ASSENT TO PHASE III SETTLEMENT
if
.
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ASSENT TO PHASE ill SETILEMENT
The undersigned Phase III Shipper hereby agrees to the terms and conditions of the Phase
III Settlement and agrees to support such settlement through the approval process. For purposes
hereof, the "Phase III Settlement" shall mean the August 25, 1992 "Stipulation and Agreement"
circulated by Florida Gas Transmission Company (FGT).
BY:
TITLE: Managing Director & Executive Officer
APPROVED BY THE CITY COMMISSION OF THE CITY OF CLEARWATER, FLORIDA
Countersigne-?:
CITY OF CLEARWATER, FLORIDA
Rita Garvey
Mayor-Commissioner
Approved as to form
and correctness:
Attest:
-'
\~z.I1..~,~._
Cy la E. Goudeau
City Clerk
Date: IO)2-2-J'1-z.-
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UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Florida Gas Transmission
Company
)
)
Docket Nos. CP92-182-000 and
CP92-182-001
STIPULATION AND AGREEMENT
Florida Gas Transmission Company ("FGT") and certain parties
that have agreed to join in this Offer of Settlement ("Signatory
Parties"), pursuant to Rule 602 of the Federal Energy Regulatory
Commission ("Commission") Rules of Practice and Procedure, 18
C.F.R. Part 385.602 (1992), submit for the approval of the
Commission this Stipulation and Agreement ("Settlement") to settle
the non-environmental issues raised by the captioned proceeding
upon the terms, conditions and provisions set forth below. It is
the intent of the Signatory Parties and FGT that by resolving
issues through this Settlement pertaining to rate design, cost
allocation, supply area capacity, allocation of receipt point
capacity, and terms and conditions of firm transportation service
under proposed FTS-2 Rate Schedule to be rendered through FGT' s
proposed pipeline expansion ("Phase III Expansion"), the Commission
will issue an order approving the Settlement which will constitute
a preliminary determination on non-environmental issues. A
Commission order resolving non-environmental issues will provide
both FGT and its Phase III customers with certainty on important
issues. Prompt resolution of such issues will demonstrate to FGT's
.cbICP92.182.S&A
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Phase III customers the significant progress and certainty of the
Phase III Expansion necessary in order to finance certain
customers' individual electric generation projects. In addition,
such resolution will allow FGT to embark upon financing related
activities and the option to commence other preconstruct ion
activities, such as ordering of pipe, compression and other
materials, that may be essential for FGT to meet the time sensitive
demand of the electric generation market in Florida, which dictates
an in-service date for the Phase III Expansion occur no later than
fourth quarter of 1994.
ARTICLE I
PRELIMINARY DETERMINATION
1. The Commission's order on this Settlement shall
constitute the Commission's preliminary determination in Docket
Nos. CP92-182-000 and CP92-182-001 that issuance of a certificate
of public convenience and necessity authorizing the construction
and operation of the proposed facilities described in such
proceedings, as modified herein ("Phase III Facilities"), on the
basis of all non-environmental issues, would be in the public
convenience and necessity.
As a result of ongoing negotiations
with the Phase III customers, FGT and the Signatory Parties have
d~termined that the Phase III supply area facility design reflected
in the April 15, 1992 amendment to the certificate application in
this docket ("April 15 amendment") requires slight modification to
1cb\CPV2-182.S6.A
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provide greater access to supply sources in Louisiana, thus_
enhancing supply flexibility and security for the Phase III
Expansion.
Accordingly, attached as Volumes I and II of this
stipulation and Agreement are revised Exhibits F, F-I, F-IV, G, G-
I, G-II, I, K, L, N, 0, and P which have been modified from the
April 15 amendment to show changes resulting from the revised
supply area design. Also included in Volume I of this Stipulation
and Agreement at Exhibit Z-l is a comparison of the facilities
included in the April 15 amendment and the facilities included in
the above-referenced revised exhibits. Volumes I and II and the
revised Exhibits therein are incorporated into the Settlement and
shall constitute the revised exhibits required by sections 157.6,
157.14 and 157.18 of the Commission's regulations to amend FGT's
application, as amended, in this docket to reflect such facility
modifications.
Subsequent issuance of a certificate of public convenience and
necessity authorizing the construction and operation of the Phase
III Expansion shall be subject to the Commission's completion of
the environmental review currently being conducted which addresses
all environmental matters raised by the application in accordance
with the National Environmental Policy Act ("NEPA") and Section
7(c) of the Natural Gas Act ("NGA").
