10 (k)(k)(k)
NATURAL GAS ASSET MANAGEMENT AGREEMENT
BETWEEN
ROANOKE GAS COMPANY
AND
DUKE ENERGY TRADING AND MARKETING, L.L.C.
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NATURAL GAS ASSET MANAGEMENT AGREEMENT
PREAMBLE
This Natural Gas Asset Management Agreement (the "Agreement") is made and
entered into effective as of November 1, 2001, (the "Effective Date") by and
between Roanoke Gas Company ("Counterparty"), a Virginia corporation, and Duke
Energy Trading and Marketing, L.L.C. ("Manager"), a Delaware limited liability
company. Counterparty and Manager are sometimes hereinafter referred to
collectively as the "Parties" and singularly as a "Party."
WHEREAS, Counterparty has certain Firm natural gas transportation and storage
rights and gas supply inventories and utilizes such transportation, storage
rights and gas supply inventories (hereafter referred to collectively as the
"Asset Portfolio") to provide a secure and reliable source of natural gas supply
available for delivery to Counterparty;
WHEREAS, Counterparty desires to optimize the use of such Asset Portfolio;
WHEREAS, Counterparty has chosen Manager to assist Counterparty in optimizing
the use of such Asset Portfolio, and
WHEREAS, in order to accomplish the results described above, Manager is prepared
to provide to Counterparty services substantially the same as those embedded in
such Asset Portfolio; and
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained in this Agreement, Counterparty and Manager agree as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms
The terms set forth below shall have the meaning ascribed to them below. Other
terms are also defined elsewhere in this Agreement, and shall have the meanings
ascribed to them therein.
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"Agreement" shall mean this document and all attachments and exhibits hereto, as
each of the same may be amended from time to time.
"Asset Manager" or "Manager" shall mean DETM.
"Bankruptcy Default" shall mean, with respect to either Party, such Party (or
its Guarantor, if applicable) (i) makes an assignment or any general arrangement
for the benefit of creditors; (ii) files a petition or otherwise commences,
authorizes, or acquiesces in the commencement of a bankruptcy proceeding against
it; (iii) otherwise becomes bankrupt or insolvent (however evidenced); (iv)
becomes unable to pay its debts as they fall due; or (v) defaults in the payment
or performance of any obligation to the other Party under this Agreement (which
remains uncured for a period of two (2) consecutive Business Days).
"Baseload Gas" shall mean a Firm, fixed volume of Gas which Counterparty commits
to purchase each Day of a given Month, and which Manager commits to deliver and
sell at a price calculated according to the methodology set forth in Article IV
and as shown in Exhibit G.
"British Thermal Unit (Btu)" shall mean the amount of heat required to raise the
temperature of one (1) pound of pure water one (1) degree Fahrenheit at sixty
(60) degrees Fahrenheit measured on a dry basis at fourteen and seventy-three
hundredths (14.73) pounds per square inch absolute (psia). For reporting
purposes, Btu conversion factors of not less than three (3) decimal places shall
be used.
"Business Day" shall mean a calendar day on which both Parties are open for
business.
"Capacity Release" shall mean those contract rights released to Manager, as
specifically set forth in Section 2.01 of this Agreement.
"Central Prevailing Time" or "CPT" shall mean Central Standard Time adjusted for
Daylight Savings Time.
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"Counterparty City Gate" or "City Gate" shall mean any interconnection between
the facilities of a Transporter and the facilities of Counterparty.
"Cubic Foot" and "Standard Cubic Foot" shall mean that quantity of natural gas
that occupies one (1) cubic foot of volume at a temperature of sixty (60)
degrees Fahrenheit and at an absolute pressure of fourteen and seventy-three
hundredths (14.73) pounds per square inch (psi).
"Day" or "Gas Day" shall mean a period of twenty-four (24) consecutive hours
beginning and ending at nine o'clock (9:00) a.m. Central Prevailing Time, or
such other time as may be specified in the applicable Transporter's Tariff.
"Delivery Point(s)" shall mean any point or points on a Transporter's pipeline
system at which Counterparty has the night to receive or deliver Gas, such point
or points to be designated by Counterparty from time to time pursuant to the
nomination process.
"Effective Date" shall mean the Day on which this Agreement becomes effective,
as set forth in the preamble of this Agreement.
"Federal Funds Rate" shall mean, for any Day, an interest rate per annum equal
to either (a) the rate published as the Overnight Federal Funds Effective Rate
that appears on the Telerate Page 118 for such day (or, if such day is not a
Business Day, for the preceding Business Day) or (b) if such rate is not so
published for any day which is a Business Day, the Federal Funds Rate as
published by the Federal Reserve Bank in H.15 (519).
"FERC" shall mean the Federal Energy Regulatory Commission or any successor
regulatory agency or body which has authority to regulate the rates and/or the
services of the Parties.
"Fill Volume" shall have the meaning set forth in Section 7.01.
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"Firm" means that either Party may only interrupt its performance to the extent
caused by an applicable Force Majeure event.
"Force Majeure," as employed within this Agreement, shall mean acts of God,
including epidemics, landslides, lightning, earthquakes, hurricanes, storms,
fires, floods, washouts and other similar unusual and severe natural calamities;
acts of the public enemy, wars, blockades, insurrections, riots, civil
disturbances, arrests and any laws, orders, rules, regulations, acts, restraints
of any government or governmental body or authority, civil or military, which
have the effect of prohibiting or substantially impairing performance of a
Party's obligations hereunder; strikes, lockouts, or other labor disturbances;
explosions, breakage or accidents to ▇▇▇▇▇, machinery or lines of pipe; the
necessity for making non-routine repairs or alterations to machinery or lines of
pipe, freezing of lines of pipe; inability to obtain materials, supplies,
permits, or labor to perform or comply with any obligation or condition of this
Agreement, or the unavailability, interruption or curtailment of services
provided by a Service Provider under any of the contract rights released to
Manager pursuant to this Agreement. Force Majeure shall not include the
unavailability of capacity under any released contract to the extent the
unavailability is the result of Manager-utilizing the capacity to deliver Gas to
a third party, the inability to inject or to withdraw Gas to the extent such
inability is the result of the actual storage inventory under such Storage
Agreements being inadequate for such purposes as a result of acts or omissions
by Manager, or any other cause, whether of the kind herein enumerated or
otherwise, not within the control of the Party claiming suspension and which by
the exercise of due diligence such Party is unable to prevent or overcome. Force
Majeure shall also not include: (1) failure or loss of Counterparty's market(s),
(2) the inability of Manager to perform its obligations at a profit, (3) any
unanticipated increases in Manager's cost of Gas, or (4) the loss of any
particular source of supply, unless caused by an event of Force Majeure
affecting a geographic region.
"Funded Debt" shall mean long term debt plus current maturities of long term
debt.
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"Gas" or "Natural Gas" shall mean any mixture of hydrocarbons or of hydrocarbons
and non-combustible gases, in a gaseous state, consisting essentially of
methane, which is of pipeline quality.
"Heating Value" shall mean the gross heating value on a dry basis which is the
number of Btu produced by the complete combustion at constant pressure of the
amount of dry gas which would occupy a volume of one (1) cubic foot at an
absolute pressure of fourteen and seventy-three hundredths (14.73) psi and sixty
(60) degrees Fahrenheit with combustion air at the same temperature and pressure
as the gas, the products of combustion being cooled to the initial temperature
of the gas and air, and the water formed by combustion condensed to the liquid
state.
"Interest Charges" shall mean long and short term interest expense
"Intra-Day Gas" shall mean that volume of Gas which Counterparty may request for
delivery during any particular Gas delivery Day after 8:30 a.m. CPT on the last
Business Day prior to the Day(s) of Gas flow. If the Parties agree to a quantity
of Intra-Day Gas, the obligations of the Parties shall be Firm. The price for
Intra-Day Gas shall be a negotiated price based on then-current market prices.
"MMBtu" shall mean one million (1,000,000) British Thermal Units.
"Month" shall mean a period beginning at nine o'clock (9:00) a.m. CPT, on the
first Day of a calendar month and shall end at the aforesaid time on the first
Day of the next succeeding calendar month, or such other period as may be agreed
to by the Parties.
"Net Earnings Available for Interest" shall be defined as net income plus income
taxes and interest expense.
"Service Provider(s)" shall mean either a Storage Provider or a Transporter, or
both, individually or collectively, as the context requires.
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"Storage Accounts" shall mean the accountings performed by Manager for each of
the Storage Facilities in which Gas transferred to Manager by Counterparty is
stored, into which Gas is injected or out of which Gas is withdrawn. Such
accountings shall reflect the initial Counterparty Storage inventory transfer
and all subsequent injections and withdrawals whether or not such injections or
withdrawals actually occur.
"Storage Agreements" shall mean those agreements for Storage Services as listed
in Exhibit A.
"Storage Equivalent Injection Volumes" or "SEIVS" shall mean volumes of Baseload
Gas in storage transferred to Manager pursuant to Section 3.01 at the outset of
this Agreement, or which Manager injects into Counterparty's Storage Accounts.
SEIVs are reported volumes of Gas owed by Manager to Counterparty as set forth
in Section 4.02 of this Agreement.
"Storage Equivalent Withdrawal Volumes" or "SEWVS" shall mean volumes of
Baseload Gas to be delivered to and received by Counterparty on a Firm basis
from the reported volumes of Gas held in Counterparty Storage Accounts pursuant
to Section 4.02.
"Storage Facilities" shall mean, collectively, the storage facilities covered by
the Storage Agreements.
"Storage Provider" means any provider of storage services, including, but not
limited to, a provider of storage services under the Storage Agreements.
"Storage Services" shall mean, collectively, the pipeline storage services
provided according to Tariff, covered by the assigned Storage Agreements listed
in Exhibit A.
"Swing Gas" shall mean a volume of Gas which Counterparty may nominate for
delivery no later than 8:30 a.m. CPT on the last Business Day prior to the
day(s) of Gas flow. Upon a proper nomination, the Parties' obligations to
deliver and receive Swing Gas shall be Firm and Manager shall commit to deliver
and sell Swing Gas at a price using the methodology set forth in Article IV and
as shown in Exhibit G.
"Total Capitalization" shall mean Funded Debt plus stockholder's equity.
"Tariff" shall mean the applicable FERC approved tariff of any Service Provider
or the applicable Public Service Commission approved tariff of Counterparty.
"Term" shall have the meaning set forth in Section 10.01.
"Transporter" shall mean any pipeline transporter of Natural Gas.
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"Utilization Fee" means the payment from Manager to Counterparty pursuant to
Section 8.03.
"Unit of Measurement" means one million (1,000,000) British Thermal Units
(MMBtus) on a dry basis.
"Weighted Average Storage Variable Costs" shall mean those costs identified on
Exhibits E and F as variable cost components of the calculation of the cost of
Baseload Gas and Swing Gas.
"Weighted Average Transportation Variable Costs" shall mean the weighted average
of all applicable variable pipeline transportation charges and surcharges,
including fuel, for each transportation contract released to Manager, assuming
full utilization of those assets. An example is set forth on Exhibit D.
"Year" shall mean a period of three hundred sixty-five (365) consecutive
calendar days provided, however, that any such year that contains a date of
February 29th shall consist of three hundred sixty-six (366) consecutive
calendar days.
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ARTICLE II
RELEASE OF CONTRACTUAL CAPACITY
2.01 Capacity Release
Counterparty shall release to Manager the portion of Counterparty's right, title
and interest in and to those contracts and agreements for Fin-n transportation
and storage capacity listed in Exhibit A, and any and all amendments or
modifications thereto. The releases are on more than one pipeline and in more
than one storage facility, and are intended to represent, in so far as
operationally feasible, all of Counterparty's transportation and storage assets.
Counterparty shall not terminate or materially modify or amend any contract or
agreement without prior consultation with Manager. The Parties shall negotiate
appropriate and comparable adjustments if the Manager's ability to render
service is reduced and, if unable to reach agreement, the appropriate
adjustments shall be submitted to arbitration pursuant to Article XVII.
2.02 Term of Capacity Release
The Capacity Release shall be accomplished in a manner that will provide Manager
with the appropriate capacity for a term of thirty-six (36) months. The Capacity
Release shall be released at the maximum reservation rates and reservation
surcharges under the applicable contracts and in accordance with the terms and
conditions of the document or documents evidencing the releases. The releases
may be revoked pursuant to Article X if there is a material breach or early
termination of this Agreement. Upon revocation, Counterparty reassumes all
rights and obligations that had been released to Manager.
2.03 Responsibility for Payment of Charges
During the term of the Capacity Release, Manager shall pay to each Service
Provider, as applicable, all amounts due and payable under the released
agreement(s) including, without limitation, reservation charges, reservation
surcharges, commodity charges, gathering and offshore charges, storage fuel
adjustments, overrun charges, and any other applicable charges and penalties
attributable to the Capacity Release. All amounts so paid by Manager during the
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term of the Capacity Release will be paid in accordance with various applicable
payment terms and provisions of the contracts released as those terms and
provisions have been disclosed to Manager, and applicable Tariffs. With respect
to the Capacity Release asset, Manager shall pay directly to Counterparty all
pipeline refunds or credits received (1) for periods prior to November 1, 2001,
(2) for demand charges and surcharges through the term of this Agreement, and
(3) refunds or credits for commodity charges and surcharges which are related to
shipments of Gas received by Counterparty during the term of this Agreement.
ARTICLE III
TRANSFER OF COUNTERPARTY STORAGE INVENTORY
3.01 Storage Inventory
In connection with Counterparty's release to Manager of its storage capacity in
accordance with Section 2.01 of this Agreement, the balances shown in
Counterparty Storage Accounts as of October 31, 2001 shall become the initial
Counterparty Storage Account balances. The inventory of Gas so transferred in
each Storage Facility is listed in Exhibit B. In exchange for this transfer of
Gas inventory, Manager grants Counterparty the right to receive, at the
Counterparty's receipt points on the applicable Transporter, volumes of Baseload
Gas (less applicable fuel charges) as set forth in paragraph 4.02. This exchange
is a like kind exchange of equal volumes with no cash sales price.
ARTICLE IV
FIRM SALES AND DELIVERY SERVICES
4.01 Firm Sales Service
Manager shall provide Firm Gas sales service to Counterparty at the Counterparty
receipt points on the applicable Transporter up to the volume and reliability of
transportation capacity released to Manager, as provided in this Agreement.
Subject to this supply obligation and the constraints of the relevant Tariffs,
Manager will have the right to manage the released assets in any manner it
chooses. Gas sold to Counterparty will be priced at a single delivered price for
Baseload Gas, a single delivered price for Swing Gas and a single delivered
price for Intra-Day Gas. The price
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for Baseload Gas will be determined monthly; the price for Swing Gas will be
determined daily, and the price for Intra-Day Gas shall be determined at the
applicable day and hour of an Intra-Day request. The price for Baseload Gas and
Swing Gas shall be determined by adding (1) the Weighted Average Transportation
Variable Costs to (2) a gas commodity charge for each level of service. For
Baseload Gas, the gas commodity charge shall be the weighted average of the
following indices for the applicable supply area: (a) the Inside F.E.R.C. Gas
Market Report first of the month index price, (b) the GAS DAILY "Monthly
Contract Index" and (c) the price listed in NATURAL GAS INTELLIGENCE "Weekly Gas
Price Index" under "Spot Gas Prices - Bidweek Average." For Swing Gas, the gas
commodity charge shall be the Gas Daily daily mid-point price for each
applicable supply area for the Day of Gas delivery. Exhibit C details the
indices to be used in calculating Baseload and Swing Gas prices. An example of
Baseload Gas and Swing Gas price calculations are attached as Exhibit G. The
Parties understand that component rates and pipeline charges will change from
time to time and that Exhibit G is representative only. Manager shall have
discretion, subject to the applicable Tariffs and Counterparty operational
constraints, to determine the source and routing of the Gas delivered on behalf
of Counterparty. In the event the projected daily forecast pursuant to Section
5.05 exceeds the Firm capacity available under the Capacity Release,
Counterparty and Manager will work together to review alternatives that may
include additional Firm Gas sales service to Counterparty. In the event that a
Transporter determines that Counterparty's volume entitlements at particular
points are different than those shown in Exhibit C, Manager and Counterparty
shall mutually agree on an alternate pricing mechanism. The Parties may, upon
mutual agreement, agree to fix the Gas prices under this Agreement, subject to
the terms of the Trigger Price Addendum attached hereto as Exhibit N.
