<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURI-
TIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1994
------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission File Number 0-17605
-------
Yankee Energy System, Inc.
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Connecticut 06-1236430
- -----------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification
No.)
599 Research Parkway, Meriden, CT 06450-1030
- -----------------------------------------------------------------
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 639-4000
---------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ---------------------
None Not Applicable
- -----------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $5 Per Share, and Common Share Purchase
Rights
- -----------------------------------------------------------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
---- ----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Sec.229,405 of this chapter)
is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-
affiliates of the registrant at December 16, 1994 was
$216,041,343.00 based on the closing price of $21.00 per share.
On December 16, 1994, the Company had 10,287,683 shares of common
stock outstanding.
Documents Incorporated by Reference
Part of Form 10-K
Annual Report to Shareholders for the Fiscal Year Ended September
30, 1994
Parts I and II
Proxy Statement For Its Annual Meeting to be Held on February 24,
1995
Part III
<PAGE>
PART I
------
INTRODUCTION
------------
As used herein, the terms "Yankee Energy" and the "Company"
shall mean Yankee Energy System, Inc., and unless the context
indicates otherwise, the term "1994 Annual Report" shall mean the
Company's 1994 Annual Report to Shareholders and the term "Proxy
Statement" shall mean the Proxy Statement accompanying the
Company's notice, dated on or about January 6, 1995, of the
Annual Meeting of the Company's Shareholders to be held on
February 24, 1995. Portions of each are incorporated by
reference as hereinafter stated. Unless the context indicates
otherwise, any reference to 1994 in this report refers to the
fiscal year ended September 30, 1994 and references to any
previous year's results refer to the preceding 12-month period
ended September 30.
ITEM 1. BUSINESS
--------
Yankee Energy, a Connecticut corporation that began
independent operations in July, 1989, is a holding company
headquartered in Connecticut. Its principal operating subsidiary
is Yankee Gas Services Company ("Yankee Gas"), a state-regulated
utility providing retail distribution of natural gas to a
franchised service area comprising 67 cities and towns in
Connecticut and covering approximately 2,200 square miles. The
Connecticut Department of Public Utility Control ("DPUC")
regulates Yankee Gas' rates, standards of service, safety
practices and certain other matters. Yankee Energy has four
additional subsidiaries: Housatonic Corporation ("Housatonic"),
NorConn Properties, Inc. ("NorConn"), Yankee Energy Financial
Services Company ("Yankee Financial") and Yankee Energy
Production Services, Inc. ("Yankee Production").
Housatonic holds a 10.5 percent equity interest in the
Iroquois Gas Transmission System, L.P., the partnership that owns
and operates a natural gas pipeline that transports gas from
Canada to markets in northeastern United States. NorConn owns
two facilities which are leased to Yankee Gas, and may in the
future acquire other facilities for use by the Company or its
subsidiaries. Yankee Financial promotes the sale of natural gas
by providing financing for natural gas installations. Yankee
Production encourages additional natural gas sales by Yankee Gas
in special applications to large customers and seeks
opportunities for capital investment in projects, including on-
site electric generation.
1
<PAGE>
Yankee Energy is an exempt holding company under the Public
Utility Holding Company Act of 1935. Its activities are
presently confined to the ownership of 100 percent of the common
stock of its five subsidiaries and other matters incidental to
its role as a holding company. From time to time, the Company
may consider or explore opportunities to acquire or invest in
other gas distribution companies or related businesses. The
Company's non-regulated activities are limited by a cap imposed
by the DPUC at the time of the Company's formation that placed an
overall limit on investment in unregulated businesses of 20
percent of total consolidated assets.
THROUGHPUT (SALES/TRANSPORTATION)
---------------------------------
Yankee Gas operates the largest natural gas distribution
system in Connecticut as measured by number of customers and
service territory. Yankee Gas provides gas service to
approximately 177,000 retail customers. Total throughput (sales
and transportation) for 1994 was 43.2 billion cubic feet (Bcf), a
6 percent increase from 1993. Yankee Gas' revenues in 1994 were
derived 44 percent from residential customers, 30 percent from
commercial customers, 25 percent from industrial customers and
the remaining one percent from other sources. Sales were 42.5
Bcf in 1994, an increase of 8.5 percent from 1993. Volumes of
gas owned by certain of Yankee Gas' customers and transported by
Yankee Gas on its system were .7 Bcf in 1994, a 56 percent
decrease from 1993. This decrease resulted in large part because
Yankee Gas was able to provide competitively priced sales gas to
both firm and interruptible customers.
FIRM SALES
Firm gas sales of 33.5 Bcf accounted for approximately 79
percent of total gas sales. Firm gas sales, particularly sales
for residential space heating, are highly seasonal. In 1994,
about 64 percent of total firm sales occurred in the five months
from November through March.
<TABLE>
<CAPTION>
1994 FIRM SALES
---------------
Average Number Volumes
of Customers in Bcf
-------------- -------
<S> <C> <C>
Residential 155,874 13.1
Commercial 19,040 10.0
Industrial 1,888 10.4
------- ----
176,802 33.5
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Volumes as a
Percent of
Revenues Firm Sales
-------- -------------
<S> <C> <C>
Residential $140,403,000 39
Commercial $ 88,757,000 30
Industrial $ 55,749,000 31
------------ ---
$284,909,000 100
</TABLE>
INTERRUPTIBLE SALES
Certain industrial and commercial customers purchase gas on
an as available or interruptible basis. Since Yankee Gas can
interrupt service to these customers during peak demand periods,
interruptible customers must have the capability to switch to an
alternative fuel on short notice. The price charged for
interruptible sales service is a market price based on the cost
of the customer's alternative fuel, which is usually oil.
Interruptible sales depend upon the availability of gas supplies
and, generally, have offered lower margins than firm sales.
Yankee Gas has the authorization from the DPUC to engage in
flexible pricing to meet market prices for alternative fuels
available to interruptible customers.
<TABLE>
<CAPTION>
1994 INTERRUPTIBLE SALES
------------------------
Average Number Volumes
of Customers in Bcf Revenues
-------------- -------- --------
<S> <C> <C> <C>
Commercial and
Industrial 205 8.7 $28,629,000
</TABLE>
Total interruptible gas sales of 8.7 Bcf accounted for
approximately 20.5 percent of total gas sales.
Yankee Gas also offers interruptible transportation service
to its customers. This service permits customers who desire to
purchase gas from sources other than Yankee Gas to do so,
provided they have made all the necessary transportation
arrangements with the transmission pipelines to deliver their gas
3
<PAGE>
to the Yankee Gas distribution system. Generally, transportation
service is used by customers on an interruptible basis as it is
highly sensitive to alternative fuel prices as well as to the
availability of interstate pipeline capacity into the region.
Large firm sales customers can utilize transportation in place of
firm sales service during the summer. Under existing tariff
structures, the financial condition of the Company is unaffected
by customers electing to use transportation service in lieu of
making gas purchases.
SELF-GENERATION AND COGENERATION
With the current industry deregulation, two expanding gas
markets in Connecticut and elsewhere are self-generation and
cogeneration of electricity. Self-generation is the generation
of some or all of a user's electricity requirements, typically
for commercial or industrial purposes. Cogeneration involves
sequential production of electricity and thermal or mechanical
energy. Yankee Production has invested as a limited partner in
two cogeneration projects. Other opportunities for investing in
this market are currently being investigated.
Under an agreement between Yankee Gas and Dexter, Yankee
Gas' largest customer, Dexter has a contract to purchase annually
approximately 3.9 Bcf of natural gas sales service for use in its
56-megawatt cogeneration facility for an initial term of 20 years
(1989-2009). In fiscal year 1994, sales and transportation to
Dexter were 3.4 Bcf, or 8.0 percent of Yankee Gas' total gas
throughput.
MARKET EXPANSION
Opportunities to increase gas sales with little or no
capital investment exist along Yankee Gas' mains through
conversion to gas heating of low use and non-use homes and the
addition of new gas appliances. The Company continues to
increase its efforts in this important market.
Over the last few years, the Company has intensified its
efforts to provide new service throughout its service territory.
The extension of a gas main under the Thames River from Montville
to Ledyard and additional interconnections with the interstate
pipeline system have allowed Yankee Gas to provide natural gas
service to several significant industrial customers in the
region. Discussions are underway with other large and small
potential gas customers throughout the Company's service
territory.
4
<PAGE>
COMPETITION
-----------
In the past, local gas distribution companies ("LDCs"), such
as Yankee Gas, did not directly compete with other LDCs for
retail customers because the territories they serve are fixed by
franchise. However, since 1993, LDCs began marketing efforts
within the service territory of other LDCs under blanket
certificates granted by the Federal Energy Regulatory Commission
("FERC"). Yankee Gas has such a marketing certificate, which
allows gas to be sold, but not necessarily delivered, in the
service territory of another LDC.
With the recent deregulation of pipeline services brought
about by the FERC Orders 636 and 636A and local public utility
commissions, pipeline companies, producers and marketers/brokers
compete with LDCs for gas sales to those customers who utilize
transportation service, especially large industrial customers.
Additionally, LDCs compete for business with providers of
alternative energy sources, such as electric utilities and
heating oil and propane companies. Gas and electric utilities
have traditionally competed for business in areas such as space
heating, water heating, clothes drying and cooking. Air
conditioning and on-site electric generation are areas of
increasing competition. (See Regulatory and Environmental
Matters)
Environmental concerns are increasing the attractiveness of
natural gas as a fuel source over oil and other energy sources
not only for heating and cooling but for vehicle fleet
transportation as well. The increased focus on natural gas
vehicles creates a potential new market for the gas industry.
However, development of an infrastructure to provide natural gas
vehicle fueling stations is essential to the development of this
market. Currently, Yankee Gas operates 56 bi-fuel (natural gas
and gasoline) vehicles in its fleet and plans to add other
natural gas vehicles in 1995. Yankee Gas operates two refueling
stations for its own natural gas vehicles and is evaluating
various options for the establishment and location of additional
facilities. On January 13, 1994, Yankee Gas, in cooperation with
Shell Oil Company, opened Connecticut's first retail public
natural gas vehicle refueling station in Windsor Locks. A second
station was opened in Norwalk on November 21, 1994 in cooperation
with British Petroleum.
5
<PAGE>
BYPASS
------
No interstate pipeline company has physically bypassed
Yankee Gas' distribution system to provide retail service to
customers in Yankee Gas' service territory. A Connecticut
statute currently prohibits an interstate pipeline from bypassing
an LDC without the DPUC's prior approval. However, with the
industry deregulation brought about by the FERC Order 636, bypass
by large industrial customers is a reality. In its docket
reviewing FERC Order 636 issues, the DPUC stated "pipeline
unbundling has enabled LDCs, customers and marketers to shop,
select and avoid individual firm and interruptible service with
ease. Franchise customers who select anything less than firm
service from their LDC are engaging in some form of bypass." The
DPUC also stated its intent to have the Connecticut LDCs develop
and file their unbundled services and rates by November 1, 1995.
To date, Yankee Gas has successfully addressed the threat of
bypass by its industrial customers by understanding what services
they need and executing market-competitive gas service
agreements.
GAS PURCHASES
-------------
FERC Order No. 636, which required the unbundling of
interstate pipeline services, has significantly altered Yankee
Gas' supply arrangements. Pursuant to the Order, implemented
June 1, 1993 on the Algonquin Gas Transmission Company
("Algonquin") system and that of its affiliate, Texas Eastern
Transmission Company ("TETCo"), and September 1, 1993 by
Tennessee Gas Pipeline Company ("Tennessee") and Iroquois Gas
Transmission System ("Iroquois"), Yankee Gas executed contracts
with interstate pipelines for services to transport gas from
production and underground storage areas to Yankee Gas' service
territory to replace the traditional merchant services previously
provided by the pipeline companies. Yankee Gas concurrently
replaced the gas supply traditionally obtained from the
pipelines' merchant services with firm purchases directly from
producers and/or marketing companies.
Interstate pipelines delivered over 99.8 percent of Yankee
Gas' 1994 fiscal year requirements to its distribution system.
The balance was provided by a propane-air mixture produced at
facilities within Yankee Gas' service territory, as well as
purchases of liquified natural gas from Providence, Rhode Island.
Interstate pipeline capacity enables Yankee Gas to meet its firm
customers' requirements with pipeline supplies for more than 99.2
percent of the year. However, Yankee Gas does not have
sufficient capacity entitlements on the interstate pipelines to
serve its firm customers with pipeline-delivered gas at all
6
<PAGE>
times. Therefore, during the winter, whenever daily firm demand
exceeds the amount of gas delivered by the pipelines, service to
interruptible customers is interrupted and Yankee Gas supplements
pipeline gas with a propane-air mixture produced at facilities
within Yankee Gas' service territory. In fiscal year 1994, such
propane-air comprised less than .06 percent of Yankee Gas' total
supply. Although Yankee Gas anticipates continued utilization of
this relatively expensive supplemental gas, the quantities to be
used are substantially decreased from prior periods due to the
addition of the Alberta Northeast Energy, Ltd ("ANE") supplies
transported by Iroquois.
The following table sets forth sources of 1994 gas supply
(including purchases for storage injections):
<TABLE>
<CAPTION>
Source Percent of Total Supply
------- -----------------------
<S> <C>
Direct Firm Purchases 38.7
Boundary Gas ("Boundary") 7.6
Alberta Northeast Energy, Ltd. ("ANE") 47.4
Spot Market Purchase 6.1
Other 0.2
------
Total 100%
</TABLE>
Yankee Gas has firm long term contracts with a number of
suppliers to meet the requirements of its firm customers. Yankee
Gas participates in the spot market, buying gas supply on an "as
available" basis, to the extent those firm contracts permit such
replacement whenever it is operationally feasible and
economically beneficial.
Yankee Gas is entitled to purchase 59,000 thousand cubic
feet (Mcf) per day of gas or about 21.5 Bcf annually from ANE.
Yankee Gas holds a 15.9 percent equity interest in ANE, an entity
formed by several utilities in the Northeast to aggregate the
purchase of the gas from Western Canada and facilitate its sale
to LDC owners at the United States-Canadian Border. Yankee Gas'
minimal investment in ANE provides no contribution to net income
in accordance with the parties' intent. The sales contracts
between Yankee Gas and ANE expire in 2006. This gas is delivered
in the United States by the Iroquois pipeline and the
transportation contract between Yankee Gas and Iroquois expires
in 2011.
7
<PAGE>
Yankee Gas owns a 10.4 percent equity interest in Boundary,
an LDC consortium which imports natural gas from Canada,
entitling Yankee Gas to purchase a proportional share of the
natural gas Boundary purchases from Canadian sources. Yankee Gas
is entitled to purchase 9,500 Mcf of gas per day through 2003.
By design, Yankee Gas' minimal investment in Boundary provides no
contribution to net income.
In 1992, the merchant service contracts between Yankee Gas
and Tennessee were terminated, and replaced with a transportation
contract that expires in 2000, but may be continued on a year to
year basis after that with the mutual consent of the parties. In
addition to the conversion to transportation service with
Tennessee, Yankee Gas also received its proportional share
(approximately 1.8 Bcf) of the underground storage that had been
utilized previously by Tennessee to support the merchant service
it had provided Yankee Gas. To replace the remaining piece of
the former merchant service, the sale of gas itself, Yankee Gas
negotiated for the purchase of approximately 30,000 Mcf per day
of gas from three suppliers. These contracts provide varying
term lengths, flexibility options and pricing determinants.
While the merchant service previously provided by Tennessee
subjected both Tennessee's transportation and gas supply charges
to the FERC regulation, Yankee Gas' gas purchase contracts with
these suppliers contain freely negotiated (non- FERC regulated)
pricing provisions. Tennessee's transportation function remains
regulated by the FERC.
Order No. 636 mandated replacement of the former merchant
services provided by Algonquin and required that Algonquin assign
to Yankee Gas its proportional share of the transportation
capacity entitlements it held on the systems of Texas Eastern,
Transcontinental Gas Pipeline Corporation ("Transco"), National
Fuel Gas Supply Corporation ("National Fuel") and CNG
Transmission Corporation ("CNGT"). Additionally, Yankee Gas
received its proportional share of firm storage services
(approximately 2.4 Bcf) provided by Texas Eastern and CNGT which
had been utilized to provide the Algonquin merchant services.
Yankee Gas has negotiated with a variety of suppliers for a total
of approximately 65,000 Mcf per day of gas to replace the
supplies previously purchased from the Algonquin merchant
service. These contracts provide a variety of term lengths and
flexibility provisions to meet Yankee Gas' current and future
supply requirements. The contracts held with suppliers contain
freely negotiated (non-FERC regulated) pricing provisions, while
the transportation and storage services provided by Algonquin,
Texas Eastern, Transco, National Fuel and CNGT remain regulated
by the FERC.
8
<PAGE>
As a result of the restructuring of pipeline services
required by the FERC Order No. 636, Yankee Gas has increased its
firm underground storage capacity of approximately 6.4 Bcf.
IROQUOIS GAS TRANSMISSION SYSTEM
Iroquois is a natural gas pipeline that transports gas
purchased from Canadian producers to northeastern United States.
This additional capacity has enabled Yankee Gas to expand and
diversify its gas supply portfolio. Iroquois became fully
operational on November 1, 1992, and Yankee Gas on that day began
accepting its full entitlement of 59,000 Mcf per day.
Housatonic, a wholly owned subsidiary of Yankee Energy, was
organized for the sole purpose of owning 10.5 percent of the
equity in the partnership that owns Iroquois. The Iroquois
partnership consists of United States and Canadian companies
involved in various facets of the natural gas business, including
production, transmission and distribution. Earnings on
Housatonic's investment in Iroquois in 1994, approximately $1.8
million, contributed $0.17 per share to 1994 earnings.
At September 30, 1994 Housatonic's investment in Iroquois,
including its non-cash equity portion, was $18.6 million.
Housatonic entered into a $14.25 million three-year variable rate
term loan with annual sinking fund payments and including a
prepayment option. One-third of the total principal amount is
payable at the end of each year of the term loan. At September
30, 1994, a principal balance of $6.75 million was owed under
this agreement. For additional information on Iroquois, see
Management's Discussion and Analysis of Financial Condition and
Results of Operations and Note 8 in the Company's 1994 Annual
Report to Shareholders.
REGULATORY AND ENVIRONMENTAL MATTERS
------------------------------------
YANKEE GAS: FEDERAL REGULATION
Yankee Gas is not directly regulated by the FERC, but
because the FERC regulates the interstate pipelines serving
Yankee Gas' service territory, Yankee Gas is directly and
substantially affected by the FERC's policies and actions.
Accordingly, Yankee Gas closely follows and, when appropriate,
participates in proceedings before the FERC.
9
<PAGE>
ORDER NO. 636 TRANSITION COSTS
------------------------------
In essence, Order No. 636 found that pipelines would achieve
the FERC's long term goal of open access transportation services
that are indifferent to the seller of the gas only if the
traditional merchant services by the pipelines were "unbundled",
or separated into its component parts. The Order mandated
compliance by every pipeline by the winter of 1993-94. All
pipelines with whom Yankee Gas has dealings have complied.
Order No. 636 recognized that the restructuring of the
pipelines' traditional services would cause pipelines to incur
transition costs in several areas and provided mechanisms for the
pipelines to fully recover prudently incurred transition costs
attributable to the implementation of Order No. 636. Transition
costs may result from pipelines: 1) having to negotiate out of
supply contracts previously utilized to provide "merchant
service" (categorized as gas supply realignment ("GSR") costs);
2) no longer needing capacity entitlements on other pipelines
("stranded costs"); and 3) abandoning the purchased gas
adjustment mechanism through which they recovered supply costs
("Acct. 191" costs). Although the FERC has permitted some
pipelines' recovery of transition costs, such recovery is
conditioned upon a finding that such costs were caused by the
implementation of Order No. 636 and were prudently incurred.
Proceedings are currently underway at the FERC to consider these
issues for some pipelines.
An estimate made by the FERC staff as to the magnitude of
transition costs for each pipeline led Yankee Gas to conclude
that its ultimate liability would be approximately $11-15
million, should the amounts estimated be deemed eligible and
prudent by the FERC. The DPUC acknowledged FERC jurisdiction
with regard to prudence issues while indicating a need for
further discussion of these costs at the state level. On July 8,
1994 the DPUC issued an order permitting the offset of transition
costs billed by pipelines under Order No. 636 with any recoveries
from capacity release activity or deferred gas cost credits for
the 1992-1993 period and all subsequent annual deferred costs,
gas supplier refunds and fifty percent of off system sales
margins and interruptible margins earned in excess of target
amounts. With the exception of all subsequent annual deferred
gas costs credits, the DPUC has ordered that all transition cost
recovery dollars be applied immediately on a monthly basis to the
transition costs that have been or are subsequently billed. All
subsequent annual deferred gas costs credits will be applied on
an annual basis. If needed, a per unit surcharge will be applied
to firm customers' bills. The DPUC believes that the recovery
system detailed above will result in all transition costs being
recovered in approximately three years.
10
<PAGE>
Through September 30, 1994, Yankee Gas has paid
approximately $10.5 million of transition costs and an additional
$0.6 million are anticipated. To date, Yankee Gas has collected
$7.7 million through a combination of gas supplier refunds,
deferred gas costs credits and excess interruptible margins.
Yankee Gas' management anticipates full recovery of transition
costs consistent with the DPUC decision.
The DPUC also indicated its interest to have the Connecticut LDCs file
rates for unbundled services by November 1, 1995 and agreed to review areas
considered impediments to the LDCs' ability to compete with
unregulated energy providers once unbundling is implemented.
Another provision of Order No. 636 is the authorization of
LDCs to make off system sales or to release firm pipeline
capacity. Yankee Gas has engaged in these activities and expects
they will continue in the next fiscal year.
IROQUOIS
Iroquois implemented Order No. 636 restructuring on
September 1, 1993. Iroquois was designed and constructed as a
transportation-only pipeline, and as such had few of the issues
that other pipelines dealt with in restructuring. There are no
transition costs due to realignment of gas supply contracts,
Account 191 costs due to the abandonment of PGA, or non-
utilization of capacity entitlements on other pipelines arising
from Iroquois' restructuring.
TENNESSEE
Tennessee implemented plans to restructure its services on
September 1, 1993. Yankee Gas experienced no substantial
alteration in its purchasing practices due to Tennessee's
restructuring because Yankee Gas' full conversion pursuant to a
1992 special settlement effectively restructured its service from
Tennessee. (See "Gas Purchases") Daily purchasing and
dispatching operations have changed significantly with the
implementation of Tennessee's electronic nomination and
scheduling system, and the responsibility of managing gas flow
from the production area to Yankee Gas' distribution system has
shifted to the Company.
Yankee Gas is incurring transition costs resulting from
Tennessee's restructuring pursuant to Order No. 636. Currently,
the FERC has permitted Tennessee to recover (conditionally)
transition costs from its firm transportation customers, and as
of September 30, 1994, Yankee Gas had paid approximately $2.5
million in such charges.
11
<PAGE>
ALGONQUIN/TEXAS EASTERN
On June 1, 1993, both Algonquin and TETCo implemented
restructuring pursuant to Order 636. In addition to executing
separate transportation agreements with the various pipelines
previously providing transportation service underlying
Algonquin's merchant service, Yankee Gas has also negotiated with
producers and marketing companies for supplies to replace those
previously obtained under the merchant service (see "Gas
Purchases"). Daily purchasing and dispatching operations have
changed significantly with the introduction of separate
electronic nomination and scheduling systems for each pipeline,
and now the responsibilities for managing gas flow from the
production area to Yankee Gas' distribution system through
various pipelines and from storage fields have shifted to Yankee
Gas.
As a result of Algonquin's restructuring pursuant to Order
636, Yankee Gas is incurring transition costs from Algonquin and
all its former suppliers. Currently, the FERC has permitted
Algonquin, TETCo, CNGT and National Fuel to recover
(conditionally) transition costs from transportation and former
sales customers, and as of September 30, 1994, Yankee Gas has
paid approximately $8.0 million in such charges. See also Note
8, Commitments and Contingencies in the Company's 1994 Annual
Report to Shareholders.
TAKE-OR-PAY LIABILITY
---------------------
Prior to the restructuring caused by FERC Order No. 636,
some pipeline companies incurred take-or-pay liabilities. These
liabilities arose from the inability or unwillingness of the
pipeline companies to take the volumes of gas for which they had
contracted with producers. To avoid or settle litigation by
producers to recover payment for the contracted-for volumes, some
pipeline companies, including certain Yankee Gas suppliers, have
settled or are negotiating settlements of their contracts. The
pipeline companies were authorized by the FERC to recover from
their customers a portion of their settlement costs under
guidelines set forth by the FERC. Yankee Gas has collected
approximately $7.8 million of its current estimated total take-
or-pay cost of $8.4 million through September 30, 1994, which
reflects a revised estimate from Algonquin during fiscal 1994.
This collection was accomplished primarily by retaining gas
supplier refunds and deferred gas cost credits which otherwise
would have been refunded to customers as prescribed by a 1991
DPUC decision and through a surcharge applied to interruptible
customers. Management expects to recover the entire remaining
amount within the next two fiscal years.
12
<PAGE>
YANKEE GAS: STATE REGULATION
-----------------------------
Yankee Gas is subject to regulation by the DPUC, which,
among other things, has jurisdiction over rates, accounting
procedures, certain dispositions of property and plant, mergers
and consolidations, issuances of securities, standards of
service, management efficiency and construction and operation of
distribution, production and storage facilities.
RATE PROCEEDINGS
----------------
Yankee Gas sells gas to its retail customers under rate
schedules filed with and approved by the DPUC. PGA, as described
below, are included in the rate schedules. Connecticut law
provides that increased rates may not be put into effect without
the prior approval of the DPUC, which has 150 days to act upon a
proposed rate increase, with one 30-day extension possible. The
DPUC may, after a special public hearing, order an interim rate
decrease if it finds that Yankee Gas' Return on Equity ("ROE")
exceeds a reasonable rate of return and rates are more than just,
reasonable and adequate as determined by the DPUC. The DPUC also
is empowered to grant an interim rate increase under compelling
circumstances.
Yankee Gas' most recent rate order (effective for service
rendered on and after October 1, 1992) allowed a return on equity
of 12.43 percent and provided for favorable accounting treatment
for environmental cleanup costs, post-retirement benefits and
certain other major items.
PGA
---
The PGA is a mechanism that passes through most changes in
the cost of gas to customers by means of monthly adjustments to
their bills. These adjustments are designed to collect or refund
differences in purchased gas costs from the costs included in
base rates. The DPUC continually reviews Yankee Gas' purchases
in the course of its determinations of appropriate PGA billings
or credits. Charges or credits are subject to retroactive review
and appropriate adjustment by the DPUC each quarter after public
hearings. The DPUC allows Yankee Gas to defer most differences
between actual purchased gas costs and the revenues currently
recovered from customers through the PGA and base rates. These
deferred amounts are then refunded or recovered through future
PGAs.
13
<PAGE>
ENVIRONMENTAL MATTERS
The Company is subject to federal and state environmental
regulation of its operations and properties. Such regulation
may, at times, result in the imposition of liability or
responsibility for the clean-up or treatment of existing
environmental problems or for the prevention of future
environmental problems. Yankee Gas' future environmental
liabilities may include significant expenses incurred to remove,
contain or remediate coal tar deposits caused by operations of
former gas manufacturing plant sites. Coal tar is a by-product
of the gas manufacturing process used by Yankee Gas' predecessor
companies in the mid-20th century. Those predecessor companies
disposed of the coal tar deposits in accordance with the standard
operating practices of the time. Coal tar itself at present is
not listed as a toxic or hazardous material by any federal or
Connecticut agency. However, some of its constituents are
included on the U.S. Environmental Protection Agency's Priority
Pollutant List. Recent changes to the testing procedures for the
determination of characteristic hazardous wastes could increase
the potential for coal tar to be classified as such. Despite its
regulatory status, coal tar does contain chemical components
that, if found in sufficient quantities in ground water or
surface water, could pose environmental problems. Thus,
subsequent leaching of the deposits could result in environmental
impacts regulated by federal and state environmental agencies.
Pursuant to an Environmental Liability Sharing and Indemnity
Agreement, dated July 1, 1989, Yankee Gas and The Connecticut
Light and Power Company ("CL&P") have allocated potential
environmental liabilities at sites previously owned by CL&P and
used in CL&P's gas business and at sites not previously owned by
CL&P but which had prior uses in CL&P's gas business. As part of
that agreement, Yankee Gas and CL&P will share equally the costs
of environmental remediation at sites previously owned by CL&P
and transferred prior to July 1, 1989 that were used in CL&P's
gas business.
Fourteen sites containing coal tar became the property of
Yankee Gas upon its divestiture from CL&P in 1989 and
responsibility for future investigation and remediation rests
solely with Yankee Gas. Each of these sites has been the subject
of a field investigation, and coal tar constituents have been
found in some soil and ground water samples. The Company has
reported the results of the environmental studies to the
Connecticut Department of Environmental Protection ("DEP"). The
DEP has not required that any remedial action be undertaken to
date. However, seven of the 14 sites are presently listed on the
Connecticut Inventory of Hazardous Waste Sites. Inclusion of a
14
<PAGE>
site on this list indicates that remediation may be required in
the future. In 1993, the Company prioritized 14 sites and
identified four sites likely to require remediation. The Company
submitted its prioritization to the DEP and performed extensive
site investigations.
In 1994, the Company completed a remediation project on a
large portion of one of the four priority sites. Extensive
preliminary site work was completed for another priority site for
which remediation is expected to begin in 1995. In addition, the
Company has developed a cost estimate for the remaining ten sites
based on the probability of clean-up. As a result of this
effort, the Company has recorded a liability of $35 million for
future environmental clean-up.
Recovery of remediation costs has been specifically allowed
by the Company's 1992 rate case decision. Presently, $325,000 is
allowed annually in rates. If costs are expected to exceed $2.5
million on an annual basis, the Company is required to go to the
DPUC for review. The DPUC has stated that "to the extent that
coal tar remediation expenses are prudently incurred, they should
be allowed as proper operating expenses." The Company also
believes that it has valid claims for insurance recovery of
remediation costs and intends to pursue those claims against
insurers.
CAPITAL EXPENDITURES PROGRAM
----------------------------
Yankee Gas replaces gas mains to improve the reliability of
its gas distribution system and will extend gas mains to serve
new customers if potential returns on the investments made to
serve these customers are adequate. In 1994, Yankee Gas replaced
approximately 8 miles of gas mains in various locations
throughout Connecticut and constructed approximately 24 miles of
new mains. Yankee Gas' financial requirements in this area are
initially satisfied from internally generated funds and short-
term borrowings. See Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's
1994 Annual Report to Shareholders.
Expenditures for utility plant and other investments
totalled $28.5 million in 1994, which includes a $2.2 million
investment in two cogeneration projects by Yankee Production and
a $1.8 million investment in a new operations building. Capital
expenditures for the period 1995-1999, including $29 million for
fiscal 1995, are currently estimated at $131 million.
These estimated construction expenditures are expected to be
used primarily to extend and replace gas mains, to improve the
reliability of the gas distribution system and in projects that
will generate additional gas sales and transportation revenues.
15
<PAGE>
The foregoing statements with respect to estimated
construction expenditures are based on estimates made in
September, 1994 and are subject to periodic updating and change
resulting from cost reviews, customer and regulatory
requirements, conditions in capital markets and other factors.
FRANCHISES
----------
Over the past 137 years, Yankee Gas and its predecessors in
interest have held valid franchises to sell gas in the areas in
which Yankee Gas supplies gas service. Such franchises are
perpetual but remain subject to the power of alteration,
amendment or repeal by the General Assembly of the State of
Connecticut, the power of revocation by the DPUC and certain
approvals, permits, consents of public authorities and others
prescribed by statute. Yankee Gas franchises include, among
other rights and powers, the rights and powers to manufacture,
generate, purchase, transmit and distribute gas, to sell gas at
wholesale to other utility companies and municipalities and to
erect and maintain certain facilities on public highways and
grounds, all subject to such consents and approvals of public
authorities and others as may be required by law. The franchises
include the power of eminent domain.
EMPLOYEES
---------
Yankee Gas employs approximately 670 people. Some of these
employees also provide accounting, financial, administrative,
legal and other managerial services to the Company, Housatonic,
NorConn, Yankee Financial and Yankee Production. With the
exception of one person employed by Yankee Production, none of
these companies have employees. Services are provided on an as-
needed basis and Yankee Gas employees charge the time spent in
providing the services directly to those companies.
Yankee Energy has a non-contributory, defined benefit
retirement plan covering all regular Yankee Gas employees. At
the time of divestiture from CL&P on July 1, 1989, the future
pension liability for active gas employees and a portion of the
assets of the Northeast Utilities ("NU") System pension plan were
transferred to the Yankee Energy Retirement Plan. The NU System
plan retained the liability for accrued pension benefits for
retirees or surviving spouses and terminated vested employees
previously employed in the gas business prior to divestiture.
Yankee Gas will compensate the NU System plan for a portion of
any future cost of living increases in benefits payable to such
retirees until June 30, 1999. Yankee Energy also provides
certain health care and life insurance benefits to its retirees.
16
<PAGE>
The Company began compensating the NU System for a portion of the
latter's liability for certain of those expenses of retirees or
surviving spouses. Yankee Gas and the NU System will share the
cost of these benefits until June 30, 2005. See Note 4, Post-
Retirement Benefits in the Company's 1994 Annual Report to
Shareholders and Note 5, Postretirement Benefits Other Than
Pensions.
ITEM 2. PROPERTIES
----------
Yankee Gas' property includes, among other things, distribu-
tion lines (mains and services), meters, pumps, valves and
pressure and flow controllers . Yankee Gas currently owns 2,713
miles of distribution mains, 126,881 service lines and 176,283
active meters for customer use. Of the 126,881 miles of
distribution mains, 1,748 miles are steel, 539 miles are cast
iron and 426 miles are plastic. Yankee Gas also owns six miles
of steel transmission mains.
Yankee Gas owns various propane facilities with a combined
storage capacity equivalent to approximately 360,000 Mcf and
seven gas storage holders with a total capacity of approximately
5,000 Mcf. In addition, Yankee Gas leases approximately 200,000
Mcf of storage capacity in one other large liquified natural gas
storage facility owned by Algonquin. Yankee Gas does not own any
underground natural gas storage facilities, although it contracts
for a total of approximately 6.4 Bcf of storage capacity with
Texas-Eastern, Penn-York Energy Corporation, Consolidated Gas
Transmission Corporation and Tennessee.
In the opinion of management, Yankee Gas' distribution
system is in good condition. Virtually all of the gas properties
are subject to the lien of the Yankee Gas first mortgage bond
indenture.
NorConn owns the Company's headquarters building in Meriden,
Connecticut and currently leases it to Yankee Gas. This is the
site of the Company's corporate administrative and staff
functions including the Customer Service Center. NorConn also
owns and leases to Yankee Gas a service building in East Windsor.
Yankee Gas owns service facilities in Meriden, Waterbury,
Torrington, Mystic, Bristol, Shelton, Bethel and Danielson,
Connecticut.
17
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
-----------------
The following information relates to legal proceedings
involving Iroquois. Housatonic has a 10.5 percent equity
interest in Iroquois. Other legal proceedings involving the
Company and its subsidiaries is litigation incident to the
conduct of the Company's business which, in management's opinion,
will not have a material impact on the Company's financial
condition or results of operation.
Federal Regulatory Proceedings
- ------------------------------
On December 1, 1993, Iroquois submitted an application with
the Federal Energy Regulatory Commission ("FERC or Commission")in
Docket No. RP94-72-000 based on an actual cost of service of
$149.033 million for an increase in rates for natural gas
transportation service of $8.425 million. The filing was also
designed to comply with the Commission's November 14, 1990 Order
originally certificating the pipeline, which required Iroquois to
file a rate case within two years from the date service was
initiated, once experience has been gained in operating the new
pipeline.
Twenty-seven parties intervened in the proceeding, of which
six protested certain aspects of Iroquois' filing. On December
30, 1993, the FERC issued an order accepting Iroquois' filing and
suspending its effectiveness until June 1, 1994, subject to
refund and subject to further Commission action. The Commission
noted the pendency of two related matters: (1) in Docket No.
FA92-59-000, the Commission's Office of Chief Accountant raised
an issue regarding Iroquois' capitalization of certain
expenditures relating to the construction of the pipeline; and
(2) the Enforcement Staff of the Commission's Office of General
Counsel and Staff in the Office of Pipeline Regulation had sent
data requests (referenced below) to Iroquois which bear upon
certain concerns raised in the protests. On March 23, 1994, the
Commission issued an order establishing a hearing in the rate
case proceeding. Under the current procedural schedule, the
hearing is scheduled to commence January 31, 1995.
On December 3, 1993, Iroquois received notification from the
Enforcement Staff of the Commission's Office of the General
Counsel ("Enforcement") that Enforcement has commenced a
preliminary, non-public investigation concerning Iroquois'
construction of certain pipeline facilities. That office has
requested certain information regarding such construction. In
addition, on December 27, 1993, Iroquois received a similar
request for information from the Army Corps of Engineers
18
<PAGE>
requesting certain information regarding the construction of
certain of its pipeline facilities. Iroquois is providing
information to these agencies in response to their requests.
Federal Investigations
- ----------------------
Iroquois has been informed by the U.S. Attorneys' Offices
for the Northern, Southern and Eastern Districts of New York that
a civil investigation is underway to determine whether Iroquois
committed civil environmental violations during construction of
the pipeline. In February, 1992, 26 alleged violations were
identified to Iroquois in writing. In response, Iroquois denied
that such violations occurred and asserted that all concerns
raised by governmental authorities during construction had been
fully responded to. Iroquois subsequently was informed that the
universe of alleged violations included certain field reports
prepared by a Federal/State Inter-Agency Task Force which
surveyed the right-of-way in connection with the right-of-way
restoration program. No proceedings in connection with this
civil investigation have been commenced by the federal government
against Iroquois.
In addition, Iroquois and its environmental consultant
remain subjects of a federal criminal investigation commenced in
1992. This grand jury proceeding is being conducted by the
United States Attorney for the Northern District of New York in
conjunction with representatives of both the United States
Environmental Protection Agency ("EPA") and the Federal Bureau of
Investigation ("FBI"). An FBI press release issued in July 1992
described the focus of the inquiry as whether Iroquois and
possibly others violated federal environmental laws, provided
false information or otherwise concealed information in
conjunction with the construction of the base pipeline or
otherwise used interstate mails or wire to commit a fraud in
connection with the construction of the base pipeline. No
criminal charges have yet been filed. Iroquois management has
stated its belief that the pipeline construction and right-of-way
activities were conducted in a responsible manner. However,
Iroquois deems it probable that the United States Attorney will
seek indictments and in them substantial fines and other
sanctions.
Iroquois and its counsel expect to meet with those
conducting the civil and criminal investigations, from time to
time, both to gain an informed understanding of the focus and
direction of the investigations in order to defend itself and, if
and when appropriate, to explore a range of possible resolutions
acceptable to all parties. No understandings or agreements have
been reached that have led Iroquois to make provision in its
financial statements for any dollar liability associated with
these proceedings.
19
<PAGE>
Although it is not anticipated that the outcome of these
proceedings will have a material impact on the Company, based on
the information available at this time, management cannot predict
what the ultimate impact might be.
Legal Proceedings - Other
- ------------------------
Iroquois is party to various legal actions incident to its
business, however, Iroquois' management believes that no material
losses will result from such proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
There was no matter submitted to a vote of security holders
during the fourth quarter of 1994.
EXECUTIVE OFFICERS OF THE COMPANY
---------------------------------
Position and Business Experience
Name Age During Past Five Years
- ---- --- ---------------------------------
Philip T. Ashton* 60 Chairman and Chief Executive Officer of
the Company since September 15, 1994.
Previously President, Chairman and CEO
from February 25, 1994 to September 15,
1994; President and CEO from July 1,
1989 to September 15, 1994. Senior Vice
President and General Manager (Gas) (NU)
(5/82 to 7/89).
Branko Terzic** 47 President and Chief Operating Officer of
the Company and its subsidiaries since
September 15, 1994. From June, 1993 to
September 14, 1994, Mr. Terzic was
Managing Director of Arthur Andersen
Economic Consulting, Washington,D.C.
From October 1, 1990 to May, 1993,
Commissioner, Federal Energy Regulatory
Commission and from 1986 to October,
1990, Group Vice President and Director
of AUS Consultants (Management
Consultants) in Milwaukee, Wisconsin.
20
Charles E. Gooley 41 Executive Vice President since July,
1994. Previously, Vice President and
General Counsel of the Company (7/89 -
7/94); Director, Legal and External
Affairs (Gas) (NU) (12/87-7/89).
Michael E. Bielonko 42 Vice President, Treasurer and Chief
Financial Officer of the Company since
September, 1993. Previously Vice
President and Chief Financial Officer of
the Company (7/90-9/92); Vice President
and Treasurer of the Company (7/89 to
7/90); Director, Treasury Services and
Financial Planning (Gas) (NU) (1/88 to
7/89).
Thomas J. Houde 47 Vice President of the Company since
January, 1992. Previously Director,
Corporate Planning, Rates and Economic
Analysis of Yankee Gas (3/90-12/91);
Manager, Rates and Economic Analysis
(7/89-3/90); Manager-Rates and
Regulatory Analysis (Gas) (NU) (1/88
-7/89).
* Mr. Ashton has announced his intention to retire from the
Company on March 1, 1995. He will continue as Chairman of the
Board at least through March 1, 1996.
** On December 6, 1994, Mr. Terzic was elected to the Board of
Directors of Yankee Energy and has been elected to assume the
additional title of Chief Executive Officer upon Mr. Ashton's
retirement.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
--------------------------------------
Yankee Energy declared and paid regular quarterly cash
dividends in 1994. The dividend paid for the first two quarters
of 1994 was $.29 per share and $.305 per share in the last two
quarters of 1994. Other information required by this item is
incorporated herein by reference to Yankee Energy's 1994 Annual
Report to Shareholders, on the inside back cover, subsections
entitled "Market for Common Stock", "Dividends" and "Shareholder
Information".
21
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
Information required by this item is incorporated herein by
reference to Yankee Energy's 1994 Annual Report to Shareholders,
page 30, "Selected Financial and Operating Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
-------------------------------------------------
Information required by this item is incorporated herein by
reference to Yankee Energy's 1994 Annual Report to Shareholders,
pages 14 through 16, Management's Discussion and Analysis of
Financial Condition and Results of Operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The consolidated financial statements and notes thereto,
together with the report thereon of Management and of Arthur
Andersen LLP on pages 17 through 29 of Yankee Energy's 1994
Annual Report to Shareholders are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
-------------------------------------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
-----------------------------------------------
Information regarding Yankee Energy's directors and with
respect to delinquent filers pursuant to Item 405 of Regulation
S-K is incorporated herein by reference to the Company's Proxy
Statement for its Annual Meeting to be held on February 24, 1995.
Information regarding the Company's executive officers, who
are elected annually by the directors of Yankee Energy, follows
Item 4 in Part I of this Form 10-K.
22
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
----------------------
Information regarding compensation of Yankee Energy's
executive officers except the Report of the Organization and
Compensation Committee and the Stock Performance Graph is
incorporated herein by reference to the Company's Proxy Statement
for its Annual Meeting to be held on February 24, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
-----------------------------------------------
Information regarding the beneficial ownership of shares of
common stock of the Company by certain persons is incorporated
herein by reference to the Company's Proxy Statement for its
Annual Meeting to be held on February 24, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Not Applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
---------------------------------------------------
(a) 1. Financial Statements:
The Report of Independent Public Accountants and
financial statements and notes thereto in the 1994
Annual Report are hereby incorporated by reference and
made a part of this report. (See Item 8. Financial
Statements and Supplementary Data.)
Report of Independent Public Accountants on
Schedules.........................................S-1
2. Schedules:
Financial Statement Schedules for Yankee Energy and
Subsidiaries are listed in the Index to Financial
Statement Schedules...............................S-2
3. Exhibits:
Exhibits for Yankee Energy are listed in the Index to
Exhibits..........................................E-1
(b)Reports on Form 8-K:
None.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
YANKEE ENERGY SYSTEM, INC.
--------------------------
(Registrant)
Date: December 7, 1994 By /s/ Philip T. Ashton
--------------------
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Date Title Signature
- ---- ----- ---------
December 7, 1994 Chairman and Chief /s/ Philip T. Ashton
Executive Officer Philip T. Ashton
December 7, 1994 Vice President, /s/ Michael E. Bielonko
Treasurer and Chief Michael E. Bielonko
Financial Officer
December 7, 1994 Controller /s/ Nicholas A. Rinaldi
Nicholas A. Rinaldi
December 7, 1994 Director /s/ Eileen S. Kraus
Eileen S. Kraus
December 7, 1994 Director /s/ Frederick M. Lowther
Frederick M. Lowther
December 7, 1994 Director /s/ Thomas H. O'Brien
Thomas H. O'Brien
December 7, 1994 Director /s/ Leonard A. O'Connor
Leonard A. O'Connor
December 7, 1994 Director /s/ Emery G. Olcott
Emery G. Olcott
December 7, 1994 Director /s/Nicholas L. Trivisonno
Nicholas L. Trivisonno
December 7, 1994 Director /s/ Branko Terzic
Branko Terzic
24
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Yankee Energy System, Inc.:
We have audited, in accordance with generally accepted auditing
standards, the financial statements included in Yankee Energy
System, Inc.'s (the Company) Annual Report incorporated by
reference in this Form 10-K, and have issued our report thereon
dated November 21, 1994. As explained in Note 1 to the financial
statements, effective October 1, 1993, the Company changed its
method of accounting for postretirement benefits other than
pensions and income taxes. In addition, effective October 1,
1991, the Company changed its method of accounting for municipal
property taxes. Our audit was made for the purpose of forming an
opinion on those statements taken as a whole. The schedules
listed in the accompanying index are presented for purposes of
complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. The schedules
have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required
to be set forth therein in relation to the basic financial
statements taken as a whole.
Arthur Andersen LLP
Hartford, Connecticut
November 21, 1994
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
SCHEDULE
V Utility Plant for Years Ended September 30, 1994,
1993 and 1992
VI Accumulated Provision for Depreciation of Utility
Plant for Years Ended September 30, 1994, 1993 and
1992
VIII Valuation and Qualifying Accounts and Reserves
for Years Ended September 30, 1994, 1993 and 1992
IX Short-Term Borrowings for Years Ended
September 30, 1994, 1993 and 1992
X Supplementary Income Statement Information for
Years Ended September 30, 1994, 1993 and 1992
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
GAS UTILITY PLANT (INCLUDING INTANGIBLES)
YEAR ENDED SEPTEMBER 30, 1994
SCHEDULE V
(Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E Col. F
Bal. at Other Balance
beginning changes at end
of Additions add(deduct) of
Classification period at cost Retirements describe period
Year Ended September 30, 1994
<S> <C> <C> <C> <C> <C>
Utility Plant
in Service $445,546 $23,538 $1,196 $ 31 (a) $467,836
(83)(b)
Construction
Work in
Progress 11,772 (553) (31)(a) 11,188
Utility Plant
Held for
Future Use 166 166
Gas Plant
Acquisition
Adjustments 200 200
________ ________ ________ ______ _____
Total $457,684 $22,985 $1,196 $ (83) $479,390
________ _______ ______ ______ ________
________ _______ ______ ______ ________
</TABLE>
(a) Transfer to Utility Plant in Service from Construction Work
in Progress.
(b) Transfer from Customer Advances for Construction to Utility
Plant in Service.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
GAS UTILITY PLANT (INCLUDING INTANGIBLES)
YEAR ENDED SEPTEMBER 30, 1993
SCHEDULE V
(Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E Col. F
Bal. at Other Balance
beginning changes at end
of Additions add(deduct) of
Classification period at cost Retirements describe period
Year Ended September 30, 1993
<S> <C> <C> <C> <C> <C>
Utility Plant
in Service $432,397 $14,919 $1,666 $(104)(a) $445,546
Construction
Work in
Progress 5,052 6,621 104 (a) 11,772
(5) (b)
Utility Plant
Held for
Future Use 166 166
Gas Plant
Acquisition
Adjustments 200 200
________ ________ ________ ______ _____
Total $437,815 $21,540 $1,666 $ (5) $457,684
________ _______ ______ ______ ________
________ _______ ______ ______ ________
</TABLE>
(a)Transfer from Utility Plant in Service to Construction Work
in Progress.
(b) Transfer cost of removal between Construction Work in
Progress and Retirement Work in Progress.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
GAS UTILITY PLANT (INCLUDING INTANGIBLES)
YEAR ENDED SEPTEMBER 30, 1992
SCHEDULE V
(Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E Col. F
Bal. at Other Balance
beginning changes at end
of Additions add(deduct) of
Classification period at cost Retirements describe period
Year Ended September 30, 1992
<S> <C> <C> <C> <C> <C>
Utility Plant
in Service $400,242 $39,666 $7,566 $ 28 (a) $432,397
2 (b)
25 (c)
Construction
Work in
Progress 13,828 (8,746) (28)(a) 5,052
(2)(b)
Utility Plant
Held for
Future Use 191 (25)(c) 166
Gas Plant
Acquisition
Adjustments 200 200
________ ________ ________ ______ _____
Total $414,461 $30,920 $7,566 $ - $437,815
________ _______ ______ ______ ________
________ _______ ______ ______ ________
</TABLE>
(a) Transfer to Utility Plant in Service from Other Construction
Work in Progress.
(b) Transfer to Utility Plant in Service from Construction Work
in Progress.
(c) Transfer to Utility Plant in Service from Utility Plant Held
for Future Use.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
ACCUMULATED PROVISION FOR DEPRECIATION OF GAS UTILITY PLANT
YEARS ENDED SEPTEMBER 30, 1994, 1993, AND 1992
SCHEDULE VI
(Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E Col. F
Bal. at Additions Other Balance
beginning charged to changes at end
of costs and add(deduct) of
Classification period expenses Retirements describe period
<S> <C> <C> <C> <C> <C>
Year Ended
Sept. 30, 1994 $149,300 $16,993 $1,837 $ 41 (a) $164,327
(170)(c)
Year Ended
Sept. 30, 1993 $134,101 $17,133 $1,864 57 (a) $149,300
(5)(b)
(122)(c)
Year Ended
Sept. 30, 1992 $126,620 $16,086 $8,469 $ 52 (a) $134,101
(188)(b)
</TABLE>
(a) Depreciation charged to Transportation Clearing and Other
Accounts.
(b) Transfer cost of removal between Construction Work in
Progress and Retirement Work in Progress.
(c) Transfer Depreciation of NorConn Non-Utility Property.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED SEPTEMBER 30, 1994
SCHEDULE VIII
(Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Additions
__________
(1) (2)
Charged
Balance Charged to Balance
at to other at end
beginning costs and accounts Deductions of
Descrip. of period expenses describe describe period
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
<S> <C> <C> <C> <C> <C>
Reserves
for
uncol-
lectible
accounts $4,914 $3,455 $ - $2,925(a) $5,444
RESERVES NOT APPLIED
AGAINST ASSETS:
Injuries and
damages(b)$ 869 $ 700 $ - $ 538(c) $1,031
Medical(d) 861 3,142 - 2,918(e) 1,085
___ ______ ____ _______ _______
Total $1,730 $3,842 $ - $3,456 $2,116
______ ______ ____ ______ ______
______ ______ ____ ______ ______
</TABLE>
(a) Amounts charged off as uncollectible after deducting
customers' deposits and recoveries of accounts previously charged
off.
(b) Provided to cover claims for injuries to employees, for
workmen's compensation, for bodily injury to others and property
damage.
(c) Principally payments for various injuries and damages and
expenses in connection therewith.
(d) Provided to cover employee medical claims.
