SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification Number
1-9905 ATLANTA GAS LIGHT COMPANY 58-0145925
(A Georgia Corporation)
303 PEACHTREE STREET, NE
ATLANTA, GEORGIA 30308
404-584-4000
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 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 March 31, 1997, 55,352,415 shares of Common Stock, $5.00 Par Value, were
outstanding, all of which are owned by AGL Resources Inc.
<PAGE>
ATLANTA GAS LIGHT COMPANY
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 1997
Table of Contents
Item Page
Number PART I -- FINANCIAL INFORMATION Number
1 Financial Statements
Condensed Consolidated Income Statements 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7
2 Management's Discussion and Analysis of Results of
Operations and Financial Condition 11
PART II -- OTHER INFORMATION
1 Legal Proceedings 17
4 Submission of Matters to a Vote of Security Holders 17
5 Other Information 17
6 Exhibits and Reports on Form 8-K 22
SIGNATURES 23
Page 2 of 23 Pages
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
ATLANTA GAS LIGHT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS, SIX MONTHS AND TWELVE MONTHS ENDED
MARCH 31, 1997 AND 1996
(MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Six Months Twelve Months
--------------------------------------------------------------
1997 1996 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues ................ $ 470.5 $ 478.8 $ 835.4 $ 807.6 $ 1,245.4 $ 1,093.6
Cost of Gas ....................... 294.2 308.0 513.2 496.8 735.1 610.6
- ----------------------------------------------------------------------------------------------------
Operating Margin .................. 176.3 170.8 322.2 310.8 510.3 483.0
- ----------------------------------------------------------------------------------------------------
Other Operating Expenses .......... 87.6 91.2 174.3 172.0 335.8 333.3
Income Taxes ...................... 27.8 25.1 44.8 42.3 46.0 39.3
- ----------------------------------------------------------------------------------------------------
Operating Income .................. 60.9 54.5 103.1 96.5 128.5 110.4
- ----------------------------------------------------------------------------------------------------
Other Income
Other income and deductions . 3.5 6.7 4.7 8.3 9.0 8.0
Income taxes ................ (1.2) (2.4) (1.7) (3.0) (3.5) (2.8)
- ----------------------------------------------------------------------------------------------------
Total other income-net .. 2.3 4.3 3.0 5.3 5.5 5.2
- ----------------------------------------------------------------------------------------------------
Income Before Interest Charges .... 63.2 58.8 106.1 101.8 134.0 115.6
Interest Charges .................. 13.8 12.4 27.4 25.2 51.3 47.3
- ----------------------------------------------------------------------------------------------------
Net Income ........................ 49.4 46.4 78.7 76.6 82.7 68.3
- ----------------------------------------------------------------------------------------------------
Dividends on Preferred Stock ...... 1.1 1.1 2.2 2.2 4.4 4.4
- ----------------------------------------------------------------------------------------------------
Earnings Available for Common Stock $ 48.3 $ 45.3 $ 76.5 $ 74.4 $ 78.3 $ 63.9
====================================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
Page 3 of 23 Pages
<PAGE>
ATLANTA GAS LIGHT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(MILLIONS)
September
March 31, 30,
-------------------- ---------
1997 1996 1996
ASSETS (Unaudited)
- --------------------------------------------------------------------------------
Utility Plant .............................. $ 2,011.5 $ 1,969.3 $ 1,969.0
Less accumulated depreciation ............ 627.2 607.1 607.8
- --------------------------------------------------------------------------------
Utility plant-net ...................... 1,384.3 1,362.2 1,361.2
- --------------------------------------------------------------------------------
Other Property and Investments
(less accumulated depreciation
of $2.7 at March 31, 1996) ............... 16.5
- --------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents ................ 1.9 4.5 7.9
Receivables (less allowance for
uncollectible accounts of $7.2
at March 31, 1997, $6.4 at March
31, 1996, and $2.7 at September
30, 1996 ............................... 202.2 215.8 91.3
Receivables from associated companies .... 18.8 0.6
Inventories
Natural gas stored underground ......... 35.5 14.5 144.0
Liquefied natural gas .................. 12.3 4.0 16.8
Materials and supplies ................. 7.2 8.0 7.9
Other .................................. 0.4 0.1
Deferred purchased gas adjustment ........ 19.3 19.3 4.7
Other .................................... 7.1 8.4 10.3
- --------------------------------------------------------------------------------
Total current assets ................... 304.3 275.5 283.0
- --------------------------------------------------------------------------------
Deferred Debits and Other Assets
Unrecovered environmental response
costs .................................. 40.9 34.7 38.0
Unrecovered Integrated Resource
Plan costs ............................. 7.7 8.0 10.0
Investment in joint ventures ............. 35.0
Receivable from AGL Resources -
prepaid pension ........................ 5.2
Other .................................... 36.5 34.1 36.0
- --------------------------------------------------------------------------------
Total deferred debits and other
assets ............................... 90.3 111.8 84.0
- --------------------------------------------------------------------------------
Total Assets ............................... $ 1,778.9 $ 1,766.0 $ 1,728.2
================================================================================
See notes to condensed consolidated financial statements.
Page 4 of 23 Pages
<PAGE>
ATLANTA GAS LIGHT COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(MILLIONS, EXCEPT PAR VALUE DATA)
September
March 31, 30,
-------------------- ---------
CAPITALIZATION AND LIABILITIES 1997 1996 1996
(Unaudited)
- --------------------------------------------------------------------------------
Capitalization
Common stock, $5 par value, shares
issued and outstanding of 55.4 at
March 31, 1997, 55.4 at March 31,
1996, and 55.4 at September 30, 1996 ......$ 276.8 $ 276.8 $ 276.8
Premium on capital stock .................... 166.2 166.2 166.2
Earnings reinvested ......................... 101.2 167.6 59.7
- --------------------------------------------------------------------------------
Total common stock equity ................. 544.2 610.6 502.7
- --------------------------------------------------------------------------------
Preferred stock, cumulative $100 par
or stated value, shares issued and
outstanding of 0.6 at March 31, 1997,
March 31, 1996, and September 30, 1996 .... 58.5 58.5 58.5
Long-term debt .............................. 584.5 554.5 554.5
- --------------------------------------------------------------------------------
Total capitalization ...................... 1,187.2 1,223.6 1,115.7
- --------------------------------------------------------------------------------
Current Liabilities
Short-term debt ............................. 113.0 66.5 152.0
Accounts payable-trade ...................... 47.9 81.5 72.7
Payable to associated companies ............. 2.7
Customer deposits ........................... 30.0 29.1 27.8
Interest .................................... 27.1 25.3 25.7
Taxes ....................................... 39.1 28.0 16.0
Other ....................................... 37.9 44.0 26.9
- --------------------------------------------------------------------------------
Total current liabilities ................. 295.0 274.4 323.8
- --------------------------------------------------------------------------------
Long-Term Liabilities
Accrued environmental response
costs ..................................... 31.3 28.6 30.4
Payable to AGL Resources -
accrued pension costs ..................... 1.5 4.9
Payable to AGL Resources -
accrued postretirement benefits
costs ..................................... 35.7 33.6 36.2
Deferred credits ............................ 59.4 63.2 60.9
- --------------------------------------------------------------------------------
Total long-term liabilities ............... 126.4 126.9 132.4
- --------------------------------------------------------------------------------
Accumulated Deferred Income Taxes ............. 170.3 141.1 156.3
- --------------------------------------------------------------------------------
Total Capitalization and Liabilities ..........$ 1,778.9 $ 1,766.0 $ 1,728.2
================================================================================
See notes to condensed consolidated financial statements.
Page 5 of 23 Pages
<PAGE>
ATLANTA GAS LIGHT COMPANY AND SUBISIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS AND TWELVE MONTHS ENDED MARCH 31, 1997
(MILLIONS)
<TABLE>
<CAPTION>
Six Months Twelve Months
---------------- -----------------
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities
Net income .................................. $ 78.7 $ 76.6 $ 82.7 $ 68.3
Adjustments to reconcile net income to
net cash flow from operating activities
Depreciation and amortization ........... 32.7 33.4 65.3 64.4
Deferred income taxes ................... 1.3 2.4 23.7 17.6
Noncash compensation expense ............ 2.1 4.1
Noncash restructuring costs ............. 2.8
Other ................................... (1.1) (1.2) (2.3) (2.3)
Changes in certain assets and liabilities ... (14.8) (45.4) (50.5) (96.8)
- -------------------------------------------------------------------------------------------
Net cash flow from operating activities 96.8 67.9 118.9 58.1
- -------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Sale of common stock, net of expenses ....... 1.0 50.4
Short-term borrowings, net .................. (39.0) 15.5 46.5 66.5
Sale of long-term debt ...................... 30.0 30.0
Common stock dividends paid to parent ....... (30.1) (24.4) (59.5) (47.1)
Preferred stock dividends ................... (2.2) (2.2) (4.4) (4.4)
- -------------------------------------------------------------------------------------------
Net cash flow from financing activities (41.3) (10.1) 12.6 65.4
- -------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Utility plant expenditures .................. (61.9) (57.9) (136.1) (125.2)
Investment in joint venture ................. (32.6)
Nonutility capital expenditures ............. 1.1 1.6
Cash received from joint venture ............ 2.4
Cost of removal, net of salvage ............. 0.4 (0.2) (0.4) 1.0
- -------------------------------------------------------------------------------------------
Net cash flow from investing activities (61.5) (57.0) (134.1) (155.2)
- -------------------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents .................... (6.0) 0.8 (2.6) (31.7)
Cash and cash equivalents at
beginning of year ................... 7.9 3.7 4.5 36.2
- -------------------------------------------------------------------------------------------
Cash and cash equivalents at
end of year ......................... $ 1.9 $ 4.5 $ 1.9 $ 4.5
===========================================================================================
Supplemental Information
Cash paid during the period for
Interest ................................ $ 26.1 $ 25.5 $ 49.8 $ 48.4
Income taxes ............................ $ 18.3 $ 12.7 $ 24.6 $ 20.6
</TABLE>
See notes to condensed consolidated financial statements.
Page 6 of 23 Pages
<PAGE>
ATLANTA GAS LIGHT COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Implementation of Holding Company Reorganization
On March 6, 1996, following shareholder approval, Atlanta Gas Light
Company (AGLC) completed a corporate restructuring in which a new company,
AGL Resources Inc. (AGL Resources), became the holding company for AGLC,
AGLC's wholly owned natural gas utility subsidiary, Chattanooga Gas Company
(Chattanooga), and AGLC's nonregulated subsidiaries. The consolidated
financial statements of AGLC include the financial statements of AGLC and
Chattanooga and unless noted specifically or otherwise required by the
context, references to AGLC include the operations and activities of AGLC
and Chattanooga.
During fiscal 1996 ownership of AGLC's nonregulated business, Georgia
Gas Company (natural gas production activities), was transferred to AGL
Energy Services, Inc. (AGL Energy Services). Ownership of AGLC's other
nonregulated businesses, Georgia Gas Service Company (propane sales) and
Trustees Investments, Inc. (real estate holdings), was transferred to AGL
Investments, Inc. (AGL Investments). AGLC's interest in Sonat Marketing
Company L.P. was transferred to AGL Gas Marketing, Inc., a wholly owned
subsidiary of AGL Investments. The transfer of AGLC's nonregulated
businesses to those subsidiaries of AGL Resources was effected through a
noncash dividend of $45.9 million during fiscal 1996.
AGL Resources Service Company (Service Company) was formed during
fiscal 1996 to provide corporate support services to AGLC, AGL Resources
and its other subsidiaries. The transfer of related assets and accumulated
deferred income tax liabilities from AGLC to Service Company and other
nonregulated subsidiaries of AGL Resources was effected through noncash
dividends of $34.3 million during the fourth quarter of fiscal 1996 and
$4.8 million during the first quarter of fiscal 1997. As a result of those
noncash dividends, utility plant-net decreased by $48.4 million and
accumulated deferred income tax decreased by $9.3 million. Expenses of
Service Company are allocated to AGLC, AGL Resources and its other
subsidiaries.
2. Interim Financial Statements
In the opinion of management, the unaudited condensed consolidated
financial statements included herein reflect all normal recurring accruals
necessary for a fair statement of the results of the interim periods
reflected. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted from these condensed consolidated
financial statements pursuant to applicable rules and regulations of the
Securities and Exchange Commission. These financial statements should be
read in conjunction with the financial statements and the notes thereto
included in the annual reports on Form 10-K of AGLC for the fiscal years
ended September 30, 1996 and 1995. Certain 1996 amounts have been
reclassified for comparability with 1997 amounts.
3 . Earnings
Since consumption of natural gas is dependent to a large extent on
weather, the majority of AGLC's income is realized during the winter
months. Earnings for three-month and six-month periods are not indicative
of the earnings for a twelve-month period.
On October 3, 1995, AGLC implemented revised firm service rates
pursuant to an order on rehearing of the rate design issues of AGLC's 1993
rate case that was issued by the Georgia Public Service Commission (Georgia
Commission) on September 25, 1995. Although neutral with respect to total
annual margins, the new rates shift margins from heating months (November -
March) into non-heating months, thereby affecting the comparisons of
earnings for the twelve-month periods ended March 31, 1997, and 1996.
Page 7 of 23 Pages
<PAGE>
4. Environmental Matters
AGLC has identified nine sites in Georgia where it currently owns all
or part of a manufactured gas plant (MGP) site. In addition, AGLC has
identified three other sites in Georgia which AGLC does not now own, but
which may have been associated with the operation of MGPs by AGLC or its
predecessors. There are also three sites in Florida which have been
investigated by environmental authorities in connection with which AGLC may
be contacted as a potentially responsible party.
AGLC's response to MGP sites in Georgia is proceeding under two state
regulatory programs. First, AGLC has entered into consent orders with the
Georgia Environmental Protection Division (EPD) with respect to four sites:
Augusta, Griffin, Savannah and Valdosta. Under these consent orders, AGLC
is obliged to investigate and, if necessary, remediate environmental
impacts at the sites. AGLC developed a proposed Corrective Action Plan
(CAP) for the Griffin site, received conditional approval of the CAP, and
has initiated corrective measures. Assessment activities are being
conducted at Augusta and have been completed at Savannah. In addition, AGLC
is in the process of conducting certain interim remedial measures at the
Augusta MGP site. Those measures are expected to be implemented principally
during fiscal 1997.
Second, AGLC's response to all Georgia sites is proceeding under
Georgia's Hazardous Site Response Act (HSRA). AGLC submitted to EPD formal
notifications pertaining to all of its owned MGP sites, and EPD had listed
seven sites (Athens, Augusta, Brunswick, Griffin, Savannah, Valdosta and
Waycross) on the state's Hazardous Site Inventory (HSI). EPD has not listed
the Macon site on the HSI at this time. EPD has also listed the Rome site,
which AGLC has acquired, on the HSI. Under the HSRA regulations, the four
sites subject to consent orders are presumed to require corrective action;
EPD will determine whether corrective action is required at the four
remaining sites (Athens, Brunswick, Rome and Waycross) in due course. In
that respect, however, AGLC has submitted Compliance Status Reports (CSRs)
for the Athens, Brunswick and Rome MGP sites, and AGLC has concluded that
these sites do not meet applicable risk reduction standards. Accordingly,
some degree of response action is likely to be required at those sites.
AGLC has estimated that, under the most favorable circumstances
reasonably possible, the future cost to AGLC of investigating and
remediating the former MGP sites could be as low as $31.3 million.
Alternatively, AGLC has estimated that, under reasonably possible
unfavorable circumstances, the future cost to AGLC of investigating and
remediating the former MGP sites could be as high as $117.3 million. Those
estimates have been adjusted from the September 30, 1996 estimates to
reflect settlements of property damage claims at certain sites. If
additional sites were added to those for which corrective action now
appears reasonably likely, or if substantially more stringent cleanups were
required, or if site conditions are markedly worse than those now
anticipated, the costs could be higher. In addition, those costs do not
include other expenses, such as property damage claims, for which AGLC may
ultimately be held liable, but for which neither the existence nor the
amount of such liabilities can be reasonably forecast. Within the stated
range of $31.3 million to $117.3 million, no amount within the range can be
reliably identified as a better estimate than any other estimate.
Therefore, a liability at the low end of this range and a corresponding
regulatory asset have been recorded in the financial statements.
AGLC has two means of recovering the expenses associated with the
former MGP sites. First, the Georgia Commission has approved the recovery
by AGLC of Environmental Response Costs, as defined, pursuant to an
Environmental Response Cost Recovery Rider (ERCRR). For purposes of the
ERCRR, Environmental Response Costs include investigation, testing,
remediation and litigation costs and expenses or other liabilities relating
to or arising from MGP sites. In connection with the ERCRR, the staff of
the Georgia Commission conducted a financial and management process audit
related to the MGP sites, cleanup activities at the sites and environmental
response costs that have been incurred for purposes of the ERCRR. On
October 10, 1996, the Georgia Commission issued an order to prohibit funds
collected through the ERCRR from being used for the payment of any damage
award, including punitive damages, as a result of any litigation associated
with any of the MGP sites in which AGLC is involved. AGLC is currently
pursuing judicial review of the October 10, 1996, order.
Page 8 of 23 Pages
<PAGE>
Second, AGLC intends to seek recovery of appropriate costs from its
insurers and other potentially responsible parties. With respect to its
insurers, AGLC filed a declaratory judgement action against 23 of its
insurance companies in 1991. After the trial court entered a judgement
adverse to AGLC and AGLC appealed that ruling, the Eleventh Circuit Court
of Appeals held that the case did not present a case or controversy when
filed, and the case was remanded with instructions to dismiss. Since the
Eleventh Circuit's decision, AGLC has settled with, or is close to
settlement with, most of the major insurers. AGLC has not determined what
actions it will take with respect to non-settling insurers.
5. Competition
AGLC competes to supply natural gas to interruptible customers who are
capable of switching to alternative fuels, including propane, fuel and
waste oils, electricity and, in some cases, combustible wood by-products.
AGLC also competes to supply gas to interruptible customers who might seek
to bypass its distribution system.
AGLC can price distribution services to interruptible customers four
ways. First, multiple rates are established under the rate schedules of
AGLC's tariff approved by the Georgia Commission. If an existing tariff
rate does not produce a price competitive with a customer's relevant
competitive alternative, three alternate pricing mechanisms exist:
Negotiated Contracts, Interruptible Transportation and Sales Maintenance
(ITSM) discounts and Special Contracts.
On February 17, 1995, the Georgia Commission approved a settlement that
permits AGLC to negotiate contracts with customers who have the option of
bypassing AGLC's facilities (Bypass Customers) to receive natural gas from
other suppliers. The bypass avoidance contracts (Negotiated Contracts) can
be renewable, provided the initial term does not exceed five years, unless
a longer term specifically is authorized by the Georgia Commission. The
rate provided by the Negotiated Contract may be lower than AGLC's filed
rate, but not less than AGLC's marginal cost of service to the potential
Bypass Customer. Service pursuant to a Negotiated Contract may commence
without Georgia Commission action, after a copy of the contract is filed
with the Georgia Commission. Negotiated Contracts may be rejected by the
Georgia Commission within 90 days of filing; absent such action, however,
the Negotiated Contracts remain in effect. None of the Negotiated Contracts
filed to date with the Georgia Commission have been rejected.
The settlement also provides for a bypass loss recovery mechanism to
operate until the earlier of September 30, 1998, or the effective date of
new rates for AGLC resulting from a general rate case. Under the recovery
mechanism, AGLC is allowed to recover from other customers 75% of the
difference between (a) the nongas cost revenue that was received from the
potential Bypass Customer during the most recent 12-month period and (b)
the nongas cost revenue that is calculated to be received from the lower
Negotiated Contract rate applied to the same volumetric level. Concerning
the remaining 25% of the difference, AGLC is allowed to retain a 44% share
of capacity release revenues in excess of $5 million until AGLC is made
whole for discounts from Negotiated Contracts. To the extent there are
additional capacity release revenues, AGLC is allowed to retain 15% of such
amounts.
In addition to Negotiated Contracts, which are designed to serve
existing and potential Bypass Customers, AGLC's ITSM Rider continues to
permit discounts for short-term transactions to compete with alternative
fuels. Revenue shortfalls, if any, from interruptible customers as measured
by the test-year interruptible revenues determined by the Georgia
Commission in AGLC's 1993 rate case will continue to be recovered under the
ITSM Rider.
The settlement approved by the Georgia Commission also provides that
AGLC may file contracts (Special Contracts) for Georgia Commission approval
if the service cannot be provided through the ITSM Rider, existing rate
schedules, or Negotiated Contract procedures. A Special Contract, for
example, could involve AGLC providing a long-term service contract to
compete with alternative fuels where physical bypass is not the relevant
competition.
Pursuant to the approved settlement, AGLC has filed and is providing
service pursuant to 46 Negotiated Contracts. Additionally, the Georgia
Commission has approved Special Contracts between AGLC and six
interruptible customers.
Page 9 of 23 Pages
<PAGE>
On November 27, 1996, the Tennessee Regulatory Authority (TRA) approved
a settlement that permits Chattanooga to negotiate contracts with large
commercial or industrial customers who are capable of bypassing
Chattanooga's distribution system. The settlement provides for approval on
an experimental basis, with the Tennessee Regulatory Authority (TRA) to
review the measure two years from the approval date. The pricing terms
provided in any such contract may be neither less than Chattanooga's
marginal cost of providing service nor greater than the filed tariff rate
generally applicable to such service. Chattanooga can recover 50% of the
difference between the contract rate and the applicable tariff rate through
the balancing account of the purchased gas adjustment provisions of
Chattanooga's rate schedules. Pursuant to the approved settlement,
Chattanooga has entered into four negotiated contracts which are currently
under review by the TRA.
