF STORAGE CONTRACTS
Peoples Gas and North Shore Gas had certain natural gas storage
contracts with Natural that expired on or before December 1, 1995.
Associated with the expiration of the contracts, the utilities
realized a gain of approximately $14.8 million ($8.9 million after
income taxes) during fiscal year 1996.
7. RETIREMENT AND POSTEMPLOYMENT BENEFITS
7A Pension Benefits
The Company and certain of its subsidiaries participate in two
defined benefit pension plans covering substantially all employees.
These plans provide pension benefits that generally are based on an
employee's length of service, compensation during the five years
preceding retirement, and social security benefits. The Company and
its participating subsidiaries make annual contributions to the plans
based upon actuarial determinations and in consideration of tax
regulations and funding requirements under federal law.
The Company also has non-qualified pension plans that provide
certain employees with pension benefits in excess of qualified plan
limits imposed by federal tax law.
<TABLE>
<CAPTION>
Net pension cost for all plans for fiscal 1997, 1996, and 1995
included the following components:
1997 1996 1995
(Millions)
<S> <C> <C> <C>
Service cost - benefits earned during year $ 11.7 $ 13.7 $ 14.4
Interest cost on projected benefit obligations 29.4 32.6 29.9
Actual return on plan assets (gain) (110.0) (68.8) (85.0)
Net amortization and deferral 60.2 22.1 45.5
Settlement accounting (18.0) (7.7) -
Net pension cost (credit) $ (26.7) $ (8.1) $ 4.8
</TABLE>
In 1997 and 1996, the Company recognized net gains of $18.0 million
and $7.7 million, respectively, from the settlement of portions of
pension plan obligations.
The calculation of pension cost assumed a long-term rate of return
on assets of 9.0 per cent for 1997, 8.5 per cent for 1996, and 7.5 per
cent for 1995. The settlement accounting cost for 1997 and 1996 was
determined using a discount rate of 7.5 per cent and assumed future
compensation increases of 4.5 per cent per year.
<TABLE>
<CAPTION>
The following table shows the estimated funded status of the
Company's pension plans at September 30, 1997 and 1996:
1997 1996
(Millions)
<S> <C> <C>
Plan assets at market value $ 579.0 $ 577.5
Actuarial present value of plan benefits:
Vested 265.1 298.4
Non-vested 33.6 33.4
Accumulated benefit obligation 298.7 331.8
Effect of projected future compensation increases 81.8 75.8
Projected benefit obligation 380.5 407.6
Excess of plan assets over projected benefit obligation 198.5 169.9
Less:
Unrecognized transition asset 18.7 23.7
Unrecognized prior service cost (5.8) (4.6)
Unrecognized net gain 150.8 144.0
Non-qualified plan contributions: 7-1-97 to 9-30-97 1.5 -
Recognition of non-qualified plan additional minimum liability (4.6) (1.9)
Accrued pension asset $ 31.7 $ 4.9
</TABLE>
The projected benefit obligation and plan assets at September 30,
1997 and 1996, are based on a July 1 measurement date, using a
discount rate of 7.5 per cent and assumed future compensation
increases of 4.5 per cent per year. Plan assets consist primarily of
marketable equity and fixed-income securities.
7B Other Postretirement Benefits
The Company and its subsidiaries also provide certain health care
and life insurance benefits for retired employees. Substantially all
employees may become eligible for such benefit coverage if they reach
retirement age while working for the companies. The plans are funded
based upon actuarial determinations and in consideration of tax
regulations. The Company accrues the expected costs of such benefits
during the employees' years of service.
<TABLE>
<CAPTION>
Net postretirement benefit cost for all plans for fiscal 1997,
1996, and 1995 included the following components:
1997 1996 1995
(Millions)
<S> <C> <C> <C>
Service cost - benefits earned during year $ 3.2 $ 3.4 $ 2.7
Interest cost on projected benefit obligation 8.6 7.8 7.9
Actual return on plan assets (gain) (6.7) (3.1) (3.7)
Amortization of transition obligation 4.9 4.9 4.9
Net amortization and deferral 3.4 1.2 2.5
Net postretirement benefit cost $ 13.4 $ 14.2 $ 14.3
</TABLE>
The calculation of postretirement benefit cost assumed a long-term
rate of return on assets of 9.0 per cent for 1997 and 7.5 per cent for
1996 and 1995.
Of the above total postretirement costs recognized for fiscal years
1997, 1996, and 1995, $6.1 million, $6.2 million, and $6.4 million,
respectively, were funded through trust funds for future benefit
payments.
<TABLE>
<CAPTION>
The following table sets forth the estimated funded status for the
postretirement health care and life insurance plans at September 30,
1997 and 1996:
1997 1996
(Millions)
<S> <C> <C>
Plan assets at market value $ 47.7 $ 35.6
Accumulated postretirement benefit obligation (APBO):
Retirees 69.2 65.6
Fully eligible active plan participants 14.2 18.7
Other active plan participants 31.9 31.8
Total APBO 15.3 116.1
Deficiency of plan assets over the APBO (67.6) (80.5)
Less:
Unrecognized transition obligation
(being amortized over 20 years) (78.9) (83.8)
Unrecognized net gain 19.7 11.9
Contributions: July 1 to September 30 7.9 8.1
Accrued postretirement benefit liability $ (0.5) $ (0.5)
</TABLE>
The total APBO and plan assets at September 30, 1997 and 1996, are
based on a July 1 measurement date using a discount rate of 7.5 per
cent and assumed future compensation increases of 4.5 per cent per
year. Plan assets consist primarily of marketable equity and fixed-
income securities.
For measurement purposes, a health care cost trend rate of 7.9 per
cent was assumed for fiscal 1998, and that rate thereafter will
decline gradually to 4.75 per cent in 2003 and subsequent years. The
health care cost trend rate assumption has a significant effect on the
amounts reported. Increasing the assumed health care cost trend rate
by one percentage point for each future year would have increased the
APBO at September 30, 1997, by $8.5 million and the aggregate of
service and interest cost components of the net periodic
postretirement benefit cost by $1.3 million annually.
8. TAX MATTERS
8A Provision for Income Taxes
<TABLE>
<CAPTION>
Total income tax expense as shown on the Consolidated Statements of
Income is composed of the following:
For fiscal years ended September 30, 1997 1996 1995
(Millions)
<S> <C> <C> <C>
Current:
Federal $ 32,720 $ 40,341 $ 18,328
State 7,266 8,534 3,323
Total current income taxes 39,986 48,875 21,651
Deferred:
Federal 14,162 12,781 9,847
State 3,846 3,551 2,917
Total deferred income taxes 18,008 16,332 12,764
Investment tax credits - net:
Federal (1,713) (2,824) (1,975)
State 154 161 213
Total investment tax credits - net (1,559) (2,663) (1,762)
Total provision for income taxes 56,435 62,544 32,653
Less - Included in operation expense - 85 97
Net provision for income taxes $ 56,435 $ 62,459 $ 32,556
</TABLE>
8B Tax Rate Reconciliation
<TABLE>
<CAPTION>
The following is a reconciliation between the computed federal
income tax expense (tax rate of 35 per cent times pre-tax book income)
and the total provision for federal income tax expenses:
For fiscal years ended September 30, 1997 1996 1995
Per Cent Per Cent Per Cent
of of of
Amount Pre-tax Amount Pre-tax Amount Pre-tax
(000's) Income (000's) Income (000's) Income
<S> <C> <C> <C> <C> <C> <C>
Computed federal income
tax expense $50,250 35.00 $53,808 35.00 $30,924 35.00
Amortization of investment
tax credits (1,713) (1.19) (2,824) (1.84) (1,975) (2.24)
Amortization of deferred taxes(1,195) (0.83) (823) (0.54) (932) (1.05)
Nontaxable-tax settlement - - - - (1,965) (2.22)
Accrual adjustment (2,000) (1.39) - - - -
Other, net (173) (0.27) 137 0.09 148 0.17
Total provision for federal
income taxes $45,169 31.32 $50,298 32.71 $26,200 29.66
</TABLE>
8C Deferred Income Taxes
<TABLE>
<CAPTION>
Set forth in the table below are the temporary differences which
gave rise to the net deferred income tax liabilities (see Note 1I):
At September 30, 1997 1996
(Thousands)
<S> <C> <C>
Deferred tax liabilities:
Property - accelerated depreciation and
other property related items $ 250,447 $ 236,919
Other 31,785 25,129
Total deferred income tax liabilities 282,232 262,048
Deferred tax assets:
Uncollectible accounts (13,476) (14,056)
Unamortized investment tax credits (12,008) (10,562)
Other (7,570) (6,482)
Total deferred income tax assets (33,054) (31,100)
Net deferred income tax liabilities $ 249,178 $ 230,948
</TABLE>
8D Income Tax Settlement
On September 30, 1993, the Company received notification from the
IRS that settlement of past income tax returns had been reached for
fiscal years 1978 through 1990. The IRS settlement resulted in
payments of principal and interest to the Company in 1994 in total
amount of approximately $28 million, or $21.6 million after income
taxes. Both Peoples Gas and North Shore Gas received regulatory
authorization to defer the recognition of the settlement amount in
income for fiscal year 1993, and to recognize its portion of the
settlement amount in income for fiscal years 1994 and 1995. Each
utility represented to the Commission that, having received this
accounting authorization, it would not file a request for an increase
in base rates before December 1994.
As a result of the Commission's accounting authorization, the
fiscal year 1995 portion of the settlement amount for Peoples Gas and
North Shore Gas was amortized (credited) to operation expense. The
effect was to offset increases in costs that the utilities would incur
during the year. In fiscal 1995, the utilities together amortized
approximately $14 million, or $10.8 million after income taxes.
9. ASSETS SUBJECT TO LIEN
The Indenture of Mortgage, dated January 2, 1926, as supplemented,
securing the first and refunding mortgage bonds issued by Peoples Gas,
constitutes a direct, first-mortgage lien on substantially all
property owned by Peoples Gas. The Indenture of Mortgage, dated April
1, 1955, as supplemented, securing the first mortgage bonds issued by
North Shore Gas, constitutes a direct, first-mortgage lien on
substantially all property owned by North Shore Gas.
10. OTHER INCOME AND DEDUCTIONS - MISCELLANEOUS
<TABLE>
<CAPTION>
For fiscal years ended September 30, 1997 1996 1995
(Thousands)
<S> <C> <C> <C>
Amortization of net gain on sale of Peoples Gas Building $ - $ - $ 576
Interest on amounts recoverable from customers 166 224 119
Gain on expiration of gas storage contracts (see Note 6) - 14,810 -
Amortization of gain (loss) on reacquired bonds (253) (120) 240
Loss on donation of property (650) - -
Other 236 (531) 268
Total other income and deductions - miscellaneous $ (501) $ 14,383 $ 1,203
</TABLE>
11. CAPITAL COMMITMENTS
Total contract and purchase order commitments of the Company and
its subsidiaries at September 30, 1997, amounted to approximately $3.8
million.
12. SHORT-TERM BORROWINGS AND CREDIT LINES
At September 30, 1997 1996
(Thousands)
Bank Loans
Peoples Gas
8.50% due March 27, 1998 $ 700 $ -
8.25% due February 11, 1997 - 700
Commercial Paper
North Shore Gas
due October 1, 1997 $ 2,110 $ -
due October 1, 1996 - 1,925
Letters of Credit
Peoples Energy $ 69 $ -
Peoples Gas 100 -
Available lines of credit
Unused bank lines $ 146,421 $ 126,775
At September 30, 1997, the Company had in place a bank line of
credit of $20 million, which will expire on July 31, 1998. This line
of credit covers the projected short-term credit needs of the Company.
In connection with its tentative plans to significantly increase its
investment in one or more of its unregulated subsidiaries, the Company
is in the process of establishing a $150 million Section 4(2)
commercial paper program. If this commercial paper program is
utilized, the Company will establish bank lines of credit in amounts
sufficient to provide 100% back-up for the program. Payment for all
lines of credit is by fee.
Short-term cash needs of Peoples Gas and North Shore Gas are met
through intercompany loans from the Company, bank loans, and/or the
issuance of commercial paper. The outstanding total amount of bank
loans and commercial paper issuances cannot at any time exceed total
bank credit then in effect.
At September 30, 1997 and 1996, the utility subsidiaries had
combined lines of credit totaling $129.4 million. Of this total,
North Shore Gas could borrow up to $30 million. Agreements covering
$92 million of the total at September 30, 1997, will expire on August
30, 1998; the agreement covering the remaining $37.4 million will
expire on January 31, 1999. Such lines of credit cover projected
short-term credit needs of the subsidiaries and support the long-term
debt treatment of Peoples Gas' adjustable-rate mortgage bonds. (See
Note 13A.) Payment for the lines of credit is by fee.
13. LONG-TERM DEBT
13A Interest-Rate Adjustments
The rate of interest on the City of Joliet 1984 Series C Bonds,
which are secured by Peoples Gas' Adjustable-Rate First and Refunding
Mortgage Bonds, Series W, is subject to adjustment annually on October
1. Owners of the Series C Bonds have the right to tender such bonds
at par during a limited period prior to that date. Peoples Gas is
obligated to purchase any such bonds tendered if they cannot be
remarketed. All Series C Bonds that were tendered prior to October 1,
1997, have been remarketed. The interest rate on such bonds is 3.875
per cent for the period October 1, 1997, through September 30, 1998.
The rate of interest on the City of Chicago 1993 Series B Bonds,
which are secured by Peoples Gas' Adjustable-Rate First and Refunding
Mortgage Bonds, Series EE, is subject to adjustment annually on
December 1. Owners of the Series B Bonds have the right to tender
such bonds at par during a limited period prior to that date. Peoples
Gas is obligated to purchase any such bonds tendered if they cannot be
remarketed. All Series B Bonds that were tendered prior to December
1, 1996, have been remarketed. The interest rate on such bonds is
3.70 per cent for the period December 1, 1996, through November 30,
1997.
Peoples Gas classifies these adjustable-rate bonds as long-term
liabilities since it would refinance them on a long-term basis if they
could not be remarketed. In order to ensure its ability to do so, on
February 1, 1994, Peoples Gas established a $37.4 million three year
line of credit with The Northern Trust Company which has since been
extended to January 31, 1999. (See Note 12.)
13B Bonds Redeemed
On December 29, 1995, Peoples Gas redeemed, from general corporate
funds, approximately $87 million aggregate principal amount of the
City of Joliet's 1984 Gas Supply Revenue Bonds, Series A and B, which
were secured by Peoples Gas' Series U and V First and Refunding
Mortgage Bonds.
On February 1, 1996, North Shore Gas redeemed $8 million aggregate
principal amount of its Series I First Mortgage Bonds using the
proceeds of a short-term bank loan as well as other monies of North
Shore Gas. The final payment on the short-term bank loan was made by
North Shore Gas on August 1, 1996.
13C Sinking Fund Requirements and Maturities of Subsidiaries
At September 30, 1997, long-term debt sinking fund requirements and
maturities for the next five years are:
North
Fiscal Peoples Shore
Year Gas Gas Consolidated
(Thousands)
1998 $ -- $ -- $ --
1999 -- -- --
2000 10,400 -- 10,400
2001 -- -- --
2002 -- -- --
13D Fair Value of Financial Instruments
At September 30, 1997, the carrying amount of the Company's long-term
debt of $527.0 million had an estimated fair value of $564.6 million. At
September 30, 1996, the carrying amount of the Company's long-term debt of
$527.1 million had an estimated fair value of $561.9 million. The
estimated fair value of the Company's long-term debt is based on yields
for issues with similar terms and remaining maturities. Since Peoples Gas
and North Shore Gas are subject to regulation, any gains or losses related
to the difference between the carrying amount and the fair value of
financial instruments may not be realized by the Company's shareholders.
The carrying amount of all other financial instruments approximates fair
value. The $15.9 million in temporary cash investments approximates its
fair market value.
14. PREFERRED STOCK
The Company has five million shares of Preferred Stock, no par value,
authorized for issuance, of which none was issued and outstanding at
September 30, 1997.
15. COMMON STOCK
<TABLE>
<CAPTION>
For fiscal years ended September 30, 1997 1996 1995
<S> <C> <C> <C>
Shares outstanding - beginning of year 34,960,399 34,913,426 34,868,069
Shares issued:
Employee Stock Purchase Plan 16,349 21,516 32,221
Long-Term Incentive Compensation (LTIC) 106,795 110,700 16,650
Directors Deferred Compensation Plan 1,568 1,471 1,367
Direct Purchase and Investment Plan 73,898 - -
Shares reacquired under LTIC (89,492) (86,714) (4,881)
Shares outstanding - end of year 35,069,517 34,960,399 34,913,426
</TABLE>
<TABLE>
<CAPTION>
Shares Reserved At September 30, 1997 1996 1995
<S> <C> <C> <C>
Direct Purchase and Investment Plan 1,426,102 1,500,000 1,036,891
Employee Stock Purchase Plan 981,648 997,997 1,019,513
Long-Term Incentive Compensation Plan 635,135 741,930 852,630
Directors Deferred Compensation Plan 76,717 78,285 79,756
Total shares reserved 3,119,602 3,318,212 2,988,790
</TABLE>
<TABLE>
<CAPTION>
Weighted Weighted Stock Weighted
Average Non-Qualified Average Appreciation Average
Long-Term Incentive Compensation Plan Option Price Stock Options SARs Price Rights (SARs) Fair Value
<S> <C> <C> <C> <C> <C>
Outstanding at September 30, 1994 $30.28 115,900 $30.28 115,900
Granted 25.69 71,500 25.69 71,500
Exercised - - - -
Outstanding at September 30, 1995 28.53 187,400 28.53 187,400
Granted 27.50 90,200 27.50 90,200 $2.46
Exercised 26.79 (92,500) 26.83 (88,700)
Forfeited 27.50 (5,300) 27.50 (5,300)
Outstanding at September 30, 1996 29.04 179,800 28.87 183,600
Granted 34.20 88,200 34.20 88,200 $2.90
Exercised 28.71 (97,400) 28.39 (101,200)
Forfeited 34.19 (14,000) 34.19 (14,000)
Outstanding at September 30, 1997 $31.71 156,600 $31.71 156,600
</TABLE>
Restricted stock awards granted to officers of the Company during
the last three fiscal years are as follows: 1997, 15,100 shares; 1996,
18,200 shares; and 1995, 16,650 shares. Also, during fiscal 1997,
there were 5,705 shares forfeited. At September 30, 1997, there were
478,535 shares available for future grant under options or restricted
stock awards. At September 30, 1997, there were 589,850 SARs
available for future grant.
The grant of a restricted stock award entitles the recipient to
vote the shares of Company common stock covered by such award and to
receive dividends thereon. Restricted stock awards are valued at the
closing market price of the stock as of the date of the grant. The
recipient may not transfer or otherwise dispose of such shares until
the restrictions thereon lapse. Restricted stock awards granted to
date vest in equal annual increments over a five-year period from the
date of grant. If a recipient's employment with the Company
terminates, other than by reason of death, disability, or retirement
after attaining age 65, the recipient forfeits all rights to the
unvested portion of the restricted stock award. The Compensation-
Nominating Committee of the Company's Board of Directors (and with
respect to the Chief Executive Officer, the Compensation-Nominating
Committee, subject to the approval of the non-employee directors) may,
in its sole discretion, accelerate the vesting of any restricted stock
awards granted under the LTIC.
The grant of an option enables the recipient to purchase Company
common stock at a purchase price equal to the fair market value of the
shares on the date the option was granted. The grant of an SAR
enables the recipient to receive, for each SAR granted, cash in an
amount equal to the excess of the fair market value of one share of
Company common stock on the date the SAR is exercised over the fair
market value of one share on the date the SAR was granted. Before an
option or SAR may be exercised, the recipient must complete 12 months
of continuous employment subsequent to the grant of the option or SAR.
Options and SARs may be exercised within 10 years from the date of
grant, subject to earlier termination in case of death, retirement, or
termination of employment for other reasons.
The Company grants stock options, SARs, and restricted stock awards
under its LTIC. The Company also offers employees periodic
opportunities to purchase shares of its common stock at a discount
from the then current market price under its Employee Stock Purchase
Plan (ESPP). The Company applies Accounting Principles Board (APB)
Opinion No. 25 and related Interpretations in accounting for these
plans.
The Company may sell up to 981,648 shares of common stock to its
employees under the ESPP. Under the terms of this plan, all employees
with a minimum of one year of service are eligible to purchase shares
at 90 per cent of the stock's market price at the date of purchase.
The Company sold 16,349 shares and 21,516 shares to employees in 1997
and 1996, respectively.
Under APB Opinion No. 25, no compensation cost has been recognized
for nonqualified stock options and shares issued under the ESPP. The
compensation cost that has been charged against net income for
restricted stock awards was $452,000 and $382,000 for the years ended
September 30, 1997 and 1996, respectively. Had compensation cost for
stock options, SARs and shares issued under the ESPP been determined
consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would
have changed to the following pro forma amounts:
For fiscal years ended 1997 1996
September 30,
(Thousands, except per-share amounts)
Net income:
As reported $98,404 $103,438
Pro forma 98,367 103,484
Earnings per average
common share:
As reported $2.81 $2.96
Pro forma 2.81 2.96
Since the SFAS No. 123 method of accounting has not been applied to
options granted prior to October 1, 1995, the resulting pro forma
compensation costs may not be representative of those to be expected
in future years.
The fair value of each option grant used to determine pro forma net
income is estimated as of the date of grant using a variation of the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in the years ended September 30, 1997 and 1996,
respectively: expected volatility of 15.78 and 19.69 per cent;
dividend yield of 5.0 and 5.4 per cent; risk-free interest rates of
6.03 and 5.75 per cent, and expected lives of two years for both
years. The weighted-average fair value of options granted was $2.90
and $2.46 for the years ended September 30, 1997 and 1996,
respectively.
16. QUARTERLY FINANCIAL DATA (UNAUDITED)
The first quarter of fiscal 1997 included a full quarter's impact
of the Commission-approved rate orders. (See Note 2A of the Notes to
Consolidated Financial Statements.) All four quarters reflected the
decrease in gas deliveries due primarily to warmer weather and
conservation. However, this was offset in all four quarters by
reduced pension expense. The last three quarters of fiscal 1996
reflected the gain from the expiration of gas storage contracts. (See
Note 6 of the Notes to Consolidated Financial Statements.)
Earnings
Operating Operating Per
Fiscal Quarters Revenues Income Net Income Share
(Thousands, except per-share amounts)
1997
Fourth $116,773 $(5,119) $(14,080) $(0.40)
Third 202,444 20,429 11,735 0.34
Second 567,995 71,480 63,258 1.81
First 387,158 46,752 37,490 1.07
1996
Fourth $134,005 $(1,877) $ (8,940) $(0.26)
Third 248,511 19,474 14,247 0.41
Second 498,556 68,271 62,015 1.77
First 317,605 46,545 36,116 1.03
Quarterly earnings-per-share amounts are based on the weighted
average common shares outstanding for each quarter and, therefore,
might not equal the amount computed for the total year.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information relating to the directors of the Company is set forth
under the caption "Information Concerning Nominees for Election as
Directors" of the Company's Proxy Statement, to be filed with the SEC
on or about December 29, 1997, and to be distributed in connection
with the Company's Annual Meeting of Shareholders to be held on
February 27, 1998. Such information is incorporated herein by
reference.
Information relating to the executive officers of the Company is
set forth in Part I of this report under the caption "Executive
Officers of the Company."
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is set forth under
the captions "Executive Compensation" and "Report on Executive
Compensation" of the Company's Proxy Statement, to be filed with the
SEC on or about December 29, 1997, and to be distributed in
connection with the Company's Annual Meeting of Shareholders to be
held on February 27, 1998. Such information is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to this item is set forth under the caption
"Share Ownership of Director Nominees, and Executive Officers" of the
Company's Proxy Statement, to be filed with the SEC on or about
December 29, 1997, and to be distributed in connection with the
Company's Annual Meeting of Shareholders to be held on February 27,
1998. Such information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
Page
(a) 1. Financial Statements:
See Part II, Item 8. 19
2. Financial Statement Schedules:
Schedule
Number
VIII Valuation and Qualifying Accounts 44
3. Exhibits:
See Exhibit Index on page 47.
(b) Reports on Form 8-K filed during the final quarter of fiscal year 1997:
None
Schedule VIII
<TABLE>
<CAPTION>
Peoples Energy Corporation and Subsidiary Companies
VALUATION AND QUALIFYING ACCOUNTS
(Thousands)
Column A Column B Column C Column D Column E
Additions Deductions
Charged Charges for the
Balance to costs purpose for which the Balance
at beginning and reserves or deferred at end of
Description of period expenses credits were created period
Fiscal Year Ended September 30, 1997
<S> <C> <C> <C> <C>
RESERVES (deducted from assets in balance sheet):
Uncollectible items $ 26,211 $ 27,946 $ 24,262 $ 29,895
Fiscal Year Ended September 30, 1996
RESERVES (deducted from assets in balance sheet):
Uncollectible items $ 19,013 $ 28,146 $ 20,948 $ 26,211
Fiscal Year Ended September 30, 1995
RESERVES (deducted from assets in balance sheet):
Uncollectible items $ 24,289 $ 22,740 $ 28,016 $ 19,013
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PEOPLES ENERGY CORPORATION
Date: December 22, 1997 By: /s/ RICHARD E. TERRY
Richard E. Terry
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the following
persons on behalf of the registrant and in the capacities indicated on
December 22, 1997.
/s/ RICHARD E. TERRY Chairman of the Board and Chief
Executive
Richard E. Terry Officer and Director (Principal
Executive Officer)
/s/ KENNETH S. BALASKOVITS Vice President and Controller
Kenneth S. Balaskovits (Principal Financial and Accounting Officer)
/s/ J. BRUCE HASCH Director
J. Bruce Hasch
/s/ WILLIAM J. BRODSKY Director
William J. Brodsky
/s/ PASTORA SAN JUAN CAFFERTY Director
Pastora San Juan Cafferty
/s/ FREDERICK C. LANGENBERG Director
Frederick C. Langenberg
/s/ HOMER J. LIVINGSTON, JR. Director
Homer J. Livingston, Jr.
/s/ WILLIAM G. MITCHELL Director
William G. Mitchell
/s/ EARL L. NEAL Director
Earl L. Neal
/s/ RICHARD P. TOFT Director
Richard P. Toft
/s/ ARTHUR R. VELASQUEZ Director
Arthur R. Velasquez
Peoples Energy Corporation and Subsidiary Companies
EXHIBIT INDEX
(a) The exhibits listed below are filed herewith and made a part hereof:
Exhibit
Number Description of Document
3(a) Amendment to the By-Laws of the Registrant, dated August 31,1997.
3(b) By-Laws of the Registrant, as amended, dated August 31,1997.
3(c) Amendment to the Employee Stock Purchase Plan, dated August 6,
1997.
3(d) Employee Stock Purchase Plan, as amended, dated August 6,1997.
10(a) Guaranty by Peoples Energy Corporation to Northern Border Pipeline
Company, dated July 25, 1997.
10(b) Guaranty by Peoples Energy Corporation to Northern Border Pipeline
Company, dated August 1, 1997.
10(c) Firm Transportation Service Agreement under Rate Schedule FTS
between Peoples Gas and Natural Gas Pipeline Company of America,
dated November 13, 1996.
10(d) Firm Transportation Service Agreement under Rate Schedule FT-A or
FT-G between Peoples Gas and Midwestern Gas Transmission Company,
dated November 1, 1997.
10(e) Firm Transportation Service Agreement under Rate Schedule FT-A
between Peoples Gas and Tennessee Gas Pipeline Company, dated
November 1,1997.
10(f) Firm Transportation Service Agreement under Rate Schedule FT-A or
FT-G between North Shore and Midwestern Gas Transmission Company,
dated May 1, 1997.
10(g) Firm Transportation Service Agreement under Rate Schedule FT-A
between North Shore and Tennessee Gas Pipeline Company, dated May
1,1997.
10(h) Firm Transportation Service Agreement under Rate Schedule FT-A or
FT-GS between North Shore and Midwestern Gas Transmission Company,
dated November 1, 1997.
10(i) Firm Transportation Service Agreement under Rate Schedule FT-A
between North Shore and Tennessee Gas Pipeline Company, dated
November 1,1997.
10(j) Firm Transportation Service Agreement under Rate Schedule FT-A or
FT-GS between North Shore and Midwestern Gas Transmission Company,
dated April 1, 1998.
10(k) Firm Transportation Service Agreement under Rate Schedule FT-A
between North Shore and Tennessee Gas Pipeline Company, dated April
1,1998.
Peoples Energy Corporation and Subsidiary Companies
EXHIBIT INDEX (Continued)
Exhibit
Number Description of Document
10(l) Severance Agreement Between the Company and Thomas M. Patrick
dated as of December 4, 1996.
10(m) Severance Agreement Between the Company and Kenneth S. Balaskovits
dated as of December 4, 1996.
21 Subsidiaries of the Registrant
23 Arthur Andersen LLP consent to incorporate by reference in
Registration Statement Nos. 2-82760, 2-88307, 33-6369, and
33-63193.
27 Financial Data Schedule
99 Form 11-K for the Employee Stock Purchase Plan of the Registrant
for the fiscal year ended September 30, 1997.
(b) Exhibits listed below have been filed heretofore with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as
amended, and/or the Securities Exchange Act of 1934, as amended, and
are incorporated herein by reference. The file number and exhibit
number of each such exhibit are stated in the description of such
exhibits.
3(e) Articles of Incorporation of the Registrant, as amended
on March 3, 1995 (Registrant Form 10-K for the fiscal year
ended September 30, 1995, Exhibit 3(b)).
4(a) The Peoples Gas Light and Coke Company First and
Refunding Mortgage, dated January 2, 1926, from Chicago By-
Product Coke Company to Illinois Merchants Trust Company,
Trustee, assumed by The Peoples Gas Light and Coke Company
(Peoples) by Indenture dated March 1, 1928 (Peoples - May 17,
1935, Exhibit B-6a, Exhibit B-6b A-2 File No. 2-2151, 1936);
Supplemental Indenture dated as of May 20, 1936, (Peoples -
Form 8-K for the year 1936, Exhibit B-6f); Supplemental
Indenture dated as of March 10, 1950 (Peoples - Form 8-K for
the month of March 1950, Exhibit B-6i); Supplemental Indenture
dated as of June 1, 1951 (Peoples - File No. 2-8989, Post-
Effective, Exhibit 7-4(b)); Supplemental Indenture dated as of
August 15, 1967 (Peoples - File No. 2-26983, Post-Effective,
Exhibit 2-4); Supplemental Indenture dated as of September 15,
1970 (Peoples - File No. 2-38168, Post-Effective Exhibit 2-2);
Supplemental Indenture dated as of October 1, 1984 (Peoples -
Form 10-K for fiscal year ended September 30, 1984, Exhibit
4-3); Supplemental Indentures dated March 1, 1985, (Peoples -
Form 10-K for fiscal year ended September 30, 1985, Exhibits 4-1,
4-2, and 4-3, respectively); Supplemental Indenture dated May 1,
1990 (Peoples - Form 10-K for the fiscal year ended September 30,
1990, Exhibit 4); Supplemental Indenture dated as of
April 1, 1993 (Peoples - Form 8 dated as of May 5, 1993,
Exhibit 1); Supplemental Indenture dated as of December 1,
1993 (Peoples - Form 10-Q for the quarterly period ended
December 31, 1993, Exhibits 4(a) and 4(b)). Supplemental
Indenture dated June 1, 1995. (Peoples - Form 10-K for
the fiscal year ended September 30, 1995.)