(e) Principally payments for various employee medical expenses
and expenses in connection therewith.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED SEPTEMBER 30, 1993
SCHEDULE VIII
(Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Additions
__________
(1) (2)
Charged
Balance Charged to Balance
at to other at end
beginning costs and accounts Deductions of
Descrip. of period expenses describe describe period
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
<S> <C> <C> <C> <C> <C>
Reserves
for
uncol-
lectible
accounts $4,298 $4,258 $ - $3,642(a) $4,914
RESERVES NOT APPLIED
AGAINST ASSETS:
Injuries and
damages(b)$ 614 $ 994 $ - $ 739(c) $ 869
Medical(d) 613 3,133 - 2,885(e) 861
___ ______ ____ _______ _______
Total $1,227 $4,127 $ - $3,624 $1,730
______ ______ ____ ______ ______
______ ______ ____ ______ ______
</TABLE>
(a) Amounts charged off as uncollectible after deducting
customers' deposits and recoveries of accounts previously charged
off.
(b) Provided to cover claims for injuries to employees for
workmen's compensation, for bodily injury to others and property
damage.
(c) Principally payments for various injuries and damages and
expenses in connection therewith.
(d) Provided to cover employee medical claims.
(e) Principally payments for various employee medical expenses
and expenses in connection therewith.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEAR ENDED SEPTEMBER 30, 1992
SCHEDULE VIII
(Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Additions
__________
(1) (2)
Charged
Balance Charged to Balance
at to other at end
beginning costs and accounts Deductions of
Descrip. of period expenses describe describe period
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY:
<S> <C> <C> <C> <C> <C>
Reserves
for
uncol-
lectible
accounts $4,191 $4,611 $ - $4,504(a) $4,298
RESERVES NOT APPLIED
AGAINST ASSETS:
Injuries and
damages(b)$ 507 $ 500 $ - $ 393(c) $ 614
Medical(d) 525 4,459 - 4,371(e) 613
___ ______ ____ _______ _______
Total $1,032 $4,959 $ - $4,764 $1,227
______ ______ ____ ______ ______
______ ______ ____ ______ ______
</TABLE>
(a) Amounts charged off as uncollectible after deducting
customers' deposits and recoveries of accounts previously charged
off.
(b) Provided to cover claims for injuries to employees for
workmen's compensation, for bodily injury to others and property
damage.
(c) Principally payments for various injuries and damages and
expenses in connection therewith.
(d) Provided to cover employee medical claims.
(e) Principally payments for various employee medical expenses
and expenses in connection therewith.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
SCHEDULE IX
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D (a) Col. E (b) Col. F (c)
Category Balance Weighted Maximum Average Weighted
of at end average amount amount average
aggregate of interest outstanding outstanding interest
short-term period rate at during the during the rate
borrowings end of period period during
period the period
(000's) (000's) (000's)
Sept. 30, 1994 (d)
<S> <C> <C> <C> <C> <C>
Notes Payable
to Banks $24,600 5.4% $25,500 $ 7,748 4.5%
Sept. 30, 1993 (d)
Notes Payable
to Banks - - - - -
Sept. 30, 1992 (d)
Notes Payable
to Banks $15,300 3.9% $52,450 $32,214 5.3%
</TABLE>
(a) Excludes the effect of compensating balances and commitment
fees.
(b) Average daily balance during the period.
(c) Based on the daily amounts outstanding including commitment
fees and excluding the effect of compensating balances.
(d) Intercompany transactions have been eliminated.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992
SCHEDULE X
(Thousands of Dollars)
<TABLE>
<CAPTION>
Col. A Col. B
Item Charged to
Costs and
Expenses
1994 1993 1992
<S> <C> <C> <C>
Taxes, other than payroll
and income taxes, charged
to expense:
State gross receipts $13,728 $13,709 $12,451
Real and personal property 6,811 6,577 6,227
_______ _______ _______
TOTAL $20,539 $20,286 $18,678
_______ _______ _______
_______ _______ _______
</TABLE>
<PAGE>
INDEX TO EXHIBITS
The following exhibits are filed as part of this Form 10-K
or incorporated by reference herein:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
(3)
3.1 Restated Certificate of Incorporation of Yankee
Energy System, Inc. (the "Company")(Filed in Form
10 Registration Statement dated April 14, 1989 and
amendments thereto ("Form 10")).
3.2 Amended Bylaws of the Company (Filed in Form 10).
(4) See Exhibit 3
4.1 Specimen of the Company's Common Stock (Filed in
Form 10).
4.2 Rights Agreement between the Company and The
Connecticut Bank and Trust Company, N.A., as
Rights Agent, dated November 20, 1989 (Filed in
Form 8-A Registration Statement dated December 7,
1989).
4.3 Amendment to Rights Agreement dated May 10, 1990
(Filed in Form 8 dated May 30, 1990).
4.4 Amendment to Rights Agreement dated January 23,
1991 (Filed in Form 8 dated January 31, 1991).
4.5 Guaranty of the Company dated June 30, 1989 with
Credit Agreement between Housatonic Corporation
("Housatonic") and Bankers Trust Company ("Bankers
Trust") dated June 30, 1989 (Filed Form 10).
4.6 Amendment to Credit Agreement between Housatonic
and Bankers Trust dated June 9, 1992. (Filed in
1992 Form 10-K)
4.7 Bond Purchase Agreement dated July 1, 1989 between
Yankee Gas Services Company ("Yankee Gas") and the
Purchasers identified therein (Filed in Form 10).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
4.8 Indenture of Mortgage and Deed of Trust dated July
1, 1989 between Yankee Gas and The Connecticut
National Bank, as Trustee (Filed in Form 10).
4.9 Guaranty of the Company with Term Loan Agreement
dated July 20, 1989 between United Bank & Trust
Company, as Trustee of the Trust of the Company's
401(k) Employee Stock Ownership Plan and The
First National Bank of Boston (Filed in 1989 Form
10-K).
(10)
10.1 First Supplemental Indenture of Mortgage and Deed
of Trust dated April 1, 1992 between Yankee Gas
and The Connecticut National Bank, as Trustee
(Filed in Form S-3 Registration Statement #33-
52750 dated October 2, 1992 ("Form S-3")).
10.2 Second Supplemental Indenture of Mortgage and Deed
of Trust dated December 1, 1992 between Yankee
Gas and The Connecticut National Bank, as Trustee.
(Filed in 1992 Form 10-K).
10.3 Bond Purchase Agreement dated April 1, 1992
between Yankee Gas and the Purchasers identified
therein (Filed in Form S-3).
10.4 Bond Purchase Agreement dated December 1, 1992
between Yankee Gas and Purchaser identified
therein. (Filed in 1992 Form 10-K).
10.5 Asset Transfer Agreement among Northeast Utilities
Service Company ("NUSCO"), The Connecticut Light
and Power Company ("CL&P"), the Company, Yankee
Gas and Housatonic dated June 30, 1989 (Filed in
Form 10).
10.6 Lease Agreements among Yankee Gas, NUSCO and CL&P
dated June 30, 1989 (Filed in Form 10).
10.7 Environmental Liability Sharing and Indemnity
Agreement dated June 30, 1989 between Yankee Gas
and CL&P (Filed in Form 10).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
10.8 Post-Divestiture Tax Indemnification Agreement
dated June 30, 1989 Between Yankee Gas and CL&P
(Filed in Form 10).
10.9 Agreement modifying Yankee Gas' Schedule A Inter-
ruptible Sales Tariff dated May 29, 1990 (Filed in
Form S-1 Registration Statement #33-40758 dated
May 22, 1991 and amendment thereto dated June 18,
1991 ("Form S-1")).
10.10 Rate Case Settlement Agreement dated September 21,
1990 (Filed in Form 8-K dated September 27, 1990).
10.11 Rate Case Decision dated August 26, 1992. (Filed
in 1992 Form 10-K).
10.12 Lease Agreement between Yankee Gas and NorConn
dated October 1, 1990 (Filed in Form S-1).
10.13 Note Purchase Agreement among NorConn Properties,
Inc. (NorConn), the Company and the Knights of
Columbus dated November 9, 1990 (Filed in Form S-
1).
10.14+ Long-Term Incentive Compensation Plan adopted
December 5, 1990 (Filed in Proxy Statement dated
December 24, 1990).
10.15+ Annual Incentive Compensation Plan adopted
December 5, 1990 (Filed in 1991 Form 10-K).
10.16+ Non-Employee Directors' Stock Compensation Plan
adopted March 21, 1991 (Filed in 1991 Form 10-K).
10.17 Lease Agreement between Yankee Gas and Venture V
Limited Partnership dated September 10, 1991
(Filed in 1991 Form 10-K).
10.18 Severance Pay Plan adopted October 17, 1991 (Filed
in 1991 Form 10-K).
</TABLE>
+ Management contract or compensatory plan required to be filed
as an exhibit to this form pursuant to Item 14c of this report.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
GAS PURCHASE AGREEMENTS
Algonquin Gas Transmission Company
----------------------------------
10.19* Service Agreement #93009 dated September 1, 1994,
applicable to Rate Schedule AFT-1 (Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee").
10.20* Service Agreement #93013E dated September 1, 1994,
applicable to Rate Schedule AFT-E (No-Notice Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee").
10.21 Service Agreement #93209 dated May 24, 1993,
applicable to Rate Schedule AFT-1 (Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.22* Service Agreement #9W011E dated September 1, 1994,
applicable to Rate Schedule AFT-E (No-Notice Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee").
10.23 Service Agreement #93309 dated May 24, 1993,
applicable to Rate Schedule AFT-1 (Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.24 Service Agreement #93409 dated May 24, 1993,
applicable to Rate Schedule AFT-1 (Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
</TABLE>
* Filed herewith.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
10.25* Service Agreement #9B106 dated September 1, 1994
applicable to Rate Schedule AFT-1 (Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee").
10.26* Service Agreement #9S103 dated September 1, 1994,
applicable to Rate Schedule AFT-1 (Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee").
10.27 Service Agreement #931011S dated May 24, 1993,
applicable to Rate Schedule AIT-1 (Interruptible
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.28 Service Agreement #931012B dated May 24, 1993,
applicable to Rate Schedule AIT-1(Interruptible
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.29 Service Agreement #933006 dated May 24, 1993,
applicable to Rate MDQ Schedule PSS-T (Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee").
10.30 Service Agreement #934006 dated May 24, 1993,
applicable to Rate MDQ Schedule FTP (Firm
Transportation) between Algonquin Gas Transmission
Company ("Algonquin") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.31* Service Agreement AGT 0002-LG dated December 27,
1993, applicable to Rate Schedule AIT-1
(Interruptible Transportation of LNG) between
Algonquin Gas Transmission Company ("Algonquin")
and Yankee Gas Services Company ("Yankee").
</TABLE>
* Filed herewith.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
10.32 Service Agreement dated October 7, 1993,
applicable to Rate Schedule FST-LG (Firm Storage
of LNG) between Algonquin LNG ("ALNG") and Yankee
Gas Services Company ("Yankee"). (Filed in 1993
Form 10-K).
Texas Eastern Transmission Company
----------------------------------
10.33 Dispatching Agreement dated October 1, 1993,
applicable to Rate Schedule CDS and FT-1, between
Texas Eastern Transmission Company ("Texas
Eastern") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
10.34 Service Agreement #800355 dated October 1, 1993,
applicable to Rate Schedule FT-1 (Firm
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.35 Service Agreement #800107 dated June 1, 1993,
applicable to Rate Schedule FT-1 (Firm
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.36 Service Agreement #800308 dated June 1, 1993,
applicable to Rate Schedule FT-1 (Firm
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.37 Service Agreement #800307 dated June 1, 1993,
applicable to Rate Schedule CDS (Firm
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.38 Service Agreement #800311 dated June 1, 1993,
applicable to Rate Schedule FT-1 (Firm
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
10.39 Service Agreement #800315 dated June 1, 1993,
applicable to Rate Schedule FT-1 (Firm
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.40 Service Agreement #800316 dated June 1, 1993,
applicable to Rate Schedule FT-1 (Firm
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.41 Service Agreement #800108 dated June 1, 1993,
applicable to Rate Schedule FT-1 (Firm
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.42 Service Agreement #331063 dated June 1, 1993,
applicable to Rate Schedule IT-1 (Interruptible
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.43 Service Agreement #331064 dated June 1, 1993,
applicable to Rate Schedule IT-1 (Interruptible
Transportation) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.44* Service Agreement #800375 dated March 1, 1994,
applicable to Rate Schedule FT-1 for ITP Service
between Texas Eastern Transmission Company
("Pipeline") and Yankee Gas Services Company
("Customer").
10.45* Service Agreement #800441 dated September 26 1994,
applicable to Rate Schedule CDS between Texas
Eastern Transmission Company ("Pipeline") and
Yankee Gas Services Company ("Customer").
</TABLE>
* Filed herewith.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
10.46* Service Agreement #800442 dated September 26,
1994, applicable to Rate Schedule CDS between
Texas Eastern Transmission Company ("Pipeline")
and Yankee Gas Services Company ("Customer").
Consolidated Natural Gas Transmission Company
---------------------------------------------
10.47 Service Agreement #100013 dated October 1, 1993,
applicable to Rate Schedule FTNN (Firm
Transportation) between CNG Transmission Corp.
("CNG") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
Tennessee Gas Pipeline Company
------------------------------
10.48 Service Agreement #2121 dated September 1, 1993,
applicable to Rate Schedule FT-A (Firm
Transportation) between Tennessee Gas Pipeline
("Tennessee") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
10.49 Service Agreement #2503 dated September 1, 1993,
applicable to Rate Schedule FT-A (Firm
Transportation) between Tennessee Gas Pipeline
("Tennessee") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
10.50 Service Agreement #2652 dated September 1, 1993,
applicable to Rate Schedule FT-A (Firm
Transportation) between Tennessee Gas Pipeline
("Tennessee") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
10.51 Service Agreement #1596 dated September 1, 1993,
applicable to Rate Schedule FT-A (Firm
Transportation) between Tennessee Gas Pipeline
("Tennessee") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
</TABLE>
* Filed herewith.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
10.52 Service Agreement #2120 dated September 1, 1993,
applicable to Rate Schedule CGT-NE (Firm
Transportation) between Tennessee Gas Pipeline
("Tennessee") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
10.53 Service Agreement #1641 dated September 1, 1993,
applicable to Rate Schedule FT-A (Firm
Transportation) between Tennessee Gas Pipeline
("Tennessee") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
10.54 Service Agreement #128 dated September 1, 1993,
applicable to Rate Schedule FT-A (Firm
Transportation) between Tennessee Gas Pipeline
("Tennessee") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
10.55 Service Agreement #333 dated September 1, 1993,
applicable to Rate Schedule FT-A (Firm
Transportation) between Tennessee Gas Pipeline
("Tennessee") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
10.56 Service Agreement #4552 dated February 7, 1991,
applicable to Firm Transportation between
Tennessee Gas Pipeline ("Tennessee") and Yankee
Gas Services Company ("Yankee").
Iroquois Gas Transmission Company
---------------------------------
10.57 Transportation Agreement dated February 7, 1991
between Iroquois Gas Transmission System
("Iroquois") and Yankee Gas for transportation of
Canadian gas purchased. (Filed in Form S-1).
Transcontinental Gas Pipeline Company
_____________________________________
10.58 Service Agreement #6340 dated June 1, 1993,
applicable to Rate Schedule FT (Firm
Transportation) between Transcontinental Gas
Pipeline Corp. ("Transco") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
National Fuel Pipeline Company
------------------------------
10.59 Service Agreement #36577 dated July 1, 1993,
applicable to Rate Schedule EFT (Enhanced Firm
Transportation) between National Fuel Gas Supply
Corporation ("National") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
GAS STORAGE AGREEMENTS
10.60 Service Agreement #400179 dated June 1, 1993,
applicable to Rate Schedule SS-1 (Firm Storage
Service) between Texas Eastern Transmission
Company ("Texas Eastern") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.61* Service Agreement #400516 dated September 26,
1994, applicable to Rate Schedule FSS-1 (Firm
Storage Service) between Texas Eastern
Transmission Company ("Texas Eastern") and Yankee
Gas Services Company ("Yankee").
10.62 Service Agreement #600039 dated October 1, 1993,
applicable to Rate Schedule GSS (Storage Service)
between CNG Transmission Corp. ("CNG") and Yankee
Gas Services Company ("Yankee"). (Filed in 1993
Form 10-K).
10.63 Service Agreement #400008 dated October 1, 1993,
applicable to Rate Schedule GSSII (Storage
Agreement) between CNG Transmission Corp. ("CNG")
and Yankee Gas Services Company ("Yankee").
(Filed in 1993 Form 10-K).
10.64 Service Agreement #300070 dated October 1, 1993,
applicable to Rate Schedule GSS (Storage Service)
between CNG Transmission Corp. ("CNG") and Yankee
Gas Services Company ("Yankee"). (Filed in 1993
Form 10-K).
</TABLE>
* Filed herewith.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
10.65 Underground Storage Service Agreement dated as of
June 21, 1988 applicable to Rate Schedule SS-2
between Penn York Energy Corporation and Yankee
Gas (Penn-York, SS-2) (Filed in Form 10).
10.66 Service Agreement #637 dated September 1, 1993,
applicable to Rate Schedule FS (Firm Storage -
Market Area) between Tennessee Gas Pipeline
Company ("Tennessee") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
GAS PURCHASE AGREEMENTS
10.67 USA SALES Agreement dated October 1, 1993,
applicable to storage gas, between CNG
Transmission Corp. ("CNG") and Yankee Gas Services
Company ("Yankee"). (Filed in 1993 Form 10-K).
10.68 Phase 2 Sales Agreement dated September 14, 1987
applicable to rate Schedule G-1 among Boundary,
Yankee Gas and other utilities (Boundary, G-1), as
amended September 14, 1988 and July 1, 1989 (Filed
in Form 10).
10.69 Service Agreement dated February 7, 1991 between
Alberta Northeast Gas Ltd. ("ANE") and Yankee Gas
Services Company for purchase of gas from ATCOR
Limited (Filed in Form S-1).
10.70 Service Agreement dated February 7, 1991 between
ANE and Yankee Gas Services Company for purchase
of gas from PROGAS Limited (Filed in Form S-1).
10.71 Service Agreement dated February 7, 1991 between
ANE and Yankee Gas for purchase of gas from AEC
Oil and Gas Company (Filed in Form S-1).
10.72 Service Agreement dated February 7, 1991 between
ANE and Yankee Gas Services Company for purchase
of gas from TransCanada Pipelines Limited (Filed
in Form S-1).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
10.73 ** Gas Sales Agreement #437 dated November 1, 1992
between Chevron U.S.A. and Yankee Gas Services
Company for purchase of gas. (Filed in 1993 Form 10-KA dated
March 10, 1994).
10.74 ** Gas Sales Agreement dated March 26, 1992 between
Seller and Yankee Gas Services Company for
purchase of gas. (Filed in 1993 Form 10-KA dated
March 10, 1994).
10.75 ** Gas Sales Agreement dated August 1, 1992 between
Natural Gas Clearinghouse and Yankee Gas Services
Company for purchase of gas. (Filed in 1993 Form 10-KA dated
March 10, 1994).
10.76* ** Gas Sales Agreement dated November 1, 1993 between
Chevron U.S.A. and Yankee Gas Services Company for
purchase of gas.
10.77* ** Gas Sales Agreement dated November 1, 1993 between
Seller and Yankee Gas Services Company for
purchase of gas.
10.78* ** Gas Sales Agreement dated November 1, 1993 between
Mobil Natural Gas and Yankee Gas Services Company
for purchase of gas.
10.79* Gas Sales Agreement dated November 1, 1993 between
OXY USA and Yankee Gas Services Company for
purchase of gas.
OTHER AGREEMENTS
10.80 Operation Balancing Agreement (OBA) dated May 24,
1993,between Algonquin Gas Transmission Company
("Algonquin")and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
</TABLE>
* Filed herewith.
** Confidential information has been removed from these exhibits
pursuant to 17 C.F.R. 20c.83, Confidential Treatment Procedures
Under the Freedom of Information Act, and filed separately with
the Commission under Form SE.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
10.81 Service Agreement #900145 for Capacity Release
Umbrella Agreement #900145 dated June 1, 1993,
between Texas Eastern Transmission Company ("Texas
Eastern") and Yankee Gas Services Company
("Yankee"). (Filed in 1993 Form 10-K).
10.82 LINKS Agreement dated June 1, 1993, between Texas
Eastern Transmission Company ("Texas Eastern") and
Yankee Gas Services Company ("Yankee"). (Filed in
1993 Form 10-K).
10.83 Precedent Agreement for ITP Transportation Service
dated September 6, 1991 between Texas Eastern and
Yankee Gas Services Company. (Filed in 1992 Form
10-K).
10.84 Precedent Agreement for ITP Transportation Service
dated October 15, 1991 between Algonquin and
Yankee Gas (Filed in 1991 Form 10-K).
MANAGEMENT CONTRACTS
10.85+ Employment Agreement between the Company and Mr.
Philip T. Ashton dated January 1, 1993. (Filed in 1993
Form 10-K).
10.86+ Employment Agreement between the Company and Mr.
Michael E. Bielonko dated January 1, 1993. (Filed in 1993
Form 10-K).
10.87+ Employment Agreement between the Company and Mr.
Charles E. Gooley dated January 1, 1993. (Filed in 1993
Form 10-K).
10.88+ Employment Agreement between the Company and Mr.
Thomas J. Houde dated January 1, 1993. (Filed in 1993
Form 10-K).
10.89+ Employment Agreement between the Company and Mr.
John J. Smith dated January 1, 1993. (Filed in 1993
Form 10-K).
10.90*+ Employment Agreement between the Company and Mr.
Branko Terzic dated September 15, 1994.
</TABLE>
* Filed herewith.
+ Management contract or compensatory plan required to be filed
as an exhibit to this form pursuant to Item 14c of this report.
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- -------- -----------------------
<S> <C>
MISCELLANEOUS CONTRACTS
10.91 $40 million Credit Agreement among Yankee Gas and
several banks dated June 20, 1989 (Filed in Form
S-1).
10.92 Memorandum of Understanding among Housatonic and
Iroquois partners relating to equity contributions
and guarantees dated March 13, 1991 (Filed in Form
S-1).
10.93 Agreement for Systems Operations Services among
Yankee Gas and Integrated Systems Solutions
Corporation ("ISSC") dated August 12, 1991.
(Filed in 1992 Form 10-K).
11* Statement re: Computation of per share earnings.
13* 1994 Annual Report to Shareholders.
21* Subsidiaries of the registrant.
23* Consent of Arthur Andersen LLP
27* Financial date schedule pursuant to Article 5 of
Regulation S-X for commercial/industrial
customers.
</TABLE>
* Filed herewith.
<PAGE>
Exhibit 10.19
930009
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
This Agreement ("Agreement") is made and entered into this
1st day of September, 1994, by and between Algonquin Gas
Transmission Company, a Delaware Corporation (herein called
"Algonquin"), and Yankee Gas Services Company (herein called
"Customer" whether one or more persons).
WHEREAS, Algonquin and Customer entered into a Service
Agreement dated June 1, 1993, for service under Rate Schedule
AFT-1; and
WHEREAS, Algonquin and its customers entered into a
settlement agreement in Algonquin's Docket Nos. RP93-14-000, et
al. which provided, among other things, for revised daily and
annual contract entitlements under Rate Schedules AFT-1, AFT-E,
AFT-1S and AFT-ES; and
WHEREAS, the Federal Energy Regulatory Commission issued an
order on July 8, 1994, approving the settlement in Docket Nos.
RP93-14-000, et al; and
WHEREAS, Algonquin and Customer desire to execute a
superseding service agreement under Rate Schedule AFT-1 in
accordance with the terms of the settlement as approved by the
Commission's July 8, 1994 order;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties do agree as
follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Subject to the terms, conditions and limitations hereof
and of Algonquin's Rate Schedule AFT-1, Algonquin agrees to
receive from or for the account of Customer for transportation on
a firm basis quantities of natural gas tendered by Customer on
any day at the Point(s) of Receipt; provided, however, Customer
shall not tender without the prior consent of Algonquin, at any
Point of Receipt on any day a quantity of natural gas in excess
of the applicable Maximum Daily Receipt Obligation for such Point
of Receipt plus the applicable Fuel Reimbursement Quantity; and
provided further that Customer shall not tender at all Point(s)
of Receipt on any day or in any year a cumulative quantity of
natural gas, without the prior consent of Algonquin, in excess of
the following quantities of natural gas plus the applicable Fuel
Reimbursement Quantities:
<PAGE>
<TABLE>
<CAPTION>
Maximum Daily Transportation Quantity (MMBtu)
---------------------------------------------
<S> <C>
Nov 16 - Apr 15 31,963*
Apr 16 - May 31 30,710
Jun 1 - Sep 30 28,205
Oct 1 - Nov 15 30,710
</TABLE>
*MDTQ to be utilized in applying monthly Reservation Charge
Maximum Annual Transportation Quantity 11,092,743 MMBtu
1.2 Algonquin agrees to transport and deliver to or for the
account of Customer at the Point(s) of Delivery and Customer
agrees to accept or cause acceptance of delivery of the quantity
received by Algonquin on any day, less the Fuel Reimbursement
Quantities; provided, however, Algonquin shall not be obligated
to deliver at any Point of Delivery on any day a quantity of
natural gas in excess of the applicable Maximum Daily Delivery
Obligation.
ARTICLE II
TERM OF AGREEMENT
2.1 This Agreement shall become effective as of the date
set forth hereinabove and shall continue in effect for a term
ending on and including October 31, 2012 ("Primary Term") and
shall remain in force from year to year thereafter unless
terminated by either party by written notice one year or more
prior to the end of the Primary Term or any successive term
thereafter. Algonquin's right to cancel this Agreement upon the
expiration of the Primary Term hereof or any succeeding term
shall be subject to Customer's rights pursuant to Sections 8 and
9 of the General Terms and Conditions.
2.2 This Agreement may be terminated at any time by
Algonquin in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure
continues for thirty days after payment is due; provided
Algonquin gives ten days prior written notice to Customer of such
termination and provided further such termination shall not be
effective if, prior to the date of termination, Customer either
pays such outstanding bill or furnishes a good and sufficient
surety bond guaranteeing payment to Algonquin of such outstanding
bill; provided that Algonquin shall not be entitled to terminate
service pending the resolution of a disputed bill if Customer
complies with the billing dispute procedure currently on file in
Algonquin's tariff.
<PAGE>
ARTICLE III
RATE SCHEDULE
3.1 Customer shall pay Algonquin for all services rendered
hereunder and for the availability of such service under
Algonquin's Rate Schedule AFT-1 as filed with the Federal Energy
Regulatory Commission and as the same may be hereafter revised or
changed. The rate to be charged Customer for transportation
hereunder shall not be more than the maximum rate under Rate
Schedule AFT-1, nor less than the minimum rate under Rate
Schedule AFT-1.
3.2 This Agreement and all terms and provisions contained
or incorporated herein are subject to the provisions of
Algonquin's applicable rate schedules and of Algonquin's General
Terms and Conditions on file with the Federal Energy Regulatory
Commission, or other duly constituted authorities having
jurisdiction, and as the same may be legally amended or
superseded, which rate schedules and General Terms and Conditions
are by this reference made a part hereof.
3.3 Customer agrees that Algonquin shall have the
unilateral right to file with the appropriate regulatory
authority and make changes effective in (a) the rates and charges
applicable to service pursuant to Algonquin's Rate Schedule
AFT-1, (b) Algonquin's Rate Schedule AFT-1, pursuant to which
service hereunder is rendered or (c) any provision of the General
Terms and Conditions applicable to Rate Schedule AFT-1.
Algonquin agrees that Customer may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Algonquin's existing FERC Gas Tariff as may be found necessary to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE IV
POINT(S) OF RECEIPT
Natural gas to be received by Algonquin for the account of
Customer hereunder shall be received at the outlet side of the
measuring station(s) at or near the Primary Point(s) of Receipt
set forth in Exhibit A of the service agreement, with the Maximum
Daily Receipt Obligation and the receipt pressure obligation
indicated for each such Primary Point of Receipt. Natural gas to
be received by Algonquin for the account of Customer hereunder
may also be received at the outlet side of any other measuring
station on the Algonquin system, subject to reduction pursuant to
Section 6.2 of Rate Schedule AFT-1.
<PAGE>
ARTICLE V
POINT(S) OF DELIVERY
Natural gas to be delivered by Algonquin for the account of
Customer hereunder shall be delivered on the outlet side of the
measuring station(s) at or near the Primary Point(s) of Delivery
set forth in Exhibit B of the service agreement, with the Maximum
Daily Delivery Obligation and the delivery pressure obligation
indicated for each such Primary Point of Delivery.
Natural gas to be delivered by Algonquin for the account of
Customer hereunder may also be delivered at the outlet side of
any other measuring station on the Algonquin system, subject to
reduction pursuant to Section 6.4 of Rate Schedule AFT-1.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Algonquin's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Agreement, or any notice which any party may desire to
give to the other, shall be in writing and shall be considered as
duly delivered when mailed by registered, certified, or first
class mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Algonquin: Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, MA 02135
Attn: John J. Mullaney
Vice President, Marketing
(b) Customer: Yankee Gas Services Company
599 Research Parkway
P. O. Box 1030
Meriden, CT 06450-1030
Attn: Thomas J. Houde
Vice President, Rates and Resource
Planning
or such other address as either party shall designate by
formal written notice.
ARTICLE VII
INTERPRETATION
The interpretation and performance of the Agreement shall be
in accordance with the laws of the Commonwealth of Massachusetts,
excluding conflicts of law principles that would require the
application of the laws of a different jurisdiction.
<PAGE>
ARTICLE VIII
AGREEMENTS BEING SUPERSEDED
When this Agreement becomes effective, it shall supersede
the following agreements between the parties hereto, except that
in the case of conversions from former Rate Schedules F-2 and F-
3, the parties' obligations under Article II of the service
agreements pertaining to such rate schedules shall continue in
effect.
Service Agreement No. 93009 executed by Customer and
Algonquin under Rate Schedule AFT-1 dated June 1, 1993.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective agents thereunto duly
authorized, the day and year first above written.
ALGONQUIN GAS TRANSMISSION COMPANY
By: /s/ John Mullaney
--------------------------------
Title: Vice President, Marketing
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Title: Vice President - Rates and
Resource Planning
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
Exhibit A
Point(s) of Receipt
-------------------
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-1 between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Receipt
<TABLE>
<CAPTION>
Primary Maximum Daily Maximum
Point of Receipt Obligation Receipt Pressure
Receipt (MMBtu) (Psig)
- ---------- ------------------- -----------------
<S> <C> <C>
Hanover, NJ (TETCO) At any pressure requested
Nov 16-Apr 15 12,188 by Algonquin but not in
Apr 16-May 31 11,710 excess of 750 Psig.
Jun 1-Sep 30 10,755
Oct 1-Nov 15 11,710
Lambertville, NJ At any pressure requested
Nov 16-Apr 15 19,775 by Algonquin but not in
Apr 16-May 31 19,000 excess of 750 Psig.
Jun 1-Sep 30 17,450
Oct 1-Nov 15 19,000
</TABLE>
Signed for Identification
Algonquin: /s/ John Mullaney (RSH)
-------------------------
Customer: /s/ David C. Egelson
-------------------------
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
-----------------------------------
Exhibit B
Point(s) of Delivery
--------------------
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-1 between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Delivery
<TABLE>
<CAPTION>
Primary Maximum Daily Minimum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
- ---------- -------------------- ------------------
<S> <C> <C>
On the outlet side
of meter stations
located at:
Waterbury, CT 75
Nov 16 - Apr 15 14,241
Apr 16 - May 31 13,683
Jun 1 - Sep 30 12,567
Oct 1 - Nov 15 13,683
Willimantic, CT 75
Nov 16 - Apr 15 1,312
Apr 16 - May 31 1,261
Jun 1 - Sep 30 1,158
Oct 1 - Nov 15 1,261
Putnam, CT 50
Nov 16 - Apr 15 999
Apr 16 - May 31 960
Jun 1 - Sep 30 882
Oct 1 - Nov 15 960
Pomfret, CT 250
Nov 16 - Apr 15 2,873
Apr 16 - May 31 2,760
Jun 1 - Sep 30 2,535
Oct 1 - Nov 15 2,760
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Primary Maximum Daily Minimum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
- ---------- -------------------- ------------------
<S> <C> <C>
Plainville
(Southington), CT 3,123 50
Nov 16 - Apr 15 3,001
Apr 16 - May 31 2,756
Jun 1 - Sep 30 3,001
Oct 1 - Nov 15
Vernon, CT 100
Nov 16 - Apr 15 9,619
Apr 16 - May 31 9,242
Jun 1 - Sep 30 8,488
Oct 1 - Nov 15 9,242
Thompsonville, CT 198
Nov 16 - Apr 15 4,372
Apr 16 - May 31 4,201
Jun 1 - Sep 30 3,858
Oct 1 - Nov 15 4,201
Kensington, CT 125
Nov 16 - Apr 15 17,239
Apr 16 - May 31 16,563
Jun 1 - Sep 30 15,212
Oct 1 - Nov 15 16,563
Oxford, CT 105
Nov 16 - Apr 15 1,477
Apr 16 - May 31 1,419
Jun 1 - Sep 30 1,303
Oct 1 - Nov 15 1,419
Waterford, CT 75
Nov 16 - Apr 15 2,076
Apr 16 - May 31 1,995
Jun 1 - Sep 30 1,832
Oct 1 - Nov 15 1,995
Montville, CT 75
Nov 16 - Apr 15 1,249
Apr 16 - May 31 1,200
Jun 1 - Sep 30 1,102
Oct 1 - Nov 15 1,200
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Primary Maximum Daily Minimum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
- ---------- -------------------- ------------------
<S> <C> <C>
Ledyard, CT 75
Nov 16 - Apr 15 344
Apr 16 - May 31 331
Jun 1 - Sep 30 304
Oct 1 - Nov 15 331
</TABLE>
Algonquin's Maximum Daily Delivery Obligation for the
Waterbury, Willimantic, Putnam, Pomfret, Plainville, Vernon,
Thompsonville, Kensington and Oxford Points of Delivery under
this Service Agreement and related Service Agreement No. 93013E
shall not exceed a combined total of 48,137 MMBtu on any single
day, and for the Waterford and Montville Points of Delivery shall
not exceed a combined total of 3,382 MMBtu on any single day.
Signed for Identification
Algonquin: /s/ John Mullaney (RSH)
-------------------------
Customer: /s/ David C. Egelson
--------------------------
<PAGE>
Exhibit 10.20
93013E
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-E)
This Agreement ("Agreement") is made and entered into this
1st day of September, 1994, by and between Algonquin Gas
Transmission Company, a Delaware Corporation (herein called
"Algonquin"), and Yankee Gas Services Company (herein called
"Customer" whether one or more persons).
WHEREAS, Algonquin and Customer entered into a Service
Agreement dated June 1, 1993, for service under Rate Schedule
AFT-E; and
WHEREAS, Algonquin and its customers entered into a
settlement agreement in Algonquin's Docket Nos. RP93-14-000, et
al. which provided, among other things, for revised daily and
annual contract entitlements under Rate Schedules AFT-1, AFT-E,
AFT-1S and AFT-ES; and
WHEREAS, the Federal Energy Regulatory Commission issued an
order on July 8, 1994, approving the settlement in Docket Nos.
RP93-14-000, et al; and
WHEREAS, Algonquin and Customer desire to execute a
superseding service agreement under Rate Schedule AFT-E in
accordance with the terms of the settlement as approved by the
Commission's July 8, 1994 order;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties do agree as
follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Subject to the terms, conditions and limitations hereof
and of Algonquin's Rate Schedule AFT-E, Algonquin agrees to
receive from or for the account of Customer for transportation on
a firm basis quantities of natural gas tendered by Customer on
any day at the Point(s) of Receipt; provided, however, Customer
shall not tender without the prior consent of Algonquin, at any
Point of Receipt on any day a quantity of natural gas in excess
of the applicable Maximum Daily Receipt Obligation for such Point
of Receipt plus the applicable Fuel Reimbursement Quantity; and
provided further that Customer shall not tender at all Point(s)
of Receipt on any day or in any year a cumulative quantity of
natural gas, without the prior consent of Algonquin, in excess of
the following quantities of natural gas plus the applicable Fuel
Reimbursement Quantities:
<PAGE>
<TABLE>
<CAPTION>
Maximum Daily Transportation Quantity (MMBtu)
<S> <C>
Nov 16 - Apr 15 20,116*
Apr 16 - May 31 19,328
Jun 1 - Sep 30 17,750
Oct 1 - Nov 15 19,328
</TABLE>
*MDTQ to be utilized in applying monthly Reservation Charge
Maximum Annual Transportation Quantity 6,981,192 MMBtu
1.2 Algonquin agrees to transport and deliver to or for the
account of Customer at the Point(s) of Delivery and Customer
agrees to accept or cause acceptance of delivery of the quantity
received by Algonquin on any day, less the Fuel Reimbursement
Quantities; provided, however, Algonquin shall not be obligated
to deliver at any Point of Delivery on any day a quantity of
natural gas in excess of the applicable Maximum Daily Delivery
Obligation.
ARTICLE II
TERM OF AGREEMENT
2.1 This Agreement shall become effective as of the date
set forth hereinabove and shall continue in effect for a term
ending on and including October 31, 2012 ("Primary Term") and
shall remain in force from year to year thereafter unless
terminated by either party by written notice one year or more
prior to the end of the Primary Term or any successive term
thereafter. Algonquin's right to cancel this Agreement upon the
expiration of the Primary Term hereof or any succeeding term
shall be subject to Customer's rights pursuant to Sections 8 and
9 of the General Terms and Conditions.
2.2 This Agreement may be terminated at any time by
Algonquin in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure
continues for thirty days after payment is due; provided
Algonquin gives ten days prior written notice to Customer of such
termination and provided further such termination shall not be
effective if, prior to the date of termination, Customer either
pays such outstanding bill or furnishes a good and sufficient
surety bond guaranteeing payment to Algonquin of such outstanding
bill; provided that Algonquin shall not be entitled to terminate
service pending the resolution of a disputed bill if Customer
complies with the billing dispute procedure currently on file in
Algonquin's tariff.
<PAGE>
ARTICLE III
RATE SCHEDULE
3.1 Customer shall pay Algonquin for all services rendered
hereunder and for the availability of such service under
Algonquin's Rate Schedule AFT-E as filed with the Federal Energy
Regulatory Commission and as the same may be hereafter revised or
changed. The rate to be charged Customer for transportation
hereunder shall not be more than the maximum rate under Rate
Schedule AFT-E, nor less than the minimum rate under Rate
Schedule AFT-E.
3.2 This Agreement and all terms and provisions contained
or incorporated herein are subject to the provisions of
Algonquin's applicable rate schedules and of Algonquin's General
Terms and Conditions on file with the Federal Energy Regulatory
Commission, or other duly constituted authorities having
jurisdiction, and as the same may be legally amended or
superseded, which rate schedules and General Terms and Conditions
are by this reference made a part hereof.
3.3 Customer agrees that Algonquin shall have the
unilateral right to file with the appropriate regulatory
authority and make changes effective in (a) the rates and charges
applicable to service pursuant to Algonquin's Rate Schedule
AFT-E, (b) Algonquin's Rate Schedule AFT-E, pursuant to which
service hereunder is rendered or (c) any provision of the General
Terms and Conditions applicable to Rate Schedule AFT-E.
Algonquin agrees that Customer may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Algonquin's existing FERC Gas Tariff as may be found necessary to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE IV
POINT(S) OF RECEIPT
Natural gas to be received by Algonquin for the account of
Customer hereunder shall be received at the outlet side of the
measuring station(s) at or near the Primary Point(s) of Receipt
set forth in Exhibit A of the service agreement, with the Maximum
Daily Receipt Obligation and the receipt pressure obligation
indicated for each such Primary Point of Receipt. Natural gas to
be received by Algonquin for the account of Customer hereunder
may also be received at the outlet side of any other measuring
station on the Algonquin system, subject to reduction pursuant to
Section 6.2 of Rate Schedule AFT-E.
<PAGE>
ARTICLE V
POINT(S) OF DELIVERY
Natural gas to be delivered by Algonquin for the account of
Customer hereunder shall be delivered on the outlet side of the
measuring station(s) at or near the Primary Point(s) of Delivery
set forth in Exhibit B of the service agreement, with the Maximum
Daily Delivery Obligation and the delivery pressure obligation
indicated for each such Primary Point of Delivery.
Natural gas to be delivered by Algonquin for the account of
Customer hereunder may also be delivered at the outlet side of
any other measuring station on the Algonquin system, subject to
reduction pursuant to Section 6.4 of Rate Schedule AFT-E.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Algonquin's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Agreement, or any notice which any party may desire to
give to the other, shall be in writing and shall be considered as
duly delivered when mailed by registered, certified, or first
class mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Algonquin: Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, MA 02135
Attn: John J. Mullaney
Vice President, Marketing
(b) Customer: Yankee Gas Services Company
599 Research Parkway
P. O. Box 1030
Meriden, CT 06450-1030
Attn: Thomas J. Houde
Vice President, Rates and Resource
Planning
or such other address as either party shall designate by formal
written notice.
<PAGE>
ARTICLE VII
INTERPRETATION
The interpretation and performance of the Agreement shall be
in accordance with the laws of the Commonwealth of Massachusetts,
excluding conflicts of law principles that would require the
application of the laws of a different jurisdiction.
ARTICLE VIII
AGREEMENTS BEING SUPERSEDED
When this Agreement becomes effective, it shall supersede
the following agreements between the parties hereto.
Service Agreement No. 93013E executed by Customer and
Algonquin under Rate Schedule AFT-E dated June 1, 1993.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective agents thereunto duly
authorized, the day and year first above written.
ALGONQUIN GAS TRANSMISSION COMPANY
By: /s/ John Mullaney (RSH)
--------------------------------
Title: Vice President, Marketing
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Title: Vice President - Rates and
Resource Planning
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-E)
Exhibit A
Point(s) of Receipt
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-E between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Receipt
<TABLE>
<CAPTION>
Primary Maximum Daily Maximum
Point of Receipt Obligation Receipt Pressure
Receipt (MMBtu) (Psig)
- ---------- ------------------ ------------------
<S> <C> <C>
Hanover, NJ (TETCO) At any pressure requested
Nov 16-Apr 15 7,670 by Algonquin but not in
Apr 16-May 31 7,370 excess of 750 Psig.
Jun 1-Sep 30 6,768
Oct 1-Nov 15 7,370
Lambertville, NJ At any pressure requested
Nov 16-Apr 15 12,446 by Algonquin but not in
Apr 16-May 31 11,958 excess of 750 Psig.
Jun 1-Sep 30 10,982
Oct 1-Nov 15 11,958
</TABLE>
Signed for Identification
Algonquin: /s/ John Mullaney
-------------------------
Customer: /s/ David C. Egelson
-------------------------
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-E)
Exhibit B
Point(s) of Delivery
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-E between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Delivery
<TABLE>
<CAPTION>
Primary Maximum Daily Minimum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
- --------- -------------------- -------------------
<S> <C> <C>
On the outlet side
of meter stations
located at:
Waterbury, CT 75
Nov 16 - Apr 15 8,963
Apr 16 - May 31 8,612
Jun 1 - Sep 30 7,909
Oct 1 - Nov 15 8,612
Willimantic, CT 75
Nov 16 - Apr 15 825
Apr 16 - May 31 793
Jun 1 - Sep 30 728
Oct 1 - Nov 15 793
Putnam, CT 50
Nov 16 - Apr 15 629
Apr 16 - May 31 604
Jun 1 - Sep 30 555
Oct 1 - Nov 15 604
Pomfret, CT 250
Nov 16 - Apr 15 1,808
Apr 16 - May 31 1,737
Jun 1 - Sep 30 1,595
Oct 1 - Nov 15 1,737
Plainville
(Southington), CT 50
Nov 16 - Apr 15 1,966
Apr 16 - May 31 1,889
Jun 1 - Sep 30 1,735
Oct 1 - Nov 15 1,889
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Primary Maximum Daily Minimum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
- --------- -------------------- -------------------
<S> <C> <C>
Vernon, CT 100
Nov 16 - Apr 15 6,054
Apr 16 - May 31 5,817
Jun 1 - Sep 30 5,342
Oct 1 - Nov 15 5,817
Thompsonville, CT 198
Nov 16 - Apr 15 2,752
Apr 16 - May 31 2,644
Jun 1 - Sep 30 2,428
Oct 1 - Nov 15 2,644
Kensington, CT 125
Nov 16 - Apr 15 10,850
Apr 16 - May 31 10,425
Jun 1 - Sep 30 9,574
Oct 1 - Nov 15 10,425
Oxford, CT 105
Nov 16 - Apr 15 930
Apr 16 - May 31 894
Jun 1 - Sep 30 821
Oct 1 - Nov 15 894
Waterford, CT 75
Nov 16 - Apr 15 1,306
Apr 16 - May 31 1,255
Jun 1 - Sep 30 1,152
Oct 1 - Nov 15 1,255
Montville, CT 75
Nov 16 - Apr 15 786
Apr 16 - May 31 755
Jun 1 - Sep 30 694
Oct 1 - Nov 15 755
Ledyard, CT 75
Nov 16 - Apr 15 216
Apr 16 - May 31 208
Jun 1 - Sep 30 191
Oct 1 - Nov 15 208
</TABLE>
<PAGE>
Algonquin's Maximum Daily Delivery Obligation for the
Waterbury, Willimantic, Putnam, Pomfret, Plainville, Vernon,
Thompsonville, Kensington and Oxford Points of Delivery under
this Service Agreement and related Service Agreement No. 93009
shall not exceed a combined total of 48,137 MMBtu on any single
day, and for the Waterford and Montville Points of Delivery shall
not exceed a combined total of 3,382 MMBtu on any single day.
Signed for Identification
Algonquin: /s/ John Mullaney (RSH)
-------------------------
Customer: /s/ David C. Egelson
-------------------------
<PAGE>
Exhibit 10.22
9W011E
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-E)
This Agreement ("Agreement") is made and entered into this
1st day of September, 1994, by and between Algonquin Gas
Transmission Company, a Delaware Corporation (herein called
"Algonquin"), and Yankee Gas Services Company (herein called
"Customer" whether one or more persons).
WHEREAS, Algonquin and Customer entered into a Service
Agreement dated May 24, 1993, for service under Rate Schedule
AFT-E; and
WHEREAS, Algonquin and its customers entered into a
settlement agreement in Algonquin's Docket Nos. RP93-14-000, et
al. which provided, among other things, for revised daily and
annual contract entitlements under Rate Schedules AFT-1, AFT-E,
AFT-1S and AFT-ES; and
WHEREAS, the Federal Energy Regulatory Commission issued an
order on July 8, 1994, approving the settlement in Docket Nos.
RP93-14-000, et al; and
WHEREAS, Algonquin and Customer desire to execute a
superseding service agreement under Rate Schedule AFT-E in
accordance with the terms of the settlement as approved by the
Commission's July 8, 1994 order;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties do agree as
follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Subject to the terms, conditions and limitations hereof
and of Algonquin's Rate Schedule AFT-E, Algonquin agrees to
receive from or for the account of Customer for transportation on
a firm basis quantities of natural gas tendered by Customer on
any day at the Point(s) of Receipt; provided, however, Customer
shall not tender without the prior consent of Algonquin, at any
Point of Receipt on any day a quantity of natural gas in excess
of the applicable Maximum Daily Receipt Obligation for such Point
of Receipt plus the applicable Fuel Reimbursement Quantity; and
provided further that Customer shall not tender at all Point(s)
of Receipt on any day or in any year a cumulative quantity of
natural gas, without the prior consent of Algonquin, in excess of
the following quantities of natural gas plus the applicable Fuel
Reimbursement Quantities:
<PAGE>
<TABLE>
<CAPTION>
Maximum Daily Transportation Quantity (MMBtu)
---------------------------------------------
<S> <C>
Nov 16 - Apr 15 15,700*
Apr 16 - May 31 10,467
Jun 1 - Sep 30 0
Oct 1 - Nov 15 10,467
</TABLE>
*MDTQ to be utilized in applying monthly Reservation Charge
Maximum Annual Transportation Quantity 3,333,664 MMBtu
1.2 Algonquin agrees to transport and deliver to or for the
account of Customer at the Point(s) of Delivery and Customer
agrees to accept or cause acceptance of delivery of the quantity
received by Algonquin on any day, less the Fuel Reimbursement
Quantities; provided, however, Algonquin shall not be obligated
to deliver at any Point of Delivery on any day a quantity of
natural gas in excess of the applicable Maximum Daily Delivery
Obligation.
ARTICLE II
TERM OF AGREEMENT
2.1 This Agreement shall become effective as of the date set
forth hereinabove and shall continue in effect for a term ending
on and including October 31, 2012 ("Primary Term") and shall
remain in force from year to year thereafter unless terminated by
either party by written notice one year or more prior to the end
of the Primary Term or any successive term thereafter.
Algonquin's right to cancel this Agreement upon the expiration of
the Primary Term hereof or any succeeding term shall be subject
to Customer's rights pursuant to Sections 8 and 9 of the General
Terms and Conditions.
2.2 This Agreement may be terminated at any time by
Algonquin in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure
continues for thirty days after payment is due; provided
Algonquin gives ten days prior written notice to Customer of such
termination and provided further such termination shall not be
effective if, prior to the date of termination, Customer either
pays such outstanding bill or furnishes a good and sufficient
surety bond guaranteeing payment to Algonquin of such outstanding
bill; provided that Algonquin shall not be entitled to terminate
service pending the resolution of a disputed bill if Customer
complies with the billing dispute procedure currently on file in
Algonquin's tariff.
<PAGE>
ARTICLE III
RATE SCHEDULE
3.1 Customer shall pay Algonquin for all services rendered
hereunder and for the availability of such service under
Algonquin's Rate Schedule AFT-E as filed with the Federal Energy
Regulatory Commission and as the same may be hereafter revised or
changed. The rate to be charged Customer for transportation
hereunder shall not be more than the maximum rate under Rate
Schedule AFT-E, nor less than the minimum rate under Rate
Schedule AFT-E.
3.2 This Agreement and all terms and provisions contained or
incorporated herein are subject to the provisions of Algonquin's
applicable rate schedules and of Algonquin's General Terms and
Conditions on file with the Federal Energy Regulatory Commission,
or other duly constituted authorities having jurisdiction, and as
the same may be legally amended or superseded, which rate
schedules and General Terms and Conditions are by this reference
made a part hereof.
3.3 Customer agrees that Algonquin shall have the unilateral
right to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Algonquin's Rate Schedule AFT-E, (b)
Algonquin's Rate Schedule AFT-E, pursuant to which service
hereunder is rendered or (c) any provision of the General Terms
and Conditions applicable to Rate Schedule AFT-E. Algonquin
agrees that Customer may protest or contest the aforementioned
filings, or may seek authorization from duly constituted
regulatory authorities for such adjustment of Algonquin's
existing FERC Gas Tariff as may be found necessary to assure that
the provisions in (a), (b), or (c) above are just and reasonable.
ARTICLE IV
POINT(S) OF RECEIPT
Natural gas to be received by Algonquin for the account of
Customer hereunder shall be received at the outlet side of the
measuring station(s) at or near the Primary Point(s) of Receipt
set forth in Exhibit A of the service agreement, with the Maximum
Daily Receipt Obligation and the receipt pressure obligation
indicated for each such Primary Point of Receipt. Natural gas to
be received by Algonquin for the account of Customer hereunder
may also be received at the outlet side of any other measuring
station on the Algonquin system, subject to reduction pursuant to
Section 6.2 of Rate Schedule AFT-E.
<PAGE>
ARTICLE V
POINT(S) OF DELIVERY
Natural gas to be delivered by Algonquin for the account of
Customer hereunder shall be delivered on the outlet side of the
measuring station(s) at or near the Primary Point(s) of Delivery
set forth in Exhibit B of the service agreement, with the Maximum
Daily Delivery Obligation and the delivery pressure obligation
indicated for each such Primary Point of Delivery. Natural gas
to be delivered by Algonquin for the account of Customer
hereunder may also be delivered at the outlet side of any other
measuring station on the Algonquin system, subject to reduction
pursuant to Section 6.4 of Rate Schedule AFT-E.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Algonquin's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Agreement, or any notice which any party may desire to
give to the other, shall be in writing and shall be considered as
duly delivered when mailed by registered, certified, or first
class mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Algonquin: Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, MA 02135
Attn: John J. Mullaney
Vice President, Marketing
(b) Customer: Yankee Gas Services Company
599 Research Parkway
P. O. Box 1030
Meriden, CT 06450-1030
Attn: Thomas J. Houde
Vice President, Rates and Resource
Planning
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
INTERPRETATION
The interpretation and performance of the Agreement shall be
in accordance with the laws of the Commonwealth of Massachusetts,
excluding conflicts of law principles that would require the
application of the laws of a different jurisdiction.