The 1997 session of the Georgia General Assembly passed legislation
which provides a legal framework for comprehensive deregulation of many
aspects of the natural gas business in Georgia. Senate Bill 215, the
Natural Gas Competition and Deregulation Act, which became law on April 14,
1997, if implemented by AGLC with respect to its system, would result in
the application of an alternative form of regulation, such as performance
based regulation, to AGLC. Pursuant to a separate election, AGLC, as an
electing distribution company, could choose to exit the merchant function
and fully unbundle its system.
Senate Bill 215 provides for a transition period leading to a
condition of effective competition in the natural gas markets. An electing
distribution company would unbundle all services to its natural gas
customers, assign firm delivery capacity to certificated marketers selling
the gas commodity and create a secondary transportation market for
interruptible transportation capacity. Marketers, including unregulated
affiliates of AGLC, would compete to sell natural gas to all customers at
market-based prices. AGLC would continue to provide intrastate
transportation of the gas to end users through its existing system, subject
to continued rate regulation by the Georgia Commission. In addition, the
Georgia Commission would continue to regulate safety, access, and quality
of service pursuant to an alternative form of regulation.
The law provides for marketer standards and rules of business practice
to ensure that the benefits of a competitive natural gas market are
available to all customers on the AGLC system. It imposes an obligation to
serve on marketers with a corresponding universal service fund which can
also facilitate the extension of AGLC facilities in order to serve the
public interest.
In order to implement the new law, the Georgia Commission must
undertake and complete several rulemakings by December 31, 1997. As these
rules become effective the extent of and schedule for actions under the
legislation by AGLC will evolve further.
Currently, in accordance with Statement of Financial Accounting
Standard No. 71, "Accounting for the Effects of Certain Types of
Regulation," (SFAS 71), AGLC has recorded regulatory assets and liabilities
which represent regulator-approved deferrals resulting from the ratemaking
process. Recently, the staff of the Securities and Exchange Commission has
questioned the continued applicability of SFAS 71 to portions of the
business of three California utilities, as a result of legislation recently
enacted in California. The Emerging Issues Task Force (EITF) will begin
discussion of this issue at its May 1997 meeting. While the legislation and
circumstances under review with respect to California differ substantially
from those associated with electing distribution companies in Georgia, AGLC
will monitor the deliberations of the EITF.
On May 1, 1997, Chattanooga filed a rate proceeding with the TRA
seeking an increase in revenues of $4.4 million annually. Revenues from the
rate increase will be used to improve and expand Chattanooga's natural gas
distribution system, to recover increased operation, maintenance and tax
expenses, and to provide a reasonable return to investors. Under the TRA's
rules and regulations, the effective date of the requested increase likely
will be suspended until November 1, 1997. During that time the TRA will
complete a review of the requested increase and will hold public hearings
on the request.
Page 10 of 23 Pages
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On March 6, 1996, Atlanta Gas Light Company (AGLC) completed a
corporate restructuring in which a new company, AGL Resources Inc. (AGL
Resources) became the holding company for AGLC and its subsidiaries. During
calendar 1996, ownership of AGLC's nonregulated businesses was transferred to
AGL Resources and its various subsidiaries. Unless noted specifically or
otherwise required by the context, references to AGLC include the operations and
activities of AGLC and Chattanooga. The following discussion and analysis
reflects events affecting AGLC's results of operations and financial condition
and factors expected to impact its future operations. See Note 1 in Notes to
Condensed Consolidated Financial Statements in this Form 10-Q.
Results of Operations
Three-Month Periods Ended March 31, 1997 and 1996
Explained below are the major factors that had a significant effect on
results of operations for the three-month period ended March 31, 1997, compared
with the same period in 1996.
Operating revenues decreased 1.7% for the three-month period ended March
31, 1997, compared with the same period in 1996 primarily due to (1) decreased
volumes of gas sold as a result of weather that was 34.6% warmer than during the
same period in 1996 and (2) a decrease in the cost of the gas supply recovered
from customers under the purchased gas provisions of AGLC's rate schedules, as
explained in the following paragraph. The decrease in operating revenues was
offset partly by growth in the number of customers served.
AGLC balances the cost of gas with revenues collected from customers
under the purchased gas provisions of its rate schedules. Underrecoveries or
overrecoveries of gas costs are deferred and recorded as current assets or
liabilities, thereby eliminating the effect that recovery of gas costs would
otherwise have on net income. Cost of gas decreased 4.5% during the three-month
period ended March 31, 1997, compared with the same period in 1996. The decrease
in the cost of AGLC's gas supply was primarily due to decreased volumes of gas
sold as a result of weather that was 34.6% warmer than during the same period in
1996. The decrease in cost of gas was offset partly by (1) an increase in the
cost of gas purchased for system supply and (2) an increase in the cost of gas
withdrawn from underground storage.
Operating margin increased 3.2% for the three-month period ended March
31, 1997, compared with the same period in 1996 primarily due to growth in the
number of customers served. Weather normalization adjustment riders (WNARs)
approved by the Georgia Commission and the TRA stabilized margin at the level
which would occur with normal weather for the three-month periods ended March
31, 1997 and 1996. As a result of the WNARs, weather conditions experienced do
not have a significant impact on the comparability of operating margin.
Operating expenses decreased 3.9% for the three-month period ended March
31, 1997, compared with the same period in 1996 primarily due to decreased (1)
labor and labor-related expenses as a result of the transfer of AGLC's
nonregulated business to AGL Resources and its subsidiaries subsequent to March
1996 (see Note 1 to Notes to Condensed Consolidated Financial Statements in this
Form 10-Q), (2) outside services employed and (3) maintenance of general plant.
The decrease in operating expenses was offset partly by increased (1)
uncollectible accounts expense, (2) injuries and damages expense and (3)
expenses related to AGLC's Integrated Resource Plan (IRP) which are recovered
through an IRP Cost Recovery Rider approved by the Georgia Commission. AGLC
balances IRP expenses which are included in operating expenses with revenues
collected under the rider, thereby eliminating the effect that recovery of IRP
expenses would otherwise have on net income. Operating expenses excluding IRP
expenses decreased $4.2 million, or 4.9%.
Page 11 of 23 Pages
<PAGE>
Other income decreased $2 million for the three-month period ended March
31, 1997, compared with the same period in 1996 primarily due to the transfer of
AGLC's nonregulated business to AGL Resources and its subsidiaries subsequent to
March 1996 (See Note 1 to Notes to Condensed Consolidated Financial Statements
in this Form 10-Q). The decrease in other income was offset partly by (1) the
recovery from customers of carrying costs not included in base rates related to
storage gas inventories and (2) the recovery from customers of carrying costs
attributable to an increase in underrecovered deferred purchased gas costs.
Income taxes increased $1.5 million for the three-month period ended
March 31, 1997, compared with the same period in 1996 primarily due to increased
taxable income.
Interest charges increased $1.4 million for the three-month period ended
March 31, 1997, compared with the same period in 1996 primarily due to increased
amounts of short-term and long-term debt outstanding.
Earnings available for common stock for the three-month period ended
March 31, 1997, was $48.3 million, compared with $45.3 million in 1996. The
increase in earnings available for common stock was primarily due to (1)
increased operating margin and (2) decreased other operating expenses.
Six-Month Periods Ended March 31, 1997 and 1996
Explained below are the major factors that had a significant effect on
results of operations for the six-month period ended March 31, 1997, compared
with the same period in 1996.
Operating revenues increased 3.4% for the six-month period ended March
31, 1997, compared with the same period in 1996 primarily due to (1) an increase
in the cost of the gas supply recovered from customers under the purchased gas
provisions of AGLC's rate schedules, as explained in the following paragraph and
(2) growth in the number of utility customers served. The increase in operating
revenues was offset partly by decreased volumes of gas sold as a result of
weather that was 30.6% warmer than during the same period in 1996.
AGLC balances the cost of gas with revenues collected from customers
under the purchased gas provisions of its rate schedules. Underrecoveries or
overrecoveries of gas costs are deferred and recorded as current assets or
liabilities, thereby eliminating the effect that recovery of gas costs would
otherwise have on net income. Cost of gas increased 3.3% during the six-month
period ended March 31, 1997, compared with the same period in 1996. The increase
in the cost of AGLC's gas supply was primarily due to (1) an increase in the
cost of gas purchased for system supply and (2) an increase in the cost of gas
withdrawn from underground storage. The increase in cost of gas was offset
partly by decreased volumes of gas sold as a result of weather that was 30.6%
warmer than during the same period in 1996.
Operating margin increased 3.7% for the six-month period ended March 31,
1997, compared with the same period in 1996 primarily due to growth in the
number of customers served. WNARs approved by the Georgia Commission and the TRA
stabilized margin at the level which would occur with normal weather for the
six-month periods ended March 31, 1997 and 1996. As a result of the WNARs,
weather conditions experienced do not have a significant impact on the
comparability of operating margin.
Operating expenses increased 1.3% for the six-month period ended March
31, 1997, compared with the same period in 1996 primarily due to increased (1)
uncollectible accounts expense, (2) injuries and damages expense, (3) expenses
related to AGLC's IRP which are recovered through an IRP Cost Recovery Rider
approved by the Georgia Commission, (4) ad valorem taxes and (5) franchise
expenses which are recovered through a Franchise Recovery Rider approved by the
Georgia Commission. AGLC balances IRP and franchise expenses which are included
in operating expenses with revenues collected under the riders, thereby
eliminating the effect that recovery of IRP and franchise expenses would
otherwise have on net income. Operating expenses excluding IRP and franchise
expenses increased $1 million, or 1%. The increase in operating expenses was
offset partly by decreased labor and labor-related expenses as a result of the
transfer of AGLC's nonregulated
Page 12 of 23 Pages
<PAGE>
business to AGL Resources and its subsidiaries subsequent to March 1996 (see
Note 1 to Notes to Condensed Consolidated Financial Statements in this Form
10-Q).
Other income decreased $2.3 million for the six-month period ended March
31, 1997, compared with the same period in 1996 primarily due to the transfer of
AGLC's nonregulated business to AGL Resources and its subsidiaries subsequent to
March 1996 (See Note 1 to Notes to Condensed Consolidated Financial Statements
in this Form 10-Q). The decrease in other income was offset partly by (1) the
recovery from customers of carrying costs not included in base rates related to
storage gas inventories and (2) the recovery from customers of carrying costs
attributable to an increase in underrecovered deferred purchased gas costs.
Income taxes increased $1.2 million for the six-month period ended March
31, 1997, compared with the same period in 1996 primarily due to increased
taxable income.
Interest charges increased $2.2 million for the six-month period ended
March 31, 1997, compared with the same period in 1996 primarily due to increased
amounts of short-term and long-term debt outstanding.
Earnings available for common stock for the six-month period ended March
31, 1997, was $76.5 million, compared with $74.4 million in 1996. The increase
in earnings available for common stock was primarily due to increased operating
margin. The increase in earnings available for common stock was offset partly by
increased (1) operating expenses and (2) interest charges.
Twelve-Month Periods Ended March 31, 1997 and 1996
Explained below are the major factors that had a significant effect on
results of operations for the twelve-month period ended March 31, 1997, compared
with the same period in 1996.
Operating revenues increased 13.9% for the twelve-month period ended
March 31, 1997, compared with the same period in 1996 primarily due to (1) an
increase in the cost of the gas supply recovered from customers under the
purchased gas provisions of AGLC's rate schedules, as explained in the following
paragraph and (2) growth in the number of customers served. The increase in
operating revenues was offset partly by decreased volumes of gas sold as a
result of weather that was 27.2% warmer than during the same period in 1996.
AGLC balances the cost of gas with revenues collected from customers
under the purchased gas provisions of its rate schedules. Underrecoveries or
overrecoveries of gas costs are deferred and recorded as current assets or
liabilities, thereby eliminating the effect that recovery of gas costs would
otherwise have on net income. Cost of gas increased 20.4% during the
twelve-month period ended March 31, 1997, compared with the same period in 1996.
The increase in the cost of AGLC's gas supply was primarily due to (1) an
increase in the cost of gas purchased for system supply and (2) an increase in
the cost of gas withdrawn from underground storage. The increase in cost of gas
was offset partly by decreased volumes of gas sold as a result of weather that
was 27.2% warmer than during the same period in 1996.
Operating margin increased 5.7% for the twelve-month period ended March
31, 1997, compared with the same period in 1996 primarily due to (1) revised
firm services rates, effective October 3, 1995, which shift margins from heating
months into non-heating months (see Note 3 to Notes to Condensed Consolidated
Financial Statements in this Form 10-Q) and (2) growth in the number of
customers served. WNARs approved by the Georgia Commission and the TRA
stabilized margin at the level which would occur with normal weather for the
twelve-month periods ended March 31, 1997 and 1996. As a result of the WNARs,
weather conditions experienced do not have a significant impact on the
comparability of operating margin.
Operating expenses increased $2.5 million for the twelve-month period
ended March 31, 1997, compared with the same period in 1996 primarily due to
increased (1) uncollectible accounts expense, (2) franchise expenses which are
Page 13 of 23 Pages
<PAGE>
recovered through a Franchise Recovery Rider approved by the Georgia Commission,
(3) depreciation expense recorded as a result of increased property and (4)
expenses related to AGLC's IRP which are recovered through an IRP Cost Recovery
Rider approved by the Georgia Commission. AGLC balances franchise and IRP
expenses which are included in operating expenses with revenues collected under
the riders, thereby eliminating the effect that recovery of franchise and IRP
expenses would otherwise have on net income. The increase in operating expenses
was offset partly by decreased (1) maintenance of general plant, (2) customer
service expense and (3) outside services employed.
Other income increased $0.3 million for the twelve-month period ended
March 31, 1997, compared with the same period in 1996 primarily due to (1) the
recovery from customers of carrying costs attributable to an increase in
underrecovered deferred purchased gas costs, (2) recoveries of environmental
response costs from insurance carriers and third parties and (3) the recovery
from customers of carrying costs not included in base rates related to storage
gas inventories. The increase in other income was offset partly by the transfer
of AGLC's nonregulated business to AGL Resources and its subsidiaries subsequent
to March 1996. See Note 1 to Notes to Condensed Consolidated Financial
Statements in this Form 10-Q.
Income taxes increased $7.4 million for the twelve-month period ended
March 31, 1997, compared with the same period in 1996 primarily due to increased
taxable income.
Interest charges increased $4 million for the twelve-month period ended
March 31, 1997, compared with the same period in 1996 primarily due to increased
amounts of short-term and long-term debt outstanding.
Earnings available for common stock for the twelve-month period ended
March 31, 1997, was $78.3 million, compared with $63.9 million in 1996. The
increase in earnings available for common stock was primarily due to (1)
increased operating margin and (2) increased other income. The increase in
earnings available for common stock was offset partly by (1) increased operating
expenses and (2) increased interest expense.
Financial Condition
AGLC's business is highly seasonal in nature and typically shows a
substantial increase in accounts receivable from customers from September 30 to
March 31 as a result of colder weather. AGLC also uses gas stored underground
and liquefied natural gas to serve its customers during periods of colder
weather. As a result, accounts receivable increased $110.9 million and inventory
of gas stored underground and liquefied natural gas decreased $113 million
during the six-month period ended March 31, 1997.
Accounts receivable decreased $13.6 million from March 31, 1996 to March
31, 1997, primarily due to decreased operating revenues. Inventory of gas stored
underground and liquefied natural gas increased $29.3 million from March 31,
1996 to March 31, 1997, primarily due to decreased volumes of gas withdrawn from
storage as a result of weather that was 27.2% warmer during the twelve-month
period ended March 31, 1997, compared with the same period in 1996.
The purchasing practices of AGLC are subject to review by the Georgia
Commission under legislation enacted by the Georgia General Assembly (Gas Supply
Plan Legislation). The Gas Supply Plan Legislation establishes procedures for
review and approval, in advance, of gas supply plans for gas utilities and gas
cost adjustment factors applicable to firm service customers of gas utilities.
Pursuant to AGLC's approved Gas Supply Plan for fiscal year 1997, gas supply
purchases are being recovered under the purchased gas provisions of AGLC's rate
schedules. The plan also allows recovery from the customers of AGLC of Federal
Energy Regulatory Commission (FERC) Order No. 636 transition costs that are
currently being charged by AGLC's pipeline suppliers.
On February 27, 1997, the FERC issued Order No. 636-C, on remand from the
decision by the United States Court of Appeals for the District of Columbia
Circuit (D. C. Circuit) in UNITED DISTRIBUTION COS. V. FERC. In Order No. 636-C,
the FERC reaffirmed its decision to permit pipelines to pass all of their gas
supply realignment (GSR) costs through to their
Page 14 of 23 Pages
<PAGE>
customers, and ruled that individual pipelines should submit proposals
concerning the share of GSR costs their interruptible transportation customers
should bear. Requests for rehearing of Order No. 636-C have been filed with the
FERC.
AGLC currently estimates that its portion of transition costs resulting
from the FERC Order No. 636 restructuring proceedings from all of its pipeline
suppliers, that have been filed to be recovered to date, could be as high as
approximately $105 million. This estimate assumes that FERC approval of Southern
Natural Gas Company's (Southern) restructuring settlement agreement is not
overturned on judicial review, that FERC approval of Tennessee Gas Pipeline
Company's (Tennessee) transition cost settlement becomes final, and that FERC
does not alter its GSR recovery policies on rehearing of its Order No. 636-C.
Such filings currently are pending final FERC approval, and the transition costs
are being collected subject to refund. Approximately $87.8 million of such costs
have been incurred by AGLC as of March 31, 1997, recovery of which is provided
under the purchased gas provisions of AGLC's rate schedules. For further
discussion of the effects of FERC Order No. 636 on AGLC, see Part II, Item 5,
"Other Information - Federal Regulatory Matters" of this Form 10-Q.
As noted above, AGLC recovers the cost of gas under the purchased gas
provisions of its rate schedules. AGLC was in an underrecovery position of $19.3
million as of March 31, 1997, and March 31, 1996, and $4.7 million as of
September 30, 1996. Under the provisions of the utility's rate schedules, any
underrecoveries of gas costs are included in current assets and have no effect
on net income.
Cash and cash equivalents decreased $6 million and $2.6 million for the
six-month and twelve-month periods ended March 31, 1997, primarily to offset
other working capital requirements.
The expenditures for plant and other property totaled $61.9 million and
$136.1 million for the six-month and twelve-month periods ended March 31, 1997.
Service Company was formed during fiscal 1996 to provide corporate
support services to AGLC, AGL Resources and its other subsidiaries. The transfer
of related assets and accumulated deferred income tax liabilities from AGLC to
Service Company and other nonregulated subsidiaries was effected through noncash
dividends of $34.3 million during the fourth quarter of fiscal 1996 and $4.8
million during the first quarter of fiscal 1997. As a result of those noncash
dividends, utility plant-net decreased by $48.4 million and accumulated deferred
income tax decreased by $9.3 million. Expenses of Service Company are allocated
to AGL Resources and its subsidiaries.
AGLC has accrued liabilities of $31.3 million as of March 31, 1997, $28.6
million as of March 31, 1996, and $30.4 million as of September 30, 1996, for
estimated future expenditures which are expected to be made over a period of
several years in connection with or related to MGP sites. The Georgia Commission
has approved the recovery by AGLC of Environmental Response Costs, as defined in
Note 4 to Notes to Condensed Consolidated Financial Statements in this Form
10-Q, pursuant to the ERCRR. In connection with the ERCRR, the staff of the
Georgia Commission conducted a financial and management process audit related to
the MGP sites, cleanup activities at the sites and environmental response costs
that have been incurred for purposes of the ERCRR. On October 10, 1996, the
Georgia Commission issued an order to prohibit funds collected through the ERCRR
from being used for the payment of any damage award, including punitive damages,
as a result of any litigation associated with any of the MGP sites in which AGLC
is involved. AGLC is currently pursuing judicial review of the October 10, 1996,
order. See Note 4 to Notes to Condensed Consolidated Financial Statements in
this Form 10-Q.
Short-term debt decreased $39 million for the six-month period ended
March 31, 1997, primarily due to net cash flow from operating activities.
Short-term debt increased $46.5 million for the twelve-month period ended March
31, 1997, primarily to meet increased working capital requirements.
Long-term debt outstanding increased $30 million during the six-month and
twelve-month periods ended March 31, 1997, as a result of the issuance by AGLC
of $30 million in principal amount of Medium-Term Notes, Series C in November
1996. The notes were issued under a registration statement filed with the
Securities and Exchange Commission in September 1993 covering the periodic offer
and sale of up to $300 million in principal amount of Medium-Term Notes, Series
C. As of March 31, 1997, AGLC had issued $224.5 million in principal amount of
Medium-Term Notes Series C,
Page 15 of 23 Pages
<PAGE>
with maturity dates ranging from ten to 30 years and with interest rates ranging
from 5.9% to 7.2%. Net proceeds from the issuance of Medium-Term Notes were used
to fund capital expenditures, to repay short-term debt and for other corporate
purposes.
On February 17, 1995, the Georgia Commission approved a settlement that
permits AGLC to negotiate contracts with customers who have the option of
bypassing AGLC's facilities (Bypass Customers) to receive natural gas from other
suppliers. The bypass avoidance contracts (Negotiated Contracts) can be
renewable, provided the initial term does not exceed five years, unless a longer
term specifically is authorized by the Georgia Commission. The rate provided by
the Negotiated Contract may be lower than AGLC's filed rate, but not less than
AGLC's marginal cost of service to the potential Bypass Customer. Service
pursuant to a Negotiated Contract may commence without Georgia Commission
action, after a copy of the contract is filed with the Georgia Commission.
Negotiated Contracts may be rejected by the Georgia Commission within 90 days of
filing; absent such action, however, the Negotiated Contracts remain in effect.
None of the Negotiated Contracts filed to date with the Georgia Commission have
been rejected.