4(b) North Shore Gas Company (North Shore) Indenture, dated as
of April 1, 1955, from North Shore to Continental Bank,
National Association, as Trustee; Third Supplemental
Indenture, dated as of December 20, 1963 (North Shore - File
No. 2-35965, Exhibit 4-1); Fifth Supplemental Indenture dated
as of February 1, 1970 (North Shore - File No. 2-35965,
Exhibit 4-2);
Peoples Energy Corporation and Subsidiary Companies
EXHIBIT INDEX (Continued)
Exhibit
Number Description of Document
4(b) Ninth Supplemental Indenture dated as of December 1, 1987
Cont'd (North Shore - Form 10-K for the fiscal year ended September
30, 1987, Exhibit 4); Tenth Supplemental Indenture dated as of
November 1, 1990 (North Shore - Form S-3 Registration
Statement No. 33-37332, Exhibit 4b); Eleventh Supplemental
Indenture dated as of October 1, 1992 (North Shore - Form 10-K
for the fiscal year ended September 30, 1992, Exhibit 4):
and Twelfth Supplemental Indenture dated as of April 1, 1993
(North Shore - Form 8-K dated April 23, 1993, Exhibit 4).
10(n) Firm Transportation Service Agreement Under Rate Schedule
FT between Peoples Gas and Trunkline Gas Company, dated as of
December 1, 1993 (Registrant Form 10-K for the fiscal year
ended September 30, 1994, Exhibit 10(d)). Trust Under
Executive Deferred Compensation Plan and Supplemental
Retirement Benefit Plan, Part A and Part B, of the Registrant,
effective September 25, 1995. (Registrant Form 10-K for fiscal
year ended September 30, 1995, Exhibit 10(a)); ETS Service
Agreement between Peoples Gas and ANR Pipeline Company, dated
September 21, 1994. (Registrant Form 10-K for fiscal year
ended September 30, 1995, Exhibit 10(b)); FSS Service
Agreement between Peoples Gas and ANR Pipeline Company, dated
September 21, 1994. (Registrant Form 10-K for fiscal year
ended September 30, 1995, Exhibit 10(c)); Storage Rate
Schedule NSS Agreement between Peoples Gas and Natural Gas
Pipeline Company of America, dated October 19, 1995.
(Registrant Form 10-K for fiscal year ended September 30,
1995, Exhibit 10(d)); Transportation Rate Schedule FTS
Agreement between Peoples Gas and Natural Gas Pipeline Company
of America, dated October 19, 1995. (Registrant Form 10-K for
fiscal year ended September 30, 1995, Exhibit 10(e)); Storage
Rate Schedule DSS Agreement between Peoples Gas and Natural
Gas Pipeline Company of America, dated December 1, 1995.
(Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 10(f)); Transportation Rate
Schedule FTS Agreement between Peoples Gas and Natural Gas
Pipeline Company of America, dated December 1, 1995.
(Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 10(g)); Firm Transportation
Service Agreement Under Rate Schedule FT between Peoples Gas
and Trunkline Gas Company, dated as of April 1, 1995.
(Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 10(h)); Quick Notice
Transportation Service Agreement Under Rate Schedule QNT
between Peoples Gas and Trunkline Gas Company, dated as of
December 1, 1995. (Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 10(i)); Quick Notice
Transportation Service Agreement Under Rate Schedule QNT
between Peoples Gas and Trunkline Gas Company, dated as of
December 1, 1995. (Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 10(j)); ETS Service Agreement
between North Shore Gas and ANR Pipeline Company, dated
September 21, 1994. (Registrant Form 10-K for fiscal year
ended September 30, 1995, Exhibit 10(k)); FSS Service
Agreement between North Shore Gas and ANR Pipeline Company,
dated September 21, 1994. (Registrant Form 10-K for fiscal
year ended September 30, 1995, Exhibit 10(l)); Transportation
Rate Schedule FTS Agreement between North Shore Gas and
Natural Gas Pipeline Company of America, dated
September 22, 1995. (Registrant Form 10-K for fiscal year
ended September 30, 1995, Exhibit 10(m)); Storage Rate
Schedule NSS Agreement between North Shore Gas and Natural Gas
Pipeline Company of America, dated October 19, 1995.
(Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 10(n)); Transportation Rate
Schedule FTS Agreement between
Peoples Energy Corporation and Subsidiary Companies
EXHIBIT INDEX (Continued)
Exhibit
Number Description of Document
10(n) North Shore Gas and Natural Gas Pipeline Company
cont. of America, dated October 19, 1995. (Registrant Form 10-K for
fiscal year ended September 30, 1995, Exhibit 10(o));
Storage Rate Schedule DSS Agreement between North Shore Gas
and Natural Gas Pipeline Company of America, dated December
1, 1995. (Registrant Form 10-K for fiscal year ended
September 30, 1995, Exhibit 10(p)); Firm Transportation
Service Agreement under Rate Schedule FTS-1 between Peoples
Gas and ANR Pipeline Company, dated as of September 20,
1995. (Registrant form 10-K for fiscal year ended
September 30, 1996, Exhibit 10(q)); Firm Transportation
Service Agreement under Rate Schedule FTS between Peoples
Gas and Natural Gas Pipeline Company of America, dated as
of February 21, 1996. (Registrant form 10-K for fiscal
year ended September 30, 1996, Exhibit 10(r)); Firm
Transportation Service Agreement under Rate Schedule FTS
between Peoples Gas and Natural Gas Pipeline Company of
America, dated as of February 21, 1996. (Registrant form
10-K for fiscal year ended September 30, 1996, Exhibit
10(s)); Firm Transportation Service Agreement under Rate
Schedule FTS-1 between North Shore Gas and ANR Pipeline
Company, dated as of October 25, 1995. (Registrant form 10-
K for fiscal year ended September 30, 1996, Exhibit 10(t)).
10(o) Lease dated October 20, 1993, between Prudential Plaza
Associates, as Landlord, and Peoples Gas, as Tenant
(Registrant Form 10-Q for the quarterly period ended
December 31, 1993, Exhibit 10(a)).
10(p) Construction Guaranty Agreement dated December 16, 1992,
by the Company and Trigen Energy Corporation (Registrant Form
10-Q for the quarterly period ended December 31, 1993, Exhibit
10(f)); Service Guaranty Agreement dated December 16, 1992, by
the Company and Trigen Energy Corporation (Registrant Form 10-
Q for the quarterly period ended December 31, 1993, Exhibit
10(g)).
10(q) Short-Term Incentive Compensation Plan of the Registrant,
as amended on December 7, 1994 (Registrant Form 10-K for the
fiscal year ended September 30, 1994, Exhibit 10(a));
Executive Deferred Compensation Plan of the Registrant,
effective October 1, 1994 (Registrant Form 10-K for the fiscal
year ended September 30, 1994, Exhibit 10(b)); Supplemental
Retirement Benefit Plan, Part A, Part B and Part C, of the
Registrant, effective December 7, 1994 (Registrant Form 10-K
for the fiscal year ended September 30, 1994, Exhibit 10(c));
Long-Term Incentive Compensation Plan (File No. 33-63193, Form
S-8 filed on October 4, 1995).
10(r) Severance Agreement Between the Company and Richard E. Terry dated
as of December 4, 1996. (Registration Form 10-Q for the quarterly
period ended December 31, 1996, Exhibit 10(a)); Severance Agreement
Between the Company and J. Bruce Hasch dated as of December 4, 1996.
(Registrant From 10-Q for the quarterly period ended December 31,
1996, Exhibit 10(b)); Severance Agreement Between the Company and
Michael S. Reeves dated as of December 4, 1996. (Registrant Form
10-Q for the quarterly period ended December 31, 1996, Exhibit
10(c)); Severance Agreement Between the Company and James Hinchliff
dated as of December 4,1996. (Registrant Form 10-Q for the
quarterly period ended December 31, 1996, Exhibit 10(d)).
21 Subsidiaries of the Registrant (Registrant Form 10-K for the fiscal
year ended September 30, 1982, Exhibit 22).
Exhibit 3(a)
Peoples Energy Corporation
Consider Amendment to the By-Laws of the Company
RESOLVED, That, effective as of the
close of business on August 31, 1997,
Section 3.1 of Article III of the By-Laws of
the Company be, and it hereby is, amended by
deleting said Section in its entirety and
substituting the following in lieu thereof:
ARTICLE III
Directors and Committees
SECTION 3.1. Number and Election.
The business and affairs of the Company
shall be managed and controlled by a Board
of Directors, ten (10) in number, none of
whom need to be a shareholder, which number
may be altered from time to time by
amendment of these by-laws, but shall never
be less than three (3). Except as provided
in the Articles of Incorporation, the
directors shall be elected by the
shareholders entitled to vote at the annual
meeting of such shareholders and each
director shall be elected to serve for a
term of one (1) year and thereafter until a
successor shall be elected and shall
qualify. Only persons who are nominated in
accordance with the procedures set forth in
this section shall be eligible to be
nominated as directors at any meeting of the
shareholders of the Company. At any meeting
of the shareholders of the Company,
nominations of persons for election to the
Board of Directors may be made (1) by or at
the direction of the Board of Directors or
(2) by any shareholder of the Company who is
a holder of record at the time of giving the
notice provided for in this section, who
shall be entitled to vote at the meeting,
and who complies with the notice procedures
set forth in this section. For a nomination
to be properly brought before a
shareholders' meeting by a shareholder,
timely written notice shall be made to the
Secretary of the Company. The shareholder's
notice shall be delivered to, or mailed and
received at, the principal office of the
Company no less than 60 days nor more than
90 days prior to the meeting; provided,
however, in the event that less than 70 days
notice or prior public disclosure of the
date of the meeting is given or made to
shareholders, notice by the shareholder to
be timely must be received not later than
the close of business on the tenth day
following the day on which the notice of the
date of the meeting was mailed or the public
disclosure was made; provided further,
however, notice by the shareholder to be
timely must be received in any event not
later than the close of business on the
seventh day preceding the day on which the
meeting is to be held. The shareholder's
notice shall set forth (1) as to each person
whom the shareholder proposes to nominate
for election or reelection as a director,
all information relating to such person that
is required to be disclosed in solicitations
of proxies for election of directors, or is
otherwise required by applicable law
(including the person's written consent to
being named as a nominee and to serving as a
director if elected), and (2) (a) the name
and address, as they appear on the Company's
books, of the shareholder, (b) the class and
number of shares of capital stock of the
Company owned by the shareholder, and (c) a
description of all arrangements or
understandings between the shareholder and
each nominee and any other person or persons
(naming such person or persons) pursuant to
which the nomination or nominations are to
be made by the shareholder. The shareholder
shall also comply with all applicable
requirements of the 1934 Act and the rules
and regulations thereunder with respect to
the matters set forth in this section. If
the chairman of the meeting shall determine
and declare at the meeting that a nomination
was not made in accordance with the
procedures prescribed by this section, the
nomination shall not be accepted.
RESOLVED FURTHER, That the
Secretary of the Company be, and he hereby
is, directed to initial a copy of the
amended By-Laws presented at this meeting
and place it with the important papers of
this meeting.
Exhibit 3(b)
BY-LAWS
OF
PEOPLES ENERGY CORPORATION
AMENDED AUGUST 31, 1997
PEOPLES ENERGY CORPORATION
BY-LAWS
ARTICLE I - OFFICES
ARTICLE II - MEETINGS OF SHAREHOLDERS
ARTICLE III - DIRECTORS AND COMMITTEES
ARTICLE IV - OFFICERS
ARTICLE V - INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
ARTICLE VI - CERTIFICATES OF STOCK AND THEIR
TRANSFER
ARTICLE VII - MISCELLANEOUS (CONTRACTS)
ARTICLE VIII - AMENDMENT OR REPEAL OF BY-LAWS
PEOPLES ENERGY CORPORATION
INDEX
PAGE
A
Amendment of By-Laws 18
Appointment of Officers 10
Assistant Controller, Duties of 13
Assistant General Counsel, Duties of 13
Assistant Secretary, Duties of 13
Assistant Treasurer, Duties of 13
Assistant Vice President, Duties of 12
B
Board of Directors 5
C
Certificates of Stock and Their Transfer 15
Chairman of the Board, Duties of 11
Chairman of the Executive Committee 8
Committees
Executive 8
Other 9
Controller, Duties of 13
Contracts, Execution of 17
D
Directors and Committees 5
E
Election of Directors 5
Election of Officers 10
Executive Committee 8
F
Fees and Compensation 9
PEOPLES ENERGY CORPORATION
PAGE
G
General Counsel, Duties of 13
I
Indemnification of Directors, Officers, Employees
and Agents 14
M
Meetings
Directors 7
Action Without Meeting 9
Shareholders 1
N
Notice of Meetings
Directors 7
Shareholders 2
O
Officers
Appointed 10
Elected 10
Offices, Two or More Held By One Person 10
P
President, Duties of 11
Presiding Officer
Board Meetings 8
Shareholders Meetings 5
Proxies 4
Q
Quorum
Board 7
Shareholders 4
PEOPLES ENERGY CORPORATION
PAGE
S
Secretary, Duties of 12
Signatures to Checks, Drafts, etc. 17
Stock, Certificates of and their Transfer 15
T
Treasurer, Duties 12
V
Vice President, Duties of 12
Voting
Shareholders 4
Stock Owned by Company 18
BY-LAWS
OF
PEOPLES ENERGY CORPORATION
ARTICLE I
Offices
SECTION 1.1. Principal Office. The principal office of
the Company shall be in the City of Chicago, County of Cook and
State of Illinois.
SECTION 1.2. Other Offices. The Company may also have
offices at such other places both within and without the State of
Illinois as the Board of Directors may from time to time
determine or the business of the Company may require.
ARTICLE II
Meetings of Shareholders
SECTION 2.1. Annual Meeting. The annual meeting of the
shareholders shall be held on the fourth Friday of the month of
February in each year, if not a legal holiday, or, if a legal
holiday, then on the next succeeding business day, for the
purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the election
of directors shall not be held on the day herein designated for
the annual meeting, or at any adjournment thereof, the Board of
Directors shall cause such election to be held at a special
meeting of the shareholders as soon thereafter as convenient.
SECTION 2.2. Special Meetings. Except as otherwise
prescribed by statute, special meetings of the shareholders for
any purpose or purposes, may be called by the Chairman of the
Board, the Vice Chairman of the Executive Committee, the
Executive Committee or the President. Such request shall
state the purpose or purposes of the proposed meeting.
SECTION 2.3. Place of Meetings. Each meeting of the
shareholders for the election of the directors shall be held at
the principal office of the Company in the City of Chicago,
Illinois, unless the Board of Directors shall by resolution
designate another place as the place of such meeting. Meetings
of shareholders for any other purpose may be held at such place,
and at such time as shall be determined by the Chairman of the
Board, or the President, or in their absence, by the Secretary,
and stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
SECTION 2.4. Notice of Meetings. Written or printed
notice stating the place, date and hour of each annual or special
meeting of the shareholders, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called,
shall be given not less than 10 nor more than 60 days before the
date of the meeting, except as otherwise provided in this section
or by statute. Notice of any meeting of the shareholders may be
waived by any shareholder. At any meeting of the shareholders of
the Company, only such business shall be conducted as shall have
been brought before the meeting (1) by or at the direction of the
Board of Directors or (2) by any shareholder of the Company who
is a holder of record at the time of giving the notice provided
for in this section, who shall be entitled to vote at the
meeting, and who complies with the notice procedures set forth in
this section. For business to be properly brought before a
shareholders' meeting by a shareholder, timely written notice
shall be made to the Secretary of the Company. The shareholder's
notice shall be delivered to, or mailed and received at, the
principal office of the Company not less than 60 days nor more
than 90 days prior to the meeting; provided, however, in the
event that less than 70 days notice or prior public disclosure of
the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be received not later than
the close of business on the tenth day following the day on which
the notice of the date of the meeting was mailed or the public
disclosure was made; provided further however, notice by the
shareholder to be timely must be received in any event not later
than the close of business on the seventh day preceding the day
on which the meeting is to be held. The shareholder's notice
shall set forth (1) a brief description of the business desired
to be brought before the meeting and the reasons for considering
the business, and (2) (a) the name and address, as they appear on
the Company's books, of the shareholder, (b) the class and number
of shares of capital stock of the Company owned by the
shareholder, and (c) any material interest of the shareholder in
the proposed business. The shareholder shall also comply with
all applicable requirements of the Securities Exchange Act of
1934 (the "1934 Act") and the rules and regulations thereunder
with respect to the matters set forth in this section. If the
chairman of the meeting shall determine and declare at the
meeting that the proposed business was not brought before the
meeting in accordance with the procedures prescribed by this
section, the business shall not be considered. The notice
procedures set forth in this section 2.4 do not change or limit
any procedures the Company may require in accordance with
applicable law with respect to the inclusion of matters in the
Company's proxy statement.
SECTION 2.5. Quorum. The holders of a majority of the
shares issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall be requisite
for, and shall constitute, a quorum at all meetings of the
shareholders of the Company for the transaction of business,
except as otherwise provided by statute or these by-laws. If a
quorum shall not be present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than
announcement at the meeting if the adjournment is for thirty days
or less or unless after that adjournment a new record date is
fixed, until a quorum shall be present or represented. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
SECTION 2.6. Proxies. At every meeting of the
shareholders, each shareholder having the right to vote thereat
shall be entitled to vote in person or by proxy. Such proxy
shall be appointed by an instrument in writing subscribed by such
shareholder and bearing a date not more than eleven months prior
to such meeting, unless such proxy provides for a longer period,
and shall be filed with the Secretary of the Company before, or
at the time of, the meeting.
SECTION 2.7. Voting. At each meeting of the
shareholders, each shareholder shall be entitled to one vote for
each share of stock entitled to vote thereat which is registered
in the name of such shareholder on the books of the Company. At
all elections of directors of the Company, the holders of shares
of stock of the Company shall be entitled to cumulative voting.
When a quorum is present at any meeting of the shareholders, the
vote of the holders of a majority of the shares present in person
or represented by proxy and entitled to vote at the meeting shall
be sufficient for the transaction of any business, unless
otherwise provided by statute, the Articles of Incorporation or
these by-laws.
SECTION 2.8. Presiding Officer. The presiding officer of
any meeting of the shareholders shall be the Chairman of the
Board or, in the case of the absence of the Chairman of the
Board, the President.
ARTICLE III
Directors and Committees
SECTION 3.1. Number and Election. The business and
affairs of the Company shall be managed and controlled by a Board
of Directors, ten (10) in number, none of whom need to be a
shareholder, which number may be altered from time to time by
amendment of these by-laws, but shall never be less than three
(3). Except as provided in the Articles of Incorporation, the
directors shall be elected by the shareholders entitled to vote
at the annual meeting of such shareholders and each director
shall be elected to serve for a term of one (1) year and
thereafter until a successor shall be elected and shall qualify.
Only persons who are nominated in accordance with the procedures
set forth in this section shall be eligible to be nominated as
directors at any meeting of the shareholders of the Company. At
any meeting of the shareholders of the Company, nominations of
persons for election to the Board of Directors may be made (1) by
or at the direction of the Board of Directors or (2) by any
shareholder of the Company who is a holder of record at the time
of giving the notice provided for in this section, who shall be
entitled to vote at the meeting, and who complies with the notice
procedures set forth in this section. For a nomination to be
properly brought before a shareholders' meeting by a shareholder,
timely written notice shall be made to the Secretary of the
Company. The shareholder's notice shall be delivered to, or
mailed and received at, the principal office of the Company no
less than 60 days nor more than 90 days prior to the meeting;
provided, however, in the event that less than 70 days notice or
prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder to be timely must
be received not later than the close of business on the tenth day
following the day on which the notice of the date of the meeting
was mailed or the public disclosure was made; provided further,
however, notice by the shareholder to be timely must be received
in any event not later than the close of business on the seventh
day preceding the day on which the meeting is to be held. The
shareholder's notice shall set forth (1) as to each person whom
the shareholder proposes to nominate for election or reelection
as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required by applicable law
(including the person's written consent to being named as a
nominee and to serving as a director if elected), and (2) (a) the
name and address, as they appear on the Company's books, of the
shareholder, (b) the class and number of shares of capital stock
of the Company owned by the shareholder, and (c) a description of
all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are
to be made by the shareholder. The shareholder shall also comply
with all applicable requirements of the 1934 Act and the rules
and regulations thereunder with respect to the matters set forth
in this section. If the chairman of the meeting shall determine
and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by this section, the
nomination shall not be accepted.
SECTION 3.2. Regular Meetings. A regular meeting of the
Board of Directors shall be held immediately, or as soon as
practicable, after the annual meeting of the shareholders in each
year for the purpose of electing officers and for the transaction
of such other business as may be deemed necessary, and regular
meetings of the Board shall be held at such date and time and at
such place as the Board of Directors may from time to time
determine. Not less than two days' notice of all regular
meetings of the Board, except the meeting to be held after the
annual meeting of shareholders which shall be held without other
notice than this by-law, shall be given to each director
personally or by mail or telegram.
SECTION 3.3. Special Meetings. Special meetings of the
Board may be called at any time by the Chairman of the Board, the
President, or by any two directors, by causing the Secretary to
mail to each director, not less than three days before the time
of such meeting, a written notice stating the time and place of
such meeting. Notice of any meeting of the Board may be waived
by any director.
SECTION 3.4. Quorum. At each meeting of the Board of
Directors, the presence of not less than a majority of the total
number of directors specified in Section 3.1 hereof shall be
necessary and sufficient to constitute a quorum for the
transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall
be the act of the Board of Directors, except as may be otherwise
specifically provided by statute. If a quorum shall not be
present at any meeting of directors, the directors present
thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be
present. In determining the presence of a quorum at a meeting of
the directors or a committee thereof for the purpose of
authorizing a contract or transaction between the Company and one
or more of its directors, or between the Company and any other
corporation, partnership, association, or other organization in
which one or more of the directors of this Company are directors
or officers, or have a financial interest in such other
organization, such interested director or directors may be
counted in determining a quorum.
SECTION 3.5. Presiding Officer. The presiding officer of
any meeting of the Board of Directors shall be the Chairman of
the Board. In the case of the absence of the Chairman of the
Board, for reasons other than provided in Section 4.3, the
President shall act in his place and stead. In the case of the
temporary absence of both the Chairman of the Board and the
President, the Vice Chairman of the Executive Committee or, in
his absence, any other director elected by vote of a majority of
the directors present at the meeting, shall act as chairman of
the meeting.
SECTION 3.6. Executive Committee. The Executive
Committee of the Board of Directors shall consist of the Chairman
of the Board who shall be the Chairman of the Executive
Committee, and each of the nonmanagement directors. The Chairman
of the Board shall select a Vice Chairman of the Executive
Committee subject to the approval of the Board of Directors of
the Company. The Executive Committee shall, in the recess of the
Board, have all the powers of the Board except those powers
which, under the law of the State of Illinois, may not be
exercised by such Committee and shall keep a record of its
proceedings and report the same to the Board. The Executive
Committee may meet at any place whenever required by a member of
the Committee and may act by the consent of a majority of its
members, although not formally convened.
SECTION 3.7. Other Committees. The Board may appoint
other committees, standing or special, from time to time from
among its own members or otherwise, and may confer such powers on
such committees as the Board may determine and may revoke such
powers and terminate the existence of such committees at its
pleasure.
SECTION 3.8. Action Without Meeting. Any action required
or permitted to be taken at any meeting of the Board of
Directors, or any committee thereof, may be taken without a
meeting if all members of the Board or of such committee, as the
case may be, consent thereto in writing and such writing or
writings are filed with the minutes of the proceedings of the
Board or such committee.
SECTION 3.9. Fees and Compensation of Directors.
Directors shall not receive any stated salary for their services
as such; but, by resolution of the Board of Directors, reasonable
fees, with or without expenses of attendance, may be allowed.
Members of the Board shall be allowed their reasonable traveling
expenses when actually engaged in the business of the Company, to
be audited and allowed as in other cases of demands against the
Company. Members of standing or special committees may be
allowed fees and expenses for attending committee meetings.
Nothing herein contained shall be construed to preclude any
director from serving the Company in any other capacity and
receiving compensation therefor.
ARTICLE IV
Officers
SECTION 4.1. Election of Officers. There shall be
elected by the Board of Directors in each year the following
officers: a Chairman of the Board; a President; such number of
Senior Vice Presidents, such number of Executive Vice Presidents,
such number of Vice Presidents and such number of Assistant Vice
Presidents as the Board at the time may decide upon; a Secretary;
such number of Assistant Secretaries as the Board at the time may
decide upon; a Treasurer; such number of Assistant Treasurers as
the Board at the time may decide upon; a Controller; and such
number of Assistant Controllers as the Board at the time may
decide upon; a General Counsel; and such number of Assistant
General Counsel as the Board at the time may decide upon. Any
two or more offices may be held by one person, except that the
offices of President and Secretary may not be held by the same
person. All officers shall hold their respective offices during
the pleasure of the Board.
SECTION 4.2. Appointment of Officers. The Board of
Directors, the Executive Committee, the Chairman of the Board, or
the President may from time to time appoint such other officers
as may be deemed necessary, including one or more Vice
Presidents, one or more Assistant Vice Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, one or
more Assistant Controllers and one or more Assistant General
Counsel, and such other agents and employees of the Company as
may be deemed proper. Such officers, agents and employees shall
have such authority, perform such duties and receive such
compensation as the Board of Directors, the Executive Committee
or, in the case of appointments made by the Chairman of the Board
or the President, as the Chairman of the Board or the President,
may from time to time prescribe and determine. The Board of
Directors or the Executive Committee may from time to time
authorize any officer to appoint and remove agents and employees,
to prescribe their powers and duties and to fix their
compensation therefor.
SECTION 4.3. Duties of Chairman of the Board. The
Chairman of the Board shall be the chief executive officer of the
Company and shall have control and direction of the management
and affairs of the Company and may execute all contracts, deeds,
assignments, certificates, bonds or other obligations for and on
behalf of the Company, and sign certificates of stock and records
of certificates required by law to be signed by the Chairman of
the Board. When present, the Chairman of the Board shall preside
at all meetings of the Board and of the shareholders. In the
absence of the Chairman of the Board, due to his permanent
disability, death, resignation or removal from office, the Vice
Chairman of the Executive Committee shall promptly convene the
Executive Committee to select a nominee for that office and
submit said nominee's name to the Board of Directors for their
consideration.
SECTION 4.4. Duties of President. Subject to the Control
and direction of the Chairman of the Board, and to the control of
the Board, the President shall have general management of all the
business of the Company, and he shall have such other powers and
perform such other duties as may be prescribed for him by the
Board or be delegated to him by the Chairman of the Board. He
shall possess the same power as the Chairman of the Board to
sign all certificates, contracts and other instruments of the
Company. In case of the absence or disability of the President,
or in case of his death, resignation or removal from office, the
powers and duties of the President shall devolve upon the
Chairman of the Board during absence or disability, or until the
vacancy in the office of President shall be filled.
SECTION 4.5. Duties of Vice President. Each of the
Senior Vice Presidents, Executive Vice Presidents, Vice
Presidents and Assistant Vice Presidents shall have such powers
and duties as may be prescribed for him by the Board, or be
delegated to him by the Chairman of the Board or by the
President. Each of such officers shall possess the same power as
the President to sign all certificates, contracts and other
instruments of the Company.
SECTION 4.6. Duties of Secretary. The Secretary shall
have the custody and care of the corporate seal, records and
minute books of the Company. He shall attend the meetings of the
Board, of the Executive Committee, and of the shareholders, and
duly record and keep the minutes of the proceedings, and file and
take charge of all papers and documents belonging to the general
files of the Company, and shall have such other powers and duties
as are commonly incident to the office of Secretary or as may be
prescribed for him by the Board, or be delegated to him by the
Chairman of the Board or by the President.
SECTION 4.7. Duties of Treasurer. The Treasurer shall
have charge of, and be responsible for, the collection, receipt,
custody and disbursement of the funds of the Company, and shall
deposit its funds in the name of the Company in such banks, trust
companies or safety deposit vaults as the Board may direct. He
shall have the custody of the stock record books and such other
books and papers as in the practical business operations of the
Company shall naturally belong in the office or custody of the
Treasurer, or as shall be placed in his custody by the Board, the
Chairman of the Board, the President, or any Vice President, and
shall have such other powers and duties as are commonly incident
to the office of Treasurer, or as may be prescribed for him by
the Board, or be delegated to him by the Chairman of the Board or
by the President.
SECTION 4.8. Duties of Controller. The Controller shall
have control over all accounting records pertaining to moneys,
properties, materials and supplies of the Company. He shall have
Charge of the bookkeeping and accounting records and functions,
the related accounting information systems and reports and
executive supervision of the system of internal accounting
controls, and such other powers and duties as are commonly
incident to the office of Controller or as may be prescribed by
the Board, or be delegated to him by the Chairman of the Board or
by the President.
SECTION 4.9. Duties of General Counsel. The General
Counsel shall have full responsibility for all legal advice,
counsel and services for the Company and its subsidiaries
including employment and retaining of attorneys and law firms as
shall in his discretion be necessary or desirable and shall have
such other powers and shall perform such other duties as from
time to time may be assigned to him by the Board, the Chairman of
the Board or the President.
SECTION 4.10. Duties of Assistant Secretary, Assistant
Treasurer, Assistant Controller and Assistant General Counsel.
The Assistant Secretary, Assistant Treasurer, Assistant
Controller and Assistant General Counsel shall assist the
Secretary, Treasurer, Controller, and General Counsel,
respectively, in the performance of the duties assigned to each
and shall for such purpose have the same powers as his principal.
He shall also have such other powers and duties as may be
prescribed for him by the Board, or be delegated to him by the
Chairman of the Board or by the President.
ARTICLE V
Indemnification of Directors, Officers, Employees and Agents
SECTION 5.1. Indemnification of Directors, Officers and
Employees. The Company shall indemnify, to the fullest extent
permitted under the laws of the State of Illinois and any other
applicable laws, as they now exist or as they may be amended in
the future, any person who was or is a party, or is threatened to
be made a party, to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, an action by or in
the right of the Company), by reason of the fact that he or she
is or was a director, officer or employee of the Company, or is
or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise
against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or
proceeding.
SECTION 5.2. Advancement of Expenses to Directors,
Officers and Employees. Expenses incurred by such a director,
officer or employee in defending a civil or criminal action, suit
or proceeding shall be paid by the Company in advance of the
final disposition of such action, suit or proceeding to the
fullest extent permitted under the laws of the State of Illinois
and any other applicable laws, as they now exist or as they may
be amended in the future.