<PAGE>
ARTICLE VIII
AGREEMENTS BEING SUPERSEDED
When this Agreement becomes effective, it shall supersede
the following agreements between the parties hereto.
Service Agreement No. 9W011E executed by Customer and
Algonquin under Rate Schedule AFT-E dated May 24, 1993.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective agents thereunto duly
authorized, the day and year first above written.
ALGONQUIN GAS TRANSMISSION COMPANY
By: /s/ John Mullaney (RSH)
--------------------------------
Title: Vice President, Marketing
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Title: Vice President - Rates and
Resource Planning
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-E)
Exhibit A
Point(s) of Receipt
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-E between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Receipt
<TABLE>
<CAPTION>
Primary Maximum Daily Maximum
Point of Receipt Obligation Receipt Pressure
Receipt (MMBtu) (Psig)
- ---------- ------------------ -----------------
<S> <C> <C>
Hanover, NJ (TETCO) At any pressure requested
Nov 16-Apr 15 9,730 by Algonquin but not in
Apr 16-May 31 6,487 excess of 750 Psig.
Jun 1-Sep 30 0
Oct 1-Nov 15 6,487
Lambertville, NJ At any pressure requested
Nov 16-Apr 15 5,970 by Algonquin but not in
Apr 16-May 31 3,980 excess of 750 Psig.
Jun 1-Sep 30 0
Oct 1-Nov 15 3,980
</TABLE>
Signed for Identification
Algonquin: /s/ John Mullaney (RSH)
-------------------------
Customer: /s/ David C. Egelson
--------------------------
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-E)
Exhibit B
Point(s) of Delivery
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-E between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Delivery
<TABLE>
<CAPTION>
Primary Maximum Daily Minimum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
- ---------- -------------------- --------------------
<S> <C> <C>
On the outlet side
of meter stations
located at:
Waterbury, CT 75
Nov 16 - Apr 15 14,211
Apr 16 - May 31 9,474
Jun 1 - Sep 30 0
Oct 1 - Nov 15 9,474
Waterford, CT 75
Nov 16 - Apr 15 1,369
Apr 16 - May 31 913
Jun 1 - Sep 30 0
Oct 1 - Nov 15 913
Stonington, CT 75
Nov 16 - Apr 15 120
Apr 16 - May 31 80
Jun 1 - Sep 30 0
Oct 1 - Nov 15 80
</TABLE>
Signed for Identification
Algonquin: /s/ John Mullaney (RSH)
-------------------------
Customer: /s/ David C. Egelson
--------------------------
<PAGE>
Exhibit 10.25
9B106
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
This Agreement ("Agreement") is made and entered into this
1st day of September, 1994, by and between Algonquin Gas
Transmission Company, a Delaware Corporation (herein called
"Algonquin"), and Yankee Gas Services Company (herein called
"Customer" whether one or more persons).
WHEREAS, Algonquin and Customer entered into a Service
Agreement dated May 24, 1993, for service under Rate Schedule
AFT-1; and
WHEREAS, Algonquin and its customers entered into a
settlement agreement in Algonquin's Docket Nos. RP93-14-000, et
al. which provided, among other things, for revised daily and
annual contract entitlements under Rate Schedules AFT-1, AFT-E,
AFT-1S and AFT-ES; and
WHEREAS, the Federal Energy Regulatory Commission issued an
order on July 8, 1994, approving the settlement in Docket Nos.
RP93-14-000, et al; and
WHEREAS, Algonquin and Customer desire to execute a
superseding service agreement under Rate Schedule AFT-1 in
accordance with the terms of the settlement as approved by the
Commission's July 8, 1994 order;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties do agree as
follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Subject to the terms, conditions and limitations hereof
and of Algonquin's Rate Schedule AFT-1, Algonquin agrees to
receive from or for the account of Customer for transportation on
a firm basis quantities of natural gas tendered by Customer on
any day at the Point(s) of Receipt; provided, however, Customer
shall not tender without the prior consent of Algonquin, at any
Point of Receipt on any day a quantity of natural gas in excess
of the applicable Maximum Daily Receipt Obligation for such Point
of Receipt plus the applicable Fuel Reimbursement Quantity; and
provided further that Customer shall not tender at all Point(s)
of Receipt on any day or in any year a cumulative quantity of
natural gas, without the prior consent of Algonquin, in excess of
the following quantities of natural gas plus the applicable Fuel
Reimbursement Quantities:
<PAGE>
<TABLE>
<CAPTION>
Maximum Daily Transportation Quantity (MMBtu)
<S> <C>
Nov 16 - Apr 15 3,016*
Apr 16 - May 31 2,011
Jun 1 - Sep 30 0
Oct 1 - Nov 15 2,011
</TABLE>
*MDTQ to be utilized in applying monthly Reservation Charge
Maximum Annual Transportation Quantity 640,428 MMBtu
1.2 Algonquin agrees to transport and deliver to or for the
account of Customer at the Point(s) of Delivery and Customer
agrees to accept or cause acceptance of delivery of the quantity
received by Algonquin on any day, less the Fuel Reimbursement
Quantities; provided, however, Algonquin shall not be obligated
to deliver at any Point of Delivery on any day a quantity of
natural gas in excess of the applicable Maximum Daily Delivery
Obligation.
ARTICLE II
TERM OF AGREEMENT
2.1 This Agreement shall become effective as of the date
set forth hereinabove and shall continue in effect for a term
ending on and including October 31, 2012 ("Primary Term") and
shall remain in force from year to year thereafter unless
terminated by either party by written notice one year or more
prior to the end of the Primary Term or any successive term
thereafter. Algonquin's right to cancel this Agreement upon the
expiration of the Primary Term hereof or any succeeding term
shall be subject to Customer's rights pursuant to Sections 8 and
9 of the General Terms and Conditions.
2.2 This Agreement may be terminated at any time by
Algonquin in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure
continues for thirty days after payment is due; provided
Algonquin gives ten days prior written notice to Customer of such
termination and provided further such termination shall not be
effective if, prior to the date of termination, Customer either
pays such outstanding bill or furnishes a good and sufficient
surety bond guaranteeing payment to Algonquin of such outstanding
bill; provided that Algonquin shall not be entitled to terminate
service pending the resolution of a disputed bill if Customer
complies with the billing dispute procedure currently on file in
Algonquin's tariff.
<PAGE>
ARTICLE III
RATE SCHEDULE
3.1 Customer shall pay Algonquin for all services rendered
hereunder and for the availability of such service under
Algonquin's Rate Schedule AFT-1 as filed with the Federal Energy
Regulatory Commission and as the same may be hereafter revised or
changed. The rate to be charged Customer for transportation
hereunder shall not be more than the maximum rate under Rate
Schedule AFT-1, nor less than the minimum rate under Rate
Schedule AFT-1.
3.2 This Agreement and all terms and provisions contained
or incorporated herein are subject to the provisions of
Algonquin's applicable rate schedules and of Algonquin's General
Terms and Conditions on file with the Federal Energy Regulatory
Commission, or other duly constituted authorities having
jurisdiction, and as the same may be legally amended or
superseded, which rate schedules and General Terms and Conditions
are by this reference made a part hereof.
3.3 Customer agrees that Algonquin shall have the
unilateral right to file with the appropriate regulatory
authority and make changes effective in (a) the rates and charges
applicable to service pursuant to Algonquin's Rate Schedule
AFT-1, (b) Algonquin's Rate Schedule AFT-1, pursuant to which
service hereunder is rendered or (c) any provision of the General
Terms and Conditions applicable to Rate Schedule AFT-1.
Algonquin agrees that Customer may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Algonquin's existing FERC Gas Tariff as may be found necessary to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE IV
POINT(S) OF RECEIPT
Natural gas to be received by Algonquin for the account of
Customer hereunder shall be received at the outlet side of the
measuring station(s) at or near the Primary Point(s) of Receipt
set forth in Exhibit A of the service agreement, with the Maximum
Daily Receipt Obligation and the receipt pressure obligation
indicated for each such Primary Point of Receipt. Natural gas to
be received by Algonquin for the account of Customer hereunder
may also be received at the outlet side of any other measuring
station on the Algonquin system, subject to reduction pursuant to
Section 6.2 of Rate Schedule AFT-1.
<PAGE>
ARTICLE V
POINT(S) OF DELIVERY
Natural gas to be delivered by Algonquin for the account of
Customer hereunder shall be delivered on the outlet side of the
measuring station(s) at or near the Primary Point(s) of Delivery
set forth in Exhibit B of the service agreement, with the Maximum
Daily Delivery Obligation and the delivery pressure obligation
indicated for each such Primary Point of Delivery. Natural gas
to be delivered by Algonquin for the account of Customer
hereunder may also be delivered at the outlet side of any other
measuring station on the Algonquin system, subject to reduction
pursuant to Section 6.4 of Rate Schedule AFT-1.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Algonquin's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Agreement, or any notice which any party may desire to
give to the other, shall be in writing and shall be considered as
duly delivered when mailed by registered, certified, or first
class mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Algonquin: Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, MA 02135
Attn: John J. Mullaney
Vice President, Marketing
(b) Customer: Yankee Gas Services Company
599 Research Parkway
P. O. Box 1030
Meriden, CT 06450-1030
Attn: Thomas J. Houde
Vice President, Rates and Resource
Planning
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
INTERPRETATION
The interpretation and performance of the Agreement shall be
in accordance with the laws of the Commonwealth of Massachusetts,
excluding conflicts of law principles that would require the
application of the laws of a different jurisdiction.
<PAGE>
ARTICLE VIII
AGREEMENTS BEING SUPERSEDED
When this Agreement becomes effective, it shall supersede
the following agreements between the parties hereto, except that
in the case of conversions from former Rate Schedules F-2 and F-
3, the parties' obligations under Article II of the service
agreements pertaining to such rate schedules shall continue in
effect.
Service Agreement No. 9B106 executed by Customer and
Algonquin under Rate Schedule AFT-1 dated May 24, 1993.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective agents thereunto duly
authorized, the day and year first above written.
ALGONQUIN GAS TRANSMISSION COMPANY
By: /s/ John Mullaney
--------------------------------
Title: Vice President, Marketing
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Title: Vice President - Rates and
Resource Planning
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
Exhibit A
Point(s) of Receipt
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-1 between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Receipt
<TABLE>
<CAPTION>
Primary Maximum Daily Maximum
Point of Receipt Obligation Receipt Pressure
Receipt (MMBtu) (Psig)
- ---------- ------------------- -----------------
<S> <C> <C>
Lambertville, NJ At any pressure requested
Nov 16-Apr 15 3,016 by Algonquin but not in
Apr 16-May 31 2,011 excess of 750 Psig.
Jun 1-Sep 30 0
Oct 1-Nov 15 2,011
</TABLE>
Signed for Identification
Algonquin: /s/ John Mullaney
-------------------------
Customer: /s/ David C. Egelson
-------------------------
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
Exhibit B
Point(s) of Delivery
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-1 between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Delivery
<TABLE>
<CAPTION>
Primary Maximum Daily Minimum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
- ---------- -------------------- ------------------
<S> <C> <C>
On the outlet side
of meter stations
located at:
Willimantic, CT 75
Nov 16 - Apr 15 1,005
Apr 16 - May 31 670
Jun 1 - Sep 30 0
Oct 1 - Nov 15 670
Pomfret, CT 250
Nov 16 - Apr 15 1,005
Apr 16 - May 31 670
Jun 1 - Sep 30 0
Oct 1 - Nov 15 670
Waterford, CT 75
Nov 16 - Apr 15 1,006
Apr 16 - May 31 671
Jun 1 - Sep 30 0
Oct 1 - Nov 15 671
Signed for Identification
Algonquin: /s/ John Mullaney
-------------------------
Customer: /s/ David C. Egelson
-------------------------
</TABLE>
<PAGE>
Exhibit 10.26
9S103
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
This Agreement ("Agreement") is made and entered into this
1st day of September, 1994, by and between Algonquin Gas
Transmission Company, a Delaware Corporation (herein called
"Algonquin"), and Yankee Gas Services Company (herein called
"Customer" whether one or more persons).
WHEREAS, Algonquin and Customer entered into a Service
Agreement dated May 24, 1993, for service under Rate Schedule
AFT-1; and
WHEREAS, Algonquin and its customers entered into a
settlement agreement in Algonquin's Docket Nos. RP93-14-000, et
al. which provided, among other things, for revised daily and
annual contract entitlements under Rate Schedules AFT-1, AFT-E,
AFT-1S and AFT-ES; and
WHEREAS, the Federal Energy Regulatory Commission issued an
order on July 8, 1994, approving the settlement in Docket Nos.
RP93-14-000, et al; and
WHEREAS, Algonquin and Customer desire to execute a
superseding service agreement under Rate Schedule AFT-1 in
accordance with the terms of the settlement as approved by the
Commission's July 8, 1994 order;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties do agree as
follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Subject to the terms, conditions and limitations hereof
and of Algonquin's Rate Schedule AFT-1, Algonquin agrees to
receive from or for the account of Customer for transportation on
a firm basis quantities of natural gas tendered by Customer on
any day at the Point(s) of Receipt; provided, however, Customer
shall not tender without the prior consent of Algonquin, at any
Point of Receipt on any day a quantity of natural gas in excess
of the applicable Maximum Daily Receipt Obligation for such Point
of Receipt plus the applicable Fuel Reimbursement Quantity; and
provided further that Customer shall not tender at all Point(s)
of Receipt on any day or in any year a cumulative quantity of
natural gas, without the prior consent of Algonquin, in excess of
the following quantities of natural gas plus the applicable Fuel
Reimbursement Quantities:
<PAGE>
<TABLE>
<CAPTION>
Maximum Daily Transportation Quantity (MMBtu)
<S> <C>
Nov 16 - Apr 15 39*
Apr 16 - May 31 26
Jun 1 - Sep 30 0
Oct 1 - Nov 15 26
</TABLE>
*MDTQ to be utilized in applying monthly Reservation Charge
Maximum Annual Transportation Quantity 8,281 MMBtu
1.2 Algonquin agrees to transport and deliver to or for the
account of Customer at the Point(s) of Delivery and Customer
agrees to accept or cause acceptance of delivery of the quantity
received by Algonquin on any day, less the Fuel Reimbursement
Quantities; provided, however, Algonquin shall not be obligated
to deliver at any Point of Delivery on any day a quantity of
natural gas in excess of the applicable Maximum Daily Delivery
Obligation.
ARTICLE II
TERM OF AGREEMENT
2.1 This Agreement shall become effective as of the date
set forth hereinabove and shall continue in effect for a term
ending on and including October 31, 2012 ("Primary Term") and
shall remain in force from year to year thereafter unless
terminated by either party by written notice one year or more
prior to the end of the Primary Term or any successive term
thereafter. Algonquin's right to cancel this Agreement upon the
expiration of the Primary Term hereof or any succeeding term
shall be subject to Customer's rights pursuant to Sections 8 and
9 of the General Terms and Conditions.
2.2 This Agreement may be terminated at any time by
Algonquin in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure
continues for thirty days after payment is due; provided
Algonquin gives ten days prior written notice to Customer of such
termination and provided further such termination shall not be
effective if, prior to the date of termination, Customer either
pays such outstanding bill or furnishes a good and sufficient
surety bond guaranteeing payment to Algonquin of such outstanding
bill; provided that Algonquin shall not be entitled to terminate
service pending the resolution of a disputed bill if Customer
complies with the billing dispute procedure currently on file in
Algonquin's tariff.
<PAGE>
ARTICLE III
RATE SCHEDULE
3.1 Customer shall pay Algonquin for all services rendered
hereunder and for the availability of such service under
Algonquin's Rate Schedule AFT-1 as filed with the Federal Energy
Regulatory Commission and as the same may be hereafter revised or
changed. The rate to be charged Customer for transportation
hereunder shall not be more than the maximum rate under Rate
Schedule AFT-1, nor less than the minimum rate under Rate
Schedule AFT-1.
3.2 This Agreement and all terms and provisions contained or
incorporated herein are subject to the provisions of Algonquin's
applicable rate schedules and of Algonquin's General Terms and
Conditions on file with the Federal Energy Regulatory Commission,
or other duly constituted authorities having jurisdiction, and as
the same may be legally amended or superseded, which rate
schedules and General Terms and Conditions are by this reference
made a part hereof.
3.3 Customer agrees that Algonquin shall have the
unilateral right to file with the appropriate regulatory
authority and make changes effective in (a) the rates and charges
applicable to service pursuant to Algonquin's Rate Schedule
AFT-1, (b) Algonquin's Rate Schedule AFT-1, pursuant to which
service hereunder is rendered or (c) any provision of the General
Terms and Conditions applicable to Rate Schedule AFT-1.
Algonquin agrees that Customer may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Algonquin's existing FERC Gas Tariff as may be found necessary to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE IV
POINT(S) OF RECEIPT
Natural gas to be received by Algonquin for the account of
Customer hereunder shall be received at the outlet side of the
measuring station(s) at or near the Primary Point(s) of Receipt
set forth in Exhibit A of the service agreement, with the Maximum
Daily Receipt Obligation and the receipt pressure obligation
indicated for each such Primary Point of Receipt. Natural gas to
be received by Algonquin for the account of Customer hereunder
may also be received at the outlet side of any other measuring
station on the Algonquin system, subject to reduction pursuant to
Section 6.2 of Rate Schedule AFT-1.
<PAGE>
ARTICLE V
POINT(S) OF DELIVERY
Natural gas to be delivered by Algonquin for the account of
Customer hereunder shall be delivered on the outlet side of the
measuring station(s) at or near the Primary Point(s) of Delivery
set forth in Exhibit B of the service agreement, with the Maximum
Daily Delivery Obligation and the delivery pressure obligation
indicated for each such Primary Point of Delivery. Natural gas
to be delivered by Algonquin for the account of Customer
hereunder may also be delivered at the outlet side of any other
measuring station on the Algonquin system, subject to reduction
pursuant to Section 6.4 of Rate Schedule AFT-1.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Algonquin's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Agreement, or any notice which any party may desire to
give to the other, shall be in writing and shall be considered as
duly delivered when mailed by registered, certified, or first
class mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Algonquin: Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, MA 02135
Attn: John J. Mullaney
Vice President, Marketing
(b) Customer: Yankee Gas Services Company
599 Research Parkway
P. O. Box 1030
Meriden, CT 06450-1030
Attn: Thomas J. Houde
Vice President, Rates and Resource
Planning
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
INTERPRETATION
The interpretation and performance of the Agreement shall be
in accordance with the laws of the Commonwealth of Massachusetts,
excluding conflicts of law principles that would require the
application of the laws of a different jurisdiction.
<PAGE>
ARTICLE VIII
AGREEMENTS BEING SUPERSEDED
When this Agreement becomes effective, it shall supersede
the following agreements between the parties hereto, except that
in the case of conversions from former Rate Schedules F-2 and F-
3, the parties' obligations under Article II of the service
agreements pertaining to such rate schedules shall continue in
effect.
Service Agreement No. 9S103 executed by Customer and
Algonquin under Rate Schedule AFT-1 dated May 24, 1993.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective agents thereunto duly
authorized, the day and year first above written.
ALGONQUIN GAS TRANSMISSION COMPANY
By: /s/ John Mullaney
--------------------------------
Title: Vice President, Marketing
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
---------------------------------
Title: Vice President - Rates and
Resource Planning
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
Exhibit A
Point(s) of Receipt
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-1 between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Receipt
<TABLE>
<CAPTION>
Primary Maximum Daily Maximum
Point of Receipt Obligation Receipt Pressure
Receipt (MMBtu) (Psig)
- ---------- ------------------- -----------------
<S> <C> <C>
Lambertville, NJ At any pressure requested
Nov 16 - Apr 15 39 by Algonquin but not in
Apr 16 - May 31 26 excess of 750 Psig.
Jun 1 - Sep 30 0
Oct 1 - Nov 15 26
</TABLE>
Signed for Identification
Algonquin: /s/ John Mullaney (RSH)
-------------------------
Customer: /s/ David C. Egelson
--------------------------
<PAGE>
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AFT-1)
Exhibit B
Point(s) of Delivery
Dated: September 1, 1994
To the service agreement under Rate Schedule AFT-1 between
Algonquin Gas Transmission Company (Algonquin) and Yankee Gas
Services Company (Customer) concerning Point(s) of Delivery
<PAGE>
<TABLE>
<CAPTION>
Primary Maximum Daily Minimum
Point of Delivery Obligation Delivery Pressure
Delivery (MMBtu) (Psig)
- ---------- -------------------- ------------------
<S> <C> <C>
On the outlet side
of a meter station
located at:
Stonington, CT 75
Nov 16 - Apr 15 39
Apr 16 - May 31 26
Jun 1 - Sep 30 0
Oct 1 - Nov 15 26
</TABLE>
Signed for Identification
Algonquin: /s/ John Mullaney (RSH)
-------------------------
Customer: /s/ David C. Egelson
--------------------------
<PAGE>
Exhibit 10.31
AGT-0002.LG
SERVICE AGREEMENT
(APPLICABLE TO RATE SCHEDULE AIT-1)
This Agreement ("Agreement") is made and entered into this
27th day of December, 1993, by and between Algonquin Gas
Transmission Company, a Delaware Corporation (herein called
"Algonquin"), and Yankee Gas Services Company (herein called
"Customer" whether one or more persons).
W I T N E S S E T H :
WHEREAS, under the superseded Rate Schedule T-LG, Algonquin
transported gas received by displacement from Providence Gas
Company ("Providence Gas"), which delivery by Providence Gas was
accomplished by physical deliveries to Providence Gas from the
storage facilities of Algonquin LNG, Inc. in Providence, Rhode
Island; and
WHEREAS, as a result of restructuring under Order No. 636,
Rate Schedule T-LG has been superseded and replaced by service
under Rate Schedule AIT-1 with the quantities being treated as
"old interruptible service" for purposes of scheduling of service
under Section 23 of the General Terms and Conditions;
NOW, THEREFORE, in consideration of the premises and mutual
agreements, herein contained, Algonquin and Customer do agree as
follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Subject to the terms, conditions and limitations hereof
and of Algonquin's Rate Schedule AIT-1, Algonquin agrees to
receive from or for the account of Customer for transportation on
an interruptible basis quantities of natural gas tendered by
Customer on any date at the Point(s) of Receipt; provided,
however, Customer shall not tender without the prior consent of
Algonquin, at any Point of Receipt on any day a quantity of
natural gas in excess of the applicable Maximum Daily Receipt
Obligation for such Point of Receipt plus the applicable Fuel
Reimbursement Quantity; and provided further that Customer shall
not tender at all Point(s) of Receipt on any day or in any year a
cumulative quantity of natural gas, in excess of the following
quantities of natural gas plus the applicable Fuel Reimbursement
Quantities:
The Maximum Daily Transportation Quantity which, on any day,
shall be equal to (i) the sum of the Maximum Daily Transportation
Quantities for service under Customer's existing service
agreements under firm rate schedules in Algonquin's FERC Gas
Tariff minus (ii) the total quantity of gas actually scheduled
<PAGE>
for delivery to Customer under such rate schedules and the Backup
Portion of Storage Demand under former Rate Schedules STB and SS-
III on that day, as applicable. Customer's Maximum Daily Receipt
Obligation shall equal Customer's Maximum Daily Transportation
Quantity for each day; provided, however, that only quantities
received by displacement from Providence Gas at the Providence
Point of Receipt shall be treated as "old interruptible service"
under Section 23.1 of the General Terms and Conditions; and
The Maximum Annual Transportation Quantity, which is equal
to the yearly aggregate of Customer's Maximum Daily
Transportation Quantity.
1.2 Algonquin agrees to transport and deliver to or for the
account of Customer at the Point(s) of Delivery and Customer
agrees to accept or cause acceptance of delivery of the quantity
received by Algonquin on any day, less the Fuel Reimbursement
Quantity; provided, however, Algonquin shall not be obligated to
deliver at any Point of Delivery on any day a quantity of natural
gas in excess of the applicable Maximum Daily Delivery Obligation
("MDDO"). Customer's MDDO for each such Point of Delivery on any
day shall be equal to (i) the sum of the MDDOs set forth in
Customer's existing service agreements under firm rate schedules
in Algonquin's FERC Gas Tariff minus (ii) the total quantity of
gas actually scheduled for delivery to Customer at each such
Point of Delivery under such rate schedules and the Backup
Portion of Storage Demand under former Rate Schedules STB and SS-
III, as applicable, on that day.
ARTICLE II
TERM OF AGREEMENT
2.1 This Agreement shall become effective as of the date
set forth hereinabove and shall continue in effect for a term
ending May 31, 1994 ("Primary Term") and shall remain in force
from month to month thereafter unless terminated by either party
by written notice one year or more prior to the end of the
Primary Term or any successive term thereafter.
2.2 This Agreement may be terminated at any time by
Algonquin in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure
continues for thirty days after payment is due; provided
Algonquin gives ten days prior written notice to Customer of such
termination and provided further such termination shall not be
effective if, prior to the date of termination, Customer either
pays such outstanding bill or furnishes a good and sufficient
surety bond guaranteeing payment to Algonquin of such outstanding
bill; provided that Algonquin shall not be entitled to terminate
service pending the resolution of a disputed bill if Customer
complies with the billing dispute procedure currently on file in
Algonquin's tariff.
<PAGE>
ARTICLE III
RATE SCHEDULE
3.1 Customer shall pay Algonquin for all services rendered
hereunder and for the availability of such service under
Algonquin's Rate Schedule AIT-1 as filed with the Federal Energy
Regulatory Commission and as the same may be hereafter revised or
changed. The rate to be charged Customer for transportation
hereunder shall not be more than the maximum rate under Rate
Schedule AIT-1, nor less than the minimum rate under Rate
Schedule AIT-1.
3.2 This Agreement and all terms and provisions contained
or incorporated herein are subject to the provisions of
Algonquin's applicable rate schedules and of Algonquin's General
Terms and Conditions on file with the Federal Energy Regulatory
Commission, or other duly constituted authorities having
jurisdiction, and as the same may be legally amended or
superseded, which rate schedules and General Terms and Conditions
are by this reference made a part hereof.
3.3 Customer agrees that Algonquin shall have the
unilateral right to file with the appropriate regulatory
authority and make changes effective in (a) the rates and charges
applicable to service pursuant to Algonquin's Rate Schedule
AIT-1, (b) Algonquin's Rate Schedule AIT-1, pursuant to which
service hereunder is rendered or (c) any provision of the General
Terms and Conditions applicable to Rate Schedule AIT-1.
Algonquin agrees that Customer may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Algonquin's existing FERC Gas Tariff as may be found necessary to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE IV
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Algonquin's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Agreement, or any notice which any party may desire to
give to the other, shall be in writing and shall be considered as
duly delivered when mailed by registered, certified, or first
class mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Algonquin: Algonquin Gas Transmission Company
1284 Soldiers Field Road
Boston, MA 02135
Attn: John J. Mullaney
Vice President, Marketing
(b) Customer: Yankee Gas Services Company
599 Research Parkway
P. O. Box 1030
Meriden, CT 06450-1030
Attn: Thomas J. Houde
Vice President, Rates and Resource
Planning
<PAGE>
or such other address as either party shall designate by formal
written notice.
ARTICLE V
INTERPRETATION
The interpretation and performance of the Agreement shall be
in accordance with the laws of the Commonwealth of Massachusetts,
excluding conflicts of law principles that would require the
application of the laws of a different jurisdiction.
ARTICLE VI
AGREEMENTS BEING SUPERSEDED
When this Agreement becomes effective, it shall supersede
the following agreements between the parties hereto.
Service Agreement executed by The Connecticut Light and
Power Company and Algonquin under Rate Schedule T-LG dated
November 1, 1984.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective agents thereunto duly
authorized, the day and year first above written.
ALGONQUIN GAS TRANSMISSION COMPANY
By: /s/ John Mullaney (RSH)
--------------------------------
Title: Vice President, Marketing
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Title: Vice President - Rates and
Resource Planning
<PAGE>
Exhibit 10.44
Contract # 800375
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
This Service Agreement, made and entered into this 1st day
of March, 1994, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and YANKEE GAS SERVICES COMPANY, (herein called "Customer",
whether one or more),
W I T N E S S E T H:
WHEREAS, Pipeline and Customer entered into a precedent
agreement dated September 6, 1991 ("Precedent Agreement"), under
which Pipeline agreed to request the necessary authorizations
from the Federal Energy Regulatory Commission ("Commission") to
construct facilities and render a firm transportation service
("ITP Service") for Customer under an incremental Pipeline rate
schedule; and
WHEREAS, the Commission issued an order on July 16, 1993,
which granted Pipeline permanent certificate authorization to
construct the necessary pipeline facilities to render the ITP
Service, but required Pipeline to render the ITP Service under
Pipeline's blanket transportation certificate issued under Part
284 of the Commission's regulations; and
WHEREAS, Pipeline and Customer desire to proceed with the
ITP Project and the ITP Service in accordance with the
Commission's July 16, 1993 order;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of
Pipeline's Rate Schedule FT-1, and of the General Terms and
Conditions, transportation service hereunder will be firm.
Subject to the terms, conditions and limitations hereof and of
Pipeline's Rate Schedule FT-1, Pipeline agrees to deliver for
Customer's account quantities of natural gas up to the following
quantity:
Commencing on the later of November 1, 1994, or the first day
following notification of Customer by Pipeline that Pipeline has
completed and placed into service all necessary facilities
authorized in Docket No. CP92-184, et al.:
Maximum Daily Quantity (MDQ) 15,000 dth
<PAGE>
Pipeline shall receive for Customer's account, at those
points on Pipeline's system as specified in Article IV herein or
available to Customer pursuant to Section 14 of the General Terms
and Conditions (hereinafter referred to as Point(s) of Receipt)
for transportation hereunder daily quantities of gas up to
Customer's MDQ, plus Applicable Shrinkage. Pipeline shall
transport and deliver for Customer's account, at those points on
Pipeline's system as specified in Article IV herein or available
to Customer pursuant to Section 14 of the General Terms and
Conditions (hereinafter referred to as Point(s) of Delivery),
such daily quantities tendered up to such Customer's MDQ.
Pipeline shall not be obligated to, but may at its
discretion, receive at any Point of Receipt on any day a quantity
of gas in excess of the applicable Maximum Daily Receipt
Obligation (MDRO), plus Applicable Shrinkage, but shall not
receive in the aggregate at all Points of Receipt on any day a
quantity of gas in excess of the applicable MDQ, plus Applicable
Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a
quantity of gas in excess of the applicable Maximum Daily
Delivery Obligation (MDDO), but shall not deliver in the
aggregate at all Points of Delivery on any day a quantity of gas
in excess of the applicable MDQ.
In addition to the MDQ and subject to the terms, conditions
and limitations hereof, Rate Schedule FT-1 and the General Terms
and Conditions, Pipeline shall deliver within the Access Area
under this and all other service agreements under Rate Schedules
CDS, FT-1, and/or SCT, quantities up to Customer's Operational
Segment Capacity Entitlements, excluding those Operational
Segment Capacity Entitlements scheduled to meet Customer's MDQ,
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on the
later of November 1, 1994, or on the first day after Pipeline
notifies Customer that the necessary facilities authorized in
Docket No. CP92-184, et al., have been completed and placed in
service, and shall continue in force and effect until October 31,
2014, and year to year thereafter unless this Service Agreement
is terminated as hereinafter provided. This Service Agreement
may be terminated by either Pipeline or Customer upon two (2)
years prior written notice to the other specifying a termination
date of any year occurring on or after the expiration of the
primary term. Subject to Section 22 of Pipeline's General Terms
and Conditions and without prejudice to such rights, this Service
Agreement may be terminated at any time by Pipeline in the event
Customer fails to pay part or all of the amount of any bill for
service hereunder and such failure continues for thirty (30) days
<PAGE>
after payment is due; provided, Pipeline gives thirty (30) days
prior written notice to Customer of such termination and provided
further such termination shall not be effective if, prior to the
date of termination, Customer either pays such outstanding bill
or furnishes a good and sufficient surety bond guaranteeing
payment to Pipeline of such outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED
CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY
CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE
NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION.
PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS
CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE
TERMINATION.
Any portions of this Service Agreement necessary to correct
or cash-out imbalances under this Service Agreement as required
by the General Terms and Conditions of Pipeline's FERC Gas
Tariff, Volume No. 1, shall survive the other parts of this
Service Agreement until such time as such balancing has been
accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule FT-1 and of
the General Terms and Conditions of Pipeline's FERC Gas Tariff on
file with the Federal Energy Regulatory Commission, all of which
are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule FT-1 as filed with the Federal Energy Regulatory
Commission, and as same may hereafter be legally amended or
superseded.
Customer agrees that Pipeline shall have the unilateral
right to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Pipeline's Rate Schedule FT-1, (b) Pipeline's
Rate Schedule FT-1 pursuant to which service hereunder is
rendered or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule FT-1. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have the unilateral
right without the consent of Customer subsequent to the execution
of this Service Agreement and Pipeline shall not have the right
during the effectiveness of this Service Agreement to make any
filings pursuant to Section 4 of the Natural Gas Act to change
the MDQ specified in Article I, to change the term of the
<PAGE>
agreement as specified in Article II, to change Point(s) of
Receipt specified in Article IV, to change the Point(s) of
Delivery specified in Article IV, or to change the firm character
of the service hereunder. Pipeline agrees that Customer may
protest or contest the aforementioned filings, and Customer does
not waive any rights it may have with respect to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which
Pipeline shall receive and deliver gas, respectively, shall be
specified in Exhibit(s) A and B of the executed service
agreement. Customer's Zone Boundary Entry Quantity and Zone
Boundary Exit Quantity for each of Pipeline's zones shall be
specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C are hereby incorporated as part of
this Service Agreement for all intents and purposes as if fully
copied and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform to the quality specifications set forth in Section
5 of Pipeline's General Terms and Conditions. Customer agrees
that in the event Customer tenders for service hereunder and
Pipeline agrees to accept natural gas which does not comply with
Pipeline's quality specifications, as expressly provided for in
Section 5 of Pipeline's General Terms and Conditions, Customer
shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications. Customer
shall execute or cause its supplier to execute, if such supplier
has retained processing rights to the gas delivered to Customer,
the appropriate agreements prior to the commencement of service
for the transportation and processing of any liquefiable
hydrocarbons and any PVR quantities associated with the
processing of gas received by Pipeline at the Point(s) of Receipt
under such Customer's service agreement. In addition, subject to
the execution of appropriate agreements, Pipeline is willing to
transport liquids associated with the gas produced and tendered
for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
<PAGE>
considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties
hereto, as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: YANKEE GAS SERVICES COMPANY
599 Research Parkway
P. O. Box 1030
Meriden, CT 06450-1030
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other. In addition, Customer may assign its
rights to capacity pursuant to Section 3.14 of the General Terms
and Conditions. To the extent Customer so desires, when it
releases capacity pursuant to Section 3.14 of the General Terms
and Conditions, Customer may require privity between Customer and
the Replacement Customer, as further provided in the applicable
Capacity Release Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.
<PAGE>
This Service Agreement and the obligations of the parties
are subject to all present and future valid laws with respect to
the subject matter, State and Federal, and to all valid present
and future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
N/A
IN WITNESS WHEREOF, the parties hereto have caused this
Service Agreement to be signed by their respective Presidents,
Vice Presidents or other duly authorized agents and their respec-
tive corporate seals to be hereto affixed and attested by their
respective Secretaries or Assistant Secretaries, the day and year
first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By: /s/Diane T. Tom
--------------------------------
Vice President
ATTEST:
/s/ Robert W. Reed
- -------------------
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
---------------------------
Thomas J. Houde
Vice President - Rates and
Resource Planning
ATTEST:
/s/ Mary J. Healey
- -------------------
Secretary
<PAGE>
Contract # 800375
EXHIBIT A, TRANSPORTATION PATHS
FOR BILLING PURPOSES, DATED March 1, 1994,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline")
AND YANKEE GAS SERVICES COMPANY ("Customer"),
DATED March 1, 1994:
(1) Customer's firm Point(s) of Receipt:
<TABLE>
<CAPTION>
Maximum Daily
Receipt Obligation
Point of (plus Applicable
Receipt Description Shrinkage)(dth)
- ---------- ----------- -------------------
Commencing on the later of November 1, 1994, or the first day
following notification of Customer by Pipeline that Pipeline has
completed and placed into service all necessary facilities
authorized in Docket No. CP92-184, et al.:
<S> <C> <C>
1. 72770 LEBANON LATERAL,
WARREN CO., OH 15,000 1/
2. 75082 OAKFORD, WESTMORELAND
COUNTY, PA 15,000 1/
</TABLE>
<TABLE>
<CAPTION>
Measurement
Responsibilities Owner Operator
---------------- ----- --------
<S> <C> <C> <C>
1. TETCO TETCO TETCO
2. TETCO TETCO TETCO
</TABLE>
1/provided, however, that Pipeline's maximum daily receipt
obligation shall not exceed 15,000 dth in the aggregate at Points
of Receipt (1) and (2) above;
<PAGE>
(2) Customer shall have Pipeline's Master Receipt Point List
("MRPL"). Customer hereby agrees that Pipeline's MRPL as revised
and published by Pipeline from time to time is incorporated
herein by reference.
Customer hereby agrees to comply with the Receipt Pressure
Obligation as set forth in Section 6 of Pipeline's General Terms
and Conditions at such Point(s) of Receipt.
<TABLE>
<CAPTION>
Transportation
Transportation Path Path Quantity (Dth/D)
Commencing on the later of November 1, 1994, or the first day
following notification of Customer by Pipeline that Pipeline has
completed and placed into service all necessary facilities
authorized in Docket No. CP 92-184, et al.:
<S> <C>
M2 to M3 15,000
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Diane T. Tom
------------------------
CUSTOMER: /s/ Thomas J. Houde
------------------------
SUPERSEDES EXHIBIT A DATED:
<PAGE>
EXHIBIT B, POINT(S) OF DELIVERY, DATED MARCH 1, 1994
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
YANKEE GAS SERVICES COMPANY ("Customer"), DATED MARCH 1, 1994:
<TABLE>
<CAPTION>
Maximum
Daily
Point of Delivery
Delivery Description Obligation
------- ----------- -------------
(dth)
Commencing on the later of November 1, 1994, or the first day
following notification of Customer by Pipeline that Pipeline has
completed and placed into service all necessary facilities
authorized in Docket No. CP92-184, et al.:
<S> <C> <C> <C>
1. 70087 ALGONQUIN-LAMBERTVILLE,NJ
HUNTERDON CO., NJ 15,000
</TABLE>
<TABLE>
<CAPTION>
Delivery
Pressure Measurement
Obligations Responsibilities Owner Operator
----------- ---------------- ----- --------
<S> <C> <C> <C> <C>
1. AS REQUESTED TETCO TETCO ALGONQUIN
BY CUSTOMER,
NOT TO
EXCEED 750
PSIG.
</TABLE>
provided, however, that until changed by a subsequent agreement
between Pipeline and Customer, Pipeline's aggregate maximum daily
delivery obligation at each of the Points of Delivery described
above, including Pipeline's maximum daily delivery obligation
under this and all other firm Service Agreements existing between
Pipeline and Customer, shall in no event exceed the following:
<TABLE>
<CAPTION>
Aggregate Maximum Daily
Point of Delivery Delivery Obligation (dth)
- ----------------- -------------------------
Commencing on the later of November 1, 1994, or the first day
following notification of Customer by Pipeline that Pipeline has
completed and placed into service all necessary facilities
authorized in Docket No. CP92-184, et al.:
<S> <C>
NO. 1 77,265
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Diane T. Tom
-------------------
CUSTOMER: /s/ Thomas J. Houde
-------------------
SUPERSEDES EXHIBIT B DATED
<PAGE>
EXHIBIT C, ZONE BOUNDARY ENTRY QUANTITY AND ZONE
BOUNDARY EXIT QUANTITY, DATED MARCH 1, 1994, TO THE SERVICE
AGREEMENT UNDER RATE SCHEDULE FT-1 BETWEEN TEXAS EASTERN
TRANSMISSION CORPORATION ("PIPELINE") AND
YANKEE GAS SERVICES COMPANY ("CUSTOMER"), DATED MARCH 1, 1994:
<TABLE>
<CAPTION>
ZONE BOUNDARY ENTRY QUANTITY
Dth/D
To
--
<S> <C> <C> <C> <C> <C> <C> <C>
FROM STX ETX WLA ELA M1-24 M1-30 M1-TXG
STX
ETX
WLA
ELA
M1-24
M1-30
M1-TXG
M1-TGC
M2-24
M2-30
M2-TXG
M2-TGC
M2
M3
</TABLE>
<TABLE>
<CAPTION>
To
--
<S> <C> <C> <C> <C> <C> <C> <C>
FROM M1-TGC M2-24 M2-30 M2-TXG M2-TGC M2 M3
STX
ETX
WLA
ELA
M1-24
M1-30
M1-TXG
M1-TGC
M2-24
M2-30
M2-TXG
M2-TGC
M2 15,000
M3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ZONE BOUNDARY EXIT QUANTITY
Dth/D
To
--
<S> <C> <C> <C> <C> <C> <C> <C>
FROM STX ETX WLA ELA M1-24 M1-30 M1-TXG
STX
ETX
WLA
ELA
M1-24
M1-30
M1-TXG
M1-TGC
M2-24
M2-30
M2-TXG
M2-TGC
M2
M3
</TABLE>
<TABLE>
<CAPTION>
To
--
<S> <C> <C> <C> <C> <C> <C> <C>
FROM M1-TGC M2-24 M2-30 M2-TXG M2-TGC M2 M3
STX
ETX
WLA
ELA
M1-24
M1-30
M1-TXG
M1-TGC
M2-24
M2-30
M2-TXG
M2-TGC
M2 15,000
M3
</TABLE>
SIGNED FOR IDENTIFICATION:
PIPELINE: /s/ Diane T. Tom
------------------
CUSTOMER: /s/Thomas J. Houde
------------------
SUPERSEDES EXHIBIT C DATED
<PAGE>
February 14, 1994
Mr. Thomas J. Houde
Vice President, Rates & Resource Planning
Yankee Gas Services Company
599 Research Parkway
P.O. Box 1030
Meriden, CT 06450-1030
RE: FT-1 Service Agreement between Texas Eastern Transmission
Corporation and Yankee Gas Services Company (Texas Eastern
Contract No. 800375)
Gentlemen:
Texas Eastern Transmission Corporation ("Texas Eastern") and
Yankee Gas Services Company ("Shipper") are parties to a letter
agreement dated February 3, 1994, which letter agreement sets
forth our agreement with respect to certain matters regarding the
ITP Project and the Federal Energy Regulatory
Commission("Commission") order dated July 16, 1993, approving
such project, subject to certain modifications and conditions.
Pursuant to the letter agreement, Texas Eastern and Shipper are
executing contemporaneously a FT-1 Service Agreement for ITP
Service ("FT-1 Service Agreement") and this rate discount
agreement applicable to such FT-1 Service Agreement.
Commencing as of the effective date of the captioned FT-1
Service Agreement and continuing while Order No. 636 GSR and
stranded costs are applicable to Rate Schedule FT-1 ("Discount
Term"), Texas Eastern agrees to discount the maximum rate, as
effective from time to time, applicable to such FT-1 Service
Agreement, inclusive of all surcharges, by an amount equivalent
to the Order No. 636 GSR and stranded cost payment obligation of
Shipper, pursuant to Sections 15.2 (C) and (D) of the General
Terms and Conditions of Texas Eastern's FERC Gas Tariff, Sixth
Revised Volume No. 1, as effective from time to time, for any
month. In no event will Shipper's monthly charge for service
under the FT-1 Service Agreement exceed the maximum rate
applicable to the FT-1 Service Agreement, as effective from time
to time, inclusive of all surcharges, less the discount agreed to
herein. At the end of the discount term, the rate for service
under the captioned FT-1 Service Agreement will be the maximum
rate applicable to such FT-1 Service Agreement, unless otherwise
agreed to in writing by the parties.
To the extent permitted by the Commission, Texas Eastern
shall be free to characterize the amount discounted as a discount
of any component of the maximum rate as it deems appropriate from
time to time. Shipper shall not oppose any such characterization
by Texas Eastern.
<PAGE>
Texas Eastern and Shipper recognize that Texas Eastern's
Rate Schedule FT-1 rates may be subject to modification by Texas
Eastern and/or the Commission from time to time. With regard to
the FT-1 rate applicable to the FT-1 Service Agreement, Texas
Eastern and Shipper expressly agree that Shipper shall be
entitled to refunds of payments paid by Shipper pursuant to the
captioned agreement and Rate Schedule FT-1 of an amount equal to
the sum of (1) the positive difference if any between the rate
actually paid by the positive difference if any between the rate
actually paid by the Shipper less the final maximum rate
inclusive of all surcharges as determined by the Commission (but
exclusive of Shipper's discount provided for herein) multiplied
by the applicable billing dererminants plus (2) applicable
interest on such amount during such time period. TETCO and
Shipper agree not to initiate or instigate any action or
proceedings for the purpose of seeking refunds not in accordance
with the foregoing amount.
Very truly yours,
TEXAS EASTERN TRANSMISSION CORPORATION
By: /s/ Diane T. Tom
--------------------------------
Title: Vice President
ACCEPTED AND AGREED to
this 18th day of
February, 1994
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
----------------------
Title: Vice President
Rates and Resource Planning
<PAGE>
February 14, 1994
Mr. Thomas J. Houde
Vice President, Rates & Resource Planning
Yankee Gas Services Company
599 Research Parkway
P.O. Box 1030
Meriden, CT 06450-1030
RE: ITP Project
Texas Eastern Transmission Corporation
Docket Nos. CP92-184, et al.
Gentlemen:
The Federal Energy Regulatory Commission ("Commission")
issued an order on July 16, 1993 ("July Order"), in the captioned
proceeding which granted Texas Eastern Transmission Corporation
("Texas Eastern") permanent certificate authorization which was
requested, in part, pursuant to a precedent agreement entered
into by and between Texas Eastern and Yankee Gas Services Company
("Shipper") dated September 6, 1991 ("Precedent Agreement") for
an incremental firm transportation service ("ITP Service"). As a
result of certain modifications and conditions in the July Order,
Texas Eastern and Shipper desire to enter into this Agreement to
address certain potential cost responsibilities resulting from
such modifications and conditions and agree to the following:
1. Texas Eastern and Shipper agree to execute by February
17, 1994, a firm transportation service agreement under Texas
Eastern's Rate Schedule FT-1 for ITP Service ("Service
Agreement") with a Maximum Daily Quantity ("MDQ") service
entitlement of 15,000 dekatherms per day commencing on the later
of November 1, 1994, or the date that Texas Eastern notifies
Shipper that Texas Eastern has completed and placed in service
all facilities authorized in Docket No. CP92-184, et al, which
are necessary to render service under the Service Agreement.
2. Texas Eastern and Shipper agree that the initial rates
for ITP Service commencing on or about November 1, 1994, will be
the initial rates authorized by the Commission for ITP Service
commencing on or about November 1, 1994, exclusive of all
applicable surcharges, to be charged by Texas Eastern. Shipper
also agrees to pay the amount of all surcharges applicable to
Rate Schedule FT-1. Shipper agrees to actively support Texas
Eastern's efforts to obtain any regulatory authorizations Texas
Eastern deems necessary to implement the provisions of this
Agreement. Shipper also agrees to actively support Texas
Eastern's efforts in Docket No. RP94-33, or such other
appropriate proceeding, to obtain any regulatory authorizations
Texas Eastern deems necessary to allocate a reduced amount of
Order No. 636 GSR and stranded costs to services utilizing
incremental facilities constructed on or after June 1, 1993,
which reflects the new incremental short-haul capacity nature of
the Service Agreement, as contrasted with Texas Eastern's other
FT-1 service agreements utilizing capacity constructed prior to
June 1, 1993. Texas Eastern recognizes and acknowledges that
Shipper's support will not preclude Shipper from opposing Texas
Eastern's recovery of Order No. 636 GSR and stranded costs to the
extent not inconsistent with this Agreement.
<PAGE>
3. Texas Eastern recognizes that the modifications set
forth in the July Order with respect to the ITP Service, in
particular the imposition of GSR and stranded costs on this
service, has created potential cost responsibility which Shipper
did not originally contemplate and/or consider when entering into
the Precedent Agreement. Accordingly, Texas Eastern and Shipper
agree to negotiate and execute, contemporaneous with the
execution of the Service Agreement, a discount agreement with
respect to the rate to be charged by Texas Eastern during the
period that Order No. 636 GSR and stranded costs are applicable
to the Service Agreement provided for in Paragraph 1 herein.
If the foregoing correctly sets forth our understanding and
our agreement, please so indicate by having a duly authorized
representative execute this Agreement in the space provided
below:
Very truly yours,
TEXAS EASTERN TRANSMISSION CORPORATION
By: /s/Diane T. Tom
--------------------------------
Title: Vice President
ACCEPTED AND AGREED TO
this 18th day of
February, 1994
YANKEE GAS SERVICES COMPANY
By: /s/Thomas J. Houde
---------------------------
Title:Vice President - Rates
and Resource Planning
<PAGE>
Exhibit 10.45
Contract #: 800441
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
This Service Agreement, made and entered into this 26th day
of September, 1994, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and YANKEE GAS SERVICES COMPANY (herein called "Customer",
whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline are parties to an executed
service agreement under Pipeline's Rate Schedule CDS, Pipeline's
Contract No. 800307 which specifies an MDQ of 13,429; and
WHEREAS, Customer is also a customer of Algonquin Gas
Transmission Company ("Algonquin"); and
WHEREAS, Algonquin is a customer of Pipeline under certain
of Pipeline's rate schedules and related service agreements; and
WHEREAS, pursuant to the Federal Energy Regulatory
Commission's ("Commission") order issued on July 8, 1994, in
Docket Nos. RP93-14-000, et al., and 18 C.F.R. Section 284.242,
Algonquin is assigning on a permanent basis certain of its firm
service entitlements on Pipeline to Customer; and
WHEREAS, Customer and Pipeline desire to supersede
Pipeline's Contract No. 800307 by entering into this Service
Agreement to reflect Algonquin's permanent assignment of capacity
to Customer as described above; and
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of
Pipeline's Rate Schedule CDS, and of the General Terms and
Conditions, transportation service hereunder will be firm.
Subject to the terms, conditions and limitations hereof and of
Sections 2.3 and 2.4 of Pipeline's Rate Schedule CDS, Pipeline
shall deliver to those points on Pipeline's system as specified
in Article IV herein or available to Customer pursuant to Section
14 of the General Terms and Conditions (hereinafter referred to
as Point(s) of Delivery), for Customer's account, as requested
for any day, natural gas quantities up to Customer's MDQ.
Customer's MDQ is as follows:
<PAGE>
Maximum Daily Quantity (MDQ) 14,233 dth
Subject to variances as may be permitted by Sections 2.4 of
Rate Schedule CDS or the General Terms and Conditions, Customer
shall deliver to Pipeline and Pipeline shall receive, for
Customer's account, at those points on Pipeline's system as
specified in Article IV herein or available to Customer pursuant
to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Receipt) daily quantities of gas equal
to the daily quantities delivered to Customer pursuant to this
Service Agreement up to Customer's MDQ, plus Applicable Shrinkage
as specified in the General Terms and Conditions.
Pipeline shall not be obligated to, but may at its
discretion, receive at any Point of Receipt on any day a quantity
of gas in excess of the applicable Maximum Daily Receipt
Obligation (MDRO), plus Applicable Shrinkage, but shall not
receive in the aggregate at all Points of Receipt on any day a
quantity of gas in excess of the applicable MDQ, plus Applicable
Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a
quantity of gas in excess of the applicable Maximum Daily
Delivery Obligation (MDDO), but shall not deliver in the
aggregate at all Points of Delivery on any day a quantity of gas
in excess of the MDQ.
