UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ............ to ............
Commission file number 1-11429
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0233140
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 COX ROAD, P.O. BOX 1398 28053-1398
GASTONIA, NORTH CAROLINA (Zip Code)
(Address of principal executive offices)
(704) 864-6731
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report.)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares of Common Stock, $1 par value, outstanding
at July 31, 1997....................................................19,732,403
1
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PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
The condensed financial statements included herein have been prepared
by the registrant without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Although certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, the registrant believes that the
disclosures herein are adequate to make the information presented not
misleading. It is recommended that these condensed financial statements be read
in conjunction with the financial statements and the notes thereto included in
the registrant's latest annual report on Form 10-K.
2
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<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------ ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- --------
Operating revenues $ 60,106 $ 58,807 $303,906 $275,782 $337,006 $302,500
Cost of gas 30,715 32,382 165,894 151,341 182,691 162,017
-------- -------- -------- -------- -------- --------
Gross margin 29,391 26,425 138,012 124,441 154,315 140,483
-------- -------- -------- -------- -------- --------
Operating expenses and taxes:
Operating and maintenance 15,138 13,465 46,223 41,065 60,360 54,146
Provision for depreciation 5,605 4,851 16,521 14,545 21,725 19,188
General taxes 3,518 3,468 14,414 13,402 17,018 15,732
Income taxes 587 736 19,509 17,974 16,032 15,184
-------- -------- -------- -------- -------- --------
24,848 22,520 96,667 86,986 115,135 104,250
-------- -------- -------- -------- -------- --------
Operating income 4,543 3,905 41,345 37,455 39,180 36,233
Other income, net 822 1,089 2,878 2,597 3,632 2,723
Interest deductions 4,080 3,553 12,646 10,904 16,485 14,158
-------- -------- -------- -------- -------- --------
Net income $ 1,285 $ 1,441 $ 31,577 $ 29,148 $ 26,327 $ 24,798
======== ======== ======== ======== ======== ========
Average common shares
outstanding 19,639 19,066 19,482 18,932 19,408 18,869
Earnings per share $.07 $.08 $1.62 $1.54 $1.36 $1.31
Cash dividends declared
per share $.23 $.22 $.67 $.645 $.89 $.8575
</TABLE>
3
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CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
Jun 30 Sep 30 Jun 30
1997 1996 1996
-------- -------- --------
Gas utility plant $666,749 $629,218 $614,243
Less - Accumulated depreciation 198,560 183,529 179,414
-------- -------- --------
468,189 445,689 434,829
-------- -------- --------
Non-utility property, net 654 691 705
-------- -------- --------
Current assets:
Cash and temporary investments 1,965 3,361 3,376
Restricted cash and temporary investments 14,577 6,395 5,776
Receivables, less allowance for
doubtful accounts 32,174 17,899 23,825
Materials and supplies 7,597 6,705 6,498
Stored gas inventory 15,337 15,863 9,483
Deferred gas costs, net 13,081 17,525 12,782
Prepayments and other 2,454 2,275 2,048
-------- -------- --------
87,185 70,023 63,788
-------- -------- --------
Deferred charges and other assets 14,258 8,486 8,072
-------- -------- --------
Total $570,286 $524,889 $507,394
======== ======== ========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common equity -
Common stock, $1 par $ 19,662 $ 19,204 $ 19,076
Capital in excess of par value 121,486 114,008 112,116
Retained earnings 73,900 55,423 64,953
-------- -------- --------
215,048 188,635 196,145
Long-term debt 183,350 140,150 143,900
-------- -------- --------
398,398 328,785 340,045
-------- -------- --------
Current liabilities:
Maturities of long-term debt 9,300 6,800 9,300
Accounts payable 19,558 20,301 23,641
Accrued taxes 9,057 3,075 9,155
Customer prepayments and deposits 3,859 6,014 2,920
Cash dividends and interest 7,156 7,319 7,056
Restricted supplier refunds 9,732 6,395 5,776
Other 4,771 3,960 3,589
-------- -------- --------
63,433 53,864 61,437
Interim bank loans 23,000 59,500 24,000
-------- -------- --------
86,433 113,364 85,437
-------- -------- --------
Deferred credits and other liabilities:
Income taxes, net 58,684 56,233 56,024
Investment tax credits 3,677 4,210 4,119
Accrued pension cost 9,205 12,214 11,679
Deferred revenues 3,345 - 232
Other 10,544 10,083 9,858
-------- -------- --------
85,455 82,740 81,912
-------- -------- --------
Total $570,286 $524,889 $507,394
======== ======== ========
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(In thousands)
Twelve Months Ended
June 30
-------------------
1997 1996
------- -------
Balance beginning of period $64,953 $56,365
Add - Net income 26,327 24,798
Deduct - Common stock dividends
and other 17,380 16,210
------- -------
Balance end of period $73,900 $64,953
======= =======
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Nine Months Ended Twelve Months Ended
June 30 June 30
----------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net income $31,577 $29,148 $26,327 $24,798
Adjustments to reconcile net income
to net cash provided by operating
activities -
Depreciation, depletion and other 19,115 17,744 25,365 23,301
Deferred income taxes, net 2,451 3,418 2,661 4,396
------- ------- ------- -------
53,143 50,310 54,353 52,495
Change in operating assets and liabilities:
Receivables, net (15,982) (11,748) (10,234) (12,746)
Inventories (367) 1,737 (6,953) (1,158)
Accounts payable (743) 3,229 (4,083) 10,422
Accrued pension cost (3,008) (1,251) (2,474) (1,278)
Other 6,239 (2,914) (1,099) (10,296)
------- ------- ------- -------
39,282 39,363 29,510 37,439
------- ------- ------- -------
Cash Flows From Investing Activities:
Construction expenditures (40,401) (43,689) (57,140) (65,099)
Non-utility and other (3,872) (1,374) (4,300) (2,011)
------- ------- ------- -------
(44,273) (45,063) (61,440) (67,110)
------- ------- ------- -------
Cash Flows From Financing Activities:
Sale of senior debentures, net of expenses 49,404 49,314 49,404 49,314
Issuance of common stock through
dividend reinvestment, stock purchase
and stock option plans 7,807 5,746 9,736 7,096
Increase (decrease) in interim bank
loans, net (36,500) (27,000) (1,000) 5,500
Retirement of long-term debt
and common stock (4,334) (7,980) (10,642) (15,496)
Cash dividends (12,782) (11,997) (16,979) (15,948)
------- ------- ------- -------
3,595 8,083 30,519 30,466
------- ------- ------- -------
Net increase (decrease) in cash and
temporary investments (1,396) 2,383 (1,411) 795
Cash and temporary investments
at beginning of period 3,361 993 3,376 2,581
------- ------- ------- -------
Cash and temporary investments
at end of period $ 1,965 $ 3,376 $ 1,965 $ 3,376
======= ======= ======= =======
Cash paid during the period for:
Interest (net of amount capitalized) $12,796 $10,180 $16,403 $12,474
Income taxes 11,560 7,845 15,195 10,663
</TABLE>
5
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NOTES TO FINANCIAL STATEMENTS
1. The accompanying unaudited consolidated financial statements and notes should
be read in conjunction with the financial statements and notes included in
PSNC's 1996 Annual Report. In the opinion of management, all adjustments
necessary for a fair statement of the results of operations for the interim
periods have been recorded. Certain amounts previously reported have been
reclassified to conform with the current period's presentation.
PSNC's business is seasonal in nature; therefore, the financial results
for any interim period are not necessarily indicative of those which may be
expected for the annual period.
2. In October 1995, the Financial Accounting Standards Board issued its
Statement of Financial Accounting Standards No. 123, "Accounting for Awards of
Stock-Based Compensation to Employees." This statement defines a fair value
method of accounting for stock options or similar equity instruments and was
adopted by PSNC beginning October 1, 1996.
SFAS No. 123 permits companies to continue to account for stock-based
compensation awards under existing accounting rules, but requires disclosure in
a note to the financial statements of the pro forma net income and earnings per
share as if PSNC had adopted the new method of accounting. Currently PSNC has
two stock-based compensation plans which are described in Note 3 to the
financial statements in PSNC's 1996 Annual Report. PSNC will continue to apply
current accounting rules and adopt only the disclosure requirements for these
plans. As a result, adoption of the new statement will not directly impact
PSNC's financial position or results of operations.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Changes in Results of Operations
(Amounts in thousands except
degree day and customer data) Three Months Ended June 30
---------------------------------
Increase
1997 1996 (Decrease) %
-------- -------- -------- --
Gross margin $ 29,391 $ 26,425 $ 2,966 11
Less - Franchise taxes 1,905 1,870 35 2
-------- -------- --------
Net margin $ 27,486 $ 24,555 $ 2,931 12
======== ======== ========
Total volume throughput (DT):
Residential 3,277 3,610 (333) (9)
Commercial/small industrial 2,246 2,549 (303) (12)
Large commercial/industrial 8,138 7,548 590 8
-------- -------- --------
13,661 13,707 (46) -
======== ======== ========
System average degree days:
Actual 406 318 88 28
Normal 258 258 - -
Percent of normal 157% 123%
Weather normalization adjustment
income (refund), net of
franchise taxes $ 907 $ (1,942) $ 2,849
Customers at end of period: (1)
Residential 262,780 247,666 15,114 6
Commercial/small industrial 39,385 40,106 (721) (2)
Large commercial/industrial 2,405 400 2,005 NMF
-------- -------- --------
304,570 288,172 16,398 6
======== ======== ========
(1) During the twelve months ended June 30, 1997, approximately 2,000
customers were reclassified from commercial/small industrial to large
commercial/industrial.
Net margin for the three months ended June 30, 1997 increased $2,931,000
as compared to the same period last year. This increase in net margin is
attributable to the items shown below (in thousands):
Commercial/ Large
Small Commercial/
Residential Industrial Industrial Other Total
----------- ----------- ----------- ----- -----
Price variance *
General rate increase
effective 10/96 $1,399 $ 402 $ (959) $ - $ 842
Volume variances, net 1,462 (110) 622 - 1,974
Other - - - 115 115
------ ----- ------- ------ ------
Total $2,861 $ 292 $ (337) $ 115 $2,931
====== ===== ======= ====== ======
* Includes changes in sales mix.
7
<PAGE>
This increase in net margin is due primarily to the general rate increase
effective October 1, 1996 and to an increase in the number of customers served.
(Amounts in thousands except
degree day data) Nine Months Ended June 30
--------------------------------
Increase
1997 1996 (Decrease) %
-------- -------- -------- --
Gross margin $138,012 $124,441 $ 13,571 11
Less - Franchise taxes 9,754 8,854 900 10
-------- -------- --------
Net margin $128,258 $115,587 $ 12,671 11
======== ======== ========
Total volume throughput (DT):
Residential 18,653 21,379 (2,726) (13)
Commercial/small industrial 11,011 12,863 (1,852) (14)
Large commercial/industrial 25,597 22,237 3,360 15
-------- -------- --------
55,261 56,479 (1,218) (2)
======== ======== ========
System average degree days:
Actual 3,231 3,845* (614) (16)
Normal 3,367 3,385* (18) (1)
Percent of normal 96% 114%
Weather normalization adjustment
income (refund), net of
franchise taxes $ 5,961 $ (8,735) $ 14,696
* Reflects an additional day for leap year.
Net margin for the nine months ended June 30, 1997 increased $12,671,000 as
compared to the same period last year. This increase in net margin is
attributable to the items shown below (in thousands):
Commercial/ Large
Small Commercial/
Residential Industrial Industrial Other Total
----------- ---------- ----------- ----- -----
Price variance*
General rate increase
effective 10/96 $ 7,162 $2,675 $(4,160) $- $ 5,677
Volume variances, net 3,754 (648) 3,594 - 6,700
Other - - - 294 294
------- ------ ------- ----- -------
Total $10,916 $2,027 $ (566) $ 294 $12,671
======= ====== ======= ===== =======
* Includes changes in sales mix.
This increase in net margin is due primarily to the general rate increase
effective October 1, 1996 and to an increase in the number of customers served.
8
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MANAGEMENT'S DISCUSSION (Continued)
(Amounts in thousands except
degree day data) Twelve Months Ended June 30
--------------------------------
Increase
1997 1996 (Decrease) %
-------- -------- -------- --
Gross margin $154,315 $140,483 $ 13,832 10
Less - Franchise taxes 10,785 9,692 1,093 11
-------- -------- --------
Net margin $143,530 $130,791 $ 12,739 10
======== ======== ========
Total volume throughput (DT):
Residential 19,672 22,417 (2,745) (12)
Commercial/small industrial 12,456 14,247 (1,791) (13)
Large commercial/industrial 32,300 28,826 3,474 12
-------- -------- --------
64,428 65,490 (1,062) (2)
======== ======== ========
System average degree days:
Actual 3,242 3,868* (626) (16)
Normal 3,384 3,402* (18) (1)
Percent of normal 96% 114%
Weather normalization adjustment
income (refund), net of
franchise taxes $ 5,963 $ (8,735) $ 14,698
* Reflects an additional day for leap year.
Net margin for the twelve months ended June 30, 1997 increased
$12,739,000 as compared to the same period last year. This increase in net
margin is attributable to the items shown below (in thousands):
Commercial/ Large
Small Commercial/
Residential Industrial Industrial Other Total
----------- ---------- ---------- ----- -----
Price variance*
General rate increase
effective 10/96 $ 7,182 $2,704 $(4,090) $ - $ 5,796
Volume variances, net 3,981 (497) 3,857 - 7,341
Resolution - S. Expansion - - - (734) (734)
Other - - - 336 336
------- ------ ------- ------ -------
Total $11,163 $2,207 $ (233) $ (398) $12,739
======= ====== ======= ====== =======
* Includes changes in sales mix.
This increase in net margin is due primarily to the general rate increase
effective October 1, 1996 and to an increase in the number of customers served.
9
<PAGE>
Operating and maintenance expenses for the three, nine and twelve months
ended June 30, 1997 increased 12%, 13% and 12%, respectively, as compared to the
same periods last year. For the nine and twelve months ended June 30, 1997,
approximately $1,440,000 of the increase resulted from expenses related to the
voluntary early retirement program offered during the first quarter of fiscal
1997, as discussed in Note 11 to the financial statements in PSNC's 1996 Annual
Report. Net of this one-time charge, operating and maintenance expenses
increased 9% for both the nine- and twelve-month periods ended June 30, 1997.
Operating and maintenance expenses increased for all three periods due to
increases in costs associated with outsourcing meter reading, telecommunications
expenses, the provision for uncollectible accounts, which is based on revenues,
increased professional fees, outside services for consultants in the information
systems and public relations areas, employee education and other
employee-related benefits. Also contributing to the increase for the nine- and
twelve-month periods was increased power usage at PSNC's liquefied natural gas
facility. Partially offsetting the nine- and twelve-month increases were reduced
expenses for hospitalization insurance due to a $605,000 adjustment in December
1996 to eliminate the health insurance reserve since the Company is now
affiliated with a health maintenance organization provider. Another offset for
all three periods is a refund of $181,000 related to favorable life insurance
claims experience for the 1996 plan year.
Depreciation expense increased for the three, nine and twelve months ended
June 30, 1997 due to utility plant additions. General taxes for the nine and
twelve months ended June 30, 1997 both increased 8% as compared to the same
periods last year. These increases are mainly due to increased franchise taxes
based on perating revenues that increased 10% and 11%, respectively, as
compared to the same periods last year.
Other income for the three months ended June 30, 1997 decreased $267,000 as
compared to the same period last year, while increasing $281,000 and $909,000,
respectively, for the nine- and twelve-month periods. The change in other income
for all three periods is comprised of several items. Income from subsidiary
operations decreased $197,000, $338,000, and $105,000, respectively, for the
three, nine and twelve months ended June 30, 1997. The decrease in subsidiary
income for all three periods is due mainly to the December 1996 formation of
Sonat Public Service Company L.L.C. of which PSNC and Sonat Marketing, Inc. each
owns 50%. Through this joint venture, all earnings, including earnings from
secondary market transactions, are split evenly between both partners. Income
from subsidiary operations also decreased for the nine- and twelve-month periods
due to weather that was 16% warmer than both of the prior year periods which
negatively impacted margin earned from secondary market transactions. This
decrease is partially offset for all three periods by the five-year amortization
of deferred revenue and the related interest income generated from the formation
of the joint venture. Merchandise and jobbing income increased for all three
respective periods by $69,000, $125,000 and $157,000. The increase for the nine-
and twelve-month periods was partially offset by a one-time expense of $235,000
related to the voluntary early retirement program. The increase in interest
income for all three periods was due primarily to interest related to deferred
gas costs of $45,000, $558,000 and $932,000, respectively. Also interest income
increased due to a loan
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MANAGEMENT'S DISCUSSION (Continued)
made to a real estate developer for purposes of constructing office and
warehouse space for PSNC. This loan was paid upon PSNC's acquisition of the
property in August 1997. Impacting other income for all three periods in the
previous year was a $265,000 gain related to the sale of land in June 1996.
Interest deductions for the three, nine and twelve months ended June 30,
1997 increased 15%, 16% and 16%, respectively, as compared to the same periods
last year. The primary reason for the increase in the three-month period is the
interest expense increase due to the December 17, 1996 issuance of $50,000,000
of 7.45% Senior Debentures due 2026. Interest deductions for the nine- and
twelve-month periods also increased due to the January 10, 1996 issuance of
$50,000,000 of 6.99% Senior Debentures due 2026. Offsetting the increases for
the nine- and twelve-month periods is a decrease in interest expense on
short-term debt resulting from decreased interest rates.
The change in earnings per share for all three periods reflects increases
of 3% in the average number of common shares outstanding as compared to the same
periods last year. These increases are primarily due to shares issued through
PSNC's stock purchase plans.
On April 9, 1997, the Board of Directors increased PSNC's quarterly cash
dividend by $.01 per share, from $.22 to $.23, payable July 1, 1997, to
shareholders of record June 10, 1997.
Changes in Financial Condition
The capital expansion program, through the construction of lines, services,
systems, and facilities, and the purchase of equipment, is designed to help PSNC
meet the growing demand for its product. PSNC's fiscal 1997 construction budget
is approximately $64,400,000, compared to actual construction expenditures for
fiscal 1996 of $60,428,000. The construction program is regularly reviewed by
management and is dependent upon PSNC's continuing ability to generate adequate
funds internally and to sell new issues of debt and equity securities on
acceptable terms. Construction expenditures during the nine and twelve months
ended June 30, 1997 were $40,401,000 and $57,140,000, respectively, as compared
to $43,689,000 nd 65,099,000 for the same periods a year ago. Although
construction expenditures for the nine months ended June 30, 1997 are
approximately $10,000,000 below budget, management anticipates meeting the
construction expenditure budget amount for fiscal 1997.
PSNC generally finances its operations with internally generated funds,
supplemented with bank lines of credit to satisfy seasonal requirements. PSNC
also borrows under its bank lines of credit to finance portions of its
construction expenditures pending refinancing through the issuance of equity or
long-term debt at a later date. PSNC has committed lines of credit with seven
commercial banks which vary monthly depending upon seasonal requirements and a
five-year revolving line of
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<PAGE>
credit with one bank. For the twelve-month period beginning April 1, 1997, lines
of credit with these banks range from a minimum of $37,000,000 to a
winter-period maximum of $81,000,000. PSNC also has uncommitted annual lines of
credit with four of these banks totaling $80,000,000. Lines of credit are
evaluated periodically by management and renegotiated to accommodate anticipated
short-term financing needs. Management believes these lines are currently
adequate to finance a portion of construction expenditures, stored gas
inventories and other corporate needs.
On December 17, 1996, PSNC sold $50,000,000 of 7.45% Senior Debentures due
2026 in a public offering. The net proceeds of $49,404,000 were used to pay down
a significant portion of the then outstanding short-term debt.
At June 30, 1997, restricted cash and temporary investments were
$14,577,000, an increase of $8,182,000 from September 30, 1996. This net
increase was due in part to the restricted cash contribution from Sonat
Marketing Company L.P. (Sonat Marketing). As discussed in Note 11 to the
financial statements in PSNC's 1996 Annual Report, PSNC Production Corporation
and Sonat Marketing, a subsidiary of Sonat Inc., created Sonat Public Service
Company L.L.C. Sonat Marketing contributed $4,944,000 for its 50% ownership of
which approximately $4,845,000 is currently restricted. Sonat Marketing is
entitled to a partial refund of its contribution not yet earned if the economics
of the transaction are adversely modified by any regulatory body over a
five-year period. Restrictions on the cash investment will be released annually
in equal amounts over a four-year period. Also contributing to the increase in
restricted cash and temporary investments are refunds of $9,732,000 received
from PSNC's pipeline supplier that have not yet been deposited into the
expansion fund in the Office of the State Treasurer. This fund was created by an
order of the North Carolina Utilities Commission (NCUC), dated June 3, 1993, to
finance the construction of natural gas lines into unserved areas of PSNC's
service territory that otherwise would not be economically feasible to serve.
The increase in receivables at June 30, 1997 as compared to June 30, 1996
includes a $7,500,000 loan made to a real estate developer for the purpose of
constructing office and warehouse space for PSNC. This receivable was paid upon
PSNC's acquisition of the property in August 1997.