4.02 Utilization of Storage Assets
Storage injections (SEIVS) and withdrawals (SEWVS) are understood by the Parties
to be paper transactions that may differ from the actual physical volumes held
in storage at any point in time. Manager has the right, subject to
Counterparty's right to receive SEWVs (which volumes may be supplied from other
sources) and limitations contained in the Tariffs, to actually inject, withdraw
and sell Gas from the released Storage Facilities as it sees fit provided,
however, that Manager complies with the withdrawal allocation set forth in the
following paragraph:
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During the Months of November through March, Manager shall withdraw Gas from
storage for delivery to Counterparty an equivalent amount of Baseload Gas
according to the following schedule:
MONTH PERCENTAGE OF INITIAL STORAGE INVENTORY TO BE WITHDRAWN
------ -------------------------------------------------------
November 10%
December 25%
January 30%
February 25%
March 10%
Manager will maintain two (2) accounts for each Storage Facility, one the
"Counterparty Storage Account" and the other the "Manager's Storage Account."
The Counterparty Storage Account shall record, on a Storage Service basis, the
initial Gas inventory transferred to Manager and all subsequent injections and
withdrawals as set forth in Exhibits I and J.
ARTICLE V
MANAGEMENT OF CAPACITY RELEASE AGREEMENTS AND EQUIVALENT
NATURE OF SERVICES
5.01 Compliance with Agreements
Manager and Counterparty shall comply with all terms and provisions of the
agreements released to Manager, as those terms and provisions have been
disclosed to Manager, and all pertinent statutes, rules, orders, Tariffs and
regulations with respect thereto. For purposes of this Agreement, Manager's
rights under the Capacity Release shall include, without limitation, the
injection of Gas into the Storage Services, the withdrawal of Gas from the
Storage Services the transportation of Gas to and from all applicable receipt
and Delivery Points and any other use which Manager sees fit, provided such use
is allowable under the applicable statutes, rules, Tariffs, orders and
regulations.
5.02 Indemnifications
Subject to Section 16.05 of this Agreement, Manager shall indemnify Counterparty
and hold Counterparty harmless from all liability and expense on account of
Manager's use of rights
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released under the Capacity Assignment, including, without limitation, any
violation or breach by Manager of the agreements released, applicable Tariffs or
pertinent statutes, rules, orders and regulations, to the extent that such
liability or expense is not the result of Counterparty negligence or willful
misconduct.
5.03 Management
Manager will manage the transferred Counterparty Storage Inventory and Capacity
Release in a prudent manner consistent with all applicable Tariffs and the
operational requirements detailed on Exhibit Q.
5.04 Quality of Services
Manager will provide Gas delivered to the Counterparty receipt points on the
applicable Transporter up to the volumes and reliability of deliveries that
Counterparty would have received had these agreements not been released to
Manager, subject to the terms of this Agreement and constraints of applicable
Transporter tariffs.
5.05 Nominations
Counterparty will provide to Manager the daily usage forecasts for each upcoming
Day, Month and/or season, as applicable by 8:30 am CPT on the previous Day,
consistent with the applicable nomination deadlines. The nomination deadline for
Baseload Gas is set forth in Exhibit K and the nomination deadlines for Swing
Gas and Intra-Day Gas are set forth in Exhibit L. Based on the Counterparty
forecasts, Manager will prioritize, make and confirm all supply contract and
pipeline nominations required to effect the delivery of Gas to the applicable
Delivery Point(s). All nominations shall be made by verbal agreement via
telephonic means or by electronic mail. The Parties agree to the following
procedures in the event the Parties reach verbal agreement regarding the
nomination of Gas by Counterparty. Any oral agreement shall be binding unless
superseded by a written confirmation, which may be in the form of a telephonic
facsimile transmission ("Fax"). The telephones of the Parties may be monitored
by recording equipment. The Parties hereby consent to such recordings and any
such recordings shall serve as the best evidence of any oral agreement. No later
than the close of the Business Day following the day of
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oral agreement, Manager shall, and Counterparty may, send a written confirmation
to the other generally in the form of Exhibit P, by Fax or other electronic
transmission, reflecting the agreed-upon terms of the particular transaction.
The Parties shall resolve any discrepancies in such confirmations as soon as
reasonably possible, so they can agree in writing to a confirmation.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties of Manager
As a material inducement to entering into this Agreement, Manager represents and
warrants to Counterparty as of the date of the execution and delivery of this
Agreement and throughout the Term hereof as follows:
(a) There are no suits, proceedings, judgments, rulings or orders by or
before any court or any governmental authority to which Manager is a
party that materially adversely affect (1) its ability to perform its
obligations under this Agreement, or (2) the rights of Counterparty
hereunder.
(b) Manager is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and it has the legal right,
power and authority and is qualified to conduct its business, and to
execute and deliver this Agreement and perform its obligations under
the same, and all regulatory authorizations have been obtained and/or
maintained as necessary for it to legally perform its obligations
hereunder.
(c) The making and performance by Manager of this Agreement is within its
powers, has been duly authorized by all necessary action on its part,
and does not and will not violate any provisions of its incorporation
or other formation, as applicable, or any other of its governing
documents, nor will the making or performance of this Agreement
violate (1) any agreement or instrument to which Manager is a party
or is bound, (2) any material provisions of any judgment, decree, or
judicial order applicable to Manager, (3) any provision of law or any
rule, regulation, or administrative order
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presently in effect and applicable to Manager or its governing
documents. To the best of Manager's knowledge and belief, no consents
of third parties, whether private, judicial or public, are required
under any agreement or instrument to which Manager is a party or is
bound; provided however, that if, after the execution hereof, any
such third party consents are deemed to be necessary in order to
effectuate the purposes and intent of this Agreement, then Manager
shall use its best efforts to promptly obtain such consents.
(d) This Agreement when entered into constitutes a legal, valid and
binding act and obligation of Manager, enforceable against it in
accordance with its terms, subject to principles of equity and
bankruptcy, insolvency, reorganization and other laws affecting
creditors' rights generally.
(e) There are no bankruptcy, insolvency, reorganization, receivership or
other arrangements or proceedings pending or being contemplated by
Manager, or to its knowledge, threatened against Manager.
(f) It is acting for its own account, has made its own independent
decision to enter into this Agreement (including any confirmation
accepted in accordance with Section 5.05) and as to whether this
Agreement (including any confirmation accepted in accordance with
Section 5.05) is appropriate or proper for it based upon its own
judgment, is not relying upon the advice or recommendations of the
other Party in so doing, and is capable of assessing the merits of
and understanding, and understands and accepts, the terms, conditions
and risks of this Agreement (including any confirmation accepted in
accordance with Section 5.05).
(g) It is a "forward contract merchant" within the meaning of the United
States Bankruptcy Code.
(h) It has entered into this Agreement (including each confirmation
accepted in accordance with Section 5.05) in connection with the
conduct of its business and it has the capacity or ability to make or
take delivery of all Gas referred to herein.
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(i) The material economic terms of this Agreement (and each confirmation
accepted in accordance with Section 5.05) have been subject to
individual negotiation by the Parties.
6.02 Representations and Warranties of Counterparty
As a material inducement to entering into this Agreement, Counterparty
represents and warrants to Manager as of the date of execution and delivery of
this Agreement and throughout the Term hereof as follows:
(a) There are no suits, proceedings, judgments, rulings or orders by or
before any court or any governmental authority to which Counterparty
is a party that materially adversely affect (1) its ability to
perform its obligations under this Agreement, or (2) the rights of
Manager hereunder.
(b) Counterparty is duly organized, validly existing and in good standing
under the laws of the State of Virginia, and it has the legal right,
power and authority and is qualified to conduct its business, and to
execute and deliver this Agreement and perform its obligations under
the same, and all regulatory authorizations have been obtained and/or
maintained as necessary for it to legally perform its obligations
hereunder.
(c) The making and performance by Counterparty of this Agreement is
within its powers, has been duly authorized by all necessary action
on its part, and does not and will not violate any provisions of its
incorporation, bylaws or any other of its governing documents, nor
will the making or performance of this Agreement violate (1) any
agreement or instrument to which Counterparty is a party or is bound,
(2) any material provisions of any judgment, decree or judicial
order, statute, rule or regulation applicable to Counterparty, (3)
any provision of law or any rule, regulation, or administrative order
(including, without limitation, any applicable state or federal
Tariffs or service certificates), presently in effect and applicable
to Counterparty or its governing documents. To the best of
Counterparty's knowledge and belief, no consents
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of third parties, whether private, judicial or public, are required
under any agreement or instrument to which Counterparty is a party or
is bound; other than consents that may be required from the Service
Providers, which consents, to the extent required, Counterparty shall
pursue the obtaining of with reasonable diligence from the
appropriate parties; provided however, that if, after the execution
hereof, any other third party consents are deemed to be necessary in
order to effectuate the purposes and intent of this Agreement, then
Counterparty shall use its best efforts to promptly obtain such
consents.
(d) This Agreement when entered into constitutes a legal, valid and
binding act and obligation of Counterparty, enforceable against it in
accordance with its terms, subject to principles of equity and
bankruptcy, insolvency, reorganization and other laws affecting
creditors' rights generally.
(e) There are no bankruptcy, insolvency, reorganization, receivership or
other arrangements or proceedings pending or being contemplated by
Counterparty, or to its knowledge, threatened against Counterparty.
(f) Counterparty is the contract owner of the contracts listed in Exhibit
A, those contracts are in full force and effect, have the termination
and notice dates listed in Exhibit A, and Counterparty is not aware
of any claims assertable under those contracts by any party to such
agreements or otherwise that would materially and adversely affect
the performance of Counterparty's obligations thereunder or hereunder
or Manager's rights and obligations hereunder.
(g) It is acting for its own account, has made its own independent
decision to enter into this Agreement (including any confirmation
accepted in accordance with Section 5.05) and as to whether this
Agreement (including any confirmation accepted in accordance with
Section 5.05) is appropriate or proper for it based upon its own
judgment, is not relying upon the advice or recommendations of the
other Party in so doing, and is capable of assessing the merits of
and understanding, and understands and accepts, the terms,
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conditions and risks of this Agreement (including any confirmation
accepted in accordance with Section 5.05).
(h) It is a "forward contract merchant" within the meaning of the United
States Bankruptcy Code.
(i) It has entered into this Agreement (including any confirmation
accepted in accordance with Section 5.05) in connection with the
conduct of its business and it has the capacity or ability to make or
take delivery of all Gas referred to herein.
(j) The material economic terms of this Agreement (and each confirmation
accepted in accordance with Section 5.05) have been subject to
individual negotiation by the Parties.
ARTICLE VII
INVENTORY FILL
7.01 Volumes
The volume to be injected by Manager into the Storage Facilities during the Term
hereof ("Fill Volume") shall be determined by Manager in its sole discretion,
subject to applicable storage ratchets.
7.02 Prices and Payment
The price for the Fill Volume delivered pursuant to this Article during the
first twenty-four (24) Months of the Term shall be determined as if one-seventh
(1/7) of the total Fill Volume was delivered each Month for the Months of April
through October, regardless of when the Gas is actually delivered. The price for
the Fill Volume delivered pursuant to this Article during the last twelve (12)
Months of the Term shall be determined as if one-seventh (1/7) of ninety-five
percent (95%) of the total Fill Volume were delivered each Month for the Months
of April through October, regardless of when the Gas is actually delivered. The
prices for each Month's Gas shall be determined by the same method as for
Baseload Gas, using the prices set forth in the
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Inside F.E.R.C. Gas Market Report, plus applicable transportation fees and
injection fees, both commodity and fuel. Prices shall be determined separately
for each Month for the Months of April through October. Each Month, Manager
shall determine that Month's Gas prices and invoice Counterparty for (a) said
prices multiplied by (b) one-seventh (1/7) of the applicable percentage of the
Fill Volume.
While the Fill Volume transactions are "paper" transactions in the sense that
Manager is not required to actually inject the monthly physical volume during
the applicable Month, if the inventory level shown in Manager's Storage Accounts
falls below the amount necessary to fill Counterparty's Storage Account to the
required level by the first of November without incurring penalties pursuant to
Tariff rules for over injection, ("Storage Shortfall"), then Manager shall
provide Counterparty with (1) adequate assurances of sufficient primary Firm
pipeline transportation capacity to the Counterparty receipt points on the
applicable Transporter equal to the Storage Shortfall, and (2) subject to
confidentiality restrictions, reasonable financial assurances, in the form of
parent guaranties, firm contracts for the required volumes of Gas, or letters of
credit acceptable to Counterparty of its ability to provide Gas supply equal to
the Storage Shortfall.
ARTICLE VIII
FEES AND OTHER CONSIDERATION
8.01 Reimbursement of Reservation Charges
Each Month during the term of this Agreement, Counterparty shall reimburse
Manager, as provided herein, by payment in immediately available funds for one
hundred percent (100%) of the aggregate total of the reservation charges and
reservation surcharges (including, but not limited to, GRI surcharges, if any),
attributable to the Capacity Release during the applicable Month, calculated on
the basis of the contract rates paid to the Service Providers by Manager.
Manager shall remit to Counterparty any and all pipeline refunds associated with
the Capacity Release as set forth in Section 2.03.
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8.02 Supporting Documentation
Manager shall furnish Counterparty with copies of the pertinent invoices and
statements from the Service Providers, along with supporting documentation and
calculations, setting forth the amount Counterparty is required to pay to
Manager in accordance with Section 8.01 no later than four (4) Business Days
prior to the applicable payment due date to the Service Providers.
Counterparty's payment to Manager in accordance with Section 8.01 shall be
deemed timely if made by wire transfer to the following account no later than
two o'clock (2:00) p.m. Central Prevailing Time on the Business Day prior to
each payment due date or three (3) Business Days after receipt of the invoices
and statements, whichever is later:
Bank: Chase Manhattan Bank of New York
ABA: ▇▇▇▇▇▇▇▇▇
Beneficiary: For the account of Duke Energy Trading and
Marketing, L.L.C.
8.03 Utilization Fees
During the term hereof, Manager shall pay to Counterparty a Utilization Fee of
$4,785,000 (the "Utilization Fee"). The Utilization Fee shall be paid in
thirty-six (36) equal monthly installments of $132,916.66 payable on the first
day of each Month by wire transfer. Payments shall be made in immediately
available funds to:
Bank: First Union National Bank
ABA: ▇▇▇▇-▇▇▇▇-▇
Beneficiary: Roanoke Gas Company
8.04 Invoicing and Payments for Gas
The Parties shall invoice each other for Gas sold to the other Party, whether
that Gas is Firm sales service pursuant to Section 4.01 or Fill Volumes pursuant
to Section 7.02. Invoices shall
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be rendered each Month for Gas delivered (or in the case of Fill Volumes, deemed
to be delivered) in the preceding Month, and for any other applicable charges
(such as injection fees), providing supporting documentation acceptable in
industry practice to support the amount charged. If the actual quantity is not
known by the billing date, billing will be prepared based on the quantity of Gas
scheduled to be delivered. The invoice will then be adjusted to the actual
quantity on the following Month's billing, or as soon thereafter as actual
information is available. Each Party shall remit the invoiced amount on the
later of (a) the twenty-fifth (25th ) day of the Month after delivery or (b) ten
(10) days after the invoice date. If the amount of an invoice is disputed in
good faith, the Party will pay the undisputed portion. Interest on late payments
of undisputed amounts shall accrue at the rate of the then effective prime rate
of interest published under "Money Rate" by the Wall Street Journal, plus two
percent (2%) per annum from the due date until the date of payment. Payment
shall be in immediately available funds to the bank accounts set forth in this
Agreement. The Parties agree to discharge mutual debts and payment obligations
due and owing to each other whether arising under this Agreement or any other
agreement, but limited to natural gas transactions only, between the Parties
through netting. Therefore, all amounts owed by one Party to the other Party
during any given month arising from natural gas transactions will be netted
against the amount owed by the other Party under such transactions. The Party
owing the greater amount shall pay the difference to the other Party and notify
the other Party of the amount netted using the invoice and payment procedures
described herein.