The settlement also provides for a bypass loss recovery mechanism to
operate until the earlier of September 30, 1998, or the effective date of new
rates for AGLC resulting from a general rate case. See Note 5 to Notes to
Condensed Consolidated Financial Statements in this Form 10-Q.
On November 27, 1996, the TRA approved a settlement that permits
Chattanooga to negotiate contracts with large commercial or industrial customers
who are capable of bypassing Chattanooga's distribution system. The settlement
provides for approval on an experimental basis, with the TRA to review the
measure two years from the approval date. The pricing terms provided in any such
contract may be neither less than Chattanooga's marginal cost of providing
service nor greater than the filed tariff rate generally applicable to such
service. Chattanooga can recover 50% of the difference between the contract rate
and the applicable tariff rate through the balancing account of the purchased
gas adjustment provisions of Chattanooga's rate schedules.
The 1997 session of the Georgia General Assembly passed legislation which
provides a legal framework for comprehensive deregulation of many aspects of the
natural gas business in Georgia. Senate Bill 215, the Natural Gas Competition
and Deregulation Act, which became law on April 14, 1997, if implemented by AGLC
with respect to its system, would result in the application of an alternative
form of regulation, such as performance based regulation, to AGLC. Pursuant to a
separate election, AGLC, as an electing distribution company, could choose to
exit the merchant function and fully unbundle its system. See Note 5 to Notes to
Condensed Consolidated Financial Statements in this Form 10-Q.
On May 1, 1997, Chattanooga filed a rate proceeding with the TRA seeking
an increase in revenues of $4.4 million annually. Revenues from the rate
increase will be used to improve and expand Chattanooga's natural gas
distribution system, to recover increased operation, maintenance and tax
expenses, and to provide a reasonable return to investors. Under the TRA's rules
and regulations, the effective date of the requested increase likely will be
suspended until November 1, 1997. During that time the TRA will complete a
review of the requested increase and will hold public hearings on the request.
Page 16 of 23 Pages
<PAGE>
PART II -- OTHER INFORMATION
"Part II -- Other Information" is intended to supplement information
contained in the Annual Report on Form 10-K for the fiscal year ended September
30, 1996 and should be read in conjunction therewith.
Item 1. Legal Proceedings
See Item 5.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of the Sole Shareholder was held by consent action taken
February 7, 1997, and the following four nominees were elected to serve as the
four directors of AGLC:
David R. Jones
Charles W. Bass
Thomas W. Benson
Melanie M. Platt
All of the outstanding shares of AGLC's common stock are owned by AGL
Resources and were voted for the election of such directors.
Item 5. Other Information
Federal Regulatory Matters
Order No. 636
On February 27, 1997, the FERC issued Order No. 636-C, on remand from the
decision by the United States Court of Appeals for the D. C. Circuit in UNITED
DISTRIBUTION COS. V. FERC. Among other matters, the court remanded Order No. 636
to the FERC for reconsideration of certain issues, including the FERC's decision
to permit pipelines to pass all of their GSR costs through to their customers
and its decision to require interruptible transportation customers to bear 10%
of GSR costs. In Order No. 636-C, the FERC reaffirmed its decision to permit
pipelines to pass all of their GSR costs through to their customers, and ruled
that individual pipelines should submit proposals concerning the share of GSR
costs their interruptible transportation customers should bear. Requests for
rehearing of Order No. 636-C have been filed with the FERC. In addition, AGLC
and others have filed petitions for certiorari to the United States Supreme
Court, seeking review of the court's ruling in UNITED DISTRIBUTION COS. V. FERC
affirming the FERC's authority over capacity release by local distribution
companies.
AGLC currently estimates that its portion of transition costs (which
include unrecovered gas costs, GSR costs and various stranded costs resulting
from unbundling of interstate pipeline sales service) from all of its pipeline
suppliers filed with the FERC to date to be recovered could be as high as
approximately $105 million. AGLC's estimate is based on the most recent
estimates of transition costs filed by its pipeline suppliers with the FERC, and
assumes that FERC approval of Southern's restructuring settlement agreement is
not overturned on judicial review, that FERC approval of Tennessee's transition
cost settlement becomes final, and that FERC does not alter its GSR recovery
policies on rehearing of its Order 636-C. Such filings by AGLC's pipeline
suppliers are pending final FERC approval. Approximately $87.8 million of
transition costs have been incurred by AGLC as of March 31, 1997, and are being
recovered from customers under the purchased gas provisions of AGLC's rate
schedules. Details concerning the status of the Order No. 636 restructuring
proceedings involving the pipelines that serve AGLC directly are set forth
below.
Page 17 of 23 Pages
<PAGE>
SOUTHERN GSR Cost Recovery Proceeding. Southern continues to make quarterly and
monthly transition cost filings to recover costs from contesting parties to the
settlement, and the FERC has ordered that such costs may be recovered by
Southern, subject to the outcome of a hearing for contesting parties. However,
since AGLC is a consenting party, its GSR and other transition cost charges are
in accordance with Southern's restructuring settlement. Assuming the FERC's
approval of the settlement is upheld on judicial review, AGLC's share of
Southern's transition costs is estimated to be $86.8 million. This estimate
would not be affected by the remand of Order No. 636, unless FERC's approval of
the settlement is not upheld on judicial review. As of March 31, 1997, $76.5
million of such costs have already been incurred by AGLC.
On April 14, 1997, the D.C. Circuit issued an order dismissing AGLC's
appeals of the FERC's orders in Southern's restructuring proceeding. AGLC had
requested that the dismissal be conditioned upon the outcome of the appeals
seeking to overturn the settlement, but the court did not impose the requested
condition. The court's order is subject to possible requests for rehearing.
TENNESSEE GSR Cost Recovery Proceeding. On February 28, 1997, Tennessee filed
with the FERC a settlement that would, if approved by the FERC, resolve the
majority of issues associated with Tennessee's restructuring, including its
recovery of GSR and other transition costs associated with restructuring. The
settlement provides for Tennessee to recover GSR costs via a fixed surcharge,
and limits the total amount of such costs that Tennessee may recover. The
settlement would also resolve AGLC's appeals of orders issued in Tennessee's
restructuring proceeding, as well as AGLC's appeal of the FERC's orders
approving the exit fee settlement between Tennessee and Columbia Gas
Transmission Corporation. The settlement was not opposed by any party, and was
approved by the FERC on April 16, 1997; however, the FERC's order is subject to
possible requests for rehearing, and thus is not yet final.
Tennessee has continued to make quarterly GSR cost recovery filings with
the FERC. On March 31, 1997, Tennessee filed with the FERC a proposal to
continue its existing GSR surcharge in light of the aforementioned settlement.
In the alternative, Tennessee sought the FERC's approval to recover an
additional $100 million in GSR costs. AGLC filed comments supporting Tennessee's
request to continue its existing GSR surcharge, but conditionally protested
Tennessee's alternate proposal; however, the FERC has not yet acted upon
Tennessee's filing. AGLC's estimated liability for GSR costs as a result of
Tennessee's settlement filing is approximately $13 million, assuming that the
FERC's approval of the settlement becomes final. As of March 31, 1997, $5.9
million of such costs have already been incurred by AGLC.
FERC Rate Proceedings
TENNESSEE On January 29, 1997, the FERC issued an order denying requests for
rehearing of the FERC's October 30, 1996 order approving Tennessee's rate case
settlement. One party has sought judicial review of the FERC's orders approving
the settlement, which therefore are not yet final.
TRANSCO On February 3, 1997, the FERC issued an order denying requests for
rehearing of the FERC's November 1, 1996 order approving the partial settlement
in Transco's ongoing rate case. One petition for judicial review of the FERC's
orders approving the settlement has been filed; therefore, the FERC's orders are
not yet final. AGLC has submitted testimony in the consolidated hearing to
address Transco's proposal to roll into its general system rates the costs
associated with the Leidy Line and Southern expansion facilities. AGLC took no
position with respect to Transco's roll-in proposal, but opposed Transco's
proposal to allocate additional costs to a bundled storage service provided by
Transco to AGLC and other customers.
ANR PIPELINE Several parties have filed exceptions to the presiding
administrative law judge's January 10, 1997 initial decision in ANR's rate
proceeding. The initial decision therefore is not yet final.
AGLC cannot predict the outcome of these federal proceedings nor can it
determine the ultimate effect, if any, such proceedings may have on AGLC.
Page 18 of 23 Pages
<PAGE>
State Regulatory Matters
The 1997 session of the Georgia General Assembly passed legislation which
provides a legal framework for comprehensive deregulation of many aspects of the
natural gas business in Georgia. Senate Bill 215, the Natural Gas Competition
and Deregulation Act, which became law on April 14, 1997, if implemented by AGLC
with respect to its system, would result in the application of an alternative
form of regulation, such as performance based regulation, to AGLC. Pursuant to a
separate election, AGLC, as an electing distribution company, could choose to
exit the merchant function and fully unbundle its system.
Senate Bill 215 provides for a transition period leading to a condition
of effective competition in the natual gas markets. An electing distribution
company would unbundle all services to its natural gas customers, assign firm
delivery capacity to certificated marketers selling the gas commodity and create
a secondary transportation market for interruptible transportation capacity.
Marketers, including unregulated affiliates of AGLC, would compete to sell
natural gas to all customers at market-based prices. AGLC would continue to
provide intrastate transportation of the gas to end users through its existing
system, subject to continued rate regulation by the Georgia Commission. In
addition, the Georgia Commission would continue to regulate safety, access, and
quality of service pursuant to an alternative form of regulation.
The law provides for marketer standards and rules of business practice to
ensure that the benefits of a competitive natural gas market are available to
all customers on the AGLC system. It imposes an obligation to serve on marketers
with a corresponding universal service fund which can also facilitate the
extension of AGLC facilities in order to serve the public interest.
In order to implement the new law, the Georgia Commission must undertake
and complete several rulemakings by December 31, 1997. As these rules become
effective the extent of and schedule for actions under the legislation by AGLC
will evolve further.
On May 21, 1996, the Georgia Commission adopted a Policy Statement
following its November 20, 1995, Notice of Inquiry concerning changes in state
regulatory guidelines to respond to trends toward increased competition in
natural gas markets. Among other things, the Policy Statement sets up a
distinction between competitive and natural monopoly services; favors
performance-based regulation in lieu of traditional cost-of-service regulation;
calls for unbundling interruptible service; directs the Georgia Commission's
staff to develop standards of conduct for utilities and their marketing
affiliates; and invites pilot programs for unbundling services to residential
and small business customers.
Consistent with specific goals in the Georgia Commission's Policy
Statement, AGLC filed on June 10, 1996, the Natural Gas Service Provider
Selection Plan (the Plan), a comprehensive plan for serving interruptible
markets. The Plan proposes further unbundling of services to provide large
customers more service options and the ability to purchase only those services
they require. Proposed tariff changes would allow AGLC to cease its sales
service function and the associated sales obligation for large customers;
implement delivery-only service for large customers on a firm and interruptible
basis; and provide pooling services to marketers. The Plan also includes
proposed standards of conduct for utilities and utility marketing affiliates.
The Georgia Commission granted AGLC's Motion for Continuance on January 30,
1997, moving the Georgia Commission to suspend the proceeding after a showing
that all parties of record had expressed an interest in pursuing settlement
discussions in lieu of rebuttal hearings. The hearing schedule remains suspended
for settlement discussions currently in progress.
AGLC supports both the Plan under consideration by the Georgia Commission
and the new regulatory model contemplated by Senate Bill 215. AGLC currently
makes no profit on the purchase and sale of gas because actual gas costs are
passed through to customers under the purchased gas provisions of AGLC's rate
schedules. Earnings are provided through revenues received for intrastate
transportation of the commodity. Consequently, allowing AGLC to cease its sales
service function and the associated sales obligation would not adversely affect
AGLC's ability to earn a return on its
Page 19 of 23 Pages
<PAGE>
distribution system investment. Gas will be sold to all customers by numerous
marketers, including nonregulated subsidiaries of AGL Resources.
On July 22, 1996, Chattanooga filed a plan with the TRA that permits
Chattanooga to negotiate contracts with customers in Tennessee who have
long-term competitive options, including bypass. On November 27, 1996, the TRA
approved a settlement that permits Chattanooga to negotiate contracts with large
commercial or industrial customers who are capable of bypassing Chattanooga's
distribution system. The settlement provides for approval on an experimental
basis, with the TRA to review the measure two years from the approval date. The
pricing terms provided in any such contract may be neither less than
Chattanooga's marginal cost of providing service nor greater than the filed
tariff rate generally applicable to such service. Chattanooga can recover 50% of
the difference between the contract rate and the applicable tariff rate through
the balancing account of the purchased gas adjustment provisions of
Chattanooga's rate schedules.
On May 1, 1997, Chattanooga filed a rate proceeding with the TRA seeking
an increase in revenues of $4.4 million annually. Revenues from the rate
increase will be used to improve and expand Chattanooga's natural gas
distribution system, to recover increased operation, maintenance and tax
expenses, and to provide a reasonable return to investors. Under the TRA's rules
and regulations, the effective date of the requested increase likely will be
suspended until November 1, 1997. During that time the TRA will complete a
review of the requested increase and will hold public hearings on the request.
Environmental Matters
AGLC has identified nine sites in Georgia where it currently owns all or
part of an MGP site. In addition, AGLC has identified three other sites in
Georgia which AGLC does not now own, but which may have been associated with the
operation of MGPs by AGLC or its predecessors. There are also three sites in
Florida which have been investigated by environmental authorities in connection
with which AGLC may be contacted as a potentially responsible party.
AGLC's response to MGP sites in Georgia is proceeding under two state
regulatory programs. First, AGLC has entered into consent orders with the EPD
with respect to four sites: Augusta, Griffin, Savannah and Valdosta. Under these
consent orders, AGLC is obliged to investigate and, if necessary, remediate
environmental impacts at the sites. AGLC developed a proposed CAP for the
Griffin site, received conditional approval of the CAP, and has initiated
corrective measures. Assessment activities are being conducted at Augusta and
have been completed at Savannah . In addition, AGLC is in the process of
conducting certain interim remedial measures at the Augusta MGP site. Those
measures are expected to be implemented principally during fiscal 1997.
Second, AGLC's response to all Georgia sites is proceeding under
Georgia's HSRA. AGLC submitted to EPD formal notifications pertaining to all of
its owned MGP sites, and EPD had listed seven sites (Athens, Augusta, Brunswick,
Griffin, Savannah, Valdosta and Waycross) on the state's HSI. EPD has not listed
the Macon site on the HSI at this time. EPD has also listed the Rome site, which
AGLC has acquired, on the HSI. Under the HSRA regulations, the four sites
subject to consent orders are presumed to require corrective action; EPD will
determine whether corrective action is required at the four remaining sites
(Athens, Brunswick, Rome and Waycross) in due course. In that respect, however,
AGLC has submitted CSRs for the Athens, Brunswick and Rome MGP sites, and AGLC
has concluded that these sites do not meet applicable risk reduction standards.
Accordingly, some degree of response action is likely to be required at those
sites.
AGLC has estimated that, under the most favorable circumstances
reasonably possible, the future cost to AGLC of investigating and remediating
the former MGP sites could be as low as $31.3 million. Alternatively, AGLC has
estimated that, under reasonably possible unfavorable circumstances, the future
cost to AGLC of investigating and remediating the former MGP sites could be as
high as $117.3 million. Those estimates have been adjusted from the September
30, 1996 estimates to reflect settlements of property damage claims at certain
sites. If additional sites were added to those for which action now appears
reasonably likely, or if substantially more stringent cleanups were required, or
if site conditions are markedly worse than those now anticipated, the costs
could be higher. In addition, those costs do not include other expenses,
Page 20 of 23 Pages
<PAGE>
such as property damage claims, for which AGLC may ultimately be held liable,
but for which neither the existence nor the amount of such liabilities can be
reasonably forecast. Within the stated range $31.3 million to $117.3 million, no
amount within the range can be reliably identified as a better estimate than any
other estimate. Therefore, a liability at the low end of this range and a
corresponding regulatory asset have been recorded in the financial statements.
AGLC has two means of recovering the expenses associated with the former
MGP sites. First, the Georgia Commission has approved the recovery by AGLC of
Environmental Response Costs, as defined, pursuant to AGLC's ERCRR. For purposes
of the ERCRR, Environmental Response Costs include investigation, testing,
remediation and litigation costs and expenses or other liabilities relating to
or arising from MGP sites. In connection with the ERCRR, the staff of the
Georgia Commission conducted a financial and management process audit related to
the MGP sites, cleanup activities at the sites and environmental response costs
that have been incurred for purposes of the ERCRR. On October 10, 1996, the
Georgia Commission issued an order to prohibit funds collected through the ERCRR
from being used for the payment of any damage award, including punitive damages,
as a result of any litigation associated with any of the MGP sites in which AGLC
is involved. AGLC is currently pursuing judicial review of the October 10, 1996,
order.
Second, AGLC intends to seek recovery of appropriate costs from its
insurers and other potentially responsible parties. See Note 4 to Notes to
Condensed Consolidated Financial Statements in this Form 10-Q.
Other Legal Proceedings
With regard to other legal proceedings, AGLC is a party, as both
plaintiff and defendant, to a number of other suits, claims and counterclaims on
an ongoing basis. Management believes that the outcome of all litigation in
which it is involved will not have a material adverse effect on the consolidated
financial statements of AGLC.
Joint Venture
During December 1996, AGL Resources signed a letter of intent with
Transco to form a joint venture, which would be known as Cumberland Pipeline
Company, to operate and market interstate pipeline capacity. The transaction is
subject to various corporate and regulatory approvals.
Initially, the 135-mile Cumberland pipeline will include existing
pipeline infrastructure owned by the two companies. Projected to enter service
by November 1, 2000, Cumberland will provide service to AGLC, Chattanooga and
other markets throughout the eastern Tennessee Valley, in northwest Georgia and
northeast Alabama.
Affiliates of Transco and AGL Resources each will own 50% of the new
pipeline company, and an affiliate of Transco will serve as operator. The
project will be submitted to the FERC for approval in the fourth quarter of
1997.
Page 21 of 23 Pages
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 - Amendment to Displacement Service Agreement, dated February
14, 1997, between Washington Gas Light Company and Atlanta Gas
Light Company, amending Exhibit 10.57, Form 10-K for the fiscal
year ended September 30, 1996.
10.2 - Amendment to Service Agreement under Rate Schedule ESS, dated
January 10, 1996, between Atlanta Gas Light Company and
Transcontinental Gas Pipe Line Corporation.
10.3 - Letter agreement amending FPS-1 Service Agreement, dated
January 9, 1997, between Atlanta Gas Light Company and Cove
Point LNG Limited Partnership, amending Exhibit 10.53, Form
10-K, for the fiscal year ended September 30, 1996.
10.4 - Letter agreement amending FPS-1 Service Agreement, dated
February 14, 1997, between Atlanta Gas Light Company and Cove
Point LNG Limited Partnership, amending Exhibit 10.53, Form
10-K for the fiscal year ended September 30, 1996.
10.5 - Notification letter dated April 2, 1997, and Service
Agreement No. 905660 under Rate Schedule FT, effective May 17,
1995, between Chattanooga Gas Company and Southern Natural Gas
Company.
10.6 - Cherokee Expansion Project Precedent Agreement and letter
agreement between Atlanta Gas Light Company and
Transcontinental Gas Pipe Line Corporation, dated February 28,
1997.
27 - Financial Data Schedule.
(b) Reports on Form 8-K.
None.
Page 22 of 23 Pages
<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.
Atlanta Gas Light Company
(Registrant)
Date May 15, 1997 /s/ David R. Jones
David R. Jones
President and Chief Executive Officer
Date May 15, 1997 /s/ J. Michael Riley
J. Michael Riley
Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)
Page 23 of 23 Pages
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000008154
<NAME> ATLANTA GAS LIGHT COMPANY
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,384
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 305
<TOTAL-DEFERRED-CHARGES> 74
<OTHER-ASSETS> 16
<TOTAL-ASSETS> 1,779
<COMMON> 277
<CAPITAL-SURPLUS-PAID-IN> 166
<RETAINED-EARNINGS> 101
<TOTAL-COMMON-STOCKHOLDERS-EQ> 544
56
3
<LONG-TERM-DEBT-NET> 585
<SHORT-TERM-NOTES> 113
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 478
<TOT-CAPITALIZATION-AND-LIAB> 1,779
<GROSS-OPERATING-REVENUE> 835
<INCOME-TAX-EXPENSE> 47
<OTHER-OPERATING-EXPENSES> 174
<TOTAL-OPERATING-EXPENSES> 687
<OPERATING-INCOME-LOSS> 103
<OTHER-INCOME-NET> 3
<INCOME-BEFORE-INTEREST-EXPEN> 106
<TOTAL-INTEREST-EXPENSE> 27
<NET-INCOME> 79
2
<EARNINGS-AVAILABLE-FOR-COMM> 77
<COMMON-STOCK-DIVIDENDS> 30
<TOTAL-INTEREST-ON-BONDS> 22
<CASH-FLOW-OPERATIONS> 97
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
Washington Gas Light Company
Washington 1100 H Street, N.W.
Gas Washington, D.C. 20080
Direct Dial (202 -624-6116)
February 28, 1997
BY FAX
Ms. Eileen Stanek
Atlanta Gas Light Company
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
Re: Amendment No. 1 to Displacement Service Agreement
Dear Eileen:
Attached is a copy of a fully executed agreement between Washington Gas
and Atlanta Gas Light Company. A hard copy will be sent out today by Federal
Express.
Sincerely,
/s/ Mac
Telemac N. Chryssikos
<PAGE>
AMENDMENT NO. 1
DISPLACEMENT SERVICE AGREEMENT
This Amendment No. 1 , made and effective as of this 14th day of
February 1997, reflects the agreement of the parties to amend the Displacement
Service Agreement (Agreement) dated April 4, 1996 between Washington Gas Light
Company (Seller) and Atlanta Gas Light Company (Buyer).