;
~
The preliminary determination in this proceeding shall
constitute a determination on non-environmental issues that will
not be altered in the order issuing a certificate in this
. tcblCI'92'182.S&A
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Commission order approving this Settlement shall constitute any and
all waivers necessary to permit the arrangement with Southern to
commence on the in-service date of the Phase III Expansion. For
the purposes of this Settlement, the "in-service date of the Phase
III Expansion" shall be deemed to be the first day of the first
month following the date on which FGT notifies the Commission in
writing that the Phase III Facilities are in service.
4. The Commission's order approving this Settlement shall
constitute its preliminary determination that the specific contract
provisions set forth in the April 15, 1992 amendment, as described
more fully at Tab 2 of this Stipulation and Agreement, are in the
public convenience and necessity. Such order approving the
Settlement shall constitute any and all waivers necessary to
implement the specific contract provisions.
5. FGT shall retain the option to construct portions of the
Phase III Facilities, such as branchlines, taps, interconnects, or
meters pursuant to authority under its blanket construction
certificate issued pursuant to 18 C.F.R. S 157.201 (Subpart F) in
Docket No. CP82-553-000 to meet the potential need of some
customers to receive^service prior to the projected in-service date
of all of the Phase III Facilities. As such situations may arise,
FGT shall notify the Commission and the parties in Docket No. CP92-
182, et al., that such facilities are being constructed under
separate blanket certificate authorization. Such notification
shall outline in detail the authorization sought in Docket No.
rcb\CP92.182.Slr.A
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CP9.2-182, et al., that would be no longer required if blanket
construction authorization is obtained. Notwithstanding any other
provision of this paragraph, however, all Phase III Facilities
described in the revised Exhibits contained in Volumes I and II
hereof shall be included in the Phase III cost-of-service described
in Article III below.
II.
NEGOTIATED ALLOCATION OF RISK AMONG FGT AND THE SIGNATORY PARTIES
In consideration of the Signatory Parties' agreement to
support the rate terms, conditions and methodology set forth in
Article III of this Settlement for a period commencing with the
date of this Settlement and ending five (5) years after the in-
service date of the Phase III Expansion ("Effective Period of the
Settlement"), subject to the exceptions set forth herein, and to
forego any pre-existing termination rights in their FTS-2 Service
Agreements, except as relate to receipt of regulatory approval on
or before December 31, 1993, FGT agrees to provide certain rate
protections to the Signatory Parties which include (i) the
acceptance of
an "at-risk" condition under the terms and
conditions set forth in Article IV of this Settlement; (ii)
agreement to seek regulatory approval to roll subsequent expansions
of the Phase III Facilities into the Phase III cost-of-service
under the terms and conditions set forth in Article V of this
Settlement; and (iii) to provide certain Signatory Parties with
ICb\CPV3'" 82.5&4
6
3:48pm I: 6/18/92
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Rate Caps as set forth in Article VI of this Settlement. The
Signatory Parties and FGT agree that this Article II is an
essential element of this Settlement which, except as provided
otherwise herein, shall survive~?uring the Effective Period of the
Settlement and which represents a negotiated allocation of the risk
of the Phase III Expansion among FGT as the project sponsor and
certain of the Signatory Parties as the beneficiaries of the
project.
The Signatory Parties and FGT agree that the agreement under
this Article II may be modified as follows:
1. In the event that the Commission modifies this Settlement
such that it is unacceptable to FGT in the exercise of its good
faith judgment, absent subsequent mutual agreement between FGT and
a Signatory Party that is a Phase III shipper ("Phase III
Shipper"), upon FGT's written notification that it finds such order
unacceptable, this Settlement shall be deemed withdrawn, and the
terms and conditions of the Phase III Shipper's original FTS-2
Service Agreement and any related agreements between the Phase III
Shipper and FGT, including any pre-existing termination rights,
would remain in effect as they were prior to the filing of this
Settlement.
In the event the Commission in approving this
Settlement mOdifiesAthis Settlement in a manner unacceptable to a
Phase III Shipper in the exercise of its good faith judgment, then
upon written notice to FGT within twenty (20) days of such
Commission order, a Phase III Shipper may elect to withdraw from
"b\CP92.182.s&A
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this Settlement and such Shipper's original FTS-2 Service Agreement
and any related agreement, including any pre-existing termination
rights, between such Shipper and FGT that existed prior to the
filing of this Settlement would remain in effect.
2. If FGT makes a section 4 filing to modify the rate terms
and conditions established in Article III of this settlementY1the
Signatory Parties' obligation during the Effective Period of the
Settlement to support the specific rate term or condition which FGT
files to change shall terminate effective with FGT's filing to
change such rate term or condition.
