Common use of Cost Allocations Clause in Contracts

Cost Allocations. Where a prevailing price does not exist, and an AGLR Entity (with the exception of AGSC) will charge the fully distributed cost of a facility or service in accordance with Section 5.1 of this Agreement, such costs will be allocated utilizing a tiered approach. First, costs will be directly charged whenever appropriate and practicable. Direct charging is essentially a “100% allocation” of costs related to a particular facility or service to the AGLR Entity (with the exception of charges from AGSC) receiving the benefit of that facility or service. Direct charges shall reflect direct labor, direct materials and direct purchased services as specified in Section 5.2(a) of this Agreement. Second, in accordance with Section 5.2(b) of this Agreement, where direct charging is not appropriate or practicable, and a facility or service jointly benefits two or more parties, allocated portions of the related costs shall be charged (with the exception of charges from AGSC) to the appropriate AGLR Entities using cost- causative allocation factors. Table A, below, lists the allocation factors used by the AGLR Entities (with the exception of AGSC) for all annual allocations that exceed (or could exceed using other reasonable allocation factors) $500,000. Nicor Gas Nicor Services* Billing and Cash Remittance Services All costs – space made available on the bill Nicor Services* Nicor Gas Customer move requests Overhead costs – employee headcount Nicor Enerchange Nicor Gas Chicago Hub administration – marketing and other administrative functions Facility-related costs – square footage and employee headcount Third, all direct labor charged to an AGLR Entity (with the exception of charges from AGSC) under the two preceding paragraphs shall be increased by a portion of indirect costs to reflect indirect labor, administrative and general, and other overhead amounts (such as, without limitation and to the extent applicable, all of the items listed in Table B, below). Indirect costs shall be summed and allocated on the basis of direct labor dollars utilizing a loading factor (referred to as a “payroll additive”), as specified in Section 5.2(c) of this Agreement. Payroll taxes Facilities Employee benefits Machinery and Equipment Employee benefits administration Furniture and Fixtures Communications and computer support * - Nicor Energy Services Company, also known as Nicor Services (d/b/a Nicor National), including its subsidiaries Cash advances made by an AGLR Entity to Nicor Gas pursuant to this Agreement shall be in accordance with the following terms and in accordance with 83 Ill. Administrative Code Part 340 (Money Pool Agreements) as adopted by ICC Order effective June 15, 2004 in Docket No. 02-0581, as the same may be amended or modified by the ICC from time to time: