OPERATIONAL FLOW ORDERS AND SCHEDULING PENALTIES Clause Samples

OPERATIONAL FLOW ORDERS AND SCHEDULING PENALTIES. Producer and Dynegy recognize that Transporter may be authorized to issue Operational Flow Orders ("OFOs"), or the equivalent, under the General Terms and Conditions of Transporter's FERC Gas Tariff, or any successor provision. Producer and Dynegy also recognize that Transporter may issue an OFO that obligates Producer or Dynegy to take action that may be contrary to the terms of this Agreement, including, without limitation, the delivery and taking of gas in quantities contrary to those set forth in Availability Reports and prior nominations. Producer and Dynegy agree to use their best efforts to prevent the issuance of such an OFO. In the event an OFO is issued, Producer and Dynegy agree that compliance with any duly authorized OFO will not constitute a violation of this Agreement, provided that: (i) the Party receiving an OFO notifies the other Party as soon as possible, and (ii) the Parties use their best efforts to minimize the operational and economic consequences of compliance with the OFO by all means at their disposal. In the event an OFO can be construed as calling for the curtailment of Producer production, the Parties will cooperate to take steps alternative to a shut-in to the extent such alternative steps may be taken without causing a different Dynegy firm supplier to bear a disproportionate share of adverse consequences flowing from the OFO. Nothing in this Section 3.4 shall be construed to require Producer to bear adverse economic consequences under an OFO issued as a result of over-deliveries by a third party supplier of gas to Dynegy or deficient takes by a Dynegy market, and not as a result of any act or omission by Producer. In addition, Producer and Dynegy recognize that the Transporter may also assess scheduling penalties on a daily or other basis based on Producer's delivery of quantities of gas into the pipeline at rates deviating from the nominated rates by more than the permissible tolerance. Notwithstanding anything in Section 3.3 to the contrary, Producer shall be responsible for (a) any penalties resulting from Producer's or Producer's operator's failure to comply with a pipeline OFO applicable to a Supply Point under this Agreement, and (b) any scheduling penalties assessed by the Transporter as a result of Producer's or Producer's operator's deviation from the rate of delivery indicated in the applicable Availability Report delivered by Producer to Dynegy.