Stored gas inventories increased $5,854,000 as compared to June 1996. This
increase was due to additional quantities stored, an increase in the average
cost of natural gas and the addition of a storage service.
Net deferred gas costs fluctuate in response to the operation of PSNC's
Rider D rate mechanism. This mechanism allows PSNC to recover margin losses on
negotiated sales to large commercial and industrial customers with alternate
fuel capability. It also allows PSNC to recover from customers all prudently
incurred gas costs. On a monthly basis, any difference in amounts paid and
collected for these costs is recorded for subsequent refund to or collection
from PSNC's customers. Deferred gas costs at June 30, 1997 represent
undercollections from customers of $13,081,000. These undercollections primarily
reflect the unanticipated surge in the price of natural gas during January 1997.
PSNC's deferred gas costs balances are approved by the NCUC
12
<PAGE>
in annual gas cost prudence reviews and are refunded to or collected from
customers over a subsequent twelve-month period. Amounts that have not been
refunded to or collected from customers bear interest at an annual rate of 10%
as required by the NCUC. PSNC's strategy is to manage the balance of deferred
gas costs to a minimal level over a twelve-month period. Deferred gas costs at
September 30, 1996 reflect undercollections of demand costs from customers of
$17,525,000.
The increase in deferred charges and other assets as compared to both
September 30, 1996 and June 30, 1996 is primarily the result of the investments
in PSNC's subsidiaries and deferred debt expense associated with the December
17, 1996 sale of 7.45% Senior Debentures previously discussed.
The increase in other current liabilities at June 30, 1997 as compared to
both September 1996 and June 1996 is primarily due to recording the current
portion of the deferred revenue associated with the creation of Sonat Public
Service Company L.L.C. The noncurrent portion is recorded in deferred revenues.
The decrease in accrued pension cost at June 30, 1997 is due to the
recognition of $1,475,000 of unrecognized net gains and assets in the pension
plan related to the voluntary early retirement program.
Regulatory Matters
PSNC began providing natural gas service in McDowell County during December
1996. The project to serve McDowell County was the first project undertaken by
PSNC using monies from its NCUC approved expansion fund. The original estimate
to complete this project was approximately $14,500,000, of which $8,193,500 will
be financed by PSNC's expansion fund. Through June 30, 1997, $14,169,000 was
spent on the project, of which $7,781,000 was received from the expansion fund.
PSNC will receive an additional $412,500 over the next five years in the form of
local government assistance payments that will be deposited into its expansion
fund.
PSNC currently provides natural gas service to the eastern portion of
Haywood County and plans to extend service to western Haywood County, including
Waynesville, Clyde and Lake Junaluska by late 1997 or early 1998. The current
estimated cost to expand service to this area is $7,182,000. On December 30,
1996, PSNC filed an application with the NCUC requesting expansion funds for
this project. On April 22, 1997, the NCUC approved this project and authorized
disbursements from the expansion fund of $4,127,000.
The Cardinal Pipeline was placed into service in December 1994 and provides
additional daily capacity to PSNC's eastern service territory in and around the
Durham and Raleigh areas. In September 1995, PSNC, Piedmont Natural Gas Company,
Inc. (Piedmont), Transcontinental Gas Pipe Line Corporation (Transco), and North
Carolina Natural Gas Corporation (NCNG) signed a letter of intent to form a
limited liability company (LLC) to purchase and extend the Cardinal Pipeline. As
proposed, the pipeline will be extended 67 miles from Burlington to a point
southeast of Raleigh, will add 140 million cubic feet per day of additional firm
capacity (100 million for PSNC and 40 million for NCNG), and will cost an
estimated $75 million. On December 23, 1996, the
13
<PAGE>
LLC filed an application with the NCUC for approval of this project. A public
hearing was held on May 20, 1997, and the applicants are awaiting an order from
the NCUC.
Pine Needle LNG Co., LLC ("Pine Needle") was formed by subsidiaries of
Transco, Piedmont, NCNG, Amerada Hess, PSNC and the Municipal Gas Authority of
Georgia. Pine Needle will own a liquefied natural gas storage facility, with an
estimated cost of $107 million. This facility will be located near Transco's
pipeline northwest of Greensboro and will have a storage capacity of four
billion cubic feet with vaporization capability of 400 million cubic feet per
day. On April 30, 1996, the Federal Energy Regulatory Commission (FERC) made a
preliminary determination to grant a certificate authorizing the construction
and peration of Pine Needle. It approved a 12.75% return on equity for the
project and stated that the debt component of the rate structure will be
determined after permanent financing is obtained. The NCUC filed an application
for rehearing of this order, which FERC denied on November 27, 1996, and the
NCUC then filed a petition for review of FERC's November 27 order with the
United States Court of Appeals for the District of Columbia Circuit; PSNC cannot
predict the outcome of this appeal. On March 5, 1997, the FERC issued an order
denying the requests for rehearing of a landowner and the NC Department of
Environment, Health, and Natural Resources; this order was not appealed by the
parties and is final.
On November 14, 1996, PSNC filed an application with the NCUC requesting
deferred accounting for the costs of a project to ensure that PSNC's computer
operating systems function properly in the year 2000. Similar costs will be
incurred by businesses worldwide and the Emerging Issues Task Force of the
Financial Accounting Standards Board has determined that these costs should be
expensed as incurred. PSNC requested that approximately $3,000,000 of estimated
contractor labor be deferred for subsequent recovery in a future rate case. On
April 29, 1997, the NCUC issued an order authorizing the deferral of each year's
costs and requiring a three-year amortization of these costs beginning in the
year incurred. PSNC will seek to recover any unamortized costs at the time of
its next general rate case.
Forward-looking Statements
Statements contained in this document and the notes to the financial
statements which are not historical in nature are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are subject to risks and uncertainties that may cause
future results to differ materially from those set forth in such forward-looking
statements. PSNC is under no obligation to update such statements.
14
<PAGE>
<TABLE>
EXHIBIT 11
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended Twelve Months Ended
June 30 June 30 June 30
------------------ ------------------ -------------------
1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- --------
Net income $ 1,285 $ 1,441 $ 31,577 $ 29,148 $ 26,327 $ 24,798
-------- -------- -------- -------- -------- --------
Average common shares outstanding 19,639 19,066 19,482 18,932 19,408 18,869
Additional dilutive effect of
outstanding options (as determined
by the application of the treasury
stock method) 99 73 99 82 93 76
-------- -------- -------- -------- -------- --------
Average common shares outstanding
as adjusted 19,738 19,139 19,581 19,014 19,501 18,945
-------- -------- -------- -------- -------- --------
Earnings per share, as adjusted $ .07 $ .08 $1.61 $1.53 $1.35 $1.31
===== ===== ===== ===== ===== =====
This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB Opinion
No. 15 because it results in dilution of less than 3%.
</TABLE>
15
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As more fully disclosed in Part I under "Environmental Matters" and in
Part II in Note 7 to the financial statements in the Annual Report on Form 10-K
for the period ending September 30, 1996, PSNC owns or has owned portions of
sites at which manufactured gas plants were formerly operated and is cooperating
with the North Carolina Department of Environment, Health and Natural Resources
to investigate these sites.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Part I Exhibits:
10-A-33 Amended and Restated Natural Gas Sales Agreement
between PSNC and Transco Energy Marketing Company
dated November 1, 1990.
10-A-33.1 Amendment to Amended and Restated Natural Gas Sales
Agreement between PSNC and Transco Energy Marketing
Company dated November 1, 1990.
10-A-34 Firm Transportation Service Agreement under
Rate Schedule FT, dated August 1, 1991,
between PSNC and Transcontinental Gas Pipe
Line Corporation.
10-A-35 Firm Storage Service Agreement under Rate
Schedule FSS, dated November 7, 1995,
between PSNC and Columbia Gas Transmission
Corporation.
10-A-36 Storage Service Transportation Agreement
under Rate Schedule SST, dated November 7,
1995, between PSNC and Columbia Gas Transmission
Corporation.
16
<PAGE>
10-A-37 Interruptible Transportation Service Agreement
under Rate Schedule TS, dated March 31, 1997,
between PSNC and Columbia Gas Transmission
Corporation.
10-A-38 Gas Sales Agreement (Southern Expansion) dated
November 1, 1990 between PSNC and Transco
Energy Marketing Company.
10-F - Form of Severance Agreement between the Company and
its Executive Officers.
11 - Statement re: computation of per share earnings.
27 - Financial Data Schedule.
(b) Reports on Form 8-K:
The Company filed on April 10 a Current Report on
Form 8-K dated April 9, 1997, describing the Stockholders
Rights Plan adopted by the Board of Directors.
The Company filed on April 14 a Current Report on
Form 8-K/A dated April 10, 1997, describing the Stockholders
Rights Plan adopted by the Board of Directors.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PUBLIC SERVICE COMPANY
OF NORTH CAROLINA, INCORPORATED
-------------------------------
(Registrant)
Date 8-11-97 /s/Charles E. Zeigler, Jr
------- --------------------------
Charles E. Zeigler, Jr.
Chairman, President and
Chief Executive Officer
Date 8-11-97 /s/Jack G. Mason
------- --------------------------
Jack G. Mason
Vice President - Treasurer
and Chief Financial Officer
18
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 468,189
<OTHER-PROPERTY-AND-INVEST> 654
<TOTAL-CURRENT-ASSETS> 87,185
<TOTAL-DEFERRED-CHARGES> 14,258
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 570,286
<COMMON> 19,662
<CAPITAL-SURPLUS-PAID-IN> 121,486
<RETAINED-EARNINGS> 73,900
<TOTAL-COMMON-STOCKHOLDERS-EQ> 215,048
0
0
<LONG-TERM-DEBT-NET> 183,350
<SHORT-TERM-NOTES> 23,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 9,300
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 139,588
<TOT-CAPITALIZATION-AND-LIAB> 570,286
<GROSS-OPERATING-REVENUE> 303,906
<INCOME-TAX-EXPENSE> 19,509
<OTHER-OPERATING-EXPENSES> 77,158
<TOTAL-OPERATING-EXPENSES> 96,667
<OPERATING-INCOME-LOSS> 41,345
<OTHER-INCOME-NET> 2,878
<INCOME-BEFORE-INTEREST-EXPEN> 44,223
<TOTAL-INTEREST-EXPENSE> 12,646
<NET-INCOME> 31,577
0
<EARNINGS-AVAILABLE-FOR-COMM> 31,577
<COMMON-STOCK-DIVIDENDS> 12,782
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 39,282
<EPS-PRIMARY> 1.62
<EPS-DILUTED> 1.61
</TABLE>
Exhibit 10-A-33
AMENDED AND RESTATED
GAS SALES AGREEMENT
BETWEEN
TRANSCO ENERGY MARKETING COMPANY
AS SELLER
AND
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
AS BUYER
CONFIDENTIAL
<PAGE>
INDEX
PAGE
I. DEFINITIONS 1
II. GOVERNMENTAL AUTHORIZATIONS 3
III. RESERVATIONS OF SELLER 4
IV. QUANTITY OF GAS 4
V. DELIVERY PRESSURE 10
Vl. POINTS OF DELIVERY AND OWNERSHIP 10
VII. TERM OF AGREEMENT 10
VIII. PRICE 10
IX. QUALITY OF GAS 14
X. METERING AND MEASUREMENT 14
XI. BILLING AND PAYMENT 15
XII. TRANSPORTATION 16
XIII. GOVERNMENTAL REGULATIONS 18
XIV. FORCE MAJEURE 20
XV. WARRANTY OF TITLE 21
XVI. RESPONSIBILITY 22
XVII. GENERAL PROVISIONS 22
<PAGE>
AMENDED AND RESTATED
GAS SALES AGREEMENT
THIS AGREEMENT, effective the 1st day of November, 1990, between
TRANSCO ENERGY MARKETING COMPANY, as "Seller", and PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, INCORPORATED, as "Buyer", W I T N E S S E T H :
WHEREAS, Buyer is a local distribution company; and
WHEREAS, Seller purchases supplies of natural gas for resale; and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer natural gas in the quantities and upon the terms and conditions
hereinafter set forth; and
WHEREAS, this agreement shall supersede and replace that certain
Gas Sales Agreement between Buyer and Seller dated January 1, 1989.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Buyer and Seller agree as follows:
ARTICLE I
DEFINITIONS
1.01 The following words and terms, wherever used in this agree-
ment, shall have the meanings set forth below:
(a) "Annual Contract Maximum" shall be equal to the DCM multiplied by the
number of days in the Contract Year.
(b) "BTU" shall mean British Thermal Unit.
(c) "Buyer's allocated DCM capacity" shall mean a volume of firm
transportation capacity available to Buyer at a TGPL receipt point
which is equal to the DCM multiplied by the percentage of capacity
allocated to such receipt point under TGPL's then current FERC Gas
Tariff.
(d) "Buyer's city gate" shall mean the interconnection of the facilities
of buyer and TGPL.
(e) "Buyer's FT Agreement" shall mean Buyer's agreement(s) with TGPL, as
may be in effect from time to time, for firm transportation of gas from
the TGPL receipt points to Buyer's city gate.
(f) "Contract Year" shall mean a period of twelve (12) consecutive months
beginning at 7:00 a.m. (C.S.T.) on November 1 and extending until 7:00
a.m. (C.S.T.) on the next November 1.
(g) "Daily Contract Maximum" or "DCM" shall be equal to the sum of 20,000
dt of gas per day
<PAGE>
plus the quantity of gas retained by TGPL for compressor fuel and line
loss makeup, as such quantity may change from time to time during the
term of this agreement.
(h) "Day" shall mean a period beginning at 7:00 a.m. (C.S.T.) on a calendar
day and ending at 7:00 a.m. (C.S.T.) on the next calendar day.
(i) "Dekatherm" or "dt" shall mean the quantity of heat energy which is one
(1) MMBtu.
(j) "FERC" shall mean the Federal Energy Regulatory Commission.
(k) "Gas" or "natural gas" shall include casinghead gas produced with crude
oil, natural gas from gas wells, coalbed methane gas, synthetic gas,
coal gasification gas and residue gas resulting from processing any of
the foregoing.
(1) "Load Factor" for the Contract Year shall mean the percentage which is
obtained by dividing the aggregate of the daily quantities purchased by
Buyer hereunder during a Contract Year by the Annual Contract Maximum.
"Load Factor" for the Summer Period shall mean the percentage which is
obtained by dividing the aggregate of the daily quantities purchased by
Buyer hereunder during the Summer Period by a number equal to the DCM
multiplied by the number of days in the Summer Period. Makeup
quantities taken pursuant to Section 4.05 shall not be included for
purposes of calculating Load Factor.
(m) "Mcf" shall mean one thousand (1,000) cubic feet of natural gas and
"MMcf" shall mean one million (1,000,000) cubic feet of natural gas.
(n) "MMBTU" shall mean one million (1,000,000) British Thermal Units.
(o) "Month" shall mean a period beginning at 7:00 a.m.(C.S.T.) on the
first day of a calendar month and ending at 7:00 a.m.(C.S.T.) on the
first day of the next calendar month.
(p) "Pricing Point" shall mean Buyer's city gate or such other point as may
be agreed upon by the parties.
(q) "Redetermination Date" shall mean November 1, 1992 and November 1 of
second year thereafter during the term hereof.
(r) "Summer Period" shall mean the period commencing at 7:00 a.m. (C.S.T.)
on April 1 and ending at 7:00 a.m. (C.S.T.) on November 1 of each
Contract Year.
(s) "TGPL" shall mean Transcontinental Gas Pipe Line Corporation.
(t) "TGPL receipt points" shall mean TGPL Compressor Stations 30, 45, 50,
and 62, or other established TGPL mainline pooling points.
(u) "Third party seller(s)" shall mean the party or parties from whom
Seller purchases gas.
(v) "Transporter" shall mean any pipeline company which provides any
portion of the transportation of the gas purchased hereunder from the
points of delivery stated in Article Vl to Buyer's city gate.
<PAGE>
(w) "Transporter's Tariff" shall mean the currently effective tariff of
Transporter filed with the FERC.
(x) "Year" shall mean a period of three hundred sixty-five (365)
consecutive days with a one day adjustment for leap years.
ARTICLE II
GOVERNMENTAL AUTHORIZATIONS
2.01 Each of the parties hereto agrees to proceed with diligence in a
good faith effort to obtain, cause to be obtained or to assist the other party
in obtaining all such governmental authorizations as may be necessary to enable
each party to perform or cause to be performed its obligations under this
agreement.
ARTICLE III
RESERVATIONS OF SELLER
3.01 Subject to the other terms and provisions of this agreement,
Seller expressly reserves unto itself the right, at its sole cost and expense,
to separate and extract liquid and liquefiable hydrocarbons, other than methane,
from the gas upstream of TGPL Compressor Station 65 located in St. Helena
Parish, Louisiana, together with such methane as cannot be separated from the
ethane and heavier hydrocarbons separated or extracted from the gas, provided
that such extraction (i) shall not reduce the total heating value per cubic foot
below a level acceptable to Transporter; (ii) shall not render the gas incapable
of meeting the quality specifications described in Article IX; and (iii) shall
not cause the total number of dekatherms received by Buyer at its city gate to
be less than the number of dekatherms purchased at the point of delivery
(excluding gas retained by TGPL for fuel and line loss). All liquid and
liquefiable hydrocarbons so recovered shall belong to Seller. Notwithstanding
Article XVI hereof, Seller agrees to indemnify and hold Buyer harmless from all
claims, liability, damages, and expenses which may occur or be asserted by
reason of Seller's processing of gas hereunder.
ARTICLE IV
QUANTITY OF GAS
4.01 Subject to the other terms and provisions of this agreement,
beginning on the date deliveries commence hereunder, and daily throughout the
term hereof, Seller agrees to make available to Buyer at the point(s) of
delivery a quantity of gas equal to the Daily Contract Maximum ("DCM") or such
lesser quantity as Buyer may nominate and schedule hereunder. Anything to the
contrary notwithstanding, Seller shall not be obligated to make available to
Buyer during any Contract Year any quantities in excess of the Annual Contract
Maximum.
4.02 On or before the day before the date nominations are due under
the terms of
<PAGE>
Transporter's Tariff ("Nomination Due Date"), Buyer shall nominate to Seller the
maximum daily quantity of gas (up to the DCM) which Buyer anticipates it will
purchase in the ensuing month ("Nominated Quantity"). If Buyer fails to nominate
any quantity of gas on or before the Nomination Due Date, Buyer shall be deemed
to have nominated a quantity equal to the DCM for such month.
4.03 (a) If in any Summer Period Buyer fails to purchase a quantity of
gas (the "Summer Period Minimum Quantity") equal to at least forty percent (40%)
of the DCM multiplied by the number of days in the Summer Period, Buyer shall
pay Seller in accordance with (i) or (ii) below, which choice shall be at
Buyer's sole discretion:
(i) a Deficiency Charge ("DC") calculated as follows:
DC = (SMQ - SQ) (SWACP)(.10)
or (ii) a Prepayment Charge ("PC") calculated as follows:
PC = (SMQ - SQ) (SWACP)
where: SMQ = Summer Period Minimum Quantity,
SQ = total quantities purchased here-
under during the Summer
Period, and
SWACP = Summer Weighted Average Commodity
Price, the weighted average of all
Commodity Prices, as defined in
Article VIII, in effect during the
Summer Period (weighted by the
number of days each such price was
in effect).
(b) If in any Contract Year Buyer fails to purchase a quantity of gas
(the "Contract Year Minimum Quantity") equal to at least sixty percent (60%) of
the DCM multiplied by the number of days in the Contract Year, Buyer shall pay
Seller either:
(i) a Deficiency Charge calculated as follows:
DC = (CYMQ - CYQ) (CYWACP)(.20)
or (ii) a Prepayment Charge calculated as follows:
PC = (CYMQ - CYQ) (CYWACP)
where: CYMQ = Contract Year Minimum Quantity.
CYQ = total quantities purchased
hereunder during the Contract Year.
<PAGE>
CYWACP = Contract Year Weighted Average
Commodity Price, the weighted
average of all Buyer's monthly
Commodity Prices, as defined in
Article VIII, in effect during the
Contract Year (weighted by the
number of days each such price was
in effect).
(c) If Buyer fails to purchase the Summer Period Minimum Quantity and
the Contract Year Minimum Quantity in the same Contract Year, Buyer shall be
required to pay Deficiency or Prepayment Charges for both the Summer Period and
the Contract Year in accordance with Sections 4.03(a) and (b), provided,
however, for purposes of determining the total quantities purchased hereunder
for the Contract Year, Buyer shall be deemed to have purchased the Summer Period
Minimum Quantity during such Summer Period.
(d) Payment by Buyer of a Deficiency Charge for a Summer Period or a
Contract Year pursuant to Section 4.03(a) or (b) shall fully satisfy the
obligation of Buyer to purchase the applicable minimum quantity and the
obligation of Seller to deliver such quantity, and neither party shall have any
remaining quantity obligation or rights as to such Summer Period or Contract
Year.
4.04 If Buyer fails, for reasons other than Force Majeure or adverse
governmental action as defined below, to purchase the Contract Year Minimum
Quantity for two consecutive Contract Years, Seller shall be entitled, at its
sole option, to reduce the Annual Contract Maximum by up to the average
percentage by which Buyer's purchases were deficient during such two year
period. Such deficiency percentage shall be calculated by subtracting the
average actual Load Factor over such two (2) year period from sixty percent
(60%). Buyer's adjusted Annual Contract Maximum shall be calculated as set forth
on Attachment "A" hereto.