SECTION 5.3. Indemnification and Advancement of Expenses
to Agents. The board of directors may, by resolution, extend the
provisions of this Article V regarding indemnification and the
advancement of expenses to any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact he or
she is or was an agent of the Company or is or was serving at the
request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
SECTION 5.4. Rights Not Exclusive. The rights provided
by or granted under this Article V are not exclusive of any other
rights to which those seeking indemnification or advancement of
expenses may be entitled.
SECTION 5.5. Continuing Rights. The indemnification and
advancement of expenses provided by or granted under this Article
V shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of that person.
ARTICLE VI
Certificates of Stock and Their Transfer
SECTION 6.1. Certificates of Stock. The certificates of
stock of the Company shall be in such form as may be determined
by the Board of Directors, shall be numbered and shall be entered
in the books of the Company as they are issued. They shall
exhibit the holder's name and number of shares and shall be
signed by the Chairman of the Board, the President or a Vice
President and also by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary and shall bear the
corporate seal or a facsimile thereof. If a certificate is
countersigned by a transfer agent or registrar, other than the
Company itself or its employee, any other signature or
countersignature on the certificate may be facsimiles. In case
any officer of the Company, or any officer or employee of the
transfer agent or registrar, who has signed or whose facsimile
signature has been placed upon such certificate ceases to be an
officer of the Company, or an officer or employee of the transfer
agent or registrar, before such certificate is issued, said
certificate may be issued with the same effect as if the officer
of the Company, or the officer or employee of the transfer agent
or registrar, had not ceased to be such at the date of issue.
SECTION 6.2. Transfer of Stock. Upon surrender to the
Company of a certificate for shares duly endorsed or accompanied
by proper evidence of succession, assignment or authority to
transfer, and upon payment of applicable taxes with respect to
such transfer, it shall be the duty of the Company, subject to
such rules and regulations as the Board of Directors may from
time to time deem advisable concerning the transfer and
registration of certificates for shares of stock of the Company,
to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
SECTION 6.3. Shareholders of Record. The Company shall
be entitled to treat the holder of record of any share or shares
of stock as the holder in fact thereof and, accordingly, shall
not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part or any other person,
whether or not it shall have express or other notice thereof,
except as otherwise provided by statute.
SECTION 6.4. Lost, Destroyed or Stolen Certificates. The
Board of Directors, in individual cases or by general resolution,
may direct a new certificate or certificates to be issued by the
Company as a replacement for a certificate or certificates for a
like number of shares alleged to have been lost, destroyed or
stolen, upon the making of an affidavit of that fact by the
person claiming the certificate or certificates of stock to be
lost, destroyed or stolen. When authorizing such issue of a new
certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, destroyed or stolen certificate
or certificates, or his legal representative, to give the Company
a bond in such form and amount as it may direct as indemnity
against any claim that may be made against the Company with
respect to the certificate or certificates alleged to have been
lost, destroyed or stolen.
ARTICLE VII
Miscellaneous
SECTION 7.1. Contracts and Other Instruments. All
contracts or obligations of the Company shall be in writing and
shall be signed either by the Chairman of the Board, the
President, or any Vice President and, unless the Board shall
otherwise determine and direct, the seal of the Company shall be
attached thereto, duly attested by the Secretary or an Assistant
Secretary, except contracts entered into in the ordinary course
of business where the amount involved is less than Five Hundred
Thousand Dollars ($500,000), and except contracts for the
employment of servants or agents, which contracts so excepted may
be entered into by the Chairman of the Board, the President, any
Vice President, or by such officers or agents as the Chairman of
the Board or the President may designate and authorize. Unless
the Board shall otherwise determine and direct, all checks or
drafts and all promissory notes shall be signed by two officers
of the Company. When prescribed by the Board, bonds, promissory
notes, and other obligations of the Company may bear the
facsimile signature of the officer who is authorized to sign such
instruments and, likewise, may bear the facsimile signature of
the Secretary or an Assistant Secretary.
SECTION 7.2. Voting Stock Owned by Company. Any or all
shares owned by the Company in any other corporation, and any or
all voting trust certificates owned by the Company calling for or
representing shares of stock of any other corporation, may be
voted by the Chairman of the Board, the President, any Vice
President, the Secretary or the Treasurer, either in person or by
written proxy given to any person in the name of the Company at
any meeting of the shareholders of such corporation, or at any
meeting of voting trust certificate holders, upon any question
that may be presented at any such meeting. Any such officer, or
anyone so representing him by written proxy, may on behalf of the
Company waive any notice of any such meeting required by any
statute or by-law and consent to the holding of such meeting
without notice.
ARTICLE VIII
Amendment or Repeal of By-Laws
These by-laws may be added to, amended or repealed at any
regular or special meeting of the Board by a vote of a majority
of the membership of the Board.
Exhibit(c)
Peoples Energy Corporation
Consider Amendments to the Employee Stock Purchase Plan
RESOLVED, That this Board of
Directors does hereby approve the proposed
amendments to the Peoples Energy Employee
Stock Purchase Plan as set forth in the copy
of the amended Plan presented at this
meeting; and
RESOLVED FURTHER, That the
Secretary of the Company be, and he hereby
is, directed to initial a copy of the amended
Peoples Energy Corporation Employee Stock
Purchase Plan presented to this Board and
place it with the important papers of this
meeting.
Exhibit 3(d)
PEOPLES ENERGY CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
(As Amended Effective August 6, 1997)
Section 1. Purpose of Plan
The Peoples Energy Corporation Employee Stock Purchase Plan
(the "Plan") is designed to provide a convenient means by which
eligible employees of Peoples Energy Corporation (the "Company")
and its Associated Companies, as hereinafter defined, may save
regularly through voluntary, systematic payroll deductions and,
twice each year, use such savings, and supplementary cash
deposits, if the employee elects to make such deposits, to
purchase common shares of the Company ("Stock"). By this means,
the Plan is intended to provide eligible employees with an
opportunity to acquire an additional interest in the economic
success of the Company and its Associated Companies and a further
incentive to promote the best interests of the Company and of
these Associated Companies.
Section 2. Effective Date of Plan
The Plan, as amended, shall be effective August 6, 1997.
The number of shares reserved for offering and issuance under the
Plan will be the number previously authorized for issuance but not
issued by that date.
Subject to the provisions of Section 19, the Plan will
continue in effect until May 31, 1998.
Section 3. Eligible Employees
All employees who have one or more years of service with the
Company or one of its Associated Companies as of any given Price
Date are eligible to participate in the Plan, provided, however,
that no employee may purchase Stock under the Plan if immediately
after such purchase the employee would own Stock possessing 5% or
more of the total combined voting power or value of all classes of
stock of the Company or one of its Associated Companies, the rules
of section 424 (d) of the Internal Revenue Code of 1986 to apply
in determining stock ownership for this purpose; and, provided
further, that no employee shall have the right to purchase Stock
under the Plan at a rate which exceeds $25,000 of fair market
value of such Stock (determined as of each Price Date)in any calendar
year. In addition to the limitations set forthabove, no employee
shall have the right to purchase Stock under the Plan who otherwise
falls within the provisions of section 423 (b) (3) or section
423 (b) (8) of the Code.
The term "employee" includes officers of the Company and
Associated Companies, but does not include directors who are not
officers of the Company or of one of its Associated Companies.
As used herein, the term "Associated Company" or Associated
Companies" includes any corporation or corporations in which the
Company, from time to time, owns 80% or more of the total combined
voting power of all classes of stock of such other corporation or
corporations, but only for so long as the Company continues to own
80% or more of the total combined voting power of all classes of
stock of such corporation or corporations, and only, if and when,
the Board of Directors of Peoples Energy Corporation designates
such "Associated Company" as eligible for participation in this
Plan. For purposes of the preceding sentence, stock owned by an
Associated Company shall be deemed to be owned by the Company.
The term "employer", as used herein, refers to the
Company and to any Associated Company.
Section 4. Purchase Price of Stock
The price of Stock per share to participating employees
will be 90% of the mean between the highest and lowest quoted
selling prices of the Stock on the New York Stock Exchange
Composite Transactions on designated Price Dates as specified in
Section 9 of the Plan.
Section 5. Savings Period
The six-month periods, June 1 to November 30, inclusive,
and December 1 to May 31, inclusive, are Savings Periods during
which participating employees may accumulate savings through
payroll deductions to be made each payday for the purchase of
shares of Stock under the Plan. Each Savings Period includes all
paydays falling within it. Stock may be purchased pursuant to the
Plan only through payroll savings so accumulated and by the use of
supplementary cash deposited as hereinafter provided for.
Section 6. Authorization for Payroll Deductions
An eligible employee may authorize payroll deductions for
the purchase of Stock under the Plan by signing and delivering to
his employer an authorization for such purpose. An employee's
authorization must be received by his employer at least 15 days
prior to the employee's payday on which his deductions are to
commence except that no payroll deductions will be commenced in
the sixth month of a Savings Period. Such authorization must
state (a) the amount to be deducted regularly from each of his pay
checks, (b) authority to purchase Stock for him in each Savings
Period, and (c) the exact name or names in which Stock purchased
for him is to be issued. In this connection, stock certificates
for shares of Stock purchased under the Plan may be issued in the
employee's name, or, if so designated by the employee, in the name
of the employee's spouse, in the name of a custodian under the
Uniform Transfers to Minors Act for the benefit of a minor who is
a member of the employee's family, in the name of a trustee for
the benefit of the employee or a person who is a member of the
employee's family, or in the name of the employee and the name of
another person of legal age as joint tenants with the right of
survivorship; provided such other person is a member of the
employee's family. For this purpose the family of an employee
shall include only his spouse, his ancestors and lineal descendants
and his brothers and sisters.
The designation by an employee of the name or names in
which Stock purchased for him is to be issued may be changed by
the employee at any time by sending notification of such change to
his employer prior to issuance.
A participating employee may change his payroll deductions
at any time by signing and delivering to his employer a new
authorization for payroll deductions. A new authorization must be
received by the employer at least 15 days prior to the employee's
payday on which such changed deductions are to commence, except
that no change in payroll deductions will be commenced in the
sixth month of a Savings Period.
Payroll deductions may be authorized or may be changed
only once during any Savings Period.
If, as a result of a change in an employee's regular rate
of pay, his deductions exceed the amount allowable, as provided in
Section 7, a new authorization for payroll deductions must be
signed and delivered to his employer. Such new authorization will
become effective on the employee's first payday in the next
Savings Period.
An employee's authorization for payroll deductions will
remain in effect for the duration of the Plan unless the amount of
deduction is changed as provided in this Section or the employee
terminates payroll deductions or is considered to have terminated
payroll deductions under other applicable Sections of the Plan.
Section 7. Amount of Payroll Deductions
An eligible employee may authorize payroll deductions in
any full dollar amount not less than $4.00 per regular pay period
but not more than 10% of his regular rate of pay for his regular
pay period determined as of the date his authorization must be
received under Section 6 hereof.
The regular rate of pay for his regular pay period shall
mean the gross amount determined on the basis of an employee's
regular straight-time hourly, weekly or semimonthly rate for the
number of hours normally worked including the amount of any
adjustment or reduction therein resulting from the employee's
election to defer receipt of salaries or wages pursuant to a
qualified cash or deferred arrangement, but excluding overtime,
shift premiums, or other compensation. For this purpose, the
number of hours normally worked shall in no case be in excess of
40 hours per week.
For example, a wage earner whose regular hourly rate is
$11.83 and whose normal weekly work schedule is 40 hours may
authorize a biweekly payroll deduction of any full dollar amount
from $4.00 to $94.00 (80 hours times $11.83 equals $946.40 X 10% =
$94.64. The maximum is thus $94.00 per biweekly payroll period).
As an additional example, a salaried employee whose
regular weekly rate is $473.00 may authorize a biweekly payroll
deduction of any full dollar amount from $4.00 to $94.00 ($473.00
times 2 equals $946.00 X 10% = $94.60. The maximum is thus $94.00
per biweekly payroll period).
Section 8. Employee's Stock Purchase Account
The amounts deducted from the pay checks of each
participating employee will be credited to his individual Stock
Purchase Account.
No interest shall be payable to a participating employee
on any amounts which have been credited to his Stock Purchase
Account.
Section 9. Purchase of Stock
Stock may be purchased only on the Price Date for each
Savings Period and the option granted by the Company to make such
purchase becomes effective on such date. Price Dates will be
November 30 for a Savings Period ending that date and May 31 for a
Savings Period ending that date. As provided in Section 4, the
purchase price per share at which employees purchase Stock will be
90% of the mean between the highest and lowest quoted selling
prices of the Stock on the New York Stock Exchange Composite
Transactions on those Price Dates. If no such price is available
on a particular November 30 or May 31, the purchase price will be
determined as of the next preceding day on which such price is
available, in which event, for such Savings Period, the Price Date
shall be such preceding day.
An employee who purchases Stock under the Plan will
purchase as many full shares as is determined by dividing the
amount of his accumulated savings for the entire Savings Period by
the purchase price per share for such Savings Period. In the
event, however, that his accumulated savings shall, for any
reason, be less than 10% of his regular rate of pay for his
regular pay period determined as of the Price Date multiplied by
the number of his paydays in the Savings Period (or if the
employee shall have no accumulated savings), the employee shall
have the right to make a cash deposit with his employer on or
before the Price Date in an amount by which his accumulated
savings are less than said 10%, and such deposit shall be deemed a
part of the employee's accumulated savings for purposes of this
Section 9. Certificates for purchased stock will be delivered to
the employee or other person designated by the employee pursuant
to Section 6 as soon as practicable.
Pursuant to this Section 9, notwithstanding any provisions
which might be construed to the contrary, all eligible employees
are granted the option to purchase, on each Price Date, the number
of full shares, and no more, equivalent to 10% of his regular rate
of pay for his regular pay period, as further defined in this
Section 9, multiplied by the number of his paydays in the Savings
Period, divided by the purchase price per share for such Savings
Period. Any balance of accumulated savings shall be refunded to
the employee.
An employee who does not wish to purchase shares of Stock
out of accumulated savings in any Savings Period must notify his
employer to this effect, in writing. Such notification must be
received not later than the applicable November or May Price Date.
All funds credited to his Stock Purchase Account will then be
returned to him as soon as practicable and no further payroll
deductions shall be made during such Savings Period. An employee
who elects not to purchase Stock in any Savings Period will,
however, continue to accumulate savings through payroll deductions
during subsequent Savings Periods unless he submits Notice of
Termination, as provided in Section 14.
Section 10. Statement of Employee Account
Following the close of each Savings Period each
participating employee will be furnished with a statement of his
individual Stock Purchase Account. The statement will show the
number of full shares of Stock purchased by the participating
employee in that Savings Period and any remaining balance of his
accumulated savings not used for the purchase of Stock will be
refunded to him as soon as practicable.
Section 11. Sales or Assignment of Purchased Stock
Because of certain Federal tax provisions, an employee
must notify the Company promptly if any shares of Stock purchased
under the Plan by such employee are disposed of within two years
of the date of purchase of such shares.
Section 12. No Transfer or Assignment of Rights Under Plan
An employee's privilege to purchase Stock under the Plan
can be exercised only by the employee acting in his own behalf.
Stock cannot be purchased by an employee for someone else, except
as provided in Section 6.
An employee participating in the Plan may not sell,
transfer, pledge or assign to any other person any interest or
right under the Plan or in any funds credited to his account.
Section 13. No Repurchase of Stock by the Company
The Company will not repurchase, nor will any Associated
Company purchase, from any employee shares of Stock he has
acquired under the Plan.
Section 14. Termination Privilege
A participating employee may terminate payroll deductions
under the Plan at any time and, subject to the provisions of
Section 6, may again authorize payroll deductions subsequent to
such termination. Termination of payroll deductions shall be
effected by proper notification to his employer on the Notice of
Termination form provided for this purpose. All funds credited to
his account not already used or unconditionally committed for the
purchase of Stock will be returned to the employee as soon as
practicable after Notice of Termination is received.
Section 15. Suspension of Deductions
If, because of leave of absence, layoff, reduction in pay,
or other reasons an employee does not have, after other authorized
and required payroll deductions, sufficient pay in any payroll
period to permit his payroll deductions authorized under the Plan
to be made in full, his payroll deductions under the Plan will be
suspended until he again has sufficient pay to permit them to be
made. Such suspension of payroll deductions may not exceed six
consecutive payroll periods, after which the employee will be
considered to have terminated payroll deductions under the Plan as
provided in Section 14.
Section 16. Termination of Employee's Rights of Participation
An employee's rights of participation in the Plan will
terminate (a) upon the discontinuance of the Plan by the Company,
(b) if the company which is his employer ceases to be an
Associated Company, or (c) if his employment is terminated because
of retirement, resignation, release, discharge, death, or for any
other reason. A Notice of Termination of payroll deductions will
be considered as having been received from the employee on the
date his employment ceases. Upon termination, all funds credited
to a participating employee's account not already used or
unconditionally committed for the purchase of Stock will be
refunded as soon as practicable.
If an employee's payroll deductions are interrupted by any
legal process, a Notice of Termination will be considered as
having been received from him on the day the interruption occurs.
Section 17. Employees Transferred to and from Associated
Companies
In the event that an eligible employee is transferred
from or to the Company to or from an Associated Company, he will
retain the right to participate in the Plan.
An employee who is not eligible for participation in the
Plan at the time of transfer may become eligible under the general
provisions for entry into the Plan, and the aggregate of his
service with one or more of the companies in the Plan will be
counted in determining such eligibility.
Section 18. Administration of Plan
The Treasurer of Peoples Energy Corporation or an
alternate named by him, will administer the Plan and make such
rulings or interpretations as are necessary in its operation.
The Company and its Associated Companies will bear all
administrative expenses of the Plan.
Section 19. Termination or Amendment of Plan
While it is hoped that the Plan will remain in effect for
the period specified, the Board of Directors of the Company
reserves the right to withdraw, suspend, modify or terminate the
Plan at any time. The Plan will terminate in any event on May 31,
1998 unless extended by the Board of Directors.
If at any time shares of Stock authorized for purposes of
the Plan are not available in sufficient number to meet all
unfilled purchase requirements, the Company will apportion the
remaining available shares among participating employees on a pro
rata basis.
Section 20. Recapitalization Adjustment
In the event of a subdivision or combination of the
shares of Stock of the Company effected without receipt or payment
of consideration by or to the Company, which results in an
increase or decrease in the number of issued shares of Stock of
the Company, the number of shares of Stock reserved for offering
and issuance under the Plan will be proportionately increased or
decreased.
EXHIBIT 10(a)
GUARANTY
As an inducement to Northern Border Pipeline Company
(hereinafter "Northern Border") to grant credit, or assume a
credit risk, from time to time, in respect to transportation of
gas by Northern Border pursuant to one or more IT-1
Transportation Agreements (Agreement), which Agreement is
identical to or substantially the same as the copy attached
hereto, for the benefit of Peoples Energy Services Corporation
(hereinafter the "Shipper"), Peoples Energy Corporation
(hereinafter the "Guarantor"), shall pay to Northern Border
promptly when due, or upon demand thereafter, without deduction
of any claim of set off or counterclaim of Shipper, or any other
defense, the full amount of all obligation or indebtedness due to
Northern Border from Shipper, including interest and expenses of
all collection and reasonable counsel's fees incurred by Northern
Border by reason of the default of Shipper.
This Guaranty by Guarantor shall remain in full force and
effect during the term of any such Agreement, and any extension
or renewal thereof and thereafter until Shipper has fully
performed all of its obligations under the Agreement. This
Guaranty applies to all successors and/or assigns of Shipper.
The Guarantor waives notice of acceptance hereof and notice
of the volumes of gas transported by Northern Border for the
benefit of Shipper, and of the amounts and terms thereof, and of
all defaults or disputes with Shipper, and of the settlement or
adjustment of such defaults or disputes. The Guarantor, without
affecting its liability hereunder in any respect, consents to and
waives notice of all change of terms, the withdrawal of extension
of credit or time to pay, the release of the whole or any part of
the indebtedness, the settlement or compromise of differences,
the acceptance or release of security, the acceptance of notes,
or any other form of obligation for Shipper's indebtedness, and
the demand, protest and notice of protest of such instruments or
their endorsements.
The obligation of the Guarantor is a primary and an
unconditional obligation and covers all existing and future
obligations of Shipper to Northern Border under the Agreement.
This obligation shall be enforceable before or after proceeding
against Shipper or against any security held by Northern Border
and shall be effective regardless of the solvency or insolvency
of Shipper at any time, the extension or modification of the
indebtedness of Shipper by operation of law or the subsequent
incorporation, reorganization, merger or consolidation of Shipper
or any other change in the composition, nature, personnel, or
location of Shipper.
This Guaranty shall for all purposes be deemed to be made
in, and shall be governed by, the laws of the State of Nebraska.
This Guaranty shall be binding upon Guarantor, its successors and
assigns and shall inure to the benefit of Northern Border, its
successors and assigns.
The Guarantor in executing this Guaranty, represents and
warrants to Northern Border that:
(i)The Guarantor is a corporation duly organized and
existing in good standing and has full power and
authority to make and deliver this Guaranty;
(ii) The execution and delivery and performance of this
Guaranty by the Guarantor has been duly authorized by
all necessary action of its directors and shareholders
and do not and will not violate the provisions of, or
constitute default under, any presently applicable law
or its articles of incorporation or by laws or any
agreement presently binding on it; and
(iii) This Guaranty has been duly executed and
delivered by the authorized officers of the Guarantor
and constitutes its lawful, binding and legally
enforceable obligation.
IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned, this 1st day of August ,1997.
PEOPLES ENERGY CORPORATION
By /s/ T. M. Patrick
Title: Executive Vice President
Attest:
By /s/ Thomas W. Harwig
Title: Assistant Secretary
Northern Border Pipeline Company
FERC Gas Tariff First Revised Sheet Number 430
First Revised Volume No. 1 Superseding
Original Sheet Number 430
[COPY]
NORTHERN BORDER PIPELINE COMPANY
IT-1 TRANSPORTATION AGREEMENT
This Agreement is made and entered into as of this ____ day of
__________, 19___ , by and between NORTHERN BORDER PIPELINE
COMPANY, hereinafter referred to as "Company" and
_____________________ hereinafter referred to as "IT-1 Shipper".
WHEREAS, IT-1 Shipper is desirous of engaging Company to provide
interruptible transportation service for quantities of natural
gas; and
WHEREAS, Company is desirous of providing interruptible
transportation service for IT-1 Shipper; and
WHEREAS, the transportation of natural gas shall be effectuated
pursuant to Section 157 or Subparts B or G of Part 284 of the
Federal Energy Regulatory Commission' s (Commission) Regulations;
and
NOW, THEREFORE, in consideration of their respective covenants
and agreements hereinafter set forth, the parties hereto covenant
and agree as follows:
Article 1 - Basic Receipts
If on any day after executing this agreement, Company determines
that capacity exists in its pipeline system to transport all or a
portion of IT-1 Shipper's Total Interruptible Receipt Quantity
then IT1 Shipper shall be entitled to tender and deliver to
Company at each of IT-1 Shipper's Point (s) of Receipt
hereinafter specified in Master Exhibit A the quantity of gas
which Company has determined as available for Point (s) of
Receipt for such days. If more than one interruptible shipper
shall notify Company of a desire to tender gas, and Company
elects to receive less than all of such gas, Company shall
schedule Basic Receipts among such interruptible shippers based
on the per 100 Dekatherm-Mile rate each interruptible shipper has
contracted to pay Company. If two or more interruptible shipper
has contracted to pay Company. If two or more interruptible
shippers have contracted to pay the same rate, Basic Receipts
will be scheduled on a pro rata basis except as provided in
Subsection 10.21 (d) of the General Terms and Conditions.
Company may schedule in such other equitable manner as operating
conditions may reasonably require.
Northern Border Pipeline Company Third Revised Sheet Number 431
FERC Gas Tariff Superseding
First Revised Volume No. 1 Second Revised Sheet Number 431
[COPY]
NORTHERN BORDER PIPELINE COMPANY
IT-1 TRANSPORTATION AGREEMENT
Article 2 - Excess Receipts
Company agrees to receive, on the same basis as set forth
hereinabove, natural gas from IT-1 Shipper in excess of its Total
Interruptible Receipt Quantity provided that Company has
determined that it has sufficient capacity to transport
quantities in excess of its firm and interruptible contractual
commitments. The transportation of excess receipts will be in
accordance with the terms and conditions of Rate Schedule OT-1.
Article 3 - Deliveries
Company shall deliver gas to IT-1 Shipper at the Point (s) of
Delivery hereinafter specified in Master Exhibit A and in
accordance with Section 13 of the General Terms and Conditions of
Company's Tariff.
Article 4 - Payments
Shipper shall pay Company each month an amount for transportation
service determined by multiplying the then effective Maximum Rate
as set forth in Rate Schedule IT-1 (or the contracted rate to the
extent the Maximum Rate is discounted) times the IT-1 Shipper's
Dekatherm Miles of gas transported during the Production Month
divided by 100; however, in no event shall Company charge less
than 1.000 cent per Dekatherm. Payment shall be made in
accordance with Section 6 of the General Terms and Conditions,
and the other applicable terms and provisions of this agreement.
Article 5 - Change in Tariff Provisions
Upon notice to IT-1 Shipper, Company shall have the right to file
and seek FERC approval of any changes in the terms of any of its
Rate Schedules, General Terms and Conditions or Form of IT-1
Transportation Agreement as Company may deem necessary, and to
make such charges
Northern Border Pipeline Company
FERC Gas Tariff
Original Sheet Number 432
First Revised Volume No. 1
[COPY]
NORTHERN BORDER PIPELINE COMPANY
IT-1 TRANSPORTATION AGREEMENT
Article 5 - Change in Tariff Provisions (Continued)
effective at such times as Company desires and is possible under
applicable law. IT-1 Shipper may protest any filed changes
before the FERC and exercise any other rights it may have with
respect thereto.
Article 6 - Fees
Shipper shall pay to Company all filing fees required by the FERC
or any regulatory body related to service provided hereunder to
Shipper.
Article 7 - Cancellation of Prior Agreements
When this IT-1 Transportation Agreement becomes effective, it
shall supersede, cancel and terminate the following agreements.
Article 8 - Term
This IT-1 Transportation Agreement shall become effective
_________________, and shall continue in full force and effect
for a term of _____________.
This Agreement shall automatically terminate and be of no further
force and effect unless Shipper shall furnish a security
arrangement, as set forth in Subsection 8.1 of Rate Schedule
IT-1, to the Company within ten (10) days after notice from the
Company subsequent to the occurrence of any of the following
events:
The filing by Shipper or its parent of a voluntary petition
in bankruptcy or the entry of a decree or order by a court
having jurisdiction in the premises adjudging the Shipper as
bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Shipper under the
Federal Bankruptcy Act or any other applicable federal or
state law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the
Shipper or of any substantial part of its property, or the
ordering of the winding-up or liquidation of its affairs,
with said orders or decree continuing unstayed and in effect
for a period of sixty (60) consecutive days.
Northern Border Pipeline Company
FERC Gas Tariff Original Sheet Number 433
First Revised Volume No. 1
[COPY]
NORTHERN BORDER PIPELINE COMPANY
IT-1 TRANSPORTATION AGREEMENT
Article 8 - Term (Continued)
If a failure by Shipper to pay in full the amount of any
invoice rendered by Company shall continue for 15 days from
the date payment is due, this Agreement shall automatically
terminate and be of no further force and effect. Such
termination shall be in addition to any other remedies that
Company may have.
Termination of this IT-1 Transportation Agreement shall not
relieve Company and IT-1 Shipper of the obligation to correct any
Receipt or Delivery Imbalances hereunder, or IT-1 Shipper to pay
money due hereunder to Company.
Article 9 - Applicable Law
This Agreement and Company's Tariff, and the rights and
obligations of company and IT-1 Shipper thereunder, are subject
to all relevant and United States lawful statutes, rules,
regulations and orders of duly constituted authorities having
jurisdiction. Subject to the foregoing, this Agreement shall be
governed by and interpreted in accordance with the laws of the
State of Nebraska.
Article 10 - Exhibit A of IT-1 Transportation Agreement, Rate
Schedules and General Terms and Conditions
Company's Rate Schedules IT-1 and OT-1 and, unless otherwise
specified in such Rate Schedules, Company's General Terms and
Conditions which are on file with the Federal Energy Regulatory
Commission and in effect, and Exhibit A hereto, are all
applicable to this Agreement and are hereby incorporated in, and
made a part of this Agreement.
Northern Border Pipeline Company
FERC Gas Tariff Original Sheet Number 434
First Revised Volume No. 1
[COPY]
NORTHERN BORDER PIPELINE COMPANY
IT-1 TRANSPORTATION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year set forth above.
ATTEST: NORTHERN BORDER PIPELINE COMPANY
_____________________________ By:____________________________________
Title:___________________________________
ATTEST: (NAME OF IT-1 SHIPPER)
______________________________ By:____________________________________
Title:___________________________________
Northern Border Pipeline Company First Revised Sheet Number 435
FERC Gas Tariff Superseding
First Revised Volume No. 1 Original Sheet Number 435
[COPY]
NORTHERN BORDER PIPELINE COMPANY
IT-1 TRANSPORTATION AGREEMENT
EXHIBIT A (See Note 1)
COMPANY - Northern Border Pipeline Company
COMPANY'S ADDRESS - 1111 South 103rd Street
Omaha, NE 68124-1000
IT-1 SHIPPER -
IT-1 SHIPPER'S ADDRESS -
COMPANY (S) (END-USER) ULTIMATELY RECEIVING THE GAS -
Total Interruptible Receipt Quantity_______________ Dekatherm
Notes 2 & 3
Total Interruptible Delivery Quantity_______________ Dekatherm
This Exhibit A is made and entered into as of __________, 19____.
On the effective date, it shall supersede the Exhibit A dated as
of __________, 19____.
Effective Date of this Exhibit A is __________, 19____.
Note 1: Company's Master Exhibit A is hereby incorporated by
reference and made part of this Agreement.
Note 2: Nominations of gas volumes under Article 1 will be limited
to the lesser of Shipper's Total Interruptible Receipt
Quantity or the volumes specified at points of receipt on
Company's Master Exhibit A.
Northern Border Pipeline Company
FERC Gas Tariff First Revised Sheet Number 436
First Revised Volume No. 1 Superseding
Original Sheet Number 436
[COPY]
NORTHERN BORDER PIPELINE COMPANY
IT-1 TRANSPORTATION AGREEMENT
EXHIBIT A (Continued)
ATTEST: NORTHERN BORDER PIPELINE COMPANY
_____________________________ By: ____________________________________
Title: ___________________________________
ATTEST: (NAME OF IT-1 SHIPPER)
______________________________ By: ____________________________________
Title: ___________________________________
EXHIBIT 10(b)
GUARANTY
GUARANTY, dated July 25, 1997, made by Peoples Energy
Corporation, a corporation, organized and existing under the laws
of the State of Illinois (the "Guarantor").