Notwithstanding the foregoing, FGT may elect to adjust the
depreciation schedule: (a) in order to accommodate changes to the
rates caused by Federal or State tax rate changes, as described
below, (b) upon filing a Section 4 rate proceeding to recover costs
of capital expenditures, including subsequent expansions, or (c) in
the first section 4 rate proceeding after the Phase III Facilities
are in-service in the event that actual construction costs are
greater than or less than estimated costs~provided, however, that
in the event FGT files to adjust the depreciation schedule under
(c) above under the following circumstances,
(i)
the
Commission
has
approved
Article
III
of
this
~~
\'1
Settlement without modification, and
(ii) the actual capital costs of the Phase III Expansion are
l
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less than the estimated capital costs shown in Volume I,
Exhibit K, hereto,
tcb\CP92-182.S6.A
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then FGT may not, through its adjustment to the depreciation
schedule proposed in such filing, file to increase the one hundred
percent (100%) load factor rate applicable under Rate Schedule FTS-
2 by more than fifty percent (50%) of the difference between the
~.)
~
rate that would have obtained (assuming the use of the rate
methodology, terms and conditions set forth in Article III at the
depreciation rates set forth in Volume I, Exhibit 0, hereto) and a
. .
one hundred percent (100%) load factor rate of $0.80.
With the
exception of the adjustments permitted in (a), (b), and (c) above,
FGT agrees not to file~to adjust the depreciation schedule merely
to accelerate depreciation to raise a rate which otherwise would be
lower absent such change in depreciation.
~ 3.-" The Rate Caps elected by each Phase III Shipper will be
incorporated in an amendment to its FTS~2 Service Agreement that
will be executed within sixty (60) days of FGT's acceptance of an
order approving this Settlement, or if acceptance of such order is
not required by the Commission's regulations, within sixty (60)
days of FGT's written notification to the Phase III Shipper that
the order approving this Settlement is satisfactory to FGT. Such
amendments shall also provide for the deletion of any pre-existing
termination rights of the Phase III Shipper under its FTS-2 Service
Agreement or any related agreements between FGT and such Shipper,
with the exception of such Shipper's right to terminate in the
event that all necessary regulatory approvals are not received on
or before December 31, 1993. In the event the Commission's order
ICIr\CP92.' 82.54"
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approving this Settlement mOdifies)\ this Settlement in a manner
unacceptable to a Phase III Shipper in the exercise of its good
faith judgment, then such Shipper shall notify FGT in writing of
any election to withdraw from the Settlement within twenty (20)
days of such order.
ARTICLE III
RATE TREATMENT AND COST ALLOCATION
The Commission's order approving this Settlement and its order
issuing a certificate of pUblic convenience and necessity shall
constitute approval of the Initial Rates, as described below and
more fully set forth in Volume I, Exhibit P hereto. The Commission
order also shall constitute approval of the rate design methodology
and cost allocation methodologies underlying the Initial Rates, as
described below and more fully set forth in Volume I, Exhibit P
hereto.
The Signatory Parties to the Settlement and FGT understand and
acknowledge that neither the Commission nor its Staff can be bound
by this Settlement with respect to the rate design and cost
allocation methodologies set forth below in designing future rates
to be charged for service pursuant to Rate Schedule FTS-2.
However, except as provided otherwise herein and in Article II
above, it is the intent of the Signatory Parties to this Settlement
that the rate design methodologies and cost allocation principles
remain in effect for the
Effective Period of the Settlement.
tcb\CP92.1 82 .54A
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Accordingly, the Signatory Parties _ to this Settlement agree to
support the continued use of the design methodologies set forth
below during the Effective Period of the Settlement in any
proceeding before the Commission addressing rates for FTS-2
service, subject to the modifications and exceptions contemplated
herein and in Article II above; provided, however, that no
provision of Article II or III of this Settlement shall affect in
any way a Signatory Party's right under Section 4 or 5 of the NGA
to challenge the level or prudence of costs included in the Phase
III cost-of-service; to challenge whether such costs are properly
included in the base or test periods used to set rates; or preclude
the exercise of any other right a Signatory Party may have under
Section..4 or 5 of the NGA not specifically addressed in this
Settlement.
1.
Initial Rates.
Volume I, Exhibit P, attached hereto,
sets forth the-Initia~ates for service under Rate Schedule FTS-2
based on the projected incremental overall cost of service, billing
demand units and commodity volumes and based upon the rate design
described below.
The rate applicable to service under Rate Schedule FTS-2 will
be a two-part rate consisting of a reservation charge and a
commodity rate.