8.05 Audit
Counterparty and its outside accountants shall have the right, upon reasonable
notice and at reasonable times during normal business hours, to enter Manager's
offices and inspect and copy
21
Manager's records and books of account, but only to the extent necessary to
audit any statement provided to Counterparty by Manager, and to assure that
amounts paid or billed to Counterparty are correct in all respects. Manager and
its outside accountants shall have the right, upon reasonable notice and at
reasonable times during normal business hours, to enter Counterparty's offices
and inspect and copy Counterparty's records and books of account, but only to
the extent necessary to audit any statement provided to Manager by Counterparty,
and to assure that amounts paid or billed to Manager are correct in all
respects. Each Party shall bear all the costs of performing its audit. Such
right to audit shall be available for the terms of this Agreement and for two
(2) years thereafter. All audits shall be on a confidential basis and shall
require the execution of a confidentiality agreement prior to commencement.
ARTICLE IX
FINANCIAL RESPONSIBILITY
9.01 Financial Assurances
Prior to the commencement of performance, or at any time during the term of this
Agreement, either Party may require the other to provide financial information
reasonably needed to ascertain the other Party's ability to pay for Gas to be
received under this Agreement or to meet any other obligation which may accrue,
including without limitation the obligation to pay damages in the event of
failure to perform. If either Party's creditworthiness becomes unsatisfactory in
this regard, then the dissatisfied party (the "Unsecured Party") may require
assurance of the other Party's ability to pay or require different terms of
payment. The Unsecured Party may suspend deliveries or receipts hereunder or
terminate this Agreement if, in the sole opinion of the Unsecured Party, the
other Party fails to deliver the requested credit
22
information or assurance of its ability to pay within two (2) Business Days of
such request. Such assurance may, at the option of the Unsecured Party, include
(i) the required posting of letter of Credit (acceptable to the Unsecured Party
and the issuing bank); (ii) cash prepayments; (iii) corporate guaranty or (iv)
other security acceptable to the Unsecured Party.
9.02 Collateral Threshold
If at any time during the Term (and notwithstanding whether an event of default
under Section 10.02 has occurred or is continuing) the Settlement Amount (as
defined in Section 10.02(d)) which would be owed by a Party (the "Non-Exposed
Party") to the other Party (the "Exposed Party") exceeds such Non-Exposed
Party's Margin Threshold (as set forth below), then the Non-Exposed Party shall
be required to transfer Collateral (as defined below) within two (2) Business
Days following receipt of a request by the Exposed Party in an amount equal to
the positive difference between the Settlement Amount owed to the Exposed Party
and the applicable Margin Threshold (rounding upward for any fractional amount
to the next $100,000). Upon receipt of the Collateral, the Exposed Party shall
be deemed the "Secured Party." If the Secured Party should thereafter become
under-secured, the Non-Exposed Party will be required to transfer additional
Collateral. The amount of additional Collateral required by the Secured Party
shall be rounded up to the nearest $100,000. If the Secured Party becomes
over-secured, it shall promptly return any excess Collateral. The amount of
Collateral to be returned shall be rounded down to the nearest $100,000.
"Collateral" shall mean: (a) cash by wire transfer to the Secured Party's
account or (b) posting of an irrevocable letter of credit acceptable to the
Secured Party in form and substance and issued by a bank acceptable to the
Secured Party in its sole discretion. Interest on any cash held as Collateral
will accrue at a rate equal to the Federal Funds Rate. The
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initial Margin Threshold shall be, with respect to Manager, $15,000,000 and with
respect to Counterparty, $12,000,000.
Notwithstanding the foregoing, Manager's Margin Threshold shall be
reduced to zero ($0) in the event Manager (1) undergoes a Bankruptcy Default or
(ii) falls to maintain an Investment Grade Credit Rating by either ▇▇▇▇▇'▇
Investor Services, Inc. ("▇▇▇▇▇'▇) or Standard and Poor's Rating Group ("S&P").
"Investment Grade Credit Rating" shall mean Baa3 with respect to ▇▇▇▇▇'▇ and
BBB- with respect to S&P.
Within twenty (20) Days of the execution of this Agreement, Counterparty
shall provide Manager with a guaranty (the "Guaranty") from RGC Resources (the
"Guarantor") substantially in the form attached hereto as Exhibit O.
Notwithstanding anything to the contrary herein, Counterparty's Margin
Threshold shall be reduced to zero ($0) upon the occurrence of any of the
following events with respect to it or its Guarantor: (a) its Funded Debt
exceeds 65% of its Total Capitalization; (b) it fails to maintain a minimum
ratio of Net Earnings Available for Interest to Interest Charges for each period
of four consecutive fiscal quarters at not less than 1.5 to 1.0; or (c) it fails
to maintain compliance with the Counterparty's covenants as provided for in
Counterparty's Note Agreement dated December 1, 1996 with American United Life
Insurance Company, or (d) Counterparty fails to maintain an adequate line of
credit to cover short term working capital requirements.
ARTICLE X
TERM, DEFAULT, CURE AND TERMINATION
10.01 Term
This Agreement shall be effective as of November 1, 2001 and shall continue
through and including October 31, 2004 (the "Term") unless earlier terminated
pursuant to the provisions of
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this Agreement. This Agreement shall terminate upon any date on which any
federal or state statute, regulation, order or judicial decision renders this
Agreement, or the Agreements comprising the Capacity Release, illegal, null or
void. This Agreement may be terminated before the expiration of the Term upon
either a Manager Default or a Counterparty Default, as defined herein.
Termination prior to the expiration of the Term shall be effected by a written
notice from the terminating Party, stating the reason for the termination,
including, if applicable, the failure of the other Party to cure within the
applicable period, and the effective date of termination.
10.02 Breach and Remedies
(a) Unless such failure is the result of Force Majeure or the failure or
negligence of Counterparty, each of the following shall be deemed a Manager
Default:
(i) The failure of Manager to comply with the material
terms and conditions of the Agreements, as disclosed
and released to Manager under the Capacity Release;
(ii) The failure of Manager to pay any undisputed amounts
due any Service Provider under the Capacity Release
and such failure continues for a period of ten (10)
days after Manager receives written notice of same;
(iii) Manager's engaging in one or more of the following
acts: (a) an assignment or any general arrangement
for the benefit of its creditors, (b) the filing of a
petition or other commencement, authorization or
acquiescence in the commencement of a proceeding or
cause under any bankruptcy or similar law for the
protection of creditors, or (c) the inability of
Manager to pay its debts when due (a "Manager
Bankruptcy Default");
(iv) Any material inaccuracy in any representation or
warranty of Manager set forth in this Agreement, and
such inaccuracy is not remedied within thirty
25
(30) days of Manager's receipt of a written notice
from Counterparty describing the particulars of such
inaccuracy in reasonable detail;
(v) The failure of Manager to perform any material
covenant or obligation in this Agreement, other than
those specified in clauses (i) through (iv) or
through (ix), and such failure is not remedied
within ten (10) days of Manager's receipt of a
written notice from Counterparty describing the
particulars of such failure in reasonable detail;
(vi) The failure of Manager to provide Firm sales service
as provided in Article IV;
(vii) The failure of Manager to provide accurate and timely
reports as set forth in Sections 4.02 and
10.02(c)(iv) and such failure is not remedied within
three (3) days of Manager's receipt of a written
notice from Counterparty describing the particulars
of such failure in reasonable detail;
(viii) The failure of Manager to deliver Gas in inventory
or provide alternative security as provided
in Article VII;
(ix) The failure of Manager to provide Counterparty with
financial information requested pursuant to Section
9.01 or requested collateral pursuant to Section
9.02, in each case, in an amount and form acceptable
to Counterparty.
(b) The occurrence of any of the following with respect to Counterparty or
the Guarantor shall be deemed a Counterparty Default:
(i) The failure to pay undisputed amounts due Manager
herein, and such failure continues for a period of
ten (10) days after receipt of written notice of
same;
26
(ii) Engaging in one or more of the following acts (a) an
assignment or any general arrangement for the benefit
of its creditors, (b) the filing of a petition or
other commencement, authorization or acquiescence in
the commencement of a proceeding or cause under any
bankruptcy or similar law for the protection of
creditors, or (c) the inability to pay its debts when
due (a "Counterparty Bankruptcy Default");
(iii) Any material inaccuracy in any representation or
warranty set forth in this Agreement or the Guaranty,
and such inaccuracy is not remedied within thirty
(30) days of receipt of a written notice describing
the particulars of such inaccuracy in reasonable
detail;
(iv) The failure to perform any material covenant or
obligation in this Agreement or Guaranty (other than
those specified in clauses (i) through (iii) and (v)
through (ix)), and such failure is not remedied with
ten (10) days of receipt of a written notice from
Manager describing the particulars of such failure in
reasonable detail; or
(v) The failure to obtain, within a reasonable time, the
necessary consents from Service Providers specified
in Section 6.02 (c).
(vi) The failure to provide Manager with financial
information requested pursuant to Section 9.01 or
requested collateral pursuant to Section 0.02, in
each case, in an amount and form acceptable to
Manager.
(vii) The failure to provide Manager with the Guaranty as
set forth in Section 9.02 herein.
(viii) The failure of the Guaranty to be in full force and
effect for purposes of this Agreement (other than in
accordance with its terms) prior to the
27
satisfaction of all obligations of Counterparty
without the written consent of Manager.
(ix) The Guarantor repudiates, disaffirms, disclaims or
rejects, in whole or in part, or challenges the
validity of the Guaranty.
(c) Remedies for Manager Defaults or Counterparty Defaults, as applicable,
shall be as follows:
(i) For a Manager Bankruptcy Default or a Counterparty
Bankruptcy Default, automatic and immediate
termination of this Agreement subject to an in
accordance with Sections 10.02(d), 10.02(e) and
10.04; and
(ii) For all other Defaults, termination of this
Agreement, termination of the Capacity Release,
transfers of inventory and releases set forth in
Articles II and III and reversion of those transfers
and releases to Counterparty on twenty-four (24)
hours notice, subject to and in accordance with
Sections 10.02(d), 10.02(e) and 10.04, and
(iii) If, for any reason other than Force Majeure, Manager
fails to deliver the volume of Gas nominated by
Counterparty on any Day during the Term of this
Agreement, then Manager shall pay to Counterparty an
amount equal to (w) the cost, per MMBtu, of obtaining
Gas or its equivalent using reasonable methods under
the circumstances then prevailing, less (x) the cost,
per MMBtu, of Baseload Gas or Swing Gas (whichever is
less), times (y) the undelivered volume, plus (z)
transportation costs and pipeline penalties if
applicable. In addition, in the event of such an
unexcused failure to deliver Gas to Counterparty,
Manager shall refund to Counterparty one hundred
percent (100%) of the reservation charges and
reservation surcharges that Counterparty pays to
Manager in accordance with Section 8.01 of this
Agreement to the extent, and only to the extent,
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that such reservation charges and reservation
surcharges are attributable to that portion of the
volume of Gas that Manager fails to deliver.
(iv) DAILY BALANCING FOR CITYGATE DELIVERIES OFF COLUMBIA
GAS PIPELINE.
With respect to Gas delivered off of Columbia Gas
Pipeline, to the extent Counterparty fails to take
nominated Gas or takes Gas in excess of its nominated
volume and such amounts are within the greater of (i)
5,000 MMBtu of the nominated amount for the
applicable Day of delivery or (ii) the applicable
Transporter storage ratchets (the "Balancing
Tolerance"), the following shall apply:
(1) For nominated Gas which Counterparty fails
to take and which falls within the Balancing
Tolerance for such Day, the price for such
Gas shall be equal to the lesser of (A) the
GAS DAILY Daily Midpoint index for
"Columbia, App." ("GDD/CGAS/APP") for the
Day of Gas flow minus (-) $0.05 per MMBtu
and (B) the GDD/CGAS/APP price for the Day
following Gas flow minus (-) $0.05 per
MMBtu.
(2) For Gas taken in excess of the nominated
volume which falls within the Balancing
Tolerance for such Day, the price for such
Gas shall be equal to the greater of (A) the
GDD/CGAS/APP price for the Day of Gas flow
plus (+) $0.05 per MMBtu plus (+) the cost
of fuel and (B) the GDD/CGAS/APP price for
the Day following the Day of Gas flow plus
(+) $0.05 plus (+) the cost of fuel. For
purposes of this calculation, the cost of
fuel shall be based on the then-effective
tariff of Columbia Gas Transmission
(currently 2.776%).
For nominated Gas which Counterparty fails to take
and which does not fall within the Balancing
Tolerance for such Day, Gas taken in excess of the
nominated volume which does not fall within the
Balancing Tolerance for such Day, and Gas delivered
off of pipelines other than Columbia Gas Pipeline,
Counterparty shall compensate Manager for the
positive difference, if any, between the price for
such Gas under this Agreement and the market price
for such Gas as determined by Manager in its sole
29
discretion. Manager shall provide Counterparty with a
report detailing the balancing conducted pursuant to
this Section 10.02(c)(iv) by e-mail or facsimile on a
daily basis. Such report shall be substantially in
the form of Exhibit M.
(v) With respect to liquidated damages provided for in
this Section, it is expressly stipulated by the
Parties that the actual amount of any damages would
be difficult if not impossible to determine
accurately because of the unique nature of this
Agreement, the unique needs and requirements of
Counterparty, the uncertainties of the Gas market and
differences of opinion with respect to such matters,
and that the liquidated damages provided for herein
are a fair and reasonable estimate by the Parties of
such damages. The liquidated damages provided for in
this Section are not intended to compensate either
Party for penalties that may be imposed pursuant to
Section 16.09.
(d) In the event of a termination of this Agreement pursuant to Section
10.02(c)(i) or (ii), in addition to any other remedies available hereunder or
pursuant to applicable law, the non-defaulting Party shall have the right,
exercisable in its sole discretion, to withhold or suspend deliveries or
receipts hereunder or to (i) terminate all agreements between the Parties (each
a "Terminated Transaction"), and determine the Settlement Amount (as defined
below) of each such Terminated Transaction and (ii) set off, at the election of
the non-defaulting Party, any other amounts owed by the defaulting Party to the
non-defaulting Party so that all such amounts are netted to a single liquidated
amount payable immediately by one Party to the other. Notwithstanding the
foregoing, in the event the non-defaulting Party is unable to terminate the
Terminated Transactions during any bankruptcy, insolvency or reorganization
proceeding, all such Terminated Transactions shall be deemed to have
automatically terminated as of the Business Day immediately preceding the Day on
which the non-defaulting Party became subject to such proceeding. "Settlement
Amount" shall mean, with respect to one or more Terminated Transactions and the
non-defaulting Party, an amount determined on the basis of not less than one (1)
nor more than the average of three (3) quotations obtained by the non-defaulting
Party from dealers or other industry participants recognized in the industry as
being knowledgeable in
30
this type of transaction ("Reference Market Makers") for an amount, if any, that
would be payable to the non-defaulting Party by the defaulting Party (expressed
hereunder as a positive number but by the Reference Market Maker as a negative
number) or payable by the non-defaulting Party to the defaulting Party
(expressed hereunder as a negative number but by the Reference Market Maker as a
positive number) as consideration for an agreement between the non-defaulting
Party and the Reference Market Maker to enter into a transaction that would have
the effect of preserving for the non-defaulting Party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition
precedent). Notwithstanding anything to the contrary herein, the non-defaulting
Party shall not be required to enter into any transactions with any dealer(s).