WITNESSETH:
WHEREAS, it is a condition of Northern Border Pipeline
Company ("Northern Border") in entering into the U.S. Shippers
Service Agreement # T1098F (as amended and supplemented from time
to time, the "Agreement") that the Guarantor execute and deliver
this Guaranty;
WHEREAS, Northern Border has entered, or will be entering,
into an Agreement, which Agreement is identical to or
substantially in the form of the copy attached hereto, with
Peoples Energy Services Corporation (together with its successors
and assigns, "Shipper");
WHEREAS, Shipper is a wholly-owned subsidiary of the
Guarantor,
NOW, THEREFORE, in consideration of the foregoing, the
receipt and sufficiency of which are hereby acknowledged, the
Guarantor hereby agrees as follows:
1. The Guarantor irrevocably and unconditionally
guarantees the full and prompt payment when due of all amounts to
be paid by Shipper under or pursuant to the Agreement and the
performance of all other obligations and liabilities of Shipper
now existing or hereafter incurred under, or arising out of the
Agreement (all such amounts, obligations, and liabilities
collectively referred to as the "Guaranteed Obligations"). This
Guaranty applies to all successors and/or assigns of Shipper.
2. The Guarantor hereby waives notice of acceptance of
this Guaranty and notice of any liability to which it may apply,
and waives presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liability, suit or taking of
other action by Northern Border against, and any other notice to,
any party liable thereon (including such Guarantor or any other
guarantor).
3. Northern Border may at any time and from time to time
without consent of, or notice to the Guarantor, and without
impairing or releasing any of the obligations of the Guarantor
hereunder:
(a) change the manner, place or terms of payment of,
and/or change or extend the time of payment of, renew or alter,
any of the Guaranteed Obligations;
(b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property
securing the Guaranteed Obligations;
(c) exercise or refrain from exercising any rights
against Shipper or others or otherwise act or refrain from
acting;
(d) settle or compromise any of the Guaranteed
Obligations, any security therefor or any liability (including
any of those hereunder) incurred directly or indirectly in
respect thereof or hereof,
(e) apply any sums, regardless of how realized, to any
liability owing by Shipper to Northern Border under or pursuant
to the Agreement;
(f) consent to or waive any breach of, or any act,
omission or default under the Agreement or otherwise amend,
modify or supplement the Agreement; and
(g) act or fail to act in any manner referred to in
this Guaranty which may deprive the Guarantor of its right to
subrogation against Shipper to recover full indemnity for any
payments made pursuant to this Guaranty.
4. The obligations of the Guarantor under this Guaranty
are absolute and unconditional and shall remain in full force and
effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance
or occurrence whatsoever, including, without limitation: (a) any
action or inaction by Northern Border as contemplated in Section
3 of this Guaranty; (b) the bankruptcy, insolvency, liquidation
or reorganization of Shipper; or (c) any change in the ownership
or structure of Shipper.
5. If and to the extent that the Guarantor makes any
payment to Northern Border pursuant to this Guaranty, any claim
which the Guarantor may have against Northern Border by reason
thereof shall be subject and subordinate to the prior payment in
full of the Guaranteed Obligations.
6. The Guarantor makes the following representations,
warranties, and agreements:
(a) The Guarantor (i) is a duly organized and validly
existing corporation in good
standing under the laws of the jurisdiction of its incorporation
and (ii) has the power and authority to own its property and
assets and to transact the business in which it is engaged.
(b) The Guarantor has the corporate power to execute,
deliver and perform the terms and provisions of this Guaranty and
has taken all necessary corporate action to authorize the
execution, delivery and performance by it of this Guaranty. The
Guarantor has duly executed and delivered this Guaranty, and this
Guaranty constitutes its legal, valid and binding obligation
enforceable in accordance with its terms.
(c) Neither the execution, delivery or performance by
the Guarantor of this Guaranty, nor compliance by it with the
terms and provisions hereof, (i) will contravene any provision of
any law, statute, rule or regulation or any order, writ,
injunction or decree of any court or governmental instrumentality
applicable to the Guarantor, (ii) will conflict or be
inconsistent with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the
obligation to create or impose) any lien upon any of the property
or assets of the Guarantor pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan
agreement or any other agreement, contract or instrument to which
the Guarantor is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will
violate any provision of the Certificate of Incorporation or By-
Laws of the Guarantor.
7. This Guaranty is a continuing one and all liabilities
to which it applies or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of Northern Border in exercising any
right, power or privilege hereunder and no course of dealing
between the Guarantor or Northern Border shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights, powers and remedies herein expressly
provided are cumulative and not exclusive of any rights, powers,
or remedies which Northern Border would otherwise have. In the
event any of the Guaranteed Obligations are, after receipt of
payment thereof, required to be paid by Northern Border pursuant
to the order of any court to or for the benefit of any creditor
of Shipper or the Guarantor, the obligations of the Guarantor
hereunder shall be reinstated.
8. This Guaranty shall be binding upon the Guarantor and
its successors and assigns and shall inure to the benefit of
Northern Border and its successors and assigns.
9. All notices and other communications hereunder shall be
in writing and shall be deemed given when delivered personally or
by reputable overnight carrier or when received if sent by
registered or certified marl, return receipt requested, to the
parties at the following addresses (or at such other address as a
party may specify by like notice):
(a) If to Guarantor, to:
Peoples Energy Corporation
130 East Randolph Drive
Chicago, Illinois 60601
Attention: Executive Vice President
(b) If to Northern Border, to:
Northern Border Pipeline Company
1111 South 103rd Street
P.O. Box 3330 (Zip: 68103-0330)
Omaha, NE 68124-1000
Attention: Director, Partnership Finance
10. This Guaranty shall be governed by and construed in
accordance with the laws of the State of Nebraska, without regard
to principles of conflicts of law.
IN WITNESS WHEREOF, the Guarantor has caused this
Guaranty to be executed and delivered as of the date first above
written.
PEOPLES ENERGY CORPORATION
By /s/ T. M. Patrick
Title: Executive Vice President
Attest:
/s/ Peter Kauffman
Title: Assistant Secretary
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
This Agreement, (the "Service Agreement") is made and entered
into at Omaha, Nebraska as of August 1, 1997, by and between
NORTHERN BORDER PIPELINE COMPANY, hereinafter referred to as
"Company" and PEOPLES ENERGY SERVICES CORPORATION, a(n) Illinois
corporation, hereinafter referred to as "Shipper".
WHEREAS, Tennessee Gas Pipeline Company and other Shippers
(collectively referred to as the "Great Plains Shippers") have
contracted to purchase the synthetic gas output of the Coal
Gasification Plant located in Mercer County, North Dakota, from
Dakota Gasification Company; and
WHEREAS, Tennessee Gas Pipeline Company is permanently assigning
its gas purchase obligations under the Gas Purchase Agreement
dated as of January 29, 1982 and subsequently amended as of
February 16, 1994 between Dakota Gasification Company and
Tennessee Gas Pipeline Company (hereinafter referred to as the
Gas Purchase Agreement) and permanently releasing its
transportation obligations under its U.S. Shippers Service
Agreement #T1007 dated as of July 14, 1983, as amended, to
Shipper; and
WHEREAS, the Amendment terminating the U.S. Shippers Service
Agreement #T1007 will become effective upon the Billing
Commencement Date of this Service Agreement; and,
WHEREAS, Company's investors and lenders rely on Certificates of
Public Convenience and Necessity granted by the Federal Energy
Regulatory Commission and on the Tariff for the return of and the
return on all funds invested in or loaned to the Company; and
WHEREAS, the transportation of natural gas shall be effectuated
pursuant to Part 157 or Part 284 of the Federal Energy
Regulatory. Commission's Regulations; and
WHEREAS, Company recognizes that it will be a condition to the
initial effectiveness of this Service Agreement that,
notwithstanding any other provision of the Tariff or this Service
Agreement, the FERC and all other appropriate federal
governmental authorities and/or agencies in the United States
shall have issued, under terms and conditions acceptable to
Shipper, all final nonappealable authorizations and certificates;
NOW THEREFORE, in consideration of their respective covenants and
agreements hereinafter set out, the parties hereto covenant and
agree as follows:
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
Article 1 - Basic Receipts
Shipper shall on each day beginning with Shipper's Billing
Commencement Date, as defined in Section 1 of the General Terms
and Conditions of Company's FERC Gas Tariff, be entitled to
tender and, following tender, deliver to Company, at each of
Shipper's Points of Receipt, a quantity of gas not in excess of
the Daily Receipt Quantity for such Point of Receipt for such
clay, as defined in such Section 1, and Company shall, on such
day, take receipt of the quantity of gas so tendered and
delivered by Shipper at such Point of Receipt.
Article 2 - Excess Receipts
If Shipper shall desire to tender to Company on any day beginning
with Shipper's Billing Commencement Date, at any of Shipper's
Points of Receipt, a quantity of gas in excess of Shipper's Daily
Receipt Quantity for such Point of Receipt for such day, it shall
notify Company of such desire. If Company in its sole judgment,
determines that it has available the necessary capacity to
receive and transport all or any part of such excess quantity and
make deliveries in respect thereof, and that the performance of
Company's obligations to other Shippers under their Agreements
will not be adversely affected thereby, Company may elect to
receive from Shipper said excess quantity or part thereof, and
shall so notify Shipper. Scheduling of Excess Receipts will be in
accordance with Section 10 of the General Terms and Conditions.
Article 3 - Deliveries
Company shall deliver gas to Shipper at the Point(s) of Delivery
and under the conditions specified in Exhibit A hereto and in
accordance with Section 13 of the General Terms and Conditions.
Article 4 - Payments
Shipper shall make payments to Company in accordance with Rate
Schedules T-1 and OT-I and the other applicable terms and
provisions of this Service Agreement.
Article 5 - Change in Tariff Provisions
Upon notice to Shipper, Company shall have the right to file with
the Federal Energy Regulatory Commission any changes in the terms
of any of its Rate Schedules, General Terms and Conditions or
Form of Service Agreement as Company may deem necessary, and to
make such changes effective at such times as Company desires and
is possible under applicable law.
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
Shipper may protest any filed changes before the Federal Energy
Regulatory Commission and exercise any other rights it may have
with respect thereto.
Article 6 - Cancellation of Prior Agreements
When this Service Agreement becomes effective, it shall
supersede, cancel and terminate the following Agreements:
U.S. Shippers Service Agreement dated as of
July 14, 1983 by and between Company and
Tennessee Gas Pipeline Company as amended
Article 7 - Term
This Service Agreement shall become effective upon its execution
and shall under all circumstances continue in effect in
accordance with the Tariff following the Billing Commencement
Date until December 31, 2008, and shall continue in effect
thereafter until extended or terminated in accordance with
Section 5 of the Rate Schedule T-1. Shipper shall give Company
not less than six (6) months prior written notice of Shipper's
intent to terminate this Service Agreement. Provided, however,
that if the Shipper is relieved of its obligations under the Gas
Purchase agreement as a result of the application of Article XIX,
then Shipper shall have the right to terminate this Service
Agreement and such termination shall be effective within six (6)
months of Company's receipt of such notice of termination by
shipper.
In the event of termination as aforesaid, Shipper shall reimburse
Company on a pro rata basis based on its Maximum Receipt Quantity
for the net undepreciated book value of any additional
facilities, including construction work in progress, constructed
or being constructed to provide transportation service for
Shipper; provided, however, Shipper's obligation to pay its pro
rata share of the net undepreciated book value of such facilities
shall be reduced to the extent that shipper contracts to
transport volumes from other sources through Company's pipeline
or Company uses such facilities to provide service for another
party.
This Service Agreement shall automatically terminate and be of no
further force and effect unless Shipper shall furnish a proper
security arrangement, in accordance with Subsection 9.1 of Rate
Schedule T-1, to the Company within (30) days after notice from
the Company subsequent to the occurrence of any of the following
events:
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
The filing by Shipper or its parent of a voluntary petition
in bankruptcy or the entry of a decree or order by a court
having jurisdiction in the premises adjudging the Shipper as
bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Shipper under the
Federal Bankruptcy Act or any other applicable federal or
state law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the
Shipper or any substantial part of its property, or the
ordering of the winding-up or liquidation of its affairs,
with said order or decree continuing unstayed and in effect
for a period of sixty (60) consecutive days.
A failure by Shipper to pay in full the amount of any
invoice rendered by Company shall continue for ten (10) days
from the date payment is due.
Termination of this Service Agreement shall not relieve Company
and Shipper of the obligation to correct any Receipt or Delivery
Imbalances hereunder, or Shipper to pay money due hereunder to
Company and shall be in addition to any other remedies that
Company may have.
Article 8 - Applicable Law and Submission to Jurisdiction
For purposes of legal proceedings, this Service Agreement shall
be deemed to have been made in the State of Nebraska and to be
performed there, and the Courts of that State shall have
jurisdiction over all disputes which may arise under this Service
Agreement, provided always that nothing herein contained shall
prevent the Company from proceeding at its election against the
Shipper in the Courts of any other state, Province or country.
At the Company's request, the Shipper shall irrevocably appoint
an agent in Nebraska to receive, for it and on its behalf,
service of process in connection with any judicial proceeding in
Nebraska relating to this Service Agreement. Such service shall
be deemed completed on delivery to such process agent (even if
not forwarded to and received by the Shipper). If said agent
ceases to act as a process agent within Nebraska on behalf of
Shipper, the Shipper shall appoint a substitute process agent
within Nebraska and deliver to the Company a copy of the new
agent's acceptance of that appointment within 30 days.
Article 9 - Successors and Assigns
Any person which shall succeed by purchase, amalgamation, merger
or consolidation to the properties, substantially as an entirety,
of Shipper or of Company, as the case may be, and which shall
assume all obligations under Shipper's Service Agreement of
Shipper or Company,
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
as the case may be, shall be entitled to the rights, and shall be
subject to the obligations, of its predecessor under Shipper's
Service Agreement. Either party to a Shipper's Service Agreement
may pledge or charge the same under the provisions of any
mortgage, deed of trust, indenture, security agreement or similar
instrument which it has executed, or assign such Service
Agreement to any affiliated Person (which for such purpose shall
mean any person which controls, is under common control with or
is controlled by such party). Nothing contained in this Article 9
shall, however, operate to release predecessor Shipper from its
obligation under its Service Agreement unless Company shall, in
its sole discretion, consent in writing to such release, which it
shall not do unless it concludes that, on the basis of the facts
available to it. such release is not likely to have a substantial
adverse effect upon other Shippers or other Persons who may
become liable to provide funds to Company to enable it to meet
any of its obligations. Company shall not release any Shipper
from its obligations under its Service Agreement without the
written consent of the other Shippers unless: (a) such release is
effected pursuant to an assignment of obligations by such
Shipper, and the assumption obligations being assigned and
assumed no more conditional and no less absolute than those at
the time provided therein; and (b) such release is not likely to
have a substantial adverse effect upon Company or the other
Shippers. For the purposes hereof, and without limiting the
generality of the foregoing, any release of any Shipper from its
obligations under its Service Agreement shall be deemed likely to
have a substantial adverse effect upon Company or the other
Shippers if the assignee of such obligations has a credit
standing which is not at least equal to the credit standing of
the assignor of such obligations (credit standings in each case
as reflected by the ratings on outstanding debt securities by
Moody's Investors Service, Standard and Poor's Corporation or
another rating service acceptable to all Shippers to the extent
available or by other appropriate objective measures). Shipper
shall, at Company's request, execute such instruments and take
such other action as may be desirable to give effect to any such
assignment of Company's rights under such Shipper's Service
Agreement or to give effect to the right of a Person whom the
Company has specified pursuant to Section 6 of the General Terms
and Conditions of Company's FERC Gas Tariff as the Person to whom
payment of amounts invoiced by Company shall be made; provided,
however, that: (a) Shipper shall not be required to execute any
such instruments or take any such other action the effect of
which is to modify the respective rights and obligations of
either Shipper or Company under this Service Agreement; and (b)
Shipper shall be under no obligation at any time to determine the
status or amount of any payments which may be due from Company to
any Person whom the Company has specified pursuant to said
Section 6 as the Person to whom payment of amounts invoiced by
Company shall be made.
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
Article 10 - Loss of Governmental Authority, Gas Supply,
Transportation or Market
Except as provided in Article 7, without limiting its other
responsibilities and obligations under this Service Agreement,
the Shipper acknowledges that it is responsible for obtaining and
assumes the risk of loss of the following: (1) gas removal
permits, (2) export and import licenses, (3) gas supply, (4)
markets and (5) transportation upstream and downstream of the
Company's pipeline system. Notwithstanding the 1oss of one of the
items enumerated above, Shipper shall continue to be liable for
payment to the Company of the transportation charges as provided
for in this Service Agreement.
Article 11 - Other Operating Provisions
(This Article to be utilized when necessary to specify other
operating provisions.)
Article 12 - Exhibit A of Service Agreement, Rate Schedules and
General Terms and Conditions
Company's Rate Schedules and General Terms and Conditions, which
are on file with the Federal Energy Regulatory Commission and in
effect, and Exhibit A hereto are all applicable to this Service
Agreement and are hereby incorporated in, and made a part of,
this Service Agreement. In the event that the terms and
conditions herein are in conflict with the General Terms and
Conditions in Company's FERC Gas Tariff, the terms and conditions
of this Service Agreement are controlling.
IN WITNESS WHEREOF, the parties hereto have caused this Service
Agreement to be duly executed as of the day and year first set
forth above.
ATTEST: NORTHERN BORDER PIPELINE COMPANY
By: Northern Plains Natural Gas
Company,
Operator
______________________________ By:______________________________
Assistant Secretary
Title: Vice President
ATTEST: PEOPLES ENERGY SERVICES CORPORATION
______________________________ By: /s/ Michael Rumman
Title: President
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
EXHIBIT A TO U.S. SHIPPERS SERVICE AGREEMENT
Company: Northern Border Pipeline Company
Company's Address: 1111 South 103rd Street
Omaha, Nebraska 68124-1000
Shipper: Peoples Energy Services Corporation
Attn.: Ms. Lina Budnar
Shipper's Address: Suite 1210
111 East Wacker Drive
Chicago, IL 60601
<TABLE>
<CAPTION>
Maximum Minimum Maximum
Role Maximum Receipt Delivery Receipt Minimum
(Notes Quantity Pressure Pressure Temperature Temperature
Points 1 and 3) (MCF/Day) (PSIG) (PSIG) (F) (F)
<S> <S> <C> <C> <C> <C> <C>
Hebron, ND PR 47,000 1435 - 120 32
RD 47,000 - - - -
TP 47,000 - - - -
PD 30,000 - 725 - -
DD 30,000 - - - -
Glen Ullin, ND PR 47,000 1435 - 120 32
(Secondary-Note 2) RD 47,000 - - - -
TP 47,000 - - - -
PD 47,000 - 725 - 32
DD 47,000 - - - -
Liston, SD RD 770 - - - -
(Secondary-Note 2) TP 47,000 - - - -
PD 770 - 700 - 32
DD 770 - - - -
Mina, SD RD 4,500 - - - -
(Secondary-Note2) TP 47,000 - - - -
PD 4,500 - 750 - 32
DD 4,500 - - - -
Warner, SD RD 24,000 - - - -
(Secondary-Note2) TP 47,000 - - - -
PD 24,000 - 1,000 - 32
DD 24,000 - - - -
</TABLE>
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
EXHIBIT A TO U.S. SHIPPERS SERVICE AGREEMENT (continued)
<TABLE>
<CAPTION>
Maximum Minimum Maximum
Role Maximum Receipt Delivery Receipt Minimum
(Notes Quantity Pressure Pressure Temperature Temperature
Points 1 and 3) (MCF/Day) (PSIG) (PSIG) (F) (F)
<S> <S> <C> <C> <C> <C> <C>
Warner, SD RD 24,000 - - - -
(Secondary- TP 47,000 - - - -
Note 2)
PD 24,000 - 1,000 - 32
DD 24,000 - - - -
Aberdeen, SD RD 35,000 - - - -
(Secondary- TP 47,000 - - - -
Note 2)
PD 35,000 - 800 - 32
DD 35,000 - - - -
Webster, SD RD 5,000 - - - -
Secondary- TP 47,000 - - - -
Note 2)
PD 5,000 - 700 - 32
DD 5,000 - - - -
Milbank, SD RD 8,073 - - - -
Secondary- TP 47,000 - - - -
Note 2)
PD 8,073 - 800 - 32
DD 8,073 - - - -
Ivanhoe, MN RD 1,791 - - - -
Secondary- TP 47,000 - - - -
Note 2)
PD 1,791 - 700 - 32
DD 1,791 - - - -
Balaton, MN RD 20,000 - - - -
Secondary- TP 47,000 - - - -
Note 2)
PD 20,000 - 720 - 32
DD 20,000 - - - -
</TABLE>
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
<TABLE>
<CAPTION>
EXHIBIT A TO U.S. SHIPPERS SERVICE AGREEMENT (continued)
Maximum Minimum Maximum
Role Maximum Receipt Delivery Receipt Minimum
(Notes Quantity Pressure Pressure Temperature Temperature
Points 1 and 3) (MCF/Day) (PSIG) (PSIG) (F) (F)
<S> <C> <C> <C> <C> <C> <C>
Marshall, MN RD 47,000 - - - -
Secondary- TP 47,000 - - - -
Note 2)
PD 47,000 - 800 - 32
DD 47,000 - - - -
Westbrook, MN RD 2,500 - - - -
Secondary- TP 47,000 - - - -
Note 2)
PD 2,500 - 800 - 32
DD 2,500 - - - -
Windom, MN RD 10,000 - - - -
(Secondary- TP 47,000 - - - -
Note 2)
PD 10,000 - 800 - 32
DD 10,000 - - - -
Welcome, MN RD 47,000 - - - -
(Secondary- TP 47,000 - - - -
Note 2)
PD 47,000 - 796 - 32
DD 47,000 - - - -
Ledyard, IA RD 4,000 - - - -
(Secondary- TP 47,000 - - - -
Note 2)
PD 4,000 - 800 - 32
DD 4,000 - - - -
Ventura, IA RD 47,000 - - - -
(Secondary- TP 47,000 - - - -
Note 2)
PD 47,000 - 820 - 32
DD 47,000 - - - -
Grundy RD 47,000 - - - -
Center, IA
(Secondary- TP 47,000 - - - -
Note 2)
PD 47,000 - 800 - 32
DD 47,000 - - - -
</TABLE>
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
<TABLE>
<CAPTION>
EXHIBIT A TO U.S. SHIPPERS SERVICE AGREEMENT (continued)
Maximum Minimum Maximum
Role Maximum Receipt Delivery Receipt Minimum
(Notes Quantity Pressure Pressure Temperature Temperature
Points 1 and 3) (MCF/Day) (PSIG) (PSIG) (F) (F)
<S> <C> <C> <C> <C> <C> <C>
Beaman, IA RD 5,100 - - - -
(Secondary- TP 47,000 - - - -
Note 2)
PD 5,100 - 839 - 32
DD 5,100 - - - -
Tama, IA RD 880 - - - -
(Secondary- TP 47,000 - - - -
Note 2)
PD 880 - 816 - 32
DD 880 - - - -
Amana, IA RD 16,350 - - - -
(Secondary- TP 47,000 - - - -
Note 2)
PD 16,350 - 783 - -
DD 16,350 - - - -
Harper, IA RD 47,000 - - - -
TP 47,000 - - - -
PD 47,000 - 712 - 32
DD 47,000 - - - -
Total Maximum
Receipt Quantity 47,000 MCF
</TABLE>
Note 1: The point role will be either PR for physical receipts,
RD for receipt by displacement, TP for transfer points,
PD for physical deliveries, and DD for delivery by
displacement.
Note 2: Should nominations at secondary receipt and delivery
points be received which exceed available capacity,
volumes will be scheduled in accordance with Northern
Border's nomination and scheduling procedures.
NORTHERN BORDER PIPELINE COMPANY
U.S. SHIPPERS SERVICE AGREEMENT
EXHIBIT A TO U.S. SHIPPERS SERVICE AGREEMENT (continued)
Note 3: For receipt or delivery of gas by displacement, Company
cannot and does not have an obligation to physically
deliver or receive gas at these points. Volumes will
be delivered or received at these point(s) only to the
extent that corresponding equal or greater volumes are
received or delivered by other parties at these points
on the same day. These corresponding volumes will be
used to displace volumes nominated for delivery or
receipt by Shipper.
Note 4: Gas volumes which are nominated/scheduled at a sub
primary receipt or delivery point(s) have priority over
gas volumes of shipper utilizing such point on a
corresponding basis as a secondary receipt or delivery
point. Shipper's rights and obligations regarding the
use of sub primary points are governed by Subsection
17.1 of the General Terms and Conditions of the Tariff.
This Exhibit A is made and entered into as of August 1, 1997. On
the effective date designed by the Federal Energy Regulatory
Commission, it shall supersede the Exhibit A dated as of
__________.
The effective date of this Exhibit A is ____________________.
ATTEST: NORTHERN BORDER PIPELINE COMPANY
By: Northern Plains Natural Gas Company,
Operator
______________________________ By:______________________________
Assistant Secretary
Title: Vice President
ATTEST: PEOPLES ENERGY SERVICES CORPORATION
______________________________ By: /s/ Michael Rumman
Title: President
EXHIBIT 10(c)
Contract No. 112196
NATURAL GAS PIPELINE COMPANY OF AMERICA (Natural)
TRANSPORTATION RATE SCHEDULE FTS AGREEMENT DATED November 13,1996
UNDER SUBPART G OF PART 284 OF THE FERC'S REGULATIONS
1. SHIPPER is: THE PEOPLES GAS LIGHT AND COKE COMPANY, a LOCAL
DISTRIBUTION COMPANY.
2. (a) MDQ totals: 30,000 MMBTU per day.
(b) Service option selected (check any or all):
[ ] LN [ ] SW [ ] NB
3. TERM: May 01, 1997 through April 30, 1999.
4. Service will be ON BEHALF OF: [X] Shipper or [ ] Other:.
5. The ULTIMATE END USERS are customers within any state in the
continental U.S.; or (specify state)
____________________________________________________
6. [ ] This Agreement supersedes and cancels a ______
Agreement dated ______
[ ] Capacity rights for this Agreement were released
from Natural's Transportation Rate Schedule Agreement (KT
#) dated and are subject to any recall/return provisions
in Natural's Capacity Release Package ID #.
[X] Service and reservation charges commence the latter of:
(a) May 01, 1997, and
(b) the date service hereunder is available on
Natural's System.
[ ] Other: ______________________________________________
7. SHIPPER'S ADDRESSES NATURAL'S ADDRESSES
General Correspondence;
THE PEOPLES GAS LIGHT AND COKE NATURAL GAS PIPELINE COMPANY
COMPANY OF AMERICA
WILLIAM MORROW ATTENTION: GAS TRANSPORTATION
130 E. RANDOLPH DRIVE, 22nd FLOOR SERVICES
CHICAGO, IL 60601-6207 3200 SOUTHWEST FREEWAY 77027-7523
P.O. BOX 283 77001-0283
HOUSTON, TEXAS
Statements/Invoices/Accounting Related Materials:
THE PEOPLES GAS LIGHT AND COKE NATURAL GAS PIPELINE
COMPANY COMPANY OF AMERICA
PATRICIA GARCIA ATTENTION: ACCOUNT SERVICES
130 E. RANDOLPH DRIVE, 23RD FLOOR 701 EAST 22ND STREET
CHICAGO, IL 60601-6207 LOMBARD, ILLINOIS 60148
Payments:
NATURAL GAS PIPELINE
COMPANY OF AMERICA
P.O. BOX 2910
CAROL STREAM,ILLINOIS 60132-2910
FOR WIRE TRANSFER OR ACH:
DEPOSITORY INSTITUTION:
CITIBANK N.A.
ABA ROUTING #: 021000089
ACCOUNT #: 4067-6195
8. The above stated Rate Schedule, as revised from time to
time, controls this Agreement and is incorporated herein.
The attached Exhibits A, B, and C (for firm service only)
are a part of this Agreement. NATURAL AND SHIPPER
ACKNOWLEDGE THAT THIS AGREEMENT IS SUBJECT TO THE PROVISIONS
OF NATURAL'S FERC GAS TARIFF AND APPLICABLE FEDERAL LAW. TO
THE EXTENT THAT STATE LAW IS APPLICABLE, NATURAL AND SHIPPER
EXPRESSLY AGREE THAT THE LAWS OF THE STATE OF ILLINOIS SHALL
GOVERN THE VALIDITY, CONSTRUCTION, INTERPRETATION AND EFFECT
OF THIS CONTRACT, EXCLUDING, HOWEVER, ANY CONFLICT OF LAWS
RULE WHICH WOULD APPLY THE LAW OF ANOTHER STATE. This
Agreement states the entire agreement between the parties
and no waiver, representation, or agreement shall affect
this Agreement unless it is in writing. Shipper shall
provide the actual end user purchaser name(s) to Natural if
Natural must provide them to FERC.
AGREED TO BY:
NATURAL GAS PIPELINE COMPANY THE PEOPLES GAS LIGHT AND
OF AMERICA COKE COMPANY
"Natural" "Shipper"
By: /s/ Stephen G. Weiman By: /s/ T. M. Patrick
Name: Stephen G. Weiman Name: T. M. Patrick
Title:Vice President Title:Executive Vice President
EXHIBIT A
DATED: November 13, 1996
EFFECTIVE DATE: May 01, 1997
COMPANY: THE PEOPLES GAS LIGHT AND COKE COMPANY
CONTRACT: 112196
RECEIPT POINT/S
County/Parish PIN MDQ
Name/Location Area State No. Zone (MMBtu/d)
PRIMARY RECEIPT POINT/S
1.LA GLORIA MOBIL/NGPL JIM WELLS TX 439 04 5,000
JIM WELLS AT OR NEAR THE
TAILGATE OF MOBIL'S
LA GLORIA GAS PLANT ON
TRANSPORTER'S LA GLORIA-
MOBIL LATERAL IN LOT #1,
SUBD. OF LANDS ADJ. TO
TOWN OF LA GLORIA, JIM
WELLS COUNTY, TEXAS.
2.PENNZOIL/NGPL MASTER ZAPATA ZAPATA TX 446 04 10,000
INTERCONNECT WITH PENNZOIL
OIL COMPANY ON TRANSPORTER'S
ESCOBAS-LOS MAGATOS LATERAL
IN THE CERRITO BLANCO SURVEY,
A-73, ZAPATA COUNTY, TEXAS.
3.TRANSAM/NGPL NE THMPSNVLLE JIM HOGG TX 1041 04 15,000
JIM HOGG INTERCONNECT WITH
TRANSAMERICAN GAS TRANSMISSION
CORPORATION IN BLOCK 4, "LAS
ANIMAS" HEIRS OF FELIPE DE LA PENA
SURVEY, JIM HOGG COUNTY, TEXAS.
SECONDARY RECEIPT POINT/S
All secondary receipt point, and the related priorities and
volumes, as provided under the Tariff provisions governing this
Agreement.
RECEIPT PRESSURE, ASSUMED ATMOSPHERIC PRESSURE
Natural gas to be delivered to Natural at the Receipt
Point/s shall be at a delivery pressure sufficient to enter
Natural's pipeline facilities at the pressure maintained from
time to time, but Shipper shall not deliver gas at a pressure in
excess of the Maximum Allowable Operating Pressure (MAOP) stated
for each Receipt Point. The measuring party shall use or cause to
be used an assumed atmospheric pressure corresponding to the
elevation at such Receipt Point/s.