The proposed Initial Rates on an MMBtu basis,
exclusive of surcharges and fuel, are as follows:
Reservation Charqe
Commodity Rate
$0.7488
$0.0371
,cb\CP02.1 82 .SA"
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Under the t~o-tier approach to the levelized rate methodology
contemplated by this Settlement and more fully set forth in Volume
I, Exhibit P, the above rates are Initial Rates to be charged for
years 1 to 15. For years 16 to 25, illustrative rates on an MMBtu
basis, exclusive of surcharges and fuel, would be:
Reservation Charqe Commodity Rate
$0.5828
$0.0371
The Commission's order approving this Settlement and the order
issuing a certificate of public convenience and necessity shall
expressly grant FGT authority to charge such Initial Rates until
the rates for service under Rate Schedule FTS-2 are changed
prospectively pursuant to section 4 or Section 5 of the NGA;
provided, however, that FGT agrees to file a general rate
proceeding under Section 4 of the NGA no later than eighteen (18)
months after the in-service date of the Phase III Facilities; and
provided, further, that nothing contained herein shall limit FGT's
right to file a Section 4 proceeding at any earlier date.
2. Rate Desiqn Methodoloqy. The following rate design
methodology shall be utilized in designing Initial Rates for
service under Rate Schedule FTS-2. Except as provided otherwise
herein, the Signatory Parties shall support utilization of such
rate design for the Effective Period of the Settlement.
a) Incremental Rate Desiqn. Rates for service
through the Phase III Expansion shall be
designed on an incremental basis.
tcb\CP92.182.S&A
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b)
Incremental Cost of Service.
An incremental
cost-of-service for the Phase III Expansion,
including a separate capital structure, will
be utilized to derive FTS-2 rates.
Capital
costs associated with the existing system will
not be allocated to the Phase III cost-of-
service and, with the exception described in
paragraph 3(a) below, capital costs associated
with the Phase III Expansion will not be
allocated to the cost-of-service of the
existing system; Phase III property additions,
associated depreciation expense and reserve
will be maintained as part of the Phase III
cost-of-service and separately recorded on
FGT's books; and FGT's undivided interest in
the Mobile Bay Pipeline, as expanded pursuant
to the request for authorizations included in
I
L Docket No. CP92-415-000, and the associated
costs and expenses, and the costs associated
with FGT's firm transportation agreement with
Southern shall be exclusively recorded as part
of the Phase III cost-of-service.
Levelized Rate Methodoloqy.
So long as the
FTS-2 rates are designed on an incremental
basis,
they shall be designed using a
13
teb\CP92.182.S&A
I
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levelized rate methodology to derive the
incremental rates for a 25-year term
commencing on the in-service date of the Phase
III Expansion. Under such levelized rate
methodology, the incremental rates for service
under Rate Schedule FTS-2 will be designed by
adjusting the annual depreciation expense such
that it results in a levelized annual cost of
service. In designing the FTS-2 rates, a 25-
year depreciation life for the Phase III
Expansion facilities will be used. However,
during the Effective Period of the Settlement,
FGT may elect to adjust the depreciation
schedule: (i) in order to accommodate changes
to the Rate Caps caused by Federal or State
tax rate changes, as described in Article VI
below, (ii) upon filing a Section 4 rate
proceeding to recover costs of capital
expenditures including subsequent expansions,
or (iii) in the first Section 4 rate
proceeding after the Phase III Facilities are
in-service in the event that actual
construction costs are greater than or less
than estimated costs. FGT shall agree not to
file during the Effective Period of the
14
J:4I8pm ~l 8118'92
.. .~j~'.e.'.~",*~~~~' .~.
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Settlement to adjust the depreciation schedule
merely to accelerate depreciation to raise a
rate which otherwise would be lower absent
such change in depreciation.
The annual depreciation rates set forth in
Volume I, Exhibit 0 hereto, shall be utilized
in designing Initial Rates, and are
illustrative of the annual depreciation rates
to be utilized over the 25-year depreciable
life used in designing rates, assuming that
the actual construction costs of the Phase III
Facilities approximate the costs set forth in
Volume I, Exhibit K hereto.
Notwithstanding any other provision of this
Settlement, each Phase III Shippers has agreed
pursuant to the terms of its FTS-2 Service
Agreement to support during the term thereof a
methodology which results in a levelized rate for
the Phase III Facilities.
d) Straiqht Fixed-Variable Rate Desiqn.