Further, the Parties may refer to published prices which are representative of
the economic value of this Agreement in lieu of reference to Reference Market
Makers upon mutual agreement.
(e) The remedies specifically provided for in this Section 10.02 are cumulative
of, and may be exercised without prejudice to, any other remedies (whether at
law or in equity) to which either Party may be entitled for any Default
hereunder, including, without limitation (i) suit(s) to enforce a Party's right
to collect amounts owed it hereunder, or (ii) the exercise of offset rights.
10.03 No Waiver
Termination of this Agreement for any reason shall not operate to waive any
right or claim that either Party may have against the other under this Agreement
or otherwise.
10.04 Winding Up Operations
When this Agreement terminates, whether pursuant to Sections 10.02 or 13.04 or
due to the expiration of the Term, all Gas physically present in Storage
Facilities shall be transferred to Counterparty and the Parties shall reconcile
accounts as follows. If the volume of Gas physically present in inventory is
less than the volume shown in the Counterparty Storage Accounts, Manager shall
provide Counterparty with Gas, at no charge, sufficient to make up the
difference between the Gas physically present and the volume shown in
Counterparty's Storage Accounts.
31
The Gas shall be provided by in place transfer at the maximum injection rate,
but in all events, the difference shall be made up within thirty (30) days of
the date of termination. If the volume of Gas physically present is more than
the volume shown in Counterparty Storage Accounts, then Counterparty, at its
option, may either purchase the Gas in place, at the Gas Daily price for the
applicable area on the date of termination, or require Manager to remove the Gas
within thirty (30) days of the date of termination via in place transfer to a
third party or withdrawal. The Parties shall work together to avoid any
penalties resulting from over-injection or over-withdrawals, and Manager will be
responsible for any such penalties.
ARTICLE XI
TITLE TO GAS
11.01 Passage of Title
Title to that portion of the Counterparty Storage Inventory released to Manager
shall pass from Counterparty to Manager on the Day on which the Capacity Release
is effective. Title to Gas delivered to Counterparty under the provisions of
Article IV shall pass from Manager to Counterparty at and when delivered to the
Delivery Point. The Party who has title to the Gas at any time shall be deemed
to be in control and possession of the Gas, and shall be responsible for (i) any
damage or injury caused thereby, and (ii) all charges, expenses, fees, taxes,
damages, injuries, and other costs incurred in connection with or attributable
to the purchase and handling of Gas, except that Counterparty shall reimburse
Manager for (i) any ad valorem or other taxes that would be levied on the volume
of the Gas in the Counterparty Storage Accounts if Counterparty held title to
the Gas and that volume of Gas were actually in storage, and (ii) any sales tax
assessed in connection with the transfer of the Counterparty Storage Inventory
to Manager, and in connection with the sale of Gas to Counterparty at the
Delivery Points. Each Party shall indemnify, defend, and hold the other harmless
from all such charges, expenses, fees, taxes, damages, injuries, and other
costs.
11.02 Warranty of Title
At the time title to Gas passes from one Party to the other, the Party passing
title warrants to the other that it has good title to the Gas and that the Gas
is free from all liens and adverse claims.
32
Each Party agrees to indemnify and hold the other Party harmless from, and with
respect to, all suits, actions, debts, accounts, damages, costs, losses and
expenses (including, but not limited to, reasonable attorneys' fees) arising
from or out of any adverse claims of any and all persons with respect to title
to Gas passing under this Agreement which attach before title passes to the
other Party. Each Party shall give the other notice of any suit, action, debt,
account, damage, cost, loss, or expense covered by this Section 11.02 and the
Party warranting title shall have the option to assume the defense or
settlement, or both, of any such contingency.
ARTICLE XII
ASSIGNMENT
12.01 Pledge, Mortgage or Assignment
Either Party may pledge or mortgage this Agreement, the Counterparty Storage
Accounts or the Capacity Release as security for its indebtedness only with the
prior written consent of the other Party, such consent not to be unreasonably
withheld. This Agreement shall be binding upon and inure to the benefit of the
successors, assigns, personal representatives, and heirs of the respective
Parties hereto, and the covenants, conditions, rights and obligations of the
Agreement shall run for the full term of this Agreement. No assignment of this
Agreement, in whole or in part, will be made without the prior written consent
of the non-assigning Party, which consent will not be unreasonably withheld,
provided however, either Party may transfer its interest to any affiliate by
assignment, merger or otherwise without prior written consent of the other Party
as long as such entity has a credit status which, in the non-assigning Party's
sole opinion, is at least as sound as that of the assignor. In the event of an
assignment of this Agreement, the Counterparty Storage Accounts or the Capacity
Release, the assignor shall not be relieved from the performance of its
obligations under this Agreement absent a written release issued by the
non-assigning Party. Any other assignment of this Agreement, the Counterparty
Storage Accounts or the Capacity Release other than those specifically permitted
by the foregoing parts of this Section 12.01 shall be null and void unless the
written consent of the other Party shall first have been obtained by the
assigning Party.
33
ARTICLE XIII
GOVERNMENTAL AUTHORITY
13.01 Agreement Subject to Valid Laws, Rules and Regulations
This Agreement shall be subject to all valid and applicable laws of the United
States and to the applicable valid rules, regulations or orders of any
regulatory agency or governmental authority having jurisdiction over the Parties
or this Agreement. The Parties shall be entitled to regard all applicable laws,
rules and regulations (federal, state or local) as valid and may act in
accordance therewith until such time as the same may be declared invalid by a
final, non-appealable judgment of a court of competent jurisdiction.
13.02 Permits, Licenses, Consents, Etc.
Upon execution of this Agreement, each of the Parties agree to seek such
certificates, permits, licenses, authorizations and consents (whether from
governmental or regulatory agencies, or from private parties) which are deemed
reasonably necessary to perform the obligations of each Party under this
Agreement.
13.03 Regulatory Filings
Upon execution of this Agreement, and from time to time throughout its term,
each of the Parties shall make all filings on its own behalf which are required
by any regulatory bodies having jurisdiction over this Agreement and, upon
request of the other Party, shall promptly provide copies of such filings to the
other Party.
13.04 Termination Due to Regulatory Changes
Either Party may terminate this Agreement in the event that the FERC, the public
service commission regulating Counterparty, or a legislative body changes its
statutes, regulations or orders so as (1) to significantly restrict the
transactions contemplated in this Agreement, (2) to require Counterparty to
assign to its customers portions of the assets included in the Capacity Release,
or (3) to significantly and materially modify the nature of the services
provided by the
34
Service Providers, provided however, that the Parties will first endeavor to
mutually agree on revisions to this Agreement to comply with such regulatory
changes. In the event the Parties elect to terminate this Agreement pursuant to
this Section 13.04 such termination shall be effected as set forth in Section
10.02(d).
ARTICLE XIV
FORCE MAJEURE
14.01 Performance Excused by Force Majeure
If either Party is rendered unable, wholly or in part, by Force Majeure to
perform its obligations under this Agreement, other than the obligation to make
payments then or subsequently due, it is mutually agreed that performance of the
respective obligations of the Parties, so far as they are affected by such Force
Majeure, shall be suspended without liability from the inception of any such
inability until it is corrected, but for no longer period, In order to suspend
by reason of Force Majeure, the Party claiming such inability shall promptly
notify the other Party of the full particulars after the occurrence of the event
relied on, and promptly correct the inability to the extent it may be corrected
through the exercise of reasonable diligence. No Party shall, however, be
required against its will to settle any labor disputes. Demand charges will not
be waived due to a Force Majeure event declared by a Party purchasing Gas
hereunder.
ARTICLE XV
CONFIDENTIALITY
15.01 Obligation to Maintain Confidentiality
Each Party agrees that the existence of this Agreement may be considered public
information and either Party may disclose the fact that it has entered into this
Agreement and the general purposes of the Agreement; however, any press releases
or other public announcements will be approved by the other Party before
issuance. Furthermore, each Party shall maintain all specific parts and contents
of this Agreement in strict confidence and shall not cause or pen-nit disclosure
thereof to any third party without the express written consent of the other
Party; provided, however, that no specific written consent is required if (i)
such information has already become public through no
35
act or omission on the part of either Party, (ii) such disclosure is reasonably
required in order to arrange for the Capacity Release and to effectuate the
transportation of Gas, or (iii) either Party is required to make such disclosure
by order or regulation of any court or agency exercising jurisdiction over the
Parties or the subject matter hereof Counterparty reserves the right to disclose
this Agreement and the terms hereof if Counterparty determines, in
Counterparty's reasonable discretion, that such disclosure to its regulatory
commissions is advisable, in which case Counterparty shall use its best efforts
to have this Agreement and the terms hereof disclosed only pursuant to an
agreement whereby the viewing party or parties agree to maintain the
confidentiality of the Agreement and terms hereof. Each Party hereby consents to
the disclosure of this Agreement to the outside auditors of the other Party,
provided that such auditors agree to maintain the confidentiality of this
Agreement. In the event that this Agreement or any of the terms hereof are
required to be disclosed pursuant to the provisions of this Section 15.01, the
Party who is required to make such disclosure shall as soon as reasonably
possible notify the other Party hereto of the requirement of such disclosure and
the non-disclosing Party shall be entitle to take all reasonable actions to
prevent or to minimize such disclosure if, in the non-disclosing Party's sole
reasonable judgment, such disclosure would be materially detrimental to such
Party.
ARTICLE XVI
MISCELLANEOUS
16.01 Waiver
No waiver by either Party of any one or more defaults by the other in the
performance of any provisions of this Agreement shall operate or be construed as
a waiver of any other default or defaults, whether of a like or of a different
character.
16.02 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of Virginia without regard to principles of conflicts of law.
36
16.03 Entire Agreement
This Agreement constitutes the entire agreement between the Parties pertaining
to the subject matter hereof, supercedes all prior agreements and
understandings, whether oral or written, which the Parties may have had in
connection herewith, and may not be modified or amended except by written
agreement executed by authorized representatives of each of the Parties.
16.04 Provisions Found to be Invalid
If any provision of this Agreement is determined to be invalid, illegal or
otherwise unenforceable for any reason by a governmental authority or a court of
competent Jurisdiction, and in the event that the overriding purpose of this
Agreement is frustrated by such determination, then the terms and conditions of
this Agreement shall remain in full force and effect to the fullest extent
permitted by applicable law. In the event this Agreement remains in full force
and effect, the Parties agree to make a good faith effort to replace the
affected provisions with amended provisions that comply with the governmental or
judicial rulings as aforesaid.
16.05 Waiver of Certain Damages
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, NEITHER PARTY SHALL BE LIABLE
TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE
DAMAGES OF ANY CHARACTER, INCLUDING BUT NOT LIMITED TO LOSS OF USE, LOST PROFITS
(PAST AND FUTURE), ADDITIONAL OUT OF POCKET EXPENSES INCURRED BY EITHER PARTY,
OR TORT, CONTRACT OR OTHER CLAIMS RESULTING FROM, ARISING OUT OF, IN CONNECTION
WITH OR IN ANY WAY INCIDENT TO ANY ACT OR OMISSION OF EITHER PARTY RELATED TO
THE PROVISIONS OF THIS AGREEMENT, IRRESPECTIVE OF WHETHER CLAIMS OR ACTIONS FOR
SUCH DAMAGES ARE BASED UPON CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR
ANY OTHER REMEDY AT LAW OR EQUITY.
16.06 Measurement and Quality
37
(a) Manager and Counterparty shall rely upon measurement by the Transporter at
the Delivery Points at pressures in Transporter's pipeline in existence from
time-to-time and such measurements shall be corrected to the Unit of
Measurement. Manager's deliveries of Gas shall be calculated from the
measurements taken at the meter(s) installed, operated and maintained by
Transporter at the Delivery Points, and from the heating value determined by
the instruments operated by Transporter. Measurement and determination of
Gas delivered under the Agreement shall be made in accordance with standard
industry practice.
(b) The Gas to be delivered hereunder shall meet the applicable quality
specifications required by each applicable Transporter. Either Party may
refuse to accept delivery of any Gas not meeting the quality
specifications.
16.07 Measurement and Allocation Inaccuracies
Counterparty and Manager recognize the inherent inaccuracies in the measurement
and allocation of Gas. Such inaccuracies may at times occur through no fault of
Counterparty or Manager such as in the case of allocations after actual
deliveries that are the result of measurement inaccuracies, or unpresentable
variations in rates of flow at the Delivery Points, and may result in failure to
deliver or receive the daily nominated volume (such inaccuracies are hereinafter
called "Measurement and Allocation Inaccuracies"). To the extent the actual
quantities delivered or received vary from the daily nominated volume due to
Measurement and Allocation Inaccuracies, the Parties agree that Counterparty's
obligation to purchase and receive and Manager's obligation sell and deliver,
insofar as liquidated damages and rights to termination of this Agreement are
concerned, shall be deemed to be fulfilled to the extent that, on a daily and
monthly basis, such deliveries and receipts are within the applicable
Transporter's Tariff for tolerances regarding imbalances to the extent such
tolerances do not impose a penalty or similar charge with respect to such
imbalances.
38
16.08 Transportation to Delivery Points and Downstream
(a) Manager shall be responsible for arranging for transportation of all Gas
purchased and sold to Counterparty hereunder to the Delivery Points and
Counterparty shall be responsible for transportation downstream of the Delivery
Points.
(b) In the event that any Transporter requires Manager to provide a ranking of
markets to be served by Manager for use by such Transporter in allocating
Manager's Gas among such markets in case of under delivery by Manager, or in any
other instance of Transporter's inability to deliver all quantities nominated
for delivery, Manager shall place deliveries for Counterparty at a level equal
to similarly-situated Firm customers in any such ranking; provided, however,
that any curtailment of Manager's deliveries of Gas to Counterparty pursuant to
such ranking will not, in and of itself, excuse Manager's obligations under this
Agreement, unless due to a Force Majeure event.
16.09 Service Provider Penalties
(a) It is understood that the Gas purchased and sold hereunder will be
transported and stored by third party Service Providers, and each Party hereto
has agreed to provide notice to the other Party of quantities of Gas Manager
intends to de-liver and Counterparty intends to purchase and receive at each
Delivery Point. Both Parties shall be obligated to use their best efforts to
avoid the imposition by any Service Provider of penalties or other charges,
including those for imbalances between receipts and deliveries or for imbalances
or deviations from nominated or scheduled quantities. If Manager delivers, or
causes to be delivered, for Counterparty's account, at any Delivery Point a
quantity of Gas that is greater or less than that scheduled for delivery to, and
transportation by, any Service Provider and such variable deliveries cause
Counterparty to incur a penalty or other charges as levied by such Service
Provider, then Manager shall bear and pay such penalties or other charges,
unless such penalty or other charge was incurred due to a specific Counterparty
request to Manager. If Counterparty takes, at any Delivery Point, a quantity of
Gas that is greater or less than that scheduled for delivery to and
transportation by any Service Provider (or, for
39
Columbia Gas Transmission, a quantity which is greater or less than the
Balancing Tolerance specified in Section 10.02(c)(Iv)) and such variable
receipts cause Manager to incur a penalty or other charges as levied by such
Service Provider, then Counterparty shall bear and pay such penalties or other
charges.
(b) Either Party shall immediately notify the other Party of any notice received
from any Service Provider that indicates an imbalance in deliveries exists or is
occurring that may give rise to a penalty or other charges. The Parties agree to
cooperate immediately to adjust their deliveries as necessary to bring
deliveries and receipts into balance with nominated quantities so that any
penalties or other charges are avoided or minimized as much as possible.