Buyer and Seller agree to an extended term of the Agreement through
April 15, 2001. Effective April 15, 1997, the parties agree that Article II
shall be replaced by the following provision:
"II. Term. The parties agree to extend the Term of this Agreement
to be effective December 15, 1997 for four consecutive winter periods
(Decmber 1 through the following April 15) through April 15, 2001.
Thereafter, the Agreement shall continue in full force and effect for
the same periods in subsequent years, on a year-to-year basis, unless
terminated by either party upon written notice given to the other,
non-terminating party no less than one hundred and twenty (120) days
prior to the commencement of the ensuing winter period."
In all other aspects, the Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have caused this Supplement No. 1 to
executed by their duly authorized officers, as of the day and year first written
above.
Seller:
WASHINGTON GAS LIGHT COMPANY
Witness:
By: /s/Kathy McKee By: /s/J.M. Schepis
Admin. Associate SVP
(Title) (Title)
Buyer:
ATLANTA GAS LIGHT COMPANY
Witness:
By: /s/Eileen G. Stanek By: /s/Thomas H. Benson
Director Executive Vice President
(Title) (Title)
<PAGE>
TRANSCONTINENTAL PIPE LINE CORPORATION
2800 Post Oak Boulevard
P.O. Box 1396
Houston, Tax 77125-1396
713-439-2000
January 10, 1996
Mr. Stephen Gunther
Atlanta Gas Light Company
One Peachtree Center
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3249
Dear Mr. Gunther:
Transcontinental Gas Pipe Line Corporation ("Transco") and Atlanta Gas Light
Company executed a Rate Schedule ESS Service Agreement, effective November 1,
1993, as a part of Transco's compliance with the Federal Energy Regulatory
Commission's ("FERC") Order No. 636 in Docket No. RS92-86. Notwithstanding
anything contained in Article III (Term) thereof. Atlanta Gas Light Company
hereby agrees not to exercise its contract termination rights under the Rate
Schedule ESS Service Agreement (i) to the extent that Atlanta Gas Light
Company's Rate Schedule FS service agreements remain in effect; (ii) as long as
Transco has an obligation to provide Rate Schedule FS service to Atlanta Gas
Light company; and (iii) Rate Schedule FS service remains a swing service.
Very truly yours,
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
By: /s/ Frank J. Ferazzi
Frank J. Ferazzi
Vice President
Customer Service
ACCEPTED AND AGREED TO:
ATLANTA GAS LIGHT COMPANY
By: /s/ Stephen J. Gunther
Title: Vice President
<PAGE>
AMENDMENT TO SERVICE AGREEMENT UNDER RATE SCHEDULE ESS
THIS AMENDMENT is made and entered into effective as of the first day of
December, 1994 by and between ATLANTA GAS LIGHT COMPANY, hereinafter referred to
as "Buyer," and TRANSCONTINENTAL GAS PIPE LINE CORPORATION, hereinafter referred
to as "Seller."
WITNESSETH:
WHEREAS, Buyer and Seller entered into an Agreement under Seller's Rate Schedule
ESS effective as of November 1, 1993, (Agreement); and
WHEREAS, Buyer and Seller amended this Agreement on December 1, 1993, in order
to provide for the increased capacity and deliverability attributable to Phase I
(as described in Seller's Eminence Expansion Application in Docket No.
CP90-2230-000) of Seller's Eminence Storage Field Expansion approved by the
Federal Energy Regulatory Commission (Commission) on April 18, 1991, in Docket
No. CP90-2230-000, and the allocation of such increased deliverability in
accordance with the Commission's Order on October 4, 1993, in Docket No.
RS92-86-004, el. al., (October 4 Order); and
WHEREAS, Buyer and Seller desire to further amend this Agreement to provide for
the increased capacity and deliverability attributable to Phase II (as described
in Seller's amended Eminence Expansion Application in Docket No. CP90-2230-005)
of Seller's Eminence Storage Field Expansion in order to comply with the
allocation authorized by the October 4 Order; and
WHEREAS, Buyer and Seller intend that the Agreement shall be further amended
effective as of the in-service date of Phase III (as described in Seller's
amended Eminence Expansion Application in Docket No. CP90- 2230-005) of Seller's
Eminence Storage Field Expansion to provide for any applicable revisions to the
level of Storage Injection Quantity and Storage Demand Quantity compared to
Buyer's Storage Injection Quantity and Storage Demand Quantity as of the
effective date of Phase II in order to comply with the allocation authorized by
the October 4 Order.
NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter
contained, the parties amend the Agreement as follows:
1. Article I is hereby deleted in its entirety effective December 1, 1994 and
the following Article I, substituted therefor for the period extending until the
in-service date of Phase III of Seller's Eminence Storage Field Expansion:
ARTICLE I
SERVICE TO BE RENDERED
1. Subject to the terms and provisions of this agreement and of Seller's Rate
Schedule ESS, Seller agrees to inject into storage for Buyer's account, store
and withdraw from storage, quantities of natural gas as follows:
To withdraw from storage up to a maximum quantity on any day of 37,871 Mcf,
which quantity shall be Buyer's Storage Demand Quantity, or such greater
daily quantity, as applicable from time to time, pursuant to the terms and
conditions of Seller's Rate Schedule ESS.
To inject into storage a maximum quantity on any day of 2,525 Mcf, which
quantity shall be Buyer's Storage Injection Quantity, or such greater daily
quantity, as applicable from time to time, pursuant to the terms and
conditions of Seller's Rate Schedule ESS.
To receive and store up to a total quantity at any one time of 304,821 Mcf,
which quantity shall be Buyer's Storage Capacity Quantity.
<PAGE>
AMENDMENT TO SERVICE AGREEMENT UNDER RATE SCHEDULE ESS
(CONTINUED)
ARTICLE I
SERVICE TO BE RENDERED
(Continued)
2. Article I is hereby deleted in its entirety effective upon the in-service
date of Phase III of Seller's Eminence Storage Field Expansion and the following
Article I substituted therefor:
1. Subject to the terms and provisions of this agreement and of Seller's Rate
Schedule ESS, Seller agrees to inject into storage for Buyer's account, store
and withdraw from storage, quantities of natural gas as follows:
To withdraw from storage up to a maximum quantity on any day of 30,297 Mcf,
which quantity shall be Buyer's Storage Demand Quantity, or such greater
daily quantity, as applicable from time to time, pursuant to the terms and
conditions of Seller's Rate Schedule ESS.
To inject into storage a minimum quantity on any day 2,020 of Mcf, which
quantity shall be Buyer's Storage Injection Quantity, or such greater daily
quantity, as applicable from time to time, pursuant to the terms and
conditions of Seller's Rate Schedule ESS.
To receive and store up to a total quantity at any one time of 304,821 Mcf,
which quantity shall be Buyer's Storage Capacity Quantity.
3. Seller shall notify Buyer of the in-service date of Phase III at least
thirty (30) days prior to such in-service date.
4. Except as hereinabove amended, the Agreement shall remain in full force
and effect as written.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment.
TRANSCONTINENTAL GAS PIPE CORPORATION
By /s/ Frank J. Ferazzi
Frank J. Ferazzi
Vice President
Customer Service
ATLANTA GAS LIGHT COMPANY
By /s/ Stephen J. Gunther
Name Stephen J. Gunther
Title Vice President
<PAGE>
AGL Energy Services, Inc.
P.O. Box 4569
Atlanta, Georgia 30302-4569
Telephone (404) 584-9470
January 9, 1997
Mr. John Hritcko, Jr.
Director
Marketing & Regulatory Affairs
Cove Point LNG Limited Partnership
20 Montchanin Road
Wilmington, Delaware 19807-0020
Re: Letter Agreement Concerning FPS-1 Service Agreement
between Cove Point LNG Limited Partnership ("Operator") and
Atlanta Gas Light Company ("Buyer") (the "Service Agreement")
Dear Mr. Hritcko:
Appendix A to the Service Agreement states that Buyer may terminate the Service
Agreement at the end of the first Contract Year (April 15, 1997) by providing
notice to Operator no later than ninety (90) days prior to April 15, 1997
(January 15, 1997).
As you are aware, Buyer is in the process of negotiating a transportation
agreement with a transporter ("Transporter") to transport the quantities
purchased under the Service Agreement for the period from April 15, 1997 through
the remaining term of the Service Agreement. However, Buyer does not believe
that such negotiations can be completed and a transportation agreement executed
by January 15, 1997. In order to give Buyer additional time to reach an
agreement with Transporter that would enable Buyer to continue purchasing gas
under the Service Agreement beyond the first Contract Year, Buyer and Operator
hereby agree to extend the notice date for termination to February 15, 1997.
Accordingly, Paragraph B of Appendix A to the Service Agreement will be deleted
in its entirety as of January 10, 1997 and replaced with the following new
Paragraph B:
"B. Buyer may terminate this Agreement effective as of the end of the first
Contract Year (April 15, 1997) by providing Notice to Operator of Buyer's
election to terminate no later than February 15, 1997."
<PAGE>
Page 2
Mr. John Hritcko, Jr.
January 9,1997
If the terms set forth herein reflect your understanding of our agreement,
please execute two (2) copies of this letter agreement in the space provided
below and return one (1) fully executed copy to the undersigned.
COVE POINT LNG AGL Energy Services, Inc.
LIMITED PARTNERSHIP as agent for ATLANTA GAS LIGHT COMPANY
By:/s/ John Hritcko, Jr. By: /S/Michael P. Wingo
Title:Director Marketing & Regulatory Title: VP - AGL Energy Services, Inc.
Affairs
Date: 1/16/97 Date: 1/9/97
<PAGE>
February 14, 1997
Mr. John Hritcko, Jr.
Director
Marketing & Regulatory Affairs
Cove Point LNG Limited Partnership
20 Montchanin Road
Wilmington, Delaware 19807-0020
Re: Letter Agreement Concerning FPS-1 Service Agreement
between Cove Point LNG Limited Partnership ("Operator") and
Atlanta Gas Light Company ("Buyer") (the "Service Agreement")
Dear Mr, Hritcko:
Appendix A to the Service Agreement states that Buyer may terminate the Service
Agreement at the end of the first Contract Year (April 15, 1997) by providing
notice to Operator no later than ninety (90) days prior to April 15, 1997
(January 15, 1997).
As you are aware, Buyer is in the process of negotiating a transportation
agreement with a transporter ("Transporter") to transport the quantities
purchased under the Service Agreement for the period from April 15, 1997 through
the remaining term of the Service Agreement. However, Buyer does not believe
that such negotiations can be completed and a transportation agreement executed
by January 15, 1997. In order to give Buyer additional time to reach an
agreement with Transporter that would enable Buyer to continue purchasing gas
under the Service Agreement beyond the first Contract Year, Buyer and Operator
hereby agree to extend the notice date for termination to February 15, 1997.
Accordingly, Paragraph B of Appendix A to the Service Agreement will be deleted
in its entirety as of January 10, 1997 and replaced with the following new
Paragraph B:
"B. Buyer may terminate this Agreement effective as of the end of the first
Contract Year (April 15, 1997) by providing Notice to Operator of Buyer's
election to terminate no later than February 28, 1997."
<PAGE>
Page 2
Mr. John Hritcko, Jr.
January 9,1997
If the terms set forth herein reflect your understanding of our agreement,
please execute two (2) copies of this letter agreement in the space provided
below and return one (1) fully executed copy to the undersigned.
COVE POINT LNG AGL Energy Services, Inc.
LIMITED PARTNERSHIP as agent for ATLANTA GAS LIGHT COMPANY
By: /s/John Hritcko, Jr. By: /s/Michael P. Wingo
Title: Director Marketing & Regulatory Title: VP - AGL Energy Services, Inc.
Affairs
Date: 2/26/97 Date: 2/14/97
<PAGE>
Southern Natural Gas Company
Post Office Box 2563
Birmingham AL 35202 2563
205 325 7410
SOUTHERN NATURAL GAS
April 2, 1997
Mr. John Cavallin
Atlanta Gas Light Company
P. O. Box 4569
Atlanta, GA 30302
Re: Firm Transportation Service Agreement No. 905660
Dear John:
This letter is to follow up on Southern's prior notification of the in-service
date of facilities required to provide additional firm transportation capacity
of 5,000 Mcf to Chattanooga Gas Company at the Chattanooga delivery point
(790200). As we have previously notified you, these facilities were placed in
service on November 1, 1996 as part of Southern's north system expansion.
Therefore, in accordance with Article IV, paragraph 4.1 of the above-referenced
service agreement, the term of the contract commences on November 1, 1996.
If you have further questions, please contact me at (205) 325-3816.
Yours very truly,
Lisa D. Gunthrie
Account Manager
LDG:Ief
A SONAT COMPANY
<PAGE>
Service Agreement No, 905660
Authorization: Blanket
(Reservation Charge)
SERVICE AGREEMENT
UNDER RATE SCHEDULE FT
THIS AGREEMENT, made and entered into as of this 17th day of May 1995 , by and
between Southern Natural Gas Company, a Delaware corporation, hereinafter
referred to as "Company" , and Chattanooga Gas Company, a Tennessee corporation
hereinafter referred to as "Shipper",
WITNESSETH
WHEREAS, Company is an interstate pipeline, as defined in Section 2(15) of the
Natural Gas Policy Act of 1978 (NGPA); and
WHEREAS, Shipper is a LDC/DISTRIBUTOR; and
WHEREAS, Shipper has requested firm transportation pursuant to Rate Schedule FT
of various supplies of gas for redelivery for Shipper's account, and has
submitted to Company a request for such transportation service in compliance
with Section 2 of the General Terms and Conditions applicable to Rate Schedule
FT; and
WHEREAS, Company has agreed to provide Shipper with transportation service of
such gas supplies in accordance with the terms and conditions of this Agreement.
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
TRANSPORTATION QUANTITY
1.1 Subject to the terms and provisions of this Agreement, Rate Schedule FT and
the General Terms and Conditions thereto, Shipper agrees to deliver or cause to
be delivered to Company at the Receipt Point(s) described in Exhibit A and
Exhibit A-1 to this Agreement, and Company agrees to accept at such point(s) for
transportation under this Agreement, an aggregate quantity of up to 5,000 Mcf of
natural gas per day (Transportation Demand). Company's obligation to accept gas
on a firm basis at any Receipt Point is limited to the Receipt Points set out on
Exhibit A and to the Maximum Daily Receipt Quantity (MDRQ) stated for each such
Receipt Point. The sum of the MDRQ's for the Receipt Points on Exhibit A shall
not exceed the Transportation Demand.
<PAGE>
Service Agreement No. 905660
Authorization: Blanket
1.2 Subject to the terms and provisions of this Agreement, Rate Schedule FT and
the General Terms and Conditions thereto, Company shall deliver a thermally
equivalent quantity of gas, less the applicable fuel charge as set forth in Rate
Schedule FT, to Shipper at the Delivery Point(s) described in Exhibit B and
Exhibit B-1 hereto. Company's obligation to redeliver gas at any Delivery Point
on a firm basis is limited to the Delivery Points specified on Exhibit B and to
the Maximum Daily Delivery quantity (MDDQ) stated for each such Delivery Point.
The sum of the MDDQ for the Delivery Points on Exhibit B shall equal the
Transportation Demand.
ARTICLE II
CONDITIONS OF SERVICE
2.1 It is recognized that the transportation service hereunder is provided on a
firm basis pursuant to, in accordance with and subject to the provisions of
Company's Rate Schedule FT, and the General Terms and Conditions thereto, which
are contained in Company's FERC Gas Tariff, as in effect from time to time, and
which are hereby incorporated by reference. In the event of any conflict between
this Agreement and Rate Schedule FT, the terms of Rate Schedule FT shall govern
as to the point of conflict. Any limitation of transportation service hereunder
shall be in accordance with the priorities set out in Rate Schedule FT and the
General Terms and Conditions thereto.
2.2 This Agreement shall be subject to all provisions of the General Terms and
Conditions applicable to Company's Rate Schedule FT as such conditions may be
revised from time to time. Unless Shipper requests otherwise, Company shall
provide to Shipper the filings Company makes at the Federal Energy Regulatory
Commission ("Commission") of such provisions of the General Terms and Conditions
or other matters relating to Rate Schedule FT.
2.3 Company shall have the right to discontinue service under this Agreement in
accordance with Section 15.3 of the General Terms and Conditions hereto.
2.4 The parties hereto agree that neither party shall be liable to the other
party for any special, indirect, or consequential damages (including, without
limitation, loss of profits or business interruptions) arising out of or in any
manner related to this Agreement.
2
<PAGE>
Service Agreement No, 905660
Authorization: Blanket
2.5 This Agreement is subject to the provisions of Part 284 of the Commission's
Regulations under the NGPA and the Natural Gas Act. Upon termination of this
Agreement, Company and Shipper shall be relieved of further obligation hereunder
to the other party except to complete the transportation of gas underway on the
day of termination, to comply with provisions of Section 14 of the General Terms
and Conditions with respect to any imbalances accrued prior to termination of
this Agreement, to render reports, and to make payment for all obligations
accruing prior to the date of termination.
ARTICLE III NOTICES
3.1 Except as provided in Section 8.6 herein, notices hereunder shall be given
pursuant to the provisions of Section 18 of the General Terms and Conditions to
the respective party at the applicable address, telephone number or facsimile
machine number stated below or such other addresses, telephone numbers or
facsimile machine numbers as the parties shall respectively hereafter designate
in writing from time to time:
3
<PAGE>
Service Agreement No. 905660
Authorization: Blanket
Company:
Notices and General Correspondence
Southern Natural Gas Company
Post Office Box 2563
Birmingham, Alabama 35202-2563
Attention: Transportation Services Department
Telephone No.: (205) 325-7223
Facsimile Machine No.:(205) 325-7303
Dispatching Notices - Nominations/Confirmations/Scheduling
Southern Natural Gas Company
Post Office Box 2563
Birmingham, Alabama 35202-2563
Attention: Transportation Services Department
Telephone No.: (205) 325-7223
Facsimile Machine No.:(205) 325-7303
Emergencies/24-Hour Dispatching/
Limitation and Penalty Notices
Southern Natural Gas Company
Post Office Box 2563
Birmingham, Alabama 35202-2563
Attention: Gas Operations Department
Telephone No.: (205) 325-7308
Facsimile Machine No.: (205) 325-7375
Alternative Contacts:
(1) Attention: Gas Operations Department
Telephone No.: (205) 325-7305
Facsimile Machine No.: (205) 325-7375
(2) Attention: Gas Operations Department
Telephone No: (205) 325-7309
Facsimile Machine No.: (205) 325-7375
Payments
Southern Natural Gas Company
Post Office Box 102502
68 Annex
Atlanta, Georgia 30368
4
<PAGE>
Service Agreement No. 905660
Authorization: Blanket
Shipper:
Notices and General Correspondence
MANAGER, GAS SUPPLY
P.O. BOX 4569
ATLANTA, GA 30302-4569
Telephone No.: (404) 584-3798
Facsimile Machine No.: (404) 584-3703
Dispatching Notices - Nominations/Confirmations
DEBBIE MCNEELY
P.O. BOX 4569
ATLANTA, GA 30302-4569
Telephone No.: (404) 584-3796
Facsimile Machine No.: (404) 584-3703
Dispatching Notices - Limitations
STEVEN L. MOORE
P.O. BOX 4569
ATLANTA, GA 30302-4569
Telephone No.: (404) 584-4484
Facsimile Machine No.: (404) 584-4772
Emergencies and 24-Hour Dispatching Contact
STEVEN L. MOORE
P.O. BOX 4569
ATLANTA, GA 30302-4569
Telephone No.: (404) 584-4484
Facsimile Machine No.: (404) 584-4772
Alternative Contacts:
(1) BRAD FREEMAN
P.O. BOX 4569
ATLANTA, GA 30302-4569
Telephone No.: (404) 584-4993
Facsimile Machine No.: (404) 584-4772
(2) DEBBIE MCKNEELY
P.O. BOX 4569
ATLANTA, GA 30302-4569
Telephone No.: (404) 584-3796
Facsimile Machine No.: (404) 584-3703
Invoices
W. ANDREW HAMILTON
P.O. BOX 4569
ATLANTA, GA 30302-4569
5
<PAGE>
Service Agreement No. 905660
Authorization: Blanket
ARTICLE IV TERM
4.1 Subject to the provisions hereof, this Agreement shall become effective as
of the date first hereinabove written and shall be in full force and effect for
a primary term of ten (10) years from the date Company notifies Shipper that the
facilities necessary to provide service hereunder, which Company must request
and receive authorization from the Commission to construct, are complete and in
service and therefore service will commence hereunder, and shall continue and
remain in force and effect for successive terms of one (1) year each thereafter
unless and until cancelled by either party giving 180 days written notice to the
other party prior to the end of the primary term or any yearly extension
thereof.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Unless otherwise agreed to by the parties, the terms of Rate Schedule FT,
and the General Terms and Conditions thereto,shall apply to the acquisition or
construction of any facilities necessary to effectuate this Agreement. Other
provisions of this Agreement notwithstanding, Company shall be under no
obligation to commence service hereunder unless and until (1) all facilities, of
whatever nature, as are required to permit the receipt, measurement,
transportation, and delivery of natural gas hereunder have been authorized,
installed, and are in operating condition, and (2) Company, in its reasonable
discretion, has determined that such service would constitute transportation of
natural gas authorized under all applicable regulatory authorizations and the
Commission's Regulations.