Consistent with Order No. 636, the FTS-2 rates
shall be designed using the straight-fixed-
variable ("SFV") method of classifying and
allocating costs. All fixed costs associated
with the Phase III Expansion, including return
Icb\CP92.182.S6A
15
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e)
and associated taxes,_are to be classified to
the reservation charge, with only variable
costs allocated to the commodity rate.
Return on Equity. The return on equity
("ROE") of the project shall be 14.0 percent;
provided, however, that in the event FGT files
to increase the equity component of its
capitalization above thirty-six percent (36%),
the Signatory Parties may advocate a ROE below
14.0 percent.
Cost Allocation.
0~~
3.
In addition to the determination on the
rate design methodology, the Commission's order approving this
Settlement and the order issuing a certificate of public
convenience and necessity shall approve the cost allocation
methodologies set forth below.
a) Rehabilitation Costs. In the first Section 4
rate proceeding following the issuance of a
certificate of public convenience and
necessity, FGT will propose, and the other
Signatory Parties hereto will support, the
allocation of not more than $23.5 million
(inclusive of AFUDC and contingencies) to the
cost-of-service underlying FGT's existing
services. Such amount reflects the cost of
tcb\Cf"92.182.Sl.A
16
4.34prn II 8/18/92
~;/~~,~~~~;:;z!:~~~~:~(;,{:~~~~;;.e~~Uf;~~~~;~_:~~~~~'~~;~t~~~~:'~~~~~;~~:r~~:~~./~~::~:'~~D~.!_~~7-~'!,.\;~11~~-;f+~:~;~';1.~;~*;:5~~Ti.~~~?.~~tf'.!.~~~.f1~~~::~;,'
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I
I
rehabilitating the existing pipeline systemli
that will be avoided due to the construction
of Phase III Facilities, and such allocation
shall represent the exclusive method by which
such costs will be recovered from existing
customers.
b)
Allocation of Expenses.
Operating and
Maintenance ("O&M") and Administrative and
General ("A&G") expenses shall be allocated
between the existing system cost-of-service
and the Phase III cost-of-service in the
manner set forth in Tab 3 hereto. Except as
provided in Article II, the Signatory Parties
will not contest or propose alternatives to
such
allocation
methodologies
for
the
Effective Period of the Settlement.
c)
Interruptible Service.
In the design of
ini tial rates, no portion of the Phase III
cost-of-serviceAhas yet been allocated to any
interruptible service. FGT and the Signatory
Parties agree that the issues of cost
allocation to interruptible services and
liThe rehabilitation work consists of replacement of
approximately 66 miles of 24 inch pipe between: Mile Post (MP) 64.8
and MP76.8; MP128.8 to MP143.8; MP190.8 to MP194.6; MP195 to MP202;
MP260.2 to MP273.5; and MP324.5 to MP340.2.
t4;b\CP92.182.S&A
17
4:35pm II 8/181112
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I
interruptible
revenue
sharing
shall
be
addressed in FGT's Order No. 636 restructuring
proceeding in Docket No. RS92-16-000.
ARTICLE IV
THE AT-RISK CONDITION
FGT shall accept the following "at-risk" conditionAto
ensure that no Phase III Shipper will bear the risk of any other
Phase III Shipper exercising a contractual right to terminate, or
defaulting under its FTS-2 Service Agreement for any reason:
;
The rates to be charged for service under Rate Schedule
FTS-2 for the Phase III Expansion shall be designed as
incremental rates. Moreover, the reservation charges for
Phase III service under Rate Schedule FTS-2 shal1 be
designed based on demand billing determinants equal to
541,117 MMBtu per day for the winter season and 522,573
MMBtu per day for the summer season which approximate 100
percent of the winter and summer season design day
capaci ty of the Phase III Expansion. l Such billing
determinants may be increased as a result ot tuture
expansl.ons (and related contractual commitments which are
'rolled l.n to the Phase III cost-of-servl.ce. Thl.s
'condl.tl.on wl.ll remal.n l.n effect for a maXl.mum of twenty
(20) years from the date that the Phase III Expansion
facilities are placed in-servicew provided, however, that
after the Effective Period of the Settlement, FGT shall
have the right to demonstrate in any Section 4 proceeding
that Commission ordered modifications of the rate terms,
conditions and methodology set forth in Article III of
this Settlement, other changed circumstances or overall
benefits to its customers justify the removal of this
condition. In such instance, FGT shall bear the burden
of proof in any such proceeding to show good cause for
prospective removal of this condition by the Commission.
tcb\CP92.1 B2.$&A
18
.a.3Spm I: Bf181G2
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'.