(c) Independent of any penalty or charge under 16.09(a), if any Transporter
employs a cashout mechanism to resolve imbalances under Counterparty
arrangements downstream of the Delivery Points and, despite the Parties' efforts
under 16.09(b), an imbalance is incurred and cashed out, any cash-out charges or
penalties assessed against Counterparty shall be:
(i) Counterparty's responsibility where such charges or
penalties are caused by Counterparty, and
(ii) Manager's responsibility where such charges or
penalties are caused by Manager
(d) In the event that Counterparty receives a cash-out payment from any
Transporter associated with over deliveries of Gas under this Agreement, and
provided that Counterparty has not previously paid Manager for such over
deliveries, Counterparty shall pay Manager the amount so received. In the event
that Counterparty must -purchase Gas from any Transporter associated with under
deliveries of Gas under the Agreement and the price is higher than the price
Counterparty would otherwise pay Manager, Manager shall pay Counterparty the
positive difference, if any, between the former and latter prices.
16.10 Notices
40
All notices required to be sent shall be sent to the Parties at the following
addresses, telephone numbers and fax numbers:
To Manager: Duke Energy Trading and Marketing, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Notices/Correspondence
Attn: Contract Administration
Invoices
Attn: Gas Accounting
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
To Counterparty: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
Notices/Correspondence
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Invoices
Attn: ▇▇▇▇▇▇ ▇▇▇▇
16.11 Duty to Mitigate
Each Party agrees that it has a duty to mitigate damages and covenants that it
will use commercially reasonable efforts to minimize any damages it may incur as
a result of the other Party's performance or non-performance of this Agreement.
41
16.12 Taxes
Each Party shall use reasonable efforts to administer this Agreement and
implement the provisions in accordance with the intent to minimize the
imposition of taxes.
16.13 Waiver of Jury Trial
Each Party herein waives its respective night to any jury trial with respect to
any litigation arising under, or in connection with, this Agreement.
16.14 No Third Party Beneficiary
This Agreement shall not be construed to create any third party beneficiary
relationship in favor of anyone not a party to this Agreement. In addition, the
Parties waive and disclaim any third party beneficiary status as to any of the
contracts of the other Party.
16.15 Forward Contract
The Parties acknowledge and agree that this Agreement and each transaction
document by a confirmation notice in accordance with Section 5.05 constitutes a
"forward contract" within the meaning of the United States Bankruptcy Code.
ARTICLE XVII
ARBITRATION AND DISPUTE RESOLUTION
17.01 Dispute Resolution
In the event of a dispute involving an amount under $1,000,000 or in the event
the Parties need to re-negotiate portions of this Agreement due to events
described in Section 2.01 but are unable to reach agreement, the matter will be
submitted upon the request of either Party to binding arbitration by one (1)
qualified arbitrator who has not been previously employed by either Party or its
affiliates, and does not have a direct or indirect interest in either Party or
the subject matter of the arbitration. Such arbitrator shall either be mutually
selected by the Parties within thirty
42
(30) days after written notice form either Party requesting arbitration, or
failing agreement, shall be selected under the expedited rules of the American
Arbitration Association ("AAA"). Such arbitration shall be held in alternating
location of the home offices of the Parties, beginning with Manager's home
office, or in any other mutually agreeable location. The rules of the AAA shall
apply to the extent not inconsistent with the rules herein specified. Either
Party may initiate arbitration by written notice to the other Party. The
arbitration shall be conducted according to the following: (a) not later than
seven (7) days prior to the hearing date set by the arbitrator, each Party shall
submit a brief with a single proposal for settlement, (b) the hearing shall be
conducted on a confidential basis without continuance or adjournment, (c) the
arbitrator shall be limited to selecting one (1) of the settlement proposals
submitted by the Parties, (d) each Party shall divide equally the cost of the
arbitrator and the hearing, (e) each Party shall be responsible for its own
costs and those of its counsel and representatives, and (f) evidence concerning
the financial position or organizational make-up of the Parties, any offer made
or the details of any negotiation prior to arbitration, and the cost to the
Parties of their representatives and counsel shall not be permissible. The
arbitrated award shall not include any consequential or punitive damages.
17.02 Binding Effect
Each Party understands that this Agreement contains an agreement to arbitrate
with respect to certain disputes arising under this Agreement. After signing
this Agreement, each Party understands that it will not be able to bring a
lawsuit concerning any dispute that may arise that is covered by this
arbitration provision. Instead, each Party agrees to submit such dispute to an
impartial arbitrator. Any monetary award of the arbitrator may be enforced by
the Party in whose favor such monetary award is made in any court of competent
jurisdiction.
43
IN WITNESS WHEREOF, by execution in duplicate originals, the Parties hereto have
caused this Agreement to be effective as of the day and year first above
written:
DUKE ENERGY TRADING AND MARKETING, L.L.C.
By s/F. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name F. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title Sr. Vice President, Origination
ROANOKE GAS COMPANY
By s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III
Name ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III
Title Chairman & CEO
44
LIST OF EXHIBITS
Exhibit A Agreements Released
Exhibit B Storage Inventory Transferred
Exhibit C Indices for Calculating Gas Prices
Exhibit D Weighted Average Transportation Variable Costs
Exhibit E Weighted Average Storage Variable Costs (Effective 11/01/01)
Exhibit F Weighted Average Storage Variable Costs (Effective 04/01/02)
Exhibit G Example of Baseload and Swing Gas Price Calculation
Exhibit H Example of Storage Injection and Withdrawal Price Calculation
Exhibit I Storage Withdrawal Schedule
Exhibit J Storage Injection Schedule
Exhibit K Dates for Monthly Nomination Deadlines
Exhibit L Daily Swing Gas and Intra-Day Nomination Deadlines
Exhibit M Daily Balancing Report for Citygate Deliveries
Exhibit N Trigger Price Addendum
Exhibit O Form of Guaranty
Exhibit P Sample Confirmation Notice
Exhibit Q RCG Operational Requirements
45
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT A
AGREEMENTS RELEASED
CITY GATE DELIVERIES
Pipeline Contract # Type MDQ Start End
-------------------------------------------------------------------------------------------------------
Columbia Transmission 38098 FTS 23,509 10/01/1996 10/31/2004
Columbia Transmission 57449 FTS 3,425 11/01/1999 10/31/2014
Columbia Transmission 44322 NTS 7,000 10/01/1994 11/01/2004
Columbia Transmission 38085 SST 19,475 10/01/1997 11/02/2004
Columbia Transmission 50420 SST 5,889 11/01/1997 10/31/2012
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ FTA 10,083 11/01/1993 11/01/2013
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ FTA 5,150 11/01/1998 10/31/2014
------------
Total 74,531
UPSTREAM TRANSPORTATION
Pipeline Contract # Type MDQ Start End
-------------------------------------------------------------------------------------------------------------------
Columbia Gulf 38026 FTS1 17,349 11/01/1994 10/31/2004
Columbia Gulf 40432 FTS2 13,998 11/01/1994 06/30/2002* ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ FTA 9,326 11/01/1993 11/01/2013
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ FTA 5,000 11/01/1999 10/31/2019
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ FTA 5,267 11/01/1999 10/31/2019
Midwestern 24377 FT 5,293 11/01/1999 10/31/2019
------------
Total 56,233
STORAGE
Pipeline Contract # Type MDQ SCQ Start End
------------------------------------------------------------------------------------------------------------------------------
Columbia Transmission 38129-52999 FSS 19,475 1,070,239 04/01/1997 10/31/2004
Columbia Transmission 38129-50421 FSS 5,889 441,700 04/01/1997 10/31/2012
Tennessee ▇▇▇▇ ▇▇-▇▇ 3,500 400,000 11/01/1993 11/01/2013
Tennessee 3974 FS-MA 978 134,603 11/01/1993 11/02/2013
Tennessee 4024 FS-PA 211 31,174 11/01/1993 11/03/2013
Virginia Gas (Early Grove) NA FS 2,000 180,000 04/01/1997 03/31/2012
Virginia Gas (Saltville) NA FS 2,000 180,000 11/01/2001 10/31/2016
Virginia Gas (Saltville) NA FS 2,000 180,000 11/01/2002 10/31/2017
------------------------------
Total 36,053 2,617,716
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT B
STORAGE INVENTORY TRANSFERRED
Balance
Pipeline Contract # Type SCQ As of 10/31/01*
-------------------------------------------------------------------------------------------------------------------
Columbia Transmission 38129 FSS 1,511,939 1,436,342
Tennessee ▇▇▇▇ ▇▇-▇▇ 400,000 380,000
Tennessee ▇▇▇▇ ▇▇-▇▇ 31,174 29,615
Tennessee 3974 FS-MA 134,603 127,873
Virginia Gas - Early Grove NA FS 180,000 171,000
Virginia Gas - Saltville NA FS 180,000 171,000
Virginia Gas - Saltville NA FS 180,000 -
* To be provided by Customer.
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT C
INDICES FOR CALCULATING GAS PRICES
BASELOAD GAS TRANSPORTATION INDEX: Monthly Base Load Gas
Entitlements Index 1/ Allocation %
TCO Gate CGT FTS-2 13,998 I/CGT/LA 28.00%
CGT FTS-1 3,351 GDM/RAYNE/LA 7.00%
TGP ZL 5,000 I/TGP/LA 10.00%
TCO Rec 11,585 I/CG/APP 24.00%
------
33,934
ETNG Gate MGT 5,293 NGI/(BA)/CG/NGPL 11.00%
TGP Z0 2,708 I/TGP/TX 6.00%
TGP ZL/Z1 6,618 I/TGP/LA 13.00%
ETNG Rec 614 I/CG/APP 1.00%
------
15,233
Total 49,167 100.00%
SWING GAS TRANSPORTATION INDEX: Daily Swing Gas
Entitlements Index 2/ Allocation %
TCO Gate CGT FTS-2 13,998 GDD/CGT/LA 28.00%
CGT FTS-1 3,351 GDD/RAYNE/LA 7.00%
TGP ZL 5,000 GDD/TGP500/LA 10.00%
TCO Rec 11,585 GDD/CGAS/APP 24.00%
------
33,934
ETNG Gate MGT 5,293 GDD/CHIC-LDCs 11.00%
TGP Z0 2,708 GDD/TGP/STX 6.00%
TGP ZL/Z1 6,618 GDD/TGP500/LA 13.00%
ETNG Rec 614 GDD/CGAS/APP 1.00%
-------
15,233
Total 49,167 100.00%
1/ Monthly Baseload Gas Indices are based on the applicable first of month
supply area index as posted in INSIDE FERC'S GAS MARKET REPORT "Prices of Spot
Gas Delivered to Pipelines", in GAS DAILY "Monthly Contract Index", or in NGI'S
WEEKLY GAS PRICE INDEX "Spot Gas Prices - Bidweek Average".
2/ Daily Swing Gas Indices are based on the applicable supply area GAS DAILY
"Daily Price Survey" midpoint price for the day of gas delivery.