4.05 If Buyer shall have failed to purchase the Summer Period and/or
Contract Year Minimum Quantities specified in Section 4.03 and has paid a
Prepayment Charge for such gas
<PAGE>
pursuant to Section 4.03(a)(ii) or 4.03(b)(ii)("Prepaid Gas"), Buyer shall have
the right, during the remaining term of this agreement, to receive makeup gas
equal to the quantity for which Buyer prepaid, subject to the provisions of this
section. Subject to the nomination requirements of Section 4.02, Buyer may
receive such makeup gas at any time after that point in the Contract Year at
which Buyer has purchased the Summer Period and Contract Year Minimum
Quantities, or on any day during the Contract Year after Buyer has purchased the
DCM on such day (provided Seller elects to make available gas in excess of the
DCM). Seller or Buyer, as applicable, shall account for any difference in price
between that at which a Prepayment Charge was paid and that applicable at the
time makeup gas is taken. Gas shall be deemed made up on a "first in, first out"
basis. The gas so made up during any subsequent Contract Year shall not be
considered purchased in such Contract Year for purposes of determining whether
Buyer has purchased the Summer Period or Contract Year Minimum Quantity. In the
event Buyer chooses to prepay and make up deficiency quantities, any quantities
of gas purchased by Buyer in subsequent periods that are in excess of the
applicable Minimum Quantities and any quantities which are purchased by Buyer in
excess of the DCM on any day shall be considered makeup quantities until all
quantities of Prepaid Gas are made up. The foregoing notwithstanding, Buyer's
rights to make up Prepaid Gas shall not obligate Seller to deliver gas in excess
of the DCM on any day or in excess of the ACM in any Contract Year, or serve to
extend the term of this agreement, and all of Buyer's rights to make up Prepaid
Gas shall cease upon the termination of this agreement. If upon termination of
this agreement, Buyer has not made up all Prepaid Gas, Seller shall, within
thirty (30) days after receipt of Buyer's invoice, pay to Buyer an amount equal
to all Prepayment Charges paid by Buyer for the Prepaid Gas not made up, less an
amount equal to the Deficiency Charges that would have been payable on such
quantities based on the Commodity Price applicable at the time such gas should
have been taken.
4.06 (a) If on any day Seller fails to deliver any portion of
the gas nominated and
<PAGE>
scheduled by Buyer for delivery in accordance with this Article IV, Buyer shall
use reasonable efforts to replace such gas from other sources at the lowest cost
reasonably available to Buyer. If Buyer is able to replace such gas from other
sources, then Seller shall pay to Buyer, as Buyer's sole and exclusive remedy
for such failure to deliver (in addition to the adjustments specified in Section
8.03), liquidated damages in an amount equal to:
(i) the excess, if any, of
(a) the price per dekatherm reasonably paid by
Buyer for such replacement gas, such price
to be adjusted if necessary for pricing
point comparability,
over (b) the effective price per dekatherm (including
commodity charges and excluding reservation
charges) that would have been applicable to
such gas hereunder,
multiplied by
(ii) the difference between
(a) the quantity of gas so nominated and
scheduled by Buyer, and (b) the quantity of
gas actually delivered hereunder.
(b) the quantity of gas actually delivered
hereunder.
If the price paid by Buyer for such replacement gas (as described in Section
4.06(a)(i)(a)) does not exceed the effective contract price (as described in
Section 4.06(a)(i)(b)), Buyer shall not be entitled to receive any damages from
Seller. If Buyer, in its reasonable discretion, replaces such gas from its own
supplies of gas in storage, Buyer shall so advise Seller and Seller may elect,
in lieu of paying the liquidated damages specified in this paragraph, to replace
such gas within Buyer's storage rights at a time specified by Buyer. At such
time Seller shall also reimburse Buyer for any injection and withdrawal charges
or costs paid or incurred by Buyer in connection with the withdrawal and use of
<PAGE>
Buyer's storage gas and the injection of replacement gas supplied by Seller. In
such case, Seller's replacement of such gas and reimbursement of such injection
and withdrawal charges or costs (in addition to the adjustments specified in
Section 8.03) shall constitute Buyer's sole and exclusive remedy for Seller's
failure to deliver gas hereunder.
(b) If on any day Seller fails to deliver any portion of the gas
nominated and scheduled by Buyer for delivery in accordance with this Article
IV, and if Buyer is unable to replace such gas from other sources, then Seller
shall pay to Buyer, as Buyer's sole and exclusive remedy for such failure to
deliver (in addition to the adjustments specified in Section 8.03), liquidated
damages in an amount equal to the applicable Commodity Price (as defined in
Article VIII) multiplied by the difference between the quantity of gas so
nominated and scheduled by Buyer and the quantity of gas actually delivered.
(c) Anything to the contrary notwithstanding, the provisions of Sections
4.06(a) and (b) and Section 8.03 shall not apply if Seller's failure to deliver
is due to a force majeure condition or an adverse governmental action, as such
terms are defined below, or the failure of Buyer to provide sufficient
transportation capacity pursuant to Section 12.02(a).
4.07 Buyer shall timely provide to Seller all nomination and scheduling
information required by Transporter in connection with the quantities of gas
Buyer desires to purchase hereunder. Buyer shall notify Seller by telephone of
all changes in its daily scheduled quantities sufficiently in advance so that
Seller may comply with Transporter's advance notice requirements. Buyer shall
take gas as nearly as practicable at uniform hourly rates of flow, at uniform
daily deliveries and in conformance with any requirements of Transporter subject
to Article XII.
ARTICLE V
DELIVERY PRESSURE
5.01 Seller shall deliver natural gas to Buyer at Transporter's line pressure at
the point(s) of delivery
<PAGE>
designated in Article VI hereof.
ARTICLE VI
POINTS OF DELIVERY AND OWNERSHIP
6.01 The point(s) of delivery for gas purchased and sold hereunder
shall be at the interconnection of the facilities of Transporter with the
facilities of third party sellers at Seller's sources of gas. Title shall pass
to Buyer at such point(s) of delivery.
ARTICLE VII
TERM OF AGREEMENT
7.01 Subject to the other provisions hereof, this agreement shall be
effective on November 1, 1990 and shall remain in full force and effect for a
primary term ending November 1, 2000. Beyond the primary term, this agreement
shall extend on a year to year basis, unless terminated upon six (6) months
prior written notice by either party.
ARTICLE VIII
PRICE
8.01 Subject to the other provisions of this agreement, for all gas
purchased hereunder in a month, the Base Contract Price at the Pricing Point(s)
shall be equal to the sum of:
(a) eighteen cents ($.18) plus the arithmetic average of the
following:
(i) the weighted average of the average prices for gas
delivered into TGPL for the week of publication, at
Wharton County, Texas - Station 30
8.04 The Commodity Bill for each month shall be equal to the
Commodity Price multiplied by the total quantity of gas purchased by Buyer
hereunder during such month. The Commodity Price for a month shall be equal to
eighty percent (80%) of the Base Contract Price for such month. An example of
the calculation of the Demand and Commodity Bills and adjustments thereto is
outlined in Attachment "B" hereto.
<PAGE>
8.05 (a) Either party may initiate a redetermination of the Base
Contract Price and/or the rate design (the "applicable price component(s)") by
delivering written notice to the other party on or before the 60th day prior to
the next Redetermination Date ("Redetermination Notice"). If neither party
receives a Redetermination Notice on or before such 60th day, the applicable
price component(s) then in effect shall remain in effect for the next two (2)
year period commencing on the Redetermination Date.
(b) If either party receives a Redetermination Notice on or
before such 60th day, the parties shall commence negotiating in good faith
within five (5) days of such notice to redetermine the applicable price
component(s). If the parties fail to reach agreement within twenty (20) days of
such notice, any remaining disputed matters shall be referred to the respective
chief executive officers of Seller and Buyer for resolution. lf the parties
reach agreement, the redetermined applicable price components shall become
effective on the Redetermination Date. If said chief executive officers fail to
reach agreement on or before the thirtieth (30th) day prior to the
Redetermination Date, either party may terminate this agreement by giving
written notice to the other party. In such event, this agreement shall terminate
on the one hundred-fiftieth (150th) day from the date such notice of termination
is received, and the applicable price components in effect prior to the
Redetermination Date shall remain in effect until such termination.
8.06 On any day in which the Commodity Price is not competitive with
the applicable residual fuel oil price, Buyer shall be deemed to have purchased
the DCM for purposes of determining whether Buyer purchased the Summer Period
and Contract Year Minimum Quantities, regardless of the quantity of gas actually
purchased by buyer on such day. For purposes of this section, the Commodity
Price ("CP"), shall be considered competitive with the residual fuel oil price
unless:
(CP + GRFT) x.95 exceeds{RFR} OVER {6.287}
where:
<PAGE>
GRFT = applicable gross receipt and franchise and
sales taxes
RFR = a residual fuel oil reference price which
shall be the low quote for estimated
Wilmington, North Carolina spot cargo prices
for No. 6 - 2.9% sulphur high pour residual
fuel oil published in the most recent
Platt's Oilgram Price Report.
ARTICLE IX
QUALITY OF GAS
9.01 (a) The gas delivered hereunder shall be merchantable gas which
shall comply with the quality requirements stated in the tariff(s) of the
Transporter(s) transporting the gas purchased and sold hereunder.
(b) SELLER HAS NO KNOWLEDGE OF ANY PARTICULAR OR SPECIAL
PURPOSE OF BUYER FOR THE GAS TO BE SOLD HEREUNDER AND MAKES NO WARRANTY WITH
RESPECT TO THE FITNESS OF THE GAS FOR ANY SUCH PURPOSE.
ARTICLE X
METERING AND MEASUREMENT
10.01 The unit of measurement of the gas shall be one dekatherm of gas.
The gas delivered hereunder shall be measured and metered by the initial
Transporter at Seller's sources of gas in accordance with the provisions,
specifications and standards set forth in said Transporter's tariff. Each party
shall preserve or cause to be preserved for at least one (1) year all test data,
charts, allocation statements and other similar records available to it, unless
a longer period is prescribed by applicable regulation.
ARTICLE XI
BILLING AND PAYMENT
11.01 On the first day of the month following the month in which
deliveries commence hereunder and on the first day of each month thereafter,
Seller shall render to Buyer a statement of the Reservation Charge for the prior
month. Such statement shall include adjustments, if any, which may be calculated
pursuant to Article VIII. Buyer shall pay Seller the Reservation Charge by wire
transfer to Seller's account at Citibank, N.A. (account number specified on
invoices) on or before the tenth (10th) day of each month or the tenth (10th)
day following Buyer's receipt of the Reservation Charge statement, whichever is
later.
11.02 On or before the tenth (10th) day of each month, Seller shall
render to Buyer a
<PAGE>
statement showing the quantities of gas delivered by Seller during the preceding
month and the Commodity Charge therefor, as well as the amount and description
of any deficiency charges owed by or liquidated damages owed to Buyer hereunder
for the preceding month. Buyer shall pay Seller the amount of such statement by
wire transfer to Seller's account at Citibank, N.A. (account number specified on
invoices) on or before the twentieth (20th) day of each month or the tenth
(10th) day following the date of Buyer's receipt of such statement, whichever is
later; provided, however, if any payment date is a Saturday, Sunday or legal
holiday, such payment shall be due on the business day immediately following
such payment date.
11.03 Liquidated damages owed by Seller pursuant to the terms of this
agreement for any month shall be credited against Buyer's Commodity Charge
statement in the next month and against Reservation Charge and Commodity Charge
statements in subsequent month(s) as necessary.
11.04 If Buyer fails to pay any statement in whole or in part when due,
in addition to any other rights or remedies available to Seller, interest at a
rate equal to the prime rate of Citibank, N.A. or its successor plus 2% shall
accrue on unpaid amounts, including on unpaid interest compounded daily,
beginning on the payment due date of Seller's statement and ending when such
statement is paid. The preceding provisions of this Article XI notwithstanding,
if a legitimate good faith dispute arises between Buyer and Seller concerning a
statement, Buyer shall pay that portion of the statement not in dispute on or
before such due date, and, upon the ultimate determination of the disputed
portion of the statement, Buyer shall pay Seller the remaining amount owed plus
the interest accrued thereon. All disputes regarding quantities delivered to
Buyer's city gate shall be resolved by reference to the measurement charts and
records of TGPL at Buyer's city gate.
11.05 Upon request, either party shall mail or deliver to the other
party for verification and calculation all charts, allocation statements and
other documents used in the measurement of gas delivered hereunder (to the
extent such charts are available to the party receiving such request) within ten
(10) days after the last charge for each billing period is received by Buyer.
Such charts, statements or documents shall be returned to the sender within
thirty (30) days.
ARTICLE XII
TRANSPORTATION
12.01 Seller shall arrange for the transportation of the gas sold
hereunder from the point(s) of delivery to the TGPL receipt points. Any
provision herein to the contrary notwithstanding, as part
<PAGE>
of Seller's obligation to arrange such transportation, Seller shall indemnify
and hold Buyer harmless from all injuries, claims, liabilities and damages
irrespective of the cause thereof (other than Buyer's negligence) which arise
out of or in connection with the gas or the handling thereof during such
transportation.
12.02 (a) The gas will be transported from the TGPL receipt points to
the Pricing Point under Buyer's FT Agreement. Buyer shall maintain firm
transportation capacity with TGPL from the TGPL receipt points to the Pricing
Point in an amount at least equivalent to the DCM plus applicable fuel and shall
make such capacity available for the transportation of all quantities scheduled
hereunder. Specifically, at each TGPL receipt point Buyer shall make available
firm capacity equal to Buyer's allocated DCM capacity at such point, and Seller
shall deliver a quantity of gas equal to the quantity Buyer nominates and
schedules to be delivered at such point; provided, however, that from time to
time Buyer and Seller may agree that the portion of the Nominated Quantity to be
delivered hereunder in the ensuing month at one or more of the TGPL receipt
point(s) shall be greater than Buyer's allocated DCM capacity at such point(s)
if such additional firm capacity is available to Buyer, and that the portion to
be delivered to other TGPL receipt point(s) in such month shall be less. If such
modified allocation is agreed to, it shall be used to determine the weighted
averages described in Section 8.01. If Buyer and Seller fail to agree to such
modified allocation on or before the seventh (7th) day prior to the first day of
the ensuing month, the gas scheduled by Buyer in such month shall be delivered
to the TGPL receipt points on a pro-rata basis in accordance with Buyer's
allocated DCM capacity at each such point. Any other provision in this agreement
notwithstanding, if Seller has made the quantities of gas scheduled by Buyer
available for delivery at the TGPL receipt points in accordance with Buyer's
allocated DCM capacity or such modified allocation as the parties may have
agreed to, then to the extent Buyer fails to make sufficient firm capacity on
the TGPL system available to receive and transport such quantities, Seller's
obligation to deliver any quantities in excess of the firm capacity made
available to Seller by Buyer shall be subject to and limited by the availability
of interruptible transportation on the TGPL system, if firm transportation is
not otherwise available.
(b) Seller shall reimburse or credit Buyer for all TGPL commodity
charges which are incurred by Buyer under Buyer's FT Agreement for the
transportation of gas purchased hereunder to the Pricing Point.
12.04 Buyer and Seller shall cooperate to adjust any discrepancy
among (a) the quantity
<PAGE>
allocated at Seller's sources of gas, (b) the quantity scheduled by Buyer and
(c) the quantity allocated as Seller's gas at Buyer's city gate by the final
Transporter.
12.05 Without waiver of any other remedies, in the event any charges,
penalties, costs or expenses are incurred or payable to Transporter as a result
of Seller's failure to give Buyer timely notice of any increase or decrease in
daily quantities to be delivered at any point of delivery or TGPL receipt point
from the quantities nominated and scheduled by-Buyer in accordance with Article
IV, Seller shall be responsible for such charges, penalties, costs or expenses.
12.06 Without waiver of any other remedies, in the event any charges,
penalties, costs or expenses are incurred or payable to Transporter as a result
of Buyer's failure to give Seller timely notice of any increase or decrease in
daily quantities to be accepted at any TGPL receipt point or Pricing Point from
the quantities nominated and scheduled by Buyer in accordance with Article IV,
Buyer shall be responsible for such charges,, penalties, costs or expenses.
12.07 For the purpose of Sections 12.05 and 12.06, notice will be
deemed timely if, under the circumstances, it should have given the party
receiving such notice reasonably sufficient time to notify Transporter of such
changes in quantities by the time required under the terms of Transporter's
tariff to avoid imposition of a penalty or charge.
ARTICLE XIII
GOVERNMENTAL REGULATIONS
13.01 This agreement shall be subject to all valid applicable state,
federal and local laws, rules and regulations; provided, that either party
hereto shall be entitled to regard all laws, rules and regulations issued by any
federal or state regulatory body as valid and may act in accordance therewith
until such time as the same may be held invalid by final judgment in a court of
competent jurisdiction. Nothing herein shall be taken to preclude Buyer or
Seller or both from contesting the validity of any such law(s), rule(s) or
regulation(s).
13.02 In the event that the FERC, Congress or any other governmental
body asserting jurisdiction ("governmental authority") (i) imposes price
controls on natural gas (ii) prohibits or prevents any of the transactions
described in (a) this agreement, (b) any agency agreement between Buyer and
Seller or (c) any transportation agreement between Transporter and Buyer or
Seller covering the transportation of the gas delivered hereunder; (iii)
directly or indirectly materially and adversely conditions such transactions in
a form that is unacceptable in the sole judgment of the party
<PAGE>
affected thereby, or (iv) adopts any law, action, rule or order which directly
or indirectly, materially and adversely affects a party's rights or obligations
hereunder, (each of the events described above being referred to herein as an
"adverse governmental action"), then the party hereto affected by such adverse
governmental action (the "affected party") may terminate this agreement
effective as of the effective date of such adverse governmental action by giving
written notice of termination to the other party. However, if such adverse
governmental action becomes effective in any month from October through April
inclusive, upon Buyer's request, Seller shall continue to deliver gas hereunder
until the following May 1, provided that: (A) Buyer or Seller can arrange the
necessary transportation; (B) Buyer shall agree in writing to keep Seller whole
on a monthly basis with respect to all increased costs Seller may incur by so
continuing to perform this agreement; (C) so continuing to perform this
agreement will not result in Seller being subject to the jurisdiction of the
FERC or any successor governmental authority beyond that in effect on the date
of this agreement, and (D) Seller is able to obtain sufficient supplies of gas
to satisfy Buyer's requirements hereunder without affecting Seller's ability to
fulfill Seller's other firm sales contract obligations that are not suspended by
such adverse governmental action. If conditions (A), (B) and (C) of this
paragraph are satisfied but, due to such adverse governmental action, Seller is
unable to obtain sufficient supplies of gas to satisfy Buyer's requirements and
meet all of Seller's other firm sales obligations, then Buyer shall be entitled
to receive, until the following May 1, such proportion of the total reduced
quantity Seller is able to make available at each TGPL receipt point, if any, as
Buyer's nominated quantity for each such receipt point bears to the sum of such
nominated quantity under this agreement and the nominated quantities under
Seller's other firm contracts for such TGPL receipt point. Any provision herein
to the contrary notwithstanding, the affected party may terminate its
performance of this agreement effective immediately if continued performance
hereof would cause such party to be in violation of any enforceable law, action,
rule, order or regulation under this article.
ARTICLE XIV
FORCE MAJEURE
14.01 No failure or delay in performance, whether in whole or in part,
by either Seller or Buyer shall be deemed to be a breach hereof when such
failure or delay is occasioned by or due to any acts of God, strikes, lockouts,
or other industrial disturbances, acts of the public enemy, sabotage, wars,
blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
floods, storms,
<PAGE>
fires, washouts, arrests and restraints of rulers and peoples, civil
disturbances, explosions, breakage or accident to machinery or lines of pipe,
hydrate obstructions of lines of pipe, lack of pipeline capacity due to a
declared force majeure event experienced by Transporter affecting the firm
transportation of gas hereunder, repairs, maintenance, improvement, replacement
or alterations to plants, lines of pipe or related facilities, partial or
complete failure to perform by persons transporting or storing gas on a firm
basis for Buyer or Seller, inability of either party to obtain necessary
machinery, materials or permits or to obtain easements or rights of way,
freezing of a well or delivery facility, well blowouts, the act of any court or
governmental authority, or any other cause, whether of the kind herein
enumerated or otherwise, not reasonably within the control of the party claiming
suspension and which, by the exercise of due diligence, such party is unable to
prevent or overcome; provided, however, that the settlement of strikes or
lockouts shall be entirely within the discretion of the party having the
difficulty, and the requirement that any force majeure shall be remedied with
the exercise of diligence shall not require the settlement of strikes or
lockouts by acceding to the demands of opposing parties when such course is
inadvisable in the discretion of the party having difficulty.
14.02 Such causes or contingencies affecting the performance of this
agreement by any party hereto, however, shall not relieve such party of
liability in the event of its negligence or in the event of its failure to
remedy the situation and remove the cause in an adequate manner and with all
reasonable dispatch. Nor shall such causes or contingencies affecting the
performance of this agreement relieve any party from its obligations to make
payments of amounts when due. Nor shall such causes or contingencies relieve any
party of liability, unless such party shall give notice and full particulars of
the same in writing or by telegraph to the other party as soon as possible after
the occurrence relied on, and like notice shall be given upon termination of
such force majeure conditions.