EXHIBIT A (CONT'D)
DATED November 13, 1996
EFFECTIVE DATE: May 01, 1997
COMPANY: THE PEOPLES GAS LIGHT AND COKE COMPANY
CONTRACT: 112196
RATES
Except as provided to the contrary in any written
agreement(s) between the parties in effect during the term
hereof, Shipper shall pay Natural the maximum rate and all other
lawful charges as specified in Natural's applicable rate
schedule.
FUEL GAS AND GAS LOST AND UNACCOUNTED FOR PERCENTAGE (%)
Shipper will be assessed the applicable percentage for Fuel
Gas and Gas Lost and Unaccounted For.
TRANSPORTATION OF LIQUIDS
Transportation of liquids may occur at permitted points
identified in Natural's current Catalog of Receipt and Delivery
Points, but only if the parties execute a separate liquids
agreement.
EXHIBIT B
DATED: November 13, 1996
EFFECTIVE DATE: May 01, 1997
COMPANY: THE PEOPLES GAS LIGHT AND COKE COMPANY
CONTRACT: 112196
DELIVERY POINT/S
County/Parish PIN MDQ
Name/Location Area State No. Zone (MMBtu/d)
PRIMARY DELIVERY POINT/S
1.PGLC/NGPL ROGERS PARK COOK COOK IL 4174 06 30,000
INTERCONNECT WITH THE PEOPLES
GAS LIGHT AND COKE COMPANY ON
TRANSPORTER'S HOWARD STREET
LINE IN SEC. 36-T41N-R13E, COOK,
COUNTY, ILLINOIS.
SECONDARY DELIVERY POINT/S
All secondary delivery points, and the related priorities
and volumes, as provided under the Tariff provisions governing
this Agreement.
DELIVERY PRESSURE, ASSUMED ATMOSPHERIC PRESSURE
Natural gas to be delivered by Natural to Shipper, or for
Shipper's account, at the Delivery Point/s shall be at the
pressure available in Natural's pipeline facilities from time to
time. The measuring party shall use or cause to be used an
assumed atmospheric pressure corresponding to the elevation at
such Delivery Point/s.
EXHIBIT C
DATED November 13, 1996
EFFECTIVE DATE: May 01, 1997
COMPANY: THE PEOPLES GAS LIGHT AND COKE COMPANY
CONTRACT: 112196
Pursuant to Natural's tariff, an MDQ exists for each primary
transportation path segment and direction under the Agreement.
Such MDQ is the maximum daily quantity of gas which Natural is
obligated to transport on a firm basis along a primary
transportation path segment.
A primary transportation path segment is the path between a
primary receipt, delivery, or node point and the next primary
receipt, delivery, or node point. A node point is the point of
interconnection between two or more of Natural's pipeline
facilities.
A segment is a section of Natural's pipeline system designated
by a segment number whereby the Shipper under the terms of their
agreement based on the points within the segment identified on
Exhibit C has throughput capacity rights.
The segment numbers listed on Exhibit C reflect this
Agreement's path corresponding to Natural's most recent Pipeline
System Map which identifies segments and their corresponding
numbers. All information provided in this Exhibit C is subject to
the actual terms and conditions of Natural's Tariff.
EXHIBIT C
DATED November 13, 1996
EFFECTIVE DATE: May 01, 1997
COMPANY: THE PEOPLES GAS LIGHT AND COKE COMPANY
CONTRACT: 112196
Segment Upstream Forward/Backward Flow Through
Number Segment -Haul (Contractual) Capacity
18 0 F 0
20 18 F 25,000
22 20 F 30,000
26 22 F 30,000
27 26 F 30,000
28 27 F 30,000
30 28 F 30,000
EXHIBIT 10(d)
SERVICE PACKAGE NO. 19346
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-G )
THIS AGREEMENT is made and entered into as of the 1st day of
November, 1997, by and between MIDWESTERN GAS TRANSMISSION
COMPANY, a Delaware Corporation, hereinafter referred to as
"Transporter" and PEOPLES GAS LIGHT & COKE CO., an ILLINOIS
Corporation, hereinafter referred to as "Shipper." Transporter
and Shipper shall be collectively referred to as "Parties."
WITNESSETH:
That, in consideration of the premises and of the mutual
agreements herein contained, Transporter and Shipper agree as
follows:
ARTICLE I - DEFINITIONS
The definitions found in Article 1 of Transporter's General Terms
and Conditions are incorporated herein by reference.
ARTICLE II - TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily, on a firm basis, at Eligible Receipt Point(s), from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity and deliver to
or for the account of Shipper to authorized Delivery Point(s) an
equivalent quantity of gas.
ARTICLE III- POINTS OF RECEIPT AND DELIVERY
AND ASSOCIATED PRESSURES
3.1 The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit A attached hereto. Shipper shall
have access to secondary receipt and delivery points as
specified in the applicable rate schedule (FT-A or FT-G)
pursuant to which Shipper's volumes are being transported.
Priority of transportation to such secondary points shall be
determined in accord with Article III Section 5 of the
General Terms and Conditions of Transporter's tariff.
3.2 Shipper may request a change to the Primary Points of
Receipt and/or Primary Points of Delivery provided in this
Agreement by submitting to Transporter a Service Request
Form in accord with Article XXV of the General Terms and
Conditions of Transporter's FERC Gas Tariff. Priority of
transportation service to such additional Points of Receipt
and/or Delivery shall be determined pursuant to Article III,
Section 5 of the General Terms and Conditions.
3.3 Shipper shall deliver, or cause to be delivered, to
Transporter the gas to be transported hereunder at pressures
sufficient to deliver such gas into Transporter's system at
the Receipt Point(s), provided such pressure shall not
exceed Transporter's maximum allowable operating pressure.
Transporter shall deliver
SERVICE PACKAGE NO. 19346
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-G )
the gas to be transported hereunder to or for the account of
Shipper at the pressures existing in Transporter's system at
the Delivery Point(s).
ARTICLE IV - FACILITIES
All facilities are in place to render the service provided for in
this Agreement.
or
(If facilities are contemplated to be constructed, a brief
description of the facilities will be included, as well as who is
to construct, own and/or operate such facilities.)
ARTICLE V - QUALITY SPECIFICATIONS AND STANDARDS FOR
MEASUREMENTS
For all gas received, transported, and delivered hereunder, the
Parties agree to the quality specifications and standards for
measurement as provided for in the General Terms and Conditions
of Transporter's FERC Gas Tariff. Transporter shall be
responsible for the operation of measurement facilities at the
Delivery Point(s) and at the Receipt Point(s). In the event that
measurement facilities are not operated by Transporter, then the
responsibility for operations shall be deemed to be that of the
Balancing Party at such point. If measurement facilities are
not operated by Transporter and there is no Balancing Party at
such point, then the responsibility for operations shall be
deemed to be Shipper's.
ARTICLE VI - RATES FOR SERVICE
6.1 Transportation Charge - Commencing on the date of the rates,
charges and surcharges to be paid by Shipper to Transporter,
including compensation for system fuel and losses, shall be
in accordance with Transporter's applicable effective Rate
Schedule (FT-A or FT-G) and the General Terms and Conditions
of Transporter's Tariff.
6.2 Incidental Charges - Upon execution of this Agreement,
Shipper agrees to pay Transporter for all known and
anticipated filing fees, reporting fees or similar charges
required for the rendition of the transportation service
provided for herein. Further, Shipper agrees to reimburse
Transporter for all such fees within thirty (30) days after
receiving proof of payment from Transporter.
6.3 Changes in Rates and Charges - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make changes effective in
(a) the rates, charges, terms and conditions applicable to
service pursuant to the Rate Schedule under which this service is
rendered, (b) the Rate Schedule(s) pursuant to which service
hereunder is rendered, and (c)any provisions of the General Terms
and Conditions in Transporter's FERC Gas Tariff applicable to
those Rate Schedules, as such Tariff may be revised or replaced
from time to time. Transporter agrees that Shipper may
SERVICE PACKAGE NO. 19346
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-G )
protest or contest the aforementioned filings, or may seek
authorization from duly constituted regulatory authorities
for such adjustment of Transporter's existing FERC Gas
Tariff as may be found necessary to assure Transporter just
and reasonable rates.
ARTICLE VII - RESPONSIBILITY DURING TRANSPORTATION
As between the Parties hereto, it is agreed that from the time
gas is delivered by Shipper to Transporter at the Receipt
Point(s) and prior to delivery of such gas to or for the account
of Shipper at the Delivery Point(s), Transporter shall have the
unqualified right to commingle such gas with other gas in its
system and shall have the unqualified right to handle and treat
such gas as its own.
ARTICLE VIII - BILLINGS AND PAYMENTS
Billings and payments under this Agreement shall be in accordance
with the terms and conditions of Transporter's FERC Gas Tariff as
such Tariff may be revised or replaced from time to time.
ARTICLE IX - RATE SCHEDULES AND GENERAL TERMS AND CONDITIONS
This Agreement and all terms and provisions contained or
incorporated herein are subject to the effective provisions of
Transporter's applicable Rate Schedule(s) as set forth on Exhibit
A and Transporter's General Terms and Conditions on file with the
FERC, or other duly constituted authorities having jurisdiction,
as the same may be changed or superseded from time to time in
accordance with the rules and regulations of the FERC, which Rate
Schedule(s) and General Terms and Conditions are incorporated by
reference. To the extent a term or condition set forth in this
Contract is inconsistent with the General Terms and Conditions,
the General Terms and Conditions shall govern. Furthermore, to
the extent a term or condition set forth in this Contract is
inconsistent with the applicable Rate Schedule, the Rate Schedule
shall govern unless the relevant provision is inconsistent with
General Terms and Conditions.
ARTICLE X - REGULATION
10.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
or authorization is not so obtained or continued.
All Parties hereto shall cooperate to obtain or continue all
necessary approvals or authorizations, but no Party shall be
liable to any other Party for failure to obtain or continue
such approvals or authorizations.
SERVICE PACKAGE NO. 19346
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-G )
10.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC
regulations.
10.3 In the event the Parties are unable to obtain all necessary
and satisfactory regulatory approvals for service on
facilities prior to the expiration of two (2) years from the
effective date hereof, then, prior to receipt of such
regulatory approvals, either Party may terminate this
Agreement by giving the other Party at least thirty (30)
days prior written notice, and the respective obligations
hereunder, except for the provisions of Section 6.2 herein,
shall be of no force and effect from and after the effective
date of such termination.
ARTICLE XI - WARRANTIES
Shipper agrees to indemnify and hold Transporter harmless from
all suits, actions, debts, accounts, damages, costs, losses, and
expenses (including reasonable attorneys fees) arising from or
out of breach of any warranty, express or implied, by the Shipper
herein. Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII - TERM OF AGREEMENT
12.1 This Agreement shall become effective on the date of its
execution, and shall be implemented no later than the first
day of the month following the later of the date of
execution or the completion of any necessary facilities on
Transporter's system and shall remain in full force and
effect until the 31st day of March, 1998, ("Primary
Term")and will terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement upon its termination, as
required by the General Terms and Conditions of
Transporter's FERC Gas Tariff, shall survive the other parts
of this Agreement until such time as such balancing has been
accomplished.
12.3 In addition to any other remedy Transporter may have, this
Agreement will terminate automatically in the event Shipper
fails to pay all of the amount of any bill for service
rendered by Transporter hereunder when that amount is due,
provided Transporter shall give Shipper thirty days notice
prior to any termination of service. Service may continue
hereunder if within the thirty day notice period
satisfactory assurance of payment is made in accord with the
terms and conditions of Article VI of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO.19346
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Rate Schedule FT-A or FT-G)
ARTICLE XIII - NOTICES
Except when notice is required through Transporter's Electronic
Bulletin Board, any notice, request, demand, statement, or bill
provided for in this Agreement or any notice that either Party
may desire to give to the post office address of the Party
intended to receive the same as follows::
TRANSPORTER: MIDWESTERN GAS TRANSMISSION COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: PEOPLES GAS LIGHT & COKE CO
130 East Randolph Drive
22ND Floor
Chicago, IL 60601-6207
Attention: Raulando C. deLara
BILLING: PEOPLES GAS LIGHT & COKE CO
130 East Randolph Drive
22ND Floor
Chicago, IL 60601-6207
Attention: Raulando C. deLara
or to such other address as either Party may designate by written
notice to the other.
ARTICLE XIV - ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture, or other instrument
which it has executed or may execute hereafter as security
for indebtedness. Either Party, without relieving itself of
its obligation under this Agreement, may assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its rights and obligations hereunder, except in accord with
Article XXI of the General Terms and Conditions of
Transporter's Tariff.
14.2 Any person or entity that succeeds by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
ARTICLE XV - MISCELLANEOUS
SERVICE PACKAGE NO. 19346
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-G )
15.1 Except for changes specifically authorized pursuant to this
Agreement, no modification of or supplement to the terms and
conditions hereof shall be or become effective until Shipper
has submitted a request for change through Transporter's
Electronic Bulletin Board and Shipper has been notified
through Transporter's Electronic Bulletin Board of
Transporter's agreement to such change.
15.2 No waiver by any Party of any one or more defaults by the
other in the performance of any provision of this Agreement
shall operate or be construed as a waiver of any future
default or defaults, whether of a like or of a different
character.
15.3 The interpretation and performance of this agreement shall
be in accordance with and controlled by the laws of the
State of Texas, without regard to Choice of Law doctrine
that refers to the laws of another jurisdiction.
15.4 Exhibit A attached hereto is incorporated herein by
reference add made a part of this agreement purposes.
15.5 If any provision of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at
Transporter's option and if the severability option is
exercised, the remaining provisions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove
written.
MIDWESTERN GAS TRANSMISSION COMPANY
BY: /s/ J. P. Dickerson
J. P. Dickerson
Agent and Attorney-in-Fact
Date: 9/23/97
PEOPLES GAS LIGHT & COKE CO.
BY: /s/ W. E. Morrow
Title: Vice President
Date: August 25, 1997
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED November 1, 1997
BETWEEN
MIDWESTERN GAS TRANSMISSION COMPANY
AND
PEOPLES GAS LIGHT & COKE CO
PEOPLES GAS LIGHT & COKE CO
EFFECTIVE DATE OF AMENDMENT: November 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19346
SERVICE PACKAGE TQ: 53,410 Dth
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
<S> <C> <C> <C> <C> <C> <C> <C> <C>
017024 MGT PURCHASE (Bi 2- MIDWESTERN GAS SUMMER TN 01 R 53,410 53,410
7086 Dual TRANSMISSION CO
Total 53,410 53,410
Receipt
TQ:
027062 PEOPLES-UNION HILL PEPLES GAS LIGHT & COKE WILL IL 01 D 53,410 53,410
SALES CO
NUMBER OF RECEIPT POINTS AFFECTED: 1
NUMBER OF DELIVERY POINTS AFFECTED: 1
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(e)
SERVICE PACKAGE NO.19399
AGREEMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
THIS AGREEMENT is made and entered into as of the 1st day of
November, 1997, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
PEOPLES GAS LIGHT & COKE CO, a ILLINOIS Corporation, hereinafter
referred to as "Shipper." Transporter and Shipper shall
collectively be referred to herein as the "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for
the account of Shipper hereunder on each day during each
year during the term hereof, which shall be 53,950
dekatherms. Any limitations of the quantities to be
received from each Point of Receipt and/or delivered to each
Point of Delivery shall be as specified on Exhibit "A"
attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily on a firm basis, at the Point(s) of Receipt from Shipper or
for Shipper's account such quantity of gas as Shipper makes
available up to the Transportation Quantity, and to deliver to or
for the account of Shipper to the Point(s) of Delivery an
Equivalent Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit "A" attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in
this Agreement.
SERVICE PACKAGE NO.19399
AGREEMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT
For all gas received, transported and delivered hereunder the
Parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that no
new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter or a downstream
pipeline, then responsibility for operations shall be deemed to
be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the effective date
hereof, the rates, charges, and surcharges to be paid by
Shipper to Transporter for the transportation service
provided herein shall be in accordance with Transporter's
Rate Schedule FT-A and the General Terms and Conditions of
Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been
previously paid for by Shipper, which Transporter incurs in
rendering service hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes
in (a) the rates and charges applicable to service pursuant
to Transporter's Rate Schedule FT-A, (b) the rate
schedule(s) pursuant to which service hereunder is rendered,
or (c) any provision of the General Terms and Conditions
applicable to those rate schedules. Transporter agrees that
Shipper may protest or contest the aforementioned filings,
or may seek authorization from duly constituted regulatory
authorities for such adjustment of Transporter's existing
FERC Gas Tariff as may be found necessary to assure
Transporter just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
SERVICE PACKAGE NO.19399
AGREEMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
is not so obtained or continued. All Parties hereto shall
cooperate to obtain or continue all necessary approvals or
authorizations, but no Party shall be liable to any other
Party for failure to obtain or continue such approvals or
authorizations.
9.2 The transportation service described herein shall be
provided subject to Subpart G, Part 284, of the FERC
Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified, the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas
Tariff, Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in place as
of the requested effective date of service, and that it has
advised the upstream and downstream transporters of the receipt
and delivery points under this Agreement and any quantity
limitations for each point as specified on Exhibit "A" attached
hereto. Shipper agrees to indemnify and hold Transporter harmless
for refusal to transport gas
SERVICE PACKAGE NO. 19399
AGREEMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
hereunder in the event any upstream or downstream
transporter fails to receive or deliver gas as
contemplated by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter
harmless from all suits, actions, debts, accounts,
damages, costs, losses and expenses (including reasonable
attorneys fees) arising from or out of breach of any
warranty by Shipper herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall be effective as of the 1st day of
November, 1997, and shall remain in force and effect until
the 31st day of March, 1998,("Primary Term") and will
terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's Tariff, shall
survive the other parts of this Agreement until such time as
such balancing has been accomplished; provided, however,
that Transporter notifies Shipper of such imbalance not
later than twelve months after the termination of this
Agreement.
12.3 This Agreement will terminate automatically upon written
notice from Transporter in the event Shipper fails to pay
all of the amount of any bill for service rendered by
Transporter hereunder in accord with the terms and
conditions of Article VI of the General Terms and Conditions
of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO.19399
AGREEMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE XIII
NOTICE
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed the post office address of the
Party intended to receive the same, as follows:
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Director, Transportation Control
SHIPPER:
NOTICES: PEOPLES GAS LIGHT & COKE CO.
130 East Randolph Drive
22nd Floor
Chicago, IL 60601-6207
Attention: Raulando C. deLara
BILLING: PEOPLES GAS LIGHT & COKE CO.
130 East Randolph Drive
22nd Floor
Chicago, IL 60601-6207
Attention: Raulando C deLara
or to such other address as either Party may designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture, or other instrument
which it has executed or may execute hereafter as security
for indebtedness. Either Party, without relieving itself of
its obligations under this Agreement, assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its rights hereunder, except in accord with Article III,
Section 11 of the General Terms and Conditions of
Transporter's FERC Gas Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
SERVICE PACKAGE NO. 19399
AGREEMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE XV
MISCELLANEOUS
15.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE
IN ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE DOCTRINES GOVERNING CHOICE
OF LAW.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at either
Party's option; and if the severability option is exercised,
the remaining provisions of the Agreement shall remain in
full force and effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement
to the terms and provisions stated in this agreement shall
be or become effective until Shipper has submitted a request
for change through the Electronic Bulletin Board and Shipper
has been notified through the Electronic Bulletin Board of
Transporter's agreement to such change.
15.4 Exhibit "A" attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
By: /s/ J. P. Dickerson
J.P. Dickerson
Agent and Attorney-in-Fact
Date: 9/27/97
PEOPLES GAS LIGHT & COKE CO
By: /s/ William E. Morrow
Title: Vice President
Date: August 25, 1997
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED November 1, 1997
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
PEOPLES GAS LIGHT & COKE CO
PEOPLES GAS LIGHT & COKE CO
EFFECTIVE DATE OF AMENDMENT: November 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19399
SERVICE PACKAGE TQ: 53,950 Dth
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
010932 PENNZOIL-SHIP SHOAL PENNZOIL EXPLORATION OFFSHORE- OL OL R 500 9,809 9,809
BLK 154 E AND PRODU FEDERA
011127 TEXACO-EUGENE ISLAND TEXACO EXPLORATION AND OFFSHORE- OL OL R 500 4,904 4,904
BLK 338 A PRODUCT FEDERA
011423 TEXACO-(NGP)-WEST TEXACO EXPLORATION AND OFFSHORE- OL OL R 500 4,905 4,905
DELTA BLK 10 PRODUCT FEDERA
011724 VASTOR-ATLANTIC-SOUTH VASTAR GAS MARKETING, OFFSHORE- OL OL R 500 3,218 3,218
PASS BLK INC. FEDERA
011971 CHEVRON-SOUTH MARSH CHEVRON USA INC OFFSHORE- OL OL R 500 11,495 11,495
ISLAND 7 FEDERA
012225 WALTER - SOUTH MARSH WALTER OIL & GAS CORP OFFSHORE- OL OL R 500 4,905 4,905
ISLAND 36 FEDERA
012416 ALLAR CO #1 AMERADA HESS CORP FORREST MS 01 R 500 14,714 14,714
Total 53,950 53,950
Receipt
TQ:
020852 MGT SMS (Bi 1-2447 SUMNER TN 01 D 999 53,950 53,950
Dual 1-70
NUMBER OF RECEIPT POINTS AFFECTED: 7
NUMBER OF DELIVERY POINTS AFFECTED: 1
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(f)
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
THIS AGREEMENT is made and entered into as of the 1st day of May,
1997, by and between MIDWESTERN GAS TRANSMISSION COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and NORTH SHORE GAS COMPANY, an Illinois Corporation, hereinafter
referred to as "Shipper." Transporter and Shipper shall be
collectively referred to as "Parties."
WITNESSETH:
That, in consideration of the premises and of the mutual
agreements herein contained, Transporter and Shipper agree as
follows:
ARTICLE I - DEFINITIONS
The definitions found in Article 1 of Transporter's General Terms
Conditions are incorporated herein by reference.
ARTICLE II - TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily, on a firm basis, at Eligible Receipt Point(s), from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity and deliver to
or for the account of Shipper to authorized Delivery Point(s) an
equivalent quantity of gas.
ARTICLE III- POINTS OF RECEIPT AND DELIVERY
AND ASSOCIATED PRESSURES
3.1 The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit A attached hereto. Shipper shall
have access to secondary receipt and delivery points as
specified in the applicable rate schedule (FT-A or FT-GS)
pursuant to which Shipper's volumes are being transported.
Priority of transportation to such secondary points shall be
determined in accord with Article III, Section 5 of the
General Terms and Conditions of Transporter's tariff.
3.2 Shipper may request a change to the Primary Points of
Receipt and/or Primary Points of Delivery provided in this
Agreement by submitting to Transporter a Service Request
Farm in accord with Article XXV of the General Terms and
Conditions of Transporter's FERC Gas Tariff. Priority of
transportation service to such additional Points of Receipt
and/or Delivery shall be determined pursuant to Article III,
Section 5 of the General Terms and Conditions.
3.3 Shipper shall deliver, or cause to be delivered, to
Transporter the gas to be transported hereunder at pressures
sufficient to deliver such gas into Transporter's system at
the Receipt Point(s), provided such pressure shall not
exceed Transporter's maximum allowable operating pressure.
Transporter shall deliver the gas to be transported
hereunder to or for the account of Shipper at the pressures
existing in Transporter's system at the Delivery Point(s).
SERVICE PACKAGE NO. 19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE IV- FACILITIES
All facilities are in place to render the service provided for in
this Agreement.
or
(If facilities are contemplated to be constructed, a brief
description of the facilities will be included, as well as who is
to construct, own and/or operate such facilities.)
ARTICLE V - QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported, and delivered hereunder, the
Parties agree to the quality specifications and standards for
measurement as provided for in the General Terms and Conditions
of Transporter's FERC Gas Tariff. Transporter shall be
responsible for the operation of measurement facilities at the
Delivery Point(s) and at the Receipt Point(s). In the event that
measurement facilities are not operated by Transporter, then the
responsibility for operations shall be deemed to be that of the
Balancing Party at such point. If measurement facilities are
not operated by Transporter and there is no Balancing Party at
such point, then the responsibility for operations shall be
deemed to be Shipper ' s.
ARTICLE VI - RATES FOR SERVICE
6.1 Transportation Charge - Commencing on the date of the rates,
charges and surcharges to be paid by Shipper to Transporter,
including compensation for system fuel and losses, shall be
in accordance with Transporter's applicable effective Rate
Schedule (FT-A or FT-GS) and the General Terms and
Conditions of Transporter's Tariff.
6.2 Incidental Charges - Upon execution of this Agreement,
Shipper agrees to pay Transporter for all known and
anticipated filing fees, reporting fees or similar charges
required for the rendition of the transportation service
provided for herein. Further, Shipper agrees to reimburse
Transporter for all such fees within thirty (30) days after
receiving proof of payment from Transporter.
6.3 Changes in Rates and Charges - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make changes effective
in (a) the rates, charges, terms and conditions applicable
to service pursuant to the Rate Schedule under which' this
service is rendered, (b) the Rate Schedule(s) pursuant to
which service hereunder is rendered, and (c)any provisions
of the General Terms and Conditions in Transporter's FERC
Gas Tariff applicable to those Rate Schedules, as such
Tariff may be revised or replaced from time to time.
Transporter agrees that Shipper may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter just and reasonable rates.
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE VII - RESPONSIBILITY DURING -TRANSPORTATION
As between the Parties hereto, it is agreed that from the time
gas is delivered by Shipper to Transporter at the Receipt
Point(s) and prior to delivery of such gas to or for the account
of Shipper at the Delivery Point(s), Transporter shall have the
unqualified right to commingle such gas with other gas in its
system and shall have the unqualified right to handle and treat
such gas as its own.
ARTICLE VIII - BILLINGS AND PAYMENTS
Billings and payments under this Agreement shall be in accordance
with the terms and conditions of Transporter's FERC Gas Tariff as
such Tariff may be revised or replaced from time to time.
ARTICLE IX - RATE SCHEDULES AND GENERAL TERMS AND CONDITIONS
This Agreement and all terms and provisions contained or
incorporated herein are subject to the effective provisions of
Transporter's applicable Rate Schedule(s) as set forth on Exhibit
A and Transporter's General Terms and Conditions on file with the
FERC, or other duly constituted authorities having jurisdiction,
as the same may be changed or superseded from time to time in
accordance with the rules and regulations of the FERC, which Rate
Schedule(s) and General Terms and Conditions are incorporated by
reference. To the extent a term or condition set forth in this
Contract is inconsistent with the General Terms and Conditions,
the General Terms and Conditions shall govern. Furthermore, to
the extent a term or condition set forth in this Contract is
inconsistent with the applicable Rate Schedule, the Rate Schedule
shall govern unless the relevant provision is inconsistent with
General Terms and Conditions.
ARTICLE X - REGULATION
10.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
or authorization is not so obtained or continued.
All Parties hereto shall cooperate to obtain or continue all
necessary approvals or authorizations, but no Party shall be
liable to any other Party for failure to obtain or continue
such approvals or authorizations.
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
10.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC
regulations.
10.3 In the event the Parties are unable to obtain all necessary
and satisfactory regulatory approvals for service on
facilities prior to the expiration of two (2 years from the
effective date hereof, then, prior to receipt of such
regulatory approvals, either Party may terminate this
Agreement by giving the other Party at least thirty (30)
days prior written notice, and the respective obligations
hereunder, except for the provisions of Section 6.2 herein,
shall be of no force and effect from and after the effective
date of such termination.
ARTICLE XI - WARRANTIES
Shipper agrees to indemnify and hold Transporter harmless from
all suits, actions, debts, accounts, damages, costs, losses, and
expenses (including reasonable attorneys fees) arising from or
out of breach of any warranty, express or implied, by the Shipper
herein. Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII - TERM OF AGREEMENT
12.1 This Agreement shall become effective on the date of its
execution, and shall be implemented no later than the first
day of the month following the later of the date of
execution or the completion of any necessary facilities on
Transporter's system and shall remain in full force and
effect until the 31st day of October, 1997, ("Primary
Term")and will terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement upon its termination, as
required by the General Terms and Conditions of
Transporter's FERC Gas Tariff, shall survive the other parts
of this Agreement until such time as such balancing has been
accomplished.
12.3 In addition to any other remedy Transporter may have, this
Agreement will terminate automatically in the event Shipper
fails to pay all of the amount of any bill for service
rendered by Transporter hereunder when that amount is due,
provided Transporter shall give Shipper thirty days notice
prior to any termination of service. Service may continue
hereunder if within the thirty day notice period
satisfactory assurance of payment is made in accord with the
terms and conditions of Article VI of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE XIII - NOTICES
Except when notice is required through TENN-SPEED 2, any notice,
request, demand, statement, or bill provided for in this
Agreement or any notice that either Party may desire to give to
the other shall be in writing and mailed by registered mail to
the post office address of the Party intended to receive the same
as follows:
TRANSPORTER: MIDWESTERN GAS TRANSMISSION COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by written
notice to the other.
ARTICLE XIV - ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument that
it has executed or may execute hereafter as security for
indebtedness. Either Party, without relieving itself of its
obligations under this Agreement, may assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its rights and obligations hereunder, except in accord with
Article XXI of the General Terms and Conditions of
Transporter's Tariff.
14.2 Any person or entity that succeeds by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
ARTICLE XV - MISCELLANEOUS
15.1 Except for changes specifically authorized pursuant to this
Agreement, no modification of or supplement to the terms
conditions hereof shall be or become effective until Shipper
has
SERVICE PACKAGE NO.19392
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
submitted a request for change through TENN-SPEED 2 and
Shipper has been notified through TENN-SPEED 2 of
Transporter's agreement to such change.
15.2 No waiver by any Party of any one or more defaults by the
other in the performance of any provision of this Agreement
shall operate or be construed as a waiver of any future
default or defaults, whether of a like or of a different
character.
15.3 The interpretation and performance of this agreement shall
be in accordance with and controlled by the laws of the
State of Texas, without regard to Choice of Law doctrine
that refers to the laws of another jurisdiction.
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part of this Agreement for all
purposes.
15.5 If any provision of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at
Transporter's option; and if the severability option is
exercised, the remaining provisions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written.