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT D
WEIGHTED AVERAGE TRANSPORTATION VARIABLE COSTS
NON-STORAGE TRANSPORTATION TO GATE: Receipt PATH TO GATE Cost
Entitlements CGT FTS-2 CGT FTS-1 TGP Z3 TCO Del Total Cost Allocation % Allocation
TCO Gate CGT FTS-2 13,998 $0.0017 $0.0191 $0.0225 $ 0.0433 28.00% $ 0.0121
CGT FTS-1 3,351 $0.0191 $0.0225 $ 0.0416 7.00% $ 0.0029
TGP ZL 5,000 $0.0895 $0.0225 $ 0.1120 10.00% $ 0.0112
TCO Rec 11,585 $0.0225 $ 0.0225 24.00% $ 0.0054
------
33,934
MGT TGP Z0 TGP Z1 ETNG Del
ETNG Gate MGT 5,293 $0.0181 $0.0593 $0.0102 $ 0.0876 11.00% $ 0.0096
TGP Z0 2,708 $0.0690 $0.0102 $ 0.0792 6.00% $ 0.0048
TGP ZL/Z1 6,618 $0.0593 $0.0102 $ 0.0695 13.00% $ 0.0090
ETNG Rec 614 $0.0102 $ 0.0102 1.00% $ 0.0001
-------
15,233
Total 49,167 100.00% $ 0.0551
NON-STORAGE FUEL TO GATE: Receipt PATH TO GATE Fuel
WINTER FUEL (NOVEMBER-MARCH) Entitlements CGT FTS-2 CGT FTS-1 TGP Z3 TCO Del Total Fuel Allocation % Allocation
TCO Gate CGT FTS-2 13,998 0.697% 2.920% 2.776% 6.393% 28.00% 1.790%
CGT FTS-1 3,351 2.920% 2.776% 5.696% 7.00% 0.400%
TGP ZL 5,000 4.990% 2.776% 7.766% 10.00% 0.780%
TCO Rec 11,585 2.776% 2.776% 24.00% 0.670%
------
33,934
MGT TGP Z0 TGP Z1 ETNG Del
ETNG Gate MGT 5,293 0.500% 1.910% 2.220% 4.630% 11.00% 0.510%
TGP Z0 2,708 2.790% 2.220% 5.010% 6.00% 0.300%
TGP ZL/Z1 6,618 1.910% 2.220% 4.130% 13.00% 0.540%
ETNG Rec 614 2.220% 2.220% 1.00% 0.020%
-------
15,233
Total 49,167 100.00% 5.010%
NON-STORAGE FUEL TO GATE: Receipt PATH TO GATE Fuel
SUMMER FUEL (APRIL-OCTOBER) Entitlements CGT FTS-2 CGT FTS-1 TGP Z3 TCO Del Total Fuel Allocation % Allocation
TCO Gate CGT FTS-2 13,998 0.697% 2.920% 2.776% 6.393% 28.00% 1.790%
CGT FTS-1 3,351 2.920% 2.776% 5.696% 7.00% 0.400%
TGP ZL 5,000 4.290% 2.776% 7.066% 10.00% 0.710%
TCO Rec 11,585 2.776% 2.776% 24.00% 0.670%
------
33,934
MGT TGP Z0 TGP Z1 ETNG Del
ETNG Gate MGT 5,293 0.500% 1.700% 1.580% 3.780% 11.00% 0.420%
TGP Z0 2,708 2.440% 1.580% 4.020% 6.00% 0.240%
TGP ZL/Z1 6,618 1.700% 1.580% 3.280% 13.00% 0.430%
ETNG Rec 614 1.580% 1.580% 1.00% 0.020%
-------
15,233
Total 49,167 100.00% 4.680%
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT E
WEIGHTED AVERAGE STORAGE VARIABLE COSTS (EFFECTIVE NOVEMBER 1, 2001)
STORAGE INJECTION COSTS TRANSPORTATION TO STORAGE
Cost
Transport CGT FTS-2 CGT FTS-1 TGP Z3 TCO Del Total Cost Allocation % Allocation
TCO Storage CGT FTS-2 13,998 $0.0017 $0.0191 $0.0225 $ 0.0433 41.00% $ 0.0178
CGT FTS-1 3,351 $0.0191 $0.0225 $ 0.0416 10.00% $ 0.0042
TGP ZL 5,000 $0.0895 $0.0225 $ 0.1120 15.00% $ 0.0168
TCO Rec 11,585 $0.0225 $ 0.0225 34.00% $ 0.0077
------
33,934 100.00% $ 0.0465
MGT TGP Z0 TGP Z1 ETNG Del
ETNG Storage MGT 5,293 $0.0181 $0.0593 $0.0102 $ 0.0876 35.00% $ 0.0307
TGP Z0 2,708 $0.0690 $0.0102 $ 0.0792 18.00% $ 0.0143
TGP ZL/Z1 6,618 $0.0593 $0.0102 $ 0.0695 43.00% $ 0.0299
ETNG Rec 614 $0.0102 $ 0.0102 4.00% $ 0.0004
------
15,233 100.00% $ 0.0753
TGP Z1 TGP Z1
TGP Storage TGP Z0 2,708 $0.0690 $ 0.0690 29.00% $ 0.0200
TGP ZL/Z1 6,618 $0.0593 $ 0.0593 71.00% $ 0.0421
-----
9,326 100.00% $ 0.0621
STORAGE INJECTION FUEL TRANSPORTATION FUEL TO STORAGE
Fuel
SUMMER FUEL (APRIL-OCTOBER) Transport CGT FTS-2 CGT FTS-1 TGP Z3 TCO Del Total Fuel Allocation % Allocation
TCO Storage CGT FTS-2 13,998 0.697% 2.920% 2.776% 6.393% 41.00% 2.620%
CGT FTS-1 3,351 2.920% 2.776% 5.696% 10.00% 0.570%
TGP ZL 5,000 4.290% 2.776% 7.066% 15.00% 1.060%
TCO Rec 11,585 2.776% 2.776% 34.00% 0.940%
------
33,934 100.00% 5.190%
MGT TGP Z1 TGP Z1 ETNG Rec
ETNG Storage MGT 5,293 0.500% 1.700% 1.580% 3.870% 35.00% 1.320%
TGP Z0 2,708 2.440% 1.580% 4.020% 18.00% 0.720%
TGP ZL/Z1 6,618 1.700% 1.580% 3.280% 43.00% 1.410%
ETNG Rec 614 1.580% 1.580% 4.00% 0.060%
-------
15,233 100.00% 3.510%
TGP Z1 TGP Z1
TGP Storage TGP Z0 2,708 2.440% 2.440% 29.00% 0.710%
TGP ZL/Z1 6,618 1.700% 1.700% 71.00% 1.210%
-------
9,326 100.00% 1.920%
STORAGE WITHDRAWAL COSTS TRANSPORTATION FROM STORAGE
Cost
Transport TCO Total Cost Allocation % Allocation
TCO Storage TCO Rec 25,364 $0.0132 $ 0.0132 100.00% $ 0.0132
100.00% $ 0.0132
ETNG
ETNG Storage ETNG Rec 4,000 $0.0102 $ 0.0102 100.00% $ 0.0102
100.00% $ 0.0102
TGP Z1 ETNG
TGP Storage TGP ZL/Z1 6,618 $0.0593 $0.0102 $ 0.0695 100.00% $ 0.0695
100.00% $ 0.0695
STORAGE COSTS
Injection Total Cost
Service Storage MSQ Cost Cost Allocation% Allocation
FSS 1,511,939 $ 0.0153 $ 0.0618 62.02% $ 0.0383
Early Grove 180,000 $ 0.0500 $ 0.1253 7.38% $ 0.0093
Saltville 180,000 $ 0.0500 $ 0.1253 7.38% $ 0.0093
FSMA 134,603 $ 0.0102 $ 0.0723 5.52% $ 0.0040
FSPA 431,174 $ 0.0053 $ 0.0674 17.69% $ 0.0119
Total 2,437,716 100.00% $ 0.0727
STORAGE FUEL
Injection Total Fuel
Service Storage MSQ Fuel Fuel Allocation% Allocation
FSS 1,511,939 0.170% 5.360% 62.02% 3.324%
Early Grove 180,000 0.000% 3.510% 7.38% 0.259%
Saltville 180,000 0.000% 3.510% 7.38% 0.259%
FSMA 134,603 1.490% 3.410% 5.52% 0.168%
FSPA 431,174 1.490% 3.410% 17.69% 0.603%
Total 2,437,716 100.00% 4.634%
STORAGE COSTS
WTD Total Cost
Service Storage MSQ Cost Cost Allocation% Allocation
FSS 1,1511,939 $ 0.0153 $ 0.0285 62.02% $ 0.0177
Early Grove 180,000 $ 0.0500 $ 0.0602 7.38% $ 0.0044
Saltville 180,000 $ 0.0500 $ 0.0500 7.38% $ 0.0037
FSMA 134,603 $ 0.0102 $ 0.0797 5.52% $ 0.0044
FSPA 431,174 $ 0.0053 $ 0.0748 17.69% $ 0.0132
Total 2,437,716 100.00% $ 0.0434
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT F
WEIGHTED AVERAGE STORAGE VARIABLE COSTS (EFFECTIVE APRIL 1, 2002)
STORAGE INJECTION COSTS TRANSPORTATION TO STORAGE
Cost
Transport CGT FTS-2 CGT FTS-1 TGP Z3 TCO Del Total Cost Allocation % Allocation
TCO Storage CGT FTS-2 13,998 $0.0017 $0.0191 $0.0225 $ 0.0433 41.00% $ 0.0178
CGT FTS-1 3,351 $0.0191 $0.0225 $ 0.0416 10.00% $ 0.0042
TGP ZL 5,000 $0.0895 $0.0225 $ 0.1120 15.00% $ 0.0168
TCO Rec 11,585 $0.0225 $ 0.0225 34.00% $ 0.0077
------
33,934 100.00% $ 0.0465
MGT TGP Z0 TGP Z1 ETNG Del
ETNG Storage MGT 5,293 $0.0181 $0.0593 $0.0102 $ 0.0876 35.00% $ 0.0307
TGP Z0 2,708 $0.0690 $0.0102 $ 0.0792 18.00% $ 0.0143
TGP ZL/Z1 6,618 $0.0593 $0.0102 $ 0.0695 43.00% $ 0.0299
ETNG Rec 614 $0.0102 $ 0.0102 4.00% $ 0.0004
------
15,233 100.00% $ 0.0753
TGP Z1 TGP Z1
TGP Storage TGP Z0 2,708 $0.0690 $ 0.0690 29.00% $ 0.0200
TGP ZL/Z1 6,618 $0.0593 $ 0.0593 71.00% $ 0.0421
-----
9,326 100.00% $ 0.0621
STORAGE INJECTION FUEL TRANSPORTATION FUEL TO STORAGE
Fuel
SUMMER FUEL (APRIL-OCTOBER) Transport CGT FTS-2 CGT FTS-1 TGP Z3 TCO Del Total Fuel Allocation % Allocation
TCO Storage CGT FTS-2 13,998 0.697% 2.920% 2.776% 6.393% 41.00% 2.620%
CGT FTS-1 3,351 2.920% 2.776% 5.696% 10.00% 0.570%
TGP ZL 5,000 4.290% 2.776% 7.066% 15.00% 1.060%
TCO Rec 11,585 2.776% 2.776% 34.00% 0.940%
------
33,934 100.00% 5.190%
MGT TGP Z1 TGP Z1 ETNG Rec
ETNG Storage MGT 5,293 0.500% 1.700% 1.580% 3.870% 35.00% 1.320%
TGP Z0 2,708 2.440% 1.580% 4.020% 18.00% 0.720%
TGP ZL/Z1 6,618 1.700% 1.580% 3.280% 43.00% 1.410%
ETNG Rec 614 1.580% 1.580% 4.00% 0.060%
-------
15,233 100.00% 3.510%
TGP Z1 TGP Z1
TGP Storage TGP Z0 2,708 2.440% 2.440% 29.00% 0.710%
TGP ZL/Z1 6,618 1.700% 1.700% 71.00% 1.210%
-------
9,326 100.00% 1.920%
STORAGE WITHDRAWAL COSTS TRANSPORTATION FROM STORAGE
Cost
Transport TCO Total Cost Allocation % Allocation
TCO Storage TCO Rec 25,364 $0.0132 $ 0.0132 100.00% $ 0.0132
100.00% $ 0.0132
ETNG
ETNG Storage ETNG Rec 4,000 $0.0102 $ 0.0102 100.00% $ 0.0102
100.00% $ 0.0102
TGP Z1 ETNG
TGP Storage TGP ZL/Z1 6,618 $0.0593 $0.0102 $ 0.0695 100.00% $ 0.0695
100.00% $ 0.0695
STORAGE COSTS
Injection Total Cost
Service Storage MSQ Cost Cost Allocation% Allocation
FSS 1,511,939 $ 0.0153 $ 0.0618 57.76% $ 0.0357
Early Grove 180,000 $ 0.0500 $ 0.1253 6.88% $ 0.0086
Saltville 180,000 $ 0.0500 $ 0.1253 13.75% $ 0.0172
FSMA 134,603 $ 0.0102 $ 0.0723 5.14% $ 0.0037
FSPA 431,174 $ 0.0053 $ 0.0674 16.47% $ 0.0111
Total 2,617,716 100.00% $ 0.0764
STORAGE FUEL
Injection Total Fuel
Service Storage MSQ Fuel Fuel Allocation% Allocation
FSS 1,511,939 0.170% 5.360% 57.76% 3.096%
Early Grove 180,000 0.000% 3.510% 6.88% 0.241%
Saltville 180,000 0.000% 3.510% 13.75% 0.483%
FSMA 134,603 1.490% 3.410% 5.14% 0.175%
FSPA 431,174 1.490% 3.410% 16.47% 0.562%
Total 2,617,716 100.00% 4.557%
STORAGE COSTS
WTD Total Cost
Service Storage MSQ Cost Cost Allocation% Allocation
FSS 1,1511,939 $ 0.0153 $ 0.0285 57.76% $ 0.0165
Early Grove 180,000 $ 0.0500 $ 0.0602 6.88% $ 0.0041
Saltville 180,000 $ 0.0500 $ 0.0500 13.75% $ 0.0069
FSMA 134,603 $ 0.0102 $ 0.0797 5.14% $ 0.0041
FSPA 431,174 $ 0.0053 $ 0.0748 16.47% $ 0.0123
Total 2,617,716 100.00% $ 0.0439
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT G
EXAMPLE OF BASELOAD AND SWING GAS PRICE CALCULATION
Baseload Gas Price Calculation:
Monthly Baseload Gas Index 1/ Index Value Allocation % Price Allocation
TCO Gate I/CGT/LA $ 2.300 28.00% $ 0.6440
GDM/RAYNE/LA $ 2.370 7.00% $ 0.1659
I/TGP/LA $ 2.220 10.00% $ 0.2220
I/CG/APP $ 2.460 24.00% $ 0.5904
ETNG Gate NGI(BA)/CG/NGPL $ 2.340 11.00% $ 0.2574
I/TGP/TX $ 2.210 6.00% $ 0.1326
I/TGP/LA $ 2.220 13.00% $ 0.2886
I/CG/APP $ 2.460 1.00% $ 0.0246
PRICE CALCULATION:
A) Baseload Gas Commodity Charge 100.00% $ 2.3255
B) Weighted Average Transportation Fuel % (See Exhibit D) 4.680%
C) Weighted Average Transportation Fuel Cost (A / (1-B) - A) $ 0.1142
D) Weighted Average Transportation Variable Cost (See Exhibit D) $ 0.0551
E) BASELOAD GAS PRICE (A+C+ D) $ 2.4948
Swing Gas Price Calculation:
Daily Swing Gas Index 2/ Index Value Allocation % Price Allocation
TCO Gate GDD/CGT/LA $ 1.970 28.00% $ 0.5516
GDD/RAYNE/LA $ 2.015 7.00% $ 0.1411
GDD/TGP500/LA $ 2.005 10.00% $ 0.2005
GDD/CGAS/APP $ 2.250 24.00% $ 0.5400
ETNG Gate GDD/CHIC-LDCs $ 2.015 11.00% $ 0.2217
GDD/TGP/STX $ 1.945 6.00% $ 0.1167
GDD/TGP/500/LA $ 2.005 13.00% $ 0.2607
GDD/CGAS/APP $ 2.250 1.00% $ 0.0225
PRICE CALCULATION:
A) Baseload Gas Commodity Charge 100.00% $ 2.0548
B) Weighted Average Transportation Fuel % (See Exhibit D) 4.680%
C) Weighted Average Transportation Fuel Cost (A / (1-B) - A) $ 0.1009
D) Weighted Average Transportation Variable Cost (See Exhibit D) $ 0.0551
E) BASELOAD GAS PRICE (A+C+ D) $ 2.2108
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT H
EXAMPLE OF STORAGE INJECTION AND WITHDRAWAL PRICE CALCULATION
Storage Injection Price Calculation:
Monthly Baseload Gas Index 1/ Index Value Allocation % Price Allocation
TCO Gate I/CGT/LA $ 2.300 28.00% $ 0.6440
GDM/RAYNE/LA $ 2.370 7.00% $ 0.1659
I/TGP/LA $ 2.220 10.00% $ 0.2220
I/CG/APP $ 2.460 24.00% $ 0.5904
ETNG Gate NGI(BA)/CG/NGPL $ 2.340 11.00% $ 0.2574
I/TGP/TX $ 2.210 6.00% $ 0.1326
I/TGP/LA $ 2.220 13.00% $ 0.2886
I/CG/APP $ 2.460 1.00% $ 0.0246
PRICE CALCULATION:
A) Baseload Gas Commodity Charge 100.00% $ 2.3255
B) Weighted Average Transportation Fuel % (See Exhibit E or F) 4.680%
C) Weighted Average Transportation Fuel Cost (A / (1-B) - A) $ 0.1130
D) Weighted Average Transportation Variable Cost (See Exhibit E or F) $ 0.0727
E) STORAGE INJECTION GAS PRICE (A+C+ D) $ 2.5112
STORAGE WITHDRAWAL PRICE CALCULATION:
Customer's gas withdrawn from storage will pay only the Weighted Average Storage Withdrawal Cost.