In addition to the MDQ and subject to the terms, conditions
and limitations hereof, Rate Schedule CDS and the General Terms
and Conditions, Pipeline shall deliver within the Access Area
under this and all other service agreements under Rate Schedules
CDS, FT-1, and/or SCT, quantities up to Customer's Operational
Segment Capacity Entitlements, excluding those Operational
Segment Capacity Entitlements scheduled to meet Customer's MDQ,
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on
September 1, 1994 and shall continue in force and effect until
10/31/2012 and year to year thereafter unless this Service
Agreement is terminated as hereinafter provided. This Service
Agreement may be terminated by either Pipeline or Customer upon
five (5) years prior written notice to the other specifying a
termination date of any year occurring on or after the expiration
of the primary term. In addition to Pipeline rights under
Section 22 of Pipeline's General Terms and Conditions and without
prejudice to such rights, this Service Agreement may be
terminated at any time by Pipeline in the event Customer fails to
pay part or all of the amount of any bill for service hereunder
and such failure continues for thirty (30) days after payment is
due; provided, Pipeline gives thirty (30) days prior written
<PAGE>
notice to Customer of such termination and provided further such
termination shall not be effective if, prior to the date of
termination, Customer either pays such outstanding bill or
furnishes a good and sufficient surety bond guaranteeing payment
to Pipeline of such outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED
CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY
CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE
NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION.
PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS
CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE
TERMINATION.
Any portions of this Service Agreement necessary to correct
or cash-out imbalances under this Service Agreement as required
by the General Terms and Conditions of Pipeline's FERC Gas
Tariff, Volume No. 1, shall survive the other parts of this
Service Agreement until such time as such balancing has been
accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule CDS and of
the General Terms and Conditions of Pipeline's FERC Gas Tariff on
file with the Federal Energy Regulatory Commission, all of which
are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule CDS as filed with the Federal Energy Regulatory
Commission, and as same may hereafter be legally amended or
superseded.
Customer agrees that Pipeline shall have the unilateral
right to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Pipeline's Rate Schedule CDS, (b) Pipeline's
Rate Schedule CDS pursuant to which service hereunder is rendered
or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule CDS. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have the unilateral
right without the consent of Customer subsequent to the execution
of this Service Agreement and Pipeline shall not have the right
during the effectiveness of this Service Agreement to make any
filings pursuant to Section 4 of the Natural Gas Act to change
the MDQ specified in Article I, to change the term of the
agreement as specified in Article II, to change Point(s) of
<PAGE>
Receipt specified in Article IV, to change the Point(s) of
Delivery specified in Article IV, or to change the firm character
of the service hereunder. Pipeline agrees that Customer may
protest or contest the aforementioned filings, and Customer does
not waive any rights it may have with respect to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which
Pipeline shall receive and deliver gas, respectively, shall be
specified in Exhibit(s) A and B of the executed service
agreement. Customer's Zone Boundary Entry Quantity and Zone
Boundary Exit Quantity for each of Pipeline's zones shall be
specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C are hereby incorporated as part of
this Service Agreement for all intents and purposes as if fully
copied and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform to the quality specifications set forth in
Section 5 of Pipeline's General Terms and Conditions. Customer
agrees that in the event Customer tenders for service hereunder
and Pipeline agrees to accept natural gas which does not comply
with Pipeline's quality specifications, as expressly provided for
in Section 5 of Pipeline's General Terms and Conditions, Customer
shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications. Customer
shall execute or cause its supplier to execute, if such supplier
has retained processing rights to the gas delivered to Customer,
the appropriate agreements prior to the commencement of service
for the transportation and processing of any liquefiable
hydrocarbons and any PVR quantities associated with the
processing of gas received by Pipeline at the Point(s) of Receipt
under such Customer's service agreement. In addition, subject to
the execution of appropriate agreements, Pipeline is willing to
transport liquids associated with the gas produced and tendered
for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered,
<PAGE>
certified, or regular mail to the post office address of the
parties hereto, as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: YANKEE GAS SERVICES COMPANY
P.O. Box 1030
599 Research Parkway
Meriden, CT 06450
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other. In addition, Customer may assign its
rights to capacity pursuant to Section 3.14 of the General Terms
and Conditions. To the extent Customer so desires, when it
releases capacity pursuant to Section 3.14 of the General Terms
and Conditions, Customer may require privity between Customer and
the Replacement Customer, as further provided in the applicable
Capacity Release Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.
<PAGE>
This Service Agreement and the obligations of the parties
are subject to all present and future valid laws with respect to
the subject matter, State and Federal, and to all valid present
and future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
Service Agreement dated, August 11, 1994 between Pipeline
and Customer under Pipeline's Rate Schedule CDS (Pipeline's
Contract No. 800307).
IN WITNESS WHEREOF, the parties hereto have caused this Service
Agreement to be signed by their respective Presidents, Vice
Presidents or other duly authorized agents and their respective
corporate seals to be hereto affixed and attested by their
respective Secretaries or Assistant Secretaries, the day and year
first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By: /s/ Robert B. Evans
--------------------------------
Vice President
ATTEST:
/s/ Robert W. Reed
- --------------------
Corporate Secretary
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Vice President - Rates and
Resource Planning
ATTEST:
/s/ David C. Egelson
- --------------------
Manager - Supply
Planning & Acquisition
<PAGE>
Contract #: 800441
EXHIBIT A, TRANSPORTATION PATHS
FOR BILLING PURPOSES, DATED September 26, 1994,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE CDS
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
YANKEE GAS SERVICES COMPANY ("Customer"),
DATED September 26, 1994:
(1)Customer's firm Point(s) of Receipt:
<TABLE>
<CAPTION>
<S> <C> <C>
Maximum Daily
Receipt Obligation
Point of (plus Applicable
Receipt Description Shrinkage) (dth)
- ---------- ----------- -------------------
None
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Measurement
Point of Responsi-
Receipt bilities Owner Operator
- --------- ------------ ------- ----------
</TABLE>
(2) Customer shall have Pipeline's Master Receipt Point List
("MRPL"). Customer hereby agrees that Pipeline's MRPL as revised
and published by Pipeline from time to time is incorporated
herein by reference.
Customer hereby agrees to comply with the Receipt Pressure
Obligation as set forth in Section 6 of Pipeline's General Terms
and Conditions at such Point(s) of Receipt.
<TABLE>
<CAPTION>
Transportation
Transportation Path Path Quantity (Dth/D)
- -------------------- ---------------------
<S> <C>
M1 to M3 14,233
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Robert B. Evans
----------------------
CUSTOMER: /s/ Thomas J. Houde
----------------------
SUPERSEDES EXHIBIT A DATED:
<PAGE>
Contract #:800441
EXHIBIT B, POINT(S) OF DELIVERY, DATED September 26, 1994,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE CDS
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
YANKEE GAS SERVICES COMPANY ("Customer"),
DATED September 26, 1994:
<TABLE>
<CAPTION>
Maximum Daily
Point of Delivery
Delivery Description Obligation
---------- ------------ ---------------
<S> <C> <C> <C>
1. 70087 ALGONQUIN - LAMBERTVILLE, NJ
HUNTERDON CO. CO., NJ 14,233
2. 71078 ALGONQUIN - HANOVER, NJ
MORRIS CO. CO., NJ 14,233
3. 79834 AGT-YANKEE FOR NOMINATION
PURPOSES 0
4. 79513 FSS-1 AND SS-1 STORAGE POINT 8,992
04/01-10/31
8,992
11/01-03/31
</TABLE>
<TABLE>
<CAPTION>
Delivery Measurement
Pressure Responsi-
Obligation bilities Owner Operator
---------- ------------ ------- ----------
<S> <C> <C> <C>
1. AS REQUESTED TX EAST TRAN TX EAST TRAN ALGONQUIN
BY CUSTOMER,
NOT TO
EXCEED 750
POUNDS PER
SQUARE INCH
GAUGE
2. AS REQUESTED TX EAST TRAN TX EAST TRAN ALGONQUIN
BY CUSTOMER,
NOT TO
EXCEED 750
POUNDS PER
SQUARE INCH
GAUGE
3. N/A N/A N/A N/A
4. N/A N/A N/A N/A
</TABLE>
provided, however, that until changed by a subsequent Agreement
between Pipeline and Customer, Pipeline's aggregate maximum daily
delivery obligations under this and all other firm Service
Agreements existing between Pipeline and Customer, shall in no
event exceed the following:
<TABLE>
<CAPTION>
Aggregate Maximum Daily
Point of Delivery Delivery Obligation (dth)
- ----------------- -------------------------
<S> <C>
No. 1 63,279
No. 2 30,966
No. 4 8,992
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Robert B. Evans
----------------------
CUSTOMER: /s/ David C.Egelson
----------------------
SUPERSEDES EXHIBIT B DATED
<PAGE>
Contract #:800441
EXHIBIT C, ZONE BOUNDARY ENTRY QUANTITY AND ZONE
BOUNDARY EXIT QUANTITY,
DATED September 26, 1994, TO THE SERVICE
AGREEMENT UNDER RATE SCHEDULE CDS
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION
("PIPELINE") AND YANKEE GAS SERVICES COMPANY (CUSTOMER"),
DATED September 26, 1994:
</TABLE>
<TABLE>
<CAPTION>
ZONE BOUNDARY ENTRY QUANTITY
Dth/D
To
--
<S> <C> <C> <C> <C> <C>
FROM STX ETX WLA ELA M1-24
STX
ETX 1,716
WLA
ELA
M1-24
M1-30
M1-TXG
M1-TGC
M2-24
M2-30
M2-TXG
M2-TGC
M2
M3
</TABLE>
<TABLE>
<CAPTION>
TO
--
<S> <C> <C> <C> <C> <C>
FROM M1-30 M1-TXG M1-TGC M2-24 M2-30
STX 404
ETX 611
WLA 186 404
ELA 11,145
M1-24 1,716
M1-30 11,145
M1-TXG
M1-TGC
M2-24
M2-30
M2-TXG
M2-TGC
M2
M3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TO
--
<S> <C> <C> <C> <C>
FROM M2-TXG M2-TGC M2 M3
STX
ETX
WLA
ELA
M1-24
M1-30
M1-TXG 797
M1-TGC 807
M2-24
M2-30
M2-TXG
M2-TGC
M2 14,233
M3
</TABLE>
<TABLE>
<CAPTION>
ZONE BOUNDARY EXIT QUANTITY
Dth/D
To
--
<S> <C> <C> <C> <C> <C>
FROM STX ETX WLA ELA M1-24
STX
ETX
WLA
ELA
M1-24
M1-30
M1-TXG
M1-TGC
M2-24
M2-30
M2-TXG
M2-TGC
M2
M3
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
TO
--
<S> <C> <C> <C> <C> <C>
FROM M1-30 M1-TXG M1-TGC M2-24 M2-30
STX
ETX
WLA
ELA
M1-24 1,716
M1-30 11,145
M1-TXG
M1-TGC
M2-24
M2-30
M2-TXG
M2-TGC
M2
M3
</TABLE>
<TABLE>
<CAPTION>
TO
--
<S> <C> <C> <C> <C>
FROM M2-TXG M2-TGC M2 M3
STX
ETX
WLA
ELA
M1-24
M1-30
M1-TXG 797
M1-TGC 807
M2-24
M2-30
M2-TXG
M2-TGC
M2 14,233
M3
</TABLE>
SIGNED FOR IDENTIFICATION:
PIPELINE:
----------------------
CUSTOMER: /s/ Thomas J. Houde
----------------------
SUPERCEDES EXHIBIT C DATED
<PAGE>
Exhibit 10.46
Contract #: 800442
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
This Service Agreement, made and entered into this 26th day
of September, 1994, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and YANKEE GAS SERVICES COMPANY (herein called "Customer",
whether one or more),
W I T N E S S E T H:
WHEREAS, Customer is a customer of Algonquin Gas
Transmission Company ("Algonquin"); and
WHEREAS, Algonquin is a customer of Pipeline under certain
of Pipeline's rate schedules and related service agreements; and
WHEREAS, pursuant to the Federal Energy Regulatory
Commission's ("Commission") order issued on July 8, 1994, in
Docket Nos. RP93-14-000, et al., and 18 C.F.R. Section 284.242,
Algonquin is assigning on a permanent basis certain of its firm
service entitlements on Pipeline to certain of Algonquin's direct
customers; and
WHEREAS, Customer's capacity entilements on Pipeline
pursuant to this Service Agreement are a result of Algonquin's
permanent assignment to Customer as described above; and
WHEREAS, Customer and Pipeline desire to enter into this
Service Agreement to reflect such permanent assignment from
Algonquin to Customer;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of
Pipeline's Rate Schedule CDS, and of the General Terms and
Conditions, transportation service hereunder will be firm.
Subject to the terms, conditions and limitations hereof and of
Sections 2.3 and 2.4 of Pipeline's Rate Schedule CDS, Pipeline
shall deliver to those points on Pipeline's system as specified
in Article IV herein or available to Customer pursuant to Section
14 of the General Terms and Conditions (hereinafter referred to
as Point(s) of Delivery), for Customer's account, as requested
for any day, natural gas quantities up to Customer's MDQ.
Customer's MDQ is as follows:
<PAGE>
Maximum Daily Quantity (MDQ) 1,064 dth
Subject to variances as may be permitted by Sections 2.4 of
Rate Schedule CDS or the General Terms and Conditions, Customer
shall deliver to Pipeline and Pipeline shall receive, for
Customer's account, at those points on Pipeline's system as
specified in Article IV herein or available to Customer pursuant
to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Receipt) daily quantities of gas equal
to the daily quantities delivered to Customer pursuant to this
Service Agreement up to Customer's MDQ, plus Applicable Shrinkage
as specified in the General Terms and Conditions.
Pipeline shall not be obligated to, but may at its
discretion, receive at any Point of Receipt on any day a quantity
of gas in excess of the applicable Maximum Daily Receipt
Obligation (MDRO), plus Applicable Shrinkage, but shall not
receive in the aggregate at all Points of Receipt on any day a
quantity of gas in excess of the applicable MDQ, plus Applicable
Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a
quantity of gas in excess of the applicable Maximum Daily
Delivery Obligation (MDDO), but shall not deliver in the
aggregate at all Points of Delivery on any day a quantity of gas
in excess of the MDQ.
In addition to the MDQ and subject to the terms, conditions
and limitations hereof, Rate Schedule CDS and the General Terms
and Conditions, Pipeline shall deliver within the Access Area
under this and all other service agreements under Rate Schedules
CDS, FT-1, and/or SCT, quantities up to Customer's Operational
Segment Capacity Entitlements, excluding those Operational
Segment Capacity Entitlements scheduled to meet Customer's MDQ,
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on
September 1, 1994 and shall continue in force and effect until
10/31/2012 and year to year thereafter unless this Service
Agreement is terminated as hereinafter provided. This Service
Agreement may be terminated by either Pipeline or Customer upon
five (5) years prior written notice to the other specifying a
termination date of any year occurring on or after the expiration
of the primary term. In addition to Pipeline rights under
Section 22 of Pipeline's General Terms and Conditions and without
prejudice to such rights, this Service Agreement may be
terminated at any time by Pipeline in the event Customer fails to
pay part or all of the amount of any bill for service hereunder
and such failure continues for thirty (30) days after payment is
due; provided, Pipeline gives thirty (30) days prior written
notice to Customer of such termination and provided further such
<PAGE>
termination shall not be effective if, prior to the date of
termination, Customer either pays such outstanding bill or
furnishes a good and sufficient surety bond guaranteeing payment
to Pipeline of such outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED
CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY
CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE
NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION.
PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS
CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE
TERMINATION.
Any portions of this Service Agreement necessary to correct
or cash-out imbalances under this Service Agreement as required
by the General Terms and Conditions of Pipeline's FERC Gas
Tariff, Volume No. 1, shall survive the other parts of this
Service Agreement until such time as such balancing has been
accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule CDS and of
the General Terms and Conditions of Pipeline's FERC Gas Tariff on
file with the Federal Energy Regulatory Commission, all of which
are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule CDS as filed with the Federal Energy Regulatory
Commission, and as same may hereafter be legally amended or
superseded.
Customer agrees that Pipeline shall have the unilateral
right to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Pipeline's Rate Schedule CDS, (b) Pipeline's
Rate Schedule CDS pursuant to which service hereunder is rendered
or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule CDS. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have the unilateral
right without the consent of Customer subsequent to the execution
of this Service Agreement and Pipeline shall not have the right
during the effectiveness of this Service Agreement to make any
filings pursuant to Section 4 of the Natural Gas Act to change
the MDQ specified in Article I, to change the term of the
agreement as specified in Article II, to change Point(s) of
Receipt specified in Article IV, to change the Point(s) of
<PAGE>
Delivery specified in Article IV, or to change the firm character
of the service hereunder. Pipeline agrees that Customer may
protest or contest the aforementioned filings, and Customer does
not waive any rights it may have with respect to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which
Pipeline shall receive and deliver gas, respectively, shall be
specified in Exhibit(s) A and B of the executed service
agreement. Customer's Zone Boundary Entry Quantity and Zone
Boundary Exit Quantity for each of Pipeline's zones shall be
specified in Exhibit C of the executed service agreement.
Exhibit(s) A and B are hereby incorporated as part of this
Service Agreement for all intents and purposes as if fully copied
and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform to the quality specifications set forth in Section
5 of Pipeline's General Terms and Conditions. Customer agrees
that in the event Customer tenders for service hereunder and
Pipeline agrees to accept natural gas which does not comply with
Pipeline's quality specifications, as expressly provided for in
Section 5 of Pipeline's General Terms and Conditions, Customer
shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications. Customer
shall execute or cause its supplier to execute, if such supplier
has retained processing rights to the gas delivered to Customer,
the appropriate agreements prior to the commencement of service
for the transportation and processing of any liquefiable
hydrocarbons and any PVR quantities associated with the
processing of gas received by Pipeline at the Point(s) of Receipt
under such Customer's service agreement. In addition, subject to
the execution of appropriate agreements, Pipeline is willing to
transport liquids associated with the gas produced and tendered
for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties
<PAGE>
hereto, as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: YANKEE GAS SERVICES COMPANY
P.O. Box 1030
599 Research Parkway
Meriden, CT 06450
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other. In addition, Customer may assign its
rights to capacity pursuant to Section 3.14 of the General Terms
and Conditions. To the extent Customer so desires, when it
releases capacity pursuant to Section 3.14 of the General Terms
and Conditions, Customer may require privity between Customer and
the Replacement Customer, as further provided in the applicable
Capacity Release Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties
are subject to all present and future valid laws with respect to
the subject matter, State and Federal, and to all valid present
and future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
<PAGE>
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
None
IN WITNESS WHEREOF, the parties hereto have caused this
Service Agreement to be signed by their respective Presidents,
Vice Presidents or other duly authorized agents and their respec-
tive corporate seals to be hereto affixed and attested by their
respective Secretaries or Assistant Secretaries, the day and year
first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By: /s/ Robert B. Evans
--------------------------------
Vice President
ATTEST:
/s/ Robert W. Reed
- -------------------
Corporate Secretary
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Vice President - Rates and
Resource Planning
ATTEST:
/s/ David C. Egelson
- --------------------
Manager - Supply
Planning & Acquisitions
<PAGE>
Contract #: 800442
EXHIBIT A, TRANSPORTATION PATHS
FOR BILLING PURPOSES, DATED September 26, 1994,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE CDS
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
YANKEE GAS SERVICES COMPANY ("Customer"),
DATED September 26, 1994:
<TABLE>
<CAPTION>
(1) Customer's firm Point(s) of Receipt:
Maximum Daily
Receipt Obligation
Point of (plus Applicable
Receipt Description Shrinkage)
---------- ----------- --------------------
(dth)
<S> <C> <C>
None
</TABLE>
<TABLE>
<CAPTION>
Measurement
Responsi-
bilities Owner Operator
------------ ------- ----------
<S> <C> <C>
</TABLE>
(2) Customer shall have Pipeline's Master Receipt Point List
("MRPL"). Customer hereby agrees that Pipeline's MRPL as revised
and published by Pipeline from time to time is incorporated
herein by reference.
Customer hereby agrees to comply with the Receipt Pressure
Obligation as set forth in Section 6 of Pipeline's General Terms
and Conditions at such Point(s) of Receipt.
<TABLE>
<CAPTION>
Transportation
Transportation Path Path Quantity (Dth/D)
-------------------- ---------------------
<S> <C>
M3 to M3 1,064
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Robert B.Evans
---------------------
CUSTOMER: /s/ Thomas J.Houde
---------------------
SUPERSEDES EXHIBIT A DATED:
<PAGE>
Contract #:800442
EXHIBIT B, POINT(S) OF DELIVERY, DATED September 26, 1994,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE CDS
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
YANKEE GAS SERVICES COMPANY ("Customer"),
DATED September 26, 1994:
<TABLE>
<CAPTION>
Maximum
Daily
Point of Delivery
Delivery Description Obligation(dth)
--------- ----------- ----------------
<S> <C> <C> <C>
1. 70087 ALGONQUIN - LAMBERTVILLE,
NJ HUNTERDON CO. CO., NJ 457
2. 71078 ALGONQUIN - HANOVER, NJ
MORRIS CO. CO., NJ 607
3. 79834 AGT-YANKEE FOR NOMINATION
PURPOSES 0
</TABLE>
<TABLE>
<CAPTION>
Delivery Measurement
Pressure Responsi-
Obligation bilities Owner Operator
---------- ------------ ------------ ---------
<S> <C> <C> <C> <C>
1. AS REQUESTED TX EAST TRAN TX EAST TRAN ALGONQUIN
BY CUSTOMER,
NOT TO
EXCEED 750
POUNDS PER
SQUARE GAUGE
2. AS REQUESTED TX EAST TRAN TX EAST TRAN ALGONQUIN
BY CUSTOMER,
NOT TO
EXCEED 750
POUNDS PER
SQUARE GAUGE
3. N/A N/A N/A N/A
</TABLE>
provided, however, that until changed by a subsequent Agreement
between Pipeline and Customer, Pipeline's aggregate maximum daily
delivery obligations under this and all other firm Service
Agreements existing between Pipeline and Customer, shall in no
event exceed the following:
<TABLE>
<CAPTION>
Aggregate Maximum Daily
Point of Delivery Delivery Obligation (dth)
- ----------------- -------------------------
<S> <C>
No. 1 63,279
No. 2 30,966
</TABLE>
SIGNED FOR IDENTIFICATION
PIPELINE: /s/ Robert B. Evans
----------------------
CUSTOMER: /s/ David C. Egelson
----------------------
SUPERSEDES EXHIBIT B DATED
<PAGE>
Exhibit 10.60
Contract #: 400191
SERVICE AGREEMENT
FOR RATE SCHEDULE SS-1
This Service Agreement, made and entered into this 26th day
of September, 1994, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and YANKEE GAS SERVICES COMPANY (herein called "Customer,"
whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline are parties to an executed
service agreement under Pipeline's Rate Schedule SS-1, Pipeline's
Contract No. 400191 dated July 27, 1994 which specifies an MDQ of
22,387 and an MSQ of 1,667,505; and
WHEREAS, Customer is also a customer of Algonquin Gas
Transmission Company ("Algonquin"); and
WHEREAS, Algonquin is a customer of Pipeline under certain
of Pipeline's rate schedules and related service agreements; and
WHEREAS, pursuant to the Federal Energy Regulatory
Commission's ("Commission") order issued on July 8, 1994, in
Docket Nos. RP93-14-000, et al., and 18 C.F.R. Section 284.242,
Algonquin is assigning on a permanent basis certain of its firm
service entitlements on Pipeline to Customer; and
WHEREAS, Customer and Pipeline desire to supersede
Pipeline's Contract No. 400191 by entering into this Service
Agreement to reflect Algonquin's permanent assignment of capacity
to Customer as described above; and
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof and
of Pipeline's Rate Schedule SS-1, Pipeline agrees to provide firm
service for Customer under Rate Schedule SS-1 and to receive and
store for Customer's account quantities of natural gas up to the
following quantity:
Maximum Daily Injection Quantity (MDIQ) 8,664 dth
Maximum Storage Quantity (MSQ) 1,685,565 dth
<PAGE>
Pipeline agrees to withdraw from storage for Customer, at
Customer's request, quantities of gas up to Customer's Maximum
Daily Withdrawal Quantity (MDWQ) of 22,645 dekatherms, or such
lesser quantity as determined pursuant to Rate Schedule SS-1,
from Customer's Storage Inventory, plus Applicable Shrinkage, and
to deliver for Customer's account such quantities. Pipeline's
obligation to withdraw gas on any day is governed by the
provisions of Rate Schedule SS-1, including but not limited to
Section 6.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on
September 1, 1994 and shall continue in force and effect until
April 30, 2013 and year to year thereafter unless this Service
Agreement is terminated as hereinafter provided. This Service
Agreement may be terminated by either Pipeline or Customer upon
five (5) years prior written notice to the other specifying a
termination date of any year occurring on or after the
expiration of the primary term. Subject to Section 22 of
Pipeline's General Terms and Conditions and without prejudice to
such rights, this Service Agreement may be terminated at any time
by Pipeline in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure
continues for thirty (30) days after payment is due; provided,
Pipeline gives thirty (30) days prior written notice to Customer
of such termination and provided further such termination shall
not be effective if, prior to the date of termination, Customer
either pays such outstanding bill or furnishes a good and
sufficient surety bond guaranteeing payment to Pipeline of such
outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED
CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY
CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE
NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION.
PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS
CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE
TERMINATION.
In the event there is gas in storage for Customer's account
on April 30 of the year of termination of this Service Agreement,
this Service Agreement shall continue in force and effect for the
sole purpose of withdrawal and delivery of said gas to Customer
for an additional one-hundred and twenty (120) days.
<PAGE>
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule SS-1 and of
the General Terms and Conditions of Pipeline's FERC Gas Tariff on
file with the Federal Energy Regulatory Commission, all of which
are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule SS-1 as filed with the Federal Energy Regulatory
Commission and as the same may be hereafter revised or changed.
Customer agrees that Pipeline shall have the unilateral
right to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Pipeline's Rate Schedule SS-1, (b) Pipeline's
Rate Schedule SS-1, pursuant to which service hereunder is
rendered or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule SS-1. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have the unilateral
right without the consent of Customer subsequent to the execution
of this Service Agreement and Pipeline shall not have the right
during the effectiveness of this Service Agreement to make any
filings pursuant to Section 4 of the Natural Gas Act to change
the MDIQ, MSQ and MDWQ specified in Article I, to change the
term of the service agreement as specified in Article II, to
change Point(s) of Receipt specified in Article IV, to change
the Point(s) of Delivery specified in Article IV, or to change
the firm character of the service hereunder. Pipeline agrees
that Customer may protest or contest the aforementioned filings,
and Customer does not waive any rights it may have with respect
to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The natural gas received by Pipeline for Customer's account
for storage injection pursuant to this Service Agreement shall be
those quantities scheduled for delivery pursuant to Service
Agreements between Pipeline and Customer under Rate Schedules
CDS, FT-1, SCT, PTI or IT-1 which specify as a Point of Delivery
the "SS-1 Storage Point". For purposes of billing of Usage
Charges under Rate Schedules CDS, FT-1, SCT, PTI or IT-1,
deliveries under Rate Schedules CDS, FT-1, SCT, PTI or IT-1 for
injection into storage scheduled directly to the "SS-1 Storage
Point" shall be deemed to have been delivered 60% in Market Zone
2 and 40% in Market Zone 3. In addition, at Customer's request
any positive or negative variance between scheduled deliveries
and actual deliveries on any day at Customer's Points of
Delivery under Rate Schedules CDS, FT-1, SCT, or IT-1 shall be
<PAGE>
deemed for billing purposes delivered at the Point of Delivery
and shall be injected into or withdrawn from storage for
Customer's account. In addition to accepting gas for storage
injection at the SS-1 Storage Point, Pipeline will accept gas
tendered at points of interconnection between Pipeline and third
party facilities at Oakford and Leidy Storage Fields provided
that such receipt does not result in Customer tendering aggregate
quantities for storage in excess of the Customer MDIQ.
The Point(s) of Delivery at which Pipeline shall deliver gas
shall be specified in Exhibit A of the executed service
agreement.
Exhibit A and B are hereby incorporated as part of this
Service Agreement for all intents and purposes as if fully copied
and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform and be subject to the provisions of Section 5 of
the General Terms and Conditions. Customer agrees that in the
event Customer tenders for service hereunder and Pipeline agrees
to accept natural gas which does not comply with Pipeline's
quality specifications, as expressly provided for in Section 5 of
Pipeline's General Terms and Conditions, Customer shall pay all
costs associated with processing of such gas as necessary to
comply with such quality specifications.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties
hereto, as the case may be, as follows:
(a) Pipeline: Texas Eastern Transmission Corporation
5400 Westheimer Court
Houston, Texas 77056-5310
(b) Customer: YANKEE GAS SERVICES COMPANY
P O BOX 1030
599 RESEARCH PARKWAY
MERIDEN, CT 06450
or such other address as either party shall designate by formal
written notice.
<PAGE>
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other. In addition, Customer may assign its
rights to capacity pursuant to Section 3.14 of the General Terms
and Conditions. To the extent Customer so desires, when it
releases capacity pursuant to Section 3.14 of the General Terms
and Conditions, Customer may require privity between Customer and
the Replacement Customer, as further provided in the applicable
Capacity Release Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties
are subject to all present and future valid laws with respect to
the subject matter, State and Federal, and to all valid present
and future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
Service Agreement(s) dated, July 27, 1994 between Pipeline
and Customer under Pipeline's Rate Schedule SS-1 (Pipeline's
Contract No. 400191).
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this
Service Agreement to be signed by their respective Presidents,
Vice Presidents, or other duly authorized agents and their
respective corporate seals to be hereto affixed and attested by
their respective Secretaries or Assistant Secretaries, the day
and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By /s/ Robert B. Evans
---------------------------------
Vice President
ATTEST:
/s/ Robert W. Reed
- --------------------
Corporate Secretary
YANKEE GAS SERVICES COMPANY
By /s/ Thomas J. Houde
---------------------------------
Vice President - Rates and
Resource Planning
ATTEST:
/s/ David C. Egelson
- ------------------------
Manager - Supply
Planning and Acquisition
<PAGE>
Contract #:400191
EXHIBIT A, POINT(S) OF DELIVERY, DATED 9/26/94,
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE SS-1
BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"),
AND YANKEE GAS SERVICES COMPANY ("Customer"),
DATED 9/26/94:
<TABLE>
<CAPTION>
Maximum
Daily Daily
Point of Delivery Pressure
Delivery Description Obligation Obligation
------------------------------------------------------------
(dth)
<S> <C> <C> <C> <C>
1. 70087 ALGONQUIN-LAMBERTVILLE,
NJ HUNTERDON CO., NJ 11,057 AS REQUESTED BY
CUSTOMER, NOT TO
EXCEED 750 PSIG
2. 71078 ALGONQUIN-HANOVER, NJ
MORRIS CO., NJ 16,344 AS REQUESTED BY
CUSTOMER, NOT TO
EXCEED 750 PSIG
3. 79834 AGT-YANKEE-FOR
NOMINATION PURPOSES --0-- N/A
</TABLE>
<TABLE>
<CAPTION>
Measurement
Point of Responsi-
Delivery bilities Owner Operator
--------------------------------------------------
<S> <C> <C> <C> <C>
1. 70087 TX EAST TX EAST ALGONQUIN
TRAN TRAN
2. 71078 TX EAST TX EAST ALGONQUIN
TRAN TRAN
3. 79834 N/A N/A N/A
</TABLE>
<PAGE>
provided, however, that until changed by a subsequent Agreement
between Pipeline and Customer, Pipeline's aggregate maximum daily
delivery obligations at each of the Points of Delivery described
above, including Pipeline's maximum daily delivery obligation
under this and all other firm Service Agreements existing between
Pipeline and Customer, shall in no event exceed the following:
<TABLE>
<CAPTION>
AGGREGATE MAXIMUM DAILY
POINT OF DELIVERY DELIVERY OBLIGATION (DTH)
- ----------------- -------------------------
<S> <C>
No. 1 62,265
No. 2 29,854
SIGNED FOR IDENTIFICATION
PIPELINE:/s/ Robert B. Evans
-------------------
CUSTOMER:/s/ Thomas J. Houde
-------------------
SUPERSEDES EXHIBIT A DATED
<PAGE>
Contract #: 400191
EXHIBIT B, WITHDRAWAL QUANTITIES, DATED 9/26/94
TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE SS-1 BETWEEN
TEXAS EASTERN TRANSMISSION CORPORATION ("PIPELINE") AND
YANKEE GAS SERVICES COMPANY ("CUSTOMER"), DATED 9/26/94:
Pipeline shall not be obligated to withdraw for Customer on any
day a total daily quantity in excess of the following:
(A) the MDWQ if Customer's Storage Inventory is equal to or less
than 1,667,505 Dth, but more than 592,901 Dth;
(B) a daily entitlement of 20,041 Dth if Customer's Storage
Inventory is equal to or less than 592,900 Dth, but more than
448,601 Dth;
(C) a daily entitlement of 17,194 Dth if Customer's Storage
Inventory is equal to or less than 448,600 Dth, but more than
290,501 Dth;
(D) a daily entitlement of 5,852 Dth if Customer's Storage
Inventory is equal to or less than 290,500 Dth, but more than
131,701 Dth;
<PAGE>
(E) a daily entitlement of 3,761 Dth if Customer's Storage
Inventory is equal to or less than 131,700 Dth.
If at any time during the period from November 16 through
April 15 of each contract year the aggregate storage inventory of
all Customers under Rate Schedule SS-1 equals or is less than 30%
of the aggregate MSQ of all Customers under Rate Schedule SS-1,
then for the balance of the period ending April 15 for such
contract year injections into storage or transfers of title of
gas in storage inventory shall not be included in Customer's
Storage Inventory for purposes of determining Customer's daily
withdrawal rights pursuant to this Exhibit B. Pipeline shall
notify Customer verbally and then in writing when the aggregate
storage inventory of all Customers under Rate Schedule SS-1
and/or when Customer's individual storage inventory equals or is
less than 40% and 30% of the aggregate MSQ or Customer's
individual MSQ, respectively.
SIGNED FOR IDENTIFICATION:
PIPELINE: /s/ Robert B. Evans
-----------------------
CUSTOMER: /s/ Thomas J. Houde
------------------------
SUPERSEDES EXHIBIT B DATED:
</TABLE>
<PAGE>
Exhibit 10.61
Contract #: 400516
SERVICE AGREEMENT
FOR RATE SCHEDULE FSS-1
This agreement, made and entered into this 26th day of
September, 1994, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and YANKEE GAS SERVICES COMPANY (herein called "Customer,"
whether one or more),
W I T N E S S E T H:
WHEREAS, Customer is a customer of Algonquin Gas
Transmission Company ("Algonquin"); and
WHEREAS, Algonquin is a customer of Pipeline under certain
of Pipeline's rate schedules and related service agreements; and
WHEREAS, pursuant to the Federal Energy Regulatory
Commission's ("Commission") order issued on July 8, 1994, in
Docket Nos. RP93-14-000, et al., and 18 C.F.R. Section 284.242,
Algonquin is assigning on a permanent basis certain of its firm
service entitlements on Pipeline to certain of Algonquin's direct
customers; and
WHEREAS, Customer's capacity entilements on Pipeline
pursuant to this Service Agreement are a result of Algonquin's
permanent assignment to Customer as described above; and
WHEREAS, Customer and Pipeline desire to enter into this
Service Agreement to reflect such permanent assignment from
Algonquin to Customer;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof and
of Pipeline's Rate Schedule FSS-1, Pipeline agrees to provide
firm service for Customer under Rate Schedule FSS-1 and to
receive and store for Customer's account quantities of natural
gas up to the following quantity:
Maximum Daily Injection Quantity (MDIQ) 328 dth
Maximum Storage Quantity (MSQ) 63,840 dth
<PAGE>
Pipeline agrees to withdraw from storage for Customer, at
Customer's request, quantities of gas up to Customer's Maximum
Daily Withdrawal Quantity (MDWQ) of 1,064 dekatherms, or such
lesser quantity as determined pursuant to Rate Schedule FSS-1,
from Customer's Storage Inventory, plus Applicable Shrinkage.
Pipeline's obligation to withdraw gas on any day is governed by
the provisions of Rate Schedule FSS-1, including but not
limited to Section 6.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on
September 1, 1994 and shall continue in force and effect until
April 30, 2012 and year to year thereafter unless this Service
Agreement is terminated as hereinafter provided. This Service
Agreement may be terminated by either Pipeline or Customer upon
five (5) years prior written notice to the other specifying a
termination date of any year occurring on or after the
expiration of the primary term. In addition to Pipeline rights
under Section 22 of Pipeline's General Terms and Conditions and
without prejudice to such rights, this Service Agreement may be
terminated at any time by Pipeline in the event Customer fails to
pay part or all of the amount of any bill for service hereunder
and such failure continues for thirty (30) days after payment is
due; provided, Pipeline gives thirty (30) days prior written
notice to Customer of such termination and provided further such
termination shall not be effective if, prior to the date of
termination, Customer either pays such outstanding bill or
furnishes a good and sufficient surety bond guaranteeing payment
to Pipeline of such outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED
CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY
CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE
NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION.
PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS
CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE
TERMINATION.
In the event there is gas in storage for Customer's account
on April 30 of the year of termination of this Service Agreement,
this Service Agreement shall continue in force and effect for the
sole purpose of withdrawal and delivery of said gas to Customer
for an additional one-hundred and twenty (120) days.
<PAGE>
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule FSS-1 and
of the General Terms and Conditions of Pipeline's FERC Gas Tariff
on file with the Federal Energy Regulatory Commission, all of
which are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule FSS-1 as filed with the Federal Energy Regulatory
Commission and as the same may be hereafter revised or changed.
Customer agrees that Pipeline shall have the unilateral
right to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Pipeline's Rate Schedule FSS-1, (b)
Pipeline's Rate Schedule FSS-1, pursuant to which service
hereunder is rendered or (c) any provision of the General Terms
and Conditions applicable to Rate Schedule FSS-1.
Notwithstanding the foregoing, Customer does not agree that
Pipeline shall have the unilateral right without the consent of
Customer subsequent to the execution of this Service Agreement
and Pipeline shall not have the right during the effectiveness of
this Service Agreement to make any filings pursuant to Section 4
of the Natural Gas Act to change the MDIQ, MSQ and MDWQ specified
in Article I, to change the term of the service agreement as
specified in Article II, to change Point(s) of Receipt specified
in Article IV, to change the Point(s) of Delivery specified in
Article IV, or to change the firm character of the service
hereunder. Pipeline agrees that Customer may protest or contest
the aforementioned filings, and Customer does not waive any
rights it may have with respect to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The natural gas received by Pipeline for Customer's account
for storage injection pursuant to this Service Agreement shall be
those quantities scheduled for delivery pursuant to Service
Agreements between Pipeline and Customer under Rate Schedules
CDS, FT-1, SCT, PTI or IT-1 which specify as a Point of Delivery
the "FSS-1 Storage Point". For purposes of billing of Usage
Charges under Rate Schedules CDS, FT-1, SCT, PTI or IT-1,
deliveries under Rate Schedules CDS, FT-1, SCT, PTI or IT-1 for
injection into storage scheduled directly to the "FSS-1 Storage
Point" shall be deemed to have been delivered 60% in Market Zone
2 and 40% in Market Zone 3. In addition, subject to Pipeline's
prior written consent, any positive variance between scheduled
deliveries and actual deliveries on any day (i.e. scheduled
deliveries exceed actual deliveries) at Customer's Points of
<PAGE>
Delivery under Rate Schedules CDS, FT-1, SCT, or IT-1 shall be
deemed for billing purposes delivered at the Point of Delivery
and shall be injected into storage for Customer's account. In
addition to accepting gas for storage injection at the FSS-1
Storage Point, Pipeline will accept gas tendered at points of
interconnection between Pipeline and third party facilities at
Oakford and Leidy Storage Fields provided that such receipt does
not result in Customer tendering aggregate quantities for storage
in excess of the Customer MDIQ.
The natural gas delivered by Pipeline for Customer's account
as a result of storage withdrawal pursuant to this Service
Agreement shall be those quantities scheduled for withdrawal
hereunder and subsequent transportation pursuant to service
agreements between Pipeline and Customer under Rate Schedule CDS,
FT-1, SCT, or IT-1 which specify as a Point of Receipt the "FSS-1
Storage Point". For purpose of billing under Rate Schedules CDS,
FT-1, SCT, or IT-1, withdrawals from storage for subsequent
transportation under Rate Schedules CDS, FT-1, SCT, or IT-1 shall
be deemed to have been received 60% in Market Zone 2 and 40% in
Market Zone 3. In addition to the withdrawal of gas from storage
for delivery through a transportation service on Pipeline's
system, gas may be withdrawn for delivery into the facilities of
third parties at the points of interconnection between Pipeline
and the facilities of such third parties at Oakford and Leidy
Storage Fields provided that such withdrawals do not result in
Customer withdrawing gas in excess of his MDWQ or MSQ. A
separate transportation charge will not be applicable to these
deliveries.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform and be subject to the provisions of Section 5 of
the General Terms and Conditions. Customer agrees that in the
event Customer tenders for service hereunder and Pipeline agrees
to accept natural gas which does not comply with Pipeline's
quality specifications, as expressly provided for in Section 5 of
Pipeline's General Terms and Conditions, Customer shall pay all
costs associated with processing of such gas as necessary to
comply with such quality specifications.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered,
<PAGE>
certified, or regular mail to the post office address of the
parties hereto, as the case may be, as follows:
(a)Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b)Customer: YANKEE GAS SERVICES COMPANY
P.O. Box 1030
599 Research Parkway
Meriden, CT 06450
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties
are subject to all present and future valid laws with respect to
the subject matter, State and Federal, and to all valid present
and future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
<PAGE>
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
None
IN WITNESS WHEREOF, the Parties hereto have caused this
Service Agreement to be signed by their respective Presidents,
Vice Presidents, or other duly authorized agents and their
respective corporate seals to be hereto affixed and attested by
their respective Secretaries or Assistant Secretaries, the day
and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By: /s/ Robert B. Evans
--------------------------------
Vice President
ATTEST:
/s/ Robert W. Reed
- --------------------
Corporate Secretary
YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Vice President, Rates and
Resource Planning
ATTEST:
/s/ David C. Egelson
- --------------------
Manager - Supply
Planning and Acquisitions
<PAGE>
Exhibit 10.76
GAS PURCHASE CONTRACT
BETWEEN
YANKEE GAS SERVICES COMPANY
AS "BUYER"
AND
CHEVRON U.S.A. PRODUCTION COMPANY,
a division of Chevron U.S.A. Inc.
AS "SELLER"
Effective November 1, 1993
<PAGE>
GAS PURCHASE CONTRACT
---------------------
THIS CONTRACT, made and entered into as of the 1st day of
November, 1993, by and between YANKEE GAS SERVICES COMPANY,
herein referred to as "Buyer," and CHEVRON U.S.A. PRODUCTION
COMPANY, a division of Chevron U.S.A. Inc., herein referred to as
"Seller."
WITNESSETH
----------
WHEREAS, Seller has certain volumes of gas which are
available for sale; and
WHEREAS, Buyer desires to purchase such gas from Seller and
Seller desires to sell such gas to Buyer on a firm basis.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
For the purpose of this Contract, the following definitions
are applicable:
1.1 The term "Btu" means British thermal unit, and is the
quantity of heat required to raise the temperature of one pound
of water from fifty-eight and five-tenths degrees to fifty-nine
and five-tenths degrees Fahrenheit.
1.2 The term "Contract" means this agreement, including all
exhibits attached hereto and all amendments hereof that may be
made from time to time.
1.3 The term "day" means a period of twenty-four
consecutive hours, beginning and ending at 8:00 a.m. Eastern
Time.
1.4 The term "FERC" means the Federal Energy Regulatory
Commission or successor agency.
1.5 The term "MMBtu" means one million British thermal
units.
1.6 The term "month" means the period beginning at 8:00
a.m., Eastern Time, on the first day of a calendar month and
ending at 8:00 a.m., Eastern Time, on the first day of the next
succeeding calendar month.
1.7 The term "Party" or "Parties" means Seller and/or Buyer
under this Contract.
<PAGE>
1.8 The term "Point(s) of Delivery" means the point or
points on Transporter(s)' pipeline system where gas is to be
delivered by Seller to Transporter(s) for Buyer's account, as set
forth in Exhibit "A" attached hereto and made a part hereof.
1.9 The term "Transporter(s)" primarily means Texas Eastern
Transmission Corporation, but in addition may include any
upstream or downstream Transporter(s), as dictated by context.
1.10 The term "Transportation Segment" shall mean Texas
Eastern Transmission Corporation's East Louisiana Pooling Zone or
West Louisiana Pooling Zone, within which Seller is to deliver
and Buyer is to take Gas hereunder.
1.11 The term "Locked Price" shall mean the price per MMBtu
to be paid by Buyer, in lieu of the otherwise applicable
Commodity Charge, for Locked Quantities purchased hereunder. A
Locked Price shall be determined in accordance with Section 8.3
hereof.
1.12 The terms "Locked Quantity" or "Locked Quantities"
shall mean quantities of gas to be sold by Seller and purchased
by Buyer during any month during the term hereof, as to which a
Locked Price has been established.
1.13 The term "Minimum Locking Quantity" shall mean a
quantity of gas to be delivered during any month during the term
hereof, equal to the product of 5,000 MMBtus and the number of
days in said month.
1.14 The term "Unlocked Quantities" shall mean quantities
of gas as to which no Locked Price has been established.
ARTICLE 2
QUANTITY
----------
2.1 Seller's Obligation. Subject to the other provisions
of this Contract, Seller will make available to Buyer each day at
the Point(s) of Delivery daily volumes of natural gas equal to
the lesser of the Maximum Daily Quantity (MDQ) or ******** under
Paragraph 2.3 of this Contract, or pay a Deficiency Charge as
provided in Paragraph 2.5.B.
2.2 Buyer's Obligation. Subject to the other provisions of
this Contract, Buyer shall take from Seller each day at the
Point(s) of Delivery ******** under Paragraph 2.3 of this
Contract and shall pay Seller the applicable Reservation Fee and
Commodity Charge (or Locked Price, whichever is applicable),
together with any Deficiency Charge due pursuant to Paragraph
2.5.A.
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
2.3 Nominations. Gas shall be purchased and sold hereunder
in accordance with the following nomination procedure:
A. At least three business days prior to the Transporter's
first-of-the-month nomination deadline each month, Buyer shall
provide Seller a purchase nomination by telecopy, using the form
attached hereto as Exhibit "B," and stating the quantity of gas,
expressed in MMBtu's per day, to be purchased by Buyer hereunder
during the subsequent month (********). Buyer shall state
separately any portion of ******** which is for a Locked Quantity
of gas. Said ******** shall be for an amount less than or equal
to the MDQ, as set forth in Paragraph 2.4. At a time
sufficiently in advance of the Transporter's nomination deadline
to permit compliance with the nomination procedure, Seller shall
notify Buyer of the quantity that Seller intends to deliver at
each Point of Delivery to fulfill ********. ******** shall not
be subject to change during a month, and Seller shall have no
obligation to deliver quantities of gas in excess of ********.
B. If Buyer fails to provide Seller with a ******** for any
month, the ******** for said month shall be deemed to be equal to
the MDQ.
2.4 MDQ. The MDQ under this Contract shall be 10,443 MMBtu
per day, plus sufficient additional gas as the Transporter's
tariff may require from time to time as fuel and lost or
unaccounted for gas to effect delivery of the gas delivered
hereunder to Transporter's Zone M-3.
2.5 Deficiency Charges.
A. If Buyer fails on any day to purchase ******** for that
day pursuant to Paragraph 2.3, and to the extent that such
failure was not caused by force majeure or Seller's failure to
make appropriate volumes of gas available, a Deficiency Charge
shall apply. The unit Deficiency Charge shall be equal to the
amount, if any, by which the Commodity Charge applicable under
this Contract during the month in which the deficiency occurred
(or the Locked Price, if the deficiency pertains to Locked
Quantities) exceeds the weekly NGW Spot Price, as hereinafter
defined, for the Texas Eastern Transmission Corp. Pooling Zone in
which the deficient quantity was to have been delivered by
Seller. The "weekly NGW Spot Price" shall be determined by
reference to the table "Spot Prices On Interstate Pipeline
Systems, Delivered-to-Pipeline" in the issue of Natural Gas Week
published during the week following the week in which the
deficiency occurred. The price used will be the price per MMBtu
quoted for gas delivered to Texas Eastern Transmission Corp. in
the appropriate Pooling Zone under the column labeled "This
Week." The unit Deficiency Charge will then be multiplied by the
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
unexcused deficiency quantity. If an unexcused ******** occurs
in more than one week, the unit Deficiency Charge will be
separately computed for each week and applied to the unexcused
deficiency quantity for that week. If an unexcused ********
occurs in more than one Pooling Zone during a month, the unit
Deficiency Charge shall be calculated separately for each Pooling
Zone and shall be applied to the deficient quantities which were
to have been delivered in each such Pooling Zone. The unexcused
deficiency quantity shall be ******** for each day, less (a) the
volumes actually purchased by Buyer on such day and (b) any
volumes which Buyer was prevented from purchasing on such day by
force majeure or Seller's failure to make appropriate volumes of
gas available. Any Deficiency Charges incurred in a month may be
included in Seller's invoice for deliveries during that month or
in the next succeeding invoice issued by Seller after the
Deficiency Charge has been calculated. Payment for the
Deficiency Charge shall be due on the payable date of the invoice
in which it is included.
B. If Seller fails, in whole or in part, to make available
to Buyer on any day ******** for that day, and if such failure is
not excused by an event of force majeure or Buyer's failure to
take quantities of gas which Seller was ready, willing and able
to deliver, Seller shall pay Buyer a Deficiency Charge equal to
the unexcused shortfall in delivery from ********, multiplied by
the difference between (a) the Commodity Charge which was
applicable during the month in which the deficiency occurred (or
the Locked Price, if the deficiency pertains to Locked
Quantities) plus Buyer's cost of transportation that would have
been incurred from the Delivery Point(s) to Buyer's city gate,
and (b) the price Buyer paid to obtain and deliver to Buyer's
city gate alternate fuel supplies (including, without limitation,
natural gas, fuel oil, propane, penalty gas, and/or after-the-
fact corrections such as cash outs); provided, that if Buyer is
unable after reasonable efforts (with due consideration being
given to all relevant circumstances) to obtain such alternate
fuel supplies then Buyer's replacement cost shall be deemed to be
equal to the rate applicable under the Transporter's FERC tariff
for imbalance or unauthorized overrun gas. Buyer shall use its
best efforts, acting in a commercially reasonable manner (with
due consideration being given to all relevant circumstances), to
obtain alternate fuel supplies at the lowest available price.
Seller agrees to pay Buyer any Deficiency Charges to which Buyer
is entitled under this Section on or before the tenth day after
Seller receives a written calculation of the amount of such
charges from Buyer.
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
C. Neither Party shall be liable in any event for
consequential damages or losses which may be suffered by the
other as a result of the failure to deliver or take the required
quantities of gas, and both Parties agree that recovery of
Deficiency Charges as set forth in this Section 2.5 shall
constitute the sole and exclusive remedies for any such failure
to deliver or receive gas.
ARTICLE 3
TRANSPORTATION
--------------
3.1 Transportation Guidelines. The Transporter(s)' rules,
guidelines, operational procedures and policies, as they may be
changed from time to time, shall define and control the manner in
which gas delivered and sold under this Contract is transported.
Seller and Buyer each agree to provide to the other, in as prompt
a manner as reasonable, all information necessary to permit
scheduling pursuant to such requirements.
3.2 Transportation Imbalances. If Seller delivers or
Buyer takes a quantity of gas not equal to the quantity ********,
a "Transportation Imbalance" may occur. Upon notification by the
other Party or the Transporter that a Transportation Imbalance
exists, each Party will exercise its best efforts to correct the
Transportation Imbalance, subject to any restrictions imposed by
the Transporter(s). Buyer and Seller agree to use their best
efforts to prevent or diminish any occurrences of imbalances by
adjusting their ******** and/or actual flow rates, as necessary,
and to minimize any imbalance penalties through the use of
imbalance trading procedures or other available methods.
******** made pursuant to this Article for the purpose of
******** shall ******** the parties' ******** under Article 2
hereof.
3.2.1 ********. The Transporter's tariff or applicable
contracts may contain provisions under which, in the ********
hereunder, a Party to this Contract may be required to ********
from the Transporter or ******** to the Transporter at prices
determined pursuant to the Transporter's tariff or the ********
(such purchases and/or sales being referred to herein as "cash
outs"). If one Party hereto is required by the Transporter to
******** caused by the other Party's ******** of gas ******** for
transportation, the Party whose act or omission caused the
******** shall ******** the other Party for the ********. For
purposes of this Contract, ******** shall be the ******** by
which the ******** at which a Party is required to ********, if
applicable) in effect under Article 8 hereof during the month in
which the ********, or the ******** if applicable) in effect
under Article 8 hereof during the month in which the ******** the
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
******** at which a Party is required to ********, in each case
********. To the extent that a ******** due to a ******** in the
Transporter's tariff or applicable contract, the ******** of each
tolerance level shall be computed separately and applied to the
quantity of gas ******** at that level.
3.2.2 ******** shall hold ******** from all costs and
penalties, other than those described in Section 3.2.1, which may
be assessed by the Transporter(s) against ******** as a result of
******** of gas caused by ********. ******** shall hold ********
harmless from all costs and penalties other than those described
in Section 3.2.1 which may be assessed by the Transporter(s) as a
result of ******** of gas caused by ********.
3.2.3 Minimization of Penalties. If any costs or penalties
associated with the transportation of Gas are anticipated, the
Party becoming aware that such costs or penalties may be assessed
or incurred shall inform the other Party as soon as the Party
becomes aware, followed by notice in writing. Each Party shall
then immediately cooperate in good faith with the other Party to
minimize or eliminate, if possible, such costs or penalties. The
Parties shall cooperate with each other and with the Transporter
to verify delivery and receipt of monthly nominated quantities on
a timely basis.
3.3 Cooperation and Verification. The Parties shall
cooperate with each other and with the Transporter to verify
delivery and receipt of Gas under this Contract on a timely
basis.
3.4 Upstream Transportation. Seller shall be responsible
for transportation to the Point(s) of Delivery and payment of all
transportation charges relating thereto. Buyer shall be
responsible for transportation from the Point(s) of Delivery and
payment of all transportation charges relating thereto.
ARTICLE 4
QUALITY
---------
4.1 Transporter(s)' Specifications. All gas delivered
hereunder shall conform to the quality specifications set forth
in the transportation agreement and/or FERC-approved tariff of
the Transporter receiving the gas for Buyer's account at the
Point(s) of Delivery. If any of the gas delivered by Seller
hereunder fails to meet such specifications, then Buyer shall
have the right to refuse to accept deliveries of such
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
nonconforming gas, and, should Seller fail to replace the
nonconforming gas as soon as possible (but in no event later than
the first day for which Transporter will accept gas from Seller
to replace the nonconforming gas), such failure shall be deemed
to be a failure by Seller to sell and deliver a quantity of gas
under Section 2.5.B hereof, and Buyer may purchase deficiency gas
and be reimbursed for the cost of such purchases as provided
therein. If the Transporter's quality specifications are
changed to be more stringent and the gas from the sources Seller
is then utilizing to supply this Contract fails to meet the new
specifications, Seller shall have the option of either (a)
installing any necessary equipment to conform the gas to the new
specifications or (b) terminating this Contract upon not less
than sixty days prior written notice to Buyer.
4.2 Testing. Buyer shall have the right to be represented
and to participate in all tests of gas delivered hereunder, and
to inspect any equipment used in determining the quality of gas
delivered hereunder.
ARTICLE 5
DELIVERY AND PRESSURE; TITLE AND CONTROL; LIABILITY
-----------------------------------------------
5.1 Delivery and Pressure. All gas to be sold and
purchased hereunder shall be delivered to Buyer at the Point(s)
of Delivery, as listed in Exhibit "A," at pressures sufficient to
enter Transporter(s)' facilities from time to time.
5.2 Title and Control. Title to the gas delivered
hereunder shall pass to and vest in Buyer at the Point(s) of
Delivery. Seller shall be deemed to be in exclusive control and
possession of said gas prior to delivery to Buyer, and Buyer
shall be deemed to be in exclusive control and possession of said
gas thereafter.
5.3 Liability. The Party deemed to be in control and
possession of the gas sold hereunder shall be responsible for and
shall indemnify, defend and hold the other Party harmless with
respect to any losses, claims, liabilities or damages arising
therefrom when such gas is deemed to be in that Party's control
and possession.
ARTICLE 6
MEASUREMENT
-----------
Units of Measurement. The unit of volume for measurement of
gas delivered hereunder shall be one cubic foot of gas at a base
temperature of sixty degrees Fahrenheit and at an absolute
pressure of fourteen and seventy-three hundredths pounds per
square inch. The sales unit of the gas shall be one MMBtu,
<PAGE>
determined on a dry basis. All measurements of gas delivered and
sold hereunder shall be in accordance with the provisions of
Transporter(s)' tariff(s) as applicable at the Point(s) of
Delivery.
ARTICLE 7
RESERVATION FEE
---------------
As consideration for the right to nominate and receive
quantities of gas each month up to the applicable MDQ, Buyer
shall pay Seller each month the monthly Reservation Fee,
regardless of the quantities of gas actually purchased by Buyer
in such month. The monthly Reservation Fee shall be calculated
each month by multiplying the MDQ as stated in Section 2.4,
including fuel and lost and unaccounted for gas as required by
the Transporter's tariff, by ******** and multiplying the result
by the number of days in that month.
ARTICLE 8
PRICE
---------
8.1 Commodity Charge. For each MMBtu of gas delivered to
Buyer by Seller at the Point(s) of Delivery, except any Locked
Quantities, Buyer shall pay Seller a Commodity Charge which shall
be equal to the Inside FERC Index Price (hereinafter defined) for
deliveries in the Texas Eastern Transmission Corp. Pooling Zone
in which the gas is delivered by Seller. The Inside FERC Index
Price shall be the price per MMBtu quoted in the first issue
published during the delivery month of Inside FERC's Gas Market
Report in the table entitled "Prices of Spot Gas Delivered to
Pipelines (per MMBtu dry)" under the column entitled "Index." If
Seller delivers gas hereunder in more than one Pooling Zone
during a month, the Inside FERC Index Price for each Pooling Zone
shall be applied to the quantities delivered in each such Pooling
Zone.
8.2 Temporary Interruption of Index Publication. If the
requisite price quotes utilized to establish the Commodity Charge
are unavailable for any reason, then, until the Parties agree on
a replacement method of determining the Commodity Charge, the
Commodity Charge shall equal the average of the closing prices
for the three last days of trading of gas futures contracts for
the applicable month on the New York Mercantile Exchange
("NYMEX"), plus or minus the average (rounded to the nearest
cent), over the twelve most recent months, of the differences
between the NYMEX closing price for gas futures contracts and the
Commodity Charge as determined by reference to the publication
described above.
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
8.3 Locked Price. Subject to the terms set forth herein,
in lieu of paying the applicable Commodity Charge hereunder,
Buyer may lock the price of all or a portion of the gas to be
purchased during the term hereof, by notifying one of Seller's
authorized representatives by telephone of Buyer's desire to lock
a price on such gas.
8.3.1 Timing for Requesting Locked Price. Buyer may
request quote of a Locked Price for gas to be delivered hereunder
by telephone on any regular Chevron business day, between the
hours of 8:30 a.m. and 2:00 p.m., local Houston, Texas time, up
to and including the seventh Chevron business day prior to the
beginning of the month to which the Locked Price shall apply.
8.3.2 Procedures. As soon as possible after Buyer's
telephonic request, but in any event within 24 hours (excluding
weekends and Chevron holidays), Seller shall determine the price
per MMBtu at which it is willing and able to lock a price and
shall notify Buyer's authorized representative of such price. If
Buyer accepts such Locked Price, then Seller shall forward to
Buyer a "Price Lock Confirmation", similar to the form attached
hereto as Exhibit "C", which specifies the terms to which the
Parties have agreed. Said Price Lock Confirmation shall be
forwarded to Buyer prior to the beginning of the month in which
deliveries are to be made. The terms set forth in the Price Lock
Confirmation shall be binding upon the Parties unless Buyer
notifies Seller in writing that Buyer disputes one or more of the
terms set forth in said Price Lock Confirmation within forty-
eight hours, exclusive of weekends and Chevron holidays, after
Buyer receives the same. Any terms which remain undisputed after
expiration of said period shall be binding on the Parties, and
the Parties shall work together in good faith to resolve any
disputes as expeditiously as possible.
8.3.3 Minimum Quantities; Multiple Price Locks. Buyer may
request a Locked Price only on quantities for the applicable
month which are greater than or equal to the Minimum Locking
Quantity. Buyer may request and establish a Locked Price for a
particular month more than once, so long as Buyer meets the
requirements of this Section 8.3 with regard to timing and
quantities. Seller at its option may include all Locked Prices
and Locked Quantities in one Price Lock Confirmation for any
applicable month.
8.3.4. Irrevocability; Nominations; Allocation. Once a
Locked Price has been established for a month hereunder, the
Locked Price shall be irrevocable as to the affected Locked
Quantities, and shall not thereafter be subject to change.
Additionally, for any month as to which a Locked Price has been
established, Buyer shall be obligated to nominate and take a
quantity of gas equal to the Locked Quantities then in effect.
If Buyer elects to establish a Locked Price for less than all of
<PAGE>
the gas nominated to be delivered in any month, and/or if Buyer
and Seller have established more than one Locked Price for
different Locked Quantities, the first gas delivered during said
month shall be the first Locked Quantities established, followed
by any additional Locked Quantities in the order they were
established, followed by any Unlocked Quantities.
8.3.5. Cessation of Futures Trading. If natural gas
futures contracts cease to be traded on the New York Mercantile
Exchange or on any other mercantile exchange acceptable to Seller
in its sole discretion, then after such cessation Seller shall be
relieved of any and all obligation to establish Locked Prices
hereunder.
ARTICLE 9
BILLING AND PAYMENT; AUDIT RIGHTS; CREDIT TERMS
-----------------------------------------------
9.1 Billing and Payment. Not later than the fifteenth day
of each month, Seller shall provide Buyer an invoice (which may
be transmitted by electronic facsimile) setting forth (a) the
Reservation Fee due for the current month, (b) the quantities of
gas delivered at the Point(s) of Delivery during the preceding
month and the amount due therefor, and (c) any deficiency
payments due pursuant to Paragraph 2.5. For example, Seller's
invoice rendered during the month of April would cover gas
delivered during the preceding month of March, any deficiency
payment due for failure to receive or deliver quantities of gas
in March, and the Reservation Fee for April. If actual volumes
are not available at the time Seller issues its invoice, Seller
may invoice based on the volumes ********, subject to appropriate
adjustments to actual volumes when available. Buyer shall make
payment by wire transfer within ten business days following
receipt of Seller's invoice.
9.2 Bona Fide Disputes. If a bona fide dispute arises as
to the amount payable in any invoice rendered hereunder, Buyer
shall nevertheless pay when due the amount not in dispute under
such invoice. Such payment shall not be deemed to be a waiver of
the right by Buyer to recoup any overpayment, nor shall
acceptance of any payment be deemed to be a waiver by Seller of
any underpayment. In the event Buyer fails to forward the entire
undisputed amount due to Seller when same is due, interest on the
unpaid portion shall accrue at a rate equal to two percent above
the prime rate charged by Wells Fargo Bank, San Francisco, from
time to time, or the maximum legal rate, whichever is the lesser,
compounded monthly from the date such payment is due until the
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
same is paid. If Buyer's failure to pay the undisputed portion
of any invoice rendered hereunder continues beyond thirty days
after the due date of the payment, then Seller, in addition to
all other legal remedies available to it, shall have the right
and option to suspend further deliveries of gas until such
default shall have been cured.
9.3 Resolution of Billing Disputes. If Buyer withholds
payment of any disputed amount as authorized herein, Buyer shall
within fifteen days after the due date of the disputed invoice
submit to Seller a written explanation of the dispute and any
available supporting documentation. The parties shall then
cooperate in good faith to resolve such dispute as expeditiously
as possible, and the portion, if any, of such disputed amount
eventually determined to be due shall bear interest at the rate
stated in Paragraph 9.2 of this Article 9 from the original due
date until the date actually paid.
9.4 Audit. Each Party shall have the right, during the
term of this Contract and for twenty-four months thereafter, to
examine and audit, at its own expense and at any reasonable time,
the books, records and charts of the other to the extent
necessary to verify the accuracy of any statements or charges
made under or pursuant to any of the provisions of this Contract;
provided, however, that neither Party shall be required to
maintain books, records or charts for a period of more than two
calendar years following the end of the calendar year to which
they pertain. Upon request, Buyer shall also make available to
Seller for audit purposes any relevant records of Buyer's
Transporter(s) to which Buyer has access. A formal audit of
accounts shall not be made more often than once each calendar
year. Any inaccuracy will be promptly corrected when discovered;
provided, however, that neither Party shall have any right to
question or contest any charge or credit if the matter is not
called to the attention of the other Party in writing within two
years after the end of the calendar year to which such charge or
credit pertained.
9.5 Credit Terms. Prior to the commencement of deliveries
of gas hereunder, and at any time and from time to time
thereafter upon request from Seller, Buyer shall provide Seller
such credit information as may reasonably be required by Seller
to determine Buyer's creditworthiness. If, based on the
information provided and Seller's review thereof using generally
accepted financial evaluation standards applied on a non-
discriminatory basis, Seller concludes that Buyer does not
currently meet Seller's reasonable requirements for extension of
unsecured credit in an amount commensurate with the estimated
outstanding receivables under this Contract, Seller may request
and Buyer shall promptly provide an irrevocable standby letter of
credit, guaranty, or other good and sufficient security of a
continuing nature, satisfactory in form, issuer and amount to
<PAGE>
Seller, as determined by Seller in its reasonable discretion.
Seller will periodically review its evaluation of Buyer's
creditworthiness and will release any such security instruments
when and if Seller concludes, applying the standards set forth
above, that Buyer meets Seller's requirements for extension of
unsecured credit. Seller shall have the right to delay
commencement of deliveries, or suspend deliveries after they are
commenced, pending Buyer's full compliance with this Paragraph
9.5.
ARTICLE 10
PROCESSING RIGHTS AND INJECTION OF LIQUIDS
------------------------------------------
10.1 Seller hereby reserves the right to process all or any
portion of the gas deliverable to Buyer hereunder for the removal
of all or any constituents thereof other than methane, and to
remove such methane as is necessary in the operation of the
processing facilities; provided, however, that Seller's exercise
of such rights shall not have the effect of reducing the
quantities of gas (determined on a thermal basis) sold and
delivered hereunder below Buyer's Nominated Purchase Quantity
pursuant to Article II hereof. Such processing rights may be
exercised either upstream of or, if the Transporter allows,
downstream of the Delivery Point(s) and may be accomplished by
Seller or by any assignee or designee of Seller; provided,
however, that if Seller elects to process gas downstream of the
Delivery Point(s), Seller shall deliver to Transporter for
Buyer's account any additional quantities of gas necessary to
account for any reduction in quantity and/or heating value that
may result from such processing. When Seller is exercising its
right to process the gas (and such right may be exercised at any
time and from time to time during the term of this Contract),
title to the liquefiable hydrocarbons and other constituents
removed or consumed during processing shall not pass to Buyer,
but shall remain at all times in Seller. Buyer and Seller agree
that they will cooperate in good faith to facilitate the exercise
of Seller's processing rights, including, without limitation,
taking the actions described in the remainder of this Article 10.
10.2 Regardless of whether or not Seller initially elects
to process the gas, Buyer shall make reasonable efforts to ensure
that all transportation agreements entered into by Buyer for
transportation of the gas downstream of the Point(s) of Delivery
shall contain a provision acknowledging and providing for the
exercise of Seller's processing rights upon reasonable terms and
conditions at a mutually agreeable point on the system of
Transporter.
<PAGE>
10.3 When and if Seller elects to exercise its processing
rights, Buyer and Seller will establish reasonable accounting and
billing procedures so that (a)Buyer will pay only for the
quantities of residue gas remaining after processing (b) all
charges of the Transporter will be equitably allocated between
Buyer and Seller, with Seller paying all costs attributable to
the exercise of its processing rights (including any cash-outs
imposed by Transporter) and Buyer paying all costs attributable
to the gas purchased by it hereunder.
10.4 It is understood that Seller's gas wells may produce
liquid hydrocarbons (condensate) along with the gas well gas to
be delivered hereunder. To the extent that any Point of Delivery
provided for in this Contract is located on an offshore platform,
Buyer agrees that Seller may inject condensate into the gas
stream delivered hereunder for transportation and redelivery to
Seller at a separation facility to be located onshore. Buyer
shall make reasonable efforts to ensure that all transportation
agreements entered into by Buyer for transportation of the gas
downstream of any offshore Point(s) of Delivery shall contain a
reservation in favor of Seller of the right to inject and have
such condensate transported in Transporter's pipeline for
redelivery to Seller at the onshore separation facility. Seller
agrees to bear, or reimburse Buyer for, all charges of
Transporter attributable to the injection, transportation, and
redelivery of Seller's condensate.
10.5 Buyer shall furnish Seller with documentation
establishing the actual charges incurred by Buyer and borne by
Seller under Paragraphs 10.3 and 10.4. Such documentation shall
reflect the method of allocation of such charges between Buyer
and Seller.
10.6 Seller shall indemnify and save Buyer harmless from
all losses, damages, expenses, and liabilities (including
reasonable attorneys' fees) that may occur or be asserted by
reason of accidents or occurrences resulting from Seller's or any
third party's operations as authorized by this Article 10.
ARTICLE 11
TAXES
----------
The price for gas delivered hereunder is inclusive of all
production, severance, ad valorem, or similar taxes levied on the
production or transportation of the gas prior to its delivery to
or for the account of Buyer at the Point(s) of Delivery, and all
such taxes shall be borne and paid exclusively by Seller;
provided, however, that if Buyer is required by law to remit such
taxes to the collecting authority, Buyer shall do so and deduct
the taxes so paid on Seller's behalf from payments otherwise due
to Seller hereunder. The price does not include any Federal,
<PAGE>
Indian, State or local sale, use, consumption or similar taxes
which may now or hereafter be imposed on the transfer of title or
possession of the gas to or for the account of Buyer, or on
Buyer's subsequent use or disposition thereof. Any such taxes
shall be paid by Buyer directly to the taxing authority unless
Seller is required by law to collect and remit such taxes, in
which case Buyer shall reimburse Seller for all amounts so paid.
If Buyer claims exemption from any such taxes, Buyer shall
provide Seller a tax exemption certificate or other appropriate
documentation thereof.
ARTICLE 12
LAWS AND REGULATION
-------------------
This Contract is subject to all valid laws, orders, rules
and/or regulations of any and all duly constituted governmental
authorities, Federal, State or local, to the extent such laws,
regulations, and orders are applicable and effective from time to
time; provided, however, that if any such governmental authority
shall take any action or assert any jurisdiction whereby the
sale, delivery, receipt, or use of gas as contemplated hereunder
will be subjected to terms, conditions, or restraints that in the
sole judgment of the Party affected are unduly burdensome or
unacceptable, then such Party, within 30 days after learning of
such action or assertion of jurisdiction, may cancel and
terminate this Contract effective one day prior to the effective
date of such governmental action. In the event of such
termination, the parties agree that all gas received by Buyer
hereunder prior to cessation of deliveries shall be paid for by
Buyer at the rate in effect immediately prior to the termination
of this Contract.
ARTICLE 13
FORCE MAJEURE
-------------
13.1 Suspension of Obligations During Force Majeure. If
either Party hereto is rendered unable, wholly or in part, by
force majeure to carry out its obligations under this Contract,
other than to make payment for gas delivered hereunder, then upon
such Party's giving notice and full particulars of such force
majeure in writing to the other Party as soon as practicable
after the occurrence of the cause relied on, the obligations of
both parties, except unpaid financial obligations arising prior
to the force majeure event, shall be suspended to the extent
and insofar as they are affected by the force majeure event, for
the duration of the force majeure event, but for no longer
period, and to the extent that the force majeure situation can be
mitigated or eliminated by the exercise of due diligence by the
Party claiming force majeure, such Party shall act to remedy the
situation with all reasonable dispatch.
<PAGE>
13.2 Relationship of Force Majeure to Seller's Supply
Obligations Under This and Other Contracts. The Parties
acknowledge and agree that Seller may make sales of gas to other
buyers under other firm contracts and that those other contracts
may provide for deliveries of gas on the same Transportation
Segment(s) as this Contract. The Parties further recognize that
a force majeure occurrence affecting Seller's ability to deliver
gas on a Transportation Segment could result in Seller's having
less gas available on that Transportation Segment than Seller is
contractually obligated to deliver under all of those contracts.
If a force majeure occurrence results in Seller's total supply of
available gas on a Transportation Segment being less than the sum
of Seller's total firm sales obligations on that Transportation
Segment, even if such available supply is sufficient to fulfill
Seller's obligations under one or more of such contracts, then
such force majeure occurrence shall be deemed to have rendered
Seller unable to fulfill its obligations under each one of such
contracts, including this Contract, and Seller shall be entitled
to the protection afforded by Section 13.1 so long as Seller
endeavors in good faith to allocate its available supply in
accordance with Section 13.4, giving due regard to the nature of
the force majeure occurrence, any restrictions imposed by
transporters, and the time required for Seller to make alternate
arrangements.
13.3 Definition of Force Majeure. The term "force majeure"
as employed herein means acts of God, strikes, lockouts, or other
industrial disturbances, acts of the public enemy, wars,
blockades, insurrections, riots, epidemics, landslides,
lightning, hurricanes or storms, hurricane or storm warnings
which in Seller's judgment require the precautionary shut-down or
evacuation of production facilities, earthquakes, fires, floods,
washouts, arrest and restraints of governments and people, civil
disturbances, explosions, breakage or accidents to machinery,
equipment, or lines of pipe, freezing of wells or lines of pipe,
partial or entire failure of wells, and any other cause beyond
the reasonable control of the Party affected which renders that
Party unable to carry out its obligations under this Contract.
The settlement of strikes or lockouts shall be entirely within
the discretion of the Party having the difficulty, and the above
requirements that any force majeure shall be remedied with all
reasonable dispatch shall not require the settlement of strikes
or lockouts by acceding to the demands of opposing party when
such course is inadvisable in the discretion of the Party having
the difficulty.
13.4 Allocation of Supplies During Force Majeure
Occurrences. The Parties recognize and agree that there are no
specific reserves or wells dedicated to this Contract, and that
designation of a Point or Points of Delivery hereunder does not
mean that any gas flowing to any such Point or Points of Delivery
is dedicated specifically to this Contract or to any other
<PAGE>
contract before actually being delivered to a buyer. In the
event of a force majeure occurrence affecting Seller's ability to
deliver gas on one or more Transportation Segments associated
with this Contract, unless prevented by the force majeure from
doing so, Seller shall take the following actions, in the order
listed, to the extent reasonably necessary to maintain or restore
its deliveries to Buyer and Seller's other firm sales customers,
which, for all purposes of this Article 13 shall be deemed to
include any of Seller's own corporate facilities receiving gas on
the affected Transportation Segment(s) under a written memorandum
of understanding:
1. Curtailing or interrupting some or all of Seller's
interruptible sales on the affected Transportation Segment(s).
2. Delivering all or part of the gas to be delivered
hereunder at any mutually agreeable alternate Point(s) of
Delivery on the affected Transportation Segment(s) (excluding any
storage facilities owned or held by Seller) where Seller has gas
which can be delivered to Buyer without violating other
contractual obligations of Seller.
If, in response to a force majeure occurrence, Seller takes the
above actions and still is unable to meet all of its firm sales
obligations on the affected Transportation Segment(s), then
Seller shall curtail ratably its firm sales customers (including
Buyer) receiving gas on the affected Transportation Segment(s)
based on each customer's nominated quantities on the affected
Transportation Segment(s). If, at the inception of any force
majeure occurrence, Seller is delivering gas from a single source
to more than one Transportation Segment (i.e., from a split-
connected source) Seller shall curtail deliveries from that
source to each such Transportation Segment on a pro rata basis,
based on the relative quantities nominated by Seller's firm
customers on each of the affected Transportation Segments.
13.5 Special Arrangements. During any period when Buyer's
Nominated Purchase Quantity is being prorated as provided above,
Seller shall also use reasonable efforts to locate and offer to
Buyer substitute gas supplies on other Transportation Segments or
other pipeline systems in the vicinity of the affected
Transportation Segment, but only to the extent that (a) Buyer has
so requested, (b) Seller can do so without violating Seller's
contractual obligations to other customers, and (c) Buyer and
Seller first agree on the allocation between them of any
additional costs incurred in utilizing such alternate sources.
If such substitute supplies are available, Seller shall use
reasonable efforts to equitably allocate them among Buyer and
other adversely affected firm customers which are capable of
receiving gas at the alternate sources.
<PAGE>
ARTICLE 14
WARRANTY OF TITLE AND ROYALTIES
-------------------------------
14.1 Title. Seller hereby warrants title to the gas sold
by it hereunder and its right to sell the same and warrants that
all such gas shall be delivered by Seller free from all liens,
encumbrances and adverse claims, including, but not limited to
liens to secure payment of production taxes, severance taxes and
other taxes.
14.2 Royalties and Other Charges. Seller shall pay or
cause to be paid all royalties and other sums due on the
gathering and handling of the gas prior to its delivery to Buyer.
14.3 Indemnity. Seller shall indemnify and save Buyer
harmless from and against all suits, actions, damages, costs and
expenses arising from or out of any breach of Seller's
obligations, representations, or warranties as expressed in this
Article 14.
ARTICLE 15
TERM
----------
This Contract shall become effective as of the date first
above written and shall continue in force and effect, unless
terminated earlier under the provisions hereof, for a primary
term of five months. After the primary term, this Contract shall
continue in effect on a month to month basis, unless and until
terminated by either Party giving written notice to the other at
least thirty days prior to the end of the primary term or any
successive one month extension.
ARTICLE 16
RESOLUTION OF DISPUTES
----------------------
16.1 Any dispute arising under any paragraph of this
Contract shall be resolved as provided in this Article. During
the process of dispute resolution, the parties shall continue
performance of their respective obligations under this Contract.
16.2 Prior to resorting to mediation or litigation, the
parties agree to consult about any differences they may have
under this Contract.
16.3 Prior to initiating litigation hereunder, the parties
agree to attempt to mediate their dispute through the selection
of a mutually acceptable neutral mediator upon such terms and
conditions as they might agree to.
<PAGE>
16.4 If, after a period of two months after selection of
the neutral mediator, the parties are unable to reach agreement
through mediation, either Party may then resort to litigation or
any other legal remedy which may be available to resolve the
dispute.
16.5 Neither Party shall be required to delay the
commencement of litigation in order to comply with this Section
16 unless the other Party first agrees to toll any applicable
statute of limitations that might otherwise require commencement
of litigation to preserve either Party's rights in the disputed
matter.
ARTICLE 17
CONFIDENTIALITY
---------------
17.1 Except as specifically provided herein, each Party
agrees that it will maintain this Contract and all terms and
conditions of this Contract in strictest confidence and that it
will not cause or permit disclosure of this Contract or of the
contents thereof to any third party without the express written
consent of the other Party hereto; provided, however, that such
third party restriction does not apply to affiliated companies.
Disclosures otherwise prohibited by this Article 17 may be made
by either Party (a) to the extent necessary for such Party to
enforce its rights hereunder against the other Party, (b) to the
extent a Party is contractually or legally bound to disclose
financial information to a third party such as a royalty owner or
partner, or (c) to the extent to which a Party hereto is required
to disclose all or part of this specific Contract by a statute or
by a court, agency, or other governmental body exercising
jurisdiction over the subject matter hereof or the parties
hereto, by order, regulation or by other compulsory process
(including, but not limited to, deposition, subpoena,
interrogatory, or request for production of documents).
17.2 If either Party is or becomes aware of a fact,
obligation or circumstance that has resulted or may result in a
disclosure authorized in Section 17.1, it shall so notify the
other Party immediately and shall provide documentation or an
explanation of the disclosure as soon as it is available. Each
Party further agrees to cooperate to the fullest extent in
seeking confidential status to protect any material so disclosed.
17.3 The Parties hereto acknowledge that independent legal
counsel or consultants may, from time to time, be provided with a
copy of this Contract and agree that such disclosure does not
require consent by the other Party, provided that such counsel or
consultant affirms in writing to the client that they agree to
abide by the terms and conditions of this Article 17.
<PAGE>
ARTICLE 18
MISCELLANEOUS
-------------
18.1 Waivers. No waiver by either Seller or Buyer of any
default of the other under this Contract shall operate as a
waiver of future default, whether of like or different character
or nature.
18.2 Binding Nature; Assignment As Security. This Contract
shall be binding upon and inure to the benefit of the successors
and assigns, or the heirs, administrators, or executors of the
Parties hereto. Either Party hereto may assign its right, title
and interest in, to and under this Contract, including without
limitation, any and all renewals, extensions, amendments, and/or
supplements herein to any individual, bank, trustee, company or
corporation as security for any notes, bonds or other obligations
or securities of such assignor; provided, however, that no such
assignment shall in any way operate to enlarge, alter or change
any obligation of the other Party hereto.
18.3 Assignment. Seller and Buyer reserve the right to
assign this Contract partially or in its entirety to any of their
affiliates; however, ultimate responsibility for performance
hereunder shall remain with the respective Party hereto. Except
as otherwise provided in this Contract, this Contract may not be
assigned by either Party without the written agreement of the
other Party.
18.4 Notices. Any notice, request, demand, or statement,
provided for in this Contract, except as otherwise herein
provided, may be given in writing, delivered in person or by
United States Mail or by any other recognized delivery service,
to the parties hereto at the addresses shown below or at such
other addresses as may hereafter be furnished to the other Party
in writing:
BUYER: INVOICES, NOTICES, AND CORRESPONDENCE
Yankee Gas Services Company
P.O. Box 1030
599 Research Parkway
Meriden, Connecticut 06450-4050
Attention: Mr. Dave Egelson
Telecopy No.: (203) 639-4050
SELLER: Correspondence and Notices
Chevron U.S.A. Production Company
1301 McKinney
P.O. Box 2100
Houston, TX 77252
Attention: Natural Gas Supply and Marketing
Payments Shall Be Made By Wire Transfer To:
Chevron U.S.A. Production Company
Account No. 59-51704
First National Bank of Chicago, Illinois
ABA Ref. No. 071000013
Statements
Chevron U.S.A. Production Company
P.O. Box J - Section 726 G - East Team
Concord, California 94524
Any notice initially delivered by telecopy shall be confirmed by
regular mail within one week after transmission of the telecopy.
18.5 Choice of Law. The parties agree that Connecticut law
exclusively shall govern all terms of this Contract, including
this paragraph, disregarding, however, any applicable conflict-
of-laws provisions that would require the application of the law
of some other state. If either Party initiates litigation
relating to this Contract, then, in addition to complying with
any applicable statutory notice requirements, such Party shall
give the other Party notice thereof by certified mail, return
receipt requested, at the most recent address provided by such
Party in accordance with Section 18.4.
18.6 Modifications. No modification of the terms and
provisions of this Contract shall be or become effective except
pursuant to and upon the due and mutual execution of an
appropriate supplemental written contract by the Parties hereto.
18.7 No Third Party Beneficiaries. It is specifically
agreed that there are no third party beneficiaries to this Contr-
act, and that this Contract shall not impart any rights
enforceable by any person, firm, organization, or corporation not
a Party hereto.
18.8 Conflicts of Interest. No director, employee, or agent
of either Party shall give or receive any commission, fee,
rebate, gift, or entertainment of significant cost or value in
connection with this Contract. Any mutually agreeable
representative(s) authorized by either Party may audit the
applicable records of the other Party solely for the purpose of
determining whether there has been compliance with this
paragraph.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Contract
in duplicate originals, each of which shall constitute and be an
original contract.
BUYER: YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
--------------------------------
Title: Vice President - Rates and
Resource Planning
SELLER: CHEVRON U.S.A PRODUCTION
COMPANY, a division of
Chevron U.S.A. Inc.
By: /s/ D. H. MacLean
---------------------------------
Title: Assistant Secretary
<PAGE>
EXHIBIT A
To Gas Purchase Contract effective November 1, 1993,
between CHEVRON U.S.A. PRODUCTION COMPANY, as Seller
and
YANKEE GAS SERVICES COMPANY, as Buyer.
POINTS OF DELIVERY
<TABLE>
<CAPTION>
Texas Eastern
Pooling Zone Delivery Point Maximum Quantity
- ----------------- -------------- ----------------
<S> <C> <C>
West Louisiana Pool Cameron System ******** MMBtu/day*
Service Point
No. 79503**
East Louisiana Pool Venice System ******** MMBtu/day*
Service Point
No. 79504**
</TABLE>
* Plus fuel and lost and unaccounted for gas as required by the
Transporter's tariff.
** Chevron will deliver to the listed Service Points using its
TABS-I Agreement, which is currently designated as No. 600243.
********CONDIFENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
EXHIBIT B
To Gas Purchase Contract effective November 1, 1993,
between CHEVRON U.S.A. PRODUCTION COMPANY, as Seller
and
YANKEE GAS SERVICES COMPANY, as Buyer.
BUYER'S MONTHLY PURCHASE NOMINATION
To: Chevron U.S.A. Production Company
1301 McKinney Street
P.O. Box 2100
Houston, TX 77252
Attention: Natural Gas Business Unit--Gas Control
Telecopy No. (713) 754-3840
Buyer's Nominated Purchase Quantity under the captioned contract
for the month of , 199 , inclusive of any Price
Locked quantities, shall be a total of MMBtu per day,
plus fuel and lost and unaccounted for gas as required by the
Transporter's tariff.
If any daily quantities included in the above total have been
Price Locked pursuant to Paragraph 8.3 of the Contract they are
listed separately below:
<TABLE>
<CAPTION>
Locked Locked Date of
Quantity Price Price Lock Confirmation
<S> <C> <C> <C>
MMBtu/d $
- --------- ---------- ------------------------------
MMBtu/d $
- --------- ---------- ------------------------------
MMBtu/d $
- --------- ---------- ------------------------------
</TABLE>
YANKEE GAS SERVICES COMPANY
By:
---------------------------
Title:
-------------------------
Date:
--------------------
<PAGE>
EXHIBIT "C"
To Gas Purchase Contract effective November 1, 1993,
between CHEVRON U.S.A. PRODUCTION COMPANY, as Seller
and
YANKEE GAS SERVICES COMPANY, as Buyer.
[Date]
Price Lock Confirmation
Under Gas Purchase Contract
Our Contract No.
--------------
Yankee Gas Services Company
P.O. Box 1030
599 Research Parkway
Meriden, Connecticut 06450-4050
Attention: Mr. Dave Egelson
Gentlemen:
In accordance with that certain Gas Purchase Contract effective
November 1, 1993, by and between Chevron U.S.A. Production
Company, a division of Chevron U.S.A. Inc., as Seller, and,
Yankee Gas Services Company, as Buyer, which contract is
incorporated herein and made a part hereof, Seller hereby
confirms establishment of the following "Locked Price" and
"Locked Quantities" as previously discussed and agreed orally:
Date of Parties' Oral Agreement:
----------------------------
Month of Delivery Affected:
---------------------------------
Locked Quantities (MMBtus/day):
------------------------------
Locked Price ($/MMBtu):
--------------------------------------
Previously Locked Quantities for this month:
----------------
Remaining Unlocked Quantities (MMBtus/day):
-----------------
THIS PRICE LOCK CONFIRMATION IS BINDING UPON THE PARTIES UNLESS
BUYER NOTIFIES SELLER OF A DISPUTE WITH ALL OR A PORTION HEREOF
FORTY-EIGHT (48) HOURS (EXCLUSIVE OF WEEKENDS AND CHEVRON
HOLIDAYS) AFTER BUYER'S RECEIPT THEREOF.
<PAGE>
Very truly yours,
CHEVRON U.S.A. PRODUCTION COMPANY,
a division of Chevron U.S.A. Inc.
By:
---------------------------
Trading Representative
Date
---------------------
Approval and Execution
Review: CA T/M/ETR
--------
<PAGE>
Exhibit 10.77
Firm Gas Sales Agreement
This Firm Gas Sales Agreement is made as of November 1, 1993
("Effective Date") by and between ********. ("Seller") and Yankee
Gas Services Company ("Buyer").
Buyer and Seller Hereby Stipulate and Agree as Follows:
Article 1: Quantity
1.1 "Maximum Daily Quantity" (MDQ) is the maximum amount of gas,
expressed in MMBTU per day, that Seller agrees that it shall sell
and deliver to Buyer. Buyer and Seller agree that the MDQ herein
shall be 13,000 MMBTU per day, at the Delivery Point(s), plus
fuel to Texas Eastern Transmission Corporation s Zone M-3.
1.2 At least two (2) Business Days prior to the time of day each
Month that monthly nominations are due to Transporter, Buyer
shall notify Seller in writing of the Nominated Daily Quantity
(NDQ) that Buyer desires to purchase and take from Seller in the
next Month. If Buyer fails to notify Seller of the NDQ on or
before the date specified in this section, Buyer's NDQ shall be
deemed to be unchanged from the last effective nomination.
Seller shall sell and deliver 100% of the NDQ on a firm basis,
and Buyer shall purchase and receive 100% of the NDQ on a firm
basis pursuant to the terms of this agreement.
1.3 If Buyer in any month takes less than 100% of the NDQ
multiplied by the number of days in said month and such "under
takes" are not the fault of Seller or excused by Force Majeure or
other provisions herein, Buyer shall pay Seller a Deficiency
Charge. The unit Deficiency Charge shall be equal to the amount,
if any, by which the Commodity Charge applicable under this
Contract during the month in which the deficiency occurred
exceeds 90% of the weekly NGW Spot Price, as hereinafter defined,
for the Texas Eastern Transmission Corp. Pooling Zone in which
the deficient quantity was to have been delivered by Seller. The
"weekly NGW Spot Price" shall be determined by reference to the
table "Spot Prices On Interstate Pipeline Systems, Delivered-to-
pipeline" in the issue of Natural Gas Week published during the
week following the week in which the deficiency occurred. The
price used will be the price per MMBtu quoted for gas delivered
to Texas Eastern Transmission Corp. in the appropriate Pooling
Zone under the column labeled "This Week". The unit Deficiency
Charge will then be multiplied by the unexcused deficiency
quantity. If an unexcused deficiency occurs in more than one
week, the unit Deficiency Charge will be separately computed for
each week and applied to the unexcused deficiency quantity for
that week. If an unexcused deficiency occurs in more than one
********CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
Pooling Zone during a month, the unit Deficiency Charge shall be
calculated separately for each Pooling Zone and shall be applied
to the deficient quantities which were to have been delivered in
each such Pooling Zone. The unexcused deficiency quantity shall
be the total volumes nominated by Buyer for each day, less (a)
the volumes actually purchased by Buyer on such day and (b) any
volumes which Buyer was prevented from purchasing on such day by
force majeure or Seller's failure to make appropriate volumes of
gas available. Any Deficiency Charges incurred in a month may be
included in Seller's invoice issued by Seller after the
Deficiency Charge has been calculated. Payment for the
Deficiency Charge shall be due on the payable date of the invoice
in which it is included.
1.4 If Seller on any day delivers less than the NDQ in effect
for that day and such "under deliveries" are not the fault of
Buyer or excused by Force Majeure or other provisions herein,
Seller shall pay Buyer, a Deficiency Charge. The Deficiency
Charge will be equal to the amount, if any, of the unexcused
shortfall in delivery from the nominated quantities, multiplied
by the difference between the Commodity Charge which was
applicable during the month in which the deficiency occurred and
the price Buyer paid to obtain alternate supplies (including
without limitation, natural gas, fuel oil, propane, penalty gas,
and/or after-the fact corrections such as cash-outs). The
price(s) of such alternate supplies shall be calculated on a
city-gate basis, inclusive of all transportation and related
costs, and shall be compared with the price provided in this
Contract as adjusted to a city-gate basis, inclusive of all
transportation and related costs; provided that Buyer shall use
its best efforts, acting in a commercially reasonable manner
(with due consideration given to all relevant circumstances), to
obtain said deficiency quantity on a least cost basis. If Buyer
is unable to purchase gas from an alternate source and incurs an
imbalance penalty or an authorized or unauthorized overrun
penalty from the Transporter, Seller will reimburse Buyer for
such penalty. In no event shall the amount owed by Seller under
this section exceed a maximum limit ********. Seller agrees to
pay Buyer any Deficiency Charges to which Buyer is entitled under
this Section on or before the tenth day after Seller receives a
written calculation and supporting documentation of such damages
from Buyer.
1.5 Deficiency Charges provided for herein shall be Seller's and
Buyer's sole remedy for any failure to take or deliver the NDQ.
********CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
Article 2: Reservations
2.1 Seller reserves unto itself the sole and exclusive right to
manage its gas supply without interference of Buyer or third
parties. Such right includes, but is not limited to, Seller's
right to process, or have processed, the gas for the recovery of
liquefiable hydrocarbons or any nonhydrocarbon components, helium
or other inert elements or compounds of such gas. Title to all
such extracted components thereof shall not pass to Buyer.
Seller's exercise of such rights shall not have the effect of
reducing the quantities of gas (determined on a thermal basis)
sold and delivered hereunder below the quantities nominated by
Buyer pursuant to Section 1.2 hereof; any such reduction below
the quantities nominated by Buyer shall be deemed to be a failure
to sell and deliver under Section 1.4 hereof, and the remedy
there provided shall be applicable.
Article 3: Delivery Point(s)
3.1 The "Delivery Point(s)" are defined as the points at which
delivery of the gas purchased herein shall be made. The initial
Delivery Point(s) agreed to herein are as follows:
West Louisiana Pool: 5,000 MMBtu/day plus fuel
South Texas Pool: 6,000 MMBtu/day plus fuel
East Louisiana Pool: 2,000 MMBtu/day plus fuel
Article 4: Commodity Price
4.1 The "Commodity Price", in $/MMBtu, paid by Buyer each month
for gas quantities delivered by Seller to the Delivery Point(s)
for Buyer's account shall be the price per MMBtu for gas
delivered into the appropriate pooling zone of Transporter, as
quoted in the first issue published during the delivery month of
Inside FERC's Gas Market Report, in the table entitled "Prices of
Spot Gas Delivered to Pipelines (per MMBtu dry)" under the column
entitled "Index"
Article 5: Supply Management Service Charge
5.1 For each month of the term hereof, Buyer shall pay Seller an
amount (Service Charge) for each Month equal to ******** per
MMBtu multiplied by the number of Days in the Month and by the
MDQ (which quantity shall include the applicable fuel retention
in Dt). Buyer shall be obligated to pay the Service Charge to
Seller each Month without regard to the quantities actually
purchased and received by Buyer during each Month.
********CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
Article 6: Term
6.1 This agreement shall become effective as of November 1, 1993
and shall remain in full force and effect through March 31, 1994.
Article 7: Billing and Payment
7.1 Each month following deliveries hereunder, Seller shall
render Buyer an invoice showing the gas volume delivered during
the preceding month and the amount due Seller. If actual volumes
are not available, Seller's invoice shall be made based upon
Seller's best volume estimates. Any accounting adjustments shall
be made in Seller s succeeding month s invoice. For invoices
sent to Buyer on or before the fifteenth (15th) day of the month
following deliveries, payment is due to Seller by the twenty-
fifth (25th) day of such month. For invoices sent to Buyer after
the fifteenth (15th) day, payment is due to Seller ten (10) days
after the invoice is sent. Buyer shall make payment by wire
transfer. If Buyer does not pay Seller within such time, Seller,
in addition to other options which may be available at law, may
stop deliveries hereunder. Before stopping deliveries, however,
Seller must first offer Buyer, by written notice, the opportunity
to furnish a good and sufficient surety bond guaranteeing payment
to Seller of the amount ultimately found due after a final
determination of such amount; and if Buyer shall furnish such
surety bond within ten days of receiving Seller s notice, Seller
shall not be entitled to suspend deliveries of gas until default
be made in the conditions of such bond.
7.2 Interest shall accrue on any late payment by Buyer at an
interest rate of ******** above the prime interest rate
reported for Chase Manhattan Bank, N.A. in the financial section
of the Wall Street Journal for the date the payment became past
due.
7.3 If during the term of this agreement, Seller determines that
the financial ability of Buyer has become impaired or
unsatisfactory, advance cash payment or other satisfactory
security acceptable to Seller shall be given by Buyer upon demand
by Seller and delivery of gas may be withheld until such payment
or other security is received. If such payment or other security
is not received within three (3) days of demand, Seller may
terminate this agreement at any time thereafter upon written
notice to Buyer.
********CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
Article 8: Measurement and Quality
8.1 Gas shall be measured and delivered at the Delivery
Point(s), and shall meet the standards set forth in the published
tariff of the transporting pipeline at such Point(s). If any of
the gas delivered hereunder fails to meet such quality and
pressure specifications, then Buyer will have the right to refuse
to accept deliveries of such nonconforming gas, and, should
Seller fail to replace the nonconforming gas as soon as possible
(but in no event later than the first day for which Transporter
will accept gas from Seller to replace the nonconforming gas),
such failure shall be deemed to be a failure by Seller to sell
and deliver a quantity of gas under Section 1.4 hereof, and Buyer
may purchase deficiency gas and be reimbursed for the cost of
such purchases as provided therein.
Article 9: Title and Risk of Loss
9.1 Seller warrants the title to the gas delivered hereunder,
that it has good and lawful authority to sell such gas, and that
such gas is free from all liens and adverse claims of any kind or
character. Seller agrees to indemnify and hold Buyer harmless
from all claims, suits, actions, debts, accounts, damages, costs,
losses, and expenses of every kind and character arising out of
any adverse claim to or against such title. Title to the gas
sold and delivered and risk of loss shall pass from Seller to
Buyer at the Delivery Point(s).
9.2 Seller shall be deemed to be in control and in possession of
the gas and responsible, as between the parties, for any damage,
injury or penalty caused or associated with its actions in
handling such gas until such gas shall have been delivered at the
Delivery Point(s), and Seller shall indemnify and hold Buyer
harmless for any and all claims, losses, damages, and costs,
including reasonable fees of attorneys, arising from such
actions. Buyer shall be deemed to be in control and in
possession of the gas and responsible, as between the parties,
for any damage, injury, or penalty caused or associated with its
actions in handling such gas after such gas shall have been
received at the Delivery Point(s), and Buyer shall indemnify and
hold Seller harmless from any and all claims, losses, damages,
and costs, including reasonable fees of attorneys, arising from
such actions.
9.3 In no event shall either party be liable for special,
incidental, exemplary, punitive, or consequential damages
including, but not limited to, loss of profit or revenue, cost of
capital, cost of substitute products, downtime costs, or claims
for damages by third parties upon Buyer or Seller. This applies
whether claims are based upon contract, warranty, tort (including
negligence and strict liability), or otherwise.
<PAGE>
Article 10: Force Majeure
10.1 In the event that either Seller or Buyer is rendered unable,
by reason of an event of force majeure, to perform wholly or in
part any obligation or commitment set forth herein, then,
provided that such Party gives notice and reasonably full
particulars of such event as soon as practicable after the
occurrence thereof, the obligations of both parties, except for
unpaid financial obligations arising prior to such event of force
majeure, shall be suspended to the extent of, and insofar as they
are affected by, such force majeure event and for the duration of
the force majeure event.
10.2 The term "force majeure" as employed herein shall mean acts
of God, strikes, lockouts, or industrial disputes or
disturbances, civil disturbances, arrests and restraints of
rulers and peoples, interruptions by government or court orders,
necessity for compliance with any court order, law, statute,
ordinance, or regulation promulgated by a governmental authority
having jurisdiction, acts of the public enemy, war, riots,
blockades, insurrections, inability to secure labor or materials,
including inability to secure materials by reason of allocations
promulgated by authorized governmental agencies, inability to
obtain gas supplies at any price, epidemics, landslides,
lightning, earthquakes, fire, storms, floods, washouts, inclement
weather that would necessitate extraordinary measures and expense
to construct facilities and/or maintain operations, explosions,
breakage or accident to machinery or wells or lines of pipe,
freezing of wells or pipelines, inability to obtain or delays in
obtaining easements or rights of way, shutting-in of facilities
for the making of repairs, alterations, or maintenance to wells,
pipelines, or plants, interruption or curtailment of
transportation, gathering, treating, compression, or other such
services which Buyer or Seller require of third parties, or any
other cause not reasonably within the control of the Party
claiming force majeure; provided, however, that neither the loss
of markets by Buyer nor the inability of Seller to acquire
supplies at prices satisfactory to Seller shall be considered
force majeure events.
10.3 To the extent such force majeure situation can be mitigated
or eliminated by the exercise of due diligence by the Party
claiming force majeure, such Party shall act to remedy the
situation with all reasonable dispatch; provided, however, that
settlement of strikes and lockouts will be entirely within the
discretion of the Party affected, and the requirement that any
event of force majeure be remedied with all reasonable dispatch
(1) will not require the settlement of strikes and lockouts by
acceding to the demands of the parties directly or indirectly
involved in such strikes or lockouts when such course is
inadvisable in the discretion of the Party having the difficulty,
and (2) shall not obligate either Party to undertake
<PAGE>
unreasonable or uneconomic costs or burdens to remove the
conditions of force majeure. Each Party may use its own
discretion, acting as a reasonable and prudent business person,
in attempting to overcome force majeure conditions.
Article 11: Transportation Imbalances
11.1 If imbalance penalties, including without limitation
pipeline imbalance "Cash Outs", are imposed by a pipeline due to
Seller s failure to deliver the NDQ, then Seller shall be
responsible for paying said penalties. If imbalance penalties,
including pipeline imbalance "Cash Outs," are imposed by a
pipeline due to Buyer s failure to take the NDQ, then Buyer shall
be responsible for paying said penalties. Each party agrees to
promptly notify the other of any imbalances that are occurring or
have occurred, and to act in good faith to attempt to correct the
imbalance prior to the imposition of any penalties.
Article 12: Taxes
12.1 Seller shall cause to be paid all severance and similar
taxes with respect to the gas the taxable incident of which
occurs prior to its delivery to the Delivery Point(s). The sales
Price includes reimbursement for severance and similar taxes.
The sales Price excludes sales, use, or similar taxes. If
applicable law requires, such taxes shall be collected from Buyer
by Seller and remitted to the appropriate taxing jurisdiction,
unless Buyer issues Seller: (i) a valid certificate or other
evidence of nontaxability or (ii) evidence of direct payment
authorization by Buyer.
12.2 Buyer shall cause to be paid all taxes with respect to the
gas the taxable incident of which occurs at or after its delivery
to the Delivery Point(s).
Article 13: Miscellaneous
13.1 Performance is subject to all existing valid laws, orders,
judgments, regulations, or otherwise, of courts or regulatory
bodies having jurisdiction. This agreement shall be governed by
the laws of the State of Connecticut without recourse to any
provision or principle governing choice of law or conflicts of
law which might require reference to the laws of another forum.
13.2 Neither party shall assign all or any part of this agreement
to a third party, except an affiliate, without the written
consent from the other party, which consent shall not be
unreasonably withheld.
<PAGE>
13.3 Any notice, request, or invoice ("Document(s)") provided for
in this agreement between Buyer and Seller shall be in writing.
Such Document(s) may be transmitted via ordinary mail, telecopy,
or other recognized means of delivery, and shall be considered as
duly delivered as of the earliest of the receipt date indicated
on the telecopy, the postmark date when mailed by ordinary mail,
or the day of actual receipt when sent by other means of
delivery, to the other party at the following address:
(a) Notice to Seller: ********
Attn: Contracts Administration
********
(b) Notice to Buyer: Yankee Gas Services Company
599 Research Parkway
Meriden, CT 06450-1030
Attn: Dave Egelson
Telecopy: (203) 639-4050
(c) Statement to Buyer: Yankee Gas Services Company
599 Research Parkway
Meriden, CT 06450-1030
Attn: Dave Egelson
Telecopy: (203) 639-4050
(d) Wire Transfer Payments to Seller:
********
(e) Supporting documentation/correspondence for applicable
wire transfers should be sent to:
********
13.2 SELLER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, THAT
THE GOODS SOLD UNDER THIS AGREEMENT ARE FIT FOR ANY PARTICULAR
PURPOSE.
13.3 SELLER AND BUYER, EACH TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EXPRESSLY WAIVES THE PROVISIONS OF AND ANY
RIGHTS, CLAIMS OR CAUSES OF ACTION UNDER 17.41 THROUGH 17.63
(EXCLUDING THE PROVISION OF SECTION 17.555, WHICH ARE NOT
WAIVED), INCLUSIVE, OF THE TEXAS BUSINESS AND COMMERCE CODE (THE
"TEXAS DECEPTIVE TRADE PRACTICES ACT"), TEX. BUS. & COM. CODE
ANN. SECTION 17.41 ET SEQ. (VERNON 1987)".
********CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
In witness whereof, the parties have duly executed this
agreement effective as of the day and year first above written.
******** Yankee Gas Services Company
By: By:
---------------------- ---------------------------
Title: Title:
-------------------- -------------------------
Date: Date:
-------------------- -------------------------
********CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
Exhibit 10.78
FIRM GAS SALES AGREEMENT
This FIRM GAS SALES AGREEMENT is made as of November 1, 1993 by
and between Mobil Natural Gas Inc., ("Seller") and Yankee Gas
Services Company ("Buyer").
WITNESSETH
WHEREAS, Seller has certain volumes of gas which are
available for sale; and
WHEREAS, Buyer desires to purchase such gas from Seller and
Seller desires to sell such gas to Buyer, both on a firm basis.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
1.1 The term "Btu" means British thermal unit, and is the
quantity of heat energy required to raise the temperature of one
avoirdupois pound of water from 58.5 to 59.5 degrees Fahrenheit.
1.2 The term "Contract" means this agreement, including all
exhibits attached hereto and all amendments hereof that may be
made from time to time.
1.3 The term "day" means a period of twenty-four
consecutive hours, beginning and ending at 8:00 a.m. Eastern
Time.
1.4 The term "FERC" means the Federal Energy Regulatory
Commission or successor agency.
1.5 The term "MMBtu" means one million British thermal
units.
1.6 The term "month" means the period beginning at
8:00 a.m., Eastern Time, on the first day of a calendar month
and ending at 8:00 a.m., Eastern Time, on the first day of the
next succeeding calendar month.
1.7 The term "Party" or "Parties" means Seller
and/or Buyer under this Contract.
1.8 The term "Point(s) of Delivery" means the point or
points on Transporter(s)' pipeline system where gas is to be
delivered by Seller to Transporter(s) for Buyer's account, as set
forth in Exhibit A attached hereto and made a part hereof.
1.9 The term "Transporter(s)" means primarily Texas Eastern
Transmission Corporation, but in addition may include any
upstream or downstream Transporter(s), as dictated by context.
<PAGE>
1.10 The term "Transportation Segment" shall mean Texas
Eastern Transmission Corporation's East Louisiana Pooling Zone or
West Louisiana Pooling Zone, within which Seller is to deliver
and Buyer is take gas hereunder.
ARTICLE 2
Quantity
2.1 Seller's Obligation. Subject to the other provisions
of this Contract, Seller will make available to Buyer each day,
on a firm basis, at the Point(s) of Delivery, on a firm basis,
daily quantities of natural gas equal to the lesser of the
Maximum Dally Quantity ("MDQ") or Buyer's Nominated Purchase
Quantity ("NPQ") under Sections 2.4 through 2.6 of this Contract,
as applicable, or pay a Deficiency Charge as provided in Section
2.8.B.
2.2 Buyer's Obligation. Subject to the other provisions of
this Contract, Buyer shall take from Seller each day at the
Point(s) of Delivery, on a firm basis, Buyer's Nominated Purchase
Quantity under Sections 2.4 through 2.6 of this Contract, as
applicable, and shall pay Seller the applicable Reservation Fee
and Commodity Charge, together with any Deficiency Charge due
pursuant to Section 2.8.A.
2.3 MDQ. The MDQ under this Contract shall be 15,000 MMBtu
per day, plus sufficient additional gas as Transporter's tariff
may require from time to time as fuel to effect delivery of the
gas delivered hereunder to Transporter's Zone M-3.
2.4 At least two business days prior to the time each month
that monthly nominations are due to Transporter, Buyer shall
notify Seller in writing of the NPQ that Buyer desires to
purchase and take from Seller on the first day of the next Month.
The first-of-month NPQ may be any quantity of gas from zero up to
the full MDQ. If Buyer fails to notify Seller of a new NPQ for
the next month on or before the date specified in this section,
Buyer's NPQ for the first day of the next month shall be deemed
to be unchanged from the last effective nomination.
2.5 At any time during a month, Buyer may increase or
decrease the NPQ; provided, however, that the change shall not be
less than 5,000 MMBtu (plus fuel), with the total NPQ never to
exceed the MDQ; and provided, further, that Buyer may not so
change the NPQ under this section more than four times in any
given month.
<PAGE>
2.6 After making the four changes in NPQ permitted under
Section 2.5, Buyer may further increase or decrease the NPQ at
any time during a month; provided, however, that the change shall
not be less than 5,000 MMBtu (plus fuel), with the total NPQ
never to exceed the MDQ; and provided, further, that for each
such increase or decrease Buyer will pay the renomination fee set
forth in Section 7.2 hereof.
2.7 Buyer shall provide Seller with at least one business
da y's notice of any nomination increase or decrease under
Sections 2.5 and 2.6.
2.8 If Buyer fails on any day to purchase the total
quantity of gas nominated by Buyer for that day pursuant to this
Article 2, and to the extent that such failure was not caused by
force majeure or Seller's failure to make appropriate quantities
of gas available, a Deficiency Charge shall apply. The unit
Deficiency Charge shall be equal to the amount, if any by which
the Commodity Charge applicable under this Contract during the
month in which the deficiency occurred exceeds the weekly NGW
Spot Price, as hereinafter defined, for the Texas Eastern
Transmission Corp. Pooling Zone in which the deficient quantity
was to have been delivered by Seller. The "weekly NGW Spot
Price" shall be determined by reference to the table "Spot Prices
On Interstate Pipeline Systems, Delivered-to Pipeline" in the
issue of Natural Gas Week published during the week following the
week in which the deficiency occurred. The price used will be
the price per MMBtu quoted for gas delivered to Texas Eastern
Transmission Corporation in the appropriate Pooling Zone under
the column labeled "This Week." The unit Deficiency Charge will
then be multiplied by the unexcused deficiency quantity. If an
unexcused purchase deficiency occurs in more than one week, the
unit Deficiency Charge will be separately computed for each week
and applied to the unexcused deficiency quantity for that week.
If an unexcused purchase deficiency occurs in more than one
Pooling Zone during a month, the unit Deficiency Charge shall be
calculated separately for each Pooling Zone and shall be applied
to the deficient quantities which were to have been delivered in
each such Pooling Zone. The unexcused deficiency quantity shall
be Buyer's NPQ for each day, less (a) the volumes actually
purchased by Buyer on such day and (b) any volumes which Buyer
was prevented from purchasing on such day by force majeure or
Seller's failure to make appropriate volumes of gas available.
Any Deficiency Charges incurred in a month may be included in
Seller's invoice for deliveries during that month or in the next
succeeding invoice issued by Seller after the Deficiency Charge
has been calculated. Payment for the Deficiency Charge shall be
due on the payable date of the invoice in which it is included.
<PAGE>
B. If Seller fails, in whole or in part, to make
available to Buyer on any day Buyer's NPQ for that day, and if
such failure is not excused by an event of force majeure or
Buyer's failure to take quantities of gas which Seller was ready,
willing, and able to deliver, Seller shall pay Buyer a Deficiency
Charge equal to the unexcused shortfall in delivery from the NPQ,
multiplied by the difference between (a) the Commodity Charge
which was applicable during the month in which the deficiency
occurred plus Buyer's cost of transportation that would have been
incurred from the Delivery Point(s) to Buyer's city gate, and (b)
the price Buyer paid to obtain and deliver to Buyer's city gate
alternate fuel supplies (including, without limitation, natural
gas, fuel oil, propane, penalty gas, and/or after-the-fact
corrections such as cash outs); provided, however, that if Buyer
is unable after reasonable efforts (with due consideration being
given to all relevant circumstances) to obtain such alternate
fuel supplies, then Buyer's replacement cost shall be deemed to
be equal to the rate applicable under the Transporter's FERC
tariff for imbalance or unauthorized overrun gas. Buyer shall
use its best efforts, acting in a commercially reasonable manner
(with due consideration being given to all relevant
circumstances), to obtain alternate fuel supplies at the lowest
available price. Seller agrees to pay Buyer any Deficiency
Charges to which Buyer is entitled under this section on or
before the tenth day after Seller receives a written calculation
of the amount of such charges from Buyer.
C. Except for Transportation Imbalances discussed in
Article 3 herein, below, neither Party shall be liable in any
event for consequential damages or losses which may be suffered
by the other as a result of the failure to deliver or take the
required quantities of gas, and both Parties agree that recovery
of Deficiency Charges as set forth in this Section 2.8 shall
constitute the sole and exclusive remedies for any such failure
to deliver or receive gas.
ARTICLE 3
Transportation
--------------
3.1 Transportation Guidelines. The Transporter(s)' rules,
guidelines, operational procedures and policies, as they may be
changed from time to time, shall define and control the manner in
which gas delivered and sold under this Contract is transported.
Seller and Buyer each agree to provide to the other, in as prompt
a manner as reasonable, all information necessary to permit
scheduling pursuant to such requirements.
<PAGE>
3.2 Transportation Imbalances. If Seller delivers or Buyer
takes a quantity of gas not equal to the quantity nominated for
transportation, a "Transportation Imbalance" may occur. Upon
notification by the other Party or Transporter that a
Transportation Imbalance exists, each Party will exercise its
best efforts to correct the Transportation Imbalance, subject to
any restrictions imposed by Transporter(s). Buyer and Seller
agree to use their best efforts to prevent or diminish any
occurrences of imbalances by adjusting their transportation
nominations to match actual flow rates as closely as possible,
and to minimize any imbalance penalties through the use of
imbalance trading procedures or other available methods.
Adjustments to transportation nominations made pursuant to this
Article for the purpose of avoiding or minimizing Transportation
Imbalances shall not modify the parties' obligations or remedies
under Article 2 hereof.
3.3 Costs and Penalties. Saner shall hold Buyer harmless
from all costs and penalties which may be assessed by
Transporter(s) against Buyer as a result of over or under-
delivery of gas caused by Seller. Buyer shall hold Seller
harmless from all costs and penalties which may be assessed by
Transporter(s) against Seller as a result of over or under-takes
of gas caused by Buyer. If any such costs or penalties are
anticipated, the Party becoming aware that such costs or
penalties may be assessed or incurred shall inform the other
Party as soon as the Party becomes aware, followed by notice in
writing. Each Party shall then immediately cooperate in good
faith with the other Party to minimize or eliminate, if possible,
such costs or penalties. Notwithstanding the foregoing,
transportation imbalances cashed out with the Transporter(s)
shall be governed by Section 3.4, rather than this Section.
3.4 Cash Out of Imbalances. If one party hereto is
required by the Transporter to cash out an imbalance caused by
the other party's failure to deliver or receive the quantity of
gas nominated and confirmed for transportation, the party at
fault shall reimburse the other party for the penalty component
of the cash out price. For purposes of this Contract, the
penalty component of a cash out price shall be the amount(s) by
which the price(s) at which a party is required to buy the cashed
out quantity(ies) exceed(s) the Commodity Charge in effect under
Article 8 hereof during the month in which the imbalance accrued,
or the amount(s) by which the Commodity Charge in effect under
Article 8 hereof during the month in which the imbalance accrued
exceeds the price(s) at which a party is required to sell the
cashed out quantity(ies), in each case multiplied by the cashed
out quantity(ies).
<PAGE>
3.5 Cooperation and Verification. The Parties shall
cooperate with each other and with the Transporter to verify
delivery and receipt of gas under this Contract on a timely
basis.
3.6 Upstream Transportation . Seller shall be responsible
for transportation to and at the Point(s) of Delivery and payment
of all transportation charges relating thereto. Buyer shall be
responsible for transportation from the Point(s) of Delivery and
payment of all transportation charges relating thereto.
ARTICLE 4
Quality
-------
4.1 Transporter(s)' Specifications. All gas delivered
hereunder shall conform to the quality specifications set forth
in the transportation agreement and/or FERC-approved tariff of
the Transporter receiving the gas for Buyer's account at the
Point(s) of Delivery. If any of the gas delivered by Seller
hereunder fails to meet such specifications, then Buyer shall
have the right to refuse to accept deliveries of such
nonconforming gas, and, should Seller fail to replace the
nonconforming gas as soon as possible (but in no event later than
the first day for which Transporter will accept gas from Seller
to replace the nonconforming gas), such failure shall be deemed
to be a failure by Seller to sell and deliver a quantity of gas
under Section 2.5.B hereof, and Buyer may purchase deficiency gas
and be reimbursed for the cost of such purchases as provided
therein. If the Transporter's quality specifications are changed
to be more stringent and the gas from the sources Seller is then
utilizing to supply this Contract fails to meet the new
specifications, Seller shall have the option of either (a)
installing any necessary equipment to conform the gas to the new
specifications or (b) terminating this Contract upon not less
than sixty days prior written notice to Buyer.
4.2 Testing. Buyer shall have the right to be represented
and to participate in all tests of gas delivered hereunder, and
to inspect any equipment used in determining the quality of gas
delivered hereunder.
ARTICLE 5
Delivery and Pressure: Title and Control: Liability.
----------------------------------------------------
5.1 Delivery and Pressure. All gas to be sold and
purchased hereunder shall be delivered to Buyer at the Point(s)
of Delivery, as listed in Exhibit A, at pressures sufficient to
enter Transporter(s)' facilities from time to time.
<PAGE>
5.2 Title and Control. Title to the gas delivered
hereunder shall pass to and vest in Buyer at the Point(s) of
Delivery. Seller shall be deemed to be in exclusive control and
possession of said gas prior to delivery to Buyer, and Buyer
shall be deemed to be in exclusive control and possession of said
gas thereafter.
5.3 Liability. The party deemed to be in control and
possession of the gas hereunder shall be responsible for and
shall indemnify, defend and hold the other party harmless with
respect to any losses, claims, liabilities or damages arising
therefrom when such gas is deemed to be in that Party's control
and possession.
ARTICLE 6
Measurement
-----------
6.1 Units of Measurement. The unit of volume for
measurement of gas delivered hereunder shall be one cubic foot of
gas at a base temperature of sixty degrees Fahrenheit and at an
absolute pressure of fourteen and seventy-three hundredths pounds
per square inch. The sales unit of the gas shall be one MMBtu,
determined on a dry basis. All measurements of gas delivered and
sold hereunder shall be in accordance with the provisions of
Transporter(s)' tariff(s) as applicable at the Point(s) of
Delivery.
ARTICLE 7
Reservation Fee
---------------
7.1 Reservation Fee. As consideration for the right to
nominate and receive quantities of gas each month up to the -
applicable MDQ, Buyer shall pay Seller each month the monthly
Reservation Fee, regardless of the quantities of gas actually
purchased by Buyer in such month. The monthly Reservation Fee
shall be calculated each month by ********, includng fuel as
required by the Transporter's tariff, by ******** and ********.
7.2 Renomination Fee: For each change made in any month in
the NPQ pursuant to Section 2.6, Buyer shall pay a Renomination
Fee equal to (a) three percent (3%) of the Commodity Charge
under Section 8.1 multiplied by (b) the increase or decrease in
the NPQ from the previously effective NPQ multiplied by (c) the
number of days remaining in the month from the date when the
change in NPQ becomes effective until the end of the month. All
such Renomination Fees shall be cumulative in any given month,
even if the NPQ on which any Renomination Fee is based is
subsequently changed.
********CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THIS
DELETED INFORMATION
<PAGE>
ARTICLE 8
Price
---------
8.1 Commodity Charge. For each MMBtu of gas delivered to
Buyer by Seller at the Point(s) of Delivery, Buyer shall pay
Seller a Commodity Charge which shall be equal to the Inside FERC
Index Price (hereinafter defined) for deliveries in the Texas
Eastern Transmission Corporation Pooling Zone in which the gas is
delivered by Seller. The Inside FERC Index Price shall be the
price per MMBtu quoted in the first issue published during the
delivery month of Inside FERC's Gas Market Report in the table
entitled "Prices of Spot Gas Delivered to Pipelines (per MMBtu
dry)" under the column entitled "Index." If Seller delivers gas
hereunder in more than one Pooling Zone during a month, the
Inside FERC Index Price for each Pooling Zone shall be applied to
the quantities delivered in each such Pooling Zone.
8.2 Temporary Interruption of Index Publication. If the
requisite price quotes utilized to established the Commodity
Charge are unavailable for any reason, then, until the Parties
agree on a replacement method of determining the Commodity
Charge, the Commodity Charge shall equal the average of the
closing prices for the three last days of trading of gas futures
contracts for the applicable month on the New York Mercantile
Exchange ("NYMEX"), plus or minus the average (rounded to the
nearest cent), over the twelve most recent months, of the
differences between the NYMEX closing price for gas futures
contracts and the Commodity Charge as determined by reference to
the publication described above.
ARTICLE 9
Billing and Payment: Audit Rights: Credit Terms
-----------------------------------------------
9.1 Billing and Payment. Not later than the fifteenth day
of each month, Seller shall provide Buyer an invoice (which may
be transmitted by electronic facsimile) setting forth (a) the
Reservation Fee due for the current month, (b) the quantities of
gas delivered at the Point(s) of Delivery during, the preceding
month and the amount due therefor, and (c) any deficiency
payments due pursuant to Paragraph 2.8. For example, Seller's
invoice rendered during the month of April would cover gas
delivered furing the preceding month of March, any deficiency
payment due for failure to receive or deliver quantities of gas
in March, and the Reservation Fee for April. If actual volumes
are not available at the time Seller issues its invoice, Seller
may invoice -based on the volumes nominated and confirmed for
transportation, subject to appropriate adjustments to actual
volumes when available. Buyer shall make payment by wire
transfer within ten business days following receipt of Seller's
invoice.
<PAGE>
9.2 Bona Fide Disputes. If a bona fide dispute arises as
to the amount payable in any invoice rendered hereunder, Buyer
shall nevertheless pay when due the amount not in dispute under
such invoice. Such payment shall not be deemed to be a waiver of
the right by Buyer to recoup any overpayment, nor shall
acceptance of any payment be deemed to be a waiver by Seller of
any underpayment. In the event Buyer fails to forward the entire
undisputed amount due to Seller when same is due, interest on the
unpaid portion shall accrue at a rate equal to two percent (2%)
above the prime rate charged by Chase Manhattan Bank, N.A., from
time to time, or the maximum legal rate, whichever is the lesser,
compounded monthly from the date such payment is due until the
same is paid. If Buyer's failure to pay the undisputed portion
of any invoice rendered hereunder continues beyond thirty days
after the due date of such payment, then Seller, in addition to
all other legal remedies available to it, shall have the right
and option to suspend further deliveries of gas until such
default shall have been cured.
9.3 Resolution of Billing Disputes. If Buyer withholds
payment of any disputed amount as authorized herein, Buyer shall
within fifteen days after the due date of the disputed invoice
submit to Seller a written explanation of the dispute and any
available supporting documentation. The parties shall then
cooperate in good faith to resolve such dispute as expeditiously
as possible, and the portion, if any, of such disputed amount
eventually determined to be due shall bear interest at the rate
stated in Section 9.2 from the original due date until the date
actually paid.
9.4 Audit. Each Party shall have the right, during the
term of this Contract and for twenty-four months thereafter, to
examine and audit, at its own expense and at any reasonable time,
the books, records and charts of the other to the extent
necessary to verify the accuracy of any statements or charges
made under or pursuant to any of the provisions of this Contract;
provided, however, that neither Party shall be required to
maintain books, records or charts for a period of more than two
calendar years following the end of the calendar year to which
they pertain. Upon request, Buyer shall also make available to
Seller for audit purposes any relevant records of Buyer's
Transporter(s) to which Buyer may have access. A formal audit of
accounts shall not be made more often than once each calendar
year. Any inaccuracy will be promptly corrected when discovered;
provided, however, that neither Party shall have any right to
question or contest any charge or credit if the matter is not
called to the attention of the other Party in writing within two
years after the end of the calendar year to which such charge or
credit pertained.
<PAGE>
9.5 Credit Terms. Prior to the commencement of deliveries
of gas hereunder, and at any time and from time to time
thereafter upon request from Seller, Buyer shall provide Seller
such credit information as may reasonably be required by Seller
to determine Buyer's creditworthiness. If, based on the
information provided and Seller's review thereof using generally
accepted financial evaluation standards applied on a non-
discriminatory basis, Seller concludes that Buyer does not
currently meet Seller's reasonable requirements for extension of
unsecured credit in an amount commensurate with the estimated
outstanding receivables under this Contract, Seller may request
and Buyer shall promptly provide an irrevocable standby letter of
credit, guaranty, or other good and sufficient security of a
continuing nature, satisfactory in form, issuer and amount to
Seller, as determined by Seller in its reasonable discretion.
Seller will periodically review its evaluation of Buyer's
creditworthiness and will release any such security instruments
when and if Seller concludes, applying the standards set forth
above, that Buyer meets Seller's requirements for extension of
unsecured credit. Seller shall have the right to delay
commencement of deliveries, or suspend deliveries after they are
commenced, pending Buyer's full compliance with this Section 9.5.
ARTICLE 10
Processing Rights and Injection of Liquids
------------------------------------------
10.1 Seller hereby reserves the right to process all or any
portion of gas deliverable to Buyer hereunder for the removal of
all or any constituents thereof other than methane, and to remove
such methane as is necessary in the operation of the processing
facilities; provided, however, that Seller's's exercise of such
rights shall not have the effect of reducing the quantities of
gas (determined on a thermal basis) sold and delivered hereunder
below Buyer's Nominated Purchase Quantity pursuant to Article 11.
Such processing rights may be exercised either upstream of or, if
the Transporter allows, downstream of the Delivery Point(s) and
may be accomplished by Seller or by any assignee or designee of
Seller; provided, however, that if Seller elects to process gas
downstream of the Delivery Point(s), Seller shall deliver to
Transporter for Buyer's account any additional quantities of gas
necessary to account for any reduction in quantity and/or heating
value that may result from such processing. When Seller is
exercising its right to process the gas (and such right may be
exercised at any time and from time to time during the term of
this Contract), title to the liquefiable hydrocarbons and other
constituents removed or consumed during processing shall not pass
to Buyer, but shall remain at all times in Seller. Buyer and
Seller agree that they will cooperate in good faith to facilitate
the exercise of Seller's processing rights, including, without
limitation, taking the actions described in the remainder of this
Article 10.
10.2 Regardless of whether or not Seller initially elects to
process the gas, Buyer shall make reasonable efforts to ensure
that all transportation agreements entered into by Buyer for
transportation of the gas downstream of the Point(s) of Delivery
shall contain a provision acknowledging and providing for the
exercise of Seller's's processing rights upon reasonable terms
and conditions at a mutually agreeable point on the system of
Transporter.
10.3 When and if Seller elects to exercise its processing
rights, Buyer and Seller will establish reasonable accounting and
billing procedures so that (a) Buyer will pay only for the
quantities of residue gas remaining after processing (b) all
charges of the Transporter will be equitably allocated between
Buyer and Seller, with Seller paying all costs attributable to
the exercise of its processing rights (including any cash-outs
imposed by Transporter) and Buyer paying all costs attributable
to the gas purchased by it hereunder.
10.4 It is understood that Seller's gas wells may produce
liquid hydrocarbons (condensate) along with the gas well gas to
be delivered hereunder. To the extent that any Point of Delivery
provided for in this Contract is located on an offshore platform,
Buyer agrees that Seller may inject condensate into the gas
stream delivered hereunder for transportation and redelivery to
Seller at a separation facility to be located onshore. Buyer
shall make reasonable efforts to ensure that all transportation
agreements entered into by Buyer for transportation of the gas
downstream of any offshore Point(s) of Delivery shall contain a
reservation in favor of Seller of the right to inject and have
such condensate transported in Transporter's pipeline for
redelivery to Seller at the onshore separation facility. Seller
agrees to bear, or reimburse Buyer for, all charges of
Transporter attributable to the injection, transportation, and
redelivery of Seller's condensate.
10.5 Buyer shall furnish Seller with documentation
establishing the actual charges incurred by Buyer and borne by
Seller under Sections 10.3 and 10.4. Such documentation shall
reflect the method allocation of such charges between Buyer and
Seller.
10.6 Seller shall indemnity and save Buyer harmless from all
losses, damages, expenses, and liabilities (including reasonable
attorneys'' fees) that may occur or be asserted by reason of
accidents or occurrences resulting from Seller's or any third
party's operations as authorized by this Article 10.
<PAGE>
ARTICLE 11
Taxes
----------
The price for gas delivered hereunder is inclusive of all
production, severance, ad valorem, or similar taxes levied on the
production or transportation of the gas prior to its delivery to
or for the account of Buyer at the Point(s) of Delivery, and all
such taxes shall be borne and paid exclusively by Seller;
provided, however, that if Buyer is required by law to remit such
taxes to the collecting authority, Buyer shall do so and deduct
the taxes so paid on Seller 's behalf from payments otherwise due
to Seller hereunder. The price does not include any Federal,
Indian, State or local sale, use, consumption or similar taxes
which may now or hereafter be imposed on the transfer of title or
possession of the gas to or for the account of Buyer, or on
Buyer's subsequent use or disposition thereof. Any such taxes
shall be paid by Buyer directly to the taxing authority unless
Seller is required by law to collect and remit such taxes, in
which case Buyer shall reimburse Seller for all amounts so paid.
If Buyer claims exemption from any such taxes, Buyer shall
provide Seller a tax exemption certificate or other appropriate
documentation thereof.
ARTICLE 12
Laws and Regulation
-------------------
This Contract is subject to all valid laws, orders, rules
and/or regulations of any and all duly constituted governmental
authorities, Federal, State or local, to the extent such laws,
regulations, and orders are applicable and effective from time to
time; provided, however, that if any such governmental authority
shall take any action or assert any jurisdiction whereby the
sale, delivery, receipt, or use of gas as contemplated hereunder
will be subjected to terms, conditions, or restraints that in the
sole judgment of the party affected are unduly burdensome or
unacceptable, then such party, within 30 days after teaming of
such action or assertion of jurisdiction, may cancel and
terminate this Contract effective one day prior to the effective
date of such governmental action. In the event of such
termination, the parties agree. that all gas received by Buyer
hereunder prior to cessation of deliveries shall be paid for by
Buyer at the rate in effect immediately prior to the termination
of this Contract.
<PAGE>
ARTICLE 13
Force Majeure
-------------
13.1 Suspension of Obligations During Force Majeure. If
either Party hereto is rendered unable, wholly or in part, by
force majeure to carry out its obligations under this Contract,
other than to make payment for gas delivered hereunder, then upon
such Party's giving notice and full particulars of such force
majeure in writing to the other Party as soon as practicable
after the occurrence of the cause relied on, the obligations of
both parties, except unpaid financial obligations arising prior
to the force majeure event, shall be suspended to the extent and
insofar as they are affected by the force majeure event, for the
duration of the force majeure event, but for no longer period,
and to the extent that the force majeure situation can be
mitigated or eliminated by the exercise of due diligence by the
party claiming force majeure, such party shall act to remedy the
situation with all reasonable dispatch.
13.2 Relationship of Force Majeure to Seller's Supply
Obligations Under This and Other Contracts. The Parties
acknowledge and agree that Seller may make sales of gas to other
buyers under other firm contracts and that those other contracts
may provide for deliveries of gas on the same Transportation
Segment(s) as this Contract. The Parties further recognize that
a force majeure occurrence affecting Seller's ability to deliver
gas on a Transportation Segment could result in Seller's having
less gas available on that Transportation Segment than Seller is
contractually obligated to deliver under all of those contracts.
If a force majeure occurrence results in Seller's total supply of
available gas on a Transportation Segment being less than the sum
of Seller's total firm sales obligations on that Transportation
Segment, even if such available supply is sufficient to fulfill
Seller's obligations under one or more of such contracts, then
such force majeure occurrence shall be deemed to have rendered
Seller unable to fulfill its obligations under each one of such
contracts, including this Contract, and Seller shall be entitled
to the protection afforded by Section 13.1 so long as Seller
endeavors in good faith to allocate its available supply in
accordance with Section 13.4, giving due regard to the nature of
the force majeure occurrence, any restrictions imposed by
transporters, and the time required for Seller to make alternate
arrangements.
13.3 Definition of Force Majeure. The term "force majeure"
as employed herein means acts of God, strikes, lockouts, or other
industrial disturbances, acts of the public energy, wars,
blockades, insurrections, riots, epidemics, landslides,
lightning, hurricanes or storms, hurricane or storm warnings
which in Seller's judgment require the precautionary shutdown or
evacuation of production facilities, earthquakes, fires, floods,
washouts, arrest and restraints of governments and people, civil
<PAGE>
disturbances, explosions, breakage or accidents to machinery,
equipment, or lines of pipe, freezing of wells or lines of pipe,
partial or entire failure of wells, failure of firm pipeline
transportation, and any other cause beyond the reasonable control
of the Party affected which renders that Party unable to carry
out its obligations under this Contract. The settlement of
strikes or lockouts shall be entirely within the discretion of
the Party having the difficulty, and the above requirements that
any force majeure shall be remedied with all reasonable dispatch
shall not require the settlement of strikes or lockouts by
acceding to the demands of opposing party when such course is
inadvisable in the discretion of the party having the difficulty.
13.4 Allocation of Supplies During- Force Majeure
Occurrences. The Parties recognize and agree that there are no
specific reserves or wells dedicated to this Contract, and that
designation of a Point or Points of Delivery hereunder does not
mean that any gas flowing to any such Point or Points of Delivery
is dedicated specifically to this Contract or to any other
contract before actually being delivered to a buyer. In the
event of a force majeure occurrence affecting Seller's ability to
deliver gas on one or more Transportation Segments associated
with this Contract, unless prevented by the force majeure from
doing so, Seller shall take the following actions, in the order
listed, to the extent reasonably necessary to maintain or restore
its deliveries to Buyer and Seller's other firm sales customers,
which, for all purposes of this Article 13 shall be deemed to
include any of Seller's own corporate facilities receiving gas on
the affected Transportation Segment(s) under a written memorandum
of understanding:
1. Curtailing or interrupting some or all of Seller's
interruptible sales on the affected Transportation Segment(s).
2. Delivering all or part of the gas to be delivered
hereunder at any mutually agreeable alternate Point(s) of
Delivery on the affected Transportation Segment(s) (excluding any
storage facilities owned or held by Seller) where Seller has gas
which can be delivered to Buyer without violating other
contractual obligations of Seller.
If, in response to a force majeure occurrence, Seller takes the
above actions and still is unable to meet all of its firm sales
obligations on the affected Transportation Segment(s), then
Seller shall curtail ratably its firm sales customers (including
Buyer) receiving gas on the affected Transportation Segment(s)
based on each customer's nominated quantities on the affected
Transportation Segment(s); provided, however, that Seller's
obligation to prorate hereunder shall not extend to any of
Seller's Warranty Sales Contracts. If, at the inception of any
force majeure occurrence, Seller is delivering gas from a single
source to more than one Transportation Segment (i.e., from a
<PAGE>
split-connected source) Seller shall curtail deliveries from that
source to each such Transportation Segment on a pro rata basis,
based on the relative quantities nominated by Seller's firm
customers on each of the affected Transportation Segments.
13.5 Special Arrangements. During any period when Buyer's
Nominated Purchase Quantity is being prorated as provided above,
Seller shall also use reasonable efforts to locate and offer to
Buyer substitute gas supplies on other Transportation Segments or
other pipeline systems in the vicinity of the affected
Transportation Segment, but only to the extent that (a) Buyer has
so requested, (b) Seller can do so without violating Seller's
contractual obligations to other customers, and (c) Buyer and
Seller first agree on the allocation between them of any
additional costs incurred in utilizing" such alternate sources.
If such substitute supplies are available, Seller shall use
reasonable efforts to equitably allocate them among Buyer and
other adversely affected firm customers which are capable of
receiving gas at the alternate sources.
ARTICLE 14
Warranty of Title and Royalties
-------------------------------
14.1 Title. Seller hereby warrants title to the gas sold by
it hereunder and its right to sell the same and warrants that all
such gas shall be delivered by Seller free from all liens,
encumbrances and adverse claims, including, but not limited to,
liens to secure payment of production taxes, severance taxes and
other taxes.
14.2 Royalties and Other Charges. Seller shall pay or cause
to be paid all royalties and other sums due on the gathering and
handling of the gas prior to its delivery to Buyer.
14.3 Indemnity. Seller shall indemnity and save Buyer
harmless from and against all suits, actions, damages, costs and
expenses arising from or out of any breach of Seller's
obligations, representations, or warranties as expressed in this
Article 14.
ARTICLE 15
Term
-----------
This Contract shall become effective as of the date first
above written and shall continue in -force and effect, unless
terminated earlier under the provisions hereof, for a primary
term of five months. After the primary term, this Contract shall
continue in effect on a month to-month basis, unless and until
terminated by either Party giving written notice to the other at
least thirty days prior to the end of the primary term or any
successive one month extension.
<PAGE>
ARTICLE 16
Resolution of Disputes
----------------------
16.1 Any dispute arising under any paragraph of this
Contract shall be resolved as provided in this Article. During
the process of dispute resolution, the parties shall continue
performance of their respective obligations under this Contract.
16.2 Prior to resorting to mediation or litigation, the
parties agree to consult about any differences they may have
under this Contract.
16.3 Prior to initiating litigation hereunder, the parties
agree to attempt to mediate their dispute through the selection
of a mutually acceptable neutral mediator upon such terms and
conditions as they might agree to.
16.4 If, after a period of two months after selection of the
neutral mediator, the parties are unable to reach agreement
through mediation, either party may then resort to litigation or
any other legal remedy which may be available to resolve the
dispute.
16.5 Neither party shall be required to delay the
commencement of litigation in order to comply with this Section
16 unless the other party first agrees to toll any applicable
statute of limitations that might otherwise require commencement
of litigation to preserve either party's rights in the disputed
matter.
ARTICLE 17
Confidentiality
---------------
17.1 Except as specifically provided herein, each Party
agrees that it will maintain this Contract and all terms and
conditions of this Contract in strictest confidence and that it
will not cause or permit disclosure of this Contract or of the
contents thereof to any third party without the express written
consent of the other Party hereto; provided, however, that such
third party restriction does not apply to affiliated companies.
Disclosures otherwise prohibited by this Article 17 may be made
by either Party (a) to the extent necessary for such Party to
enforce its rights hereunder against the other Party, (b) to the
extent a Party is contractually or legally bound to disclose
financial information to a third party such as a royalty owner or
partner, or (c) to the extent to which a Party hereto is required
to disclose all or part of this specific Contract by a statute or
by a court, agency, or other governmental body exercising
jurisdiction over the subject matter hereof or the parties
hereto, by order, regulation or by other compulsory process
(including, but not limited to, deposition, subpoena,
interrogatory, or request for production of documents).
<PAGE>
17.2 If either Party is or becomes aware of a fact,
obligation or circumstance that has resulted or may result in a
disclosure authorized in Section 17.1, it shall so notify the
other party immediately and shall provide documentation or an
explanation of the disclosure as soon as it is available. Each
Party further agrees to cooperate to the fullest extent in
seeking confidential status to protect any material so disclosed.
17.3 The Parties hereto acknowledge that independent legal
counsel or consultants may, from time to time, be provided with a
copy of this Contract and agree that such disclosure does not
require consent by the other Party, provided that such counsel or
consultant affirms in writing to the client that they agree to
abide by the terms and conditions of this Article 17.
ARTICLE 18
Miscellaneous
-------------
18.1 Waivers. No waiver by either Seller or Buyer of any
default of the other under this Contract shall operate as a
waiver of future default, whether of like or different character
or nature.
18.2 Binding Nature; Assignment As Security. This Contract
shall be binding upon and inure to the benefit of the successors
and assigns, or the heirs, administrators, or executors of the
Parties hereto. Either party hereto may assign its right, title
and interest in, to and under this Contract, including without
limitation, any and all renewals, extensions, amendments, and/or
supplements herein to any individual, bank, trustee, company or
corporation as security for any notes, bonds or other obligations
or securities of such assignor; provided, however, that no such
assignment shall in any way operate to enlarge, alter or change
any obligation of the other party hereto.
18.3 Assignment. Seller and Buyer reserve the right to
assign this Contract partially or in its entirety to any of their
affiliates; however, ultimate responsibility for performance
hereunder shall remain with the respective party hereto. Except
as otherwise provided in this Contract, this Contract may not be
assigned by either party without the written agreement of the
other party.
18.4 Notices. Any notice, request, demand, or statement,
provided for in this Contract, except as otherwise herein
provided, may be given in writing, delivered in person or by
United States Mail or by any other recognized delivery service,
to the parties hereto at the addresses shown below or at such
other addresses as may hereafter be furnished to the other party
in writing:
<PAGE>
BUYER: Invoices, Notices, and Correspondence
Yankee Gas Services Company
P.O. Box 1030
599 Research Parkway
Meriden, Connecticut 06450-4050
Attention: Mr. Dave Egelson
Fax No.: (203) 639-4050
SELLER: Correspondence and Notices
Mobil Natural Gas Inc.
12450 Greenspoint Drive
Houston, TX 77060 - 1991
Attention: Northeast Area Gas Sales Manager
Payments Shall Be Made By Wire Transfer To:
Mobil Natural Gas Inc.
Account #4064-0969
Citibank, N.A.
ABA Ref. No. 021000089
Any notice initially delivered by telecopy shall be confirmed by
regular mail within one week after transmission of the telecopy.
18.5 Applicable Law. The parties agree that Connecticut law
exclusively shall govern all terms of this Contract, including
this section, disregarding, however, any applicable conflict-of-
laws provisions that would require the application-of the law of
some other state. If either party initiates litigation relating
to this Contract, then, in addition to complying with any
applicable statutory notice requirements, such party shall give
the other party notice thereof by certified mail, return receipt
requested, at the most recent address provided by such party in
accordance with Section 18.4.
18.6 Modifications. No modification of the terms and
provisions, of this Contract shall be or become effective except
pursuant to and upon the due and mutual execution of an
appropriate supplemental written contract by the Parties hereto.
18.7 No Third Party Beneficiaries. It is specifically
agreed that there are no third party beneficiaries to this
Contract, and that this Contract shall not impart any rights
enforceable by any person, firm, organization, or corporation not
a Party hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Contract
in duplicate originals, each of which shall constitute and be an
original contract.
BUYER: YANKEE GAS SERVICES COMPANY
By: /s/ Thomas J. Houde
----------------------------------
Title: Vice President - Rates and
Resource Planning
SELLER: MOBIL NATURAL GAS INC.
By: /s/ S. C. Freeman
----------------------------------
Title:
<PAGE>
EXHIBIT A
To Gas Purchase Contract dated as of November 1, 1993 between
MOBIL NATURAL GAS INC., as Seller and YANKEE GAS SERVICES
COMPANY, as Buyer.
Points of Delivery
<TABLE>
<CAPTION>
Texas Eastern
Pooling Zone Delivery Point Maximum Quantity
- -------------- --------------- -----------------
<S> <C> <C>
West Louisiana Pool Cameron System Service Pt. 7,000
MMBtu/day**
No.79503*
East Louisiana Pool Venice System Service Pt. 8,00O
MMBtu/day**
No.79504*
</TABLE>
* Seller will deliver to the listed Service Points using its
TABS Agreement, which is currently designated as No. 600284.
** Plus fuel and lost and unaccounted for gas as required by
the Transporter's tariff.
<PAGE>
EXHIBIT B
To Gas Purchase Contract dated as of November 1, 1993 between
MOBIL NATURAL GAS INC., as Seller and YANKEE GAS SERVICES
COMPANY, as Buyer.
Buyer's Monthly Purchase Nomination
To: Mobil Natural Gas Inc.
12450 Greenspoint Drive
Houston TX 77060-1991
Attention: Northeast Area Gas Sales Manager
Fax No. (713) 775-4107
Buyer's Nominated Purchase Quantity under the captioned contract
for the
month of , 199 , shall be for MMBtu
per day, plus fuel and lost and unaccounted for gas as required
by
the Transporter's tariff.
YANKEE GAS SERVICES COMPANY
By:
---------------------------
Title:
-------------------------
Date:
-------------------------
<PAGE>
Exhibit 10.79
December 6, 1993
Damir Vrcek
Manager, Natural Gas Marketing
OXY USA Inc.
P.O. Box 300
Tulsa, OK 74102
Re: Gas Purchase and Sales Contract Letter Agreement
Dear Mr. Vrcek:
Enclosed for execution are two duplicate originals of the "Gas
Purchase and Sale Contract -- Letter Agreement" dated as of
November 1, 1993.
When fully executed by OXY USA Inc. ("OXY") and Yankee Gas
Services Company ("Yankee"), the enclosed shall constitute a
contract between OXY and Yankee, whereby OXY will sell natural
gas to Yankee and Yankee will purchase natural gas from OXY on an
interim basis pursuant to the terms contained in the Letter
Agreement.
The parties intend that the Letter Agreement will be replaced by
a mutually satisfactory long term gas purchase and sale agreement
("long-term contract") on or before March 15, 1994, or such later
date as the parties may mutually agree to (the "extended
deadline"), and the parties will negotiate in good faith to
accomplish such result. If OXY and Yankee fail for any reason to
execute a long-term contract on or before March 15, 1994, or the
extended deadline if applicable, the enclosed Letter Agreement
shall automatically terminate at 8:00 a.m. Eastern time on April
1, 1994.
This transmittal letter shall be considered part of the enclosed
Letter Agreement, as if they were a single document. If this
transmittal letter and the enclosed Letter Agreement correctly
reflect our mutual agreement, please execute both duplicate
originals of both documents and return one original of each
document to the undersigned.
Very truly yours,
By /s/ Thomas J. Houde
Vice President - Rates and
Resource Planning
<PAGE>
AGREED TO AND ACCEPTED this 16th day of December, 1993
OXY USA Inc.
By /s/ Jeffrey D. Winchester
Manager, Region Gas Marketing
Contract: 3960-00
Date: November 1, 1993
GAS PURCHASE AND SALE CONTRACT
LETTER AGREEMENT
BUYER: Yankee Gas Services Company
599 Research Parkway
Meriden, CT 06450-1030
Representative: Dave Egelson
Phone:(203) 639-4107 Fax:(203) 639-4117
Fax:(203) 639-4050
SELLER: OXY USA Inc.
P.O. Box 300
Tulsa, OK 74102
Representative: Susan Forman
Phone:(918) 561-3210 Fax: (918) 561-2307
Seller agrees to sell natural gas (Gas) to Buyer and Buyer agrees
to purchase Gas from Seller, all in accordance with the following
terms and conditions:
PACKAGE DESCRIPTION:
5,234 MMBtu/d from TETCO "ELA" as primary point; 4,676 MMBtu/d
from TETCO "ETX" as primary point; plus applicable fuel to M-3.
MAXIMUM TAKE ENTITLEMENT (in MMBtu's)
10,000 DAILY plus fuel (i.e. "MDQ")
MINIMUM TAKE REQUIREMENTS
1,057,000 MMBtu (70% of 10,000 MMBtu multiplied by 151). If
Buyer fails to purchase the Minimum Take Requirement, then Buyer
shall pay the Seller a Deficiency Charge of 30 cents/MMBtu not
purchased.
<PAGE>
TERM
November 1, 1993 through March 31, 1994, and month to month
thereafter, with Option for either Buyer or Seller to cancel the
Agreement at the end of the primary term or at the end of each
month of holdover term, with 60 days notice.
PRICING TERMS
The contract price per MMBtu shall be 99% of the Index Price.
The Index Price shall be defined as the "Inside FERC Gas Market
Report:, first of the month index for TETCO "ELA" and TETCO "ETX"
in proportion to quantities delivered into each pool.
Additionally, a reservation fee calculated by multiplying the MDQ
(10,000 plus fuel) x the number of days in the month x the Index
Price x 0.03 = (FEE) shall be paid by Buyer to Seller each month
regardless of nominated quantity. FEE shall be paid as soon as
the Index Price in published.
SUPPLY ASSURANCE
Firm Supply subject to Force Majeure provisions on Attachment A.
OTHER
There is no minimum daily quantity but Buyer shall not be allowed
to increase the nomination after the initial nomination for each
month. If the nomination is reduced during the month, the Buyer
shall reimburse the Seller for the difference between the
contract price and ninety percent (90%) of the applicable
geographical Natural Gas Week index ("NGW Index") most proximate
in time to the effective date of the reduction in nominations.
If the NGW Index is higher than the contract price, Seller shall
remit to Buyer 20% (less 5 cents/MMBtu) of additional value.
This letter agreement constitutes the agreement of the parties
hereto to the material terms of a contract for the purchase and
sale of natural gas and shall be binding upon the parties.
AGREED TO AND ACCEPTED AGREED TO AND ACCEPTED
THIS 6TH day of THIS 6TH day of
DECEMBER, 1993. DECEMBER, 1993.
YANKEE GAS SERVICES COMPANY OXY USA Inc.
By:/s/ Thomas J. Houde By: /s/ Jeffrey D. Winchester
Title: Vice President-Rates and Title: Manager, Region Gas
Resource Planning Marketing
<PAGE>
Attachment A
to
Gas Purchase and Sale Contract
Memorandum of Understanding
dated as of November 1, 1993
between
Yankee Gas Services Company
and
OXY USA INC.
Force Majeure
- -------------
(1) In the event that either Seller or Buyer is rendered unable,
by reason of an event of force majeure, to perform wholly or in
part any obligation or commitment set forth herein, then,
provided that such Party gives notice and reasonably full
particulars of such event as soon as practicable after the
occurrence thereof, the obligations of both parties, except for
unpaid financial obligations arising prior to such event of force
majeure, shall be suspended to the extend of, and insofar as they
are affected by such force majeure event and for the duration of
the force majeure event.
(2) The term "force majeure" as employed herein shall mean acts
of God, strikes, lockouts, or industrial disputes or
disturbances, civil disturbances, arrests and restraints of
rulers and peoples, interruptions by government or court orders,
necessity for compliance with any court order, law, statute,
ordinance, or regulation promulgated by a governmental authority
having jurisdiction, acts of the public enemy, war, riots,
blockades, insurrections, inability to secure labor or materials,
including inability to secure materials by reason of allocations
promulgated by authorized governmental agencies, inability to
obtain Gas supplies at any price, epidemics, landslides,
lightning, earthquakes, fire, storms, floods, washouts, inclement
weather that would necessitate extraordinary measures and expense
to construct facilities and/or maintain operations, explosions,
breakage or accident to machinery or wells or lines of pipe,
freezing of wells or pipelines, inability to obtain or delays in
obtaining easements or rights of way, shutting-in of facilities
for the making of repairs, alterations, or maintenance to wells,
pipelines, or plants, or any other cause not reasonably within
the control of the Party claiming force majeure; provided,
however, that neither the loss of markets by Buyer nor the
inability of Seller to acquire supplies at prices satisfactory to
Seller shall be considered force majeure events.
<PAGE>
(3) To the extent such force majeure situation can be mitigated
or eliminated by the exercise of due diligence by the Party
claiming force majeure, such Party shall act to remedy the
situation will all reasonable dispatch; provided, however, that
settlement of strikes and lockouts will be entirely within the
discretion of the Party affected, and the requirement that any
event of force majeure be remedied with all reasonable dispatch
will not require the settlement of strikes and lockouts by
acceding to the demands of the parties directly or indirectly
involved in such strikes or lockouts when such course is
inadvisable in the discretion of the Party having the difficulty.
<PAGE>
Exhibit 10.90
EMPLOYMENT AGREEMENT
This Agreement, effective as of September 15, 1994, is made
between Yankee Gas Services Company ("Yankee Gas") and Yankee
Energy System, Inc. ("YES"), Connecticut corporations, and Branko
Terzic (the "Executive").
WHEREAS, YES is a public utility holding company which owns
all of the outstanding common stock of Yankee Gas; and
WHEREAS, the Executive possesses an intimate knowledge of
the business industry in which Yankee Gas and YES operate and
therefore is expected to contribute substantially to the
financial well-being and prospects of those corporations; and
WHEREAS, the Board of Directors of Yankee Gas and YES
(collectively, the "Boards," and individually, as applicable, the
"Board") consider the services of the Executive to be essential
to the success of Yankee Gas as a natural gas distribution
company and therefore consider the employment of the Executive to
be in the best interests of Yankee Gas and YES; and
WHEREAS, the Boards believe it is necessary that Yankee Gas
and YES be able to rely upon the Executive to continue in his
position, and that they be able to receive and rely upon his
advice, if they request it, as to the best interests of Yankee
Gas, YES and YES' shareholders, without concern that he might be
distracted by the personal uncertainties and risks that arise
should a Change of Control (as defined in Section 3) be pending
or threatened; and
WHEREAS, the Boards desire that Yankee Gas and YES be
assured of the continued dedication of the Executive and the
availability of his advice and counsel notwithstanding the
possibility, threat or occurrence of a Change of Control; and
WHEREAS, the Executive is willing to serve Yankee Gas and
YES as an officer and employee thereof as hereinafter provided;
NOW, THEREFORE, the parties hereby agree as follows:
1. Employment. YES hereby agrees to appoint the Executive
as an officer of YES, Yankee Gas hereby agrees to employ the
Executive and the Executive hereby agrees to serve Yankee Gas and
YES for the Employment Period, as defined below, on the terms and
conditions set forth herein. For purposes of this Agreement, the
terms "employ" and "employment" shall be deemed to refer to both
the employment of the Executive by Yankee Gas and the status of
the Executive as an officer of YES and any of its other
subsidiaries.
<PAGE>
2. Term. The "Initial Employment Period" of the Executive
hereunder is the period commencing September 15, 1994 through
December 31, 1994. The "Employment Period" of the Executive
thereafter is the annual period commencing as of January 1 and
ending at midnight on December 31, unless sooner terminated as
provided herein. The Employment Period shall be automatically
extended for successive one year periods unless either party
shall have notified the other in writing by December 15 of any
year of its intent to terminate this Agreement, such termination
to be effective at midnight on December 31 of the year in which
notice is given. Notwithstanding the foregoing, if a Change of
Control occurs during the Employment Period, said Employment
Period shall be automatically extended to December 31 of the year
following the Change of Control Effective Date (as defined in
Section 3).
3. Change of Control. For the purposes of this Agreement,
a "Change of Control" shall be deemed to have taken place if: (i)
a third person, including a "person" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange
Act"), becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) directly or indirectly, of securities of
YES representing twenty-five percent (25%) or more of the total
number of votes that may be cast for the election of the
directors of YES; or (ii) as the result of, or in connection
with, any tender or exchange offer, merger, consolidation or
other business combination, sale of assets or one or more
contested elections, or any combination of the foregoing
transactions (a "Transaction") the persons who were directors of
Yankee Gas or YES immediately prior to the Transaction shall
cease to constitute a majority of the Board of Directors of
Yankee Gas or of YES or of any successor to Yankee Gas or YES.
The "Change of Control Effective Date" shall be the date on which
such Change of Control becomes effective.