14.03 If, due to force majeure, the gas available for delivery by
Seller is insufficient to meet all of Seller's firm, long-term sales obligations
(those with terms of one (1) year or longer), Buyer shall not be disadvantaged
relative to Seller's other firm, long term sales commitments with respect to
allocation of supplies of gas which could reasonably be delivered to Buyer
during the continuance of the force majeure.
<PAGE>
ARTICLE XV
WARRANTY OF TITLE
15.01 Seller warrants title to all gas delivered by it, that it has the
right to sell or deliver the same, and that such gas is free from liens and
adverse claims of every kind. Seller shall pay or cause to be paid all taxes and
other sums due on the gathering and handling of the gas delivered by Seller.
Seller shall indemnify and save Buyer harmless from and against all suits,
actions, damages, costs and expenses arising from or out of any breach of this
provision.
ARTICLE XVI
RESPONSIBILITY
16.01 As between the parties hereto, Seller shall be deemed to be in
exclusive control and possession of the gas sold hereunder until such gas has
been delivered to the point(s) of delivery, after which point Buyer shall be
deemed to be in exclusive control and possession of such gas.
16.02 The party deemed to be in control and possession of the gas sold
hereunder shall be responsible for and shall indemnify the other party with
respect to any claims, liabilities or damages arising therefrom when such gas is
in that party's control and possession.
ARTICLE XVII
GENERAL PROVISIONS
17.01 Copies of any filing submitted to the FERC, or to any state or
federal regulatory agency having jurisdiction, and any notice, request, demand,
payment or statement provided for in this agreement shall be in writing and
shall be directed to the address of the parties hereto as follows:
BUYER:
For Notices, Payment and Billing:
Public Service Company of North Carolina, Inc.
800 Cox Road
Gastonia, North Carolina 28053
Attention: Vice President - Gas Supply and Transportation
SELLER:
For Notices:
Transco Energy Marketing Company
P. O. Box 1396
Houston, Texas 77251
or
<PAGE>
2800 Post Oak Blvd.
Houston, Texas 77056
Attention: Vice President - Gas Marketing & Operations
For Payment and Billings:
Transco Energy Marketing Company
P. O. Box 1396
Houston, Texas 77251
Attention: TEMCO Accounting
or at such other address as either party shall from time to time designate by
correspondence to the other party.
17.02 This agreement shall not be assignable by either party in whole
or in part, except with the consent of the other party, which shall not be
unreasonably withheld. This agreement shall inure to the benefit of and be
binding upon permitted successors and assigns.
17.03 This agreement is for the sole and exclusive benefit of the
parties hereto. Except as otherwise provided in the Guaranty Agreement attached
hereto between Buyer and Transco Energy Company, nothing expressed or implied
herein is intended to benefit any other person, firm or corporation not a party
hereto and none of such other persons shall have any legal or equitable right,
remedy or claim under this agreement or under any provision hereof.
17.04 This agreement constitutes the entire agreement between the
parties pertaining to the subject matter hereof; supersedes all prior agreements
and understandings, whether oral or written, which the parties may have in
connection herewith; and may not be modified except by written agreement of the
parties. The parties and their legal counsel have cooperated in the drafting of
this agreement and it shall therefore be deemed their joint work product and
shall not be construed against either party by reason of its preparation.
17.05 THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
TEXAS.
17.06 The parties acknowledge that this agreement contains commercially
sensitive information and each party agrees that it will not, without the
written consent of the other, disclose to any third party except Transco Energy
Company and Transco Energy Services Company, this agreement or the terms or
provisions thereof except to the extent, and only to the extent, that disclosure
is required (a) by law or by a court or administrative agency having
jurisdiction over the
<PAGE>
disclosing party; (b) to obtain transportation of the gas purchased and sold
hereunder; or (c) in the course of an audit of the disclosing party, and further
provided that upon learning that disclosure is required by law or by a court or
administrative agency, the party required to make such disclosure shall
immediately notify the other party and shall take all reasonable steps requested
by such other party to limit the extent of such disclosure.
IN WITNESS WHEREOF, this instrument is executed as of the day and year
first above written.
TRANSCO ENERGY MARKETING
COMPANY
By /s/ W. Colin Harper
Vice President -
Gas Marketing and Operations
PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, INCORPORATED
By /s/ Franklin H. Yoho
Vice President -
Gas Supply and Transportation
<PAGE>
Exhibit 10-A-33.1
Transco
Gas Marketing Company
September 13, 1993
Public Service Company of North Carolina, Inc.
800 Cox Road
Gastonia, North Carolina 28053
Attention: Vice President, Gas Supply and Transportation
Re: Amendment to that certain "AMENDED AND RESTATED GAS SALES AGREEMENT" by and
between Transco Energy Marketing Company, as Seller, and Public Service Company
of North Carolina, Incorporated, as Buyer, dated November 1, 1990
Gentlemen:
Pursuant to our previous discussions, please accept this letter as amending the
above-named agreement as follows:
1. Effective November 1, 1993 - Article I, Section l.Ol(g) shall be amended
to reduce the Daily Contract Maximum from twenty thousand (20,000) dt of
gas per day to ten thousand (10,000) dt of gas per day; and,
2. Effective November 1, 1992, Article VIII, Section 8.01(a) shall be amended
to reduce the eighteen cents ($.18) reference therein to ten cents ($.10).
All other terms and conditions of the above-named agreement shall remain in full
force and effect.
<PAGE>
Public Service Company of North Carolina, Inc.
September 13, 1993
Page Two
If the foregoing represents your understanding of the transaction contemplated
by the parties hereto, please so indicate by executing both copies of this
letter and returning one (1) to the undersigned.
Sincerely,
TRANSCO ENERGY MARKETING COMPANY
/s/H. Dean Jones II
H. Dean Jones II
Senior Vice President
HDJ/MJS/dms/9300 1
Agreed to and Accepted this the 20 day of Sept., 1993.
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
By: /s/Franklin H. Yoho
Title: Franklin H. Yoho
Vice President
Corporate Development & Gas Supply
<PAGE>
Exhibit l0-A-34
System Contract #.4996
SERVICE AGREEMENT
between
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
and
PUBLIC SERVICE COMPANY OF NORTH CAROLINA
DATED
August 1, 1991
<PAGE>
FORM OF SERVICE AGREEMENT
(For Use Under Seller's Rate Schedule FT)
THIS AGREEMENT entered into this ____ day of __________ , 1991, by and
between TRANSCONTINENTAL GAS PIPE LINE CORPORATION, a Delaware corporation,
hereinafter referred to as "Seller", first party, and PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, hereinafter referred to as "Buyer," second party,
W I T N E S S E T H
WHEREAS, Seller and Buyer have agreed to convert Buyers firm sales
service under Seller's PS Rate Schedule to firm transportation; and
WHEREAS, Seller and Buyer have agreed to terminate and abandon Buyer's
existing PS firm sales service to permit such conversion; and
WHEREAS, Seller is agreeable as part of such conversion to receiving,
transporting and redelivering or causing the redelivery of such gas as requested
under the terms and conditions hereinafter set forth,
NOW, THEREFORE, Seller and Buyer agree as follows:
ARTICLE I
GAS TRANSPORTATION SERVICE
1. Subject to the terms and provisions of this agreement and of
Seller's Rate Schedule FT, Buyer agrees to deliver or cause to be delivered to
Seller gas for transportation and Seller agrees to receive, transport and
redeliver natural gas to Buyer or for the account of Buyer, on a firm basis, up
to the dekatherm equivalent of a Transportation Contract Quantity ("TCQ") of
4,200 Mcf per day.
2. Transportation service rendered hereunder shall not be subject to
curtailment or interruption except as provided in Section 11 of the General
Terms and Conditions of Seller's FERC Gas Tariff.
<PAGE>
FORM OF SERVICE AGREEMENT
(For Use Under Seller's Rate Schedule FT)
(Continued)
ARTICLE II
POINT(S) OF RECEIPT
Buyer shall deliver or cause to be delivered gas at the Point(s) of
receipt hereunder at a pressure sufficient to allow the gas to enter Seller's
pipeline system at the varying pressures that may exist in such system from time
to time; provided, however, that such pressure of the gas delivered or caused to
be delivered by Buyer shall not exceed the maximum operating pressure(s)
specified below. In the event the maximum operating pressure(s) of Seller's
pipeline system, at the Point(s) of receipt hereunder, is from time to time
increased or decreased, then the maximum allowable pressure(s) of the gas
delivered or caused to be delivered by Buyer to Seller at the point(s) of
receipt shall be correspondingly increased or decreased upon written
notification of Seller to Buyer. The point(s) of receipt for natural gas
received for transportation pursuant to this agreement shall be:
SEE Exhibit A, attached hereto, for points of receipt.
ARTICLE III
POINT(S) OF DELIVERY
Seller shall redeliver to Buyer or for the account of Buyer the gas
transported hereunder at the following point(s) of delivery and at a pressure(s)
of:
SEE Exhibit B, attached hereto for points of delivery.
ARTICLE IV
TERM OF AGREEMENT
This agreement shall be effective as of August 1, 1991 and shall remain
in force and effect until 8:00 a.m. Eastern Standard Time July 31, 2011 and
thereafter until terminated by Seller or Buyer upon at least three (3) years
written notice; provided, however, this agreement shall terminate immediately
and, subject to the receipt of necessary authorizations, if any, Seller may
discontinue service hereunder if (a) Buyer, in Seller's reasonable judgment
fails to demonstrate credit worthiness, and (b) Buyer fails to provide adequate
security in accordance with Section 8.3 of Seller's Rate Schedule FT. As set
forth in Section 8 of Article II of Seller's August 7, 1989 revised Stipulation
and Agreement in Docket Nos. RP88-68 et. al., (a) pregranted abandonment under
Section 284.221 (d) of the Commission's Regulations shall not apply to any long
term conversions from firm sales service to transportation service under
Seller's Rate Schedule FT and (b) Seller shall not exercise its right to
terminate this service agreement as it applies to transportation service
resulting from conversions from firm sales service so long as Buyer is willing
to pay rates no less favorable than Seller is otherwise able to collect from
third parties for such service.
<PAGE>
FORM OF SERVICE AGREEMENT
(For Use Under Seller's Rate Schedule FT)
(Continued)
ARTICLE V
RATE SCHEDULE AND PRICE
1. Buyer shall pay Seller for natural gas delivered to Buyer hereunder
in accordance with Seller's Rate Schedule FT and the applicable provisions of
the General Terms and Conditions of Seller's FERC Gas Tariff as filed with the
Federal Energy Regulatory Commission, and as the same may be legally amended or
superseded from time to time. Such Rate Schedule and General Terms and
Conditions are by this reference made a part hereof.
2. Seller and Buyer agree that the quantity of gas that Buyer delivers
or causes to be delivered to Seller shall include the quantity of gas retained
by Seller for applicable compressor fuel, line loss make-up (and injection fuel
under Seller's Rate Schedule GSS, if applicable) in providing the transportation
service hereunder, which quantity may be changed from time to time and which
will be specified in the currently effective Sheet No. 44 of Volume No. 1 of
this Tariff which relates to service under this agreement and which is
incorporated herein.
3. In addition to the applicable charges for firm transportation
service pursuant to Section 3 of Seller's Rate Schedule FT, Buyer shall
reimburse Seller for any and all filing fees incurred as a result of Buyer's
request for service under Seller's Rate Schedule FT, to the extent such fees are
imposed upon Seller by the Federal Energy Regulatory Commission or any successor
governmental authority having jurisdiction.
ARTICLE VI
MISCELLANEOUS
1. This Agreement supersedes and cancels as of the effective date
hereof the following contract(s) between the parties hereto:
PS Service Agreement between Buyer and Seller dated November 16,
1970.
2. No waiver by either party of any one or more defaults by the other
in the performance of any provisions of this agreement shall operate or be
construed as a waiver of any future default or defaults, whether of a like or
different character.
3. The interpretation and performance of this agreement shall be in
accordance with the laws of the State of Texas, without recourse to the law
governing conflict of laws and to all present and future valid laws with respect
to the subject matter, including present and future orders, rules and
regulations of duly constituted authorities.
4. This agreement shall be binding upon, and inure to the benefit
of the parties hereto and their respective successors and assigns.
5. Notices to either party shall be in writing and shall be considered
as duly delivered when mailed to the other party at the following address:
<PAGE>
FORM OF SERVICE AGREEMENT
(For Use Under Seller's Rate Schedule FT)
Continued)
(a) If to Seller:
Transcontinental Gas Pipe Line Corporation
P. O. Box 1396
Houston, Texas 77251
Attention: Customer Services
(b) If to Buyer:
Public Service Company of North Carolina
P. O. Box 1398
Gastonia, North Carolina 28053-1398
Attention: Mr. Marshall Dickey
Such address may be changed from time to time by mailing appropriate notice
thereof to the other party by certified or registered mail.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be signed
by their respective officers or representatives thereunto duly authorized.
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
(Seller)
By:
Thomas E. Skains
Senior Vice President
Transportation and Customer
Services
PUBLIC SERVICE COMPANY OF NORTH
CAROLINA
(Buyer)
By: /s/Franklin H. Yoho
Title: Vice President, Gas Suppy and
Transportation
<PAGE>
EXHIBIT "A"
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
1. Suction Side of Seller's Compressor 714 340
Station 30 at the Existing Point of
Interconnection between Seller's
Central Texas Lateral and Seller's
Mainline at Wharton County, Texas.
(Station 30 TP#7133)
2. Existing Point of Interconnection 714
between Seller and Valero Transmission
Company (Seller Meter No. 3396) at
Wharton County, Texas. (Wharton Valero
TP#6690)
3. Existing Point of Interconnection 714
between Seller and Meter named
Spanish Camp (Seller Meter
No. 3365) Wharton County, Texas.
(Spanish Camp-Delhi TP #6895)
4. Existing Point of Interconnection 714
between Seller and Meter named Denton
Cooley #1 (Seller Meter No. 3331), in Fort
Bend County, Texas (Denton Cooley #1
-TP#1106)
5. Existing Point of Interconnection between 714
Seller and Meter named Randon East (Fulshear)
(Seller Meter No. 1427), in Fort Bend County,
Texas. (Randon East (Fulshear) TP#299)
6. Existing Point of Interconnection 714
between Seller and Houston Pipeline
Company (Seller Meter No. 3364)
At Fulshear, Fort Bend County, Texas.
(Fulshear-HPL TP#6097)
7. Existing Point of Interconnection between 714
Seller and Meter named White Oak Bayou-
Exxon Gas System, Inc. (Seller Meter No.
3545), in Harris County, Texas. (White
Oak Bayou-EGSI-TP#1036)
<PAGE>
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
8. Existing Point of Interconnection 714
between Seller and Houston Pipeline
Company (Seller Meter No. 4359) at
Bammel, Harris County, Texas.
(Bammel-HPL TP #6014)
9. Existing Point of Interconnection 714
between Seller and Delhi Pipeline
Company (Seller Meter No. 3346) at
Hardin County, Texas. (Hardin-Delhi
TP#6696)
10. Existing Point of Interconnection between 714
Seller and Meter named Vidor Field Junction
(Seller Meter No. 3554), in Jasper County,
Texas. (Vidor Field Junction-TP#2337)
11. Existing Point of Interconnection between 714
Seller and Meter named Starks McConathy
(Seller Meter No. 3535), in Calcasieu Parish,
Lousiana. (Starks McConathy-TP#7346)
12. Existing Point of Interconnection between 714
Seller and Meter named DeQuincy Intercon
(Seller Meter No. 2698) in Calcasieu Parish,
Lousiana. (DeQuicy Intercon-TP#7035)
13. Existing Point of Interconnection between 714
Seller and Meter named DeQuincy Great Scott
(Seller Meter No. 3357), in Calcasieu Parish,
Louisiana. (DeQuincy Great Scott-TP #6809)
14. Existing Point of Interconnection between 714
Seller and Meter named Perkins-Phillips
(Seller Meter No. 3532), in Calcasieu
Parish, Louisiana. (Perkins-Phillips-TP#7508)
15. Existing Point of Interconnection between 714
Seller and Meter named Perkins (Intercon)
(Seller Meter No. 3395), in Calcasieu
Parish, Louisiana. (Perkins (Intercon)
-TP#7036)
16. Existing Point of Interconnection between 714
Seller and Meter named Perkins East (Seller
Meter No. 2369), in Beauregard Parish,
Louisiana. (Perkins East-TP#139)
<PAGE>
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
17. Discharge Side of Seller's Compressor 1764 500
Station 45 at the Existing point of
Interconnection between Seller's
Southwest Louisiana Lateral and
Seller's Mainline Beauregard Parish,
Louisiana. (Station 45 TP#7101)
18. Existing Point of Interconnection 1764
between Seller and Texas Eastern
Transmission Corporation, (Seller
Meter No. 4198) at Ragley, Beauregard
Parish, Louisiana. (Ragley-TET
TP#6217)
19. Existing Point of Interconnection between 1764
Seller and Trunkline Gas Company (Seller
Meter No. 4215) at Ragley, Beauregard
Parish, Louisiana. (Ragley-Truckline
TP#6218)
20. Existing Point of Interconnection between 1764
Seller and Tennessee Gas Transmission
Company (Seller Meter No. 3371)
at Kinder, Allen Parrish, Louisiana.
(Kinder TGT-TP#6149)**
21. Existing Point of Interconnection between 1764
Seller and Texas Gas Transmission
Corporation (Seller Meter Nos. 3227,
4314, 4457) at Eunice, Evangeline Parish,
Louisiana. (Eunice Mamou Tx. Gas TP#6923)
22. Suction Side of Seller's Compressor 2562 380
Station 50 at the Existing Point of
Interconnection between Seller's Central
Louisiana Lateral and Seller's Mainline
Evangeline Parish, Louisiana. (Station 50
TP#6948)
23. Existing Point of Interconnection between 2562
Seller and Columbia Gulf Transmission
Corporation (Seller Meter No. 3142) at
Eunice, Evangeline Parish, Louisiana.
(Eunice Evangeline Col. Gulf TP#6414)
<PAGE>
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
24. Discharge Side of Seller's Compressor 2562
Station 54 at Seller's Washington Storage
Field, St. Landry Parish, Louisiana
(Station 54 TP#6768)*****
25. Existing Point of Interconnection between 2562
Seller and Acadian Pipeline (Seller Meter
No. 3506) in Pointe Coupee Parish, Louisiana.
(Morganza-Acadian Pipeline TP#7060)
26. Existing Point of Interconnection 2562
(Seller Meter No. 3272) at M.P. 566.92,
Morganza Field, Pointe Coupee Parish,
Louisiana. (Morganza Field - TP#576)
27. Existing Point of Interconnection between 2562
Seller and Meter named West Feliciana
Parish-Creole (Seller Meter No. 4464),
in West Feliciana Parish, Louisiana.
(West Feliciana Parish-Creole TP#7165)
28. Existing Point of Interconnection between 2562
Seller and Mid-Louisiana Gas Company
(Seller Meter Nos. 4137, 4184, 3229)
at Ethel, East Feliciana Parish,
Louisiana. (Ethel-Mid LA TP#6083)
29. Existing Point of Interconnection between 2562
Seller and Meter named Liverpool Northwest
(Seller Meter No. 3390), in St. Helena
Parish, Louisiana. (Liverpool Northwest-
TP#6757)
30. Suction Side of Seller's Compressor 1638 781
Station 62 on Seller's Southeast
Louisiana Lateral in Terrebonne Parish
Louisiana. (Station 62 TP#7141)
31. Existing Point of Interconnection between 1638
Seller and Meter named Texas Gas - TLIPCO-
Thibodeaux (Seller Meter No. 3533), in
LaFourche Parish, Louisiana (TXGT-TLIPCO)
-Thibodeaux-TP#7206)
<PAGE>
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
32. Existing Point of Interconnection 1638
Seller and Meter named Romeville-Monterey
Pipeline (Seller Meter No. 4410), in
St. James Parish, Louisiana. (Romeville-
Monterey Pipeline-TP#580)
33. Existing Point of Interconnection between 1638
Seller and Meter named St. James CCIPC
(Seller Meter No. 4462), in St. James
Parish, Louisiana. (St. James CCIPC-
TP#7164)**
34. Existing Point of Interconnection between 1638
Seller and Meter names St. James Faustina
(St. Amelia) (Seller Meter No. 3328), in
St. James Parish, Louisiana. (St. James
Faustina (St. Amelia) TP#6268)**
35. Existing Point of Interconnection between 1638
Seller and Meter named St. James Acadian
(Seller Meter No. 4366), in St. James
Parish, Louisiana. (St. James Acadian-
TP#6677)**
36. Existing Point of Interconnection between 1638
Seller and Meter named Livingston-Flare
(Seller Meter No. 3540), in Livingston
Parish, Louisiana. (Livingston-Flare-
TP#8739)
37. Existing Point of Interconnection between 1638
Seller and Florida Gas Transmission
Company (Seller Meter No. 3217), at
St. Helena, St. Helena Parish,
Louisiana. (St. Helena FGT-TP#6267)
38. Existing Point of Interconnection between 1638
Seller and Meter named Beaver Dam Creek
(Seller Meter No. 3536), in St. Helena
Parish, Louisiana. (Beaver Dam Creek-
TP#8218)
39. Suction Side of Seller's Compressor 4200
Station 65 at the Existing Point of
Interconnection between Seller's
Southeast Louisiana Lateral and Seller's
Mainline St. Helena Parish, Louisiana.