ARTICLE VI
REMUNERATION
6.1 Shipper shall pay Company monthly for the transportation services rendered
hereunder the charges specified in Rate Schedule FT, including any penalty and
other authorized charges assessed under Rate Schedule FT and the General Terms
and Conditions. Company shall notify Shipper as soon as practicable of the date
services will commence hereunder, and if said date is not the first day of the
month, the Reservation Charge for the first month of service hereunder shall be
adjusted to reflect only the actual number of days during said month that
transportation service is available. Company may agree from time to time to
discount the rate charged Shipper for services provided hereunder in accordance
with the provisions of Rate Schedule FT. Said discounted charge shall be set
forth on Exhibit E hereto. 6
<PAGE>
Service Agreement No. 905660
Authorization: Blanket
6.2 The rates and charges provided for under Rate Schedule FT shall be subject
to increase or decrease pursuant to any order issued by the Commission in any
proceeding initiated by Company or applicable to the services performed
hereunder. Shipper agrees that Company shall, without any further agreement by
Shipper, have the right to change from time to time, all or any part of this
Agreement, as well as all or any part of Rate Schedule FT, or the General Terms
and Conditions thereto, including without limitation the right to change the
rates and charges in effect hereunder, pursuant to Section 4(d) of the Natural
Gas Act as may be deemed necessary by Company, in its reasonable judgment, to
assure just and reasonable service and rates under the Natural Gas Act. Nothing
contained herein shall prejudice the rights of Shipper to contest at any time
the changes made pursuant to this Section 6.2, including the right to contest
the transportation rates or charges for the services provided under this
Agreement, from time to time, in any subsequent rate proceedings by Company
under Section 4 of the Natural Gas Act or to file a complaint under Section 5 of
the Natural Gas Act with respect to such transportation rates or charges.
ARTICLE VII
SPECIAL PROVISIONS
7.1 If Shipper is a seller of gas under more than one Service Agreement and
requests that Company allow it to aggregate nominations for certain Receipt
Points for such Agreements, Company will allow such an arrangement under the
terms and conditions set forth in this Article VII. To be eligible to aggregate
gas, Shipper must comply with the provisions of Section 2.2 of the General Terms
and Conditions and the terms and conditions of the Supply Pool Balancing
Agreement executed by Shipper and Company pursuant thereto.
7.2 If Shipper is a purchaser of gas from seller(s) that are selling from an
aggregate of Receipt Points, and Shipper wishes to nominate to receive gas from
such seller's aggregate supplies of gas, Company will allow such a nomination,
provided that the seller (i) has entered into a Supply Pool Balancing Agreement
with Company and (ii) submits a corresponding nomination to deliver gas to
Shipper from its aggregate supply pool.
ARTICLE VIII
MISCELLANEOUS
8.1 This Agreement constitutes the entire Agreement between the parties and no
waiver by Company or Shipper of any default of either party under this Agreement
shall operate as a waiver of any subsequent default whether of a like or
different character.
7
<PAGE>
Service Agreement No. 905660
Authorization: Blanket
8.2 The laws of the State of Alabama shall govern the validity, construction,
interpretation, and effect of this Agreement.
8.3 No modification of or supplement to the terms and provisions hereof shal1 be
or become effective except by execution of a supplementary written agreement
between the parties except that in accordance with the provisions of Rate
Schedle FT, and the General Terms and Conditions thereto, Receipt Points may be
added to or deleted from Exhibit A and the Maximum Daily Receipt Quantity for
any Receipt Point on Exhibit A may be changed upon execution by Company and
Shipper of a Revised Exhibit A to reflect said change(s), and Delivery Points
may be added to or deleted from Exhibit B and the Maximum Daily Delivery
Quantity for any Delivery Point may be changed upon execution by Company and
Shipper of a Revised Exhibit B to reflect said change(s); provided, however,
that any such change to Exhibit A or Exhibit B must include corresponding
changes to the existing Maximum Daily Receipt Quantities or Maximum Daily
Delivery Quantities, respectively, such that the sum of the changed Maximum
Daily Receipt Quantities shall not exceed the Transportation Demand and the sum
of the Maximum Daily Delivery Quantities equals the Transportation Demand.
8.4 This Agreement shall bind and benefit the successors and assigns of the
respective parties hereto. Subject to the provisions of Section 22 of the
General Terms and Conditions applicable hereto, neither party may assign this
Agreement without the prior written consent of the other party, which consent
shall not be unreasonably withheld; provided, however, that either party may
assign or pledge this Agreement under the Provisions of any mortgage, deed of
trust, indenture or similar Instrument.
8.5 Exhibits A, A-l, B, B-l, and/or E, if applicable, attached to this Agreement
constitute a part of this Agreement and are incorporated herein.
8.6 This Agreement is subject to all present and future valid laws and orders,
rules, and regulations of any regulatory body of the federal or state government
having or asserting jurisdiction herein. After the execution of this Agreement,
each party shall make and diligently prosecute all necessary filings with
federal or other governmental bodies, or both, as may be required for the
initiation and continuation of the transportation service which is the subject
of this Agreement and to construct and operate any facilities necessary
therefor. Each party shall have the right to seek such governmental
authorizations as it deems necessary, including the right to prosecute its
requests or applications for such authorization in the manner it deems
appropriate. Upon either party's request, the other party shall timely provide
or cause to be provided to the requesting party
8
<PAGE>
Service Agreement No. 905660
Authorination: Blanket
such information and material not within the requesting party's control and/or
possession that may be required for such filings. Each party shall promptly
inform the other party of any changes in the representations made by such party
herein and/or in the information provided pursuant to this paragraph. Each party
shall promptly provide the party with a copy of all filings, notices, approvals,
and authorizations in the course of the prosecution of its filings. In the event
all such necessary regulatory approvals have not been issued or have not been
issued on terms and conditions acceptable to Company or Shipper within twelve
(12) months from the date of the initial application therefor, then Company or
Shipper may terminate this Agreement without further liability or obligation to
the other party by giving written notice thereof at any time subsequent to the
end of such twelve-month period, but prior to the receipt of all such acceptable
approvals. Such notice will be effective as of the date it is delivered to the
U. S. Mail, for delivery by certified mail, return receipt requested.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the
date first written above by their respective duly authorized officers.
Attest: SOUTHERN NATUAL GAS COMPANY
Illegible Signature By /s/ Joel Anderson
Its Vice President
Attest:/s/ J.E. Greer CHATTANOOGA GAS COMPANY
By /s/ K.A Royse
Its President
9
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A
The legal description of the Receipt Points listed below are more particularly
set forth in Company's Receipt Point catalog, a copy of which can be requested
from Company or accessed through SoNet, Company's electronic computer system.
RECEIPT POINT: MDRQ
ZONE in Mcf
/s/ K.A. Royse /s/ Joel Anderson
CHATTANOOGA GAS COMPANY SOUTHERN NATURAL GAS COMPANY
EFFECTIVE DATE: May 17,1995
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B
The legal description of the Delivery Points listed below are more particularly
set forth in Company's Delivery Point catalog, a copy of which can be requested
from Company or accessed through SoNet, Company's electronic computer system.
DELIVERY POINT: MDDQ CONTRACT
790200 CHATTANOOGA GAS COMPANY in Mcf PRESS.
5,000 250
- --------------------------------------------------------------------------------
/S/ K.A. Royse /s/ Joel Anderson
CHATTANOOGA GAS COMPANY SOUTHERN NATURAL GAS COMPANY
EFFECTIVE DATE: May 17,1995
<PAGE>
Service Agreement No. 905660
EXHIBIT E
Discount Information
Discounted Transportation Rate: See below
Discounted Rate Effective From: See below
This Exhibit E shall be in effect for a period which begins on the date that
Company notifies Shipper that service will commence hereunder and terminates on
the earlier of (i) three years from commencement of service hereunder, or (ii)
the effective date of any Transportation Demand reduction under or termination
of Shipper's FT Service Agreement No. 904470 dated November 1, 1994, ("Rate Cap
Period"). During the term of this Agreement, Shipper shall pay the full charges
and surcharges applicable to service under Rate Schedule FT, including any
applicable charges assessed to this Agreement under the General Terms and
Conditions of Company's Tariff, provided, however, that during the Rate Cap
Period the Reservation Charge to be paid by Shipper under this Agreement shall
not exceed $12.50 per Mcf.
/S/ K.A. Royse /s/ Joel Anderson
CHATTANOOGA GAS COMPANY SOUTHERN NATURAL GAS COMPANY
(Shipper) (Company)
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
The legal description of the Receipt Points listed below are more particularly
set forth in the Company's Receipt Point catalogs, a copy of which can be
requested from Company or accessed through SoNet, Company's electronic computer
system.
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
010850 ALLIANCE - CITRUS LAND #1 PO 5,000
601600 ANGI - JACKSON TO SNG PO 5,000
604000 ANR - SHADYSIDE TO SNG PO 5,000
ARCO - MOPS EXCH - MATAGORDA ISLAND 686
OFFSYSTEM RECEIPT POINT:
664100 ARCO - MOPS EXCH - MATAGORDA ISLAND 686 P0 5,000
OFFSYSTEM DELIVERY POINT(S):
656800 NNG EXCHANGE - MOPS TIVOLI
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIVOLI
656802 FGT EXCHANGE - MOPS TIVOLI
010600 BARATARIA SOUTH PO 5,000
025300 BARATANIA WEST - CANLAN PO 5,000
015200 BASTIAN BAY #1 PO 5,000
038300 BAY NATCHEZ PO 5,000
034200 BAYOU BOULLION - AMERICAN QUASAR PO 5,000
032100 BAYOU BOULLION - WILBERT 1 PO 5,000
032400 BAYOU CROOK CHENE PO 5,000
010700 BAYOU DE FLEUR - CHEVRON PO 5,000
017000 BAYOU FELICE - TEXACO - SOUTH PASS 24 PO 5,000
018800 BAYOU FELICE - VINTAGE - SOUTH PASS 24 PO 5,000
030500 BAYOU LONG #1 PO 5,000
024700 BAYOU LONG #3 - VINTAGE PO 5,000
030600 BAYOU LONG NORTH PO 5,000
027500 BAYOU MONGOULOIS R/S - PLAINS RESOURCES PO 5,000
400300 BAYOU MONGOULOIS TO SNG PO 4,800
030900 BAYOU POSTILLION - ANSON #2 PO 5,000
031000 BAYOU POSTILLION - EXXON PO 5,000
030850 BAYOU POSTILLION - LLOG PO 3,000
034900 BAYOU POSTILLION - WILLIAMS PO 5,000
036300 BAYOU SALE - MCCORMICK PO 5,000
035900 BAYOU SALE - NRM PO 5,000
030000 BAYOU SALE - TEXACO - HORSESHOE BAYOU PO 5,000
010500 BAYOU VILLARS - CHEVRON PO 5,000
051513 BEAR CREEK - BROYLES FANNIE WOOD #1 GO 5,000
051510 BEAR CREEK - BROYLES R/S #1 GO 3,336
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 2 OF 15
Maximum Daily
Receipt
Quantity in MMBTU
Production Area Receipt Points:
051512 BEAR CREEK - BROYLES R/S #2 GO 5,000
051515 BEAR CREEK - PAN OK D.E. BROWN #1 GO 5,000
503971 BEAR CREEK - RECEIPTS FROM TENNESSEE P0 5,000
051550 BEAR CREEK - SONAT ARTHUR SOUR GO 3,384
051514 BEAR CREEK - SONAT CONTINENTAL CAN #2 GO 5,000
051544 BEAR CREEK - SONAT CRAWLEY #A-1 GO 5,000
051540 BEAR CREEK - SONAT CRAWLEY #1 GO 5,000
051535 BEAR CREEK - SONAT CRAWLEY M #1 GO 1,368
051567 BEAR CREEK - SONAT CULBERTSON "A" NO. l GO 5,000
051556 BEAR CREEK - SONAT DUNCAN #1 GO 3,360
051539 BEAR CREEK - SONAT F. WOODS #1-2 ALT GO 5,000
051516 BEAR CREEK - SONAT H. JORDAN #1 GO 5,000
051557 BEAR CREEK - SONAT HARRISON #4 GO 5,000
051517 BEAR CREEK - SONAT HODGE HUNT #1C GO 2,856
051518 BEAR CREEK - SONAT J. HARRISON #2 GO 5,000
051549 BEAR CREEK - SONAT JAMES JORDAN #1 GO 5,000
051563 BEAR CREEK - SONAT JORDAN #B-1 GO 3,360
051546 BEAR CREEK - SONAT KMI CONT. ROYALTY #1 GO 2,856
051537 BEAR CREEK - SONAT KMI ROYALTY M#1 GO 5,000
051564 BEAR CREEK - SONAT LOE "C" NO. 1 GO 5,000
051565 BEAR CREEK - SONAT LOE "D" NO. 1 GO 5,000
051558 BEAR CREEK - SONAT LOE B-1 (COTTON VALLEY) GO 5,000
051559 BEAR CREEK - SONAT LOE B-1 (HOSSTON) GO 5,000
051560 BEAR CREEK - SONAT LOE B-2 GO 5,000
051519 BEAR CREEK - SONAT LONETTE JONES #1 GO 5,000
051561 BEAR CREEK - SONAT LOUISIANA MINERALS A #1 GO 5,000
051536 BEAR CREEK - SONAT M.E. JORDAN #12-1 GO 5,000
051562 BEAR CREEK - SONAT MCGEE #A-1 GO 2,856
051522 BEAR CREEK - SONAT MS. E. CONVILLE #1D GO 5,000
051524 BEAR CREEK - SONAT N A CULBERTSON #1 (SLIG0) GO 5,000
051525 BEAR CREEK - SONAT O.C. POOLE #2 GO 5,000
051526 BEAR CREEK - SONAT O.M. ALLISON #1 GO 5,000
051527 BEAR CREEK - SONAT OTIS POOLE #3 GO 5,000
051547 BEAR CREEK - SONAT POOLE #5 GO 5,000
051529 BEAR CREEK - SONAT SNG FEE #2 G0 5,000
051530 BEAR CREEK - SONAT T.A. L0E #3 G0 5,000
051542 BEAR CREEK - SONAT T.A. LOW M#1 GO 2,856
051531 BEAR CREEK - SONAT T.J. CUMMINGS #2 GO 5,000
051533 BEAR CREEK - SONAT T.J. CUMMINGS #4 GO 5,000
051534 BEAR CREEK - SONAT W.T. HAYES #1 GO 5,000
051551 BEAR CREEK - TXO ALLISON #1 GO 3,360
051553 BEAR CREEK - TXO CRAWLEY #C-1 GO 3,360
051543 BEAR CREEK - TXO FEDERAL LAND BANK #1 GO 5,000
050900 BENSON PO 2,000
604800 BENSON SABINE-TEXICAN PO 4,500
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 3 OF 15
Production Area Receipt Points:
Maximum Daily
Receipt
Quantity in MMBTU
050950 BENSON - TXO POLLOCK F PO 4,800
602200 BIG POINT PO 5,000
013900 BLACK BAY - GULF PO 5,000
014000 BLACK BAY - WEST - CHEVRON PO 5,000
690700 BOURBON LINE (FGT) FROM MISS CANYON 268 PO 5,000
690600 BOURBON LINE (FGT) FROM MISS CANYON 311 PO 5,000
690500 BOURBON LINE (FGT) FROM WEST DELTA 152 PO 5,000
BRAZOS A-133A - TEXACO
OFFSYSTEM RECEIPT POINT:
509100 BRAZOS A-133A - TEXACO PO 5,000
0FFSYSTEM DELIVERY POINT(S):
519000 TRANSCO MARKHAM PLANT - CENTRAL TEXAS LOOP
519001 NGPL EXCHANGE - TRANSC0 MARKHAM PLANT
672600 SNG - TRANSC0 EXCHANGE - WHARTON COUNTY, TX
BRAZOS A-133B - TEXACO
OFFSYSTEM RECEIPT POINT:
509150 BRAZOS A-133B - TEXACO PO 5,000
OFFSYSTEM DELIVERY POINT(S):
519000 TRANSCO MARKHAM PLANT - CENTRAL TEXAS LOOP
519001 NGPL EXCHANGE - TRANSCO MARKHAM PLANT
672600 SNG - TRANSCO EXCHANGE - WHARTON COUNTY, TX
BRAZOS A-47 - TEXAS GULF
OFFSYSTEM RECEIPT POINT:
508400 BRAZOS A-47 - TEXAS GULF PO 5,000
OFFSYSTEM DELIVERY POINT(S):
519000 TRANSCO MARKHAM PLANT - CENTRAL TEXAS LOOP
519001 NGPL EXCHANGE - TRANSCO MARKHAM PLANT
672600 SNG - TRANSC0 EXCHANGE -WHARTON COUNTY, TX
BRAZOS 367-L
OFFSYSTEM RECEIPT POINT:
503300 BRAZOS 367-L PO 1,000
OFFSYSTEM DELlVERY POINT(S):
656900 FGT EXCHANGE - BRAZOS 367
<PAGE>
SERVICE AGREEMENT N0: 905660
EXHIBIT A-1
PAGE 4 OF 15
MAXIMUM Daily
Receipt
Quantity in MMBTU
Production Area Receipt Points:
512100 BRETON SOUND 11 PO 5,000
016200 BRETON SOUND 18 (19,30,35 & MP 21) PO 5,000
020600 BRETON SOUND 21 PO 5,000
023000 BRETON SOUND 23 - POGO PO 5,000
020800 BRETON SOUND 32 PO 5,000
015600 BRETON SOUND 34 PO 5,000
016300 BRETON SOUND 36 (BS29) PO 5,000
035800 BULL BAYOU PO 1,500
022800 CARTHAGE - UPRC PO 5,000
013100 CHANDELEUR SOUND 25 PO 5,000
654000 CHANDELEUR SOUND 51 PO 5,000
036700 CHANDELEUR SOUND 51 - GULF PO 5,000
024300 CHANDELEUR SOUND 52 - UNION PO 5,000
021400 CHANDELEUR SOUND 71 - MLG PO 5,000
013400 CHANDELEUR SOUND 73 PO 5,000
685200 COGNAC LINE (FGT) FROM MISS CANYON 109 PO 5,000
685000 COGNAC LINE (FGT) FROM MISS CANYON 194 PO 5,000
685100 COGNAC LINE (FGT) FROM MISS CANYON 20 PO 5,000
685300 COGNAC LINE (FGT) FROM SOUTH PASS 27 PO 5,000
685600 COGNAC LINE (TGPL) FROM MISS CANYON 109 PO 5,000
685400 COGNAC LINE (TGPL) FROM MISS CANYON 194 PO 5,000
685500 COGNAC LINE (TGPL) FROM MISS CANYON 20 PO 5,000
685700 COGNAC LINE (TGPL) FROM SOUTH PASS 27 PO 5,000
605500 COLUMBIA GULF - SHADYSIDE TO SNG PO 5,000
CONE MILLS - NABISCO
OFFSYSTEM RECEIPT POINT:
034100 CONE MILLS - NABISCO PO 2,500
OFFSYSTEM DELIVERY POINT(S):
501000 EAST HAPPYTOWN - BAYOU HENRY TO GGC
015700 COQUILLE BAY P0 5,000
027100 COQUILLE BAY - COMMERCE P0 5,000
015800 COQUILLE BAY - SOUTH P0 2,500
014800 COX BAY P0 5,000
400650 CUTOFF FIELD - COLUMBIA EXCHANGE P0 5,000
014200 DIAMOND - GULF EXPLORATION P0 5,000
EAST CAMERON 23
OFFSYSTEM RECEIPT POINT:
503404 EAST CAMERON 23 P0 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 5 OF 15
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
OFFSYSTEM DELIVERY POINT(S):
689300 COLUMBIA GULF EXCHANGE - EAST CAMERON 23
EAST CAMERON 46
OFFSYSTEM RECEIPT POINT:
502200 EAST CAMERON 46 PO 5,000
OFFSYSTEM DELIVERY POINT(S):
032508 TENN EXCHANGE - EAST CAMERON 46
027750 EAST LAKE WASHINGTON - LL&E P0 5,000
019000 ELOI BAY - TIPCO P0 5,000
EUGENE ISLAND 108
OFFSYSTEM RECEIPT POINT:
508300 EUGENE ISLAND 108