MIDWESTERN GAS TRANSMISSION COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Vice President
Date: May 1, 1997
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED May 1, 1997
BETWEEN
MIDWESTERN GAS TRANSMISSION COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: May 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19392
SERVICE PACKAGE TQ: 9,658 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE- TQ
017024 MGT PURCHASE (Bi 2- SUMNER TN 01 R 9,658 9,658
7086, Dual
Total 9,658 9,658
Receipt
TQ:
027062 PEOPLES-UNION HILL PEOPLES GAS LIGHT & WILL IL 01 D 9,658 9,658
SALES COKE CO
NUMBER OF RECEIPT POINTS AFFECTED: 1
NUMBER OF DELIVERY POINTS AFFECTED: 1
<FN>
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(g)
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
THIS AGREEMENT is made and entered into as of the 1st day of May,
1997, by and between TENNESSEE GAS PIPELINE COMPANY, a Delaware
Corporation, hereinafter referred to as "Transporter" and NORTH
SHORE GAS COMPANY, an Illinois Corporation, hereinafter referred
to as "Shipper." Transporter and Shipper shall be collectively
referred to as "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for
the account of Shipper hereunder on each day during each
year during the term hereof, which shall be 9,756
dekatherms. Any limitations of the quantities to be
received from each Point of Receipt and/or delivered to each
Point of Delivery shall be as specified on Exhibit "A"
attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily on a firm basis, the Point(s) of Receipt from Shipper or
for Shipper's account such quantity of gas as Shipper makes
available up to the Transportation Quantity, and to deliver to or
for the account of Shipper to Point(s) of Delivery an Equivalent
Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit "A" attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in
this Agreement.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported, and delivered hereunder the
Parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that
no new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter or a downstream
pipeline, then responsibility for operations shall be deemed to
be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the effective date
hereof, the rates, charges and surcharges to be paid by
Shipper to Transporter for the transportation service
provided herein shall be in accordance with Transporter's
Rate Schedule FT-A and the General Terms and Conditions of
Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been
previously paid for by Shipper, which Transporter incurs in
rendering service hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes
in (a) the rates and charges applicable to service pursuant
to Transporter's Rate Schedule FT-A, (b) the rate
schedule(s) pursuant to which service hereunder is rendered,
and (c)any provisions of the General Terms and Conditions
applicable to those rate schedules. Transporter agrees that
Shipper may protest or contest the aforementioned filings,
or may seek authorization from duly constituted regulatory
authorities for such adjustment of Transporter's existing
FERC Gas Tariff as may be found necessary to assure
Transporter just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
is not so obtained or continued. All Parties hereto shall
cooperate to obtain or continue all necessary approvals or
authorizations, but no Party shall be liable to any other
Party for failure to obtain or continue such approvals or
authorizations.
9.2 The transportation service described herein shall be
provided subject to Subpart G, Part 284, of the FERC
Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified, the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas
Tariff, Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place and of the requested effective date of service, and
that it has advised the upstream and downstream
transporters of the receipt and delivery points under this
Agreement and any quantity limitations for each point as
specified on Exhibit "A" attached hereto.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
Shipper agrees to indemnify and hold Transporter harmless
for refusal to transport gas hereunder in the event any
upstream or downstream transporter fails to receive or
deliver gas as contemplated by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter harmless
from all suits, actions, debts, accounts, damages, costs,
losses and expenses (including reasonable attorneys fees)
arising form or out of breach of any warranty by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall become effective as of the 1st day of
May, 1997, and shall remain in full force and effect until
the 31st day of October, 1997, ("Primary Term") and will
terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's Tariff, shall
survive the other parts of this Agreement until such time as
such balancing has been accomplished; provided, however,
that Transporter notifies Shipper of such imbalance not
later than twelve months after the termination of this
Agreement.
12.3 This Agreement will terminate automatically upon written
notice from Transporter in the event Shipper fails to pay
all of the amount of any bill for service rendered by
Transporter hereunder in accord with the terms and
conditions of Article VI of the General Terms and Conditions
of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XIII
NOTICES
Except as otherwise provided in the General Terms and conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
Party intended to receive the same, as follows:
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Director, Transportation Control
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument which
it has executed or may execute hereafter as security for
indebtedness. Either Party may, without relieving itself of
its obligations under this Agreement, assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its hereunder, except in accord with Article III, Section 11
of the General Terms and Conditions of Transporter's FERC
Gas Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XV
MISCELLANEOUS
15.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE
IN ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE DOCTRINES GOVERNING CHOICE
OF LAW.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at either
Party's option; and if the severability option is exercised,
the remaining provisions of the Agreement shall remain in
full force and effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement
to the terms and provisions stated in this agreement shall
be or become effective until Shipper has submitted a request
for change through the TENN-SPEED 2 System and Shipper has
been notified through TENN-SPEED 2 of Transporter's
agreement to such changes.
15.4 Exhibit "A" attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
TENNESSEE GAS PIPELINE COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: May 1, 1997
SERVICE PACKAGE NO. 19386
AMENDMENT NO. 0
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED May 1, 1997
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: May 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19386
SERVICE PACKAGE TQ: 9,756 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
011929 TRANSCO - WHARTON TRANSCONTINENTAL GAS WHARTON TX 00 R 100 4,878 4,878
COUNTY TIE-1 PPELINE
012020 TRANSCO - FALFURRIAS TRANSCONTINENTAL GAS JIM WELLS TX 00 R 100 4,878 4,878
TRANSPORT PIPELINE
Total 9,756 9,756
Receipt
TQ:
020852 MGT SMS (Bi 1-2447, SUMNER TN 01 D 999 9,756 9,756
Dual 1-702
NUMBER OF RECEIPT POINTS AFFECTED: 2
NUMBER OF DELIVERY POINTS AFFECTED: 1
<FN>
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(h)
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
THIS AGREEMENT is made and entered into as of the 1st day of
November, 1997, by and between MIDWESTERN GAS TRANSMISSION
COMPANY, a Delaware Corporation, hereinafter referred to as
"Transporter" and NORTH SHORE GAS COMPANY, an Illinois
Corporation, hereinafter referred to as "Shipper." Transporter
and Shipper shall be collectively referred to as "Parties."
WITNESSETH:
That, in consideration of the premises and of the mutual
agreements herein contained, Transporter and Shipper agree as
follows:
ARTICLE I - DEFINITIONS
The definitions found in Article 1 of Transporter's General Terms
and Conditions are incorporated herein by reference.
ARTICLE II - TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily, on a firm basis, at Eligible Receipt Point(s), from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity and deliver to
or for the account of Shipper to authorized Delivery Point(s) an
equivalent quantity of gas.
ARTICLE III- POINTS OF RECEIPT AND DELIVERY
AND ASSOCIATED PRESSURES
3.1 The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit A attached hereto. Shipper shall
have access to secondary receipt and delivery points as
specified in the applicable rate schedule (FT-A or FT-GS)
pursuant to which Shipper's volumes are being transported.
Priority of transportation to such secondary points shall be
determined in accord with Article III, Section 5 of the
General Terms and Conditions of Transporter's tariff.
3.2 Shipper may request a change to the Primary Points of
Receipt and/or Primary Points of Delivery provided in this
Agreement by submitting to Transporter a Service Request
Form in accord with Article XXV of the General Terms and
Conditions of Transporter's FERC Gas Tariff. Priority of
transportation service to such additional Points of Receipt
and/or Delivery shall be determined pursuant to Article III,
Section 5 of the General Terms and Conditions.
3.3 Shipper shall deliver, or cause to be delivered, to
Transporter the gas to be transported hereunder at pressures
sufficient to deliver such gas into Transporter's system at
the Receipt Point(s), provided such pressure shall not
exceed Transporter's maximum allowable operating pressure.
Transporter shall deliver the gas to be transported
hereunder to or for the account of Shipper at the pressures
existing in Transporter's system at the Delivery Point(s).
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE IV- FACILITIES
All facilities are in place to render the service provided for in
this Agreement.
or
(If facilities are contemplated to be constructed, a brief
description of the facilities will be included, as well as who is
to construct, own and/or operate such facilities.)
ARTICLE V - QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported, and delivered hereunder, the
Parties agree to the quality specifications and standards for
measurement as provided for in the General Terms and Conditions
of Transporter's FERC Gas Tariff. Transporter shall be
responsible for the operation of measurement facilities at the
Delivery Point(s) and at the Receipt Point(s). In the event that
measurement facilities are not operated by Transporter, then the
responsibility for operations shall be deemed to be that of the
Balancing Party at such point. If measurement facilities are
not operated by Transporter and there is no Balancing Party at
such point, then the responsibility for operations shall be
deemed to be Shipper's.
ARTICLE VI - RATES FOR SERVICE
6.1 Transportation Charge - Commencing on the date of the rates,
charges and surcharges to be paid by Shipper to Transporter,
including compensation for system fuel and losses, shall be
in accordance with Transporter's applicable effective Rate
Schedule (FT-A or FT-GS) and the General Terms and
Conditions of Transporter's Tariff.
6.2 Incidental Charges - Upon execution of this Agreement,
Shipper agrees to pay Transporter for all known and
anticipated filing fees, reporting fees or similar charges
required for the rendition of the transportation service
provided for herein. Further, Shipper agrees to reimburse
Transporter for all such fees within thirty (30) days after
receiving proof of payment from Transporter.
6.3 Changes in Rates and Charges - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make changes effective
in (a) the rates, charges, terms and conditions applicable
to service pursuant to the Rate Schedule under which this
service is rendered, (b) the Rate Schedule(s) pursuant to
which service hereunder is rendered, and (c)any provisions
of the General Terms and Conditions in Transporter's FERC
Gas Tariff applicable to those Rate Schedules, as such
Tariff may be revised or replaced from time to time.
Transporter agrees that Shipper may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter just and reasonable rates.
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE VII - RESPONSIBILITY DURING TRANSPORTATION
As between the Parties hereto, it is agreed that from the time
gas is delivered by Shipper to Transporter at the Receipt
Point(s) and prior to delivery of such gas to or for the account
of Shipper at the Delivery Point(s), Transporter shall have the
unqualified right to commingle such gas with other gas in its
system and shall have the unqualified right to handle and treat
such gas as its own.
ARTICLE VIII - BILLINGS AND PAYMENTS
Billings and payments under this Agreement shall be in accordance
with the terms and conditions of Transporter's FERC Gas Tariff as
such Tariff may be revised or replaced from time to time.
ARTICLE IX - RATE SCHEDULES AND GENERAL TERMS AND CONDITIONS
This Agreement and all terms and provisions contained or
incorporated herein are subject to the effective provisions of
Transporter's applicable Rate Schedule(s) as set forth on Exhibit
A and Transporter's General Terms and Conditions on file with the
FERC, or other duly constituted authorities having jurisdiction,
as the same may be changed or superseded from time to time in
accordance with the rules and regulations of the FERC, which Rate
Schedule(s) and General Terms and Conditions are incorporated by
reference. To the extent a term or condition set forth in this
Contract is inconsistent with the General Terms and Conditions,
the General Terms and Conditions shall govern. Furthermore, to
the extent a term or condition set forth in this Contract is
inconsistent with the applicable Rate Schedule, the Rate Schedule
shall govern unless the relevant provision is inconsistent with
General Terms and Conditions.
ARTICLE X - REGULATION
10.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
or authorization is not so obtained or continued.
All Parties hereto shall cooperate to obtain or continue all
necessary approvals or authorizations, but no Party shall be
liable to any other Party for failure to obtain or continue
such approvals or authorizations.
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
10.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC
regulations.
10.3 In the event the Parties are unable to obtain all necessary
and satisfactory regulatory approvals for service on
facilities prior to the expiration of two (2) years from the
effective date hereof, then, prior to receipt of such
regulatory approvals, either Party may terminate this
Agreement by giving the other Party at least thirty (30)
days prior written notice, and the respective obligations
hereunder, except for the provisions of Section 6.2 herein,
shall be of no force and effect from and after the effective
date of such termination.
ARTICLE XI - WARRANTIES
Shipper agrees to indemnify and hold Transporter harmless from
all suits, actions, debts, accounts, damages, costs, losses, and
expenses (including reasonable attorneys fees) arising from or
out of breach of any warranty, express or implied, by the Shipper
herein. Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII - TERM OF AGREEMENT
12.1 This Agreement shall become effective on the date of its
execution, and shall be implemented no later than the first
day of the month following the later of the date of
execution or the completion of any necessary facilities on
Transporter's system and shall remain in full force and
effect until the 31st day of March, 1998, ("Primary Term")
and will terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement upon its termination, as
required by the General Terms and Conditions of
Transporter's FERC Gas Tariff, shall survive the other parts
of this Agreement until such time as such balancing has been
accomplished.
12.3 In addition to any other remedy Transporter may have, this
Agreement will terminate automatically in the event Shipper
fails to pay all of the amount of any bill for service
rendered by Transporter hereunder when that amount is due,
provided Transporter shall give Shipper thirty days notice
prior to any termination of service. Service may continue
hereunder if within the thirty day notice period
satisfactory assurance of payment is made in accord with the
terms and conditions of Article VI of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE XIII - NOTICES
Except when notice is required through TENN-SPEED 2, any notice,
request, demand, statement, or bill provided for in this
Agreement or any notice that either Party may desire to give to
the other shall be in writing and mailed by registered mail to
the post office address of the Party intended to receive the same
as follows:
TRANSPORTER: MIDWESTERN GAS TRANSMISSION COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by written
notice to the other.
ARTICLE XIV - ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument that
it has executed or may execute hereafter as security for
indebtedness. Either Party, without relieving itself of its
obligations under this Agreement, may assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its rights and obligations hereunder, except in accord with
Article XXI of the General Terms and Conditions of
Transporter's Tariff.
14.2 Any person or entity that succeeds by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
ARTICLE XV - MISCELLANEOUS
15.1 Except for changes specifically authorized pursuant to this
Agreement, no modification of or supplement to the terms
conditions hereof shall be or become effective until Shipper has
SERVICE PACKAGE NO. 19394
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
submitted a request for change through TENN-SPEED 2 and
Shipper has been notified through TENN-SPEED 2 of
Transporter's agreement to such change.
15.2 No waiver by any Party of any one or more defaults by the
other in the performance of any provision of this Agreement
shall operate or be construed as a waiver of any future
default or defaults, whether of a like or of a different
character.
15.3 The interpretation and performance of this agreement shall
be in accordance with and controlled by the laws of the
State of Texas, without regard to Choice of Law doctrine
that refers to the laws of another jurisdiction.
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part of this Agreement for all
purposes.
15.5 If any provision of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at
Transporter's option; and if the severability option is
exercised, the remaining provisions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
MIDWESTERN GAS TRANSMISSION COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: November 1, 1997
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED November 1, 1997
BETWEEN
MIDWESTERN GAS TRANSMISSION COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: November 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19394
SERVICE PACKAGE TQ: 9,711 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
017024 MGT PURCHASE (Bi 2- SUMNER TN 01 R 9,711 9,711
7086, Dual
Total 9,711 9,711
Receipt
TQ:
027062 PEOPLES-UNION HILL PEOPLES GAS LIGHT & WILL IL 01 D 9,711 9,711
SALES COKE CO
NUMBER OF RECEIPT POINTS AFFECTED: 1
NUMBER OF DELIVERY POINTS AFFECTED: 1
<FN>
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(i)
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
THIS AGREEMENT is made and entered into as of the 1st day of
November, 1997, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and NORTH SHORE GAS COMPANY, an Illinois Corporation, hereinafter
referred to as "Shipper." Transporter and Shipper shall be
collectively referred to as "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for
the account of Shipper hereunder on each day during each
year during the term hereof, which shall be 9,809
dekatherms. Any limitations of the quantities to be
received from each Point of Receipt and/or delivered to each
Point of Delivery shall be as specified on Exhibit "A"
attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily, on a firm basis, the Point(s) of Receipt from Shipper or
for Shipper's account such quantity of gas as Shipper makes
available up to the Transportation Quantity, and to deliver to or
for the account of Shipper to Point(s) of Delivery an Equivalent
Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit "A" attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in
this Agreement.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported and delivered hereunder the
Parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that
no new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter or a downstream
pipeline, then responsibility for operations shall be deemed to
be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing on the effective date
hereof, the rates, charges and surcharges to be paid by
Shipper to Transporter for the transportation service
provided herein shall be in accordance with Transporter's
Rate Schedule FT-A and the General Terms and Conditions of
Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees which have not been
previously paid by Shipper, which Transporter incurs in
rendering service hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes
in (a) the rates and charges applicable to service pursuant
to Transporter's Rate Schedule FT-A, (b) the rate
schedule(s) pursuant to which service hereunder is rendered,
and (c)any provisions of the General Terms and Conditions
applicable to those rate schedules. Transporter agrees that
Shipper may protest or contest the aforementioned filings,
or may seek authorization from duly constituted regulatory
authorities for such adjustment of Transporter's existing
FERC Gas Tariff as may be found necessary to assure
Transporter just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
is not so obtained or continued. All Parties hereto shall
cooperate to obtain or continue all necessary approvals or
authorizations, but no Party shall be liable to any other
Party for failure to obtain or continue such approvals or
authorizations.
9.2 The transportation service described herein shall be
provided subject to Subpart G, Part 284, of the FERC
Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified, the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas
Tariff, Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place and of the requested effective date of service, and
that it has advised the upstream and downstream
transporters of the receipt and delivery points under this
Agreement and any quantity limitations for each point as
specified on Exhibit "A" attached hereto.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
Shipper agrees to indemnify and hold Transporter harmless
for refusal to transport gas hereunder in the event any
upstream or downstream transporter fails to receive or
deliver gas as contemplated by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter harmless
from all suits, actions, debts, accounts, damages, costs,
losses and expenses (including reasonable attorneys fees)
arising form or out of breach of any warranty by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall become effective as of the 1st day of
November, 1997, and shall remain in full force and effect
until the 31st day of March, 1998, ("Primary Term") and will
terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's Tariff, shall
survive the other parts of this Agreement until such time as
such balancing has been accomplished; provided, however,
that Transporter notifies Shipper of such imbalance not
later than twelve months after the termination of this
Agreement.
12.3 This Agreement will terminate automatically upon written
notice from Transporter in the event Shipper fails to pay
all of the amount of any bill for service rendered by
Transporter hereunder in accord with the terms and
conditions of Article VI of the General Terms and Conditions
of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XIII
NOTICES
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
Party intended to receive the same, as follows:
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Director, Transportation Control
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument which
it has executed or may execute hereafter as security for
indebtedness. Either Party may, without relieving itself of
its obligations under this Agreement, assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its hereunder, except in accord with Article III of the
General Terms and Conditions of Transporter's FERC Gas
Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
SERVICE PACKAGE NO. 19388
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XV
MISCELLANEOUS
15.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE
IN ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE DOCTRINES GOVERNING CHOICE
OF LAW.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at either
Party's option; and if the severability option is exercised,
the remaining provisions of the Agreement shall remain in
full force and effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement
to the terms and provisions stated in this agreement shall
be or become effective until Shipper has submitted a request
for change through the TENN-SPEED 2 System and Shipper has
been notified through TENN-SPEED 2 of Transporter's
agreement to such changes.
15.4 Exhibit "A" attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
TENNESSEE GAS PIPELINE COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: November 1, 1997
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED November 1, 1997
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: November 1, 1997
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19388
SERVICE PACKAGE TQ: 9,809 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
012416 ALLAR CO #1 AMERADA HESS CORP FORREST MS 01 R 500 9,809 9,809
Total 9,809 9,809
Receipt
TQ:
020852 MGT SMS (Bi 1-2447, SUMNER TN 01 D 999 9,809 9,809
Dual 1-702
NUMBER OF RECEIPT POINTS AFFECTED: 1
NUMBER OF DELIVERY POINTS AFFECTED: 1
<FN>
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(j)
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
THIS AGREEMENT is made and entered into as of the 1st day of
April, 1998, by and between MIDWESTERN GAS TRANSMISSION COMPANY,
a Delaware Corporation, hereinafter referred to as "Transporter"
and NORTH SHORE GAS COMPANY, an Illinois Corporation, hereinafter
referred to as "Shipper." Transporter and Shipper shall be
collectively referred to as "Parties."
WITNESSETH:
That, in consideration of the premises and of the mutual
agreements herein contained, Transporter and Shipper agree as
follows:
ARTICLE I - DEFINITIONS
The definitions found in Article 1 of Transporter's General Terms
and Conditions are incorporated herein by reference.
ARTICLE II - TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily, on a firm basis, at Eligible Receipt Point(s), from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity and deliver to
or for the account of Shipper to authorized Delivery Point(s) an
equivalent quantity of gas.
ARTICLE III- POINTS OF RECEIPT AND DELIVERY
AND ASSOCIATED PRESSURES
3.1 The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit A attached hereto. Shipper shall
have access to secondary receipt and delivery points as
specified in the applicable rate schedule (FT-A or FT-GS)
pursuant to which Shipper's volumes are being transported.
Priority of transportation to such secondary points shall be
determined in accord with Article III, Section 5 of the
General Terms and Conditions of Transporter's tariff.
3.2 Shipper may request a change to the Primary Points of
Receipt and/or Primary Points of Delivery provided in this
Agreement by submitting to Transporter a Service Request
Farm in accord with Article XXV of the General Terms and
Conditions of Transporter's FERC Gas Tariff. Priority of
transportation service to such additional Points of Receipt
and/or Delivery shall be determined pursuant to Article III,
Section 5 of the General Terms and Conditions.
3.3 Shipper shall deliver, or cause to be delivered, to
Transporter the gas to be transported hereunder at pressures
sufficient to deliver such gas into Transporter's system at
the Receipt Point(s), provided such pressure shall not
exceed Transporter's maximum allowable operating pressure.
Transporter shall deliver the gas to be transported
hereunder to or for the account of Shipper at the pressures
existing in Transporter's system at the Delivery Point(s).
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE IV- FACILITIES
All facilities are in place to render the service provided for in
this Agreement.
or
(If facilities are contemplated to be constructed, a brief
description of the facilities will be included, as well as who is
to construct, own and/or operate such facilities.)
ARTICLE V - QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported, and delivered hereunder, the
Parties agree to the quality specifications and standards for
measurement as provided for in the General Terms and Conditions
of Transporter's FERC Gas Tariff. Transporter shall be
responsible for the operation of measurement facilities at the
Delivery Point(s) and at the Receipt Point(s). In the event that
measurement facilities are not operated by Transporter, then the
responsibility for operations shall be deemed to be that of the
Balancing Party at such point. If measurement facilities are
not operated by Transporter and there is no Balancing Party at
such point, then the responsibility for operations shall be
deemed to be Shipper's.
ARTICLE VI - RATES FOR SERVICE
6.1 Transportation Charge - Commencing on the date of the rates,
charges and surcharges to be paid by Shipper to Transporter,
including compensation for system fuel and losses, shall be
in accordance with Transporter's applicable effective Rate
Schedule (FT-A or FT-GS) and the General Terms and
Conditions of Transporter's Tariff.
6.2 Incidental Charges - Upon execution of this Agreement,
Shipper agrees to pay Transporter for all known and
anticipated filing fees, reporting fees or similar charges
required for the rendition of the transportation service
provided for herein. Further, Shipper agrees to reimburse
Transporter for all such fees within thirty (30) days after
receiving proof of payment from Transporter.
6.3 Changes in Rates and Charges - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make changes effective
in (a) the rates, charges, terms and conditions applicable
to service pursuant to the Rate Schedule under which this
service is rendered, (b) the Rate Schedule(s) pursuant to
which service hereunder is rendered, and (c)any provisions
of the General Terms and Conditions in Transporter's FERC
Gas Tariff applicable to those Rate Schedules, as such
Tariff may be revised or replaced from time to time.
Transporter agrees that Shipper may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter just and reasonable rates.
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE VII - RESPONSIBILITY DURING TRANSPORTATION
As between the Parties hereto, it is agreed that from the time
gas is delivered by Shipper to Transporter at the Receipt
Point(s) and prior to delivery of such gas to or for the account
of Shipper at the Delivery Point(s), Transporter shall have the
unqualified right to commingle such gas with other gas in its
system and shall have the unqualified right to handle and treat
such gas as its own.
ARTICLE VIII - BILLINGS AND PAYMENTS
Billings and payments under this Agreement shall be in accordance
with the terms and conditions of Transporter's FERC Gas Tariff as
such Tariff may be revised or replaced from time to time.
ARTICLE IX - RATE SCHEDULES AND GENERAL TERMS AND CONDITIONS
This Agreement and all terms and provisions contained or
incorporated herein are subject to the effective provisions of
Transporter's applicable Rate Schedule(s) as set forth on Exhibit
A and Transporter's General Terms and Conditions on file with the
FERC, or other duly constituted authorities having jurisdiction,
as the same may be changed or superseded from time to time in
accordance with the rules and regulations of the FERC, which Rate
Schedule(s) and General Terms and Conditions are incorporated by
reference. To the extent a term or condition set forth in this
Contract is inconsistent with the General Terms and Conditions,
the General Terms and Conditions shall govern. Furthermore, to
the extent a term or condition set forth in this Contract is
inconsistent with the applicable Rate Schedule, the Rate Schedule
shall govern unless the relevant provision is inconsistent with
General Terms and Conditions.
ARTICLE X - REGULATION
10.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules, and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
or authorization is not so obtained or continued.
All Parties hereto shall cooperate to obtain or continue all
necessary approvals or authorizations, but no Party shall be
liable to any other Party for failure to obtain or continue
such approvals or authorizations.
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
10.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC
regulations.
10.3 In the event the Parties are unable to obtain all necessary
and satisfactory regulatory approvals for service on
facilities prior to the expiration of two (2) years from the
effective date hereof, then, prior to receipt of such
regulatory approvals, either Party may terminate this
Agreement by giving the other Party at least thirty (30)
days prior written notice, and the respective obligations
hereunder, except for the provisions of Section 6.2 herein,
shall be of no force and effect from and after the effective
date of such termination.
ARTICLE XI - WARRANTIES
Shipper agrees to indemnify and hold Transporter harmless from
all suits, actions, debts, accounts, damages, costs, losses, and
expenses (including reasonable attorneys fees) arising from or
out of breach of any warranty, express or implied, by the Shipper
herein. Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII - TERM OF AGREEMENT
12.1 This Agreement shall become effective on the date of its
execution, and shall be implemented no later than the first
day of the month following the later of the date of
execution or the completion of any necessary facilities on
Transporter's system and shall remain in full force and
effect until the 30th day of April, 1998, ("Primary Term")
and will terminate on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement upon its termination, as
required by the General Terms and Conditions of
Transporter's FERC Gas Tariff shall survive the other parts
of this Agreement until such time as such balancing has been
accomplished.
12.3 In addition to any other remedy Transporter may have, this
Agreement will terminate automatically in the event Shipper
fails to pay all of the amount of any bill for service
rendered by Transporter hereunder when that amount is due,
provided Transporter shall give Shipper thirty days notice
prior to any termination of service. Service may continue
hereunder if within the thirty day notice period
satisfactory assurance of payment is made in accord with the
terms and conditions of Article VI of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
ARTICLE XIII - NOTICES
Except when notice is required through TENN-SPEED 2, any notice,
request, demand, statement, or bill provided for in this
Agreement or any notice that either Party may desire to give to
the other shall be in writing and mailed by registered mail to
the post office address of the Party intended to receive the same
as follows:
TRANSPORTER: MIDWESTERN GAS TRANSMISSION COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by written
notice to the other.
ARTICLE XIV - ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument that
it has executed or may execute hereafter as security for
indebtedness. Either Party, without relieving itself of its
obligations under this Agreement, may assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its rights and obligations hereunder, except in accord with
Article XXI of the General Terms and Conditions of
Transporter's Tariff.
14.2 Any person or entity that succeeds by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
ARTICLE XV - MISCELLANEOUS
15.1 Except for changes specifically authorized pursuant to this
Agreement, no modification of or supplement to the terms and
conditions hereof shall be or become effective until Shipper has
SERVICE PACKAGE NO. 19393
AMENDMENT NO. 0
FIRM GAS TRANSPORTATION AGREEMENT
(For Use Under Rate Schedule FT-A or FT-GS )
submitted a request for change through TENN-SPEED 2 and
Shipper has been notified through TENN-SPEED 2 of
Transporter's agreement to such change.
15.2 No waiver by any Party of any one or more defaults by the
other in the performance of any provision of this Agreement
shall operate or be construed as a waiver of any future
default or defaults, whether of a like or of a different
character.
15.3 The interpretation and performance of this agreement shall
be in accordance with and controlled by the laws of the
State of Texas, without regard to Choice of Law doctrine
that refers to the laws of another jurisdiction.
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part of this Agreement for all
purposes.
15.5 If any provision of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at
Transporter's option; and if the severability option is
exercised, the remaining provisions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
MIDWESTERN GAS TRANSMISSION COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: April 1, 1998
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED April 1, 1998
BETWEEN
MIDWESTERN GAS TRANSMISSION COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: April 1, 1998
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19393
SERVICE PACKAGE TQ: 9,658 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
017024 MGT PURCHASE (Bi 2- SUMNER TN 01 R 9,658 9,658
7086, Dual
Total 9,658 9,658
Receipt
TQ:
027062 PEOPLES-UNION HILL PEOPLES GAS LIGHT & WILL IL 01 D 9,658 9,658
SALES COKE CO
NUMBER OF RECEIPT POINTS AFFECTED: 1
NUMBER OF DELIVERY POINTS AFFECTED: 1
<FN>
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
</TABLE>
EXHIBIT 10(k)
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
THIS AGREEMENT is made and entered into as of the 1st day of
April, 1998, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and NORTH SHORE GAS COMPANY, an Illinois Corporation, hereinafter
referred to as "Shipper." Transporter and Shipper shall be
collectively referred to as "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for
the account of Shipper hereunder on each day during each
year during the term hereof, which shall be 9,756
dekatherms. Any limitations of the quantities to be
received from each Point of Receipt and/or delivered to each
Point of Delivery shall be as specified on Exhibit "A"
attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive
daily on a firm basis, the Point(s) of Receipt from Shipper or
for Shipper's account such quantity of gas as Shipper makes
available up to the Transportation Quantity and to deliver to or
for the account of Shipper to Point(s) of Delivery an Equivalent
Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit "A" attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in
this Agreement.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENTS
For all gas received, transported and delivered hereunder the
Parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that
no new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter or a downstream
pipeline, then responsibility for operations shall be deemed to
be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS SERVICE
6.1 TRANSPORTATION RATES - Commencing upon the effective date
hereof, the rates, charges and surcharges to be paid by
Shipper to Transporter for the transportation service
provided herein shall be in accordance with Transporter's
Rate Schedule FT-A and the General Terms and Conditions of
Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been
previously paid by Shipper, which Transporter incurs in
rendering service hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes
in (a) the rates and charges applicable to service pursuant
to Transporter's Rate Schedule FT-A, (b) the rate
schedule(s) pursuant to which service hereunder is rendered,
or (c)any provisions of the General Terms and Conditions
applicable to those rate schedules. Transporter agrees that
Shipper may protest or contest the aforementioned filings,
or may seek authorization from duly constituted regulatory
authorities for such adjustment of Transporter's existing
FERC Gas Tariff as may be found necessary to assure
Transporter just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon terms
acceptable to Transporter. This Agreement shall be void and
of no force and effect if any necessary regulatory approval
is not so obtained or continued. All Parties hereto shall
cooperate to obtain or continue all necessary approvals or
authorizations, but no Party shall be liable to any other
Party for failure to obtain or continue such approvals or
authorizations.
9.2 The transportation service described herein shall be
provided subject to Subpart G, Part 284, of the FERC
Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified, the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas
Tariff, Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place and of the requested effective date of service, and
that it has advised the upstream and downstream
transporters of the receipt and delivery points under this
Agreement and any quantity limitations for each point as
specified on Exhibit "A" attached hereto.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
Shipper agrees to indemnify and hold Transporter harmless
for refusal to transport gas hereunder in the event any
upstream or downstream transporter fails to receive or
deliver gas as contemplated by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter harmless
from all suits, actions, debts, accounts, damages, costs,
losses and expenses (including reasonable attorneys fees)
arising form or out of breach of any warranty by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall be effective as of the 1st day of
April, 1998, and shall remain in force and effect until the
30th day of April, 1998, ("Primary Term") and will terminate
on that date.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's Tariff, shall
survive the other parts of this Agreement until such time as
such balancing has been accomplished; provided, however,
that Transporter notifies Shipper of such imbalance not
later than twelve months after the termination of this
Agreement.