(Station 65 TP#6685)
<PAGE>
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
40. Existing Point of Interconnection between 4200
Seller and Meter named Amite County/Koch
(Seller Meter No. 3332), in Amite County,
Mississippi (Amite County/Koch-TP#6701)
41. Existing Point of Interconnection between 4200
Seller and Meter named McComb (Seller Meter
No. 3461), in Pike County, Mississippi.
(McComb-TP#6446)
42. Existing Point of Interconnection 4200
between Seller and United Gas Pipe
Line Company at Holmesville (Seller
Meter No. 3150), Pike County,
Mississippi. (Holmesville-United TP#6128)
43. Discharge Side of Seller's Compressor 4200
Station 70 at M.P. 661.77 in Walthall
County, Mississippi. (M.P. 661.77-
Station 70 Discharge-TP#7142)
44. Existing Point of Interconnection 4200
between Seller and United Gas Pipe
Line Company at Walthall (Seller Meter
No. 3095), Walthall County, Mississippi.
(Walthall-UGPL TP#6310)***
45. Existing Point of Interconnection 4200
between Seller and Meter named Darbun-
Pruett 34-10 (Seller Meter No. 3446)
at M.P. 668.46 on Seller's Main
Transmission Line, Darbun Field,
Walthall County, Mississippi. (Darbun
Pruett TP#6750)
46. Existing Point of Interconnection between 4200
Seller and Meter Named Ivy Newsome (Seller
Meter No. 3413) in Marion County,
Mississippi. (Ivy Newsome-TP#6179)
47. Existing Point of Interconnection between 4200
Seller and West Oakvale Field at M.P.
680.47-Marion County, Mississippi.
(M.P. 680.47-West Oakvale Field-TP#7144)
<PAGE>
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
48. Existing Point of Interconnection between 4200
Seller and East Morgantown Field at M.P.
680.47 in Marion County, Mississippi.
(M.P. 680.47-E. Morgantown Field-TP#7145)
49. Existing Point of Interconnection 4200
between Seller and Greens Creek Field,
at M.P. 681.84 Marion County, Mississippi.
(M.P. 681.84 Greens Creek Field TP#7146)
50. Existing Point of Interconnection between 4200
Seller and Meter named M.P. 685.00-Oakville
Unit 6-6 in Jefferson Davis County,
Mississippi. (M.P. 685.00-Oakville Unit 6-6 TP#1376)
51. Existing Point of Interconnection between 4200
Seller and Meter named M.P. 687-23-Oakvale
Field in Marion County, Mississippi.
(M.P. 687.23-Oakvale Field-TP#7147)
52. Existing Point of Interconnection between 4200
Seller and Bassfield at named M.P. 696.40
in Marion County, Mississippi. (M.P. 696.40
Bassfield-TP#9439)
53. Existing Point of Interconnection between 4200
Seller and Meter named Lithium/Holiday Creek
-Frm (Seller Meter No. 3418), in Jefferson
Davis County, Mississippi. (Lithium/Holiday
Creek-Frm-TP#7041)
54. Existing Point of Interconnection between 4200
Seller and S.W. Sumrall Field and Holiday
Creek at M.P. 692.05-Holiday Creek in
Jefferson Davis, Mississippi. (M.P. 692.05
-Holiday Creek-TP#7159)
55. Existing Point of Interconnection 4200
between Seller and ANR Pipe Line
Company at Holiday Creek (Seller
Meter No. 3241), Jefferson David
County, Mississippi. (Holiday
Creek-ANR TP#398)
<PAGE>
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
56. Existing Point of Interconnection 4200
between Seller and Mississippi Fuel
Company at Jeff Davis (Seller Meter
No. 3252), Jefferson Davis County,
Mississippi. (Jefferson Davis
County-Miss Fuels TP#6579)***
57. Existing Point of Interconnection between 4200
Seller and Meter named Jefferson Davis-Frm
(Seller Meter No. 4420), in Jefferson Davis
County, Mississippi. (Jefferson Davis-Frm-
TP#7033)
58. Existing Point of Interconnection between 4200
Seller and Carson Dome Field M.P. 696.41,
in Jefferson Davis County, Mississippi.
(M.P. 696.41-Carson Dome Field-TP#7148)
59. Existing Point of Interconnection 4200
between Seller and Meter Station named
Bassfield-ANR Company at M.P. 703.17
on Seller's Main Transmission Line
(Seller Meter No. 3238), Covington
County, Mississippi. (Bassfield-ANR
TP#7029)
60. Existing Point of Interconnection between 4200
Seller and Meter named Patti Bihm #1
(Seller Meter No. 3468), in Covington County,
Mississippi. (Patti Bihm #1-TP#7629)
61. Discharge Side of Seller's Compressor 4200
at Seller's Eminence Storage Field (Seller
Meter No. 4166 and 3160) Covington County,
Mississippi. (Eminence Storage TP#5561)
62. Existing Point of Interconnection between 4200
Seller and Dont Dome Field at M.P. 713.39
in Covington, County, Mississippi.
(M.P. 713.39-Dont Dome-TP#1396)
63. Existing Point of Interconnection 4200
between Seller and Endevco in Covington
County, Mississippi. (Hattiesburg-
Interconnect storage TP#1686)
<PAGE>
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
64. Existing Point at M.P. 719.58 on 4200
Seller's Main Transmission Line
(Seller Meter No. 3544), Centerville
Dome Field, Jones County, Mississippi.
(Centerville Dome Field-TP#1532)
65. Existing Point at M.P. 727.78 on 4200
Seller's Main Transmission Line,
Jones County, Mississippi. (Jones
County-Gitano TP-7166)
66. Existing Point of Interconnection 4200
between Seller and a Meter named
Koch Reedy Creek (Seller Meter No. 3333),
Jones County, Mississippi. (Reedy Creek-
Koch TP#670)
67. Existing Point of Interconnection between 4200
Seller and Meter named Sharon Field
(Seller Meter No. 3000), in Jones County,
Mississippi. (Sharon Field-TP#419)
68. Existing Point of Interconnection 4200
between Seller and Tennessee Gas
Transmission Company at Heidelberg
(Seller Meter No. 3109), Jasper
County, Mississippi. (Heidelberg-
Tennessee TP#6120)***
69. Existing Point of Interconnection 4200
between Seller and Mississippi Fuel
Company at Clarke (Seller Meter No. 3254),
Clarke County, Mississippi. (Clarke
County-Miss Fuels TP#6047)***
70. Existing Point of Interconnection 4200
between Seller and Meter named Clarke
County-Koch at M.P. 757.29 in Clarke
County, Mississippi. (Clarke County-
Koch-TP#5566)
71. Existing Point of Interconnection between 4200
Seller's mainline and Mobile Bay Lateral at
Butler, Choctaw County, Alabama (Butler-
TP#6034)
<PAGE>
Buyer's Cumulative
Mainline Capacity Billing
Entitlement Determinent
Point(s) of Receipt (Mcf/d)* Quantity****
72. Existing Point of Interconnection between 4200
Seller and Southern Natural Gas Company,
(Seller Meter No. 4087) at Jonesboro,
Clayton County, Georgia. (Jonesboro-SNG-
TP#6141)
Buyer shall not tender, without the prior consent of Seller, at any point(s) of
receipt on any day, a quantity in excess of the applicable Buyer's Cumulative
Mainline Capacity Entitlement for such point(s) of receipt.
<PAGE>
* These quantities do not include the additional
quantities of gas retained by Seller for applicable
compressor fuel and line loss make-up provided for in
Article V, 2 of this Service Agreement, which are
subject to change as provided for in Article V,2
hereof.
** Receipt of gas by displacement only.
*** Receipt of gas limited to physical capacity of
Seller's lateral line facilities.
**** In order to effectuate the cost allocation and rate
design allocation approved in the Settlement in
docket Nos. RP87-7 et. al., the parties recognize
that the quantities reflected herein shall be
considered Buyer's applicable TCQ Quantities for the
purpose of billing the rates and charges hereunder,
and such billing determinants are subject to change
through rate filings of Seller pursuant to the terms
and conditions of Article V hereof.
***** Buyer's Cumulative Mainline Capacity Entitlement at Compressor
Station 54 shall not supersede or otherwise affect any rights,
obligations or limitations which are stated in Seller's WSS
Rate Schedule.
<PAGE>
Transcontinental Gas Pipe Line Corporation
Exhibit B
Point(s) of Delivery Pressure
1. Station 54* Not applicable.
2. Asheville Meter Station, Not less than fifty (50)
located at milepost 1249.35 pounds per square inch
on Seller's main trans- gauge or such other
mission line near Kings pressures as may be
Mountain, North Carolina. agreed upon in the day-
to-day operations of Buyer
and Seller.
3. Davidson Meter Station, Not less than fifty (50)
located at milepost 1287.10 pounds per square inch
on Seller's main trans- gauge or such other
mission line in Iredell pressures as may be
County, North Carolina, agreed upon in the day-
at Compressor Station No. to-day operations of Buyer
150, approximately two (2) and Seller.
miles northwesterly from
Davidson, North Carolina.
4. Foote Mineral Meter Station, Not less than fifty (50)
located at milepost 1251.55 pounds per square inch
on Seller's main trans- gauge or such other
mission line in Cleveland pressures as may be
County, North Carolina. agreed upon in the day-
to-day operations of Buyer
and Seller.
* Delivery to Seller's Washington Storage Field for injection into storage
is subject to the terms, conditions and limitations of Seller's WSS Rate
Schedule.
<PAGE>
Transcontinental Gas Pipe Line Corporation
Exhibit B (Continued)
Point(s) of Delivery Pressure
5. Gastonia Meter Station, Not less than fifty (50)
located at milepost 1260.83 pounds per square inch
on Seller's main trans- gauge or such other
mission line in Gaston pressures as may be
County, North Carolina, agreed upon in the day-
approximately three (3) to-day operations of Buyer
miles northwesterly from and Seller.
Gastonia, North Carolina,
near West Gastonia, North
Carolina.
6. Mooresville Meter Station, Not less than fifty (50)
located at milepost 1292.90 pounds per square inch
on Seller's main trans- gauge or such other
mission line in Iredell pressures as may be
County, North Carolina, agreed upon in the day-
approximately two (2) miles to-day operations of Buyer
easterly from Mooresville, and Seller.
North Carolina.
7. Stanley Meter Station, Not less than fifty (50)
located at milepost 1269.23 pounds per square inch
on Seller's main trans- gauge or such other
mission line near Stanley, pressures as may be
North Carolina. agreed upon in the day-
to-day operations of Buyer
and Seller.
8. Greensboro Meter Station, Not less than fifty (50)
located at milepost 1355.06 pounds per square inch
on Seller's main trans- gauge or such other
mission line in Guilford pressures as may be
County, North Carolina, agreed upon in the day-
where the facilities of to-day operations of Buyer
Piedmont Natural Gas Company and Seller.
connect with those of Seller.
<PAGE>
Transcontinental Gas Pipe Line Corporation
Exhibit B (Continued)
Point(s) of Delivery Pressure
9. Dan River Meter Station, Not less than fifty (50)
located at milepost 1382.53 pounds per square inch
on Seller's main trans- gauge or such other
mission line approximately pressures as may be
0.5 mile south of Dan agreed upon in the day-
River, North Carolina. to-day operations of Buyer
and Seller.
10. Statesville Meter Station, Not less than fifty (50)
located on Seller's main pounds per square inch
transmission line approxi- gauge or such other
mately 125 feet downstream pressures as may be
From milepost 1305.80 in agreed upon in the day-
Rowan County, North to-day operations of Buyer
Carolina. and Seller.
11. Lithium Corporation Not less than fifty (50)
Industrial Meter Station, pounds per square inch
located at milepost 1255.86 gauge or such other
on Seller's main transmis- pressures as may be
sion line in Gaston County, agreed upon in the day-
near Bessemer City, North to-day operations of Buyer
Carolina, where U. S. and Seller.
Highway 29 intersects
Seller's main line.
12. Tryon Meter Station, Not less than fifty (50)
located on Seller's Mill pounds per square inch
Spring extension, at gauge or such other
approximately milepost pressures as may be
28.06, one (1) mile south- agreed upon in the day-
east of Tryon in Polk to-day operations of Buyer
County, North Carolina. and Seller.
<PAGE>
Transcontinental Gas Pipe Line Corporation
Exhibit B (Continued)
Point(s) of Delivery Pressure
13. Columbus Meter Station, Not less than fifty (50)
located at milepost 31.41 pounds per square inch
on Seller's Mill Spring gauge or such other
extension approximately pressures as may be
1/2 mile east of Columbus agreed upon in the day-
in Polk County, North to-day operations of Buyer
Carolina. and Seller.
14. Mill Spring Meter Station, Not less than fifty (50)
located at the terminus of pounds per square inch
Seller's Mill Spring gauge or such other
extension, in Polk County, pressures as may be
North Carolina. agreed upon in the day-
to-day operations of Buyer
and Seller.
15. Wise Meter Station, Not less than fifty (50)
located at the terminus of pounds per square inch
Seller's Wise extension, gauge or such other
1/4 mile west of the pressures as may be
intersection of Virginia agreed upon in the day-
State Highway No. 713 and to-day operations of Buyer
U. S. Highway No. 1, Warren and Seller.
County, North Carolina.
16. Seller's Eminence Storage Prevailing pressure in
Field, Covington County, Seller's pipeline system
Mississippi. not to exceed maximum
allowable operating
pressure.
<PAGE>
EXHIBIT 10-A-35
SERVICE AGREEMENT NO. 49529
CONTROL NO. 1995-04-30 - 0027
FSS SERVICE AGREEMENT
THIS AGREEMENT, made and entered into this 7th day of November, 1995, by and
between:
COLUMBIA GAS TRANSMISSION CORPORATION ("SELLER")
AND
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED ("BUYER")
WITNESSETH: That in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
Section 1. Service to be Rendered. Seller shall perform and Buyer shall receive
the service in accordance with the provisions of the effective FSS Rate Schedule
and applicable General Terms and Conditions of Seller's FERC Gas Tariff, Second
Revised Volume No. 1 (Tariff), on file with the Federal Energy Regulatory
Commission (Commission), as the same may be amended or superseded in accordance
with the rules and regulations of the Commission. Seller shall store quantities
of gas for Buyer up to but not exceeding Buyer's Storage Contract Quantity as
specified in Appendix A, as the same may be amended from time to time by
agreement between Buyer and Seller, or in accordance with the rules and
regulations of the Commission. Service hereunder shall be provided subject to
the provisions of Part 284.223 of Subpart G of the Commission's regulations.
Buyer warrants that service hereunder is being provided on behalf of BUYER.
Section 2. Term. Service under this Agreement shall commence as of APRIL 01,
1997 , or upon completion of facilities and shall continue in full force and
effect until OCTOBER 31, 2012 , and from YEAR-to-YEAR thereafter unless
terminated by either party upon 2 YEARS ' written notice to the other prior to
the end of the initial term granted or any anniversary date thereafter.
Pre-granted abandonment shall apply upon termination of this Agreement, subject
to any right of first refusal Buyer may have under the Commission's regulations
and Seller's Tariff.
Section 3. Rates. Buyer shall pay the charges and furnish the Retainage
percentage set forth in the above-referenced Rate Schedule and specified in
Seller's currently effective Tariff, unless otherwise agreed to by the parties
in writing and specified as an amendment to this Service Agreement.
Section 4. Notices. Notices to Seller under this Agreement shall be addressed to
it at Post Office Box 1273, Charleston, West Virginia 25325-1273, Attention:
Manager - Agreements Administration and notices to Buyer shall be addressed to
it at:
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
P O BOX 1398
400 COX ROAD
GASTONIA, NC 28053-1398
ATTN: DANNY SMITH; until changed by either party by written notice.
<PAGE>
SERVICE AGREEMENT NO. 49529
CONTROL NO. 1995-04-30-0027
FSS SERVICE AGREEMENT
Section 5. Superseded Agreements. This Service Agreement supersedes and cancels,
as of the effective date hereof, the following Service Agreements: N/A .
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
By: Franklin H. Yoho
Name: /s/ Franklin H. Yoho
Title: Senior Vice President - Marketing & Gas Supply
Date: 10/31/95
COLUMBIA GAS TRANSMISSION CORPORATION
By: /s/ Stephen M. Warnick
Name: Stephen M Warnick
Title: Vice President
Date: November 7, 1995
<PAGE>
Revision No.
Control No. 1995-04-80 - 0027
Appendix A to Service Agreement No. 49529
Under Rate Schedule F S S
Between (Seller) COLUMBIA GAS TRANSMISSION CORPORATION
and (Buyer) PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
GFNT / THIS SERVICE AGREEMENT AND ITS EFFECTIVENESS ARE SUBJECT TO PRECEDENT
AGREEMENT NO. 47810 BETWEEN BUYER AND SELLER DATED JUNE 27, 1995.
<PAGE>
Revision No.
Control No. 1995-04-30 - 0027
Appendix A to Service Agreement No. 49529
Under Rate Schedule FSS
Between (Seller) COLUMBIA GAS TRANSMISSION CORPORATION
and (Buyer) PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
Storage Contract Quantity 1,060,020 Dth
Maximum Daily Storage Quantity 11,778 Dth per day
CANCELLATION OF PREVIOUS APPENDIX A
Service changes pursuant to this Appendix A shall become effective as of April
01, 1997. This Appendix A shall cancel and supersede the previous Appendix A
effective as of N/A , to the Service Agreement referenced above. With the
exeception of this Appendix A, all other terms and conditions of said Service
Agreement shall remain in full force and effect.
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
By: Franklin H. Yoho
Name: /s/ Franklin H. Yoho
Title: Senior Vice President - Marketing & Gas Supply
Date: 10/31/95
COLUMBIA GAS TRANSMISSION CORPORATION
By: /s/ Stephen M. Warnick
Name: Stephen M. Warnick
Title: Vice President
Date: November 7, 1995
<PAGE>
EXHIBIT 10-A-36
SERVICE AGREEMENT NO. 49530
CONTROL NO. 1995-04-30 - 0026
SST SERVICE AGREEMENT
THIS AGREEMENT, made and entered into this 7th day of November, 1995, by and
between:
COLUMBIA GAS TRANSMISSION CORPORATION ("SELLER")
AND
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
("BUYER")
WITNESSETH: That in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
Section 1. Service to be Rendered. Seller shall perform and Buyer shall receive
service in accordance with the provisions of the effective SST Rate Schedule and
applicable General Terms and Conditions of Seller's FERC Gas Tariff, Second
Revised Volume No. 1 (Tariff), on file with the Federal Energy Regulatory
Commission (Commission), as the same may be amended or superseded in accordance
with the rules and regulations of the Commission. The maximum obligation of
Seller to deliver gas hereunder to or for Buyer, the designation of the points
of delivery at which Seller shall deliver or cause gas to be delivered to or for
Buyer, and the points of receipt at which Buyer shall deliver or cause gas to be
delivered, are specified in Appendix A, as the same may be amended from time to
time by agreement between Buyer and Seller, or in accordance with the rules and
regulations of the Commission. Service hereunder shall be provided subject to
the provisions of Part 284. 223 of Subpart G of the Commission's regulations.
Buyer warrants that service hereunder is being provided on behalf of BUYER .
Section 2. Term. Service under this Agreement shall commence as of NOVEMBER 01,
1997 , or upon completion of facilities and shall continue in full force and
effect until OCTOBER 31, 2012, and from YEAR -to-YEAR thereafter unless
terminated by either party upon 2 YEARS ' written notice to the other prior to
the end of the initial term granted or any anniversary date thereafter.
Pre-granted abandonment shall apply upon termination of this Agreement, subject
to any right of first refusal Buyer may have under the Commission's regulations
and Seller's Tariff.
Section 3. Rates. Buyer shall pay Seller the charges and furnish Retainage as
described in the above-referenced Rate Schedule, unless otherwise agreed to by
the parties in writing and specified as an amendment to this Service Agreement.
Section 4. Notices. Notices to Seller under this Agreement shall be addressed to
it at Post Office Box 1273, Charleston, West Virginia 25325-1273, Attention:
Manager - Agreements Administration and notices to Buyer shall be addressed to
it at:
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
P O BOX 1398
400 COX ROAD
GASTONIA, NC 28053-1398
ATTN: DANNY SMITH;
until changed by either party by written notice.
<PAGE>
SERVICE AGREEMENT NO. 49530
CONTROL NO. 1995-O4-30 - 0026
SST SERVICE AGREEMENT
Section 5. Superseded Agreements. This Service Agreement supersedes and cancels,
as of the effective date hereof, the following Service Agreements: N/A.
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
By: Franklin H. Yoho
Name: /s/ Franklin H. Yoho
Title: Senior Vice President - Marketing & Gas Supply
Date: 10/31/95
COLUMBIA GAS TRANSMISSION CORPORATION
By: /s/Stephen M. Warnick
Name: Stephen M. Warnick
Title: Vice President
Date: November 7, 1995
<PAGE>
Revision No.