OFFSYSTEM DELIVERY POINT(S):
673500 TRANSCO EXCHANGE - EUGENE ISLAND 129 P0 5,000
EUGENE ISLAND 341
OFFSYSTEM RECEIPT POINT:
037203 EUGENE ISLAND 341
OFFSYSTEM DELIVERY POINT(S):
037204 ANR EXCHANGE - EUGENE ISLAND 341 PO 3,650
EUGENE ISLAND 47
OFFSYSTEM RECEIPT POINT:
035200 EUGENE ISLAND 47
OFFSYSTEM DELIVERY POINT(S):
675900 UNITED EXCHANGE - EUGENE ISLAND 51 PO 5,000
EUGENE ISLAND 57
OFFSYSTEM RECEIPT POINT:
503000 EUGENE ISLAND 57
OFFSYSTEM DELIVERY POINT(S):
675800 UNITED EXCHANGE - EUGENE ISLAND 32 PO 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 6 OF 15
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
029000 FGT - FRANKLINTON - TO SNG PO 5000
037300 FT. PIKE PO 5000
017250 GRAND BAY - MID-LOUISIANA EXCHANGE PO 5000
038500 GRAND CANE - TEXICAN PO 2000
024200 GRAYS CREEK PO 5000
601950 GULF STATES - GSP TO SNG PO 5000
049912 JOAQUIN - ARCO J.S. PRICE #2 GO 5000
049913 JOAQUIN - ARCO J.S. PRICE #3 GO 3336
049911 JOAQUlN - ARCO R/S #1 GO 5000
049944 JOAQUIN - BIG RUN SILER #1 GO 1368
049910 JOAQUIN - FREDONIA COOK #1 GO 2856
049927 JOAQUIN - GRAND ENERGY GO 5000
049929 JOAQUIN - GRAND ENERGY R/S #2 GO 1752
049917 JOAQUIN - KEY C. CHILDRESS #1 GO 5000
049919 JOAQUIN - KEY E.L. LOWE #1 GO 2856
049920 JOAQUIN - KEY E.L. LOWE #2 GO 5000
049912 JOAQUIN - KEY GARRETT #1 GO 5000
049905 JOAQUIN - KEY R/S #1 GO 5000
049906 JOAQUIN - KEY R/S #2 GO 2856
049923 JOAQUIN - KEY REED #1 GO 3336
049924 JOAQUIN - KEY RUSHING #1 GO 2856
049925 JOAQUIN - KEY TEXAS CORP GO 2856
049930 JOAQUIN - SONAT BROOKS #1 GO 1128
049932 JOAQUIN - SONAT O.L. GUY #1 GO 5000
049933 JOAQUIN - SONAT O.L. GUY #2 GO 5000
049940 JOAQUIN - SONAT PICKERING B-7 GO 5000
049945 JOAQUIN - SONAT PICKERING C-8 GO 3312
049948 JOAQUIN - SONAT PICKERING C-9 GO 3360
049943 JOAQUIN - SONAT R/S #2 GO 5000
049949 JOAQUIN - STATELINE R/S GO 5000
512000 KOCH GATEWAY - FT. PIKE TO SNG PO 5000
602910 KOCH GATEWAY - LIVINGST0N TO SNG (DISPLACE) PO 5000
030300 KOCH GATEWAY - SHADYSIDE TO SNG PO 5000
538100 KOCH GATEWAY - ST. MARTIN TO SNG PO 5000
601110 KOCH GATEWAY -TANGIPAHOA TO SNG (DISPLACE) PO 5000
013060 LAKE CAMPO - LINDER PO 5000
013600 LAKE FORTUNA PO 3000
025600 LAKE FORTUNA - NOMECO PO 5000
031900 LAKE LAROSE PO 5000
023300 LAKE ST. CATHERINE PO 5000
035600 LAKE WASHINGION - LADD PO 5000
036100 LAKE WASHINGTON NORTH #2 - PHILLIPS PO 5000
015000 LAKE WASHINGTON SOUTH - PHILLIPS PO 5000
LEDRICK RANCH - ALPHA #1-7
OFFSYSTEM RECEIPT POINT:
503408 LEDRICK RANCH - ALPHA #l-7 PO 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 7 OF 15
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
OFFSYSTEM DELIVERY POINT(S):
692300 NNG EXCHANGE - ROBERTS COUNTY, TEXAS
LEDRICK RANCH - LARD 1-61
OFFSYSTEM RECEIPT POINT:
503407 LEDRICK RANCH - LARD 1-61 PO 5,000
OFFSYSTEM DELIVERY POINT(S):
692300 NNG EXCHANGE - ROBERTS COUNTY, TEXAS
LEDRICK RANCH - MAULSBY 1-4
OFFSYSTEM RECEIPT POINT:
503405 LEDRICK RANCH - MAULSBY 1-4 PO 5,000
OFFSYSTEM DELIVERY POINT(S):
692300 NNG EXCHANGE - ROBERTS COUNTY, TEXAS
LEDRICK RANCH - MAUSLBY 2-4
OFFSYSTEM RECEIPT POINT:
503406 LEDRICK RANCH - MAUSLBY 2-4 PO 5,000
OFFSYSTEM DELIVERY POINT(S):
692300 NNG EXCHANGE - ROBERTS COUNTY, TEXAS
048000 LIG - LOGANSPORT TO SNG PO 5,000
011000 LITTLE LAKE PO 5,000
657100 LITTLE LAKE SOUTH PO 4,500
LOCKHART CROSSING - AMOCO
OFFSYSTEM RECEIPT POINT:
044200 LOCKHART CROSSING - AMOCO GO 5,000
OFFSYSTEM DELIVERY POINT(S):
690900 KOCH GATEWAY EXCHANGE - LOCKHART CROSSING
050011 LOGANSPORT - ARCO A.D. COBB GO 3,336
050012 LOGANSPORT - ARCO A.E. WELLS #1 GO 1,368
050013 LOGANSPORT - ARCO ALSTON FROST #2 GO 3,336
050017 LOGANSPORT - ARCO D.B. FURLOW GO 5,000
050016 LOGANSPORT - ARCO D.B. LEWIS GO 5,000
050018 LOGANSPORT - ARCO FROST BILLINGSLEY #1 GO 2,856
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 8 OF 15
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
050019 LOGANSPORT - ARCO FROST BILLINGSLEY #2 GO 3,336
050020 LOGANSPORT - ARC0 FROST LUMBER IND #1 GO 1,368
050021 LOGANSPORT - ARC0 FROST LUMBER IND #2 GO 2,856
050026 LOGANSPORT - ARCO J. O. PACE GO 1,368
050033 LOGANSPORT - ARCO R/S #1 GO 5,000
050032 LOGANSPORT - ARCO R/S #2 GO 5,000
050027 LOGANSPORT - ARGO R/S #3 GO 2,856
050036 LOGANSPORT - ARCO T. J. HOLLINGSWORTH GO 2,856
050037 LOGANSPORT - CITIES A. W. WELLS #1 GO 5,000
050058 LOGANSPORT - CITIES A. W. WELLS #2 GO 5,000
050043 LOGANSPORT - CITIES STEPHENS A LEASE GO 1,368
050044 LOGANSPORT - CITIES W. E. STEPHEN B-1 GO 5,000
050048 LOGANSPORT - INEXCO WILLIAMS ESTATE GO 5,000
050057 LOGANSPORT - KEYS R/S #1 GO 1,368
025500 LOGANSPORT - LONG O&G R/S #1 PO 5,000
050067 LOGANSPORT - MARATHON DOW A-1 GO 5,000
050055 LOGANSPORT - MARATHON DOWDELL GO 3,360
050061 LOGANSPORT - MARATHON O. E. PRICE #1 GO 2,856
050069 LOGANSPORT - MARATHON PARK CIRCLE #1 GO 3,360
050053 LOGANSPORT - MARATHON R/S #1 GO 4,776
050068 LOGANSPORT - MARATHON W. A. WILLIAMS #1 GO 3,360
050001 LOGANSPORT - MARSHALL R/S #1 GO 5,000
050002 LOGANSPORT - MARSHALL R/S #2 GO 5,000
050003 LOGANSPORT - MARSHALL R/S #3 GO 2,856
050060 LOGANSPORT - OXY FROST #2 GO 2,856
050064 LOGANSPORT - OXY FULMER A-1 GO 5,000
050056 LOGANSPORT - OXY M. E. WILLIAMS #1 GO 3,360
050040 LOGANSPORT - OXY R/S #1 GO 5,000
050039 LOGANSPORT - OXY R/S #2 GO 3,336
050041 LOGANSPORT - OXY R/S #4 GO 5,000
050062 LOGANSPORT - OXY STEPHEN B-2 ALT GO 3,360
050066 LOGANSPORT - PG&E RESOURCES #3 GO 5,000
050046 LOGANSPORT - PG&E RESOURCES R/S #4 GO 5,000
050065 LOGANSPORT - TEX/CON R/S #1 GO 4,776
050047 LOGANSPORT - TEX/CON R/S #2 GO 5,000
604110 LRC - CARRVILLE TO SNG (DISPLACEMENT) PO 5,000
664000 LRC - WHITE CASTLE TO SNG PO 5,000
024600 LUCKY FIELD PO 5,000
024400 MAIN PASS 108 PO 5,000
023800 MAIN PASS 116 - MAXUS PO 5,000
028250 MAIN PASS 123 - POGO EXCHANGE PO 5,000
037600 MAIN PASS 127 - CHEVRON PO 5,000
023500 MAIN PASS 129 - HALL HOUSTON PO 5,000
021200 MAIN PASS 133C PO 5,000
026750 MAIN PASS 138 - UMC EXCHANGE PO 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 9 OF 15
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
017800 MAIN PASS 144 - CHEVRON PO 5,000
663300 MAIN PASS 151 - M.P. 72 - UNITED EXCHANGE PO 5,000
663000 MAIN PASS 151 - NGPL EXCHANGE PO 5,000
018300 MAIN PASS 153 - S.P. 65 - SHELL PO 5,000
028050 MAIN PASS 181 - DIAMOND SHAMROCK EXCHANGE PO 5,000
022700 MAIN PASS 265 PO 5,000
019900 MAIN PASS 288 - CONOCO PO 5,000
018400 MAIN PASS 289 - M.P. 290 - SHELL PO 5,000
026050 MAIN PASS 292 - AMERADA EXCHANGE PO 5,000
018100 MAIN PASS 293 - M.P. 306 - SUN PO 5,000
020000 MAIN PASS 296 PO 5,000
017900 MAIN PASS 298 - CHEVRON PO 5,000
018500 MAIN PASS 306 PO 5,000
022900 MAIN PASS 310 PO 5,000
021651 MAIN PASS 311 - WALTER O&G EXCHANGE PO 5,000
021600 MAIN PASS 311A PO 5,000
021700 MAIN PASS 311B PO 5,000
021300 MAIN PASS 313 PO 5,000
016100 MAIN PASS 46 - NERCO PO 5,000
651000 MAIN PASS 46 - QUINTANA PO 5,000
016000 MAIN PASS 47 PO 5,000
026150 MAIN PASS 49 - EDC EXCHANGE PO 5,000
023900 MAIN PASS 59 PO 5,000
023200 MAIN PASS 64 - HOWELL PO 5,000
016451 MAIN PASS 68 - PELTO EXCHANGE PO 5,000
016400 MAIN PASS 69 PO 5,000
027400 MAIN PASS 69(FEDERAL) PO 5,000
036901 MAIN PASS 72 - EXCHANGE PO 5,000
036900 MAIN PASS 73 - M.P. 72/73/74 - MOBIL PO 5,000
023100 MAIN PASS 77 - CHEVRON PO 5,000
012000 MANILA VILLAGE PO 5,000
011900 MANILA VILLAGE #2 PO 5,000
012050 MANILA VILLAGE S. E. PO 5,000
MATAGORDA ISLAND 632
OFFSYSTEM RECEIPT POINT:
508001 MATAGORDA ISLAND 632 P0 5,000
OFFSYSTEM DELIVERY POINT(S):
656800 NNG EXCHANGE - MOPS TIVOLI
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIVOLI
656802 FGT EXCHANGE - MOPS TIVOLI
MATAGORDA ISLAND 665
OFFSYSTEM RECEIPT POINT:
502100 MATAGORDA ISLAND 665 PO 5,000
<PAGE>
SERVICE AGREEMENT ND: 905660
EXHIBIT A-1
PAGE 10 OF 15
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
OFFSYSTEM DELIVERY POINT(S):
656800 NNG EXCHANGE - MOPS TIVOLI
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIVOLI
656802 FGT EXCHANGE - MOPS TIVOLI
MATAGORDA ISLAND 686
OFFSYSTEM RECEIPT POINT:
511500 MATAGORDA ISLAND 686 PO 5,000
OFFSYSTEM DELIVERY POINT(S):
656800 NNG EXCHANGE - MOPS TIVOLI
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIVOLI
656802 FGT EXCHANGE - MOPS TIVOLI
MATAGORDA ISLAND 686 - 0XY USA EXCHANGE
OFFSYSTEM RECEIPT POINT:
MATAGORDA ISLAND 686 - OXY USA EXCHANGE P0 5,000
OFFSYSTEM DELIVERY POINT(S):
656800 NNG EXCHANGE - MOPS TIVOLI
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIVOLI
656802 FGT EXCHANGE - MOPS TIVOLI
MATAGORDA ISLAND 686 - WALTER 0&G EXCHANGE
OFFSYSTEM RECEIPT POINT:
692800 MATAGORDA ISLAND 686 - WALTER 0&G EXCHANGE P0 5,000
OFFSYSTEM DELIVERY POINT(S):
656800 NNG EXCHANGE - MOPS TIVOLI
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIVOLI
656802 FGT EXCHANGE - MOPS TIVOLI
MATAGORDA ISLAND 696
OFFSYSTEM RECEIPT POINT:
508900 MATAGORDA ISLAND 696 P0 5,000
OFFSYSTEM DELIVERY POINT(S):
656800 NNG EXCHANGE - MOPS TIVOLI
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIVOLI
856802 FGT EXCHANGE - MOPS TIVOLI
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 11 OF 15
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
603300 MISSISSIPPI CANYON 109 - BP PO 5,000
022400 MISSISSIPPI CANYON 194 PO 5,000
603700 MISSISSIPPI CANYON 20 - BP PO 5,000
024950 MISSISSIPPI CANYON 268 - ORYX EXCHANGE PO 5,000
037400 MISSISSIPPI CANYON 268A - EXXON PO 5,000
037000 MISSISSIPPI CANYON 311 PO 5,000
027800 MISSISSIPPI CANYON 397 PO 5,000
012400 MONTEGUT PO 5,000
030700 MYSTIC BAYOU PO 5,000
663200 NGPL - ERATH TO SNG PO 5,000
- ---------------------------------------------------------------------------
NNG EXCHANGE - MATAGORDA ISLAND 713
OFFSYSTEM RECEIPT POINT:
663900 NNG EXCHANGE - MATAGORDA ISLAND 713 PO 5,000
OFFSYSTEM DELIVERY POINT(S):
656800 NNG EXCHANGE - MOPS TIVOLI
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIVOLI
656802 FGT EXCHANGE - MOPS TIVOLI
- ---------------------------------------------------------------------------
030200 PATTERSON - PLANT OUTLET GO 5,000
025400 PATTERSON - ZENOR GO 5,000
026200 PAXTON R/S PO 5,000
014100 POINTE A LA HACHE PO 5,000
010900 QUARANTINE BAY PO 5,000
016500 ROMERE PASS PO 5,000
605200 SABINE - HENRY HUB TO SNG PO 5,000
019300 SATURDAY ISLAND - HUBCO PO 5,000
605300 SEA ROBIN - ERATH TO SNG PO 5,000
033200 SECTION 28 - AMOCO PO 3,000
032900 SECTION 28 - GULF PO 250
- ---------------------------------------------------------------------------
SHELL - MOPS EXCHANGE - MAT IS 686 (MAT 681)
OFFSYSTEM RECEIPT POINT:
664150 SHELL - MOPS EXCHANGE - MAT IS 686 (MAT 681) PO 5,000
OFFSYSTEM DELlVERY POINT(S):
656800 NNG EXCHANGE - MOPS TIVOLI
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIV0LI
656802 FGT EXCHANGE - MOPS TIVOLI
- ---------------------------------------------------------------------------
SHIP SHOAL 84 - AMOCO
0FFSYSTEM RECEIPT POINT:
029003 SHIP SHOAL 84 - AMOCO PO 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 12 OF 15
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
OFFSYSTEM DELIVERY POINT(S):
695900 TRANSCO EXCHANGE - SHIP SHOAL 70
695950 TRANSCO EXCHANGE - SHIP SHOAL 72
- -------------------------------------------------------------------------------
022450 SOUTH PASS 27 - TEXACO PO 5,000
020400 SOUTH PASS 60 PO 5,000
026950 SOUTH PASS 62 - BP EXCHANGE PO 5,000
018200 SOUTH PASS 62 - CHEVRON PO 5,000
018600 SOUTH PASS 62 - SHELL PO 5,000
021100 SOUTH PASS 70 PO 5,000
- -------------------------------------------------------------------------------
SOUTH PASS 77 - OXY
OFFSYSTEM RECEIPT POINT:
045501 SOUTH PASS 77 - OXY PO 5,000
OFFSYSTEM DELIVERY POINT(S):
694700 TENN EXCHANGE - SOUTH PASS 77 (SP 78)
- -------------------------------------------------------------------------------
SOUTH TIMBALIER 37
OFFSYSTEM RECEIPT POINT:
032506 SOUTH TIMBALIER 37 PO 5,000
OFFSYSTEM DELIVERY POINT(S):
694900 TENN EXCHANGE - SOUTH TIMBALIER 37
- -------------------------------------------------------------------------------
050300 SPIDER - PHILLIPS #1 PO 5,000
032600 ST. GABRIEL GO 5,000
013700 STUARD'S BLUFF PO 5,000
013200 STUARD'S BLUFF EAST - RANGER PO 5,000
601700 SUGAR BOWL #3 - DESOTO PARISH PO 1,000
601410 SUGAR BOWL #6 - TO SNG - DISPLACEMENT PO 5,000
601900 SUGAR BOWL #7 - BIENVILLE PARISH TO SNG PO 5,000
603000 SUGAR BOWL #9 - DESOTO PARISH TO SNG PO 4,080
032500 TENN - PATTERSON TO SNG PO 5,000
503802 TENN - TOCA TO SNG PO 5,000
501410 TEXAS GAS - BAYOU PIGEON TO SNG PO 5,000
046400 TRANSCO - FROST TO SNG PO 5,000
601500 TRANSOK - BIENVILLE PARISH TO SNG PO 5,000
502710 TRUNKLINE - SHADYSIDE TO SNG PO 5,000
018450 VKGC - MAIN PASS 289 TO SNG PO 5,000
017100 WEST BAY PO 5,000
017120 WEST BAY - NORTHCOAST PO 5,000
017500 WEST DELTA 105 PO 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 13 OF 15
Maximum Daily
Receipt
Production Area Receipt Points: Quantity in MMBTU
017600 WEST DELTA 133,152 - TAYLOR PO 5,000
015100 WEST DELTA 30 PO 5,000
017300 WEST DELTA 42 PO 5,000
025950 WEST DELTA 62 - WALTER EXCHANGE PO 5,000
017400 WEST DELTA 75 - AMOCO (WD 73) PO 5,000
026600 WEST DELTA 89 - AGIP
Maximum Daily
Receipt
Zone 1 Receipt Points: Quantity in MMBTU
605110 AIM PIPELINE - AIM TO SNG (DISPLACE) Z1 5,000
653000 COLUMBIA GULF - EAST CARROLL TO SNG Z1 5,000
044600 CORINNE - NASON G1 1,560
043350 CORINNE FIELD - TOTAL VOLUME G1 5,000
041200 CRANFIELD NORTH - KAISER FRANCIS Z1 5,000
040125 DEXTER - CELT R/S #1 G1 2,856
040119 DEXTER - GETTY PITTMAN C-1 G1 5,000
040120 DEXTER - PENNZOIL MORRIS A-1 G1 5,000
040123 DEXTER - PENNZOIL PRISK C G1 5,000
040130 DEXTER - PITTMAN R/S #1 - TYSON G1 5,000
040112 DEXTER - TEXACO J.N. PITTMAN G1 5,000
040113 DEXTER - TEXACO MORRIS 2-9 G1 5,000
040126 DEXTER - TXO MORRIS 35-9 G1 3,360
043600 GRANGE - STEELE #1 WELL Z1 5,000
041712 GWINVILLE - EXXON UNIT 103D G1 5,000
041714 GWINVILLE - LAUREL FUEL B.A. WALKER G1 1,368
041715 GWINVILLE - LAUREL FUEL C.E. BERRY G1 1,368
041711 GWINVILLE - WILL-DRILL GGU 203 #1 G1 5,000
044700 HOOKER Z1 5,000
040350 HUB - EXXON -HELEN K BALL Z1 5,000
040250 HUB R/S #2 - MOON-HINES-TIGRETT Z1 5,000
027700 HUB R/S #3 - SKRIVANOS Z1 5,000
041000 KNOXO R/S #2 - JR POUNDS G1 4,000
051300 KOCH GATEWAY - PERRYVILLE TO SNG Z1 5,000
740310 KOCH GATEWAY - RANKIN TO SNG (DISPLACE) Z1 5,000
040400 KOKOMO - GARTMEN #1 (TEXACO) G1 5,000
025000 KOKOMO - MARATHON WALKER G1 3,000
041850 MAGEE SOUTH FIELD Z1 5,000
028350 MAIN PASS 245 - WALTER O&G EXCHANGE Z1
041600 OLDENBURG FIELD - EASON G1 5,000
039900 SANDY HOOK WEST - BOONE #1 Z1 5,000
045100 SANDY HOOK WEST - F.E. FORBES Z1 5,000
046900 SANDY HOOK WEST - FORBES #3 Z1 5,000
046100 SANDY HOOK WEST - FORNEA #1 (UMC) Z1 1,392
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 14 OF 15
Maximum Daily
Receipt
Zone 1 Receipt Points: Quantity in MMBTU
043500 SANDY HOOK WEST - HART #1 Z1 2,856
045200 SANDY HOOK WEST - HART #2 Z1 5,000
045300 SANDY HOOK WEST - HART #3 Z1 5,000
044800 SANDY HOOK WEST - HART #4 Z1 5,000
047200 SANDY HOOK WEST - HART #5 Z1 5,000
047400 SANDY HOOK WEST - HART #6 Z1 5,000
043100 SANDY HOOK WEST - MAXIE FORBES Z1 3,312
047300 SANDY HOOK WEST - R/S #1 - CARDINAL Z1 5,000
040000 SANDY HOOK WEST - R/S #2 - EXXON Z1 5,000
045900 SANDY HOOK WEST - RANKIN #1 Z1 1,300
047500 SANDY HOOK WEST - RONALD FORBES Z1 1,368
050101 SPIDER - MIDLAND Z1 5,000
041900 TALLAHALA CREEK Z1 2,500
051800 TENN - PUGH TO SNG Z1 5,000
504002 TENN - ROSE HILL TO SNG Z1 5,000
600810 TEXAS EASTERN - KOSCIUSKO TO SNG(DISPLACEMENT) Z1 5,000
043700 THOMASVILLE FIELD Z1 5,000
504200 TRUNKLINE - WEST CARROLL TO SNG Z1 5,000
Maximum Daily
Receipt
Zone 2 Receipt Points: Quantity in MMBTU
- --------------------------------------------------------------------------------
BIG ESCAMBIA
OFFSYSTEM RECEIPT POINT:
045000 BIG ESCAMBIA Z2 500
OFFSYSTEM DELIVERY POINT(S):
501200 FGT EXCHANGE - ESCAMBIA COUNTY, ALABAMA
- ------------------------------------------------------------------------------
046830 BLUE CREEK #2 - RIVER GAS Z2 5,000
046835 BLUE CREEK #2 - SIA TO SNG EXCHANGE Z2 5,000
046840 BLUE CREEK #3 - RIVER GAS Z2 5,000
046845 BLUE CREEK #3 - SIA TO SNG EXCHANGE Z2 5,000
045800 BROOKWOOD Z2 5,000
025100 CAINWOOD Z2 5,000
025700 CEDAR COVE - MOUNDVILLE - MERIDIAN Z2 5,000
601200 CORONADO TO SNG Z2 5,000
046800 DEERLICK CREEK - TRW Z2 5,000
025200 GURNEE #1 - MCKENZIE METHANE Z2 5,000
046200 LEXINGTON #1 - ESPERO ENERGY Z2 5,000
046000 OAK GROVE - U.S. STEEL/COAL Z2 5,000
046050 OAK GROVE #2 - BASIN Z2 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT A-1
PAGE 15 OF 15
Maximum Daily
Receipt
Zone 2 Receipt Points: Quantity in MMBTU
046060 OAK GROVE #3 - MCKENZIE Z2 5,000
046070 OAK GROVE #4 - AMOCO Z2 5,000
046040 OAK GROVE #5 - TAURUS Z2 5,000
046080 OAK GROVE #6 - AMOCO Z2 5,000
026300 ROBINSON BEND - TORCH Z2 5,000
605400 SIA - DUNCANVILLE TO SNG Z2 5,000
051900 SIA - MCCONNELLS TO SNG Z2 5,000
052400 SOUTHLAND TO SNG - MERIDIAN OIL Z2 5,000
027900 VIRGINIA MINE - TAURUS Z2 5,000
046850 WHITE OAK - SIA TO SNG EXCHANGE Z2
047600 WOOLBANK CREEK - GERMANY Z2 4,500
047100 WOOLBANK CREEK - JUSTISS OIL Z2 5,000
Maximum Daily
Receipt
Zone 3 Receipt Points: Quantity in MMBTU
043200 TRANSCO - JONESBORO TO SNG (DISPLACEMENT) Z3 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 1
The legal description of the Delivery Points listed below are more particularly
set forth in the Company's Delivery Point catalogs, a copy of which can be
requested from Company or accessed through SoNet, Company's electronic computer
system.