A) Weighted Average Storage Withdrawal Variable Cost (See Exhibit E or F) $ 0.0434
B) STORAGE WITHDRAWAL GAS PRICE $ 0.0434
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT I
STORAGE WITHDRAWAL SCHEDULE
WITHDRAWALS YEAR 1 Allocated Storage Withdrawals
Balance 10% 25% 30% 25% 10%
Pipeline Contract # Type SCQ As of 10/31/01* Nov-01 Dec-01 Jan-02 Feb-02 Mar-02
Columbia Transmission 38129 FSS 1,511,939 1,436,342 143,634 359,086 430,903 359,086 143,633
Tennessee 2012 FSPA 400,000 380,000 38,000 95,000 114,000 95,000 38,000
Tennessee 4024 FSPA 31,174 29,615 2,962 7,404 8,885 7,404 2,960
Tennessee 3974 FSMA 134,603 127,873 12,787 31,968 38,362 31,968 12,788
Virginia Gas - Early Grove NA FS 180,000 171,000 17,100 42,750 51,300 42,750 17,100
Virginia Gas - Saltville NA FS 180,000 171,000 17,100 42,750 51,300 42,750 17,100
Virginia Gas - Saltville NA FS 180,000 - - - - - -
TOTALS 2,315,830 231,583 578,958 694,750 578,958 231,58
WITHDRAWALS YEAR 2 Allocated Storage Withdrawals
Balance 10% 25% 30% 25% 10%
Pipeline Contract # Type SCQ As of 10/31/01* Nov-02 Dec-02 Jan-03 Feb-03 Mar-03
Columbia Transmission 38129 FSS 1,511,939 1,511,939 151,194 377,985 453,582 377,985 151,193
Tennessee 2012 FSPA 400,000 400,000 40,000 100,000 120,000 100,000 40,000
Tennessee 4024 FSPA 31,174 31,174 3,117 7,794 9,352 7,794 3,117
Tennessee 3974 FSMA 134,603 134,603 13,460 33,651 40,381 33,651 13,460
Virginia Gas - Early Grove NA FS 180,000 180,000 18,000 45,000 54,000 45,000 18,000
Virginia Gas - Saltville NA FS 180,000 180,000 18,000 45,000 54,000 45,000 18,000
Virginia Gas - Saltville NA FS 180,000 180,000 18,000 45,000 54,000 45,000 18,000
TOTALS 2,617,716 261,771 654,430 85,315 654,430 261,770
WITHDRAWALS YEAR 3 Allocated Storage Withdrawals
Balance 10% 25% 30% 25% 10%
Pipeline Contract # Type SCQ As of 10/31/01* Nov-03 Dec-03 Jan-04 Feb-04 Mar-04
Columbia Transmission 38129 FSS 1,511,939 1,511,939 151,194 377,985 453,582 377,985 151,193
Tennessee 2012 FSPA 400,000 400,000 40,000 100,000 120,000 100,000 40,000
Tennessee 4024 FSPA 31,174 31,174 3,117 7,794 9,352 7,794 3,117
Tennessee 3974 FSMA 134,603 134,603 13,460 33,651 40,381 33,651 13,460
Virginia Gas - Early Grove NA FS 180,000 180,000 18,000 45,000 54,000 45,000 18,000
Virginia Gas - Saltville NA FS 180,000 180,000 18,000 45,000 54,000 45,000 18,000
Virginia Gas - Saltville NA FS 180,000 180,000 18,000 45,000 54,000 45,000 18,000
TOTALS 2,617,716 261,771 654,430 785,315 654,430 261,770
* To be provided by Customer
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT J
STORAGE INJECTION SCHEDULE
INJECTIONS YEAR 1 Allocated Storage Injections
Beginning Balance 14.3% 14.3% 14.3% 14.3% 14.3% 14.3% 14.3%
Pipeline Contract # Type SCQ As of 3/31/02 Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sept-02 Oct-02
Columbia Transmission 38129 FSS 1,511,939 - 215,991 215,991 215,991 215,991 215,991 215,991 215,993
Tennessee 2012 FSPA 400,000 - 57,143 57,143 57,143 57,143 57,143 57,143 57,142
Tennessee 4024 FSPA 31,174 - 4,453 4,453 4,453 4,453 4,453 4,453 4,456
Tennessee 3974 FSMA 134,603 - 19,229 19,229 19,229 19,229 19,229 19,229 19,229
Virginia Gas - Early Grove NA FS 180,000 - 25,714 25,714 25,714 25,714 25,714 25,714 25,716
Virginia Gas - Saltville NA FS 180,000 - 25,714 25,714 25,714 25,714 25,714 25,714 25,716
Virginia Gas - Saltville NA FS 180,000 - 25,714 25,714 25,714 25,714 25,714 25,714 25,716
Totals 2,617,716 - 373,958 373,958 373,958 373,958 373,958 373,958 373,968
INJECTIONS YEAR 2 Allocated Storage Injections
Beginning Balance 14.3% 14.3% 14.3% 14.3% 14.3% 14.3% 14.3%
Pipeline Contract # Type SCQ As of 3/31/03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sept-03 Oct-03
Columbia Transmission 38129 FSS 1,511,939 - 215,991 215,991 215,991 215,991 215,991 215,991 215,993
Tennessee 2012 FSPA 400,000 - 57,143 57,143 57,143 57,143 57,143 57,143 57,142
Tennessee 4024 FSPA 31,174 - 4,453 4,453 4,453 4,453 4,453 4,453 4,456
Tennessee 3974 FSMA 134,603 - 19,229 19,229 19,229 19,229 19,229 19,229 19,229
Virginia Gas - Early Grove NA FS 180,000 - 25,714 25,714 25,714 25,714 25,714 25,714 25,716
Virginia Gas - Saltville NA FS 180,000 - 25,714 25,714 25,714 25,714 25,714 25,714 25,716
Virginia Gas - Saltville NA FS 180,000 - 25,714 25,714 25,714 25,714 25,714 25,714 25,716
Totals 2,617,716 - 373,958 373,958 373,958 373,958 373,958 373,958 373,968
INJECTIONS YEAR 3* Allocated Storage Injections (Based on 95% Fill)
Beginning Balance 14.3% 14.3% 14.3% 14.3% 14.3% 14.3% 14.3%
Pipeline Contract # Type SCQ As of 3/31/04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sept-04 Oct-04
Columbia Transmission 38129 FSS 1,511,939 - 205,192 205,192 205,192 205,192 205,192 205,192 205,190
Tennessee 2012 FSPA 400,000 - 54,286 54,286 54,286 54,286 54,286 54,286 54,284
Tennessee 4024 FSPA 31,174 - 4,231 4,231 4,231 4,231 4,231 4,231 4,229
Tennessee 3974 FSMA 134,603 - 18,268 18,268 18,268 18,268 18,268 18,268 18,265
Virginia Gas - Early Grove NA FS 180,000 - 24,429 24,429 24,429 24,429 24,429 24,429 24,426
Virginia Gas - Saltville NA FS 180,000 - 24,429 24,429 24,429 24,429 24,429 24,429 24,426
Virginia Gas - Saltville NA FS 180,000 - 24,429 24,429 24,429 24,429 24,429 24,429 24,426
Totals 2,617,716 - 355,264 355,264 355,264 355,264 355,264 355,264 355,246
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT K
DATES FOR MONTHLY NOMINATION DEADLINES
Futures Baseload Gas
Delivery Month Closing Date 1/ Nomination Date 2/
November-0l 29-Oct 24-Oct
December-0l 28-Nov 21 -Nov
January-02 27-Dec 19-Dec
February-02 29-Jan 22-Jan
March-02 26-Feb 19-Feb
April-02 26-Mar 19-Mar
May-02 26-Apr 19-Apr
June-02 29-May 22-May
July-02 26-Jun 19-Jun
August-02 29-Jul 22-Jul
September-02 28-Aug 21 -Aug
October-02 26-Sep 19-Sep
November-02 29-Oct 22-Oct
December-02 ▇▇-▇▇▇ ▇▇-▇▇▇
▇▇▇▇▇▇▇-▇▇ 27-Dec 19-Dec
February-03 29-Jan 22-Jan
March-03 26-Feb 19-Feb
April-03 27-Mar 20-Mar.
May-03 28-Apr 21-Apr
June-03 28-May 21-May
July-03 26-Jun 19-Jun
August-03 29-Jul 22-Jul
September-03 27-Aug 20-Aug
October-03 26-Sep 19-Sep
November-03 29-Oct 22-Oct
December-03 ▇▇-▇▇▇ ▇▇-▇▇▇
▇▇▇▇▇▇▇-▇▇ 29-Dec 19-Dec
February-04 28-Jan 21-Jan
March-04 25-Feb 18-Feb
April-04 29-Mar 22-Mar
May-04 28-Apr 21-Apr
June-04 27-May 20-May
July-04 28-Jun 21-Jun
August-04 28-Jul 21-Jul
September-04 27-Aug 20-Aug
October-04 28-Sep 21-Sep
1/ Dates are set by the New York Mercantile Exchange and therefore are subject to change.
2/ Baseload Gas Nominations are due five (5) business days prior to the Futures Closing Date
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT L
DAILY SWING GAS AND INTRADAY NOMINATION DEADLINES
SWING GAS
Gas Day Time 1/ Activity
1 by 8:30 a.m. Daily Swing Gas Nomination for Day 2 to DETM from Roanoke (GISB Cycle 1)
INTRADAY GAS
Gas Day Time 1/ Activity
1 by 4:00 p.m. Intraday Gas Nomination for Day 2 to DETM from Roanoke (GISB Cycle 2)
2 by 8:00 a.m. Intraday Gas Nomination for Day 2 to DETM from Roanoke (GISB Cycle 3)
2 by 2:00 p.m. Intraday Gas Nomination for Day 2 to DETM from Roanoke (GISB Cycle 4)
Note:
1 / All Times are Central Clock Time.
Any delivery change initiated by DETM shall be reported to Roanoke within 45 minutes.
DUKE ENERGY TRADING & MARKETING, L.L.C.
NATURAL GAS ASSET MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT M
SAMPLE DAILY BALANCING REPORT FOR COLUMBIA GAS (TCO) CITYGATE DELIVERIES*
Daily balancing for volumes within the Balancing Tolerance, as set
forth in Section 10.02(c)(iv) shall be "cashed out" as follows:
*Assumes the applicable storage ratchets are less than 5,000 MMBtu.
November-01
Roanoke Roanoke Roanoke Roanoke
Nov-01 Baseload Gas Storage Swing Gas Intra-day Total DETM Meter Daily Storage Swing
Requested Withdrawal Request Request Requested Nomination Actuals Imbalance Balance
143,634 GDD/CGAS/APP
1 10,000 4,788 5,000 - 19,788 19,788 21,323 (1,535) (1,535) $2.4500
2 10,000 4,788 7,000 - 21,788 21,788 21,500 288 (1,247) $2.4800
3 10,000 4,788 8,500 - 23,288 23,288 22,950 338 (909) $2.5500
4 10,000 4,788 7,000 - 21,788 21,788 19,875 1,913 1,004 $2.5700
5 10,000 4,788 5,000 1,000 20,788 20,788 22,000 (1,212) (208) $2.6500
6 10,000 4,788 3,500 - 18,288 18,288 19,000 (712) (920) $2.4500
7 10,000 4,788 1,000 - 15,788 15,788 14,570 1,218 298 $2.5000
8 10,000 4,788 - - 14,788 14,788 15,000 (212) 86 $2.5100
9 10,000 4,788 - - 14,788 14,788 15,000 (212) (126) $2.5100
10 10,000 4,788 - - 14,788 14,788 15,000 (212) (338) $2.5100
11 10,000 4,788 25,000 - 39,788 39,788 32,564 7,224 6,886 $2.5400
12 10,000 4,788 10,000 - 24,788 15,000 23,000 (8,000) (1,114) $2.4800
13 10,000 4,788 - - 14,788 - - - (1,114) $2.4400
14 10,000 4,788 - - 14,788 - - - (1,114) $2.4000
15 10,000 4,788 - - 14,788 - - - (1,114) $2.3800
16 10,000 4,788 - - 14,788 - - - (1,114) $2.3800
17 10,000 4,788 - - 14,788 - - - (1,114) $2.3800
18 10,000 4,788 - - 14,788 - - - (1,114) $2.4100
19 10,000 4,788 - - 14,788 - - - (1,114) $2.4500
20 10,000 4,788 - - 14,788 - - - (1,114) $2.5500
21 10,000 4,788 - - 14,788 - - - (1,114) $2.6000
22 10,000 4,788 - - 14,788 - - - (1,114) $2.7000
23 10,000 4,788 - - 14,788 - - - (1,114) $2.7000
24 10,000 4,788 - - 14,788 - - - (1,114) $2.7000
25 10,000 4,788 - - 14,788 - - - (1,114) $2.7500
26 10,000 4,788 - - 14,788 - - - (1,114) $2.7100
27 10,000 4,788 - - 14,788 - - - (1,114) $2.6800
28 10,000 4,788 - - 14,788 - - - (1,114) $2.6500
29 10,000 4,788 - - 14,788 - - - (1,114) $2.6100
30 10,000 4,788 - - 14,788 - - - (1,114) $2.6100
$2.6100
Totals 300,000 143,840 72,000 1,000 518,640 240,668 241,782
Long Imbalance (Actual Total Requested ) Short Imbalance (Actual > Total Requested)
Lessor Of Greater of Lesser Of 000 DETM Deal P-001 Greater of 000 DETM Deal S-001
Current Day Current Day ( $0.00) Purchase Purchase *(0.00) Sales Sales
vs. Next Day vs. Next Day Volume Value *(2.778% Fuel) Volume Value
$2.4500 $2.480 $2.4000 $0.00 $2.6000 1,535 $3,991.00
$2.4800 $2.550 $2.4300 285 ($690.64) $2.6700 - $0.00
$2.5500 $2.570 $2.5000 338 ($545.00) $2,6900 - $0.00
$2.5700 $2.650 $2.6200 1,913 $4,670.75 $2,7800 - $0.00
$2.4500 $2.650 $2.4000 $0.00 $2,7800 1,212 $3,369.36
$2.4500 $2.500 $2.4000 $0.00 $2,6200 712 $1,685.44
$2.5000 $2.510 $2.4500 1,218 $2,964.10 $2,6300 - $0.00
$2.5100 $2.510 $2.4500 $0.00 $2,6300 212 $557.56
$2.5100 $2.520 $2.4500 $0.00 $2,6300 212 $557.56
$2.5100 $2.540 $2.4800 $0.00 $2,6800 212 $563.92
$2.4800 $2.540 $2.4300 5,000 $12,160.00 $2.6600 - $0.00
$2.4400 $2.480 $2,3900 $0.00 $2.6000 5,000 $13,000.00
$2.4000 $2.440 $2,3500 $0.00 $2.5800 - $0.00
$2.3800 $2.400 $2,3300 $0.00 $2.5200 - $0.00
$2.3800 $2.380 $2,3300 $0.00 $2.5000 - $0.00
$2.3800 $2.380 $2,3300 $0.00 $2.5000 - $0.00
$2.3800 $2.410 $2,3300 $0.00 $2.5300 - $0.00
$2.4100 $2.450 $2,3600 $0.00 $2.5700 - $0.00
$2.4500 $2.550 $2,4000 $0.00 $2.5700 - $0.00
$2.5500 $2.600 $2,5000 $0.00 $2.7200 - $0.00
$2.6000 $2.700 $2,6500 $0.00 $2.8300 - $0.00
$2.7000 $2.700 $2,6500 $0.00 $2.8300 - $0.00
$2.7000 $2.700 $2,6500 $0.00 $2.8300 - $0.00
$2.7000 $2.750 $2,6500 $0.00 $2.8800 - $0.00
$2.7100 $2.750 $2,6500 $0.00 $2.8800 - $0.00
$2.6800 $2.710 $2,6600 $0.00 $2.8400 - $0.00
$2.6500 $2.680 $2,6300 $0.00 $2.8100 - $0.00
$2.6100 $2.650 $2,6000 $0.00 $2.7800 - $0.00
$2.6100 $2.610 $2,5600 $0.00 $2.7300 - $0.00
$2.6100 $2.610 $2,5600 $0.00 $2.7300 - $0.00
$2.6100 $2.610 $2,5600 $0.00 $2.7300 - $0.00
Total 8,757 $(21,499.70) 9,095 $ 23,904.84
Imbalance > 5.000
Market DETM (Purchase) Net
Price (Purchase) Sale (Purchase)
Sale Volume Value (Sales)
$0.0000 0 $0.00 $3,991.00
$0.0000 0 $0.00 ($ 699.84)
$0.0000 0 $0.00 ($ 545.00)
$0.0000 0 $0.00 ($4,820.76)
$0.0000 0 $0.00 ($3,369.36)
$0.0000 0 $0.00 ($1,565.44)
$0.0000 0 $0.00 ($2,984.10)
$0.0000 0 $0.00 $ 557.56
$0.0000 0 $0.00 $ 557.56
$0.0000 0 $0.00 $ 563.92
$2.3000 (2,224) ($5,115.20) ($17,265.20)
$2.3000 3,000 $7,950.00 $20,950.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
$0.0000 0 $0.00 $0.00
Total 778 $2,834.80 $ 5,239.94
EXHIBIT N
TRIGGER PRICE ADDENDUM ("ADDENDUM")
ATTACHED TO AND MADE PART OF DUKE ENERGY TRADING AND
MARKETING, L.L.C.'S
GAS PURCHASE AND SALE AGREEMENT
This Addendum may be attached to, or used in connection with, a standard Duke
Energy Trading and Marketing, L.L.C. ("DETM") form of natural gas purchase and
sale agreement or any other agreement for the purchase and sale of natural gas
entered into by the Parties (the "Agreement"). The purpose of this Addendum is
to set forth the methodology and special terms and conditions for pricing gas
purchased or sold pursuant to the Agreement by reference to the following
pricing mechanisms:
1 Exchange Price. This is the Price for any specified
delivery month(s) as established by trading of natural
gas futures contracts on the New York Mercantile
Exchange ("NYMEX"), Kansas City Board of Trade
("KCBOT") or other commodities exchange as designated
in the Agreement, covering such delivery month(s) for
the ▇▇▇▇▇ Hub, Permian Basin, Alberta, Waha or other
delivery location for which gas futures contracts are
traded.