Control No. 1995-04-30 - 0026
Appendix A to Service Agreement No. 49530
Under Rate Schedule SST
Between (Seller) COLUMBIA GAS TRANSMISSION CORPORATION
and (Buyer) PUBLIC SERVICE COMPANY OF NORTH CAROLINA
INCORPORATED
October through March Transportation Demand 11,778 Dth/day
April through September Transportation Demand 5,889 Dth/day
Primary Receipt Points
Scheduling Scheduling Maximum Daily
Point No. Point Name Quantity (Dth/Day)
STOW STORAGE WITHDRAWALS 11,778
<PAGE>
Revision No.
Control No. 1995-04-30 - 0026
Appendix A to Service Agreement No. 49530
Under Rate Schedule SST
Between (Seller) COLUMBIA GAS TRANSMISSION CORPORATION
and (Buyer) PUBLIC SERVICE COMPANY OF NORTH CAROLINA
INCORPORATED
Primary Delivery Points
Scheduling Scheduling Measuring Measuring
Point No. Point Name Point No. Point Name
- - --------------------------------------------------------------------------------
833097 TRC BOSWELLS TAVERN 833097 TRC BOSWELLS TAVERN
Maximum S1/
Delivery
Maximum Daily Pressure
Delivery Obligation Obligation
(Dth/Day) (PSIG)
11,778 750
<PAGE>
Revision No.
Control No. 1995-04-30 - 0026
Appendix A to Service Agreement No. 49530
Under Rate Schedule SST
Between (Seller) COLUMBIA GAS TRANSMISSION CORPORATION and
(Buyer) PUBLIC SERVICE COMPANY OF NORTH CAROLINA
INCORPORATED
S1 / IF A MAXIMUM PRESSURE IS NOT SPECIFICALLY STATED,
THEN SELLER'S OBLIGATION SHALL BE AS STATED IN
SECTION 13 (DELIVERY PRESSURE) OF THE GENERAL
TERMS AND CONDITIONS.
GFNT / THIS SERVICE AGREEMENT AND ITS EFFECTIVENESS ARE
SUBJECT TO PRECEDENT AGREEMENT NO. 47810
BETWEEN BUYER AND SELLER DATED JUNE 27, 1995.
UNLESS STATION SPECIFIC MDDOS ARE SPECIFIED IN A SEPARATE
FIRM SERVICE AGREEMENT BETWEEN SELLER AND BUYER, SELLER'S
AGGREGATE MAXIMUM DAILY DELIVERY OBLIGATION, UNDER THIS
AND ANY OTHER SERVICE AGREEMENT BETWEEN SELLER AND BUYER,
AT THE STATION(S) LISTED ABOVE SHALL NOT EXCEED THE MDDO
QUANTITIES SET FORTH ABOVE FOR EACH STATION. ANY STATION
SPECIFIC MDDOS IN A SEPARATE FIRM SERVICE AGREEMENT BETWEEN
SELLER AND BUYER SHALL BE ADDITIVE TO THE INDIVIDUAL STATION
MDDOS SET FORTH ABOVE.
<PAGE>
Revision No.
Control No. 1995-04-30 - 0026
Appendix A to Service Agreement No. 49530
Under Rate Schedule SST
Between (Seller) COLUMBIA GAS TRANSMISSION CORPORATION and
(Buyer) PUBLIC SERVICE COMPANY OF NORTH CAROLINA
INCORPORATED
The Master List of Interconnects (MLI) as defined in Section 1 of the General
Terms and Conditions of Seller's Tariff is incorporated herein by reference for
the purposes of listing valid secondary receipt and delivery points.
Service changes pursuant to this Appendix A shall become effective as of
November 1, 1997, or upon completion of facilities. This Appendix A shall cancel
and supersede the previous Appendix A effective as of N/A, to the Service
Agreement referenced above. With the exception of this Appendix A, all other
terms and conditions of said Service Agreement shall remain in full force and
effect.
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
By: Franklin H. Yoho
Name: /s/ Franklin H. Yoho
Title: Senior Vice President - Marketing & Gas Supply
Date: 10/31/95
COLUMBIA GAS TRANSMISSION CORPORATION
By: /s/Stephen M. Warnick
Name: Stephen M. Warnick
Title: Vice President
Date: November 7, 1995
<PAGE>
EXHIBIT 10-A-37
SERVICE AGREEMENT NO. 55293
CONTROL NO. 1995-04-30 - 0028
ITS SERVICE AGREEMENT
THIS AGREEMENT, made and entered into this 31 day of March 1997, by and between:
COLUMBIA GAS TRANSMISSION CORPORATION ("SELLER")
AND
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
("BUYER")
WITNESSETH: That in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
Section 1. Service to be Rendered. Seller shall perform and Buyer shall receive
service in accordance with the provisions of the effective ITS Rate Schedule and
applicable General Terms and Conditions of Seller's FERC Gas Tariff, Second
Revised Volume No. 1 (Tariff), on file with the Federal Energy Regulatory
Commission (Commission), as the same may be amended or superseded in accordance
with the rules and regulations of the Commission. The maximum obligation of
Seller to deliver gas hereunder to or for Buyer, the designation of the points
of delivery at which Seller shall deliver or cause gas to be delivered to or for
Buyer, and the points of receipt at which Buyer shall deliver or cause gas to be
delivered, are specified in Appendix A, as the same may be amended from time to
time by agreement between Buyer and Seller, or in accordance with the rules and
regulations of the Commission. Service hereunder shall be provided subject to
the provisions of Part 284. 223 of Subpart G of the Commission's regulations.
Buyer warrants that service hereunder is being provided on behalf of BUYER.
Section 2. Term. Service under this Agreement shall commence as of APRIL 01,
1997, and shall continue in full force and effect from month-to-month thereafter
unless terminated by either party upon thirty (30) days written notice to the
other prior to the end of the initial term granted or any anniversary date
thereafter. Pre-granted abandonment shall apply upon termination of this
Agreement, subject to any right of first refusal Buyer may have under the
Commission's regulations and Seller's Tariff.
Section 3. Rates. Buyer shall pay Seller the charges and furnish Retainage as
described in the above-referenced Rate Schedule, unless otherwise agreed to by
the parties in writing and specified as an amendment to this Service Agreement.
Section 4. Notices. Notices to Seller under this Agreement shall be addressed to
it at Post Office Box 1273, Charleston, West Virginia 25325-1273, Attention:
Manager - Agreements Administration and notices to Buyer shall be addressed to
it at:
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
P O BOX 1398
400 COX ROAD
GASTONIA, NC 28053-1398
ATTN: DANNY SMITH; until changed by either party by written notice.
<PAGE>
SERVICE AGREEMENT NO. 55293
CONTROL NO. 1995-04-30 - 0028
ITS SERVICE AGREEMENT
Section 5. Superseded Agreements. This Service Agreement supersedes and cancels,
as of the effective date hereof, the following Service Agreements: N/A .
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
By: /s/ Franklin H. Yoho
Name: Franklin H. Yoho
Title: Senior Vice President - Marketing & Gas Supply
Date: 3/25/97
COLUMBIA GAS TRANSMISSION CORPORATION
By: /s/ Evie M. Jones
Name: Evie M. Jones
Title: Aqreements Administration Representative
Date: March 31, 1997
<PAGE>
Revision No.
Control No. 1995-04-30 - 0028
Appendix A to Service Agreement No.55293 Under Rate Schedule ITS Between(Seller)
COLUMBIA GAS TRANSMISSION CORPORATION and (Buyer) PUBLIC SERVICE COMPANY OF
NORTH CAROLINA INCORPORATED
Transportation Quantity 50,000 Dth/day
The Master List of Interconnects (MLI) as defined in Section 1 of the General
Terms and Conditions is incorporated herein by reference for purposes of listing
valid interruptible receipt points and delivery points.
Service changes pursuant to this Appendix A shall become effective as of APRIL
01, 1997. This Appendix A shall cancel and supersede the previous Appendix A
effective as of N/A, to the Service Agreement referenced above. With the
exception of this Appendix A, all other terms and conditions of said Service
Agreement shall remain in full force and effect.
PUBLIC SERVICE COMPANY OF NORTH CAROLINA INCORPORATED
By: /s/ Franklin H. Yoho
Name: Franklin H. Yoho
Title: Senior Vice President - Marketing & Gas Supply
Date: 3/25/97
COLUMBIA GAS TRANSMISSION CORPORATION
By: /s/ Evie M. Jones
Name: Evie M. Jones
Title: Aqreements Administration Representative
Date: March 31, 1997
<PAGE>
EXHIBIT 10-A-38
GAS SALES AGREEMENT
BETWEEN
TRANSCO ENERGY MARKETING COMPANY
AS SELLER
AND
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
AS BUYER
(SOUTHERN EXPANSION)
CONFIDENTIAL
<PAGE>
INDEX
Page
I. DEFINITIONS 1
II. GOVERNMENTAL AUTHORIZATIONS 3
III. RESERVATIONS OF SELLER 3
IV. QUANTITY OF GAS 4
V. DELIVERY PRESSURE 7
VI. POINTS OF DELIVERY AND OWNERSHIP 7
VII. TERM OF AGREEMENT 7
VIII. PRICE 7
IX. QUALITY OF GAS 11
X. METERING AND MEASUREMENT 12
Xl. BILLING AND PAYMENT 12
Xll. TRANSPORTATION 14
XIII. GOVERNMENTAL REGULATIONS 15
XIV. FORCE MAJEURE 16
XV. WARRANTY OF TITLE 18
XVI. RESPONSIBILITY 18
XVII. GENERAL PROVISIONS 18
<PAGE>
GAS SALES AGREEMENT
THIS AGREEMENT, effective the 1st day of November, 1990, between
TRANSCO ENERGY MARKETING COMPANY, as "Seller", and PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, INCORPORATED, as "Buyer",
WITNESSETH:
WHEREAS, Buyer is a local distribution company; and WHEREAS, Seller
purchases supplies of natural gas for resale; and WHEREAS, Buyer
desires to purchase from Seller, and Seller desires to sell to
Buyer natural gas in the quantities and upon the terms and
conditions hereinafter set forth; NOW, THEREFORE, in consideration of
the premises and mutual covenants herein contained, Buyer and Seller
agree as follows:
ARTICLE I.
DEFINITIONS
1.01 The following words and terms, wherever used in this agreement, shall have
the meanings set forth below:
(a) "BTU" shall mean British Thermal Unit.
(b) "Buyer's city gate" shall mean the interconnection(s) between the
facilities of Buyer and TGPL.
(c) "Buyer's FT Agreement" shall mean Buyer's agreement(s) with TGPL, as
may be in effect from time to time, for firm transportation of gas from
the Pricing Point(s) to Buyer's city gate, including that certain
transportation agreement authorized by the Federal Energy Regulatory
Commission's Order issued May 14, 1990 in Docket No. CP88-760-000
("TGPL Southern Expansion Order").
(d) "Contract Year" shall mean a period beginning at 7:00 a.m. (C.S.T.) on
November 1, and extending until 7:00 a.m. (C.S.T.) on April 1 of each
year during the term hereof.
(e) "Daily Contract Maximum" or "DCM" shall be equal to 23,000 dt of gas
per day at the Pricing Point.
(f) "Day" shall mean a period beginning at 7:00 a.m. (C.S.T.) on a calendar
day and ending at 7:00 a.m. (C.S.T.) on the next calendar day.
<PAGE>
(g) "Dekatherm" or "dt" shall mean the quantity of heat energy which is one
(1) MMBtu.
(h) "Gas" or "natural gas" shall include casinghead gas produced with crude
oil, natural gas from gas wells, coalbed methane gas, synthetic gas,
coal gasification gas and residue gas resulting from processing any of
the foregoing.
(i) "Mcf" shall mean one thousand (1,000) cubic feet of natural gas and
"MMcf" shall mean one million (1,000,000) cubic feet of natural gas.
(j) "MMBTU" shall mean one million (1,000,000) British Thermal Units.
(k) "Month" shall mean a period beginning at 7:00 a.m.(C.S.T.)on the first
day of a calendar month and ending at 7:00 a.m. (C.S.T.) on the first
day of the next calendar month.
(l) "Pricing Point(s)" shall mean receipt points on the TGPL mainline which
are mutually acceptable to Buyer and Seller, including certain receipt
points which are permissible receipt points for gas to be transported
by TGPL pursuant to the TGPL Southern Expansion Order.
(m) "Redetermination Date" shall mean July 1, 1995 and July 1 of every
fifth (5th) Contract Year thereafter.
(n) "Seller's WASP" shall mean Seller's weighted average sales price for a
month, which shall be determined by dividing (a) Seller's total
revenues for such month from sales of gas less costs of transportation
and/or storage for deliveries to the point of sale (including fuel
retention and any other transportation surcharges), by (b) the total
quantities of gas sold by Seller during such month.
(o) "TGPL" shall mean Transcontinental Gas Pipe Line Corporation.
(p) "Third party seller(s)" shall mean the party or parties from whom
Seller purchases gas.
(q) "Transporter" shall mean any pipeline company which provides any
portion of the transportation of the gas purchased hereunder from
the points of delivery stated in Article Vl to Buyer's city gate.
(r) "Year" shall mean a period of three hundred sixty-five (365)
consecutive days with a one day adjustment for leap years.
ARTICLE II.
GOVERNMENTAL AUTHORIZATIONS
2.01 Each of the parties hereto agrees to proceed with diligence in a good
faith
<PAGE>
effort to obtain, cause to be obtained or to assist the other party in obtaining
all such governmental authorizations as may be necessary to enable each party to
perform or cause to be performed its obligations under this agreement.
ARTICLE III.
RESERVATIONS OF SELLER
3.01 Subject to the other terms and provisions of this agreement, Seller
expressly reserves unto itself the right, at its sole cost and expense, to
separate and extract liquid and liquefiable hydrocarbons, other than methane,
from the gas upstream of the Pricing Point, together with such methane as cannot
be separated from the ethane and heavier hydrocarbons separated or extracted
from the gas, provided that such extraction (i) shall not reduce the total
heating value per cubic foot below a level acceptable to Transporter; (ii) shall
not render the gas incapable of meeting the quality specifications described in
Article IX; and (iii) shall not cause the total number of dekatherms received by
Buyer at the Pricing Point to be less than the number of dekatherms scheduled by
Buyer in accordance with Article IV. All liquid and liquefiable hydrocarbons so
recovered shall belong to Seller. Article XVI hereof notwithstanding, Seller
agrees to indemnify and hold Buyer harmless from all claims, liability, damages,
and expenses which may occur or be asserted by reason of Seller's processing of
gas hereunder.
ARTICLE IV.
QUANTITY OF GAS
4.01 Subject to the other terms and provisions of this agreement, beginning
November 1, 1990 and daily thereafter during each Contract Year, Seller agrees
to make available to Buyer at the Pricing Point(s) a maximum quantity of gas
equal to the Daily Contract Maximum ("DCM") or such lesser quantity as Buyer may
schedule from time to time hereunder.
4.02 Buyer shall have no obligation to purchase any minimum quantity of gas
hereunder.
4.03 Buyer shall timely provide to Seller all nomination and scheduling
information required by Transporter in connection with the quantities of gas
Buyer desires to purchase hereunder. Buyer shall notify Seller by telephone
of all changes in its daily scheduled quantities sufficiently in advance so
that Seller may comply with Transporter's advance notice requirements. Buyer
shall take gas as nearly as practicable at uniform hourly rates of flow, at
uniform daily deliveries and in conformance with any requirements of
Transporter, subject to Article XII.
<PAGE>
4.04 (a) If on any day during a Contract Year Seller fails to deliver any
portion of the gas scheduled by Buyer for delivery on such day in accordance
with this Article IV, Buyer shall use reasonable efforts to replace such gas at
the lowest cost reasonably available to Buyer. If Buyer is able to replace such
gas from other sources, then Seller shall pay to Buyer, as Buyer's sole and
exclusive remedy for such failure to deliver (in addition to the adjustments
specified in Section 8.03), liquidated damages in an amount equal to:
(i) the excess of
(a) the price per dekatherm reasonably paid by Buyer for such
replacement gas, such price to be adjusted if necessary for
pricing point comparability,
over (b) the effective price per Dekatherm (including demand and commodity
charges) that would have been applicable to such gas hereunder,
multiplied by
(ii) the difference between
(a) the quantity of gas so scheduled by Buyer hereunder and
(b) the quantity of gas actually delivered hereunder.
If the price paid by Buyer for such replacement gas (as described in Section
4.04(a)(i)(a)) does not exceed the effective contract price (as described in
Section 4.04(a)(i)(b)), Buyer shall not receive any damages. If Buyer in its
reasonable discretion, replaces such gas from its own supplies of gas in
underground storage, Buyer shall so advise Seller and Seller may elect, in lieu
of paying the liquidated damages specified in this paragraph, to replace such
gas within Buyer's storage rights at a time specified by Buyer. At such time
Seller shall also reimburse Buyer for any injection and withdrawal charges paid
or incurred by Buyer in connection with the withdrawal and use of Buyer's
storage gas and the injection of replacement quantities supplied by Seller. In
such case, Seller's replacement of such gas and reimbursement of such injection
and withdrawal charges (in addition to the adjustments specified in Section
8.03) shall constitute Buyer's sole and exclusive remedy for Seller's failure to
deliver gas hereunder. (b) If on any day during a Contract Year Seller fails to
deliver any portion of the gas nominated and scheduled by Buyer for delivery on
such day in accordance with this Article IV, and if Buyer is unable to replace
such gas from other sources, or if Seller fails to redeliver such gas to storage
as requested by Buyer pursuant to Section 4.04(a), Seller shall pay to Buyer, as
Buyer's sole and exclusive remedy for such failure to deliver (in addition to
the adjustments specified in Section 8.03),
<PAGE>
liquidated damages in an amount equal to the applicable Commodity Price (as
defined in Section 8.04) multiplied by the difference between the quantity of
gas so nominated and scheduled by Buyer hereunder and the quantity of gas
actually delivered.
(c) If Seller fails to deliver the quantity of gas scheduled by Buyer
hereunder for sixty (60) consecutive days, (i) Seller (a) may, by giving written
notice to Buyer, reduce the DCM to the average daily quantity which Seller was
able to deliver during such sixty (60) day period; and (b) may terminate this
agreement by giving written notice to Buyer prior to the end of the Contract
Year in which the DCM was so reduced, provided that such termination by Seller
shall be effective upon the expiration of the following Contract Year; and (ii)
Buyer may terminate this agreement by giving written notice to Seller within
sixty (60) days of the expiration of such sixty 60 day failure period, and such
termination by Buyer shall be effective upon Seller's receipt of Buyer's notice.
Upon termination of this agreement by either party pursuant to this paragraph,
neither party shall incur any further liability hereunder.
(d) Anything to the contrary notwithstanding, the provisions of
Sections 4.04(a), (b) and (c) and Section 8.03 shall not apply if Seller's
failure to deliver is due to a force majeure condition or an adverse
governmental, action, as such terms are defined below, or the failure of Buyer
to provide sufficient transportation capacity pursuant to Section 12.02.
ARTICLE V.
DELIVERY PRESSURE
5.01 Seller shall deliver natural gas to Buyer at Transporter's line pressure at
the point(s) of delivery designated in Article VI hereof.
ARTICLE VI.
POINTS OF DELIVERY AND OWNERSHIP
6.01 The point(s) of delivery for gas purchased and sold hereunder shall be
at the interconnection of the facilities of Transporter with the facilities of
third party sellers at Seller's sources of gas. Title shall pass to Buyer at
such point(s) of delivery.
ARTICLE VII.
TERM OF AGREEMENT
7.01 Subject to the other provisions hereof, this agreement shall be effective
on the date first above written and shall remain in full force and effect for a
primary term ending March 31, 2006. Beyond the primary term, this agreement
shall extend on a year to year basis, unless terminated upon six (6)
<PAGE>
months prior written notice by either party.
ARTICLE VIII.
PRICE
8.01 (a) Subject to the other provisions of this agreement, for all gas
purchased hereunder in a month, the Base Contract Price at the Pricing Point(s)
shall be equal to the sum of:
(i) one hundred and twenty-one percent (121%) of the arithmetic
average of the following:
(A) the arithmetic average of the spot prices for gas
delivered to pipelines in the Louisiana Gulf Coast,
Onshore and Offshore, published in Natural Gas Week's
"Gas Price Report" in the first issue of such month;
(B) the arithmetic average of the midpoints of the ranges
of prices of spot gas delivered to Tennessee Gas
Pipeline Company in Louisiana and Offshore (mainline),
published in Inside F.E.R.C.'s Gas Market Report in the
first issue of such month; and
(C) the regional average spot price for gas delivered to
Tennessee Gas Pipeline Company in South Louisiana,
mainline in such month published in Natural Gas
Intelligence Gas Price Index in the first issue of such
month;
plus (ii) the actual cost of transportation incurred by Seller
upstream of the Pricing Point including fuel and all
applicable surcharges but excluding backhaul fees on
Transco, not to exceed thirty cents (30) per dekatherm.