Maximum Daily
Delivery
Production Area Delivery Points: Quantity in MMBTU
705500 AIR PRODUCTS 5,000
705600 AMAX METALS RECOVERY INC. 5,000
601610 ANGI - JACKSON TO ANGI (DISPLACEMENT) 5,000
033400 ANR - SHADYSIDE TO ANR 5,000
037204 ANR EXCHANGE - EUGENE ISLAND 341 3,650
034510 BAYOU BOULLION - REDELIVERY (US EXPL) 5,000
033510 BAYOU LONG #2 - REDELIVERY 2,228
503970 BEAR CREEK - DELIVERIES TO TENNESSEE 5,000
604810 BENSON - SABINE-TEXICAN TO S-T (DISPLACE) 4,500
013910 BLACK BAY - REDELIVERY 2,400
014010 BLACK BAY - WEST - REDELIVERY 3,936
705300 BP OIL - ALLIANCE REFINERY 5,000
022810 CARTHAGE - TO UPRC (DISPLACEMENT) 5,000
706800 CHANDELEUR SOUND 25 - REDELIVERY TO ARCO 3,936
656801 CHANNEL INDUSTRIES EXCHANGE - MOPS TIVOLI 5,000
605510 COLUMBIA GULF - SHADYSIDE TO CG (DISPLACE) 5,000
689300 COLUMBIA GULF EXCHANGE - EAST CAMERON 23 5,000
741300 DENHAM SPRINGS 3,840
014510 DIAMOND SOUTH - REDELIVERY 2,400
501000 EAST HAPPYTOWN - BAYOU HENRY TO GGC 5,000
019010 ELOI BAY - TIPC0 REDELIVERY 4,968
601000 FGT - FRANKLINTON - TO FGT 5,000
656900 FGT EXCHANGE - BRAZOS 367 1,000
656802 FGT EXCHANGE - MOPS TIVOLI 5,000
705700 FMP SULPHUR - MAIN PASS 299 5,000
601850 GULF STATES - SNG TO GSP 4,200
601951 GULF STATES - TO GSP (DISPLACEMENT) 5,000
030320 KOCH GATEWAY - SHADYSIDE TO KOCH (DISPLACE) 5,000
538110 KOCH GATEWAY - ST. MARTIN KOCH (DISPLACE) 5,000
601100 KOCH GATEWAY - TANGIPAHOA TO KOCH 5,000
690900 KOCH GATEWAY EXCHANGE - LOCKHART CROSSING 5,000
707200 LAKE FORTUNA - GAS LIFT - O'MEARA 3,936
048010 LIG - LOGANSPORT TO LIG (DISPLACEMENT) 5,000
604100 LRC - CARRVILLE TO LRC 5,000
664010 LRC - WHITE CASTLE TO LRC (DISPLACEMENT) 5,000
023510 MAIN PASS 129 - HALL HOUSTON - REDELIVERY 2,544
017810 MAIN PASS 144 - REDELIVERY 2,544
017910 MAIN PASS 298 - REDELIVERY 2,544
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 2
Maximum Daily
Delivery
Production Area Delivery Points: (Continued) Quantity in MMBTU
022910 MAIN PASS 310 - REDELIVERY 2,544
021750 MAIN PASS 311B - REDELIVERY 2,544
021310 MAIN PASS 313 - REDELIVERY 2,544
023910 MAIN PASS 59 - REDELIVERY 5,000
016410 MAIN PASS 69 - REDELIVERY 2,544
663210 NGPL - ERATH TO NGPL (DISPLACEMENT) 5,000
519001 NGPL EXCHANGE - TRANSCO MARKHAM PLANT 5,000
656800 NNG EXCHANGE - MOPS TIVOLI 5,000
692300 NNG EXCHANGE - ROBERTS COUNTY, TEXAS 5,000
603500 NOPSI - SNG TO NOPSI (NEW ORLEANS EAST) 5,000
656600 NUECES COUNTY, TEXAS 1,000
710200 POLARIS 1,968
605210 SABINE - HENRY HUB TO SABINE 5,000
605310 SEA ROBIN - ERATH TO SEA ROBIN (DISPLACE) 5,000
672600 SNG - TRANSCO EXCHANGE - WHARTON COUNTY, TX 5,000
020410 SOUTH PASS 60 - REDELIVERY 2,424
018210 SOUTH PASS 62 - REDELIVERY 2,424
021110 SOUTH PASS 70 - REDELIVERY 5,000
601710 SUGAR BOWL #3 - DESOTO PH TO SB - DISPLACE 1,000
601400 SUGAR BOWL #6 - TO ACADIAN - CARRVILLE 5,000
601910 SUGAR BOWL #7 - BIENVILLE PH TO SB - DISPLACE 5,000
603010 SUGAR BOWL #9 - DESOTO PH TO SB - DISPLACE 4,080
032510 TENN - PATTERSON TO TENN (DISPLACMENT) 5,000
503801 TENN - TOCA TO TENN (DISPLACEMENT) 5,000
032508 TENN EXCHANGE - EAST CAMERON 46 5,000
694700 TENN EXCHANGE - SOUTH PASS 77 (SP 78) 5,000
694900 TENN EXCHANGE - SOUTH TIMBALIER 37 5,000
501400 TEXAS GAS - BAYOU PIGEON TO TEXAS GAS 5,000
011110 THREE BAYOU BAY REDELIVERY - WICHITA 1,000
703500 TRANS LOUISIANA GAS COMPANY 528
603100 TRANSCO - FROST TO TRANSCO 5,000
673500 TRANSCO EXCHANGE - EUGENE ISLAND 129 5,000
695900 TRANSCO EXCHANGE - SHIP SHOAL 70 5,000
695950 TRANSCO EXCHANGE - SHIP SHOAL 72 5,000
519000 TRANSCO MARKHAM PLANT - CENTRAL TEXAS LOOP 5,000
601510 TRANSOK - BIENVILLE PARISH TO TRANSOK (DISPL) 5,000
502711 TRUNKLINE - SHADYSIDE TO TRUNK (DISPLACEMENT) 5,000
675800 UNITED EXCHANGE - EUGENE ISLAND 32 5,000
675900 UNITED EXCHANGE - EUGENE ISLAND 51 5,000
Maximum Daily
Delivery
Zone 1 Delivery Points: Quantity in MMBTU
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 3
Maximum Daily
Delivery
Zone 1 Delivery Points: (Continued) Quantity in MMBTU
605100 AIM PIPELINE INTERCONNECT - SNG TO AIM 5,000
738300 ARTESIA 217
741200 BAY SPRINGS 480
731900 BUNGE CORPORATION 2,736
740500 CANTON 5,000
743100 CHEVRON - BROOKHAVEN 1,032
653010 COLUMBIA GULF - EAST CARROLL TO CG (DISPLACE) 5,000
732300 ERGON REFINING 5,000
742500 FAYETTE, MISSISSIPPI 3,312
712500 GAYLORD CONTAINER CO. 5,000
733200 HASSIE HUNT - JOHNSON & FAIR 72
742700 JOHN W. MCGOWAN - FRANKLIN CO 2,304
733100 JONES & O'BRIEN - STEVENS TAP 336
051410 KOCH GATEWAY - KOSCIUSKO TO KOCH 5,000
051310 KOCH GATEWAY - PERRYVILLE TO KOCH (DISPLACE) 5,000
740300 KOCH GATEWAY - RANKIN TO KOCH 5,000
741100 LAKE ST. JOHN - INTERNATIONAL PAPER 5,000
734000 MCGOWAN #1 120
734300 MCGOWAN #2 96
501300 MID-LOUISIANA - PERRYVILLE TO MID-LOUISIANA 5,000
726900 MISSISSIPPI CHEMICAL 5,000
739500 MVG - AMORY 5,000
727300 MVG - BENTON 336
735100 MVG - CARTHAGE 3,744
738600 MVG - CLAYTON VILLAGE 432
739200 MVG - COLUMBUS 5,000
725300 MVG - DEER CREEK NATURAL GAS DISTRICT 3,648
737200 MVG - DEKALB 960
730000 MVG - DURANT 1,776
729000 MVG - GOODMAN 624
734900 MVG - KOSCIUSKO 5,000
731100 MVG - LEXINGTON 5,000
735700 MVG - LOUISVILLE 5,000
736500 MVG - MACON LINE 5,000
940000 MVG - MERIDIAN AREA 5,000
741400 MVG - NATCHEZ 55
737500 MVG - NAVAL AIR STATION 1,320
735600 MVG - NORTH CENTRAL GAS DISTRICT 5,000
735500 MVG - NOXAPATER 696
728000 MVG - PICKENS 1,488
738800 MVG - STARKVILLE 5,000
746400 MVG - SYSTEMWIDE FARM TAPS 100
739600 MVG - WEST POINT 5,000
726000 MVG - YAZ00 CITY 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 4
Maximum Daily
Delivery
Zone 1 Delivery Points: (Continued) Quantity in MMBTU
732700 PENNZOIL - MILNER 96
733900 PENNZOIL - MITCH PAYNE 432
733800 PENNZOIL - NAN BERRY 1,032
733600 PENNZOIL - PERRY & CHILDRESS TAP 288
733400 PENNZOIL - PERRY TAP 840
732600 PENNZOIL - POWELL & TWINER TAP 696
732900 PENNZOIL - STEVENS 336
733000 PENNZOIL - STEVENS, WOODRUFF & HERRON 288
733300 PENNZOIL - WOODRUFF & FRILEY 288
744700 PLANT SWEATT - MISSISSIPPI POWER 5,000
740800 RALEIGH 1,440
742900 ROXIE 1,008
746600 SMC - SYSTEMWIDE FARM TAPS 2,000
732800 SOHIO PUMPING STATION 168
731000 TCHULA 912
051810 TENN - PUGH TO TENN 5,000
504001 TENN - ROSE HILL TO TENN 5,000
600800 TEXAS EASTERN - KOSCIUSKO TO TETCO 5,000
504210 TRUNKLINE - WEST CARROLL TO TRUNKLINE (DISPL) 5,000
731700 U.S. CORPS OF ENGINEERS 552
732200 VICKSBURG 5,000
746200 VICKSBURG AREA FARM TAPS 100
656200 WASHINGTON PARISH AREA 2,064
742600 WEST LINCOLN 1,728
727600 WESTLAND RESOURCES - CMW OIL 96
740400 WESTLAND RESOURCES - MADISON 72
Maximum Daily
Delivery
Zone 2 Delivery Points: Quantity in MMBTU
850010 ADEL - SGNG 2,688
659700 ALA - ANNISTON AREA 5,000
841400 ALA - ASHVILLE 1,632
838100 ALA - BARRETT COMPANY 2,496
658500 ALA - BIRMINGHAM AREA 5,000
817400 ALA - BRENT & CENTERVILLE 2,880
838300 ALA - BULLOCK 1,152
659900 ALA - DEMOPOLOS AREA 5,000
806800 ALA - ECLECTIC 530
940021 ALA - FAIRFAX-SHAWMUT AREA 5,000
654700 ALA - GADSDEN AREA 5,000
801600 ALA - GREENE COUNTY 5,000
802400 ALA - GREENSBORO 2,880
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 5
Maximum Daily
Delivery
Zone 2 Delivery Points: (Continued) Quantity in MMBTU
847000 ALA - HEFLIN GATE 1,488
940035 ALA - JASPER AREA 5,000
940005 ALA - LINCOLN AREA 2,688
803400 ALA - MARION 2,832
833400 ALA - MONTEVALLO 4,176
940022 ALA - MONTGOMERY AREA 5,000
809400 ALA - NOTASULGA TAP 696
821200 ALA - OAK GROVE 1,032
940011 ALA - OPELIKA AREA 5,000
836201 ALA - PARRISH-OAKMAN 1,152
940056 ALA - PELL CITY AREA 2,304
909700 ALA - PHENIX CITY AREA 5,000
834100 ALA - PLANT MILLER 5,000
818800 ALA - REFORM #1 888
819400 ALA - REFORM #2 1,176
844800 ALA - RIVERSIDE EAST TAP 100
940023 ALA - SELMA AREA 5,000
847900 ALA - SYSTEMWIDE FARM TAPS 100
940006 ALA - TALLADEGA AREA 5,000
845400 ALA - TALLADEGA RACEWAY 432
940002 ALA - TUSCALOOSA AREA 5,000
940024 ALA - TUSKEGEE AREA 5,000
802600 ALA - UNIONTOWN 2,064
843200 ALABAMA POWER COMPANY - GADSDEN 5,000
940012 ALABASTER AREA 5,000
850020 ALBANY AREA - SGNG 5,000
831900 ALLIED LIME CO 3,336
800500 AMERICAN CAN JAMES RIVERS 5,000
850030 AMERICUS AREA - SGNG 5,000
850041 ANDERSONVILLE #1 - SGNG 288
850040 ANDERSONVILLE/MULCOA AREA - SGNG 5,000
850050 ASHBURN - SGNG 2,688
850390 ATLANTA GAS LIGHT - SGNG 5,000
850060 BAINBRIDGE AREA - SGNG 4,032
820200 BERRY 696
850070 BLAKELY AREA - SGNG 3,360
832900 BLUE CIRCLE 5,000
909300 BOAZ AREA 3,096
811700 BRICKYARD - BICKERSTAFF 4,488
821900 BROOKSIDE 888
820300 BROWN WOOD PRESERVING 480
850080 CAIRO - SGNG 2,304
833200 CALERA 5,000
850090 CAMILLA - SGNG 1,728
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 6
Maximum Daily
Delivery
Zone 2 Delivery Points: (Continued) Quantity in MMBTU
808500 CAMP HILL 1,392
832100 CHENEY LIME 3,096
844400 CHILDERSBURG #1 3,648
844500 CHILDERSBURG #2 5,000
833600 CHILTON COUNTY 1,488
850100 COLQUITT - SGNG 864
832600 COLUMBIANA 2,376
850110 CORDELE AREA - SGNG 5,000
940027 CORDOVA AREA 3,480
601210 CORONADO TO CORONADO - DISPLACEMENT 5,000
823300 CULLMAN - JEFFERSON 5,000
850120 CUTHBERT - SGNG 2,904
808400 DADEVILLE 4,440
850130 DAWSON - SGNG 2,544
850140 DECATUR COUNTY - SGNG 2,688
843400 DEKALB -CHEROKEE #1 5,000
843500 DEKALB - CHEROKEE #2
811500 DIXIELAND - BICKERSTAFF 4,224
850150 DOERUN - SGNG 720
850160 DONALSONVILLE - SGNG 864
834800 DORA 1,032
850170 DOUGLAS - SGNG 5,000
832300 DRAVO - LONGVIEW LIME 5,000
850180 EDISON - SGNG 864
850410 ENGELHARD - SGNG 5,000
814400 FAIRFAX MILLS - WEST POINT PEPPERELL 3,192
819900 FAYETTE, ALABAMA 5,000
656100 FGT EXCHANGE - ESCAMBIA COUNTY, ALABAMA 500
501200 FGT EXCHANGE - ESCAMBIA COUNTY, ALABAMA 500
850190 FITZGERALD - SGNG 2,688
850420 FLORIDA POWER - SGNG 5,000
850430 FLORIDIN - SGNG 5,000
850200 FORT GAINES - SGNG 864
940029 FULTONDALE AREA 5,000
850450 GEORGIA PACIFIC CORPORATION - SGNG 5,000
850440 GOLDKIST - SGNG 1,488
819600 GORDO 948
940030 GRAYSVILLE AREA 5,000
801000 GULF STATES PAPER COMPANY 5,000
850210 HAVANA - SGNG 1,920
830600 HELENA 744
816800 HUNT OIL COMPANY 5,000
850530 JACKSONVILLE - SGNG 5,000
846200 JACKSONVILLE, ALABAMA 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 7
Maximum Daily
Delivery
Zone 2 Delivery Points: (Continued) Quantity in MMBTU
850220 JASPER - SGNG 840
801900 LAFARGE - CITADEL DIVISION 1,368
814200 LAFAYETTE - CHAMBERS COUNTY, ALABAMA 4,704
901100 LAGRANGE #2 5,000
815500 LANETT 3,336
815600 LANETT MILLS - WEST POINT PEPPERELL 1,392
814800 LANGDALE MILLS - WELLINGTON SEARS 1,104
815700 LANTUCK - WELLINGTON SEARS 480
826700 LEHIGH PORTLAND CEMENT 5,000
800800 LIVINGSTON 5,000
850230 LUMPKIN - SGNG 784
825400 MARSHALL COUNTY #1 5,000
825500 MARSHALL COUNTY #2 5,000
802900 MCMILLAN-BLOEDEL 5,000
850240 MEIGS AREA - SGNG 2,616
850460 MERCK & COMPANY - SGNG 5,000
809820 MGAG - LEE COUNTY 5,000
850470 MILWHITE - SGNG 1,248
850250 MONTEZUMA - SGNG 3,840
850260 MOULTRIE AREA - SGNG 5,000
807900 MOUNT VERNON MILLS, INC. 696
821400 MULGA 2,064
850270 NASHVILLE - SGNG 2,688
840800 NATIONAL CEMENT 5,000
819800 NORTHWEST ALABAMA GAS 5,000
046042 OAK GROVE - LICK CREEK METER STATION 4,152
046071 OAK GROVE #4 - FUEL GAS 3,768
046041 OAK GROVE #5 - FUEL GAS 3,648
046081 OAK GROVE #6 - FUEL GAS 3,768
850490 OCCIDENTAL CORP - SGNG 5,000
850280 OCILLA - SGNG 1,008
850500 OIL DRI OF GEORGIA - SGNG 5,000
823400 ONEONTA 5,000
850510 PACKAGING CORP OF AMERICA - SGNG 5,000
850290 PELHAM - SGNG 2,424
819000 PICKENS COUNTY GAS DISTRICT 2,640
846400 PIEDMONT 5,000
850300 QUINCY - SGNG 5,000
850310 QUITMAN - SGNG 2,688
841200 RAGLAND 576
840400 RAGLAND BRICK 696
850320 RICHLAND - SGNG 624
814700 RIVERVIEW MILLS - WEST POINT PEPPERELL 576
842600 SCOTTSBORO 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 8
Maximum Daily
Delivery
Zone 2 Delivery Points: (Continued) Quantity in MMBTU
815300 SHAWMUT MILLS - WEST POINT PEPPERELL 1,080
850330 SHELLMAN - SGNG 576
605410 SIA - DUNCANVILLE TO SIA (DISPLACEMENT) 5,000
051950 SIA - MCCONNELLS TO SIA (DISPLACEMENT) 5,000
940031 SOUTHEAST ALABAMA GAS DISTRICT AREA 5,000
052410 SOUTHLAND TO SOUTHLAND - DISPLACEMENT 5,000
834600 SUMITON 1,440
848000 SYLACAUGA 5,000
850340 SYLVESTER - SGNG 1,056
850350 TALLAHASSEE - SGNG 5,000
940032 TALLASSEE AREA 4,752
840600 TEMCO METALS ASBESTOS 312
850360 THOMASVILLE - SGNG 5,000
850370 TIFTON - SGNG 5,000
912900 TRUSSVILLE AREA 5,000
940037 U.S. STEEL FAIRFIELD AREA 5,000
850380 UNADILLA AREA - SGNG 1,032
809200 UNION SPRINGS 4,392
698200 UNITED CITIES - COLUMBUS AREA 5,000
850400 VIENNA - SGNG 3,240
823600 VULCAN MATERIALS - DOLCITO QUARRY 480
850520 WAVERLY MINERAL - SGNG 5,000
834400 WEST JEFFERSON 888
900800 WEST POINT, GEORGIA 3,888
802800 WILCOX COUNTY 5,000
833800 WILTON 288
800200 YORK 1,176
Maximum Daily
Delivery
Zone 3 Delivery Points: Quantity in MMBTU
905500 ADAIRSVILLE 5,000
919200 AGL - ALAMO 5,000
683600 AGL - ATLANTA AREA 5,000
940016 AGL - AUGUSTA AREA 5,000
917800 AGL - BARNESVILLE 5,000
919600 AGL - BAXLEY 5,000
931600 AGL - BLYTHE 432
920200 AGL - BRUNSWICK 5,000
940019 AGL - CALHOUN AREA 5,000
940026 AGL - CARROLLTON AREA 5,000
907800 AGL - CATOOSA COUNTY 888
940020 AGL - CEDARTOWN - ROCKMART AREA 5,000
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 9
Maximum Daily
Delivery
Zone 3 Delivery Points: (Continued) Quantity in MMBTU
907600 AGL - CHATSWORTH 5,000
918400 AGL - DANVILLE 888
918600 AGL - DEXTER 888
918800 AGL - EASTMAN - CADWELL 5,000
917200 AGL - FORSYTH 5,000
913400 AGL - GRIFFIN 5,000
919400 AGL - HAZLEHURST 3,576
918000 AGL - JACKSON 2,880
919800 AGL - JESUP 5,000
911500 AGL - MACON AREA 5,000
940018 AGL - NEWNAN-YATES-DALLAS AREA 5,000
908000 AGL - RINGGOLD 5,000
940013 AGL - ROME AREA 5,000
932500 AGL - SANDERSVILLE 5,000
911800 AGL - SAVANNAH AREA 5,000
934200 AGL - SPRINGFIELD-GUYTON 864
907000 AGL - SYSTEMWIDE FARM TAPS 100
917600 AGL - THOMASTON 5,000
930600 AGL - WARRENTON 5,000
917400 AGL - ZEBULON 2,208
932400 ARCADIAN 5,000
935500 ARCADIAN - SAVANNAH 5,000
659000 AUSTELL AREA 5,000
780900 BATH MILL 504
940039 CARTERSVILLE AREA 5,000
935700 CERTAIN-TEED 1,152
790200 CHATTANOOGA 5,000
934400 CLAXTON 2,736
781100 CLEARWATER MILL 5,000
915001 COCHRAN 5,000
940017 DALTON AREA 5,000
780500 DIXIE CLAY 1,056
901600 DIXIE MILLS - WEST POINT PEPPERELL 720
916800 DUBLIN #3 5,000
940028 DUBLIN AREA 5,000
901700 DUNSON MILLS - WEST POINT PEPPERELL 696
916400 EATONTON-GRAY 5,000
935200 ELBA ISLAND REDELIVERY TO SOUTHERN ENERGY 1,000
914800 FORT VALLEY 5,000
782700 GRANITEVILLE MILLS 5,000
902200 GRANTVILLE 888
915002 HAWKINSVILLE 5,000
902000 HOGANSVILLE 4,560
781200 HUBER #1 864
<PAGE>
SERVICE AGREEMENT NO: 905660
EXHIBIT B-1
Page: 10
Maximum Daily
Delivery
Zone 3 Delivery Points: (Continued) Quantity in MMBTU
915000 JOINTLY OWNED BOARD #1 5,000
783300 KENTUCKY-TENNESSEE CLAY CO 576
905800 LAFAYETTE 5,000
901000 LAGRANGE #1 5,000
932800 LOUISVILLE 5,000
914200 MANCHESTER 2,880
933200 MILLEN 2,304
916200 MONTICELLO 4,704
935900 OWENS CORNING FIBERGLAS 984
915003 PERRY 5,000
935300 SAVANNAH SUGAR 5,000
782500 SCPL - AIKEN 5,000
780600 SCPL - BATH 3,648
781600 SCPL - GRANITEVILLE 4,080
780200 SCPL - NORTH AUGUSTA 5,000
783500 SOUTHEASTERN CLAY 576
930200 SPARTA 1,488
933600 STATESBORO 5,000
935100 STONE CONTAINER - PORT WENTWORTH 5,000
905400 SUMMERVILLE, TRION & LAFAYETTE 5,000
933800 SYLVANIA 5,000
914000 TALBOTTON 816
903400 TALLAPOOSA 2,064
931000 THOMSON, GEORGIA 5,000
043201 TRANSCO - JONESBORO TO TRANSCO 5,000
906000 TRION - LAFAYETTE 5,000
936300 UNION CAMP CORP. #1 5,000
936400 UNION CAMP CORP. #2 5,000
915100 WARNER ROBINS #2 5,000
781900 WARRENVILLE 840
933000 WAYNESBORO 2,880
914400 WOODLAND 336
931200 WRENS 5,000
931300 WRENS #2 5,000
TRANSCONTINENTAL GAS PIPELINE CORPORATION
2800 Post Oak Boulevard
P.O. Box 1396
Houston, TX 77251-1396
713-439-2000
March 4, 1997
Ms. Eileen Stanek
AGL Resources Inc.