12.3 This Agreement will terminate automatically upon written
notice from Transporter in the event Shipper fails to pay
all of the amount of any bill for service rendered by
Transporter hereunder in accord with the terms and
conditions of Article VI of the General Terms and Conditions
of Transporter's FERC Gas Tariff.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XIII
NOTICES
Except as otherwise provided in the General Terms and conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
Party intended to receive the same, as follows:
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Director, Transportation Control
SHIPPER:
NOTICES: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
BILLING: NORTH SHORE GAS COMPANY
130 East Randolph Drive
Chicago, IL 60601
Attention: Raulando C. Delara
or to such other address as either Party may designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture or other instrument which
it has executed or may execute hereafter as security for
indebtedness. Either Party may, without relieving itself of
its obligations under this Agreement, assign any of its
rights hereunder to a company with which it is affiliated.
Otherwise, Shipper shall not assign this Agreement or any of
its hereunder, except in accord with Article III of the
General Terms and Conditions of Transporter's FERC Gas
Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially or as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule )
ARTICLE XV
MISCELLANEOUS
15.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE
IN ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO THE DOCTRINES GOVERNING CHOICE
OF LAW.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction,
then that provision will be considered severable at either
Party's option; and if the severability option is exercised,
the remaining provisions of the Agreement shall remain in
full force and effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement
to the terms and provisions stated in this agreement shall
be or become effective until Shipper has submitted a request
for change through the TENN-SPEED 2 System and Shipper has
been notified through TENN-SPEED 2 of Transporter's
agreement to such changes.
15.4 Exhibit "A" attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be duly executed as of the date first hereinabove written
TENNESSEE GAS PIPELINE COMPANY
By: /s/ Matthew W. Rowland
Agent and
Attorney-in-Fact
Matthew W. Rowland
Date: June 16, 1997
NORTH SHORE GAS COMPANY
By: /s/ T. M. Patrick
Title: Executive Vice President
Date: April 1, 1998
<TABLE>
<CAPTION>
SERVICE PACKAGE NO. 19387
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED April 1, 1998
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
NORTH SHORE GAS COMPANY
NORTH SHORE GAS COMPANY
EFFECTIVE DATE OF AMENDMENT: April 1, 1998
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 19387
SERVICE PACKAGE TQ: 9,756 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
011929 TRANSCO - WHARTON TRANSCONTINENTAL GAS WHARTON TX 00 R 100 4,878 4,878
COUNTY TIE-1 PPELINE
012020 TRANSCO - FALFURRIAS TRANSCONTINENTAL GAS JIM WELLS TX 00 R 100 4,878 4,878
TRANSPORT PIPELINE
Total 9,756 9,756
Receipt
TQ:
020852 MGT SMS (Bi 1-2447, SUMNER TN 01 D 999 9,756 9,756
Dual 1-702
NUMBER OF RECEIPT POINTS AFFECTED: 2
NUMBER OF DELIVERY POINTS AFFECTED: 1
</TABLE>
Note: Exhibit "A" is a reflection of the contract and all amendments as of the
amendment effective date.
Exhibit 10(l)
SEVERANCE AGREEMENT
BETWEEN
PEOPLES ENERGY CORPORATION
AND
THOMAS M. PATRICK
Executive Vice President
THIS AGREEMENT, effective as of December 4, 1996, by
and between Peoples Energy Corporation, an Illinois corporation
and Thomas M. Patrick, Executive Vice President (the
"Executive").
WITNESSETH
WHEREAS, the Executive is a valuable employee of the
Company and an integral part of the management of the Company;
and
WHEREAS, the Company wishes to encourage the Executive
to continue his career and services with the Company for the
period during and after an actual or threatened Change in
Control; and
WHEREAS, the Board of Directors of PEC, at its meeting
on December 4, 1996, determined that it would be in the best
interests of the Company and its shareholders to assure
continuity in the management of the Company's administration and
operations in the event of a Change in Control by entering into
this Agreement with the Executive;
NOW THEREFORE, it is hereby agreed by and between the
parties hereto as follows:
1. Definitions.
"AAA" shall have the meaning set forth in paragraph 5
of this Agreement.
"Affiliate" shall mean the subsidiaries of PEC and
other entities controlled by such subsidiaries.
"Agreement" shall mean this Severance Agreement.
"Benefit Service" shall mean the Benefit Service as
defined in the PEC Retirement Plan.
"Board" shall mean the Board of Directors of PEC.
"Cause" shall mean the Executive's fraud or dishonesty
which has resulted in or is likely to result in material economic
damage to the Company as determined in good faith by a vote of at
least two-thirds of the non-employee directors of PEC at a
meeting of the Board at which the Executive is provided an
opportunity to be heard.
"Change in Control" shall mean:
(i) either (A) receipt by PEC of a report on Schedule
13D, or an amendment to such a report, filed with the Securities
and Exchange Commission ("SEC") pursuant to Section 13(d) of the
Securities Exchange Act of 1934 (the "1934 Act") disclosing that
any person (as such term is used in Section 13(d) of the 1934
Act) ("Person"), is the beneficial owner, directly or indirectly,
of twenty (20) percent or more of the outstanding stock of PEC,
or (B) actual knowledge by PEC of facts, on the basis of which
any Person is required to file such a report on Schedule 13D, or
to make an amendment to such a report, with the SEC (or would be
required to file such a report or amendment upon the lapse of the
applicable period of time specified in Section 13 (d) of the 1934
Act) disclosing that such Person is the beneficial owner,
directly or indirectly, of twenty (20) percent or more of the
outstanding stock of PEC;
(ii) purchase by any Person, other than PEC or a wholly-
owned subsidiary of the Company, of shares pursuant to a tender
or exchange offer to acquire any stock of PEC (or securities
convertible into stock) for cash, securities or any other
consideration provided that, after consummation of the offer,
such Person is the beneficial owner (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of twenty (20)
percent or more of the outstanding stock of PEC (calculated as
provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(iii) approval by the shareholders of PEC of (a) any
consolidation or merger of PEC in which PEC is not the continuing
or surviving corporation or pursuant to which shares of stock of
PEC would be converted into cash, securities or other property,
other than a consolidation or merger of PEC in which holders of
its stock immediately prior to the consolidation or merger have
substantially the same proportionate ownership of common stock of
the surviving corporation immediately after the consolidation or
merger as immediately before, or (b) any consolidation or merger
in which PEC is the continuing or surviving corporation, but in
which the common shareholders of PEC immediately prior to the
consolidation or merger do not hold at least ninety (90) percent
of the outstanding common stock of the continuing or surviving
corporation (except where such holders of common stock hold at
least ninety (90) percent of the common stock of the corporation
which owns all of the common stock of PEC), or (c) any sale,
lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all the assets
of PEC (Transfer Transaction), (except where (A) PEC owns all of
the outstanding stock of the transferee entity or (B) the holders
of PEC's common stock immediately prior to the Transfer
Transaction own at least ninety (90) percent of the outstanding
stock of the transferee entity, immediately after the Transfer
Transaction), or (d) any consolidation or merger of PEC where,
after the consolidation or merger, one Person owns one hundred
(100) percent of the shares of stock of PEC (except where the
holders of PEC's common stock immediately prior to such merger or
consolidation own at least ninety (90) percent of the outstanding
stock of such Person immediately after such consolidation or
merger); or
(iv) a change in the majority of the members of the
Board within a twenty-four (24)month period, unless the election
or nomination for election by PEC's shareholders of each new
director was approved by the vote of at least two-thirds of the
directors then still in office who were in office at the
beginning of the twenty-four (24)month period.
"Code" shall mean the United States Internal Revenue
Code of 1986, as amended, or any successor thereto.
"Company" shall mean PEC and include any Affiliate and
successor or successors to PEC.
"Compensation" shall mean the sum of (i) the
Executive's annual rate of salary on the last day the Executive
was an employee of the Company, including any elective
contributions made by the Company on behalf of the Executive that
are not includable in the gross income of the Executive under
Section 125 or 402(a)(8) of the Code or any successor provision
thereto, and including any amount of salary that has been
deferred by the Executive, (ii) an award equal to the average of
the amounts awarded to the Executive under the PEC STIC during
the three years preceding termination of employment, and (iii)
the economic equivalent value of any awards received by Executive
under the PEC LTIC in the calendar year preceding termination of
employment (as determined in good faith by the PEC Directors'
Compensation- Nominating Committee).
"Computed Award" shall mean Computed Award as defined
in the PEC STIC.
"Constructive Discharge" shall mean a good faith
determination by the Executive that there has been any (i)
material change by the Company of the Executive's functions,
duties or responsibilities which change would cause the
Executive's position with the Company to become of less dignity,
responsibility, importance, prestige or scope, including, without
limitation, the assignment to the Executive of duties and
responsibilities inconsistent with his position, (ii) assignment
or reassignment by the Company of the Executive, without the
Executive's consent, to another place of employment more than
fifty (50) miles from the Executive's current place of
employment, (iii) liquidation, dissolution, consolidation or
merger of PEC, or transfer of all or substantially all of its
assets, other than a transaction or series of transactions in
which the resulting or surviving transferee entity has, in the
aggregate, a net worth at least equal to that of PEC immediately
before such transaction and such resulting or surviving
transferee entity expressly assumes this Agreement and all
obligations and undertakings hereunder, or (iv) reduction, which
is more than de minimis, in the Executive's total compensation
(Compensation, perquisites and benefits). It is understood and
agreed by all parties hereto that a reduction in (a) the amount
the Executive receives under PEC STIC, (b) the awards received by
the Executive under the PEC LTIC, or (c) the prerequisites or
benefits of the Executive shall not be deemed a reduction if such
amount received under the PEC STIC, awards received under the PEC
LTIC, or such prerequisites or benefits are the same as received
by the Company's similarly situated officers. An event shall not
be considered Constructive Discharge unless the Executive
provides written notice to PEC specifying the event relied upon
for Constructive Discharge within six months after the occurrence
of such event. Within thirty days of receiving such written
notice from the Executive, the Company may cure or cause to be
cured the event upon which the Executive claims a Constructive
Discharge and no Constructive Discharge shall have been
considered to have occurred with respect to such event. PEC and
the Executive, upon mutual written agreement, may waive any of
the foregoing provisions which would otherwise constitute a
Constructive Discharge.
"Coverage Period" shall mean the period commencing with
the month in which termination of employment as described in
paragraph 3.a. of this Agreement shall have occurred, and ending
thirty-six (36) months thereafter.
"Effective Date" shall mean December 4, 1996.
"PEC" shall mean Peoples Energy Corporation, an
Illinois corporation.
"PEC Directors' Compensation-Nominating Committee"
shall mean the Peoples Energy Corporation Board of Directors'
Compensation-Nominating Committee.
"PEC LTIC" shall mean the Peoples Energy Corporation
Long Term Incentive Compensation Plan as in effect on the
Effective Date, as amended from time to time or any successor
plan.
"PEC Retirement Plan" shall mean the Peoples Energy
Corporation Retirement Plan as in effect on the Effective Date,
as amended from time to time, or any successor plan.
"PEC SRB" shall mean the Peoples Energy Corporation
Supplemental Retirement Benefit Plan, as in effect on the
Effective Date, as amended from time to time or any successor
plan.
"PEC STIC" shall mean the Peoples Energy Corporation
Short Term Incentive Compensation Plan, as in effect on the
Effective Date, as amended from time to time or any successor
plan.
"PEC TAP" shall mean the Peoples Energy Corporation
Termination Allowance Plan as in effect on the Effective Date, as
amended from time to time and as enhanced as described in that
certain PEC brochure for nonunion employees titled, "Career
Transition Opportunities", dated November 1996.
"Plan Year" shall mean the Plan Year as defined under
the PEC STIC.
"Present Value Amount" shall mean the amount calculated
by the PEC Directors' Compensation-Nominating Committee as of the
date of the termination of the Executive's employment as
described in paragraph 3.a., using as a mortality basis the
mortality basis used by the PEC Retirement Plan for determining
benefits, or if such mortality basis is not available, a
mortality basis determined by the PEC Retirement Plan's
consulting actuaries, and assuming a discount rate equal to the
average of the yield on Thirty (30) year United States Treasury
Bonds for the second calendar month preceding the Executive's
termination of employment as described in paragraph 3.a.
"Rule of Eighty-Five" shall mean the Rule of Eighty-
Five as defined under the PEC Retirement Plan.
"SARs" shall mean SARs as defined under the PEC LTIC.
"Stock Options" shall mean Options as defined under the
PEC LTIC.
"Term" shall mean the term of this Agreement as set
forth in paragraph 2.
"Trust" shall mean the Trust under Peoples Energy
Corporation Executive Deferred Compensation Plan and Supplemental
Retirement Benefit Plan, Part A and Part B, dated September 22,
1995, as amended July 1, 1996, in effect on the Effective Date,
as amended from time to time.
2. Term.
This Agreement shall be effective as of the
Effective Date and shall continue thereafter until the later of:
(i) thirty-six (36) full calendar months following the date on
which occurs any of the events described in subparagraphs (i),
(ii) or (iv) of the definition of Change in Control in paragraph
1; or (ii) twenty-four (24) full calendar months following the
date on which the transaction that was the subject of shareholder
approval pursuant to subparagraph (iii) of the definition of
Change in Control in paragraph 1 has been completed.
3. Severance Benefit.
a. If, during the period commencing on the date of
a Change in Control and ending on the last day of the Term, the
Executive's employment hereunder is terminated by the Company for
any reason, other than Cause, death, or disability, or is
terminated by the Executive in the event of a Constructive
Discharge, then, within five (5) business days after such
termination, PEC shall pay to the Executive (if the Executive has
died before receiving all payments to which he has become
entitled hereunder to the beneficiary or estate of the Executive
as described in paragraph 14) the sum of (i) accrued but unpaid
salary and accrued but unused paid time off under the Company's
"Paid Time Off Bank" policy for all employees, effective
January 1, 1997, or any successor plan, (ii) severance pay in a
lump sum cash amount equal to three (3) years of the Executive's
Compensation, and (iii) the amount determined pursuant to
paragraph 3.e. The Executive (if the Executive has died before
receiving all payment to which he becomes entitled hereunder, the
beneficiary or the estate of the Executive as described in
paragraph 14) will be paid in cash within ten (10) business days
after termination as described in paragraph 3.a., the Present
Value Amount of the benefits accrued by the Executive under the
PEC SRB, Part A and Part B on the date of termination of
employment as described in this paragraph 3.a., determined as if
the Executive had received credit for an additional three (3)
years of Benefit Service. For purposes of determining the
Executive's accrued benefits under the preceding sentence, such
benefits shall be determined as full benefits, without actuarial
reduction, as if the Executive qualified for the Rule of Eighty-
Five under the PEC Retirement Plan and PEC SRB (regardless of
whether the Executive so qualifies). All non-vested Options and
SARs awarded to the Executive under the PEC LTIC shall be deemed
vested as of the earlier of the date of a Change in Control as
defined in this Agreement or Change in Control as defined in the
PEC LTIC. The Company shall treat the Executive as employed by
the Company for purposes of exercising Stock Options and SARs
during the Coverage Period. All non-vested restricted stock
awarded to the Executive under the PEC LTIC shall be deemed
vested and owned by the Executive as of the earlier of the date
of a Change in Control as defined in this Agreement or a Change
in Control as defined in the PEC LTIC and such stock shall be
delivered to the Executive within five (5) business days after
the date of such Change in Control. The Executive's termination
of employment with the Company to become an employee of a
corporation which directly or indirectly owns one hundred percent
(100%) of or which is owned one hundred percent (100%) by the
Company shall not be considered a termination of employment for
purposes of this Agreement. The subsequent termination of the
Executive's employment from such corporation, without employment
at a company that is wholly-owned by such corporation, shall be
considered a termination of employment for purposes of this
Agreement.
b. During the longer of: (i) the Coverage Period or
(ii) the period commencing with the date of the Executive's
termination of employment as described in paragraph 3a and ending
on the last day of the first month in which the Executive may
retire under the PEC Retirement Plan and be eligible to receive a
retirement annuity thereunder without actuarial reduction, the
Executive shall be entitled to all benefits under the Company's
welfare benefit plans (within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended), as
if the Executive were still employed during such period, at the
same level of benefits and at the same dollar cost to the
Executive as is available to all of the Company's executives
generally and if and to the extent that equivalent benefits shall
not be payable or provided under any such plans, the Company
shall pay or provide equivalent benefits on an individual basis;
provided, however, that PEC's obligations under this paragraph
3.b. shall cease upon the date following the termination of the
Executive's employment as described in paragraph 3.a. that the
Executive is eligible to receive benefits under welfare benefit
plans (within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) provided by
an employer of the Executive other than the Company.
c. (i) If Independent Tax Counsel shall determine that
the aggregate payments made to the Executive pursuant to this
Agreement and any other payments to the Executive from the
Company which constitute "parachute payments" as defined in
Section 280G of the Code (or any successor provision thereto)
("Parachute Payments") would be subject to the excise tax imposed
by Section 4999 of the Code (the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount calculated at the highest
marginal tax rate applicable to the Executive for the tax year in
which such payments were paid to the Executive (determined by
Independent Tax Counsel) such that after payment by the Executive
of all federal, state and other taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties
imposed with respect to such taxes, the Executive retains from
the Gross-Up Payment an amount equal to the Excise Tax imposed
upon the payments. For purposes of this paragraph 3.c.,
"Independent Tax Counsel" shall mean a lawyer, a certified public
accountant with a nationally recognized accounting firm, or a
compensation consultant with a nationally recognized actuarial
and benefits consulting firm, with expertise in the area of
executive compensation tax law, who shall be selected by the
Executive and shall be reasonably acceptable to PEC, and whose
fees and disbursements shall be paid by PEC.
(ii) If Independent Tax Counsel shall determine
that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that the Executive has
substantial authority not to report any Excise Tax on the
Executive's Federal income tax return. If the Executive is
subsequently required to make a payment of any Excise Tax, then
the Independent Tax Counsel shall determine in the same manner as
a Gross-up Payment the amount (the amount of such additional
payments are referred herein as "Gross-Up Underpayment") of such
payment and any such Gross-Up Underpayment shall be promptly paid
by PEC to or for the benefit of the Executive. The fees and
disbursements of the Independent Tax Counsel shall be paid by
PEC.
(iii) The Executive shall notify PEC in writing
within 15 days of any claim by the Internal Revenue Service that,
if successful, would require the payment by PEC of a Gross-Up
Payment. If PEC notifies the Executive in writing that it
desires to contest such claim and that it will bear the costs and
provide the indemnification as required by this subparagraph
(iii) of paragraph 3.c., the Executive shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim,
(B) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney selected by the Company,
(C) cooperate with the Company in good faith in
order to effectively contest such claim, and
(D) permit the Company to participate in any
proceedings relating to such claim; provided, however, that the
Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis calculated at the
highest marginal tax rate applicable to the Executive, for any
Excise Tax or federal and state income tax or other taxes,
including interest and penalties with respect thereto, imposed as
a result of such representation and payment of costs and
expenses. The Company shall control all proceedings taken in
connection with such contest; provided, however, that if the
Company directs the Executive to pay such claim and sue for a
refund, PEC shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis calculated at the
highest marginal tax rate applicable to the Executive, from any
Excise Tax or federal and state income tax or other taxes,
including interest or penalties with respect thereto, imposed
with respect to such advance or with respect to any imputed
income with respect to such advance.
(iv) If, after the receipt by the Executive of
an amount advanced by PEC pursuant to subparagraph (iii) of
paragraph 3.c., the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall within 10
days pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable
thereto).
d. In the event of any termination of the Executive's
employment as described in paragraph 3.a., the Executive shall be
under no obligation to seek other employment, and there shall be
no offset against amounts due the Executive under this Agreement
on account of any remuneration attributable to any subsequent
employment.
e. The Executive shall be paid the following described
amounts pursuant to subparagraph (iii) of paragraph 3.a. If the
Executive has not received an award under the STIC for the Plan
Year in which his employment is terminated the PEC Directors'
Compensation-Nominating Committee shall determine in good faith,
specifically considering the Executive's Computed Award under the
STIC for such Plan Year, an award amount equal to a prorated
award for the portion of the Plan Year that the Executive was
employed by the Company. If the Executive has not yet received
payment of his award amount under the STIC for the Plan Year
preceding the Executive's termination, the PEC Directors'
Compensation-Nominating Committee shall determine in good faith,
specifically considering the Executive's Computed Award under the
STIC for such Plan Year, an award amount under the STIC for such
Plan Year.
4. Source of Payments.
All payments provided for in paragraph 3 shall be
paid in cash from the general funds of PEC; provided, however,
that such payments shall be reduced by the amount of any payments
made to the Executive or his dependents, beneficiaries or estate
from any trust or special or separate fund established or
utilized by PEC to assure such payments. The Company shall not
be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the
Company shall make any investments to aid it in meeting its
obligations hereunder, the Executive shall have no right, title
or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument
relating to such investments. Nothing contained in this
Agreement, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and the Executive or
any other person. To the extent that any person acquires a right
to receive payments from the Company such right shall be no
greater than the right of an unsecured creditor of the Company.
5. Litigation Expenses: Arbitration.
a. PEC's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the
Company may have against the Executive or others, except as set
forth in paragraph 7. In no event shall the Executive be
obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. PEC agrees to pay, upon
written demand therefor by the Executive, all legal fees and
expenses which the Executive may reasonably incur as a result of
any dispute or contest (regardless of the outcome thereof) by or
with the Company or others regarding the validity or
enforceability of, or liability under, any provision of this
Agreement, plus in each case interest at the Federal long-term
rate in effect under Section 1274(d) of the Code, compounded
monthly. In any such action brought by the Executive for damages
or to enforce any provisions of this Agreement, the Executive
shall be entitled to seek both legal and equitable relief and
remedies, including, without limitation, specific performance of
the Company's obligations hereunder, in his sole discretion. The
obligation of the Company under this paragraph 5. shall survive
the termination for any reason of this Agreement (whether such
termination is by the Company, by the Executive, upon the
expiration of this Agreement or otherwise).
b. In the event of any dispute or difference
between the Company and the Executive with respect to the subject
matter of this Agreement and the enforcement of rights hereunder,
the Executive may, in his sole discretion by written notice to
PEC, require such dispute or difference to be submitted to
arbitration. The arbitrator or arbitrators shall be selected by
agreement of the parties or, if they cannot agree on an
arbitrator or arbitrators within 30 days after the Executive had
notified PEC of his desire to have the question settled by
arbitration, then the arbitrator or arbitrators shall be selected
by the American Arbitration Association (the "AAA") in Illinois
upon the application of the Executive. The determination reached
in such arbitration shall be final and binding on both parties
without any right of appeal of further dispute. Execution of the
determination by such arbitrator may be sought in any court of
competent jurisdiction. The arbitrators shall not be bound by
judicial formalities and may abstain from following the strict
rules of evidence and shall interpret this Agreement as an
honorable engagement and not merely as a legal obligation.
Unless otherwise agreed by the parties, any such arbitration
shall take place in Illinois, and shall be conducted in
accordance with the Rules of the AAA.
6. Tax Withholding.
The Company may withhold from any payments made
under this Agreement all federal, state or other taxes, including
excise taxes as shall be required pursuant to any law or
governmental regulation or ruling.
7. Waiver and Releases.
a. In consideration of the covenants under this
Agreement, including, but not limited to, paragraphs 3 and 5, the
Executive hereby waives, releases and forever discharges the
Company from any and all claims he has or may have against the
Company arising out of or relating to the following: (a) The PEC
TAP, upon receipt by the Executive of all amounts due or owing to
the Executive under this Agreement; and (b) The PEC SRB, Part A
and Part B, provided that the amount paid to the Executive
pursuant to the second and third sentences of paragraph 3.a.
exceeds the amount of the Executive's accrued benefits under the
PEC SRB, Part A and Part B as of the date of the Executive's
termination of employment as described in paragraph 3.a.
b. In consideration of the covenants under this
Agreement, including, but not limited to, paragraphs 3 and 5, and
as a condition precedent to receiving any payments under this
Agreement, the Executive agrees to execute after the date of his
termination as described in paragraph 3.a., a release
substantially in the form of Exhibit A attached hereto and by
this reference made a part hereof.
8. Amendment of Trust and Deposit of Assets.
On or before December 31, 1996, PEC shall amend the
Trust to provide that within ten (10) business days after the
date of a Change in Control, PEC shall deposit cash into the
Trust, in an amount equal to the following: (a) the payment
obligations of PEC under the Peoples Energy Corporation's
Executive Deferred Compensation Plan as in effect on the
Effective Date, as amended from time to time or any successor
plan, and (b) the accrued benefits of the participants, as of the
date of the Change in Control, under the PEC SRB, Part A and Part
B.
9. Outplacement Services.
Unless PEC offers outplacement services to the
Executive during the Coverage Period, PEC shall reimburse the
Executive for the costs of outplacement services incurred by the
Executive up to a maximum amount of Seven Thousand Dollars
($7,000).
10. Entire Understanding.
This Agreement contains the entire understanding
between the Company and the Executive with respect to the subject
matter hereof and supersedes any prior severance agreement
between the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of any kind elsewhere provided and not
expressly provided for in this Agreement.
11. Severability.
If, for any reason, any one or more of the
provisions or part of a provision contained in this Agreement
shall be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provision or part of a provision of this
Agreement not held so invalid, illegal or unenforceable, and each
other provision or part of a provision shall to the full extent
consistent with law continue in full force and effect.
12 Consolidation, Merger, or Sale of Assets.
If PEC consolidates or merges into or with, or
transfers all or substantially all of its assets to, another
corporation the term "the Company" as used herein shall include
such other corporation and this Agreement shall continue in full
force and effect.
13. Notices.
All notices, requests, demands and other
communications required or permitted hereunder shall be given in
writing and shall be deemed to have been duly given if delivered
or mailed, postage prepaid, first class with return receipt as
follows:
a. to PEC:
Peoples Energy Corporation
130 East Randolph Drive
Chicago, Illinois 60601
Attention: E. P. Cassidy, Secretary
b. to the Executive:
Thomas M. Patrick
Executive Vice President
Peoples Energy Corporation
130 East Randolph Drive
Chicago, Illinois 60601
or to such other address as either party shall have previously
specified in writing to the other.
14. No attachment.
Except as required by law and as expressly provided
in his paragraph 14, no right to receive payments under this
Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or
hypothecation or to execution, attachment, levy or similar
process or assignment by operation of law, and any attempt,
voluntary or involuntary, to effect any such action shall be
null, void and of no effect. Notwithstanding the preceding
sentence, the Executive may, by giving notice to PEC during the
Executive's lifetime, designate a beneficiary or beneficiaries to
whom the severance benefits described in paragraph 3.a. shall be
transferred in the event of the Executive's death. Any such
designation may be revoked or changed by the Executive at any
time and from time to time by similar notice. If there is no
such designated beneficiary living upon the death of the
Executive or if all such designated beneficiaries die prior to
the receipt by the Executive of the referenced severance
benefits, such severance benefits shall be transferred to the
Executive's surviving spouse or, if none, then such severance
benefits will be transferred to the estate or personal
representative of the Executive. If the Company, after
reasonable inquiry, is unable to determine within twelve months
after the Executive's death whether any designated beneficiary of
the Executive did in fact survive the Executive, such beneficiary
shall be conclusively presumed to have died prior to the
Executive's death.
15. Binding Agreement.
This Agreement shall be binding upon, and shall
inure to the benefit of, the Executive and the Company and their
respective permitted successors and assigns.
16. Modification and Waiver.
This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.
No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement except by written
instrument signed by the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing
waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived
and shall not constitute a waiver of such term or condition for
the future or as to any act other than that specifically waived.
17. Headings of No Effect.
The paragraph headings contained in this Agreement
are included solely for convenience of reference and shall not in
any way affect the meaning or interpretation of any of the
provisions of this Agreement.
18. Governing Law.
This Agreement and its validity, interpretation,
performance, and enforcement shall be governed by the laws of the
State of Illinois without giving effect to the choice of law
provisions in effect in such State.
IN WITNESS WHEREOF, PEC has caused this Agreement
to be executed by its officers thereunto duly authorized, and the
Executive has signed this Agreement, all effective as of the date
first above written.
PEOPLES ENERGY CORPORATION
By: /s/ H. J. Livingston, Jr.
Director and Chairman of the
Compensation-Nominating Committee
of the Board of Directors
By: /s/ Thomas M. Patrick
Thomas M. Patrick
Executive Vice President
EXHIBIT A
TO SEVERANCE AGREEMENT
BETWEEN PEOPLES ENERGY CORPORATION AND
EXECUTIVE, DATED DECEMBER 4, 1996
RELEASE AGREEMENT
This Agreement is entered into on this ____ day of
_______________, between Thomas M. Patrick, Executive Vice
President ("Executive") and Peoples Energy Corporation on behalf
of Peoples Energy Corporation and any affiliate and sucessor or
sucessors to Peoples Energy Corporation.
1. In consideration of the benefits to be paid and
provided to the Executive under that certain Severance Agreement
between Peoples Energy Corporation ("PEC") and the Executive,
dated as of December 4, 1996, ("Severance Agreement") Executive
waives, releases and forever discharges PEC (including its
current and former affiliated companies, and their current and
former officers, directors, employees and agents) from all claims
which he may have against PEC (including its current and former
affiliated companies, and their current and former officers,
directors, employees and agents) arising out of the Americans
With Disabilities Act, the Age Discrimination in Employment Act,
Title VII of the Civil Rights Act of 1964, the Illinois Human
Rights Act, or any other federal, state or local statute,
regulation, ordinance, or doctrine of common law prohibiting
discrimination on the basis of disability or age or race or
gender or on any other substantially similar basis.
2. The Executive acknowledges that, prior to his
execution of this Agreement, he was encouraged to review it with
counsel or anyone else of his choosing. Executive states that he
understands its meaning and that he knowingly, freely and
voluntarily executes it.
The Company encourages the Executive to consult with an
attorney regarding this Agreement. If after review, the
Executive wishes to accept, he should sign the document and
return it to the Secretary of Peoples Energy Corporation. This
Release will not become effective until seven days thereafter,
and if the Executive changes his mind within that period, he may
revoke this Release by notifying the Secretary of Peoples Energy
Corporation. The Executive understands and agrees that no
benefits will be paid or provided to the Executive under the
Severance Agreement prior to the receipt by PEC of this release
executed by the Executive.
PEOPLES ENERGY CORPORATION:
By: ___________________________________ _______________________
Date
By: ___________________________________ ________________________
Thomas M. Patrick Date
Exhibit 10(m)
SEVERANCE AGREEMENT
BETWEEN
PEOPLES ENERGY CORPORATION
AND
KENNETH S. BALASKOVITS
Vice President and Controller
THIS AGREEMENT, effective as of December 4, 1996, by
and between Peoples Energy Corporation, an Illinois corporation
and Kenneth S. Balaskovits, Vice President and Controller (the
"Executive").