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ARTICLE V
FUTURE.EXPANSIONS
FGT agrees to seek to roll the costs and revenues of a
"Phase IV" expansion (s) into the FTS-2 rates at the earliest
practicable date. Phase IV expansion(s) shall include the next
expansion or series of expansions of FGT's mainline market area
capacity (i) totalling up to 875,000 MMBtu/day in combination with
the size of the Phase III Expansion; (ii) for which an application
for a certificate is filed prior to July 1, 1998; and (iii) which
lower(s) the FTS-2 rates. The incremental expansion customers
shall pay the FTS-2 rate. FGT may postpone a Section 4 rate
proceeding to roll-in any expansion or series of expansions until
such expansion(s) in the aggregate equal at least 30,000 MMBtu per
day. This provision shall not be construed to prevent FGT from
rolling other or further expansions into the FTS-2 rates or to
prevent FGT from filing a Section 4 proceeding at any time for any
reason, including but not limited to rOlling-in expansions which
aggregate less than 30,000 MMBtu per day.
ARTICLE VI
RATE CAP MECHANISMS
Subject to the provisions of paragraph 1 of Article II of this
Settlement, FGT and the Phase III Shippers listed in Tab 4 attached
hereto agree to amend the FTS-2 Service Agreements between FGT and
tcb\CP92.182.56A
19
4.08pm :: B/18/92
..~~~~~:.~~-:t;;;;~.=t!'~~u~~~t?:~>~(!~t~~,i~~i~~~1.~~1:&~~~f:i'..~/'::~~::~:~II:~{~~:{~~~i~~~~?~~~~~~~~~~ir~~l~t;~~~~~,~:~~~li~~~l;~~'~";;
:;j
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.t.~~r:;r"(~_, .
I
I
each Phase III Shipper to incorporate the fol.lowing Rate Caps
elected by such Phase III Shippers:
1. Rate Cap 1. FGT and the Phase III Shippers listed on Tab
4, Part 1, of this Settlement agree to amend their FTS-2 Service
Agreements to incorporate Rate Cap 1 as set forth therein, through
an amendment which in form and substance will substantially conform
to the language set forth therein.
2. Rate Cap 2. FGT and the Phase III Shippers listed on Tab
4, Part 2, of this Settlement agree to amend their FTS-2 Service
Agreements to incorporate Rate Cap 2 as set forth therein, through
an amendment which in form and substance will substantially conform
to the language set forth therein.
3. ,..- Rate Cap 3. FGT and the Phase III Shippers listed on Tab
4, Part 3, of this Settlement agree to amend their FTS-2 Service
Agreements to incorporate Rate Cap 3 as set forth therein, through
an amendment which in form and substance will substantially conform
to the language set forth therein.
4. All amendments to the FTS-2 Service Agreements executed
pursuant to the terms of this Settlement shall be filed by FGT with
the Commission within ninety (90)
days of FGT's written
notification of its acceptance of an order approving this
Settlement.
tcb\CP92.182.S&A
20
J-48pm :l 8/18/82
'.
.'
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I
ARTICLE VII
SUPPLY AREA CAPACITY ALLOCATION
The Commission's order approving this Settlement shall
constitute the Commission's approval of the Supply Area Capacity
Allocation Methodology described below and set forth in Tab 1
attached hereto. Such approval shall permit FGT and its customers
to conduct the initial allocation of such capacity prior to the
issuance of a certificate in this proceeding.
1. Proportional Access Methodoloqy. The incremental supply
area mainline capacity created by the Phase III Expansion will be
allocated pursuant to the proportional access methodology set forth
in Tab 1 attached hereto.
2. ,.-.. Receipt Point Selection Process. Existing sales customers
with remaining conversion rights will be given an opportunity to
nominate receipt points within the supply area of FGT's existing
system prior to any nomination of receipt points by Phase III
Shippers.
The receipt point capacity to be allocated to each
customer shall be subject to the proportional access methodology
established in the Settlement in Docket No. RP89-50, et al., and
shall not exceed the remaining maximum daily contract quantity
("MDCQ") of each customer. The' receipt point selection process is
set forth in more detail in Tab 1 attached hereto.
3. Supply Aqqreqation. To facilitate aggregation and
pooling of supplies to serve all (existing and Phase III) firm
shippers, in its Order No. 636 compliance filing in Docket No.
tcb\CP92.182.S&A
21
3:48pm II 8/18/92
i~~
'~~~~
,';i(Il, .