303 Peachtree Street, N.E.
Atlanta, GA 30308
Dear Eileen:
Enclosed for your records are fully executed originals of the following
agreements for the 1998 Cherokee Expansion Project:
o Precedent Agreement
o Side Letter agreement regarding supply arrangements
Transco hopes to file the certificate application for the project on March 31,
1997, I will forward a copy for your records when the filing is available.
Hope you had a good vacation!
Best regards,
/s/ Craig Adams
Craig Adams
Project Development
Enclosure
<PAGE>
Transco 1998 CHEROKEE EXPANSION PROJECT
PRECEDENT AGREEMENT
THIS PRECEDENT AGREEMENT, entered into this 28th day of February, 1997, is
by and between TRANSCONTINENTAL GAS PIPE LINE CORPORATION ("Transco"), a
Delaware corporation, and ATLANTA GAS LIGHT COMPANY ("Atlanta"), a Georgia
corporation. Transco and Atlanta are sometimes referred to individually as
"Party" and jointly as "Parties".
WITNESSETH
WHEREAS, Transco conducted an open season from December 18, 1996 through
January 20, 1997, during which it accepted requests for firm transportation
service to be made available through an expansion of its transmission
facilities, hereinafter referred to as the "1998 Cherokee Expansion Project";
WHEREAS, Atlanta submitted a Complete Request (as defined in Transco's open
season announcement) during the open season and desires firm transportation
service as part of the 1998 Cherokee Expansion Project for 85,000 dekatherms of
gas per day ("Dt/D") from the receipt point(s) specified in exhibit A hereto to
the delivery point(s) specified in exhibit B hereto;
WHEREAS, subject to the terms and conditions of this Precedent Agreement,
Transco is willing to provide such firm transportation service for Atlanta as
part of the 1998 Cherokee Expansion Project commencing as soon as all rights and
regulatory approvals are received and accepted by Transco and all of the
necessary facilities are constructed and ready for service.
1
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants herein assumed,
Transco and Atlanta hereby agree as follows:
1. Rights and Approvals. Following the execution by Transco of this
Precedent Agreement, Transco shall seek such contract rights, property rights,
financing arrangements and regulatory approvals, including, without limitation,
the requisite authorizations from the Federal Energy Regulatory Commission
("FERC"), including rates based on a straight fixed-variable ("SFV") rate design
methodology and an incremental cost of service, as may be necessary to provide
firm transportation service for Atlanta of 85,000 Dt/D from point(s) of receipt
set forth in Exhibit A hereto point(s) of delivery set forth in exhibit B
hereto. Transco reserves the right to file and prosecute applications for any
required authorizations, any supplements, or amendments thereto, and, if
necessary, court review, in such manner as it deems to be in its best interest.
Atlanta agrees to use its good faith efforts to cooperate with and support
Transco in obtaining such regulatory approvals and to provide Transco with any
necessary information reasonably requested in order to obtain contract rights,
property rights, financing arrangements and/or regulatory approvals, provided
that Transco shall, upon Atlanta's request, seek confidential treatment of such
information. In that regard, Atlanta agrees to file with the FERC in support of
Transco's certificate application (including rates based on the SFV rate design
methodology) filed pursuant to Section 7(c) of the Natural Gas Act for a
certificate of public convenience and necessity and authorizing the 1998
Cherokee Expansion Project ("FERC Authorization"). In addition, if the FERC
determines that information relating to Atlanta's markets, gas supply, or
upstream transportation or storage arrangements is required from Transco,
Atlanta shall provide Transco with such information in a timely manner to enable
Transco to respond within the time required by the FERC.
2. Service Agreement. Within thirty (30) days after the date Transco
receives and accepts the FERC Authorization, on terms satisfactory to Transco in
its sole opinion, Transco and Atlanta shall deliver and execute a service
agreement under Transco's Rate Schedule FT ("Service Agreement"), provided that
this Precedent Agreement has not been previously terminated. The Service
Agreement shall provide for the firm transportation by Transco for Atlanta of
85,000 Dt/D
2
<PAGE>
from point(s) of receipt set forth in exhibit A hereto point(s) of delivery set
forth in Exhibit B hereto.
3. Rates. For the subject firm transportation service, Atlanta agrees to
pay rates as approved by the FERC.
4. Term. Transco's obligation to provide the firm transportation service
contemplated herein and Atlanta's obligation to pay Transco reservation charges
for such service shall commence on the first day on which Transco's facilities
necessary to provide firm service to Atlanta under the 1998 Cherokee Expansion
Project have been constructed and are ready for service as determined in
Transco's sole opinion. Such firm transportation service shall continue for a
primary term of fifteen (15) years from the date that the firm transportation
service commences, and year-to-year thereafter subject to termination after such
primary term by either Party upon one (1) year prior written notice to the other
Party.
5. Termination of Agreements. If Transco has not received and accepted the
necessary FERC Authorizations on or before May 31, 1999, then at any time
thereafter until Transco receives and accepts such FERC Authorizations, either
Party shall have the right to terminate this Precedent Agreement by giving (30)
days advance written notice to the other Party; provided, however, that such
termination shall not be effective if during the 30-day period Transco receives
and accepts the necessary FERC Authorizations. Additionally, if Transco has not
commenced the firm shall have the right to terminate this Precedent Agreement
and the Service Agreement by giving twenty-four (24) hours advance written
notice to the other Party; provided that such right must be exercised on or
before November 2, 2000 or else such right shall be waived.
6. Construction, After both Parties' execution of the Service Agreement
pursuant to Paragraph 2 above and Transco's receipt and acceptance of all other
necessary contracts rights, property rights, financing arrangements and
regulatory approvals in a form and substance
3
<PAGE>
satisfactory to Transco in its sole opinion, Transco shall proceed with the
construction of the facilities so as to begin firm service by a projected
in-service date of November 1, 1998. If Transco is unable to complete such
construction and place such facilities into operation by such proposed
in-service date despite its exercise of due diligence, Transco shall continue to
proceed with due diligence to complete such construction, place such facilities
in operations and commence service for Atlanta at the earliest practicable date
thereafter. Transco shall not be liable in any manner to Atlanta, nor shall this
Precedent agreement or the Service Agreement be subject to termination if,
despite Transco's exercise of due diligence, Transco is unable to complete the
construction of such facilities and commence firm transportation service
contemplated herein by the proposed in-service date.
7. Prepayment Refund. Transco and Atlanta agree that the prepayment
submitted by Atlanta during the open season for the 1998 Cherokee Expansion
Project plus any interest that accrues on the prepayment amount (any interest on
the prepayment amount calculated hereunder shall be a the interest rate set
forth in Section 7 of the General Terms and Conditions of Transco's FERC Gas
Tariff) prior to the in-service date of the project will be applied to Atlanta's
reservation charges due of the first month of firm transportation service under
the project. In the event that service commences on a date other than the first
day of the month, the reservation charge will be prorated and the prepayment
plus accrued interest will be applied to such pro rated reservation charge. In
the event that Atlanta terminates this Precedent Agreement pursuant to Paragraph
5 above, Transco shall refund Atlanta's prepayment plus accrued interest.
8. Remedies. Atlanta recognizes that Transco will be required to incur
material expenses to construct the 1998 Cherokee Expansion Project facilities by
a projected in-service date of November 1, 1998. In the event that Atlanta fails
to perform its obligations under this Precedent Agreement or terminates this
Precedent Agreement in a manner inconsistent with Paragraph 5 above, Transco
shall have the right to retain Atlanta's prepayment (plus accrued interest) made
in accordance with Atlanta's request for firm transportation service under the
1998 Cherokee Expansion Project and to seek any other legal remedies available
to Transco, provided that any such legal
4
<PAGE>
remedy which is a monetary remedy shall be reduced by an amount equal to the
prepayment (plus accrued interest) retained by Transco.
9. Notice. Notices under this Precedent Agreement shall be in writing and
shall be addressed as follows:
If to Atlanta:
Thomas H. Benson
Executive Vice President and Chief Operating Officer
Atlanta Gas Light Company
303 Peachtree Street, N.E.
Atlanta, GA 30308-3249
Fax: 404/584-3703
If to Transco:
Transcontinental Gas Pipe Line Corporation
2800 Post Oak Boulevard
P. O. Box 1396
Houston, Texas 77251-1396
Attention: Customer Services
Fax: 713/215-2549
Notices may abe given by hand, electronic transmission, mail or courier. Notices
shall be deemed given upon the date the notice is sent. Either Party may change
its address or telecopy number for notices hereunder by providing written notice
of such change to the other Party.
10. Assignment. Any individual or entity which shall succeed by purchase,
merger or consolidation of the properties of Transco or Atlanta shall be
entitled to the rights and shall be subject to the obligations of its
predecessor in title under this Precedent Agreement. Either Party may, without
prior consent of the other Party, pledge, mortgage or assign its rights
hereunder as security for its indebtedness; otherwise, any assignment of this
Precedent Agreement or any of the rights and obligations hereunder shall be void
and of no force or effect unless the assigning Party first obtains the consent
thereto in writing of the other Party. With respect to the foregoing sentence,
Atlanta and Transco hereby agree to execute and deliver to any pledgee or
mortgagee of the other
5
<PAGE>
Party a consent to assignment to the extent such consent does not materially
alter any of the terms and conditions of this Precedent Agreement. Any
assignment hereof shall be subject to the receipt and acceptance by Transco of
any necessary regulatory or governmental authorizations. This Precedent
Agreement shall be binding upon and shall inure to the benefit of the respective
authorized successors and assigns.
11. Governing Law. This Precedent Agreement and any action, claims, demands
or settlements hereunder shall be governed by and construed in accordance with
the laws of the State of Texas, excluding, however, any conflicts of laws, rules
or principles which might require the application of the laws of another
jurisdiction. Any action or proceeding arising out of this Precedent Agreement
must be brought in the courts of the State of Texas with venue in the District
Courts of Harris County; provided, however, that to the extent a basis for
federal jurisdiction exists, Transco or Atlanta may in the alternative bring an
action in the United States District Court for the Southern District of Texas.
The Parties irrevocably waive any objections they might otherwise have to such
jurisdiction or venue, whether on the grounds of inconvenience or otherwise, and
any rights they might otherwise have to bring action in other jurisdiction or
venue.
12. Third Persons. Except as expressly provided in this Precedent
Agreement, nothing herein expressed or implied is intended or shall be construed
to confer upon or to give any person not a Party hereto any rights, remedies or
obligations under or by reason of this Precedent Agreement.
13. Laws and Regulatory Bodies. This Precedent Agreement and the
obligations of the Parties hereunder are subject to all applicable laws, rules,
orders and regulations of governmental authorities having jurisdiction and, in
the event of conflict, such laws, rules, orders and regulations of governmental
authorities having jurisdiction shall control.
14. Captions. The titles to each of the paragraphs in this Precedent
Agreement are included for convenience of reference only and shall have no
effect on, or be deemed as part of the
6
<PAGE>
text of this Precedent Agreement.
15. Severability. Any provision of this Precedent Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of that prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of that provision in any other jurisdiction.
16. Further Assurances. Each Party agrees to execute and deliver all such
other and additional instruments and documents and to do such other acts as may
be reasonably necessary to effectuate the terms and provisions of this Precedent
Agreement.
IN WITNESS WHEREOF, the Parties have executed this Precedent Agreement, in
duplicate originals, as of the date first above written.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
By: /s/ Frank J. Ferazzi
Frank J. Ferazzi
Vice President, Customer Service
ATLANTA GAS LIGHT COMPANY
By: /s/ Thomas H. Benson
Thomas H. Benson
Executive Vice President & Chief Operating Officer
7
<PAGE>
EXHIBIT A
Specified Receipt Points
Atlanta Gas Light Company
Transportation Contract Quantity: 85,000 DT/D
Receipt Points Maximum Daily Quantity at Each Receipt
Point(1)
Point of interconnection between Transco's 85,000 Dt/D
mainline and Mobile Bay Lateral at milepost
784.66 in Choctaw County, Alabama
(1) These quantities do not include the additional quantities of gas to be
retained by Transco for compressor fuel and line loss make-up. Therefore,
Atlanta shall also deliver or cause to be delivered at the receipt points such
additional quantities of gas to be retained by Transco for compressor fuel and
line loss make-up.
8
<PAGE>
Exhibit B
Specified Delivery Points
Atlanta Gas Light Company
Transportation Contract Quantity: 85,000 Dt/D
Delivery Points Maximum Daily Quantity at Each Delivery
Point(2)
Suwanee 85,000
(2) Deliveries to or for the account of Atlanta at the delivery point(s) shall
be subject to the limits of the Delivery Point Entitlements ("DPEs") at such
delivery points, as such DPEs are set forth in Transco's FERC Gas Tariff as
amended from time to time.
9
<PAGE>
TRANSCONTINENTAL GAS PIPELINE CORPORATION
2800 Post Oak Boulevard
P.O. Box 1396
Houston, TX 77251-1396
713-439-2000
February 19, 1997
Mr. Thomas H. Benson
Senior Vice President and Chief Operating Officer
Atlanta Gas Light Company
303 Peachtree Street, N. E.
Atlanta, GA 30308-3249
Re: 1998 Cherokee Expansion Project
Dear Mr. Benson:
Transcontinental Gas Pipe Line Corporation ("Transco") and Atlanta Gas Light
Company ("Atlanta") are parties to a Precedent Agreement dated February 28 ,
1997, providing the terms and conditions for Atlanta's subscription to 85,000 dt
per day of firm transportation service under Transco's 1998 Cherokee Expansion
Project. Atlanta has requested that it be permitted to terminate the Precedent
Agreement in the event it is unable to secure gas supply arrangements at the
point of receipt set forth in the Precedent Agreement. Transco is agreeable to
Atlanta's request, subject to certain conditions. Accordingly, Transco and
Atlanta hereby agree as follows:
1. If Atlanta has not secured, on or before any one of the respective dates
set forth below (each such date is respectively referred to as a "Notice
Date"), arrangements with one or more sellers of natural gas which in total
will provide at least two years of natural gas supplies for Atlanta's firm
transportation capacity under the 1998 Cherokee Expansion Project, Atlanta
shall have the right to terminate the Precedent Agreement by (i) providing
written notice of termination to Transco on or before a Notice Date
(referred to as the "Applicable Notice Date" and (ii) delivering, on or
before the Applicable Notice Date, payment of the reimbursement amount set
forth below which corresponds to the Applicable Notice Date. Upon Transco's
receipt of timely delivered termination notice and reimbursement amount, if
any, the Precedent Agreement shall automatically terminate.
<PAGE>
Mr. Thomas H. Benson
Atlanta Gas Light Company
February 19, 1997
Page 2
Notice Date Reimbursement Amount(1)
March 31, 1997 None
April 30, 1997 $360,000
May 31, 1997 $550,000
June 30, 1997 $1,000,000
2. Notices under this letter agreement shall be in writing and shall be
addressed as follows:
If to Atlanta:
Thomas H. Benson
Senior Vice President and Chief Operating Officer
Atlanta Gas Light Company
303 Peachtree Street, N. E.
Atlanta, GA 30308-3249
Fax: 404/584-3703
If to Transco:
Transcontinental Gas Pipe Line Corporation
2800 Post Oak Boulevard
P. O. Box 1396
Houston, Texas 77251-1396
Attention: Director, Project Development
Fax: 713/215-2459
Notices may be delivered by fax, and notices shall be deemed delivered
upon receipt by the receiving party. Either party may change its address or
fax number for notices hereunder by providing written notice of such change
to the other party.
3. This letter agreement shall be effective as of the date first above written.
(1) In addition to the reimbursement amount, Transco shall have the right to
retain Atlanta's $50,000 prepayment (plus accrued interest) submitted with
Atlanta's request for service under the project.
<PAGE>
Mr. Thomas H. Benson
Atlanta Gas Light Company
February 19, 1997
Page 3
4. This letter agreement shall be governed by the laws of the State of Texas.
5. Any assignment of this letter agreement by either party to an entity other
than an affiliate shall be void and of no force or effect.
If the foregoing is agreeable to Atlanta, please execute both originals of this
letter agreement and return them to Transco. Upon receipt, Transco will execute
both duplicate originals and return one for Atlanta's records.
Sincerely,
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
By: /s/ Frank J. Ferazzi
Frank J. Ferazzi
Vice President, Customer Service
Accepted and Agreed:
ATLANTA GAS LIGHT COMPANY
By:/s/Thomas H. Benson
Thomas H. Benson
Executive Vice President and Chief Operating Officer
<PAGE>