2. Settlement Exchange Price. This is the final
Settlement Price as established by the NYMEX or other
applicable Exchange upon expiration of trading for
the applicable delivery month(s).
3. Index Price. This is the Price reported by Inside
F.E.R.C.'s Gas Market Report for the period of
delivery, or in another publication reporting current
gas sales which the Parties may specify, for the
delivery location which the Parties specify, or which
is most proximate to the Delivery Point(s) or most
applicable to the Price of gas delivered at the
Delivery Point(s), for the period(s) of delivery.
4. Basis Difference. This is the difference which may
exist for any period between the Exchange Price and
the Index Price.
The Parties acknowledge that the Exchange Price and Index Price vary based upon
market conditions. Under the terms of this Addendum the Parties may agree to
price certain quantities of gas to be delivered in the future under this
Agreement by fixing, or "locking in", either or both, of the Exchange Price and
the Basis Difference. If the Parties do not fix or "lock in" either the Exchange
Price or the Basis Difference, then that pricing factor shall continue to vary
with market conditions and shall be referred to as "Floating". In light of this
background, the Price for a specified quantity of gas for specified delivery
period(s) may be priced by agreement of the Parties according to any one of
three formulas which are as follows:
1. Fix Exchange Price and Basis Difference:
Price = Agreed Exchange Price + Agreed Basis Difference
Page 1 of 2
2. Fix Exchange Price but not Basis Difference:
Price = Agreed Exchange Price + Floating Basis
Difference
3. Fix Basis Difference but not Exchange Price:
Price = Settlement Exchange Price + Agreed Basis
Difference
Note that the Basis Difference may be a positive or negative value depending
upon market conditions. If the Parties reach an agreement to Price gas under the
Agreement according to any of the three formulas set forth above, it shall be
known as "Trigger Price Gas". The agreed upon Trigger Price shall be confirmed
between the Parties under the terms and conditions of the Agreement.
At its election, the DETM Counterparty (whether Buyer or Seller) may seek to
establish a Trigger Price for any quantity of gas, delivery period(s) and
Delivery Point(s). The Parties must agree to any Trigger Price at least two (2)
hours before the close of trading for the applicable NYMEX, KCBOT or other
exchange gas futures contract. Failing such timely agreement between the
Parties, the contract Price for such gas shall be as set forth in the Agreement.
Any quantity of Trigger Price Gas shall be fully delivered during the designated
delivery period at the designated Delivery Point(s) on a firm basis without any
interruption. The first volume of gas which is delivered to, or received from,
DETM at any Delivery Point(s) shall be deemed Trigger Price Gas until the
quantity as agreed for any particular Delivery Point(s) for the specified
delivery period has been fully delivered or received. Any quantity delivered or
received in excess of the specified quantity for that Delivery Point(s) for the
specified delivery period shall be delivered or received at the Price, and up to
the quantity limitations, set forth in the Agreement.
The Parties acknowledge that a hedge position is a financial transaction which
requires liquidation if physical delivery or receipt of the Trigger Price Gas is
interrupted for any reason (including without limitation force majeure). Such
interruption may require liquidation of the entire position, which may not be
partially liquidated to accommodate only the duration, or anticipated duration,
of the interruption. In the event any hedge position is undertaken by DETM in
reliance upon an agreed Trigger Price, and delivery of the Trigger Price Gas is
interrupted for any reason, including without limitation force majeure, then the
Counterparty shall be liable to DETM for any loss incurred by DETM in
liquidating such hedge position in a commercially reasonable manner. A loss is
incurred when all costs of undertaking the position exceed the net liquidation
proceeds. In the event such liquidation yields a profit (i.e. net liquidation
proceeds exceed all costs of undertaking the position), then the Counterparty
shall be paid or credited with such profit. DETM, in the exercise of its sole
discretion, shall determine:(i) whether the anticipated or estimated duration of
the interruption justifies liquidation of the entire hedge position, and (ii)
whether the affected hedge position may be feasibly or economically liquidated
in part only. The decision of DETM with regard to such matters shall be
controlling.
In the event of any conflict or inconsistency between the terms and conditions
of the Agreement and those stated in this Addendum, this Addendum shall be
controlling as to any issues relating to Trigger Price Gas.
Page 2 of 2
EXHIBIT O
GUARANTY
Guaranty, dated as of Nov. 1, 2001 by RGC Resources, Inc. a, Virginia
Corporation (the "Guarantor"), in favor of Duke Energy Trading and Marketing,
L.L.C., ("Beneficiary").
1. GUARANTY. In consideration of the Beneficiary entering into
financial derivative transactions which may or may not be governed by an ISDA
Master Agreement with Roanoke Gas Company ("RGC") and the Natural Gas Asset
Management Agreement dated Nov. 1, 2001 by and between RGC, an affiliate of the
Guarantor and the Beneficiary, and the Natural Gas Asset Management Agreement
dated Nov. 1, 2001 by and between the Beneficiary and Bluefield Gas Company
("BCG"), an affiliate of the Guarantor (RGC and BGC referred to herein
collectively as the "Debtor") and financial derivative transactions, which may
or may not be governed by an ISDA Master Agreement with BCG (all such agreements
collectively referred to herein as the "Master Agreement"), the Guarantor
irrevocably and unconditionally guarantees to Beneficiary, its successors and
assigns, the prompt payment when due, subject to any applicable grace period, of
all of Debtor's present and future obligations and liabilities of all kinds to
Beneficiary arising out of the Master Agreement (the "Obligations"). Guarantor
acknowledges that it will benefit directly or indirectly from the transactions
to be entered into between the Beneficiary and Debtor.
2. NATURE OF GUARANTY. This Guaranty constitutes a guarantee of
payment when due and not of collection. In the event that any payment of Debtor
in respect of any Obligations is rescinded or must otherwise be returned for any
reason whatsoever, the Guarantor shall remain liable hereunder in respect to
such Obligations as if such payment had not been made. This Guaranty shall
continue to be effective if Debtor merges or consolidates with or into another
entity, loses its separate legal identity or ceases to exist. GUARANTOR SHALL
NOT BE REQUIRED TO PAY SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, CONSEQUENTIAL
OR INDIRECT DAMAGES (WHETHER OR NOT ARISING FROM A PARTY'S NEGLIGENCE) TO
BENEFICIARY, EXCEPT TO THE EXTENT THAT THE PAYMENTS REQUIRED TO BE MADE PURSUANT
TO THE OBLIGATIONS UNDER THE MASTER AGREEMENT ARE DEEMED TO BE SUCH DAMAGES. IF
AND TO THE EXTENT ANY PAYMENT MADE PURSUANT TO THE OBLIGATIONS UNDER THE MASTER
AGREEMENT IS DEEMED TO CONSTITUTE LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGE
AND AGREE THAT DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE AND THAT SUCH
PAYMENT CONSTITUTES A REASONABLE APPROXIMATION OF THE AMOUNT OF SUCH DAMAGES,
AND NOT A PENALTY.
3. CONSENTS, WAIVERS AND RENEWALS. Guarantor agrees that Beneficiary
may, at any time and from time to time, without notice to or consent of the
Guarantor and without impairing or releasing the obligations of the Guarantor
hereunder: (1) make any change in the terms of any Obligation or liability of
Debtor to Beneficiary, (2) take or fall to take any action of any kind in
respect of any security for any Obligation or liability of Debtor to
Beneficiary, (3) exercise or refrain from exercising any rights against Debtor
or others, or (4) compromise or subordinate any Obligation or liability of
Debtor to Beneficiary including any security therefore.
4. EXPENSES. The Guarantor agrees to pay on demand all out-of-pocket
expenses
(including the reasonable fees and expenses of Beneficiary's counsel) in any way
relating to the enforcement or protection of the rights of Beneficiary
hereunder; provided, that the Guarantor shall not be liable for any expenses of
Beneficiary if no payment under this Guaranty is due.
5. SUBROGATION. The Guarantor will not exercise any rights which it
may acquire by way of subrogation until all the Obligations to Beneficiary shall
have been paid in full. Subject to the foregoing, upon payment of all the
Obligations, the Guarantor shall be subrogated to the rights of Beneficiary
against Debtor, and Beneficiary agrees to take such steps as the Guarantor may
reasonably request, at the Guarantor's expense, to implement such subrogation.
6. SETOFFS AND COUNTERCLAIMS. Guarantor reserves to itself all rights,
counterclaims and other defenses which Debtor is or may be entitled to arising
from or out of the Master Agreement, except for defenses arising out of the
bankruptcy, insolvency, dissolution or liquidation of Debtor, the power or
authority of Beneficiary to enter into the Master Agreement, and to perform its
Obligations thereunder, and the lack of validity or enforceability of Debtor's
Obligations under the Master Agreement or any transaction thereunder.
7. NO WAIVER; CUMULATIVE RIGHTS. No failure or delay on the part of
Beneficiary to exercise, and no delay in exercising, any night, remedy or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by Beneficiary of any right, remedy or power hereunder preclude any
other or future exercise of any right, remedy or power. Each and every right,
remedy and power hereby granted to Beneficiary or allowed it by law or other
agreement shall be cumulative and not exclusive of any other, and may be
exercised by Beneficiary from time to time.
8. WAIVER OF NOTICE. The Guarantor waives notice of the acceptance of
this Guaranty presentment, demand, notice of dishonor, protest, notice of any
sale of collateral security and all other notices whatsoever.
9. REPRESENTATION AND WARRANTIES.
(a) The Guarantor is duly organized validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
full corporate power to execute, deliver and perform this Guaranty.
(b) The execution, delivery and performance of this Guaranty
have been and remain duly authorized by all necessary corporate action and do
not contravene any provision of law or of the Guarantor's constitutional
documents or any contractual restriction binding on the Guarantor or its assets.
(c) This Guaranty constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms, subject to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
10. ASSIGNMENT; NON-RECOURSE. Neither the Guarantor nor the
Beneficiary may assign its rights, interest or obligations hereunder to any
other person without the prior written consent of the Guarantor or the
Beneficiary, as the case may be, and any purported assignment absent such
consent is void; provided however; that Beneficiary may assign its rights
hereunder to any transferee of the Master Agreement without the consent of, but
with notice to, the Guarantor, and Guarantor may assign and delegate all of
Guarantor's rights and obligations
hereunder, in whatever form the Guarantor deems appropriate, to a partnership,
corporation, trust or other organization in whatever form that succeeds to all
or substantially all of the Guarantor's assets and business and that assumes
such obligations by contract, operation of law or otherwise. Upon any such
delegation and assumption of obligations, the Guarantor shall be relieved of and
fully discharged from all obligations hereunder, whether such obligations arose
before or after such delegation and assumption. The obligations of the Guarantor
under this Guaranty shall be without recourse to any shareholder(s), controlling
entity(ies) or person(s) of Guarantor or any successor to any thereof, and no
such shareholder(s), controlling entity(ies) or person(s) shall have any
liability with respect thereto.
11. NOTICES. All notices or other communications to the Guarantor
shall be in writing and shall be given in the same manner and with the same
effect as set forth in the Master Agreement. The Guarantor's address for notices
is as follows:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or such other address as the Guarantor shall from time to time specify to
Beneficiary.
12. TERMINATION. This is a continuing Guaranty of all present and
future Obligations of DEBTOR to the Beneficiary. Guarantor may terminate this
Guaranty at any time upon written notice to Beneficiary, which termination shall
become effective on the eleventh (11th) day after the date of receipt by the
Beneficiary of such notice. Notwithstanding the foregoing, this Guaranty shall
continue to apply to all Obligations of DEBTOR to the Beneficiary pursuant to
the Master Agreement entered into before the effective date of termination.
13. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO CHOICE OF LAW DOCTRINE. GUARANTOR AND BENEFICIARY JOINTLY AND SEVERALLY AGREE
TO THE NON-EXCLUSIVE JURISDICTION OF COURTS LOCATED IN THE STATE OF NEW YORK,
U.S.A. OVER ANY DISPUTES ARISING OR RELATING TO THIS GUARANTY.
14. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OBLIGATIONS ARISING UNDER THE
MASTER AGREEMENT.
IN WITNESS WHEREOF, the Guarantor has caused its duly authorized
officer to execute and deliver this Guaranty as of the date first above written.
The Guaranty becomes effective concurrent with the effective date of the Master
Agreement according to its terms.
RGC RESOURCES, INC.
By: s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III
Title: President & CEO
EXHIBIT P
EXHIBIT A
FOR IMMEDIATE DELIVERY
IMPORTANT TIME SENSITIVE DOCUMENT
NATURAL GAS PURCHASE CONFIRMATION NOTICE
----------------------------------------
(Date)
DUKE ENERGY TRADING AND MARKETING, L.L.C.
DUKE ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ENERGY Contract Administration: Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇ MOBIL
Deal ID: Title ID:
This Confirmation Notice confirms the verbal agreement reached between
representatives of the Buyer and Seller identified herein and confirms a
transaction pursuant to the Agreement dated .
Buyer: Seller:
Attn: Contract #: Attn: Contract #:
Phone: Fax: Phone: Fax:
SERVICE LEVEL: I
Qty/Day Price
Meter Description Beg End MMBTU SMMBTU
PIPELINE:
If this description is contrary to our verbal agreement, notify DETM by clearly
marking any such discrepancy(ies) directly on this Confirmation Notice and
delivering to DETM Contract Administration via facsimile, telecopy or electronic
transmission by the close of the second business day following your receipt. As
soon as reasonably practical thereafter, please verbally notify either the DETM
Marketing Department or Contract Administration that such written notice has
been rendered. Your failure to notify DETM of of any such contrary understanding
by such time constitutes your confirmation of the transaction as described
above.
PLEASE BE ADVISED THAT THE DETM COMPANY LOGO
SHALL ACT AS OUR SIGNATURE IN ACCORDANCE
WITH THE PROVISIONS OF THE UNIFORM
COMMERCIAL CODE.
DUKE ENERGY TRADING AND MARKETING, L.L.C.
NATURAL GAS MANAGEMENT AGREEMENT (11/01/01)
ROANOKE GAS COMPANY
EXHIBIT Q
CITY GATE OPERATIONAL REQUIREMENTS
RGC:
In DTH/day. Volumes include transport customer activity.
C = limited by Columbia needs. E = limited by East Tenn. needs.
1 No LNG liquefaction
2 With LNG liquefaction
4 These numbers are theoretical maximums in excess of the TFE and in no way imply such a
volume would be available from the delivering pipeline.
NOTE: LNG INJECTION (LIQUEFACTION) VOLUMES SUPPLIED EXCLUSIVELY FROM TCO.
Min Max
Volume Volume
Summer (Apr-Oct)
ETN 2500 C
TCO 1 5000 E
TCO 2 6500 E
Winter (Nov-Mar)
ETN
EDD < 10 7000 C
10 < EDD < 19 8000 15000 4
20 < EDD < 24 10000 20000 4
25 < EDD < 29 11000 25000 4
30 < EDD < 34 13000 30000 4
35 < EDD < 39 14000 35000 4
EDD > 40 15200 40000 4
TCO
EDD < 10 7000 75000 4
11 < EDD < 25 15000 75000 4
EDD > 26 20000 75000 4
BGC:
C = limited by Columbia needs. B = limited by Bluefield Pipeline needs.
3 Average daily volume, may be higher or lower any given day.
Min Max
Volume Volume
Summer (Apr-Oct)
BPC 3 300 600
TCO 5000 B
Winter (Nov-Mar)
BPC 3 750 1250
TCO 5000 E
Note: Higher or lower volumes could be allowed from time to time depending on operating conditions.
Example: On a summer day, the expected demand is 15,000 Dth. The transporters are delivering
▇▇▇▇ ▇▇▇ on ETN and 1500 Dth on TCO. There is no liquefaction at the LNG facility. The
manager would need to deliver at least 3,500 Dth on TCO and the rest on ETN.