"-..' ., .... .. " -~_"'J' '-:-....t.-'':. ~ - ~-....':r..~ _-'!""ll".'?'d:I~~,.,:r''''~:::v",,,~~};''.'':'~~~.c,,:';;:~~'';o~~1R
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RS92-16-000, FGT shall file tariff revisions which facilitate
pooling of supplies at the in-line transfer point at FGT's
Compressor station No. 11 by ensuring that all firm market area
shippers will be economically indifferent (i.e., no in-line
transfer fee shall be assessed) as to whether supplies are received
at specific firm receipt points or at the in-line transfer point
and that supplies transported in the supply area and pooled at the
in-line transfer point for delivery to a firm market area shipper
receive the priority of the firm downstream shipper for scheduling.
ARTICLE VIII
RATE SCHEDULE FTS-2
FGT's Order No. 636 restructuring proceeding currently
underway in Docket No. RS92-16-000 addresses certain service issues
that will be applicable to all services on FGT's system including
service under proposed Rate Schedule FTS-2. Since the service
changes required by Order No. 636 are anticipated to be in place
prior to the in-service date of the Phase III Facilities, the
Signatory Parties and FGT agree to defer many of the service
issues, such as nomination, scheduling, balancing, etc., to the
restructuring proceeding. Accordingly, with exception of the
service issues discussed specifically below, the Commission's order
approving this Settlement shall constitute approval of the pro
forma tariff sheets set forth in Volume I, Exhibit P, but
acceptance of such tariff sheets shall be subject to FGT filing
Icb\CI"07.182.56A
22
'J "Hen. :: 8/1 H/92
- ~~~~~:-"~~S~~~::!!S7.i';st~,~~?:~~~'Ct~,;.~~:~~:;:-~~~~~7$:i~~::~:~~:rr~~:~T:~~~~f~~~~.~:~~:~i.~.;.~i;- ~:~~~~~4t~i~~\~~~2;::r:~ig~;~~~_~~';::;:,;;~~~;:
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I
revisions to such pro forma tariff sheets to conform to the
Commission's implementation of FGT' s Order No. 636 compliance
filing prior to the in-service date of the Phase III Facilities.
1. Mitiqation of Capacity Costs. In its April 15 amendment,
FGT proposed measures that would allow Phase III Shippers to
effectively mitigate firm capacity costs.
Such measures include
alternate delivery points and a capacity relinquishment mechanism.
"
Order No. 636 also provides firm shippers with the ability to use
alternate
delivery
points
and
provides
for
a
capacity
relinquishment mechanism.
Many similar issues relating to
al ternate delivery points and capacity relinquishment will be
resolved in FGT's restructuring proceeding in Docket No.
RS92-16:"000.
However, in the event that the Commission's order approving
this Settlement provides for SFV rate design for rates to be
effecti ve under Rate Schedule FTS-2, FGT agrees that if FGT' s
compliance filing under Order No. 636 is not implemented prior to
the in-service date of the Phase III Expansion, or in the event
that Order No.
636 is modified such that the capacity
relinquishment and alternate delivery points provisions implemented
under Order No. 636 are less favorable in the opinion of the
majority~ of the Phase III Shippers than the provisions proposed
in FGT's April 15 amendment, then FGT shall file for any necessary
llMajority shall be determined by number of shippers who are
parties to this Settlement, as opposed to a volumetric or some
other basis.
tc;b\CP92-1 82.S&A
23
3:48pm II 9/18'92
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I
I
regulatory approval to provide the Phase III Shippers with capacity
mitigation measures at least as favorable to the Phase III Shippers
as those proposed in the April 15 amendment. In either event all
permanent and temporary relinquishments by Phase III Shippers will
retain Rate Cap protection.
Additionally, a Phase III Shipper
which temporarily releases capacity will retain Rate Cap protection
for capacity released under the program, although the capacity may
be resold at up to the maximum FTS-2 rate. The revenue collected
for temporarily released capacity above the releasing Phase III
Shipper's Rate Cap will be credited to the releasing Phase III
Shipper.
If SFV rate design is no longer used to design rates
under Rate Schedule FTS-2, then FGT shall have the right to file to
modify the applicable capacity mitigation mechanism.
2. Force Maieure. The force maieure provision of the pro
forma FTS-2 Rate Schedule included in Volume I, Exhibit P, has been
modified as compared to the tariff sheets included in FGT' s
April 15 amendment to provide for Reservation Fee credits in the
event of FGT's force maieure.
3. Surcharqes. The provisions of the pro forma FTS-2 Rate
Schedule included in Volume I, Exhibit P, have been modified to
provide that the FTS-2 rates shall not include: (i) any surcharge
associated with the recovery of take-or-pay costs or gas purchase
reformation costs, FERC Account No. 191 costs ("restructuring
costs") or any other surcharge associated with the restructuring of
FGT's merchant service under orders in FERC Docket No. RS92-16-000;
Icb\CI'82.182.!i6A
24
]:48pn II 811 8192
~"
'~. ~~9-~~-y~"'1 ~ ,_....