4. Duties. The Executive shall serve as President and
Chief Operating Officer of Yankee Gas, YES and its other
subsidiaries, shall have the authority and responsibilities
outlined in Appendix A and shall have such other authority and
responsibility as the respective Boards may from time to time
determine (hereinafter the "duties"), provided, however, that
such duties are consistent with the Executive's position as an
executive officer. The Executive agrees to perform the duties so
assigned in an efficient and competent manner and to devote his
skills and best efforts to the business and affairs of Yankee
Gas, YES and its other subsidiaries. The Executive shall devote
substantially all his working time and efforts to the business
and affairs of Yankee Gas, YES and their affiliates and may not
accept other employment which, in the opinion of the YES Board,
could diminish or compromise the service of the Executive to
Yankee Gas or YES.
<PAGE>
5. Compensation and Related Matters. For the services
provided hereunder, Yankee Gas shall provide to the Executive the
following compensation:
(a) Base Salary. For the first year of the Employment
Period, the Executive shall receive a base annual salary ("Base
Salary") of at least $250,000 payable in equal monthly
installments. The YES Board shall conduct annually a review of
the Executive's performance hereunder at which time the YES Board
shall consider the appropriateness of the Executive's Base
Salary, and any revision to such salary shall be effective at the
discretion of the YES Board. Any increase in Base Salary or
other compensation granted by the YES Board or any of its
committees shall in no way limit or reduce any other obligation
of Yankee Gas or YES hereunder and, once established at an
increased specified rate, the Executive's Base Salary hereunder
shall not be thereafter reduced except for cause.
(b) Incentive Compensation. In addition to Base
Salary, Yankee Gas will include the Executive in such incentive
compensation plans (hereinafter "incentive compensation") then
made available by Yankee Gas to its executive officers.
(c) Signing Bonus. The Executive will receive a
signing bonus of $25,000 effective in a lump sum payment on
September 1, 1994.
(d) Stock. (a) The Executive shall receive an award
of 4,000 shares of restricted common stock of YES which shall
vest over five years commencing at the rate of 10 percent for
year 1; 15 percent for year 2; and 25 percent in years three,
four and five. (b) The Executive shall receive non-qualified
stock options for 10,000 shares of YES common stock effective
September 15, 1994, at the market price of $21-3/8 per share,
which price is equal to the fair market value of a share of YES
stock as of the close of business on September 15, 1994, which
shall vest in increments of 20 percent over the next five years.
Said options shall expire at the end of ten years. The
restricted stock awards and option are subject to the terms and
conditions of the Long-Term Incentive Compensation Plan and the
Stock Option Agreement, copies of which have been provided to the
Executive.
(e) Retirement and Excess Benefit Plans. The
Executive shall be entitled to participate in or receive benefits
under the YES Retirement Plan and the Excess Benefit Plan and
shall receive accelerated vesting thereunder as follows: For the
first five years of service, each year worked will be credited as
two years of service.
<PAGE>
(f) Other Benefits. The Executive shall be entitled
to participate in or receive benefits under each retirement or
compensation plan, savings or profit-sharing plan, insurance
plan, medical plan, dental plan, accident plan or any other
employee benefit plan or arrangement made available by Yankee Gas
to its executive officers or other employees (hereinafter,
collectively, "other benefits"), subject to and on a basis
consistent with the terms, conditions and overall administration
of each such plan or arrangement, provided that, in no event
shall any such plan or arrangement provide the Executive, after
the Change of Control Effective Date, with other benefits, in
each case, less favorable, in the aggregate, than the most
favorable of those provided by YES and its affiliated companies
for the Executive under such plans or arrangements in effect at
any time during the 90-day period immediately preceding the
Change of Control Effective Date. Nothing paid to the Executive
under any plan or arrangement shall be deemed to be in lieu of
the salary payable to the Executive pursuant to Subsection (a) of
this Section. Any payments or benefits payable to the Executive
hereunder in respect of any calendar year during which the
Executive is employed by Yankee Gas for less than the entire such
year shall, unless otherwise provided in the applicable plan or
arrangement, be prorated in accordance with the number of days in
such calendar year during which he is so employed.
(g) Vacation. The Executive shall be entitled to no
less than four weeks of paid vacation annually and those paid
holidays allowed in accordance with the policies of Yankee Gas
then in effect.
(h) Expenses. Yankee Gas shall reimburse the
Executive promptly for reasonable expenses incurred by him in
accordance with the policies and procedures of Yankee Gas for its
executive officers in performing services hereunder, provided
that Yankee Gas may require an accounting therefor in accordance
with Yankee Gas policy.
6. Unauthorized Disclosure. (a) During the term of his
employment hereunder, the Executive shall not, without the
written consent of the Boards or a person authorized thereby,
disclose to any person, other than an officer or employee of YES
or any of its affiliates or a person to whom disclosure is
reasonably necessary or appropriate in connection with the
performance by the Executive of his duties as an executive
officer of Yankee Gas and YES, any material confidential
information obtained by him through YES or any of its affiliates
with respect to their business or affairs, including, without
limitation, business strategies, volumes of sales, customers,
methods of distribution and sources or prices of supply, the
disclosures of which he knows or should reasonably be expected to
know will be materially damaging to YES or any of its affiliates;
<PAGE>
provided, however, that "confidential information" shall not
include information known generally to the public (other than as
a result of unauthorized disclosure by the Executive) or any
information of a type not otherwise considered confidential by
persons engaged in the same business or a business similar to
that conducted by YES or any of its affiliates. For the period
ending two years following the termination of employment
hereunder, the Executive shall not, without the prior written
consent of YES, disclose any confidential information of the type
described above to anyone other than YES or any of its
affiliates, and those designated by YES.
(b) The foregoing provisions of this Section 6 shall be
binding upon the Executive's heirs, successors and legal
representatives.
7. Termination. (a) The employment of the Executive
under this Agreement may be terminated only in the following
circumstances:
(i) Upon death of the Executive;
(ii) By Yankee Gas or YES, in the event of the
disability of the Executive pursuant to Subsection (b) of this
Section;
(iii) By Yankee Gas or YES, pursuant to Subsection
(c) of this Section for Cause, as defined in such Subsection;
(iv) By Yankee Gas or YES, in the event of a
material breach of this Agreement by the Executive;
(v) By the Executive after the Change of Control
Effective Date, for Good Reason, as such term is defined in
Subsection (d) of this Section;
(vi) By the Executive, upon a material breach of this
Agreement by Yankee Gas or YES; or
(vii) Upon the mutual agreement of the Executive
and Yankee Gas and YES to terminate the Agreement.
(b) Disability. Except as otherwise provided by law,
if, as a result of the Executive's incapacity due to physical or
mental illness, the Executive shall have been absent from his
duties hereunder on a full-time basis for 180 substantially
consecutive calendar days, and within 30 days after written
Notice of Termination (as defined in Subsection (e) of this
Section) is given to the Executive (which may occur before or
after the end of such 180-day period) he shall not have returned
to the performance of his duties hereunder on a full-time basis,
Yankee Gas and YES may terminate the Executive's employment
hereunder. Such incapacity shall be determined by a physician
selected by YES or its insurers and acceptable to the Executive
or the Executive's legal representative (which agreement as to
acceptability shall not be unreasonably withheld.)
<PAGE>
(c) Cause. For the purposes of this Agreement, the
term "Cause" shall mean (i) the failure of the Executive to
substantially perform his duties with Yankee Gas or YES (other
than such failure resulting from his incapacity due to physical
or mental illness) after written demand for substantial
performance is delivered to the Executive by Yankee Gas or YES
specifying the manner in which Yankee Gas or YES believes the
Executive has not substantially performed his duties, or (ii) the
engagement by the Executive in misconduct which is materially
injurious to Yankee Gas or YES or its affiliates.
Notwithstanding the foregoing, YES shall not terminate this
Agreement unless and until the Executive shall receive a copy of
a resolution of the YES Board stating that, in the good faith
opinion of directors holding three-quarters of the directorships
of such Board, such Cause exists and specifying the particulars
thereof. There shall be no monetary liability on the part of,
and no cause of action shall arise against, Yankee Gas, YES or
any director of Yankee Gas or YES, or any person who provides
information to either Board, for any good faith act taken in
connection with the making of any determination hereunder.
(d) Good Reason. For purposes of this Agreement,
"Good Reason" means: (i) Material diminishment of the Executive's
authority, duties or responsibilities as contemplated by Section
4 of this Agreement relative to those in effect at any time
during the 90-day period immediately preceding the Change of
Control Effective Date, or any other action by Yankee Gas or YES
which results in a material diminution in such authority, duties
or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by Yankee Gas or YES promptly after receipt of
written notice thereof given by the Executive; (ii) any failure
by Yankee Gas or YES to comply with any of the provisions
contemplated by Section 5 of this Agreement or the failure by
Yankee Gas or YES to provide the Executive with other benefits at
least as favorable as those in effect at any time during the 90-
day period immediately preceding the Change of Control Effective
Date, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by
Yankee Gas or YES promptly after receipt of written notice
thereof given by the Executive; (iii) any purported termination
by Yankee Gas or YES of the Executive's employment otherwise than
as expressly permitted by this Agreement, or (iv) any failure by
Yankee Gas or YES to comply with and satisfy Section 13 of this
Agreement.
(e) Notice of Termination. Any termination of the
employment of the Executive by Yankee Gas or YES or by the
Executive (other than termination pursuant to Subsection (a)(i)
of this Section) shall be communicated by written Notice of
Termination to the other parties hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
<PAGE>
shall indicate the specific termination provisions in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the
provision so indicated. The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right
of the Executive hereunder or preclude the Executive from
asserting such fact or circumstance in enforcing the Executive's
rights hereunder.
(f) Date of Termination. For the purposes of this
Agreement, "Date of Termination" shall mean (i) if the employment
of the Executive is terminated by death, the date of such death;
(ii) if the employment of the Executive is terminated pursuant to
Subsection (b) of this Section, 30 days after Notice of
Termination is duly given (provided that the Executive shall not
have returned to the performance of his duties on a full-time
basis during such 30-day period); (iii) if the employment of the
Executive is terminated pursuant to Subsection (c) of this
Section, the date specified in the Notice of Termination; and
(iv) if the employment of the Executive is terminated for any
other reason, the date on which a Notice of Termination is duly
given.
8. Compensation Upon Termination. (a) If the Executive's
employment is terminated for any reason, Yankee Gas or YES shall
pay to the Executive or, in the case of death, to the Executive's
estate, the Executive's Base Salary through the Date of
Termination in a lump sum in cash within 30 days of the Date of
Termination, as well as any incentive compensation and other
benefits accrued through the Date of Termination in accordance
with the normal policies of Yankee Gas and YES.
(b) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness, he shall continue to receive his Base
Salary at the rate then in effect until this Agreement is
terminated pursuant to Section 7(b) hereof.
9. Compensation in the Event of a Change of Control. If a
Change of Control occurs during the term of this Agreement, and
the Executive terminates his employment hereunder pursuant to
Section 7(a)(v) or Yankee Gas, YES or any successor to Yankee Gas
or YES terminates the employment of the Executive after the
Change of Control Effective Date for any reason other than for
death, Disability or Cause as contemplated by Section 7(a)(iii),
the Executive shall receive a lump sum payment in cash equal to
three times the Base Salary then in effect; provided, however,
that retirement at his normal retirement age pursuant to the
retirement policy in effect for executive officers of Yankee Gas
prior to the Change of Control Effective Date shall not
<PAGE>
constitute termination by the Executive of his employment
hereunder for the purposes of this Section 9. Such amount shall
be immediately due and payable to the Executive upon such
termination.
10. Certain Additional Payments by Yankee Gas. (a) In the
event it shall be determined that any payment or distribution by
Yankee Gas to or for the benefit of the Executive, whether paid
or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise (a "Payment"), would cause the
Executive to be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code") (or
any successor thereto) or comparable state or local tax (such
excise taxes, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment
(a "Gross-Up Payment"). The Gross-Up Payment shall be equal to
the sum of the Excise Tax and all taxes (including any interest
or penalties imposed with respect to such taxes) imposed upon the
Executive as a result of the Gross-Up Payment.
(b) If the Executive determines that a Gross-Up
Payment is required, the Executive shall so notify Yankee Gas in
writing, specifying the amount of Gross-Up Payment required and
details as to the calculation thereof. Yankee Gas shall within
30 days either pay such Gross-Up Payment (net of applicable wage
withholding), to the Executive or furnish an unqualified opinion
from Independent Tax Counsel (as defined below), addressed to the
Executive and Yankee Gas, that there is substantial authority for
the position that no Gross-Up Payment is required. "Independent
Tax Counsel" means a lawyer with expertise in the area of
executive compensation tax law, who shall be selected by the
Executive and shall be reasonably acceptable to Yankee Gas, and
whose fees and disbursements shall be paid by Yankee Gas.
(c) If the Internal Revenue Service or other tax
authority proposes in writing an adjustment to the income tax of
the Executive which would result in a Gross-Up Payment or an
increase in any previously made Gross-Up Payment, the Executive
shall promptly notify Yankee Gas in writing and shall refrain for
at least thirty days after giving such notice, if so permitted by
law, from paying any tax (including interest, penalties and
additions to tax) asserted to be payable as a result of such
proposed adjustment. Before the expiration of such period,
Yankee Gas shall either pay the Gross-Up Payment, or the increase
thereto, or provide an opinion from Independent Tax Counsel to
the Executive and Yankee Gas as to whether it is more likely than
not that the proposed adjustment would be successfully challenged
if the matter were to be litigated. If the opinion provides that
a challenge would be more likely than not to be successful if the
issue were litigated, and Yankee Gas requests in writing that the
Executive contest such proposed adjustment, then the Executive
shall contest the proposed adjustment and shall consult in good
<PAGE>
faith with Yankee Gas with respect to the nature of all action to
be taken in furtherance of the contest of such proposed
adjustment; provided that the Executive, after such consultation
with Yankee Gas, shall determine in his sole discretion the
nature of all action to be taken to contest such proposed
adjustment, including (i) whether any such action shall be
initially by way of judicial or administrative proceedings, or
both, (ii) whether any such proposed adjustment shall be
contested by resisting payment thereof or by paying the same and
seeking a refund thereof, and (iii) if the Executive shall
undertake judicial action with respect to such proposed
adjustment, the court or other judicial body before which such
action shall be commenced and the court or other judicial body to
which any appeals should be taken. The Executive agrees to take
appropriate appeals of any judicial decision that would require
Yankee Gas to pay a Gross-Up Payment or an increased Gross-Up
Payment, provided Yankee Gas requests in writing that the
Executive do so and provides an opinion from Independent Tax
Counsel to the Executive and Yankee Gas that it is more likely
than not that the appeal would be successful. The Executive
further agrees to settle, compromise or otherwise terminate a
contest with the Internal Revenue Service or other tax authority
with respect to all or a portion of the proposed adjustment
giving rise to the Gross-Up Payment or increased Gross-Up
Payment, if requested by Yankee Gas in writing to do so at any
time, in which case the Executive shall be entitled to receive
from Yankee Gas the Gross-Up Payment or increase thereof. In no
event shall the Executive compromise or settle all or any portion
of a proposed adjustment which would result in a Gross-Up Payment
without the written consent of Yankee Gas.
The Executive shall not be required to take or continue
any action pursuant to this Section 10(c) unless Yankee Gas
acknowledges its liability under this Agreement in the event that
the Internal Revenue Service or other tax authority prevails in
the contest. Yankee Gas hereby agrees to indemnify the Executive
in a manner reasonably satisfactory to the Executive for any
fees, expenses, penalties, interest or additions to tax which the
Executive may incur as a result of contesting the validity of any
Excise Tax and to pay the Executive promptly upon receipt of a
written demand therefor all costs and expenses which the
Executive may incur in connection with contesting such proposed
adjustment (including reasonable fees and disbursements of
Independent Tax Counsel); provided, however, that Yankee Gas
shall not be required to pay any amount necessary to permit the
Executive's institution of a claim for refund under this Section
10(c).
<PAGE>
If the Executive shall have contested any proposed
adjustment as above provided, and for so long as the Executive
shall be required under the terms of this Section 10(c), to
continue such contest, Yankee Gas shall not be required to pay a
Gross-Up Payment until there occurs a Final Determination (as
defined below) of the liability of the Executive for the tax and
interest, penalties and additions to tax asserted to be payable
as a result of such proposed adjustment. A "Final Determination"
shall mean (A) a decision, judgment, decree or other order by any
court of competent jurisdiction, which decision, judgment, decree
or other order has become final after all allowable appeals by
either party to the action have been exhausted, the time for
filing such appeal has expired or Yankee Gas has no right under
the terms hereof to request an appeal, (B) a closing agreement
entered into under Section 7121 of the Code or any other
settlement agreement entered into in connection with an
administrative or judicial proceeding and with the consent of
Yankee Gas, or (C) the expiration of the time for instituting a
claim for refund, or if such claim was filed, the expiration of
the time for instituting suit with respect thereto.
(d) In the event the Executive receives any refund
from the Internal Revenue Service or other tax authority on
account of an overpayment of Excise Tax, and Yankee Gas shall
have paid a Gross-Up Payment to the Executive, such amount and
interest attributable thereto shall be promptly paid by the
Executive to Yankee Gas.
11. Non-Exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plans,
programs, policies or practices, provided by Yankee Gas or YES
and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may
have under any other agreements with Yankee Gas or YES. Amounts
which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program
of Yankee Gas or YES at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice
or program except as explicitly modified by this Agreement.
12. Full Settlement. The obligation of Yankee Gas or YES
to make the payments provided for in this Agreement and otherwise
to perform their obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim,
right or action which Yankee Gas or YES may have against the
Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement. Yankee Gas or YES agree
to pay, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of
<PAGE>
any contest (regardless of the outcome thereof) by Yankee Gas or
YES or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to Section 10
of this Agreement), plus in each case interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code.
13. Assignment. The Executive may not assign, transfer,
pledge or in any way encumber the compensation or other benefits
payable to him or any rights which he may have under this
Agreement. This Agreement shall be assigned or transferred to,
and shall be expressly assumed by and be binding upon, any
successor to Yankee Gas or YES, and any such successor shall be
deemed substituted for all purposes to the rights and obligations
of Yankee Gas or YES, as the case may be, under the terms of this
Agreement.
14. Severability. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to
be invalid or otherwise unenforceable, in whole or in part, the
remaining provisions, and any partially enforceable provision, to
the extent enforceable in any jurisdiction, shall nevertheless be
binding and enforceable.
15. Waiver. The waiver by Yankee Gas, YES or the Executive
of a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any prior or subsequent breach by
any of the parties hereto.
16. Entire Agreement; Amendment. This Agreement contains
the entire agreement between the parties hereto with respect to
the transactions contemplated herein. No amendment or alteration
of terms of this Agreement shall be valid unless made in writing
and signed by both of the parties hereto.
17. Governing Law. This Agreement shall be governed by the
laws of the State of Connecticut.
18. Arbitration. Any controversy, claim or breach arising
out of or relating to this Agreement shall be submitted for
settlement to a panel of three arbitrators. Each party shall
select an arbitrator and the two thus chosen shall select a
third. The decision of a majority of the arbitrators shall be
final and binding on the parties. If the two arbitrators cannot
agree upon a third arbitrator, the American Arbitration
Association will be requested to appoint such an arbitrator.
Such arbitration shall be held in Hartford, Connecticut in
accordance with the rules and practices of the American
Arbitration Association then in effect, and judgment upon the
award rendered may be entered in any court having jurisdiction
thereof.
<PAGE>
19. Notices and Communications. Notices and all other
communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or
three business days after being mailed by United States
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to Yankee Gas or YES, to:
Yankee Energy System, Inc.
599 Research Parkway
Meriden, CT 06450-1030
Att: Chairman of the Board
If to the Executive, to:
Branko Terzic
c/o Yankee Gas Services Company
599 Research Parkway
Meriden, CT 06450-1030
(Marked "Personal and Confidential")
or to such other address as either party shall furnish to the
other in writing in accordance with this Section.
20. Authorization. This Agreement is executed for and on
behalf of YES by the Chairman of the Board of Directors, and on
behalf of Yankee Gas by the Executive Vice President, both of
whom are duly authorized to do so by resolutions of the Boards,
voting separately, approving this Agreement and authorizing such
execution.
21. Counterparts. This Agreement may be executed in
several counterparts, each one of which shall be deemed to be an
original but all of which together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed as of the day and year first above written.
YANKEE ENERGY SYSTEM, INC.
By /s/ Philip T. Ashton
---------------------------------
Chairman of the Board of Directors
YANKEE GAS SERVICES COMPANY
By /s/ Charles E. Gooley
----------------------------------
Executive Vice President
By /s/ Branko Terzic
----------------------------------
Executive
<PAGE>
EXHIBIT 11
<TABLE>
<CAPTION>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
Earnings Per Share Computation
For the Years Ended September 30
<S> <C> <C> <C>
1994 1993 1992
---- ---- ----
(Thousands of Dollars, Except Share Data)
Net Income $19,485 (d) $17,479 $13,135(a)
------- ---------- -------
Average Common
Shares Outstanding(b) 10,287,683 10,287,683 9,125,183
---------- --------- ---------
Earnings Per Share $1.89 (d)(c) $1.70(a)(c) $1.44(c)
</TABLE>
(a) Exclusive of a $2,566,000 credit, or $0.28 per share,
resulting from a change in the Company's method of accounting for
municipal property taxes.
(b) All per share amounts have be restated to give
retroactive effect to a three-for-two stock split on June 28,
1993.
(c) Earnings per share information is the same on both a
primary and fully diluted basis as Yankee Energy System, Inc. has
a simple capital structure.
(d) Exclusive of an $879,900 charge, or $0.08 per share,
for a premium paid on the early redemption of the 9.125%
cumulative preferred stock of Yankee Gas.
<PAGE>
Exhibit 13
(COVER)
YANKEE ENERGY SYSTEM, INC.
1994 ANNUAL REPORT
Photographs of:
Yankee employee, Michelle Morin, and son Christopher celebrate a
special fifth birthday.
Residence featuring 17 different uses of natural gas for
comfort and convenience.
Predictive dialer telephone equipment used for improved credit
and collections contacts.
Yankee Gas signature graphics, newly created for image
enhancement.
<PAGE>
(INSIDE COVER)
COMPANY PROFILE
- ---------------
Yankee Energy System, Inc. (Yankee Energy) is the parent of
Yankee Gas Services Company (Yankee Gas). Housatonic Corporation
(Housatonic), NorConn Properties, Inc. (NorConn), Yankee Energy
Financial Services Company (Yankee Financial) and Yankee Energy
Production Services, Inc. (Yankee Production).
Yankee Gas, the principal subsidiary, is a natural gas
distribution company regulated by the Connecticut Department of
Public Utility Control (DPUC) and provides natural gas service to
about 177,000 customers in 67 Connecticut communities.
Housatonic is a single purpose corporation holding a 10.5
percent interest in the Iroquois Gas Transmission System
(Iroquois) - a pipeline that delivers Canadian gas into the
Northeast and is regulated by the Federal Energy Regulatory
Commission (FERC).
NorConn owns the Company's corporate office building and
another service building and leases both to Yankee Gas.
Yankee Financial provides customers with equipment financing
for natural gas installations.
Yankee Production funds gas-fired and other electric
generation projects at selected customer sites.
Yankee Gas Service Area
{Map of Yankee Gas Service Area with legend}
The Cover (captions)
- -------------------
Yankee employee, Michelle Morin and son Christopher celebrate a
special fifth birthday.
Residence featuring 17 different uses of natural gas for
comfort and convenience.
Predictive dialer telephone equipment used for improved credit
and collections contacts.
Yankee Gas signature graphics, newly created for image
enhancement.
<TABLE>
<CAPTION>
Contents
- --------
<S> <C>
Highlights 1
Chairman's Letter 2
Technology Achievements 4
Expanding Reliability 6
Directors and Officers 12
Financial and Statistical Section 13
Shareholder and Stock Information 31
</TABLE>
<PAGE>
PAGE 1
FINANCIAL HIGHLIGHTS
- --------------------
Graph showing dividends and earnings growth
Graph showing Book Value Per Share
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Years Ended, September 30, 1994 1993 %Change
<S> <C> <C> <C>
Financial (Thousands)
Operating Revenues $317,298 $302,657 4.8%
Net Income 18,605 17,479 6.4%
Net Income
(Before redemption premium) 19,485 17,479 11.5%
Capital Expenditures 28,493 23,280 22.4%
Net Utility Plant 315,063 308,384 2.2%
Common Stock (Per Share Data)
Earnings Per Share $ 1.81 $ 1.70 6.5%
Earnings Per Share
(Before redemption premium) 1.89 1.70 11.2%
Stock Price (End of Year) $ 21.50 $ 26.50 -18.9%
Quarterly Dividend (End of Year) $ 0.305 $ 0.29 5.2%
Yield (End of Year) 5.7% 4.4% 29.5%
Common Shares Outstanding
(Average) 10,287,683 10,287,683 ---
Book Value Per Share
(End of Year) $ 14.54 $ 13.86 4.9%
Operations
Sales and Transportation (MMcf) 43,150 40,689 6.0%
Degree Days (Normal 6,151) 6,454 6,232 3.6%
Customers (Average) 177,011 176,418 0.3%
</TABLE>
<PAGE>
PAGE 2
TO OUR SHAREHOLDERS
{Graphic: "Celebrating 5 Years 1989-1994}
Despite the lingering effects of the recession affecting
Connecticut's economy and an increasingly competitive
marketplace, I am pleased to report our fifth consecutive
increase in annual earnings. Yankee Energy earned $1.89 per
share for 1994, up from $1.70 in 1993. This continued improvement
is due to aggressive cost containment efforts, lower interest
charges and higher sales driven by weather 3.6% colder than 1993
and 4.9% colder than normal. In addition, the Board of Directors
increased the dividend to an annualized rate of $1.22 from $1.16
per share in June. This 5.2% increase was greater than any other
New England gas utility.
On July 1, 1994, we celebrated our fifth anniversary as an
independent publicly-traded company. Consistently meeting our
past strategic goals has allowed us to achieve or exceed
financial and operational parity with our New England peers. As
we move towards the year 2000 and beyond, Yankee Energy will
strive to become a dominant player in the region's energy
industry with Yankee Gas the premier gas distribution company in
New England. We will attain this vision for the future by
focusing on:
- Intensified marketing and sales efforts
- Maintaining strong cost management
- Transforming key business processes
- Increasing the contributions of subsidiaries
- Optimizing the gas supply portfolio
- Improving customer service quality and efficiency
The Company achieved numerous accomplishments in 1994, which
are detailed in the body of this report. Yankee Gas, our
principal subsidiary, had a significant impact on the financial
performance of Yankee Energy. For the second consecutive year,
operating costs were successfully contained without compromising
safety or service provided to our customers, and without
increases in staffing levels.
Our aggressive marketing efforts are continuing to expand
reliable natural gas service to new towns in Connecticut. Over
the past year, we extended service to Woodbury and Preston and
added major new customers in Groton and Southbury.
Our other subsidiaries are making greater contributions to
the overall success of Yankee Energy.
- Over the last year, Yankee Financial issued $5.6
million in loans to finance customer installations of gas
equipment.
- Yankee Production, created in 1993 to fund gas-fired
electric generation projects, invested $2.2 million in two such
facilities. In addition, Page D. Miller, with over 25 years
experience in manufacturing and cogeneration, was appointed Vice
President and will focus on developing new opportunities in this
business area.
- For the second consecutive year Housatonic Corporation,
which holds a 10.5 percent interest in the Iroquois Gas
Transmission System, contributed 17 cents per share towards
earnings.
- This summer NorConn, our real estate subsidiary opened
a new 23,000 square foot area service center in East Windsor.
None of this could have been done without the cooperation
and effort of our employees and their commitment to our new
Company theme, "You Get Our Best Energy". Yankee employees also
have demonstrated their commitment to the success of the Company
through their participation in the Very Satisfied Customer
process. This process, designed to make our corporate culture
even more customer oriented, has resulted in numerous
<PAGE>
PAGE 3
employee-generated projects suggesting new and better ways to
conduct our business. This process of continuous improvement
will play a major role in our quest to become the premier energy
company in New England.
Key management changes occurred in 1994. John J. Smith,
Vice President of Operations for the Company's subsidiaries,
retired after 40 years of distinguished service to the Company
and its predecessors. In addition, I recently announced to the
Board of Directors my intention to retire as Chief Executive
Officer effective March 1, 1995, although I will continue to
serve
as Chairman for at least a year. My decision to retire as CEO
was made possible by two very positive changes in our senior
management team:
- On July 1, Charles E. Gooley was elected to the
position of Executive Vice President. Mr. Gooley was previously
Vice President and General Counsel for Yankee Energy and the
administrative officer of the Company's subsidiaries.
- On August 23, Branko Terzic, a former commissioner at
the Federal Energy Regulatory Commission and the Wisconsin Public
Service Commission, was elected President and Chief Operating
Officer.
Further, Mr. Terzic will assume the responsibilities of CEO
next March. His wealth of experience as a regulator and
consultant to the industry will help us immeasurably.
Finally, I regret to announce that Mr. John Armstrong
retired from the Board of Directors effective in December. Jack's
vision and wisdom were highly valued and he significantly
contributed to the steady record of the Company's successes. I
know you will join in expressing appreciation for his efforts.
With Mr. Terzic and Mr. Gooley overseeing the day-to-day
operations of the Company, I will focus on the Company's vision
and long term planning. I am ever confident that Yankee will
continue to fulfill the expectations of our shareholders, our
customers and all those who are stakeholders in our success.
{Photograph of Philip T. Ashton, Chairman and Chief Executive
Officer of the Company}
/s/ Philip T. Ashton
- --------------------
Philip T. Ashton
Chairman and Chief Executive Officer
<PAGE>
PAGE 4
(Photograph of Yankee Gas Technology Award)
Caption: Philip T. Ashton quote "Reliability goes beyond good
service - it demands our best in all respects."
<PAGE>
PAGE 5
(Photograph of Laptop Computer and GasCam)
Caption: Yankee Gas received the Greater Hartford Chamber of
Commerce Technology Business Leader of the Year Award. Company
accomplishments include:
- First natural gas utility in the nation to completely
automate meter reading.
- New England leader in developing infrastructure for
natural gas vehicles.
- Complete upgrade of data processing capabilities.
- First in New England to use GasCam, mobile camera
technology that internally inspects underground pipelines without
expensive excavation.
<PAGE>
PAGE 6
EXPANDING RELIABILITY
- ---------------------
Yankee Gas begins its next five years with an aggressive
growth strategy designed to increase the Company's share of the
Connecticut energy marketplace. This strategy includes actively
helping Connecticut state agencies reduce their dependency on
foreign oil and assisting large customers to comply with federal
Clean Air Act Amendments. With this strategy guiding our efforts
over the past year, Yankee Gas continued to expand reliable
service throughout the State.
In 1994, Yankee Gas added the towns of Woodbury and Preston
to its service area. In Southbury, the Company's aggressive
marketing led to the addition of Pomperaug Woods, a private
retirement community with life care facilities, O&G Industries,
a leading manufacturer of asphalt, and the well known Heritage
Inn and Conference Center in Heritage Village.
The Foxwoods Casino in Ledyard continues to expand. In the
two years since it first opened, Foxwoods has become a major
tourist attraction in the State and has gained an international
reputation as one of the most successful casinos in the world.
Yankee Gas has expanded its facilities to meet their ever
increasing energy needs. A 12-mile main extension will enable
Yankee Gas to further expand its service to compete in the energy
market of Southeastern Connecticut.
Dow Chemical Corporation in Gales Ferry and Wyman Gordon in
Groton joined the growing number of industrial companies in the
State that are now able to receive the benefits of natural gas.
Yankee Gas continues to be in the forefront of promoting the
use of natural gas for vehicles as a means of improving the
State's air quality. Natural gas vehicles play a significant
role in the United States Department of Energy (D.O.E.) Clean
Cities programs. During 1994, through the Company's involvement,
Norwalk, Waterbury and New London were each designated a "Clean
City" by the D.O.E.
The next five years will feature a renewed commitment to
both present customers and new ones. The Company's theme "You Get
Our Best Energy" is a reflection of this commitment. Yankee Gas
employees continue to give their best energy to customers, while
providing an energy source that is superior to others.
{Photograph of David G. Leftwich, General Manager-Heritage Inn}
Caption: David G. Leftwich quote "We look forward to a long-term
relationship with Yankee Gas. I've been impressed with the
genuine personal service they have given us."
{Very Satisfied Customer Graphic}
Caption: Yankee Gas is committed to creating not just satisfied
but Very Satisfied Customers. All Company employees have received
Very Satisfied Customer training, an important first step in
cultivating and maintaining a customer oriented culture.
<PAGE>
PAGE 7
(Photograph of couple at the Heritage Inn & Conference Center)
Caption: The Heritage Inn entertains 500 diners each week in
their warm and elegant New England setting.
<PAGE>
PAGE 8
EXPANDING RELIABILITY
- ---------------------
The Yankee Gas relationship with Plainfield Public Schools
began three years ago when Business Manager Thomas Moon decided
to heat the town's newly constructed Shepherd Hill School with
natural gas. A year later, when problems with the high school's
two oil-fired boilers escalated, Mr. Moon turned to Yankee Gas
once again. It was time to replace the 1929 vintage heating
system. Confronted with squeezing a $300,000 purchase in the
school's tight capital budget, Yankee Energy was able to design a
tax-exempt equipment lease through its Yankee Financial
subsidiary to the advantage of the town's more flexible operating
budget.
Yankee Energy subsidiaries support the Company's core
natural gas distribution business.
Housatonic holds an ownership interest in the Iroquois Gas
Transmission System, which brings Canadian natural gas to the
Northeast. The availability of gas through Iroquois was key in
meeting customer needs as evidenced by our ability to provide
emergency assistance to New York City during last winter's cold
period.
Yankee Financial enhances gas sales by offering competitive
financing for customers' gas equipment. In addition to the
Plainfield tax-exempt loan, Yankee Financial stepped forward with
a $4.9 million financing deal for the gas-fired heating and
cooling system at the Foxwoods Casino. Yankee Financial has
several loans outstanding totaling $5.6 million with other
applications pending for future projects.
Yankee Production takes equity positions in gas-fired
electric generation projects. Yankee Production invested in two
cogeneration facilities in New Jersey in 1994. Energy analyses
for similar projects are ongoing and additional investments will
be made depending on their respective economic merits.
NorConn develops and implements advantageous financing
options to meet the Company's facilities needs. NorConn owns the
Company's corporate headquarters building and the East Windsor
Service Center which opened this year. NorConn leases both
buildings to Yankee Gas.
(Photograph of Thomas F. Moon, Business Manager-Plainfield Public
Schools)
Caption: Thomas F. Moon quote "When we had major heating
problems with our old oil system, Yankee Gas came through for us
when we needed it the most."
(Photograph of Lou Demers)
Caption: Lou Demers, supervisor of buildings and grounds, shows
off the new natural gas boiler at Plainfield High School
<PAGE>
PAGE 9
(Photograph of children in classroom)
Caption: Gas heating comfort and innovative financing at
Plainfield Public Schools exemplifies the Yankee "Expanding
Reliability" philosophy.
<PAGE>
PAGE 10
EXPANDING RELIABILITY
- ---------------------
The natural gas industry has undergone changes that have
resulted in a marked increase in competition among producers,
pipelines, local distribution companies and even customers. To
succeed in this fast changing and competitive environment, Yankee
Gas meets customers' needs in a variety of non-traditional ways.
Through innovative pricing, the Company was able to meet
Rand Whitney's need for a long- term fixed energy rate. Rand
Whitney, located in Montville, Connecticut, has the oldest
continually running paperboard mill in the United States. Yankee
Gas evaluated several supply options before developing a contract
that will provide a reliable gas supply with the additional
benefit of having the energy costs known over the next 10 years.
In other cases, the Company has developed supply
arrangements for customers with special requirements. In all
cases, reliability was among the prime reasons companies looked
to Yankee Gas to meet their long- term gas supply requirements.
Yankee Gas has also taken advantage of recent regulatory
changes in the gas industry that impact the way gas is
transported and marketed throughout the country. Among the many
tools now available is the ability to sell the Company's
reserved space in the interstate pipelines that carry the gas
from the Texas Gulf Coast to Connecticut when our need for the
gas is low. This more efficiently utilizes our assets and
significantly reduces our gas costs associated with pipeline
expense. Yankee Gas has been at the forefront in selling off-peak
pipeline space.
Another tool Yankee Gas has utilized is the ability to sell
gas outside of Connecticut. Whether due to higher alternate
energy costs or greater environmental restrictions, certain
markets outside our traditional service territory offer an
opportunity to generate additional revenue.
Innovative capacity releases and off-system sales have
contributed greatly to our decreased costs. Yankee will continue
to seek new ways and methods to expand reliability and remain in
the forefront of a competitive industry.
(Photograph of Jerry N. Couch, General Manager-Rand Whitney
Containerboard)
Caption: Jerry N. Couch quote "Rand Whitney depends on a
reliable source of energy with long-term pricing benefits.
Yankee Gas helps us accomplish that goal."
(Yankee Gas Graphic Symbol)
Caption: The new graphic look and theme was established to
provide an energetic image of Yankee Gas as a reliable supplier
of energy and superior service.
<PAGE>
PAGE 11
(Photograph of Rand Whitney employees)
Caption: Rand Whitney's commitment to high standards led to
their decision to use natural gas for their major expansion
project.
<PAGE>
PAGE 12
DIRECTORS AND OFFICERS
- ----------------------
Directors and Officers
- ----------------------
Philip T. Ashton (1)
Chairman and
Chief Executive Officer
Yankee Energy System, Inc.
Meriden, CT
Eileen S. Kraus (2,4,5)
President
Shawmut Bank Connecticut, N.A.
Hartford, CT and Vice Chairman,
Shawmut National Corporation
Boston, MA
Frederick M. Lowther (4,5)
Partner
Dickstein, Shapiro & Morin
Washington, D.C.
Thomas H. O'Brien (3,5)
President
O'Brien Associates
Garden City, NY
Leonard A. O'Connor (3)
Retired Vice President and
Chief Financial Officer
Yankee Energy System, Inc.
Meriden, CT
Emery G. Olcott (1,4,5)
President and
Chief Executive Officer
Canberra Industries, Inc.
Meriden, CT
Branko Terzic
President and
Chief Operating Officer
Yankee Energy System, Inc.
Meriden, CT
Nicholas L Trivisonno (1,2)
Executive Vice President -
Strategic Planning and
Group President
GTE Corporation
Stamford, CT
Officers of Yankee Energy System, Inc.
- --------------------------------------
Philip T. Ashton
Chairman and
Chief Executive Officer
Branko Terzic
President and
Chief Operating Officer
Charles E. Gooley
Executive Vice President
Michael E. Bielonko
Vice President, Treasurer and
Chief Financial Officer
Thomas J. Houde
Vice President
Mary J. Healey
Secretary and
Assistant General Counsel
Nicholas A. Rinaldi
Controller
Sarah K. Sanders
Assistant Treasurer
Committees of the Board
- -----------------------
1 Executive
2 Audit
3 Finance
4 Organization and Compensation
5 Committee on Directors
<PAGE>
BACK COVER
Graphic: Logo for the Special Olympics World Games Connecticut 1995
Yankee Energy Logo
Yankee Energy System, Inc.
599 Research Parkway
Meriden, CT 06450-1030
203-639-4000
Caption: Yankee Gas is proud to be an official provider of the
Special Olympics World Games
<PAGE>
FINANCIAL INFORMATION
Contents
Management's Discussion and Analysis
Management and Independent Public Accountants Reports
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Capitalization
Consolidated Statements of Common Shareholders' Equity
Notes to Consolidated Financial Statements
Selected Financial and Operating Data
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Financial Condition
OVERVIEW
Yankee Energy System, Inc. (Yankee Energy or the Company) is a
holding company, headquartered in Connecticut, whose principal
operating subsidiary is Yankee Gas Services Company (Yankee Gas).
Yankee Gas provides retail distribution of natural gas to a
service area comprising 67 cities and towns in Connecticut which
cover approximately 2,200 square miles. The Company has four
nonregulated subsidiaries: Housatonic Corporation (Housatonic),
which owns a 10.5 percent equity interest in the Iroquois Gas
Transmission System, L.P. (Iroquois); NorConn Properties, Inc.
(NorConn), which owns selected system real estate; Yankee Energy
Financial Services Company (Yankee Financial), which provides
certain customers with financing to promote the sale of natural
gas and Yankee Energy Production Services, Inc. (Yankee
Production), whose purpose is to encourage additional natural gas
sales in special applications to large customers and to make
capital investments in such projects, including onsite electric
generation.
The Company's earnings per share increased to $1.89 in 1994,
exclusive of an $0.08 per share charge resulting from an early
redemption premium on the Company's preferred stock, from $1.70
in 1993 and $1.44 in 1992. The 1992 earnings per share are
exclusive of a $0.28 per share credit resulting from a change in
the Company's method of accounting for municipal property taxes
in October, 1991. The increase in 1994 earnings was due
primarily to higher firm sales from colder weather in fiscal 1994
and lower interest expense. The increase in 1993 earnings was in
part attributable to a rate increase implemented on October 1,
1992 by Yankee Gas and increased firm gas sales in fiscal 1993
compared to fiscal 1992.
Earnings on Housatonic's investment in Iroquois in both 1994 and
1993 were approximately $1.8 million and contributed $0.17 per
share in both periods. As of September 30, 1994, Housatonic's
investment in Iroquois totaled approximately $18.6 million.
Housatonic received net cash distributions of approximately $2.2
million in fiscal 1994 and $4.7 million in fiscal 1993.
The Company increased dividends paid to $1.19 in 1994 from $1.13
in 1993, an increase of 5.3 percent. Nonetheless, due to
improved earnings, the Company's dividend payout ratio improved
from 67 percent in 1993 to 63 percent in 1994 (exclusive of the
early redemption premium).
Earnings per share are based on 10,287,683 average common shares
outstanding during fiscal 1994 and 1993 and 9,125,183 in fiscal
1992. All per share amounts in this report have been adjusted to
reflect a three-for-two common stock split on June 28, 1993. The
Company issued an additional 775,000 shares of common stock
(1,162,500 shares restated for three-for-two common stock split)
on October 28, 1992.
RATE MATTERS
On April 8, 1992, the Federal Energy Regulatory Commission (FERC)
issued Order No. 636 on pipeline restructuring. In essence, the
FERC found that absent the unbundling of traditional merchant
services, pipelines would not be able to achieve the FERC's long-
term goal of open access and provide transportation services that
are indifferent to the seller of the gas. Order No. 636,
therefore, required all pipelines to implement restructuring of
their services by the winter of 1993-94. The three major
pipeline systems serving Yankee Gas (Iroquois Gas Transmission
System, Tennessee Gas Pipeline Company and Algonquin Gas
Transmission Company and its affiliate, Texas Eastern
Transmission Company), have all restructured pursuant to the FERC
directive. Iroquois was designed and constructed as a
transportation-only pipeline, and as such, its restructuring has
very minimal impact.
Order No. 636 acknowledges that the restructuring of the
pipelines' traditional services will cause pipelines to incur
transition costs in several areas and provides mechanisms for the
pipelines to fully recover prudently incurred transition costs
attributable to the implementation of Order No. 636.
On July 8, 1994, the Connecticut Department of Public Utility
Control (DPUC) issued a decision on the implementation of FERC
Order No. 636 by the Connecticut Local Distribution Companies
(LDCs). The DPUC is allowing the LDCs to offset the transition
costs billed by pipelines under Order No. 636 with any recoveries
from capacity release activity refunds or deferred gas costs
credits for the 1992-93 period and all subsequent annual deferred
gas costs, gas supplier refunds and fifty percent of off system
sales margins and interruptible margins earned in excess of
target amounts. With the exception of all subsequent annual
deferred gas costs credits, the DPUC has ordered that all
transition cost recovery dollars be applied immediately on a
monthly basis to the transition costs that have been or are
subsequently billed. All subsequent annual deferred gas costs
credits will be applied on an annual basis. If needed, a per
unit surcharge will be applied to firm customers' bills. The
DPUC believes that the recovery system detailed above will result
in all transition costs being recovered in approximately three
years.
Through September 30, 1994, Yankee Gas has paid approximately
$10.5 million of transition costs and an additional $0.6 million
are anticipated. To date, Yankee Gas has collected $7.7 million
through a combination of gas supplier refunds, deferred gas costs
credits and excess interruptible margins. Yankee Gas' management
anticipates full recovery of transition costs consistent with the
DPUC decision.
RESULTS OF OPERATIONS
OPERATING REVENUES
Operating revenues increased $14.6 million from 1993 to 1994 and
$23.9 million from 1992 to 1993. The components of the change in
operating revenues for the past two years are provided in the
following table:
<TABLE>
<CAPTION>
(Millions of Dollars)
Increase/(Decrease)
Years Ended September 30, 1994 vs 1993 1993 vs 1992
<S> <C> <C>
Firm and other (excluding gas
cost recoveries):
Regulatory decision $ 0.2 $12.9
Sales, transportation
and other 3.9 3.8
_____ _____
Subtotal - Firm and
other 4.1 16.7
_____ _____
Interruptible (excluding gas
cost recoveries):
Sales and transportation - (1.1)
Margin sharing 0.5 1.0
____ _____
Subtotal -
Interruptible 0.5 (0.1)
____ _____
Total excluding gas cost
recoveries 4.6 16.6
Plus: Gas cost
recoveries 10.0 7.3
____ ____
Total $14.6 $23.9
_____ _____
_____ _____
</TABLE>
The corresponding increases in the Company's throughput were as
follows:
<TABLE>
<CAPTION>
(Mcf-thousands)
1994 vs 1993 1993 vs 1992
<S> <C> <C>
Firm sales and transportation 1,603 1,095
Interruptible sales and
transportation 858 243
_____ _____
Total 2,461 1,338
_____ _____
_____ _____
</TABLE>
The increase in firm and other revenues from 1993 to 1994 was due
primarily to increased firm gas heating sales reflecting colder
weather experienced in 1994. Firm and other revenues increased
from 1992 to 1993 due primarily to the rate increase implemented
in October, 1992 and increased firm sales due to colder weather.
Despite an increase in interruptible sales from 1993 to 1994,
interruptible margin was essentially flat, reflecting a decrease
in per unit revenue in fiscal 1994 compared to fiscal 1993. This
per unit revenue decrease is attributable to an increasingly
competitive environment. Additionally, certain interruptible
customers were shut-off in January, 1994 due to high demand as a
result of twenty-eight percent colder weather compared to
January, 1993. Interruptible margins in excess of target amounts
earned in fiscal 1994 were applied to unrecovered transition
costs as allowed in the July 8, 1994 DPUC decision and resulted
in a reduction of the required sharing with firm customers of
interruptible margins in excess of target amounts when compared
to fiscal 1993. Higher gas costs in fiscal 1993, making gas less
economical for customers able to use alternative fuels, resulted
in a decrease in interruptible margin from fiscal 1992. This
decrease was partially offset by a reduction of the required
sharing with firm customers of interruptible margins in excess of
target amounts earned in fiscal 1993 compared to fiscal 1992.
Gas cost recoveries increased in fiscal 1994 compared to fiscal
1993 due to higher firm sales and the effect of less of an
underrecovery of gas costs in fiscal 1994 compared to fiscal
1993. Gas cost recoveries increased in fiscal 1993 compared to
fiscal 1992 due to higher firm sales and higher gas prices.
These factors were partially offset by the undercollection of
fiscal 1993 gas costs and the refund of the fiscal 1992
overcollection of gas costs from firm customers through the
Company's Purchased Gas Adjustment Clause (PGA).
COST OF GAS
Cost of gas increased $11.0 million in 1994 compared to 1993 and
increased $7.2 million in 1993 compared to 1992. The Company
defers differences between actual purchased gas costs and the
current cost recovery and recovers or refunds such differences in
future periods. This deferral results in an increase or decrease
to gas costs in each fiscal year. The fiscal 1994 deferral
reflected an underrecovery of gas costs that was less than the
underrecovery in fiscal 1993 and had the effect of increasing gas
costs in the current period. The fiscal 1993 increase was
primarily due to higher firm sales and higher unit gas prices.
These factors were partially offset by the undercollection of gas
costs in fiscal 1993 and the refund of a fiscal 1992 gas cost
overcollection.
OTHER OPERATING EXPENSES
Total other operating expenses increased $2.9 million in 1994
compared to 1993 and $12.5 million from 1992 to 1993 as a result
of the following items:
Operations expense increased $2.7 million in 1994 compared
to 1993 and $2.9 million in 1993 compared to 1992. The 1994
increase was due primarily to higher payroll and employee
benefits. The 1993 increase was due primarily to higher
expenses for postretirement benefits and the Company's
program to match payments for low income customers, both of
which were granted in the Company's August 26, 1992 rate
decision. Additionally, higher payroll contributed to the
1993 increase. These items were offset by lower medical
expense due to the implementation of a managed care plan to
control health care costs in 1993, employee contributions
and fewer major medical claims.
Depreciation expense decreased $0.1 million in 1994 compared
to 1993 and increased $1.0 million in 1993 compared to 1992.
The 1994 decrease was primarily due to a change in the
estimated cost of removal percentages for distribution
property and was partially offset by normal plant additions.
The 1993 increase was due to greater plant investment.
Federal and state income taxes, including the portion
contained in other income, decreased $0.1 million in 1994
compared to 1993. The $7.5 million increase (excluding the
tax effect of the change in method of accounting for
municipal property taxes) from 1993 to 1992 was primarily
due to higher income from operations in fiscal 1993, the
acceleration of deductions for property taxes and
postretirement benefits in fiscal 1992 and the increase in
the federal tax rate to 35 percent effective January 1,
1993. Please refer to Note 2 to the Consolidated Financial
Statements for additional information concerning the
components of federal and state income taxes.
Taxes other than income taxes decreased $0.5 million in 1994
compared to 1993 due to higher unemployment tax expense in
1993 associated with claims paid to Yankee Gas bargaining
unit employees during a ten-week work stoppage that ended on
January 4, 1993. The higher 1993 unemployment tax as well
as higher Connecticut gross earnings taxes and higher
municipal property taxes resulted in a $2.6 million increase
in taxes other than income taxes from 1992 to 1993.
Other income increased $0.1 million in 1994 compared to 1993 and
$2.7 million, exclusive of the one-time gain for property taxes,
in 1993 compared to 1992. The 1993 increase was primarily due to
higher earnings associated with Housatonic's investment in
Iroquois as the Iroquois pipeline became fully operational on
November 1, 1992 and interest earned on temporary cash
investments during 1993.
Interest expense decreased $0.8 million partly due to lower
interest on long-term debt resulting from the retirement of the
$15 million first mortgage bond in April, 1993. Additionally,
there was lower interest expense on the Company's PGA balance in
1994. Interest expense increased $1.0 million in fiscal 1993
compared to fiscal 1992 due partly to higher interest expense on
long-term debt.
LIQUIDITY AND CAPITAL RESOURCES
Expenditures for utility plant and other investments totaled
$28.5 million in 1994 reflecting a $5.2 million increase from
1993. The 1994 increase was primarily due to a $2.2 million
investment in two cogeneration projects by Yankee Production and
a $1.8 million investment in a new operations building.
Cash flow (defined as net income adjusted for non-cash items such
as depreciation, deferred income taxes, the Company's non-cash
equity earnings from investments and the change in the method of
accounting for municipal property taxes) represents the cash
generated from operations available for capital expenditures,
dividends and other needs. Cash flows from operating activities
increased $0.7 million in fiscal 1994 compared to fiscal 1993.
On July 1, 1994, Yankee Gas redeemed all 600,000 outstanding
shares of its 9.125 percent cumulative preferred stock, $25 par
value. The Company used cash on hand to pay both the $15 million
par amount and the early redemption premium of $879,900.
The seasonal nature of gas revenues, inventory purchases and
construction expenditures create a need for short-term borrowing
to supplement internally generated funds. Yankee Gas has
arranged a $40 million revolving line of credit with a group of
five banks whereby funds may be borrowed on a short-term
revolving basis using either fixed or variable rate loans. Yankee
Gas also has another $22 million of credit lines available on an
uncommitted basis. At September 30, 1994, Yankee Gas had $17.3
million outstanding on its agreements. In addition, Yankee
Energy (parent) had $7.3 million outstanding at September 30,
1994, on a $15 million line of credit.