(b) Notwithstanding Section 8.01(a), if the interconnection between
United Gas Pipeline Company and TGPL at Holmesville, Mississippi is used as the
Pricing Point for a month, the Base Contract Price shall be equal to one hundred
and twenty-one percent (121%) of the arithmetic average of the following:
(i) the average spot price for the week of publication for gas
delivered to TGPL in Holmesville, Mississippi (Zone 4),
published in Natural Gas Week in the first issue of such
month in the table reporting spot prices of gas delivered
to interstate pipelines; and
(ii) the midpoint of the range of prices of spot gas delivered
to TGPL in Mississippi and Alabama, published in Inside
F.E.R.C.'s Gas Market Report in the first issue of such
month.
<PAGE>
(c) If any of the indices described in Section 8.01(a) or (b) or any
replacement index selected by the parties ceases to be published, Buyer and
Seller shall immediately negotiate a similar, mutually acceptable replacement
index or indices. Until such replacement index or indices are selected, the
average determined in accordance with paragraph 8.01(a)(i) or 8.01(b) shall be
based upon the subparagraphs of paragraph 8.01(a)(i) or 8.01(b) for which the
necessary indices remain available. In the event that none of the average spot
prices described in subparagraphs 8.01(a)(i)(A), (B) and (C) or in subparagraphs
8.01(b)(i) or (ii) can be determined for a month because the necessary indices
have ceased to be published and the parties have failed to agree upon
replacement indices, then either party may refer the matter to the respective
chief executive officers of Buyer and Seller for resolution by giving the other
party written notice thereof ("CEO Notice"). The replacement indices selected by
said chief executive officers shall be effective commencing the month following
the last month for which the Base Contract Price was determined from a published
index or indices, (the "Index Replacement Month"), and Seller's statements and
Buyer's payments shall be adjusted accordingly. If said chief executive officers
fail to reach agreement on or before the fourteenth (14th) day following the
date of the CEO Notice, either party may terminate this agreement by giving
written notice of termination to the other party, such termination to be
effective upon the expiration of the current Contract Year. In such event, the
Base Contract Price for the Index Replacement Month and each succeeding month
for the remainder of the term shall be determined according to the following
formula:
Base Contract Price for the current month = 1.21 x [(A-B) + C] where:
A = Seller's WASP for the current month; B = Seller's WASP for
the month immediately preceding the current month; and C = the
Base Contract Price for the month immediately preceding the
current month.
8.02 The Base Contract Price shall be billed each month based on a two part
(demand/commodity) rate design: twenty-five percent (25%) demand rate and
seventy-five percent (75%) commodity rate.
The Demand Bill shall be calculated on a monthly basis as follows:
(A)(.25)(B) = Demand Bill
where:
A = Base Contract Price; and B = DCM multiplied by 30.20.
8.03 The Demand Bill for a month shall be reduced if Seller failed to
deliver any
<PAGE>
quantities of gas requested by Buyer in accordance with Article IV on any day
during the preceding month. Such reduction shall be calculated as follows:
(A)(.25)(C) = Amount to be subtracted from the Demand
Bill as otherwise calculated
where:
A = Base Contract Price for the preceding month; and
C = Quantities of gas requested by Buyer but not delivered
by Seller during such month.
8.04 The Commodity Bill for a month shall be equal to the Commodity Price
multiplied by the total quantity of gas purchased by Buyer hereunder during such
month. The Commodity Price for a month shall be equal to seventy-five percent
(75%) of the Base Contract price for such month.
An example of the calculation of the Demand and Commodity Bills and
adjustments thereto is outlined in Attachment "A" hereto.
8.05 (a) Either party may initiate a redetermination of the Base Contract Price
and/or the rate design (the "applicable price component(s)") by delivering
written notice to the other party on or before the 60th day prior to the
next Redetermination Date ("Redetermination Notice"). If neither party
receives a Redetermination Notice on or before such 60th day, the applicable
price component(s) then in effect shall remain in effect for the next five
(5) year period commencing on the Redetermination Date.
(b) If either party receives a Redetermination Notice on or before such
60th day, the parties shall commence negotiating in good faith within five (5)
days of such notice to redetermine the applicable price component(s). If the
parties fail to reach agreement within twenty (20) days of such notice, any
remaining disputed matters shall be referred to the respective chief executive
officers of Seller and Buyer for resolution. If said chief executive officers
fail to reach agreement on or before the thirtieth (30th) day prior to the
Redetermination Date, either party may terminate this agreement effective on the
Redetermination Date by giving twenty-five (25) days written notice to the other
party.
ARTICLE IX.
QUALITY OF GAS
<PAGE>
9.01 (a) The gas delivered hereunder shall be merchantable gas which shall
comply with the quality requirements stated in the tariff(s) of the
Transporter(s) transporting the gas purchased and sold hereunder.
(b) SELLER HAS NO KNOWLEDGE OF ANY PARTICULAR OR SPECIAL PURPOSE OF
BUYER FOR THE GAS TO BE SOLD HEREUNDER AND MAKES NO WARRANTY WITH RESPECT TO THE
FITNESS OF THE GAS FOR ANY SUCH PURPOSE.
ARTICLE X.
METERING AND MEASUREMENT
10.01 The unit of measurement of the gas shall be one dekatherm of gas. The gas
delivered hereunder shall be measured and metered by the initial Transporter at
Seller's sources of gas in accordance with the provisions, specifications and
standards set forth in said Transporter's tariff. Each party shall preserve or
cause to be preserved for at least one (1) year all test data, charts,
allocation statements and other similar records available to it, unless a longer
period is prescribed by applicable regulation.
ARTICLE XI.
BILLING AND PAYMENT
11.01 On the first day of the month following the month in which deliveries
commence hereunder and on the first day of each month thereafter, Seller shall
render to Buyer a statement of the Demand Bill for the prior month. Such
statement shall include adjustments, if any, which may be calculated pursuant to
Section 8.03. Buyer shall pay Seller the amount of the Demand Bill statement by
wire transfer to Seller's account at Citibank, N.A. (account number specified on
invoices) on or before the tenth (lOth) day of each month, or the tenth (lOth)
day following Buyer's receipt of such statement, whichever is later; provided,
however, if any payment date is a Saturday, Sunday or legal holiday, such
payment shall be due on the business day immediately following such payment
date.
11.02 On or before the tenth (lOth) day of each month, Seller shall render
to Buyer a statement showing the quantities of gas delivered by Seller during
the preceding month and the Commodity Bill therefor, as well as the amount and
description of any liquidated damages owed to Buyer pursuant to Article IV for
the preceding month. Buyer shall pay Seller the amount of the Commodity Bill
statement by wire transfer to Seller's account at Citibank, N.A. (account number
specified on invoices) on or before the twentieth (20th) day of each month, or
the tenth (lOth) day following Buyer's receipt of such statement, whichever is
later; provided, however, if any payment date is a
<PAGE>
Saturday, Sunday or legal holiday, such payment shall be due on the business day
immediately following such payment date.
11.03 Liquidated damages owed by Sellerfor any month shall be credited against
Buyer's Commodity Bill in the next month and against Buyer's Demand Bill and
Commodity Bill in subsequent month(s) as necessary.
11.04 If Buyer fails to pay any statement in whole or in part when due, in
addition to any other rights and remedies available to Seller, interest at a
rate equal to the prime rate of Citibank, N.A. or its successor plus 2%
shall accrue on unpaid amounts, including on unpaid interest compounded daily,
beginning on the payment due date of Seller's statement and ending when such
statement is paid. The foregoing provisions of this Article XI notwithstanding,
if a legitimate, good faith dispute arises between Buyer and Seller concerning a
statement, Buyer shall pay that portion of the statement not in dispute on or
before such due date, and, upon the ultimate determination of the disputed
portion of the statement, Buyer shall pay Seller the remaining amount owed plus
interest accrued thereon. All disputes regarding quantities delivered to Buyer's
city gate shall be resolved by reference to the measurement charts and records
of TGPL at Buyer's city gate.
11.05 Upon request, either party shall mail or deliver to the other party
for verification and calculation all charts, allocation statements and
other documents used in the measurement of gas delivered hereunder (to the
extent such charts are available to the party receiving such request)
within ten (10) days after the last charge for each billing period is received
by Buyer. Such charts, statements or documents shall be returned to the sender
within thirty (30) days.
ARTICLE XII.
TRANSPORTATION
12.01 Seller will arrange for the transportation of the gas sold hereunder from
the point(s) of delivery to the Pricing Point(s) agreed on by Buyer and Seller.
Any provision in this agreement to the contrary notwithstanding, as part of
Seller's obligation to arrange such transportation, Seller shall indemnify and
hold Buyer harmless from all injuries, claims, liabilities, and damages
irrespective of the cause thereof (other than Buyer's negligence) which arise
out of or in connection with the gas or the handling thereof during such
transportation.
12.02 The gas will be transported on TGPL from the Pricing Point(s) to Buyer's
city gate under Buyer's FT Agreement. Buyer shall maintain firm transportation
capacity on TGPL in an amount equivalent to the DCM. To the extent that Buyer
fails to make sufficient firm transportation capacity
<PAGE>
on TGPL available for the transportation of the gas scheduled for delivery
hereunder, and firm transportation is not otherwise available, Seller's
obligation to deliver such gas shall be subject to the availability of
interruptible transportation on TGPL.
12.03 Buyer and Seller shall cooperate to adjust any discrepancy among (a) the
quantity allocated at Seller's sources of gas, (b) the quantity scheduled
by Buyer and (c) the quantity allocated as Seller's gas at Buyer's city gate
by the final Transporter.
12.04 Without waiver of any other remedies, in the event any charges,
penalties, costs or expenses are incurred or payable to Transporter as a result
of Seller's failure to give Buyer timely notice of any increase or decrease
in daily quantities to be delivered at any point of delivery or Pricing Point
from the quantities nominated and scheduled by Buyer pursuant to Article IV,
Seller shall be responsible for such charges, penalties, costs or expenses.
12.05 Without waiver of any other remedies, in the event any charges, penalties,
costs or expenses are incurred or payable to Transporter as a result of Buyer's
failure to give Seller timely notice of any increase or decrease in daily
quantities to be accepted at any Pricing Point or at Buyer's city gate from
the quantities nominated and scheduled by Buyer pursuant to Article IV, Buyer
shall be responsible for such charges, penalties, costs or expenses.
12.06 For the purpose of Sections 12.04 and 12.05, notice will be deemed
timely if, under the circumstances, it should have given the party receiving
such notice reasonably sufficient time to notify Transporter of such changes
in quantities by the time required under the terms of Transporter's tariff
to avoid imposition of a penalty or charge.
ARTICLE XIII.
GOVERNMENTAL REGULATIONS
13.01 This agreement shall be subject to all valid applicable state, federal and
local laws, rules and regulations; provided that either party hereto shall be
entitled to regard all laws, rules and regulations issued by any federal or
state regulatory body as valid and may act in accordance therewith until such
time as the same may be held invalid by final judgment in a court of competent
jurisdiction. Nothing herein shall be taken to preclude Buyer or Seller or both
from contesting the validity of any such law(s), rule(s) or regulation(s).
13.02 In the event that the Federal Energy Regulatory Commission ("FERC") or
any other regulatory or governmental body asserting jurisdiction (i)
imposes price controls on natural gas; (ii) prohibits or prevents any of
the transactions described in (a) this agreement, (b) any agency
<PAGE>
agreement between Buyer and Seller or (c) any transportation agreement between
Transporter and Buyer or Seller covering the transportation of the gas delivered
hereunder; (iii) otherwise conditions such transactions in a form that is
unacceptable in the sole judgment of the party affected thereby; or (iv) adopts
any action, rule or order which directly or indirectly, materially and adversely
affects the rights or obligations of either party hereunder (each of the events
described in (i), (ii), (iii) and (iv) being referred to herein as "adverse
governmental action"), then the party hereto affected by such adverse
governmental action may terminate this agreement effective as of the effective
date of such adverse governmental action by giving written notice to the other
and each party shall be held harmless as a result of such termination.
ARTICLE XIV.
FORCE MAJEURE
14.01 No failure or delay in performance, whether in whole or in part, by either
Seller or Buyer shall be deemed to be a breach hereof when such failure or delay
is occasioned by or due to any acts of God, strikes, lockouts, or other
industrial disturbances, acts of the public enemy, sabotage, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, floods,
storms, fires, washouts, arrests and restraints of rulers and peoples, civil
disturbances, explosions, breakage or accident to machinery or lines of pipe,
hydrate obstructions of lines of pipe, lack of pipeline capacity due to a
declared force majeure event experienced by Transporter, repairs, maintenance,
improvement, replacement or alterations to plants, lines of pipe or related
facilities, partial or complete failure to perform by persons storing gas for
Buyer or Seller, inability of either party to obtain necessary machinery,
materials or permits or to obtain easements or rights of way, freezing of a well
or delivery facility, well blowouts, craterings and the act of any court or
governmental authority, or any other cause, whether of the kind herein
enumerated or otherwise, not within the control of the party claiming suspension
which, by the exercise of due diligence, such party is unable to prevent or
overcome; provided, however, that the settlement of strikes or lockouts shall be
entirely within the discretion of the party having the difficulty, and the
requirement that any force majeure shall be remedied with the exercise of
diligence shall not require the settlement of strikes or lockouts when such
course is inadvisable in the discretion of the party having difficulty. Any
proration or curtailment of capacity under an interruptible transportation
agreement shall not constitute a force majeure condition hereunder.
14.02 Such causes or contingencies affecting the performance of this agreement
by any party hereto,
<PAGE>
however, shall not relieve such party of liability in the event of its failure
to use due diligence to prevent or overcome such cause or contingency in an
adequate manner and with all reasonable dispatch. Nor shall such causes or
contingencies affecting the performance of this agreement relieve any party from
its obligations to make payments of amounts when due. Nor shall such causes or
contingencies relieve any party of liability, unless such party shall give
notice and full particulars of the same in writing or by telegraph to the other
party as soon as possible after the occurrence relied on, and like notice shall
be given upon termination of such force majeure conditions.
14.03 If, due to force majeure, the quantities of gas available for delivery
on any day at a Pricing Point are insufficient to meet all of Seller's firm
sales obligations at such point, then Buyer shall be entitled to receive such
proportion of the total deliveries which Seller is able to effect at such
point (including any quantities of gas deliverable by Seller to such point
pursuant to Seller's interruptible transportation from TGPL Zones 1, 2 and 3)
as Buyer's Nominated Quantity for such point bears to the sum of the nominated
quantities under this agreement and Seller's other firm sales contracts for such
point. In such event, deliveries to Buyer hereunder of its full Nominated
Quantity shall have priority over all sales of gas by Seller under interruptible
sales contracts at such point.
ARTICLE XV.
WARRANTY OF TITLE
15.01 Seller warrants title to all gas delivered by it, that it has the right to
sell or deliver the same, and that such gas is free from liens and adverse
claims of every kind. Seller shall pay or cause to be paid all taxes and other
sums due on the gathering and handling of the gas delivered by Seller. Seller
shall indemnify and save Buyer harmless from and against all suits, actions,
damages, costs and expenses arising from or out of any breach of this provision.
ARTICLE XVI.
RESPONSIBILITY
16.01 As between the parties hereto, Seller shall be deemed to be in exclusive
control and possession of the gas sold hereunder until such gas has been
delivered to the point(s) of delivery, after which point Buyer shall be deemed
to be in exclusive control and possession of such gas.
16.02 The party deemed to be in control and possession of the gas sold hereunder
shall be responsible for and shall indemnify the other party with respect to any
claims, liabilities or damages arising therefrom when such gas is in
that party's control and possession.
<PAGE>
ARTICLE XVII.
GENERAL PROVISIONS
17.01 Copies of any filing submitted to the FERC, or to any state or federal
regulatory agency having jurisdiction, and any notice, request, demand, payment
or statement provided for in this agreement shall be in writing and shall be
directed to the address of the parties hereto as follows:
BUYER:
Notices, Payment and Billing:
Public Service Company of North Carolina, Inc.
400 Cox Road
Gastonia, North Carolina 28053-1398
Attention: Manager - Gas Supply and Transportation
SELLER:
For Notices:
Transco Energy Marketing Company
P. O. Box 1396
Houston, Texas 77251
or
2800 Post Oak Blvd.
Houston, Texas 77056
Attention: Vice President - Gas Marketing and Operations
For Payment and Billings:
Transco Energy Marketing Company
P. O. Box 1396
Houston, Texas 77251
Attention: TEMCO Accounting
or at such other address as either party shall from time to time designate by
correspondence to the other party.
17.02 This agreement shall not be assignable by either party in whole or in
part, except with the consent of the other party, which shall not be
unreasonably withheld. This agreement shall inure to the benefit of and be
binding upon permitted successors and assigns.
17.03 This agreement is for the sole and exclusive benefit of the parties
hereto. Except as otherwise provided in the Guaranty Agreement attached hereto
between Buyer and Transco Energy Company, nothing expressed or implied herein
is intended to benefit any other person, firm or corporation not a party hereto
and none of such other persons shall have any legal or equitable right, remedy
or claim
<PAGE>
under this agreement or under any provision hereof.
17.04 This agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof; supersedes all prior agreements and
understandings, whether oral or written, which the parties may have in
connection herewith; and may not be modified except by written agreement of the
parties. The parties and their legal counsel have cooperated in the drafting of
this agreement and it shall therefore be deemed their joint work product and
shall not be construed against either party by reason of its preparation.
17.05 THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
17.06 The parties acknowledge that this agreement contains commercially
sensitive information and each party agrees that it will not, without the
written consent of the other, disclose to any third party except Transco Energy
Company and Transco Energy Services Company this agreement or the terms or
provisions thereof except to the extent, and only to the extent, that disclosure
is required (a) by law or by a court or administrative agency having
jurisdiction over the disclosing party; (b) to obtain transportation of the gas
purchased and sold hereunder; or (c) in the course of an audit of the
disclosing party, and further provided that upon learning that disclosure is
required by law or by a court or administrative agency, the party required to
make such disclosure shall immediately notify the other party and shall take all
reasonable steps requested by such other party to limit the extent of such
disclosure.
<PAGE>
IN WITNESS WHEREOF, this instrument is executed as of the day and year
first above written.
TRANSCO ENERGY MARKETING
COMPANY
By: /s/W. Colin Harper
Vice President
Gas Marketing and Operations
PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, INCORPORATED
By: /s/ Franklin H. Yoho
Vice President -
Gas Supply and Transportation
<PAGE>
GUARANTY AGREEMENT
THIS AGREEMENT, effective November 1, 1990, by and between TRANSCO
ENERGY COMPANY (hereinafter referred to as "Transco") and Public Service Company
of North Carolina (hereinafter referred to as "Public Service")
WITNESSETH:
WHEREAS, Public Service and Transco Energy Marketing Company,
(hereinafter referred to as "TEMCO"), a wholly-owned subsidiary of Transco
Energy Services Company, which is a wholly-owned subsidiary of Transco, desire
to enter into a Gas Sales Agreement (Southern Expansion version) effective
November 1, 1990, (hereinafter referred to as the "Agreement"), pursuant to
which Public Service will purchase from TEMCO natural gas in the quantities and
upon the terms and conditions set forth in the Agreement; and
WHEREAS, Public Service desires assurances that Transco will be
responsible for the obligations of TEMCO set forth in the Agreement in the event
TEMCO does not satisfy such obligations; and
WHEREAS, Transco desires that the Agreement be executed and desires to
give such assurances;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and other valuable consideration, the adequacy and receipt of
which is hereby acknowledged, Transco and Public Service hereby agree as
follows:
1. Transco hereby guarantees the performance of the obligations of
TEMCO set forth in and subject to the terms of the Agreement. If TEMCO fails to
perform its obligations under the Agreement, Transco shall cause TEMCO or
another of its subsidiaries or affiliates to perform said obligations in
accordance with the terms of the Agreement, subject to the receipt of such
regulatory approvals as may be required.
<PAGE>
Guaranty Agreement
Public Service Company of North Carolina
(Southern Expansion)
PSOvlpl72
Page 2
2. This Guaranty Agreement shall not be assignable in whole or in part,
except with the consent of the other party, which shall not be unreasonably
withheld. This agreement shall be binding upon the parties hereto and their
permitted successors and assigns.
3. This Guaranty Agreement is for the sole and exclusive benefit of the
parties hereto. Nothing expressed or implied herein is intended to benefit any
other person, firm or corporation not a party hereto. None of such other persons
shall have any legal or equitable right, remedy or claim under this Guaranty
Agreement or under any provisions hereof. Notwithstanding anything contained in
this paragraph 3, if any claim or demand is made against Transco pursuant to
this Guaranty Agreement, Transco shall be subrogated to all rights, set-offs,
counterclaims and defenses to which TEMCO may be entitled, except for defenses
arising out of bankruptcy, insolvency, liquidation or dissolution of TEMCO.
4. This guaranty shall extend until the termination of all obligations
under the Agreement or March 31, 2006 whichever is earlier.
IN WITNESS WHEREOF, this instrument is executed as of the day and year
first above written.
TRANSCO ENERGY COMPANY
By: /s/ W.J. Bowen
PUBLIC SERVICE COMPANY OF
NORTH CAROLINA, INCORPORATED
By: /s/ Franklin H. Yoho
Its: Vice President-
Gas Supply and Transportation
<PAGE>
EXHIBIT 10-F
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INC.