WITNESSETH
WHEREAS, the Executive is a valuable employee of the
Company and an integral part of the management of the Company;
and
WHEREAS, the Company wishes to encourage the Executive
to continue his career and services with the Company for the
period during and after an actual or threatened Change in
Control; and
WHEREAS, the Board of Directors of PEC, at its meeting
on December 4, 1996, determined that it would be in the best
interests of the Company and its shareholders to assure
continuity in the management of the Company's administration and
operations in the event of a Change in Control by entering into
this Agreement with the Executive;
NOW THEREFORE, it is hereby agreed by and between the
parties hereto as follows:
1. Definitions.
"AAA" shall have the meaning set forth in paragraph 5
of this Agreement.
"Affiliate" shall mean the subsidiaries of PEC and
other entities controlled by such subsidiaries.
"Agreement" shall mean this Severance Agreement.
"Benefit Service" shall mean the Benefit Service as
defined in the PEC Retirement Plan.
"Board" shall mean the Board of Directors of PEC.
"Cause" shall mean the Executive's fraud or dishonesty which has
resulted in or is likely to result in material economic damage to
the Company as determined in good faith by a vote of at least two-
thirds of the non-employee directors of PEC at a meeting of the
Board at which the Executive is provided an opportunity to be
heard.
"Change in Control" shall mean:
(i) either (A) receipt by PEC of a report on Schedule
13D, or an amendment to such a report, filed with the Securities
and Exchange Commission ("SEC") pursuant to Section 13(d) of the
Securities Exchange Act of 1934 (the "1934 Act") disclosing that
any person (as such term is used in Section 13(d) of the 1934
Act) ("Person"), is the beneficial owner, directly or indirectly,
of twenty (20) percent or more of the outstanding stock of PEC,
or (B) actual knowledge by PEC of facts, on the basis of which
any Person is required to file such a report on Schedule 13D, or
to make an amendment to such a report, with the SEC (or would be
required to file such a report or amendment upon the lapse of the
applicable period of time specified in Section 13 (d) of the 1934
Act) disclosing that such Person is the beneficial owner,
directly or indirectly, of twenty (20) percent or more of the
outstanding stock of PEC;
(ii) purchase by any Person, other than PEC or a wholly-
owned subsidiary of the Company, of shares pursuant to a tender
or exchange offer to acquire any stock of PEC (or securities
convertible into stock) for cash, securities or any other
consideration provided that, after consummation of the offer,
such Person is the beneficial owner (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of twenty (20)
percent or more of the outstanding stock of PEC (calculated as
provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(iii) approval by the shareholders of PEC of (a) any
consolidation or merger of PEC in which PEC is not the continuing
or surviving corporation or pursuant to which shares of stock of
PEC would be converted into cash, securities or other property,
other than a consolidation or merger of PEC in which holders of
its stock immediately prior to the consolidation or merger have
substantially the same proportionate ownership of common stock of
the surviving corporation immediately after the consolidation or
merger as immediately before, or (b) any consolidation or merger
in which PEC is the continuing or surviving corporation, but in
which the common shareholders of PEC immediately prior to the
consolidation or merger do not hold at least ninety (90) percent
of the outstanding common stock of the continuing or surviving
corporation (except where such holders of common stock hold at
least ninety (90) percent of the common stock of the corporation
which owns all of the common stock of PEC), or (c) any sale,
lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all the assets
of PEC (Transfer Transaction), (except where (A) PEC owns all of
the outstanding stock of the transferee entity or (B) the holders
of PEC's common stock immediately prior to the Transfer
Transaction own at least ninety (90) percent of the outstanding
stock of the transferee entity, immediately after the Transfer
Transaction), or (d) any consolidation or merger of PEC where,
after the consolidation or merger, one Person owns one hundred
(100) percent of the shares of stock of PEC (except where the
holders of PEC's common stock immediately prior to such merger or
consolidation own at least ninety (90) percent of the outstanding
stock of such Person immediately after such consolidation or
merger); or
(iv) a change in the majority of the members of the
Board within a twenty-four (24)month period, unless the election
or nomination for election by PEC's shareholders of each new
director was approved by the vote of at least two-thirds of the
directors then still in office who were in office at the
beginning of the twenty-four (24)month period.
"Code" shall mean the United States Internal Revenue
Code of 1986, as amended, or any successor thereto.
"Company" shall mean PEC and include any Affiliate and
successor or successors to PEC.
"Compensation" shall mean the sum of (i) the
Executive's annual rate of salary on the last day the Executive
was an employee of the Company, including any elective
contributions made by the Company on behalf of the Executive that
are not includable in the gross income of the Executive under
Section 125 or 402(a)(8) of the Code or any successor provision
thereto, and including any amount of salary that has been
deferred by the Executive, (ii) an award equal to the average of
the amounts awarded to the Executive under the PEC STIC during
the three years preceding termination of employment, and (iii)
the economic equivalent value of any awards received by Executive
under the PEC LTIC in the calendar year preceding termination of
employment (as determined in good faith by the PEC Directors'
Compensation- Nominating Committee).
"Computed Award" shall mean Computed Award as defined
in the PEC STIC.
"Constructive Discharge" shall mean a good faith
determination by the Executive that there has been any (i)
material change by the Company of the Executive's functions,
duties or responsibilities which change would cause the
Executive's position with the Company to become of less dignity,
responsibility, importance, prestige or scope, including, without
limitation, the assignment to the Executive of duties and
responsibilities inconsistent with his position, (ii) assignment
or reassignment by the Company of the Executive, without the
Executive's consent, to another place of employment more than
fifty (50) miles from the Executive's current place of
employment, (iii) liquidation, dissolution, consolidation or
merger of PEC, or transfer of all or substantially all of its
assets, other than a transaction or series of transactions in
which the resulting or surviving transferee entity has, in the
aggregate, a net worth at least equal to that of PEC immediately
before such transaction and such resulting or surviving
transferee entity expressly assumes this Agreement and all
obligations and undertakings hereunder, or (iv) reduction, which
is more than de minimis, in the Executive's total compensation
(Compensation, perquisites and benefits). It is understood and
agreed by all parties hereto that a reduction in (a) the amount
the Executive receives under PEC STIC, (b) the awards received by
the Executive under the PEC LTIC, or (c) the prerequisites or
benefits of the Executive shall not be deemed a reduction if such
amount received under the PEC STIC, awards received under the PEC
LTIC, or such prerequisites or benefits are the same as received
by the Company's similarly situated officers. An event shall not
be considered Constructive Discharge unless the Executive
provides written notice to PEC specifying the event relied upon
for Constructive Discharge within six months after the occurrence
of such event. Within thirty days of receiving such written
notice from the Executive, the Company may cure or cause to be
cured the event upon which the Executive claims a Constructive
Discharge and no Constructive Discharge shall have been
considered to have occurred with respect to such event. PEC and
the Executive, upon mutual written agreement, may waive any of
the foregoing provisions which would otherwise constitute a
Constructive Discharge.
"Coverage Period" shall mean the period commencing with
the month in which termination of employment as described in
paragraph 3.a. of this Agreement shall have occurred, and ending
thirty-six (36) months thereafter.
"Effective Date" shall mean December 4, 1996.
"PEC" shall mean Peoples Energy Corporation, an
Illinois corporation.
"PEC Directors' Compensation-Nominating Committee"
shall mean the Peoples Energy Corporation Board of Directors'
Compensation-Nominating Committee.
"PEC LTIC" shall mean the Peoples Energy Corporation
Long Term Incentive Compensation Plan as in effect on the
Effective Date, as amended from time to time or any successor
plan.
"PEC Retirement Plan" shall mean the Peoples Energy
Corporation Retirement Plan as in effect on the Effective Date,
as amended from time to time, or any successor plan.
"PEC SRB" shall mean the Peoples Energy Corporation
Supplemental Retirement Benefit Plan, as in effect on the
Effective Date, as amended from time to time or any successor
plan.
"PEC STIC" shall mean the Peoples Energy Corporation
Short Term Incentive Compensation Plan, as in effect on the
Effective Date, as amended from time to time or any successor
plan.
"PEC TAP" shall mean the Peoples Energy Corporation
Termination Allowance Plan as in effect on the Effective Date, as
amended from time to time and as
enhanced as described in that certain PEC brochure for nonunion
employees titled, "Career Transition Opportunities", dated
November 1996.
"Plan Year" shall mean the Plan Year as defined under
the PEC STIC.
"Present Value Amount" shall mean the amount calculated
by the PEC Directors' Compensation-Nominating Committee as of the
date of the termination of the Executive's employment as
described in paragraph 3.a., using as a mortality basis the
mortality basis used by the PEC Retirement Plan for determining
benefits, or if such mortality basis is not available, a
mortality basis determined by the PEC Retirement Plan's
consulting actuaries, and assuming a discount rate equal to the
average of the yield on Thirty (30) year United States Treasury
Bonds for the second calendar month preceding the Executive's
termination of employment as described in paragraph 3.a.
"Rule of Eighty-Five" shall mean the Rule of Eighty-
Five as defined under the PEC Retirement Plan.
"SARs" shall mean SARs as defined under the PEC LTIC.
"Stock Options" shall mean Options as defined under the
PEC LTIC.
"Term" shall mean the term of this Agreement as set
forth in paragraph 2.
"Trust" shall mean the Trust under Peoples Energy
Corporation Executive Deferred Compensation Plan and Supplemental
Retirement Benefit Plan, Part A and Part B, dated September 22,
1995, as amended July 1, 1996, in effect on the Effective Date,
as amended from time to time.
2. Term.
This Agreement shall be effective as of the
Effective Date and shall continue thereafter until the later of:
(i) thirty-six (36) full calendar months following the date on
which occurs any of the events described in subparagraphs (i),
(ii) or (iv) of the definition of Change in Control in paragraph
1; or (ii) twenty-four (24) full calendar months following the
date on which the transaction that was the subject of shareholder
approval pursuant to subparagraph (iii) of the definition of
Change in Control in paragraph 1 has been completed.
3. Severance Benefit.
a. If, during the period commencing on the date of
a Change in Control and ending on the last day of the Term, the
Executive's employment hereunder is terminated by the Company for
any reason, other than Cause, death, or disability, or is
terminated by the Executive in the event of a Constructive
Discharge, then, within five (5) business days after such
termination, PEC shall pay to the Executive (if the Executive has
died before receiving all payments to which he has become
entitled hereunder to the beneficiary or estate of the Executive
as described in paragraph 14) the sum of (i) accrued but unpaid
salary and accrued but unused paid time off under the Company's
"Paid Time Off Bank" policy for all employees, effective
January 1, 1997, or any successor plan, (ii) severance pay in a
lump sum cash amount equal to three (3) years of the Executive's
Compensation, and (iii) the amount determined pursuant to
paragraph 3.e. The Executive (if the Executive has died before
receiving all payment to which he becomes entitled hereunder, the
beneficiary or the estate of the Executive as described in
paragraph 14) will be paid in cash within ten (10) business days
after termination as described in paragraph 3.a., the Present
Value Amount of the benefits accrued by the Executive under the
PEC SRB, Part A and Part B on the date of termination of
employment as described in this paragraph 3.a., determined as if
the Executive had received credit for an additional three (3)
years of Benefit Service. For purposes of determining the
Executive's accrued benefits under the preceding sentence, such
benefits shall be determined as full benefits, without actuarial
reduction, as if the Executive qualified for the Rule of Eighty-
Five under the PEC Retirement Plan and PEC SRB (regardless of
whether the Executive so qualifies). All non-vested Options and
SARs awarded to the Executive under the PEC LTIC shall be deemed
vested as of the earlier of the date of a Change in Control as
defined in this Agreement or Change in Control as defined in the
PEC LTIC. The Company shall treat the Executive as employed by
the Company for purposes of exercising Stock Options and SARs
during the Coverage Period. All non-vested restricted stock
awarded to the Executive under the PEC LTIC shall be deemed
vested and owned by the Executive as of the earlier of the date
of a Change in Control as defined in this Agreement or a Change
in Control as defined in the PEC LTIC and such stock shall be
delivered to the Executive within five (5) business days after
the date of such Change in Control. The Executive's termination
of employment with the Company to become an employee of a
corporation which directly or indirectly owns one hundred percent
(100%) of or which is owned one hundred percent (100%) by the
Company shall not be considered a termination of employment for
purposes of this Agreement. The subsequent termination of the
Executive's employment from such corporation, without employment
at a company that is wholly-owned by such corporation, shall be
considered a termination of employment for purposes of this
Agreement.
b. During the longer of: (i) the Coverage Period or
(ii) the period commencing with the date of the Executive's
termination of employment as described in paragraph 3a and ending
on the last day of the first month in which the Executive may
retire under the PEC Retirement Plan and be eligible to receive a
retirement annuity thereunder without actuarial reduction, the
Executive shall be entitled to all benefits under the Company's
welfare benefit plans (within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended), as
if the Executive were still employed during such period, at the
same level of benefits and at the same dollar cost to the
Executive as is available to all of the Company's executives
generally and if and to the extent that equivalent benefits shall
not be payable or provided under any such plans, the Company
shall pay or provide equivalent benefits on an individual basis;
provided, however, that PEC's obligations under this paragraph
3.b. shall cease upon the date following the termination of the
Executive's employment as described in paragraph 3.a. that the
Executive is eligible to receive benefits under welfare benefit
plans (within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) provided by
an employer of the Executive other than the Company.
c. (i) If Independent Tax Counsel shall determine that
the aggregate payments made to the Executive pursuant to this
Agreement and any other payments to the Executive from the
Company which constitute "parachute payments" as defined in
Section 280G of the Code (or any successor provision thereto)
("Parachute Payments") would be subject to the excise tax imposed
by Section 4999 of the Code (the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount calculated at the highest
marginal tax rate applicable to the Executive for the tax year in
which such payments were paid to the Executive (determined by
Independent Tax Counsel) such that after payment by the Executive
of all federal, state and other taxes (including any Excise Tax)
imposed upon the Gross-Up Payment and any interest or penalties
imposed with respect to such taxes, the Executive retains from
the Gross-Up Payment an amount equal to the Excise Tax imposed
upon the payments. For purposes of this paragraph 3.c.,
"Independent Tax Counsel" shall mean a lawyer, a certified public
accountant with a nationally recognized accounting firm, or a
compensation consultant with a nationally recognized actuarial
and benefits consulting firm, with expertise in the area of
executive compensation tax law, who shall be selected by the
Executive and shall be reasonably acceptable to PEC, and whose
fees and disbursements shall be paid by PEC.
(ii) If Independent Tax Counsel shall determine
that no Excise Tax is payable by the Executive, it shall furnish
the Executive with a written opinion that the Executive has
substantial authority not to report any Excise Tax on the
Executive's Federal income tax return. If the Executive is
subsequently required to make a payment of any Excise Tax, then
the Independent Tax Counsel shall determine in the same manner as
a Gross-up Payment the amount (the amount of such additional
payments are referred herein as "Gross-Up Underpayment") of such
payment and any such Gross-Up Underpayment shall be promptly paid
by PEC to or for the benefit of the Executive. The fees and
disbursements of the Independent Tax Counsel shall be paid by
PEC.
(iii) The Executive shall notify PEC in writing
within 15 days of any claim by the Internal Revenue Service that,
if successful, would require the payment by PEC of a Gross-Up
Payment. If PEC notifies the Executive in writing that it
desires to contest such claim and that it will bear the costs and
provide the indemnification as required by this subparagraph
(iii) of paragraph 3.c., the Executive shall:
(A) give the Company any information reasonably
requested by the Company relating to such claim,
(B) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney selected by the Company,
(C) cooperate with the Company in good faith in
order to effectively contest such claim, and
(D) permit the Company to participate in any
proceedings relating to such claim; provided, however, that the
Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis calculated at the
highest marginal tax rate applicable to the Executive, for any
Excise Tax or federal and state income tax or other taxes,
including interest and penalties with respect thereto, imposed as
a result of such representation and payment of costs and
expenses. The Company shall control all proceedings taken in
connection with such contest; provided, however, that if the
Company directs the Executive to pay such claim and sue for a
refund, PEC shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis calculated at the
highest marginal tax rate applicable to the Executive, from any
Excise Tax or federal and state income tax or other taxes,
including interest or penalties with respect thereto, imposed
with respect to such advance or with respect to any imputed
income with respect to such advance.
(iv) If, after the receipt by the Executive of
an amount advanced by PEC pursuant to subparagraph (iii) of
paragraph 3.c., the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall within 10
days pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable
thereto).
d. In the event of any termination of the Executive's
employment as described in paragraph 3.a., the Executive shall be
under no obligation to seek other employment, and there shall be
no offset against amounts due the Executive under this Agreement
on account of any remuneration attributable to any subsequent
employment.
e. The Executive shall be paid the following described
amounts pursuant to subparagraph (iii) of paragraph 3.a. If the
Executive has not received an award under the STIC for the Plan
Year in which his employment is terminated the PEC Directors'
Compensation-Nominating Committee shall determine in good faith,
specifically considering the Executive's Computed Award under the
STIC for such Plan Year, an award amount equal to a prorated
award for the portion of the Plan Year that the Executive was
employed by the Company. If the Executive has not yet received
payment of his award amount under the STIC for the Plan Year
preceding the Executive's termination, the PEC Directors'
Compensation-Nominating Committee shall determine in good faith,
specifically considering the Executive's Computed Award under the
STIC for such Plan Year, an award amount under the STIC for such
Plan Year.
4. Source of Payments.
All payments provided for in paragraph 3 shall be
paid in cash from the general funds of PEC; provided, however,
that such payments shall be reduced by the amount of any payments
made to the Executive or his dependents, beneficiaries or estate
from any trust or special or separate fund established or
utilized by PEC to assure such payments. The Company shall not
be required to establish a special or separate fund or other
segregation of assets to assure such payments, and, if the
Company shall make any investments to aid it in meeting its
obligations hereunder, the Executive shall have no right, title
or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument
relating to such investments. Nothing contained in this
Agreement, and no action taken pursuant to its provisions, shall
create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and the Executive or
any other person. To the extent that any person acquires a right
to receive payments from the Company such right shall be no
greater than the right of an unsecured creditor of the Company.
5. Litigation Expenses: Arbitration.
a. PEC's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the
Company may have against the Executive or others, except as set
forth in paragraph 7. In no event shall the Executive be
obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. PEC agrees to pay, upon
written demand therefor by the Executive, all legal fees and
expenses which the Executive may reasonably incur as a result of
any dispute or contest (regardless of the outcome thereof) by or
with the Company or others regarding the validity or
enforceability of, or liability under, any provision of this
Agreement, plus in each case interest at the Federal long-term
rate in effect under Section 1274(d) of the Code, compounded
monthly. In any such action brought by the Executive for damages
or to enforce any provisions of this Agreement, the Executive
shall be entitled to seek both legal and equitable relief and
remedies, including, without limitation, specific performance of
the Company's obligations hereunder, in his sole discretion. The
obligation of the Company under this paragraph 5. shall survive
the termination for any reason of this Agreement (whether such
termination is by the Company, by the Executive, upon the
expiration of this Agreement or otherwise).
b. In the event of any dispute or difference
between the Company and the Executive with respect to the subject
matter of this Agreement and the enforcement of rights hereunder,
the Executive may, in his sole discretion by written notice to
PEC, require such dispute or difference to be submitted to
arbitration. The arbitrator or arbitrators shall be selected by
agreement of the parties or, if they cannot agree on an
arbitrator or arbitrators within 30 days after the Executive had
notified PEC of his desire to have the question settled by
arbitration, then the arbitrator or arbitrators shall be selected
by the American Arbitration Association (the "AAA") in Illinois
upon the application of the Executive. The determination reached
in such arbitration shall be final and binding on both parties
without any right of appeal of further dispute. Execution of the
determination by such arbitrator may be sought in any court of
competent jurisdiction. The arbitrators shall not be bound by
judicial formalities and may abstain from following the strict
rules of evidence and shall interpret this Agreement as an
honorable engagement and not merely as a legal obligation.
Unless otherwise agreed by the parties, any such arbitration
shall take place in Illinois, and shall be conducted in
accordance with the Rules of the AAA.
6. Tax Withholding.
The Company may withhold from any payments made
under this Agreement all federal, state or other taxes, including
excise taxes as shall be required pursuant to any law or
governmental regulation or ruling.
7. Waiver and Releases.
a. In consideration of the covenants under this
Agreement, including, but not limited to, paragraphs 3 and 5, the
Executive hereby waives, releases and forever discharges the
Company from any and all claims he has or may have against the
Company arising out of or relating to the following: (a) The PEC
TAP, upon receipt by the Executive of all amounts due or owing to
the Executive under this Agreement; and (b) The PEC SRB, Part A
and Part B, provided that the amount paid to the Executive
pursuant to the second and third sentences of paragraph 3.a.
exceeds the amount of the Executive's accrued benefits under the
PEC SRB, Part A and Part B as of the date of the Executive's
termination of employment as described in paragraph 3.a.
b. In consideration of the covenants under this
Agreement, including, but not limited to, paragraphs 3 and 5, and
as a condition precedent to receiving any payments under this
Agreement, the Executive agrees to execute after the date of his
termination as described in paragraph 3.a., a release
substantially in the form of Exhibit A attached hereto and by
this reference made a part hereof.
8. Amendment of Trust and Deposit of Assets.
On or before December 31, 1996, PEC shall amend the
Trust to provide that within ten (10) business days after the
date of a Change in Control, PEC shall deposit cash into the
Trust, in an amount equal to the following: (a) the payment
obligations of PEC under the Peoples Energy Corporation's
Executive Deferred Compensation Plan as in effect on the
Effective Date, as amended from time to time or any successor
plan, and (b) the accrued benefits of the participants, as of the
date of the Change in Control, under the PEC SRB, Part A and Part
B.
9. Outplacement Services.
Unless PEC offers outplacement services to the
Executive during the Coverage Period, PEC shall reimburse the
Executive for the costs of outplacement services incurred by the
Executive up to a maximum amount of Seven Thousand Dollars
($7,000).
10. Entire Understanding.
This Agreement contains the entire understanding
between the Company and the Executive with respect to the subject
matter hereof and supersedes any prior severance agreement
between the Company and the Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of any kind elsewhere provided and not
expressly provided for in this Agreement.
11. Severability.
If, for any reason, any one or more of the
provisions or part of a provision contained in this Agreement
shall be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provision or part of a provision of this
Agreement not held so invalid, illegal or unenforceable, and each
other provision or part of a provision shall to the full extent
consistent with law continue in full force and effect.
12 Consolidation, Merger, or Sale of Assets.
If PEC consolidates or merges into or with, or
transfers all or substantially all of its assets to, another
corporation the term "the Company" as used herein shall include
such other corporation and this Agreement shall continue in full
force and effect.
13. Notices.
All notices, requests, demands and other
communications required or permitted hereunder shall be given in
writing and shall be deemed to have been duly given if delivered
or mailed, postage prepaid, first class with return receipt as
follows:
a. to PEC:
Peoples Energy Corporation
130 East Randolph Drive
Chicago, Illinois 60601
Attention: E. P. Cassidy, Secretary
b. to the Executive:
Kenneth S. Balaskovits
Vice President and Controller
Peoples Energy Corporation
130 East Randolph Drive
Chicago, Illinois 60601
or to such other address as either party shall have previously
specified in writing to the other.
14. No attachment.
Except as required by law and as expressly provided
in his paragraph 14, no right to receive payments under this
Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or
hypothecation or to execution, attachment, levy or similar
process or assignment by operation of law, and any attempt,
voluntary or involuntary, to effect any such action shall be
null, void and of no effect. Notwithstanding the preceding
sentence, the Executive may, by giving notice to PEC during the
Executive's lifetime, designate a beneficiary or beneficiaries to
whom the severance benefits described in paragraph 3.a. shall be
transferred in the event of the Executive's death. Any such
designation may be revoked or changed by the Executive at any
time and from time to time by similar notice. If there is no
such designated beneficiary living upon the death of the
Executive or if all such designated beneficiaries die prior to
the receipt by the Executive of the referenced severance
benefits, such severance benefits shall be transferred to the
Executive's surviving spouse or, if none, then such severance
benefits will be transferred to the estate or personal
representative of the Executive. If the Company, after
reasonable inquiry, is unable to determine within twelve months
after the Executive's death whether any designated beneficiary of
the Executive did in fact survive the Executive, such beneficiary
shall be conclusively presumed to have died prior to the
Executive's death.
15. Binding Agreement.
This Agreement shall be binding upon, and shall
inure to the benefit of, the Executive and the Company and their
respective permitted successors and assigns.
16. Modification and Waiver.
This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.
No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement except by written
instrument signed by the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing
waiver unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition waived
and shall not constitute a waiver of such term or condition for
the future or as to any act other than that specifically waived.
17. Headings of No Effect.
The paragraph headings contained in this Agreement
are included solely for convenience of reference and shall not in
any way affect the meaning or interpretation of any of the
provisions of this Agreement.
18. Governing Law.
This Agreement and its validity, interpretation,
performance, and enforcement shall be governed by the laws of the
State of Illinois without giving effect to the choice of law
provisions in effect in such State.
IN WITNESS WHEREOF, PEC has caused this Agreement
to be executed by its officers thereunto duly authorized, and the
Executive has signed this Agreement, all effective as of the date
first above written.
PEOPLES ENERGY CORPORATION
By: /s/ H. J. Livingston, Jr.
Director and Chairman of the
Compensation-Nominating Committee
of the Board of Directors
By: /s/ Kenneth S. Balaskovits
Kenneth S. Balaskovits
Vice President and Controller
EXHIBIT A
TO SEVERANCE AGREEMENT
BETWEEN PEOPLES ENERGY CORPORATION AND
EXECUTIVE, DATED DECEMBER 4, 1996
RELEASE AGREEMENT
This Agreement is entered into on this ____ day of
_______________, between Kenneth S. Balaskovits, Vice President
and Controller ("Executive") and Peoples Energy Corporation on
behalf of Peoples Energy Corporation and any affiliate and
sucessor or sucessors to Peoples Energy Corporation.
1. In consideration of the benefits to be paid and
provided to the Executive under that certain Severance Agreement
between Peoples Energy Corporation ("PEC") and the Executive,
dated as of December 4, 1996, ("Severance Agreement") Executive
waives, releases and forever discharges PEC (including its
current and former affiliated companies, and their current and
former officers, directors, employees and agents) from all claims
which he may have against PEC (including its current and former
affiliated companies, and their current and former officers,
directors, employees and agents) arising out of the Americans
With Disabilities Act, the Age Discrimination in Employment Act,
Title VII of the Civil Rights Act of 1964, the Illinois Human
Rights Act, or any other federal, state or local statute,
regulation, ordinance, or doctrine of common law prohibiting
discrimination on the basis of disability or age or race or
gender or on any other substantially similar basis.
2. The Executive acknowledges that, prior to his
execution of this Agreement, he was encouraged to review it with
counsel or anyone else of his choosing. Executive states that he
understands its meaning and that he knowingly, freely and
voluntarily executes it.
The Company encourages the Executive to consult with an
attorney regarding this Agreement. If after review, the
Executive wishes to accept, he should sign the document and
return it to the Secretary of Peoples Energy Corporation. This
Release will not become effective until seven days thereafter,
and if the Executive changes his mind within that period, he may
revoke this Release by notifying the Secretary of Peoples Energy
Corporation. The Executive understands and agrees that no
benefits will be paid or provided to the Executive under the
Severance Agreement prior to the receipt by PEC of this release
executed by the Executive.
PEOPLES ENERGY CORPORATION:
By: ___________________________________ _______________________
Date
By: ___________________________________ ________________________
Kenneth S. Balaskovits Date
Exhibit 21
Peoples Energy Corporation
Subsidiaries of the Registrant
Date of State of
Company Incorporation Incorporation
Peoples District Energy Corporation 05/12/92 Illinois
Peoples Energy Resources Corp. 01/26/96 Illinois
Peoples Energy Services Corporation 07/21/94 Illinois
Peoples NGV Corp. 09/09/93 Illinois
The Peoples Gas Light and Coke Company 2/12/1855 Illinois
North Shore Gas Company 10/07/63 Illinois
Peoples Energy Ventures Corporation 10/23/97 Delaware
Exhibit 23
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report, dated October 31, 1997,
included in this Form 10-K, into Peoples Energy Corporation's
previously filed Registration Statement File Nos. 2-82760, 33-
6369, 333-17701,33-63193 and 333-09993.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois,
December 22, 1997
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
STATEMENTS OF INCOME, CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF
CASH FLOWS, CONSOLIDATED CAPITALIZATION STATEMENT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,402,230
<OTHER-PROPERTY-AND-INVEST> 16,305
<TOTAL-CURRENT-ASSETS> 328,707
<TOTAL-DEFERRED-CHARGES> 19,427
<OTHER-ASSETS> 54,136
<TOTAL-ASSETS> 1,820,805
<COMMON> 281,847
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 434,652
<TOTAL-COMMON-STOCKHOLDERS-EQ> 716,499
0
0
<LONG-TERM-DEBT-NET> 527,004
<SHORT-TERM-NOTES> 700
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 2,110
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 574,492
<TOT-CAPITALIZATION-AND-LIAB> 1,820,805
<GROSS-OPERATING-REVENUE> 1,274,370
<INCOME-TAX-EXPENSE> 54,595
<OTHER-OPERATING-EXPENSES> 1,086,232
<TOTAL-OPERATING-EXPENSES> 1,140,827
<OPERATING-INCOME-LOSS> 133,543
<OTHER-INCOME-NET> 3,336
<INCOME-BEFORE-INTEREST-EXPEN> 136,879
<TOTAL-INTEREST-EXPENSE> 38,475
<NET-INCOME> 98,404
0
<EARNINGS-AVAILABLE-FOR-COMM> 98,404
<COMMON-STOCK-DIVIDENDS> 65,063
<TOTAL-INTEREST-ON-BONDS> 35,722
<CASH-FLOW-OPERATIONS> 166,664
<EPS-PRIMARY> 2.81
<EPS-DILUTED> 2.81
</TABLE>
Exhibit 99
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_____________________________
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 2-82760
A. Full title of the plan and address of the plan, if different
from that of the issuer named below:
Peoples Energy Corporation
Employee Stock Purchase Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
Peoples Energy Corporation
130 East Randolph Drive
Chicago, Illinois 60601
This Form 11-K is being filed for informational purposes only.
ITEM 1. An audited statement of financial condition as of the
end of the latest two fiscal years of the plan.
Not applicable. Employees' payments for Company stock are
neither segregated nor held for investment.
ITEM 2. An audited statement of income and changes in plan
equity for each of the latest three fiscal years of the plan.
Not applicable. See above.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, Peoples Energy Corporation has duly caused this
annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Peoples Energy Corporation
Employe Stock Purchase Plan
(Name of Plan)
Date: December 22, 1997 By /s/Kenneth S. Balaskovits
(Signature)
Kenneth S. Balaskovits
Vice President and Controller
Peoples Energy Corporation