The long-term credit needs of Yankee Gas are being met by a first
mortgage bond indenture that provides for the issuance of bonds
from time to time as the need arises, subject to certain issuance
tests. At September 30, 1994, indenture requirements, including
the required coverage ratio, would allow for the issuance of an
additional $101.5 million of bonds at an assumed interest rate of
8.96 percent. The Company is expected to refinance an $18
million first mortgage bond maturing in April, 1995.
On November 4, 1994, Yankee Energy filed a Form S-3 registration
statement with the Securities and Exchange Commission to issue up
to 1,200,000 shares of common stock under its proposed
Shareholder Investment Plan (Plan). The Plan provides existing
shareholders and their family members the ability to acquire
shares of common stock through dividend reinvestment or voluntary
cash purchases. The Company anticipates at least $3 million of
new equity funding that can be generated by the Plan annually as
needed for general corporate purposes. The Plan provides the
Company the option to use new shares of common stock or market
purchases.
At September 30, 1994, Housatonic's investment in Iroquois,
including its non-cash equity portion, was $18.6 million. On
November 1, 1992, a $20 million bank credit agreement utilized by
Housatonic for purposes of making its equity contributions to
Iroquois converted to a three-year variable rate term loan
requiring annual sinking fund payments. At September 30, 1994,
Housatonic had $6.75 million outstanding on this agreement, of
which $4.75 million was paid on November 1, 1994.
The Company's estimated construction expenditures for the fiscal
years 1995 through 1999 are $131 million, including $29 million
for 1995. The 1995 construction expenditures are expected to be
financed by a combination of internally generated funds and
short-term borrowings. For Yankee Gas, long-term debt maturities
and sinking fund requirements during this period total $64.8
million and are expected to be refinanced with additional debt
issues as they come due.
The estimated expenditures discussed above for the five-year
period 1995 to 1999 are exclusive of any expenditures for
remediation of coal tar contamination. As more fully discussed
in Note 8 to the Consolidated Financial Statements, the Company
expects to incur additional expenditures for remediation efforts,
most of which will be deferred for future recovery in rates.
Depending upon the timing and extent to which such costs occur,
the Company expects to finance such expenditures through a
combination of internally generated funds and short-term debt.
The Company is pursuing recovery of costs from insurance. It is
too soon to determine the probability of recovery or the amount
recoverable.
<PAGE>
MANAGEMENT REPORT
The consolidated financial statements of Yankee Energy System,
Inc. and subsidiaries and other sections of this Annual Report
were prepared by management, which is responsible for their
integrity and objectivity. These financial statements, which
were audited by Arthur Andersen LLP, were prepared in accordance
with generally accepted accounting principles using estimates and
judgement, where required, and giving consideration to
materiality.
The Company maintains a system of internal controls over
financial reporting, which is designed to provide reasonable
assurance to the Company's management and Board of Directors
regarding the preparation of reliable published financial
statements. The system contains self-monitoring mechanisms, and
actions are taken to correct deficiencies as they are identified.
Even an effective internal control system, no matter how well
designed, has inherent limitations, including the possibility of
the circumvention or overriding of controls, and such systems can
provide only reasonable assurance with respect to financial
statement preparation. Further, because of changes in conditions,
internal control system effectiveness may vary over time.
Through established programs, the Company regularly emphasizes to
its management employees their internal control responsibilities
and policies prohibiting conflicts of interest. The Audit
Committee of the Board of Directors is composed entirely of
outside directors. This Committee meets periodically with
management, the internal auditors and the independent auditors to
review the activities of each and to discuss audit matters,
financial reporting and the adequacy of internal controls.
Management believes that its system of internal accounting
controls and control environment provide reasonable assurance
that its assets are safeguarded from loss or unauthorized use and
that its financial records, which are the basis for the
preparation of all financial statements, are reliable.
Philip T. Ashton,
Chairman and
Chief Executive Officer
Michael E. Bielonko,
Vice President, Treasurer and
Chief Financial Officer
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of Yankee Energy
System, Inc.:
We have audited the accompanying consolidated balance sheets and
consolidated statements of capitalization of Yankee Energy
System, Inc. (a Connecticut corporation) and subsidiaries (the
Company) as of September 30, 1994 and 1993, and the related
consolidated statements of income, common shareholders' equity
and cash flows, for each of the three years in the period ended
September 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion of these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Yankee Energy System, Inc. and subsidiaries as of September
30, 1994 and 1993 and the results of their operations and their
cash flows for each of the three years in the period ended
September 30, 1994, in conformity with generally accepted
accounting principles.
As explained in Note 1 to the financial statements, effective
October 1, 1993, the Company changed its method of accounting for
postretirement benefits other than pensions and income taxes. In
addition, effective October 1, 1991, the Company changed its
method of accounting for municipal property taxes.
Hartford, Connecticut Arthur Andersen LLP
November 21, 1994
<PAGE>
<TABLE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Thousands of Dollars, except share information)
<CAPTION>
For the Years Ended September 30, 1994 1993 1992
<S> <C> <C> <C>
Operating Revenues $317,298 $302,657 $278,760
Less: Cost of Gas 168,816 157,816 150,616
________ ________ ________
Revenues, net of cost of gas 148,482 144,841 128,144
________ ________ ________
Other Operating Expenses:
Operations 54,980 52,282 49,402
Maintenance 7,753 6,860 6,844
Depreciation 16,993 17,133 16,086
Federal and state income taxes 14,624 14,643 8,647
Taxes other than income taxes 22,844 23,359 20,784
________ ________ ________
Total Other Operating Expenses 117,194 114,277 101,763
________ ________ ________
Operating Income 31,288 30,564 26,381
Other Income, net 3,184 3,008 1,839
________ ________ ________
Income Before Interest Charges 34,472 33,572 28,220
Interest Charges, net 14,165 14,996 13,988
________ ________ ________
Income Before Preferred Dividends,
Redemption Premium and
Change in Accounting Method 20,307 18,576 14,232
Preferred Dividends 822 1,097 1,097
________ ________ ________
Income Before Redemption Premium
and Change in Accounting Method 19,485 17,479 13,135
Premium on Early Redemption of
Preferred Stock (880) - -
Change in Method of Accounting for
Municipal Property Taxes (net of
income taxes of $1,944) - - 2,566
________ ________ ________
Net Income $18,605 $17,479 $15,701
________ ________ ________
________ ________ ________
Earnings per Common Share Before
Redemption Premium and Change
in Accounting Method $1.89 $1.70 $1.44
Effect of Redemption Premium on
Earnings per Common Share (0.08) - -
Effect of Accounting Change on
Earnings per Common Share - - 0.28
_____ _____ _____
Total Earnings per Common Share $1.81 $1.70 $1.72
_____ _____ _____
_____ _____ _____
Common Shares Outstanding
(Average) 10,287,683 10,287,683 9,125,183
__________ _________ _________
__________ _________ _________
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands of Dollars)
<CAPTION>
At September 30, 1994 1993
ASSETS
<S> <C> <C>
Utility Plant, at original cost $468,202 $445,912
Less: Accumulated provision for depreciation 164,327 149,300
_______ _______
303,875 296,612
Construction work in progress 11,188 11,772
_______ _______
Total Net Utility Plant 315,063 308,384
_______ _______
Other Property and Investments 28,609 23,543
_______ _______
Current Assets:
Cash and temporary cash investments 602 6,509
Accounts receivable, less accumulated
provision for uncollectible accounts of
$5,444 in 1994 and $4,914 in 1993 21,412 20,214
Fuel supplies 10,936 15,702
Other material and supplies 1,550 2,393
Recoverable gas costs 429 -
Accrued utility revenues 5,751 5,016
Prepaid Taxes 3,352 3,894
Other 3,933 4,618
_______ _______
Total Current Assets 47,965 58,346
_______ _______
Deferred Gas Costs 4,338 2,776
Recoverable Pipeline Transition Costs 3,432 7,531
Recoverable Environmental Cleanup Costs 36,467 36,104
Recoverable Income Taxes 32,198 -
Recoverable Postretirement Benefits Costs 1,419 -
Other Deferred Debits 12,027 4,609
________ ________
Total Assets $481,518 $441,293
________ ________
________ ________
</TABLE>
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization (see accompanying statements):
Common shareholders' equity $149,547 $142,564
Preferred stock subject to
mandatory redemption - 15,000
Long-term debt 126,966 153,633
_______ _______
Total Capitalization 276,513 311,197
_______ _______
Current Liabilities:
Notes payable to banks 24,600 -
Long-term debt - current portion 26,667 8,667
Accounts payable 17,805 16,739
Accrued interest 4,124 4,081
Refundable gas costs 106 3,703
Pipeline transition costs payable 573 2,691
Other 4,483 4,026
_______ _______
Total Current Liabilities 78,358 39,907
_______ _______
Accumulated Deferred Income Taxes 41,439 38,441
Unfunded Deferred Income Taxes 32,150 -
Accumulated Deferred Investment Tax Credits 9,835 10,212
Reserve for Environmental Cleanup Costs 35,000 35,000
Unfunded Postretirement Benefits Costs 1,419 -
Other Deferred Credits 6,804 6,536
Commitments and Contingencies (Note 8)
________ ________
Total Capitalization and Liabilities $481,518 $441,293
________ ________
________ ________
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Thousands of Dollars)
<CAPTION>
For the Years Ended September 30, 1994 1993 1992
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Income before preferred dividends $20,307 $18,576 $16,798
Adjusted for the following:
Depreciation 16,993 17,133 16,086
Equity earnings from investments (3,352) (3,443) (1,401)
Deferred income taxes, net 3,191 11,815 (3,256)
Deferred gas costs activity and other
non-cash items (9,203) (8,221) 9,890
Change in method of accounting for
municipal property taxes - - (4,510)
Changes in working capital:
Accounts receivable and
accrued utility revenues (1,933) (2,172) (3,830)
Accounts payable 1,066 4,196 2,021
Accrued taxes 542 (6,246) 3,318
Other working capital (excludes cash) 4,103 (614) (5,365)
______ _______ _______
Net cash provided by
operating activities 31,714 31,024 29,751
_______ _______ _______
Cash Flows From Financing Activities:
Net proceeds from common
stock issuance - 21,544 -
Net proceeds from long-term debt - 19,790 36,494
Early redemption-preferred stock (15,000) - -
Retirement of long-term debt (8,667) (20,750) (550)
Net increase (decrease) in
short-term debt 24,600 (15,300)(21,085)
Cash dividends-preferred stock (822) (1,097) (1,097)
Early redemption premium
preferred stock (880) - -
Cash dividends-common stock (12,242) (11,659) (9,916)
_______ _______ _______
Net cash (used for) provided by
financing activities (13,011) (7,472) 3,846
_______ _______ _______
Investment In Plant and Other:
Utility Plant, net of allowance for
other funds used during construction(22,790) (21,501)(30,837)
Other property and investments (5,703) (1,779) (2,891)
Iroquois distributions 3,883 5,775 -
_______ _______ _______
Net cash used for plant and
other investments (24,610) (17,505)(33,728)
_______ _______ _______
Net Increase (Decrease) In Cash and
Temporary Cash Investments For The Year(5,907) 6,047 (131)
Cash and Temporary Cash Investments,
beginning of year 6,509 462 593
_______ _______ _______
Cash and Temporary Cash Investments,
end of year $ 602 $6,509 $462
_______ _______ _______
_______ _______ _______
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest, net of amounts capitalized $14,420 $15,778 $14,451
Income taxes $11,195 $10,147 $10,123
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
Consolidated Statements of Capitalization
(Thousands of Dollars)
<CAPTION>
At September 30, 1994 1993
<S> <C> <C>
Common Shareholders' Equity:
Common shares - $5 par value, authorized
20,000,000 shares; 10,287,683 shares
outstanding at September 30, 1994
and 1993 $51,438 $51,438
Capital surplus, paid in 85,294 85,211
Unearned compensation-restricted
stock awards (a) (144) (281)
Retained earnings 15,159 8,796
Employee stock ownership plan guarantee (b) (2,200) (2,600)
_______ _______
Total Common Shareholders' Equity 149,547 142,564
_______ _______
Preferred Stock Subject to Mandatory Redemption-
$25 par value, 9.125% cumulative, 5,000,000
shares authorized and 600,000 shares out-
standing at September 30, 1993 (c) - 15,000
______ ______
Long-Term Debt:
First Mortgage Bonds (d)
Maturity Interest Rates
1995 9.86% 18,000 18,000
1997 9.90% 30,000 30,000
2004 10.03% 33,633 37,000
2019 10.07% 19,000 19,000
2022 8.48% 20,000 20,000
2023 8.63% 20,000 20,000
_______ _______
Total First Mortgage Bonds 140,633 144,000
Term Loan Agreement, variable rate,
due November, 1995 (d) 6,750 11,500
Note Purchase Agreement, 9.55%,
due November, 2000 (d) 4,050 4,200
Guarantee of Employee Stock Ownership Plan
Term Loan Agreement, 10.38%,
due July, 1999 (b) 2,200 2,600
_______ _______
Total Long-Term Debt 153,633 162,300
Less amounts due within one year (b)(d) 26,667 8,667
_______ _______
Long-Term Debt, Net 126,966 153,633
_______ _______
Total Capitalization $276,513 $311,197
________ ________
________ ________
</TABLE>
(a) Consistent with the terms of the Non-Employee Directors'
Restricted Stock Plan, incentive awards of 1,350 shares of
restricted common stock were granted to Directors during 1994.
Under the Long-Term Incentive Compensation Plan, the market value
of the restricted stock awards has been recorded as unearned
compensation and is shown as a separate component of
shareholders' equity. The earned compensation is charged to
administrative and general expense as shares become vested.
Earned compensation was approximately $171,000 for fiscal 1994
and $109,000 for fiscal 1993.
(b) On July 20, 1989, Yankee Energy became guarantor of a term
loan agreement between the Trustee for the Company's 401(k)
Employee Stock Ownership Plan (ESOP), and a commercial bank, in
the amount of $4,000,000. The proceeds were used by the Trustee
exclusively to acquire outstanding shares of Yankee Energy common
stock pursuant to the terms of the Company's ESOP. The final
maturity date of the agreement is July 1, 1999 with an annual
sinking fund requirement of $400,000 for the fiscal years 1995
through 1998 and $600,000 for the 1999 fiscal year.
(c) On July 1, 1994, the Company redeemed all 600,000
outstanding shares of its 9.125 percent cumulative preferred
stock, $25 par value.
(d) Long-term debt maturities and cash sinking-fund requirements
on debt outstanding at September 30, 1994 for each of the fiscal
years 1995 through 1999 (excluding the ESOP sinking fund
requirement) are $26,267,000, $5,517,000, $33,517,000, $3,517,000
and $3,517,000, respectively.
The accompanying notes are an integral part of these financial
statements.
<PAGE>
<TABLE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
Consolidated Statements of Common Shareholders' Equity
(Thousands of Dollars)
<CAPTION>
Employee
(a) Stock
Capital Retained Ownership
Common Surplus, Earnings Plan
Shares Paid In (Deficit) Guarantee Total
<S> <C> <C> <C> <C> <C>
Balance at
September
30, 1991 $30,417 $84,454 $(2,809) $(3,400) $108,662
Net Income 15,701 15,701
Cash dividends
on common
shares - $1.09
per share (b) (9,916) (9,916)
Employee stock
ownership plan
loan repayment 400 400
Unearned compensation-
restricted stock
awards (c) 38 38
Amortization of
preferred stock
issuance expenses 6 6
_____ ______ ______ ______ _______
Balance at
September
30, 1992 30,417 84,498 2,976 (3,000) 114,891
Net Income 17,479 17,479
Issuance of 775,000
common shares -
$5 par value 3,875 18,794 22,669
Three-for-two
stock split (b) 17,146 (17,146) -
Cash dividends
on common
shares - $1.13
per share (b) (11,659) (11,659)
Employee stock
ownership plan loan
repayment 400 400
Common stock
issuance expenses (1,125) (1,125)
Unearned compensation-
restricted stock
awards (c) (97) (97)
Amortization of
preferred stock
issuance expenses 6 6
______ ______ ______ ______ _______
Balance at
September
30, 1993 51,438 84,930 8,796 (2,600) 142,564
Net Income before
redemption
premium 19,485 19,485
Cash dividends
on common shares -
$1.19 per
share (b) (12,242) (12,242)
Employee stock
ownership plan
loan repayment 400 400
Unearned compensation-
restricted
stock awards (c) 137 137
Amortization of
preferred stock
issuance expenses 83 83
Early redemption
premium on preferred
stock (d) (880) (880)
_______ _______ _______ _______ ________
Balance at
September
30, 1994 $51,438 $85,150 $15,159 $(2,200) $149,547
_______ _______ _______ _______ ________
_______ _______ _______ _______ ________
</TABLE>
(a) Yankee Gas has dividend restrictions imposed by its Bond
Purchase Agreements. At September 30, 1994, retained earnings
available for common dividends under the terms of the Series A
agreement totaled approximately $24.0 million and $34.3 million
under the terms of the Series B and C agreements.
(b) Cash dividends on common shares have been restated for fiscal
years 1993 and 1992 to give retroactive effect to the three-for-
two stock split on June 28, 1993. Amount transferred to common
shares in fiscal year 1993 represents the par value of the
additional shares issued.
(c) See note (a) of the Consolidated Statements of
Capitalization.
(d) On July 1, 1994, the Company redeemed all 600,000 outstanding
shares of its 9.125 percent cumulative preferred stock, $25 par
value and paid a 5.866 percent early redemption premium of
$879,900.
The accompanying notes are an integral part of these financial
statements.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1) Summary of Significant Accounting Policies
The Company: Yankee Energy System, Inc. (Yankee Energy or the
Company) is a holding company, headquartered in Connecticut,
whose principal operating subsidiary is Yankee Gas Services
Company (Yankee Gas). Yankee Gas provides retail distribution of
natural gas to a service area comprising 67 cities and towns in
Connecticut which cover approximately 2,200 square miles. The
Company has four nonregulated subsidiaries: Housatonic
Corporation (Housatonic), which owns a 10.5 percent equity
interest in the Iroquois Gas Transmission System, L.P.
(Iroquois); NorConn Properties, Inc. (NorConn), which owns
selected system real estate; Yankee Energy Financial Services
Company (Yankee Financial), which provides certain customers with
financing to promote the sale of natural gas and Yankee Energy
Production Services, Inc. (Yankee Production), whose purpose is
to encourage additional natural gas sales in special applications
to large customers and to make capital investments in such
projects, including onsite electric generation.
PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements of Yankee Energy include the accounts of all
subsidiaries. Intercompany transactions have been eliminated in
consolidation.
PUBLIC UTILITY REGULATION: Yankee Gas is subject to regulation
for rates and other matters by the Connecticut Department of
Public Utility Control (DPUC) and follows accounting policies
prescribed by the DPUC. Iroquois is subject to regulation by the
Federal Energy Regulatory Commission (FERC).
REVENUES: Revenues are based on authorized rates applied to each
customer's use of gas. Rates can be changed only through a
formal proceeding before the DPUC. At the end of each accounting
period, a revenue estimate for the amount of gas delivered but
unbilled is accrued.
DEPRECIATION: The provision for depreciation is calculated using
the straight-line method based on estimated remaining useful
lives of depreciable utility plant in service, adjusted for net
salvage value and removal costs as approved by the DPUC. The
depreciation rates for the several classes of plant in service
are equivalent to an overall composite rate of 3.7 percent in
fiscal year 1994, 3.9 percent in fiscal year 1993 and 3.8 percent
in fiscal year 1992.
PURCHASED GAS ADJUSTMENT CLAUSE (PGA): The DPUC-approved rates
include an adjustment clause under which gas costs above or below
base rate levels are charged or credited to customers. As
prescribed by the DPUC, differences between the actual purchased
gas costs and the current cost recovery are deferred and
recovered or refunded over future periods.
EQUITY ACCOUNTING: The Company accounts for Housatonic's
investment in Iroquois and Yankee Production's investments using
the equity method, recording their proportionate share of
earnings (losses) with corresponding increases (decreases) in
their investment. Distributions received reduce the carrying
amount of these investments.
INCOME TAXES: Differences exist between the periods in which
transactions affect income in the financial statements and the
periods in which they affect the determination of income subject
to tax. The tax effect of such timing differences is accounted
for in accordance with the ratemaking treatment required by the
DPUC.
Effective October 1, 1993, Yankee Energy adopted the provisions
of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," (FAS 109). FAS 109 supersedes
previously issued income tax accounting standards. As of
September 30, 1994, Yankee Energy recorded an additional deferred
tax liability and a regulatory asset of $32.2 million,
representing the probable future rate recovery from customers
when such deferred tax liability becomes payable. The deferred
tax liability primarily represents certain temporary differences
between the book and tax basis of utility plant for which
deferred taxes had not previously been recorded in accordance
with the regulatory rate practices of the DPUC. The adoption of
FAS 109 did not have a material effect on the Company's results
of operations or financial position.
POSTRETIREMENT BENEFITS: Effective October 1, 1993, Yankee
Energy adopted the provisions of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," (FAS 106). The
provisions of FAS 106 require that Yankee Energy record the cost
of postretirement benefits over the employees' active service
periods rather than on a pay-as-you-go basis, as was Yankee
Energy's prior practice. The adoption of FAS 106 increased
assets and liabilities but did not have a negative impact on the
Company's results of operations or financial position.
CHANGES IN PREFERRED STOCK: On July 1, 1994, Yankee Gas redeemed
all 600,000 outstanding shares of its 9.125 percent cumulative
preferred stock, $25 par value. The Company used cash on hand to
pay both the $15 million par amount and an early redemption
premium of $879,900.
CHANGES IN COMMON STOCK: A three-for-two common stock split was
effected by the June 28, 1993 distribution of one additional
share of common stock for each two shares of common stock owned
by shareholders of record on June 7, 1993. All fiscal 1993 and
1992 per share amounts and numbers of common shares outstanding
presented in this report have been restated to give retroactive
effect to the stock split.
CHANGE IN THE METHOD OF ACCOUNTING FOR MUNICIPAL PROPERTY TAXES:
As of October 1, 1991, the Company changed its method of
accounting for municipal property taxes to provide a better
matching of property tax expense with the receipt of services
provided by the municipalities.
The cumulative effect of this change in accounting for municipal
property taxes, all of which is recognized in the quarter ending
December 31, 1991, is approximately $2.6 million (net of income
taxes of approximately $1.9 million), equivalent to $0.28 per
common share. After taking into account the one-time cumulative
change, the change in accounting method resulted in a minor
reduction of the amounts of property tax expense recorded in
fiscal 1992 and has had no significant effect on subsequent
property tax expense.
RECLASSIFICATIONS: Certain prior year amounts have been
reclassified to conform with current year classifications.
Note 2) Income Tax Expense
<TABLE>
<CAPTION>
The components of the federal and state income tax provisions
are:
Years Ended September 30, 1994 1993 1992
(Thousands of Dollars)
Changed to income before change in accounting method:
<S> <C> <C> <C>
Current income taxes:
Federal $ 8,496 $ 2,315 $ 9,170
State 3,081 1,325 4,112
_______ _______ _______
Total current 11,577 3,640 13,282
_______ _______ _______
Deferred income taxes, net:
Investment tax credits (377) (377) (377)
Federal 3,617 9,743 (2,885)
State 533 2,449 (2,093)
_______ _______ _______
Total Deferred 3,773 11,815 (5,355)
_______ _______ _______
Total income tax expense
charged to income before
change in accounting method $15,350 $15,455 $ 7,927
Change in accounting method - - 1,944
_______ _______ _______
Total income tax expense $15,350 $15,455 $ 9,871
_______ _______ _______
_______ _______ _______
</TABLE>
The components of total income tax expense are classified as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Charged to operating expense $14,624 $14,643 $ 8,647
Charged (credited) to other
income 726 812 (720)
Change in accounting method - - 1,944
_______ _______ _______
Total income tax expense $15,350 $15,455 $ 9,871
_______ _______ _______
_______ _______ _______
</TABLE>
Deferred income taxes are comprised of the tax effects of timing
differences as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Investment tax credits $ (377) $ (377) $ (377)
Liberalized depreciation 3,789 3,581 2,072
Deferred gas costs (57) 7,770 (7,642)
Iroquois equity - - 400
Alternative minimum tax and other 418 841 192
_______ _______ _______
Deferred income taxes, net $ 3,773 $11,815 $(5,355)
_______ _______ _______
_______ _______ _______
</TABLE>
In accordance with required regulatory treatment, deferred income
taxes are not provided for certain timing differences. This
treatment, along with other items, causes differences between the
statutory income tax rate and the effective income tax rate.
These differences between the effective income tax rate recorded
by the Company and the statutory federal tax rate are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Federal statutory income
tax rate 35.0% 34.8% 34.0%
Tax effect of differences:
Depreciation 3.5 5.1 4.9
State income taxes net
of federal benefit 6.0 7.6 6.4
Effective tax rate
adjustment 3.0 (2.0) 1.0
Shared interest savings (0.7) (1.0) (1.3)
Property taxes 1.9 1.4 (3.3)
Investment tax credit and
excess deferred taxes (1.1) (1.1) (1.4)
Capitalized overheads 0.2 0.4 (1.0)
Postretirement benefit
contribution (0.3) 2.0 (2.1)
Bad debt reserve and
amortization (2.8) (1.1) 0.2
Miscellaneous (1.7) (0.7) (0.4)
____ ____ ____
Effective income tax rate 43.0% 45.4% 37.0%
</TABLE>
Note 3) Leases
Yankee Gas has entered into operating lease agreements for the
use of office equipment, vehicles and buildings. For fiscal
1994, 1993 and 1992, these rental payments were $1,739,000,
$1,762,000 and $1,789,000, respectively.
Future minimum rental payments, excluding associated costs such
as property taxes, state use taxes, insurance and maintenance,
under long-term noncancelable leases as of September 30, 1994,
are approximately:
<TABLE>
<CAPTION>
Year Operating Leases
(Thousands of Dollars)
<S> <C>
1995 $1,484
1996 1,327
1997 1,103
1998 880
1999 756
After 1999 2,419
Future minimum lease
payments $7,969
______
______
</TABLE>
Note 4) Postretirement Benefits
The Company has a noncontributory defined benefit retirement plan
covering all regular employees. Benefits are based on years of
service and employees' highest consecutive sixty months of
compensation during the last one hundred twenty months of
employment. It is the Company's policy to fund annually an
amount at least equal to that which will satisfy the requirements
of the Employee Retirement Income Security Act and the Internal
Revenue Code. No contributions were required nor made in fiscal
1994. Pension assets are invested primarily in equity securities
and investment grade bonds.
The components of net pension cost were:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
(Thousands of Dollars)
<S> <C> <C> <C>
Service cost $2,114 $1,928 $1,853
Interest cost 3,504 3,310 3,073
Net amortization (496) 2,376 (298)
Less: Return on plan assets 5,242 7,606 4,567
______ ______ ______
Net pension cost $ (120) $ 8 $ 61
______ ______ ______
______ ______ ______
</TABLE>
For calculating net pension cost, the Company used discount rates
of 7.75 percent, 8.5 percent and 8.5 percent for 1994, 1993 and
1992, respectively. The assumed long-term rate of return was 9.0
percent for all years and the compensation progression rate was
assumed to be 5.0 percent, 5.5 percent and 5.5 percent for 1994,
1993 and 1992, respectively.
Total pension cost, part of which was charged to utility plant,
resulted in a credit of $35,000 for the year ended September 30,
1994, and an expense of $93,000 and $146,000 for the same periods
in 1993 and 1992, respectively. Pension cost for 1994, 1993 and
1992 includes $85,000 in cost of living increases each year for
Northeast Utilities (NU) retirees who were previously employed in
the gas business operated by The Connecticut Light and Power
Company (CL&P), a subsidiary of NU. These payments were agreed
to at the time of divestiture from NU.
For calculating the plan's year-end funded status, the following
assumptions were used:
<TABLE>
<CAPTION>
Years Ended September 30, 1994 1993 1992
<S> <C> <C> <C>
Discount rate 8.25% 8.5% 8.5%
Expected long-term rate
of return 9.00% 9.0% 9.0%
Compensation/progression rate 4.50% 5.5% 5.5%
</TABLE>
The following table represents the plan's funded status
reconciled to the consolidated balance sheets:
<TABLE>
<CAPTION>
At September 30, 1994 1993
(Thousands of Dollars)
<S> <C> <C>
Accumulated benefit obligation,
including $33,401 of vested benefits
at September 30, 1994 and $27,274 at
September 30, 1993 $34,691 $30,723
_______ _______
_______ _______
Projected benefit obligation $45,832 $40,900
Less: Market value of plan assets 57,394 58,876
Plan surplus 11,562 17,976
Unrecognized transition amount (961) (1,048)
Unrecognized prior service costs (34) (37)
Unrecognized net gain (11,795) (18,240)
________ ________
Accrued pension liability $(1,228) $(1,349)
________ ________
________ ________
</TABLE>
During fiscal 1994, the Company adopted an excess benefit plan
(EBP) that provides retirement benefits to executive officers and
other key management staff. The EBP recognizes total
compensation and service that would otherwise be disregarded due
to Internal Revenue Code limitations on compensation in
determining benefits under the regular retirement plan. The EBP
also takes into consideration awards to some executives under the
Northeast Utilities Executive Incentive Compensation Program.
The plan is not funded and benefits are paid when due from
general corporate assets.
Note 5) Postretirement Benefits Other Than Pensions
The Company provides certain health care and life insurance
benefits to its retired employees. On July 1, 1990, in
accordance with terms of the divestiture, Yankee Gas began
compensating the NU System for a portion of the NU System's
liability for certain health care and life insurance expenses of
retirees or surviving spouses. Yankee Gas and the NU System will
share costs in a defined manner until June 30, 2005. The cost of
providing those benefits for NU retirees was approximately
$969,000 for the fiscal year ended September 30, 1994 and
$869,000 and $930,000 for the comparable periods in 1993 and
1992, respectively.
Yankee Gas has established two Internal Revenue Code Section
501(c)(9) Voluntary Employee Beneficiary Association (VEBA)
Trusts, one for union employees and one for non-union employees,
to fund its future liabilities for retiree health care and life
insurance benefits. Contributions to the VEBA Trusts totaled
$0.772 million for fiscal 1994. Assets of the VEBA Trusts are
invested primarily in equity securities and investment grade
bonds.
Effective October 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions," (FAS 106), which
requires, among other things, that other postretirement benefits
costs be recognized over the employment period that encompasses
eligibility to receive such benefits. The DPUC is allowing
$1.728 million of associated expenses to be recovered in rates
and has indicated its objective to grant full rate recovery
within a reasonable time frame of all FAS 106 related expenses.
On this basis, the Company is deferring for future recovery the
difference between the annual estimated expense and the portion
currently being collected in rates.
The components of net postretirement benefits costs were:
<TABLE>
<CAPTION>
Year Ended September 30, 1994
(Thousands of Dollars)
<S> <C>
Service cost $ 982
Interest cost 1,509
Net transition amortization 876
Net other deferrals (301)
Less: Return on assets (81)
_______
Net postretirement benefits costs $3,147
______
______
</TABLE>
For calculating the plan's year-end funded status, as well as the
ensuing year's postretirement benefits costs, the following
assumptions were used:
<TABLE>
<CAPTION?
Years Ended September 30,
1994 1993
<S> <C> <C>
Discount rate 8.25% 7.75%
Expected long-term rate of return 9.00% 9.00%
Health care cost trend rate
- First year 11.00% 12.00%
- Ultimate 5.00% 5.00%
</TABLE>
Trend rates are assumed to decrease one percent per year until
they reach the ultimate rate. A one percent change in the
weighted average trend rate assumption of health care claims
would result in an eighteen percent increase in accumulated
benefit obligations and a twenty-two percent increase in net
periodic postretirement benefits costs.
The following table represents the postretirement benefit plan's
funded status reconciled to the consolidated balance sheets:
<TABLE>
<CAPTION>
At September 30, 1994 1993
(Thousands of Dollars)
<S> <C> <C>
Accumulated benefit obligation $20,177 $19,644
Less: Market value of assets 2,700 2,193
Accumulated benefit obligation
(greater than) plan assets (17,477) (17,451)
Unrecognized transition amount 16,234 17,110
Unrecognized net gain (1,473) -
Accrued postretirement benefit
liability $(2,716) $ (341)
________ ________
________ ________
</TABLE>
In November, 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 112,
"Emloyers' Accounting for Post-Employment Benefits," (FAS 112).
This statement, which will be adopted during the first quarter of
fiscal 1995, establishes accounting standards for employers who
provide benefits, such as unemployment compensation, severance
benefits and disability benefits, to former or inactive employees
after employment but before retirement and requires recognition
of the obligation for these benefits. The Company does not
expect the adoption of FAS 112 to materially impact the Company's
results of operations or financial position.
Note 6) Short-Term Debt
Yankee Gas has arranged a $40 million revolving line of credit
with a group of five banks whereby funds may be borrowed on a
short-term revolving basis using either fixed or variable rate
loans. Yankee Gas also has another $22 million of credit lines
available on an uncommitted basis. At September 30, 1994, Yankee
Gas had $17.3 million outstanding under its agreements. In
addition, Yankee Energy (parent) had $7.3 million outstanding on
a $15 million line of credit at September 30, 1994. There was no
short-term debt outstanding at September 30, 1993.
Note 7) Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the
fair value of each of the following financial instruments:
CASH AND TEMPORARY CASH INVESTMENTS: The carrying amount
approximates fair value.
PREFERRED STOCK: The fair value of the Company's fixed rate
preferred stock is based upon the quoted market price for similar
issues. On July 1, 1994, the Company redeemed all 600,000
outstanding shares of its 9.125 percent cumulative preferred
stock.
FIRST MORTGAGE BONDS: The fair value of the Company's fixed rate
long-term debt is based upon borrowing rates currently available
to the Company. Adjustable rate securities are assumed to have a
fair value equal to their carrying value.
The carrying amount of the Company's financial instruments and
the estimated fair value at September 30, 1994 and 1993 are as
follows:
<TABLE>
<CAPTION>
September 30, 1994 1993
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Preferred stock
subject to
mandatory
redemption - - $ 15,000 $ 16,746
________ ________ ________ ________
First mortgage
bonds $140,633 $142,282 $144,000 $174,256
________ ________ ________ ________
</TABLE>
The fair values shown above have been reported to meet the
disclosure requirements of Statement of Financial Accounting
Standards No. 107, "Disclosures About Fair Values of Financial
Instruments" and do not purport to represent the amounts at which
those obligations would be settled.
Note 8) Commitments and Contingencies
CONSTRUCTION PROGRAM: The Company's estimated construction
expenditures for the fiscal years 1995 through 1999 are $131
million, including $29 million for fiscal 1995. The Company
intends to use these estimated construction expenditures to
maintain the reliability of the distribution system in projects
that will generate gas sales and transportation revenues.
IROQUOIS: The Iroquois Gas Transmission System has been informed
by the U.S. Attorneys' Offices for the Northern, Southern and
Eastern Districts of New York that a civil investigation is
underway to determine whether Iroquois committed civil
environmental violations during construction of the pipeline. At
the outset of the investigation, Iroquois was notified of 26
alleged violations. In response, Iroquois denied that such
violations occurred and asserted that all concerns raised by
governmental authorities during construction had been fully
responded to. Iroquois has since been informed that the universe
of alleged violations initially raised is contained in certain
field reports prepared by a Federal/State Inter-Agency Task Force
which surveyed the right-of-way in connection with the right-of-
way restoration program. No proceedings in connection with this
civil investigation have been commenced by the federal government
against Iroquois.
In addition, Iroquois and its environmental consultant remain
subjects of a federal criminal investigation commenced in 1992.
This grand jury proceeding is being conducted by the U.S.
Attorney's Office for the Northern District of New York in
conjunction with the U.S. Environmental Protection Agency (EPA)
and the Federal Bureau of Investigation (FBI). An FBI press
release issued in July, 1992, described the focus of the inquiry
as whether Iroquois and possibly others violated federal
environmental law, provided false information or otherwise
concealed information in conjunction with the construction of the
base pipeline or otherwise used interstate mails or wire to
commit a fraud in connection with the construction of the base
pipeline. To date, no criminal charges have been filed.
Iroquois management, however, believes and has represented to the
Company that the pipeline construction and right-of-way
activities were conducted in a responsible manner. However,
Iroquois deems it probable that the U.S. Attorneys' Offices will
seek indictments and in them substantial fines and other
sanctions.
Iroquois and its counsel expect to meet with those conducting the
civil and criminal investigations, from time to time, both to
gain an informed understanding of the focus and direction of the
investigations in order to defend itself, and if and when
appropriate, to explore a range of possible resolutions
acceptable to all parties. No understandings or agreements have
been reached that have led Iroquois to make provision in its
financial statements for any dollar liability associated with
these proceedings.
Although it is not anticipated that the outcome of these
proceedings will have a material impact on the Company, based on
the information available at this time, management cannot predict
what the ultimate impact might be.
ENVIRONMENTAL MATTERS: The Company is subject to federal and
state environmental regulation of its operations and properties.
Such regulation may result in future environmental liabilities
that may include significant expenses incurred to remove, contain
or remediate contamination caused by operations of former
manufactured gas plant sites.
Pursuant to an Environmental Liability Sharing and Indemnity
Agreement, dated July 1, 1989, Yankee Gas and CL&P have allocated
potential environmental liabilities at sites previously owned by
CL&P and used in CL&P's gas business, and at sites not previously
owned by CL&P but which had prior uses in CL&P's gas business. As
part of that agreement, Yankee Gas and CL&P would share equally
the costs of environmental remediation at sites owned by CL&P
prior to July 1, 1989 and used in CL&P's gas business.
Additional on and off-site investigations of one such property
began in fiscal 1993 and will continue in fiscal 1995. Following
compilation of the additional data, a determination will be made
on the need to remediate.
Fourteen sites initially believed to contain coal tar became the
property of Yankee Gas at divestiture from Northeast Utilities.
Responsibility for future investigation and remediation at these
sites rests solely with Yankee Gas. Each of these sites has been
the subject of a field investigation and coal tar constituents
have been found in some soil and ground water samples. The
Company has reported the results of the environmental studies to
the Connecticut Department of Environmental Protection (DEP).
The DEP has not ordered that any remedial action be taken.
However, of the fourteen, seven sites are presently listed on the
Connecticut Inventory of Hazardous Waste Sites. Inclusion of a
site on this list indicates that remediation may be required in
the future.
During 1993, the Company conducted additional research and began
to prioritize the fourteen sites to further define any that may
require remediation. The Company identified four sites that are
likely to require remediation. The Company's proposed
prioritization was submitted to the DEP. Extensive site
investigations were then conducted at the four sites to define
the exent of contamination and begin remedial plans. Remedial
activity began at two sites during fiscal 1994 and will continue
at those locations during fiscal 1995. In addition, the Company
has developed a cost estimate for the remaining ten sites based
on the probability of cleanup. As a result of this effort, the
Company has recorded a liability of $35 million for future
environmental cleanup.
Recovery of remediation costs has been specifically allowed by
the Company's 1992 rate case decision. Presently, $325,000 is
allowed annually in rates. If costs are expected to exceed $2.5
million on an annual basis, the Company is required to go to the
DPUC for review. The DPUC has stated that "to the extent that
coal tar remediation expenses are prudently incurred, they should
be allowed as proper operating expenses".
The Company also believes that it has valid claims for insurance
recovery of remediation costs and intends to pursue those claims
against insurers.
TRANSITION COSTS - ORDER NO. 636: On April 8, 1992, the FERC
issued Order No. 636 on pipeline restructuring. In essence, the
FERC found that absent the unbundling of traditional merchant
services, pipelines would not be able to achieve the FERC's long-
term goal of open access and provide transportation services that
are indifferent to the seller of the gas. Order No. 636,
therefore, required all pipelines to implement restructuring of
their services by the winter of 1993-94. The three major
pipeline systems serving Yankee Gas (Iroquois Gas Transmission
System, Tennessee Gas Pipeline Company and Algonquin Gas
Transmission Company (Algonquin) and its affiliate, Texas Eastern
Transmission Company), have all restructured pursuant to the FERC
directive. Iroquois was designed and constructed as a
transportation-only pipeline, and as such, its restructuring has
very minimal impact.
Order No. 636 acknowledges that the restructuring of the
pipelines' traditional services will cause pipelines to incur
transition costs in several areas and provides mechanisms for the
pipelines to fully recover prudently incurred transition costs
attributable to the implementation of Order No. 636.
On July 8, 1994, the DPUC issued a decision on the implementation
of FERC Order No. 636 by the Connecticut Local Distribution
Companies (LDCs). The DPUC is allowing the LDCs to offset the
transition costs billed by pipelines under Order No. 636 with any
recoveries from capacity release activity refunds or deferred gas
costs credits for the 1992-93 period and all subsequent annual
deferred gas costs, gas supplier refunds and fifty percent of off
system sales margins and interruptible margins earned in excess
of target amounts. With the exception of all subsequent annual
deferred gas costs credits, the DPUC has ordered that all
transition cost recovery dollars be applied immediately on a
monthly basis to the transition costs that have been or are
subsequently billed. All subsequent annual deferred gas costs
credits will be applied on an annual basis. If needed, a per
unit surcharge will be applied to firm customers' bills. The
DPUC believes that the recovery system detailed above will result
in all transition costs being recovered in approximately three
years.
Through September 30, 1994, Yankee Gas has paid approximately
$10.5 million of transition costs and an additional $0.6 million
are anticipated. To date, Yankee Gas has collected $7.7 million
through a combination of gas supplier refunds, deferred gas costs
credits and excess interruptible margins. Yankee Gas' management
anticipates full recovery of transition costs consistent with the
DPUC decision.
TAKE-OR-PAY LIABILITY: Take-or-pay liabilities arose from the
inability or unwillingness of pipeline companies to take the
volumes of gas for which they had contracted with producers. To
avoid or settle litigation by producers to recover payment for
the contracted-for volumes, some pipeline companies, including
certain Yankee Gas suppliers, have negotiated or are negotiating
settlements of their contracts. The pipeline companies were
authorized by the FERC to recover from their customers a portion
of their settlement costs under guidelines set forth by the FERC.
Yankee Gas has collected approximately $7.8 million of its
current estimated take-or-pay cost of $8.4 million through
September 30, 1994. This take-or-pay cost reflects a revised
estimate from Algonquin during fiscal 1994. The collection was
accomplished primarily by retaining gas supplier refunds and
deferred gas costs credits that otherwise would have been
refunded to customers as prescribed by a November 20, 1991 DPUC
decision and through a surcharge applied to interruptible
customers. Management expects to recover the entire remaining
amount within the next two fiscal years.
GAS SUPPLY HEDGING ACTIVITIES: The Company has entered into
fixed-revenue-rate contracts with two customers for the delivery
of natural gas. The Company has hedged these commitments with
the purchase of natural gas swaps. In order to satisfy certain
provisions of the arrangement, the Company has provided a letter
of credit for $1.25 million. Management does not anticipate
these commitments to have a material negative impact on the
Company's financial condition or results of operation.
TAX AUDIT: The Company was recently informed by the Internal
Revenue Service that the Company's federal income tax returns for
1989 and 1990 were examined and no change in reported tax was
necessary for those periods.
Note 9) Quarterly Financial Data (Unaudited)
The following table provides information with respect to the
consolidated quarterly results of operations for the fiscal years
ended September 30, 1994 and 1993 and reflects the seasonal
nature of the Company's operations. The results of any one
quarter during the year are not indicative of the results of
future quarters.
<TABLE>
<CAPTION>
Quarter Ended
Fiscal Year 1994 December 31 March 31 June 30 September 30
(Thousands of Dollars, except share information)
<S> <C> <C> <C> <C>
Operating
Revenues $91,786 $134,369 $53,612 $37,531
Operating Income
(Loss) 11,444 17,976 2,357 (489)
Net Income
(Loss) (1) 8,359 14,922 (563) (3,233)
Earnings (Loss)
per Common
Share (1) (2) $0.81 $1.45 ($0.05) $(0.32)
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended
Fiscal Year 1993 December 31 March 31 June 30 September 30
<S> <C> <C> <C> <C>
Operating
Revenues $90,984 $123,624 $51,000 $37,049
Operating Income 11,690 16,621 2,151 102
Net Income (Loss) 7,812 13,839 (994) (3,178)
Earnings (Loss) per
Common Share (2) $0.76 $1.35 $(0.10) $(0.31)
</TABLE>
(1) Exclusive of an $879,000 charge, or $0.08 per share,
resulting from the early redemption of the Company's 9.125
percent cumulative preferred stock.
(2) Earnings (Loss) per common share were calculated on the
average common shares outstanding of 10,287,683 for the
twelve months ended September 30, 1994 and 1993.
<PAGE>
YANKEE ENERGY SYSTEM, INC. AND SUBSIDIARIES
Selected Financial and Operating Data
<TABLE>
<CAPTION>
September 30, 1994 1993 1992 1991 1990
Balance Sheet Data:
(Thousands)
<S> <C> <C> <C> <C> <C>
Net Utility
Plant $315,063 $308,384 $303,715 $287,841 $271,256
Total Assets 481,518 441,293 393,227 356,269 320,533
Total
Capitalization 276,513 311,197 277,391 250,012 234,103
Income and Share Data:
(Thousands except share data)
Operating
Revenues $317,298 $302,657 $278,760 $234,458 $227,886
Cost of Gas 168,816 157,816 150,616 114,037 118,345
Other O&M
Expenses 62,733 59,142 56,246 55,009 51,037
Depreciation 16,993 17,133 16,086 14,039 14,596
Net Income (1) 19,485 17,479 13,135 10,844 8,854
Earnings
per Share (1) $1.89 $1.70 $1.44 $1.28 $1.09
Revenues:
(Thousands)
Residential $140,403 $133,846 $124,435 $100,959 $104,769
Commercial 95,286 93,045 85,920 69,746 69,378
Industrial 77,850 72,940 64,004 57,294 50,225
Miscellaneous 3,328 1,884 1,211 3,304 2,245
Transportation 431 942 3,190 3,155 1,269
Total $317,298 $302,657 $278,760 $234,458 $227,886
Sales and Transportation:
(Mcf-Thousands)
Firm:
Residential 13,101 12,691 12,312 11,029 12,175
Commercial 9,998 9,703 9,183 7,951 8,435
Industrial 10,421 9,600 8,058 8,098 6,532
Transportation 128 167 1,700 1,089 362
Unbilled and
Other 245 129 (58) (15) 38
Total Firm 33,893 32,290 31,195 28,152 27,542
Non-Firm:
Commercial 1,549 1,663 1,377 1,403 1,804
Industrial 7,149 5,336 3,632 3,240 3,889
Transportation 559 1,400 3,147 4,576 3,085
Total
Non-Firm 9,257 8,399 8,156 9,219 8,778
Total Sales and
Transportation 43,150 40,689 39,351 37,371 36,320
Customers:
(Average) (2)
Residential 155,874 155,385 154,934 154,116 154,211
Commercial (3) 19,156 19,139 19,056 18,928 18,711
Industrial (3) 1,980 1,893 1,885 1,872 1,851
Resale 1 1 1 1 1
Total 177,011 176,418 175,876 174,917 174,774
Sources of Gas:
(Mcf-Thousands)
Domestic 16,162 7,474 9,526 14,121 17,277
Canadian Gas
Firm 24,440 23,970 11,016 1,837 3,061
Spot Market Gas 2,318 8,155 14,386 16,191 12,770
Produced Gas 30 6 15 63 153
Company Use/
Unaccounted For (488) (608) (377) (487) (422)
Total 42,462 38,997 34,566 31,725 32,839
Peak Day Data:
Peak Day Send
Out (Mcf per
day) (4) 262,794 247,315 237,077 225,122 213,145
Peak Day Date 1/19/94 2/01/93 1/16/92 1/22/91 12/22/89
Peak Day
Degree Days 55 54 55 56 58
Total Annual
Degree Days 6,454 6,232 5,995 5,198 5,968
</TABLE>
(1) Exclusive of an $879,900 charge, or $0.08 per share,
resulting from the early redemption premium on the Company's
preferred stock in fiscal 1994 and a $2,566,000 credit, or $0.28
per share, resulting from a change in the Company's method of
accounting for municipal property taxes in fiscal 1992. All per
share amounts have been restated to give retroactive effect to
the three-for-two stock split on June 28, 1993.
(2) Customer data has been restated to reflect the number of
customer accounts rather than the number of dwelling units.
Additionally, certain commercial customers have been reclassified
as industrial as a result of a change in the State of Connecticut
Gross Receipts Tax Statute which redefined the parameters of the
industrial classification.
(3) Transportation customers are included in these customer
categories. Average transportation customers are as follows:
1994:17, 1993:25, 1992:51, 1991:36 and 1990:7.
(4) Converted from BTU-millions assuming 1,033 BTU per cubic
foot.
<PAGE>
GRAPHICS APPENDIX LIST
Page Where DESCRIPTION OF GRAPHIC OR
Graphic Appears CROSS-REFERENCE
14 Growth in Throughput. X axis contains
fiscal years ended 1990-1994. Y axis
contains billions of cubic feet. For
the fiscal years ended 1990-1994, the
throughput in billions of cubic feet was
36.3, 37.4, 39.4, 40.7 and 43.2,
respectively.
15 Growth in Margin. X axis contains
fiscal years ended 1990-1994. Y axis
contains millions of dollars. For the
fiscal years ended 1990-1994, the margin
in millions of dollars was 109.5, 120.4,
128.1, 144.8 and 148.5, respectively.
16 Permanent Capital Structure. X axis
contains fiscal years ended 1990-1994.
Y axis contains percentage of permanent
capital. For the fiscal years ended
1990-1994, common shareholders' equity
was 39, 43, 39, 45 and 49 percent of the
permanent capital structure,
respectively. For the fiscal years
ended 1990-1994, preferred stock was 6,
6, 5, 5 and 0 percent of the permanent
capital structure, respectively. For
the fiscal years ended 1990-1994, long-
term debt was 55, 51, 56, 50 and 51
percent of the permanent capital
structure respectively.
<PAGE>
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
YANKEE GAS SERVICES COMPANY is a wholly-owned subsidiary of
the registrant. It is incorporated in Connecticut and does
business under its own name.
YANKEE ENERGY FINANCIAL SERVICES COMPANY is a wholly-owned
subsidiary of the registrant. It is incorporated in Connecticut
and does business under its own name.
HOUSATONIC CORPORATION is a wholly-owned subsidiary of the
registrant. It is incorporated in Connecticut and does business
under its own name.
NORCONN PROPERTIES, INC. is a wholly-owned subsidiary of the
registrant. It is incorporated in Connecticut and does business
under its own name.
YANKEE ENERGY PRODUCTION SERVICES, INC. is a wholly-owned
subsidiary of the registrant. It is incorporated in Connecticut
and does business under its own name.
<PAGE>
EXHIBIT 23
(ARTHUR ANDERSEN LLP LETTERHEAD)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included (or incorporated by
reference) in this Form 10-K, into the Company's previously filed
Registration Statement File No. 033-56323.
Hartford, Connecticut
December 19, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-END> SEP-30-1994
<CASH> 602
<SECURITIES> 0
<RECEIVABLES> 32,607
<ALLOWANCES> (5,444)
<INVENTORY> 12,486
<CURRENT-ASSETS> 47,965
<PP&E> 479,390
<DEPRECIATION> 164,327
<TOTAL-ASSETS> 481,518
<CURRENT-LIABILITIES> 78,358
<BONDS> 153,633
<COMMON> 51,438
0
0
<OTHER-SE> 98,109
<TOTAL-LIABILITY-AND-EQUITY> 481,518
<SALES> 317,298
<TOTAL-REVENUES> 317,298
<CGS> 168,816
<TOTAL-COSTS> 168,816
<OTHER-EXPENSES> 109,541
<LOSS-PROVISION> 4,469
<INTEREST-EXPENSE> 14,165
<INCOME-PRETAX> 34,835
<INCOME-TAX> 15,350
<INCOME-CONTINUING> 19,485
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (880)
<NET-INCOME> 18,605
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 1.89
</TABLE>