FORM OF SEVERANCE AGREEMENT
On April 9, 1997, the Company entered into a severance agreement (the
"Severance Agreement") with each of its executive officers listed below, which
provides for the Company to make severance payments, under certain circumstances
set forth in the Severance Agreement, in an amount equal to a multiple of the
sum of the executive's base salary and annual bonus, as calculated pursuant to
the terms of the Severance Agreement, and to provide certain insurance benefits
for the time period listed below:
Executive Officer Multiple Time Period
1. Charles E. Zeigler, Jr. 3.0 36 months
2. John D. Grawe 2.5 30 months
3. Robert D. Voigt 2.5 30 months
4. Franklin H. Yoho 2.5 30 months
5. Herbert B. Cox 2.0 24 months
6. Jack G. Mason 2.0 24 months
7. Boyce C. Morrow, Jr. 2.0 24 months
8. Jerry W. Richardson 2.0 24 months
9. Fred L. Schmidt 2.0 24 months
The foregoing description of the Severance Agreement is qualified in
its entirety by reference to the Severance Agreement.
<PAGE>
THIS AGREEMENT, dated _________________, 1997, is made by and between
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED, a North Carolina
corporation (the "Company"), and _____________________ (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to foster the continued employment of key management personnel;
and
WHEREAS, the Board of the Company recognizes that, as is the case with
many publicly held corporations, the possibility of a Change in Control exists
and that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in this
Agreement are provided in the last Section hereof.
2. Term of Agreement. The Term of this Agreement shall commence on the
date hereof and shall continue in effect through December 31, 2000; provided,
however, that commencing on January 1, 2001 and each January 1 thereafter, the
Term shall automatically be extended for one additional year unless, not later
than fifteen (15) months prior to the applicable January 1, the Company or the
Executive shall have given notice not to extend the Term; and further provided,
however, that if a Change in Control shall have occurred during the Term, the
Term shall expire at the end of the twenty-fourth (24th) calendar month after
the calendar month in which such Change in Control occurred. For example, if a
Change in Control were to occur on July 1, 1997, the Term of this Agreement
would expire on June 30, 1999, and if a Change in Control were to occur on July
1, 2000, the Term of this Agreement would expire on June 30, 2002 (regardless of
whether on or before September 30, 1999 either party had given notice to the
other party not to extend the Term as provided above).
<PAGE>
3. Company's Covenants Summarized. In order to induce the Executive to
remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments and the
other payments and benefits described herein. Except as provided in Section 9.1
hereof, no Severance Payments shall be payable under this Agreement unless there
shall have been (or, under the terms of the second sentence of Section 6.1
hereof, there shall be deemed to have been) a termination of the Executive's
employment with the Company following a Change in Control and during the Term.
This Agreement shall not be construed as creating an express or implied contract
of employment and, except as otherwise agreed in writing between the Executive
and the Company, the Executive shall not have any right to be retained in the
employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Potential Change in
Control during the Term, the Executive will remain in the employ of the Company
until the earliest of (i) a date which is twelve (12) months from the date of
such Potential Change of Control, (ii) the date of a Change in Control, (iii)
the date of termination by the Executive of the Executive's employment for Good
Reason or by reason of death, Disability or Retirement, or (iv) the termination
by the Company of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control and during the Term, during any
period that the Executive fails to perform the Executive's full-time duties with
the Company as a result of incapacity due to physical or mental illness, the
Company shall pay the Executive's full salary to the Executive at the rate in
effect at the commencement of any such period, together with all compensation
and benefits payable to the Executive under the terms of any compensation or
benefit plan, program or arrangement maintained by the Company during such
period, until the Executive's employment is terminated by the Company for
Disability.
5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay the
Executive's full salary to the Executive through the Date of Termination at the
rate in effect immediately prior to the Date of Termination or, if higher, the
rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of the Company's compensation and benefit plans, programs or arrangements
as in effect
<PAGE>
immediately prior to the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason.
5.3 If the Executive's employment shall be terminated for any reason
following a Change in Control and during the Term, the Company shall pay to the
Executive the Executive's normal post-termination compensation and benefits as
such payments become due. Such post-termination compensation and benefits shall
be determined under, and paid in accordance with, the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements as
in effect immediately prior to the Date of Termination or, if more favorable to
the Executive, as in effect immediately prior to the occurrence of the first
event or circumstance constituting Good Reason.
6. Severance Payments.
6.1 Subject to Section 6.2 hereof, if the Executive's employment is
terminated following a Change in Control and during the Term, other than (A) by
the Company for Cause, (B) by reason of death or Disability, or (C) by the
Executive without Good Reason (including Retirement by the Executive), then the
Company shall pay the Executive the amounts, and provide the Executive the
benefits, described in this Section 6.1 ("Severance Payments"), in addition to
any payments and benefits to which the Executive is entitled under Section 5
hereof. For purposes of this Agreement, the Executive's employment shall be
deemed to have been terminated following a Change in Control by the Company
without Cause or by the Executive with Good Reason, if (i) the Executive's
employment is terminated by the Company without Cause prior to a Change in
Control (whether or not a Change in Control ever occurs) and such termination
was at the request or direction of a Person who has entered into an agreement
with the Company the consummation of which would constitute a Change in Control,
(ii) the Executive terminates his employment for Good Reason prior to a Change
in Control (whether or not a Change in Control ever occurs) and the circumstance
or event which constitutes Good Reason occurs at the request or direction of
such Person, or (iii) the Executive's employment is terminated by the Company
without Cause or by the Executive for Good Reason and such termination or the
circumstance or event which constitutes Good Reason is otherwise in connection
with or in anticipation of a Change in Control (whether or not a Change in
Control ever occurs). For purposes of any determination regarding the
applicability of the immediately preceding sentence, any position taken by the
Executive shall be presumed to be correct unless the Company establishes to the
Board by clear and convincing evidence that such position is not correct.
<PAGE>
(A) In lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination and in lieu
of any severance benefit otherwise payable to the Executive, the
Company shall pay to the Executive a lump sum severance payment, in
cash, equal to _____ times the sum of (i) the Executive's base salary
as in effect immediately prior to the Date of Termination or, if
higher, in effect immediately prior to the first occurrence of an event
or circumstance constituting Good Reason, and (ii) the average annual
bonus earned by the Executive pursuant to any annual bonus or incentive
plan maintained by the Company in respect of the three fiscal years
ending immediately prior to the fiscal year in which occurs the Date of
Termination or, if higher, immediately prior to the fiscal year in
which occurs the first event or circumstance constituting Good Reason.
(B) For the ___________ month period immediately
following the Date of Termination, the Company shall arrange to provide
the Executive and his dependents life, disability, accident and health
insurance benefits substantially similar to those provided to the
Executive and his dependents immediately prior to the Date of
Termination or, if more favorable to the Executive, those provided to
the Executive and his dependents immediately prior to the first
occurrence of an event or circumstance constituting Good Reason, at no
greater cost to the Executive than the cost to the Executive
immediately prior to such date or occurrence; provided, however, that,
unless the Executive consents to a different method (after taking into
account the effect of such method on the calculation of "parachute
payments" pursuant to Section 6.2 hereof), such health insurance
benefits shall be provided through a third-party insurer. Benefits
otherwise receivable by the Executive pursuant to this Section 6.1(B)
shall be reduced to the extent benefits of the same type are received
by or made available to the Executive during the _________ month period
following the Executive's termination of employment (and any such
benefits received by or made available to the Executive shall be
reported to the Company by the Executive); provided, however, that the
Company shall reimburse the Executive for the excess, if any, of the
cost of such benefits to the Executive over such cost immediately prior
to the Date of Termination or, if more favorable to the Executive, the
first occurrence of an event or circumstance constituting Good Reason.
If the Severance Payments shall be decreased pursuant to Section 6.2
hereof, and the Section 6.1(B) benefits which remain payable after the
application of Section 6.2 hereof are thereafter reduced pursuant to
the immediately preceding sentence, the Company shall, no later than
five (5) business days following such reduction, pay to the Executive
the least of (a) the amount of the decrease made in the Severance
Payments pursuant to Section 6.2
<PAGE>
hereof, (b) the amount of the subsequent reduction in these Section
6.1(B) benefits, or (c) the maximum amount which can be paid to the
Executive without being, or causing any other payment to be,
nondeductible by reason of section 280G of the Code.
6.2 (A) Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person whose actions result in a
Change in Control or any Person affiliated with the Company or such Person) (all
such payments and benefits, including the Severance Payments, being hereinafter
called "Total Payments") would not be deductible (in whole or part), by the
Company, an affiliate or Person making such payment or providing such benefit as
a result of section 280G of the Code, then, to the extent necessary to make such
portion of the Total Payments deductible (and after taking into account any
reduction in the Total Payments provided by reason of section 280G of the Code
in such other plan, arrangement or agreement), the cash Severance Payments shall
first be reduced (if necessary, to zero), and all other Severance Payments shall
thereafter be reduced (if necessary, to zero); provided, however, that the
Executive may elect to have the noncash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance Payments.
(B) For purposes of this limitation, (i) no portion of the
Total Payments the receipt or enjoyment of which the Executive shall have waived
at such time and in such manner as not to constitute a "payment" within the
meaning of section 280G(b) of the Code shall be taken into account, (ii) no
portion of the Total Payments shall be taken into account which, in the opinion
of tax counsel ("Tax Counsel") reasonably acceptable to the Executive and
selected by the accounting firm which was, immediately prior to the Change in
Control, the Company's independent auditor (the "Auditor"), does not constitute
a "parachute payment" within the meaning of section 280G(b)(2) of the Code,
including by reason of section 280G(b)(4)(A) of the Code, (iii) the Severance
Payments shall be reduced only to the extent necessary so that the Total
Payments (other than those referred to in clauses (i) or (ii)) in their entirety
constitute reasonable compensation for services actually rendered within the
meaning of section 280G(b)(4)(B) of the Code or are otherwise not subject to
disallowance as deductions by reason of section 280G of the Code, in the opinion
of Tax Counsel, and (iv) the value of any noncash benefit or any deferred
payment or benefit included in the Total Payments shall be determined by the
Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the
Code.
<PAGE>
(C) If it is established pursuant to a final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the good
faith of the Executive and the Company in applying the terms of this Section
6.2, the Total Payments paid to or for the Executive's benefit are in an amount
that would result in any portion of such Total Payments being subject to the
Excise Tax, then, if such repayment would result in (i) no portion of the
remaining Total Payments being subject to the Excise Tax and (ii) a
dollar-for-dollar reduction in the Executive's taxable income and wages for
purposes of federal, state and local income and employment taxes, the Executive
shall have an obligation to pay the Company upon demand an amount equal to the
sum of (i) the excess of the Total Payments paid to or for the Executive's
benefit over the Total Payments that could have been paid to or for the
Executive's benefit without any portion of such Total Payments being subject to
the Excise Tax; and (ii) interest on the amount set forth in clause (i) of this
sentence at the rate provided in section 1274(b)(2)(B) of the Code from the date
of the Executive's receipt of such excess until the date of such payment.
6.3 The payments provided in subsection (A) of Section 6.1 hereof shall
be made not later than the fifth day following the Date of Termination;
provided, however, that if the amounts of such payments, and the limitation on
such payments set forth in Section 6.2 hereof, cannot be finally determined on
or before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Company of the minimum amount of
such payments to which the Executive is clearly entitled and shall pay the
remainder of such payments (together with interest on the unpaid remainder (or
on all such payments to the extent the Company fails to make such payments when
due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth (5th) business day after demand by the Company (together with interest
at 120% of the rate provided in section 1274(b)(2)(B) of the Code). At the time
that payments are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement).
6.4 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any issue
hereunder relating to the termination of the
<PAGE>
Executive's employment, in seeking in good faith to obtain or enforce any
benefit or right provided by this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder. Such payments shall be
made within five (5) business days after delivery of the Executive's written
requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and during the
Term, any purported termination of the Executive's employment (other than by
reason of death) shall be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. Further, a Notice of Termination for Cause is required
to include a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering
such termination (after reasonable notice to the Executive and an opportunity
for the Executive, together with the Executive's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination," with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case of a termination for
Cause) and, in the case of a termination by the Executive, shall not be less
than fifteen (15) days nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later,
<PAGE>
prior to the Date of Termination (as determined without regard to this Section
7.3), the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be extended until the earlier of (i) the date on which the Term ends or (ii) the
date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of an
arbitrator or a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); provided, however, that the Date of Termination shall be
extended by a notice of dispute given by the Executive only if such notice is
given in good faith and the Executive pursues the resolution of such dispute
with reasonable diligence.
7.4 Compensation During Dispute. If a purported termination occurs
following a Change in Control and during the Term and the Date of Termination is
extended in accordance with Section 7.3 hereof, the Company shall continue to
pay the Executive the full compensation in effect when the notice giving rise to
the dispute was given (including, but not limited to, salary) and continue the
Executive as a participant in all compensation, benefit and insurance plans in
which the Executive was participating when the notice giving rise to the dispute
was given, until the Date of Termination, as determined in accordance with
Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all
other amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment with the Company terminates during the Term, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 hereof or Section
7.4 hereof. Further, the amount of any payment or benefit provided for in this
Agreement (other than Section 6.1(B) hereof) shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption
<PAGE>
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to compensation from
the Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.
10. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
To the Company:
Public Service Company of North
Carolina, Inc.
P. O. Box 1398
Gastonia, North Carolina 28053-1398
Attention: _____________________
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement supersedes any other
agreements
<PAGE>
or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party; provided, however,
that this Agreement shall supersede any agreement setting forth the terms and
conditions of the Executive's employment with the Company only in the event that
the Executive's employment with the Company is terminated on or following a
Change in Control, by the Company other than for Cause or by the Executive other
than for Good Reason. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of North Carolina.
All references to sections of the Exchange Act or the Code shall be deemed also
to refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law and any additional withholding to which the
Executive has agreed. The obligations of the Company and the Executive under
this Agreement which by their nature may require either partial or total
performance after the expiration of the Term (including, without limitation,
those under Sections 6 and 7 hereof) shall survive such expiration.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
14. Settlement of Disputes; Arbitration.
14.1 All claims by the Executive for benefits under this Agreement
shall be directed to and determined by the Board and shall be in writing. Any
denial by the Board of a claim for benefits under this Agreement shall be
delivered to the Executive in writing and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to the
Board a decision of the Board within sixty (60) days after notification by the
Board that the Executive's claim has been denied.
14.2 Any further dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Charlotte,
North Carolina in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the evidentiary standards
set forth in this Agreement shall apply. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
<PAGE>
Notwithstanding any provision of this Agreement to the contrary, the Executive
shall be entitled to seek specific performance of the Executive's right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(B) "Auditor" shall have the meaning set forth in Section 6.2
hereof.
(C) "Base Amount" shall have the meaning set forth in section
280G(b)(3) of the Code.
(D) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.
(E) "Board" shall mean the Board of Directors of the Company.
(F) "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)
after a written demand for substantial performance is delivered to the Executive
by the Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive's
duties, or (ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, (x) no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's act, or failure to
act, was in the best interest of the Company and (y) in the event of a dispute
concerning the application of this provision, no claim by the Company that Cause
exists shall be given effect unless the Company establishes to the Board by
clear and convincing evidence that Cause exists.
(G) A "Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
<PAGE>
(I) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or
its affiliates) representing 20% or more of the combined
voting power of the Company's then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of
paragraph (III) below; or
(II) the following individuals cease for any
reason to constitute a majority of the number of directors
then serving: individuals who, on the date hereof, constitute
the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or
nomination for election by the Company's shareholders was
approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were
directors on the date hereof or whose appointment, election or
nomination for election was previously so approved or
recommended; or
(III) there is consummated a merger or
consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other
than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least
50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in
the securities Beneficially owned by such Person any
securities acquired directly from the Company or its
Affiliates other than in connection with the acquisition by
the Company or its Affiliates of a business) representing
<PAGE>
20% or more of the combined voting power of the
Company's then outstanding securities; or
(IV) the shareholders of the Company approve a
plan of complete liquidation or dissolution of the Company or
there is consummated an agreement for the sale or disposition
by the Company of all or substantially all of the Company's
assets, other than a sale or disposition by the Company of all
or substantially all of the Company's assets to an entity, at
least 50% of the combined voting power of the voting
securities of which are owned by shareholders of the Company
in substantially the same proportions as their ownership of
the Company immediately prior to such sale.
(H) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(I) "Company" shall mean Public Service Company of North
Carolina, Incorporated and, except in determining under Section 15(G) hereof
whether or not any Change in Control of the Company has occurred, shall include
any successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
(J) "Date of Termination" shall have the meaning set forth in
Section 7.2 hereof.
(K) "Disability" shall be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from the full-time performance of the Executive's duties with
the Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within thirty
(30) days after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(L) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(M) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(N) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control, or prior to a Change in
Control under the circumstances described in clauses (ii) and (iii) of the
second sentence of Section 6.1 hereof (treating all references in paragraphs (I)
through (VII)
<PAGE>
below to a "Change in Control" as references to a "Potential Change in
Control"), of any one of the following acts by the Company, or failures by the
Company to act, unless, in the case of any act or failure to act described in
paragraph (I), (V), (VI) or (VII) below, such act or failure to act is corrected
prior to the Date of Termination specified in the Notice of Termination given in
respect thereof:
(I) the assignment to the Executive of any
duties inconsistent with the Executive's status as a senior
executive officer of the Company or a substantial adverse
alteration in the nature or status of the Executive's
responsibilities from those in effect immediately prior to the
Change in Control [other than any such alteration primarily
attributable to the fact that the Company may no longer be a
public company];
(II) a reduction by the Company in the
Executive's annual base salary as in effect on the date hereof
or as the same may be increased from time to time [except for
across-the-board salary reductions similarly affecting all
senior executives of the Company and all senior executives of
any Person in control of the Company];
(III) the relocation of the Executive's principal
place of employment to a location more than 35 miles from the
Executive's principal place of employment immediately prior to
the Change in Control or the Company's requiring the Executive
to be based anywhere other than such principal place of
employment (or permitted relocation thereof) except for
required travel on the Company's business to an extent
substantially consistent with the Executive's present business
travel obligations;
(IV) the failure by the Company to pay to the
Executive any portion of the Executive's current compensation
[except pursuant to an across-the-board compensation deferral
similarly affecting all senior executives of the Company and
all senior executives of any Person in control of the
Company], or to pay to the Executive any portion of an
installment of deferred compensation under any deferred
compensation program of the Company, within seven (7) days of
the date such compensation is due;
(V) the failure by the Company to continue in
effect any compensation plan in which the Executive
participates immediately prior to the Change in Control which
is material to the Executive's total
<PAGE>
compensation, including but not limited to the Company's stock
option, stock purchase and annual incentive plans or any
substitute plans adopted prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to
such plan, or the failure by the Company to continue the
Executive's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable,
both in terms of the amount or timing of payment of benefits
provided and the level of the Executive's participation
relative to other participants, as existed immediately prior
to the Change in Control;
(VI) the failure by the Company to continue to
provide the Executive with benefits substantially similar to
those enjoyed by the Executive under any of the Company's
pension, savings, life insurance, medical, health and
accident, or disability plans in which the Executive was
participating immediately prior to the Change in Control
(except for across-the-board changes similarly affecting all
senior executives of the Company and all senior executives of
any Person in control of the Company), the taking of any other
action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Change in Control, or the failure
by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled on the
basis of years of service with the Company in accordance with
the Company's normal vacation policy in effect at the time of
the Change in Control; or
(VII) any purported termination of the
Executive's employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section
7.1 hereof; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or failure
to act constituting Good Reason hereunder.
For purposes of any determination regarding the existence of
Good Reason, any claim by the Executive that Good Reason exists shall be
presumed to be correct unless the Company
<PAGE>
establishes to the Board by clear and convincing evidence that Good Reason does
not exist.
(O) "Notice of Termination" shall have the meaning set forth
in Section 7.1 hereof.
(P) "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(Q) "Potential Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following paragraphs shall
have occurred:
(I) the Company enters into an agreement,
the consummation of which would result in the
occurrence of a Change in Control;
(II) the Company or any Person publicly
announces an intention to take or to consider taking actions
which, if consummated, would constitute a Change in Control;
(III) any Person becomes the Beneficial owner,
directly or indirectly, of securities of the Company
representing 15% or more of either the then outstanding shares
of common stock of the Company or the combined voting power of
the Company's then outstanding securities (not including in
the securities beneficially owned by such Person any
securities acquired directly from the Company or its
affiliates); or
(IV) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in
Control has occurred.
(R) "Retirement" shall be deemed the reason for the
termination by the Executive of the Executive's employment if such employment is
terminated voluntarily by the Executive in accordance with the Company's
retirement policy, including early retirement, generally applicable to its
salaried employees.
(S) "Severance Payments" shall have the meaning set forth in
Section 6.1 hereof.
<PAGE>
(T) "Tax Counsel" shall have the meaning set forth in Section
6.2 hereof.
(U) "Term" shall mean the period of time described in Section
2 hereof (including any extension, continuation or termination described
therein).
(V) "Total Payments" shall mean those payments so described in
Section 6.2 hereof.
PUBLIC SERVICE COMPANY OF NORTH
CAROLINA, INCORPORATED
By:
Name:
Title:
[Executive's Name]
Address:
(Please print carefully)
<PAGE>