- . ~ . ........, - ",..(<1 ."".""J.:-...'t-....,;."...~.t'_~,..i."=...._t.'.:'"':o',.......i{~$~~.w-;.--->-~.-~st~...~..,.~'7:'::'
'-_."'" ,':.i..'f",.~ ~~r...c..j; .,..c.......' "~~. ~c:.4=~,I'.'f'..~.a~;:m:;:..,;;>'P- ~f":.,."'..~.."..,...,>.,,,_.,;,,.~~.J04""'.."~i....'I!;{~;5'-
.~.ttt'~~1.,;r.y,~~~...~~~...~~~!;"!~_":':....~..,~~~~~r.~i.,.y.....-"',:.,',,~, \~'""".,~:;;:1~~.,~~, .:.""-'.,"t'.. ,,:-0..:-' ","
I
I
(ii) any surcharge under the TCR Mechanism p.rovided for under
Docket No. RP89-50-000, et al.; or (iii) as between FGT and the
Phase III Shippers, any separately stated surcharge related to the
recovery of the restructuring costs of any upstream provider of the
transportation or sales services to FGT.
ARTICLE IX
FLORIDA POWER AND LIGHT COMPANY
Florida Power and Light Company is a Signatory Party to this
Stipulation and Agreement and therefore agrees to the provisions
hereof except Articles II and VI which relate to the negotiated
allocation of risk among FGT and the other Signatory Parties, and
rate cap provisions; provided, however, that to the extent that
Article III refers to rights set forth in Article II, those rights
shall be applicable to FPL. The resolution of these latter issues
with respect to Florida Power and Light are the subject of the
amendment to Florida Power and Light Company's FTS-2 Service
Agreement and Precedent Agreement, attached hereto at Volume I,
Exhibit I.
ARTICLE X
PEOPLES GAS SYSTEM, INC.
As a Signatory Party to this Settlement that is not a Phase
III Shipper, Peoples Gas System, Inc. ("Peoples") agrees to only
the following provisions:
IcIl\CP82.18' PiAA
25
3:.8"" 118/18/92
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-~':"';~F~'~~ ~-'~;i04{Y;:',{~'y..5_~ -~- --....'_..._'::{;/:,f'...'-.,;.~ ~ '~._.;..~.,.~'7i;f':J.- :"'~>:!::,:~~c..~:..."'_fi:~?(~"" ~~:'.;, Ii: -:,:.. -':':' -.~_~~:;;;-n::7.7i'!~-:: 'Jo.--::/ -:-_>~.:'w~'~ ~,:~~';:~-;'\._~,.~;'.~ /..
I
I
1. Peoples agrees to withdraw its protests to FGT's
certificate application in this docket, as amended, effective with
Commission approval of this Article X of the Settlement without
~
modification, in consideration for the Signatory Parties' support
for the cost allocation methodology for allocating O&M and A&G
expenses set forth in Section 3(b) of Article III; the provisions
regarding allocation of certain avoided pipeline rehabilitation
costs to the cost-of-service underlying FGT's existing services as
set forth in Section 3(a) of Article III; the provisions regarding
the establishment of an incremental Phase III cost-of-service as
set forth in Section 2 of Article III; and the provisions regarding
delivery pressure set forth in paragraph 5 of this Article X.
2~~~ Peoples supports Sections 1, 2 and 3 of Article III of
this Settlement for the purposes of establishing rates for service
under Rate Schedule FTS-2. In the first section 4 rate proceeding
following the construction of the Phase III Facilities, Peoples
will support an allocation of not more than $23.5 million
(inclusive of AFUDC and contingencies) to the cost-of-service
underlying FGT's pre-Phase III existing services as set forth in
Section 3(a) of Article III. Peoples also agrees that it will not
contest
or
propose
alternatives
to
the
cost
allocation
methodologies set forth in Section 3 of Article III during the
Effective Period of the Settlement.
3. In consideration of Peoples' agreements under this
Article X, FGT agrees, notwithstanding any other provision of this
Icb\CP92-182.S6.A
26
3:48pm II 8/18/92
l' 't"
...
~ ~
.Ji!
:!<
I
I
Settlement, that it will not file to seek rolled-in rate treatment
of the Phase III Facilities during the Effective Period of the
Settlement.
4. Peoples supports the methodology for the allocation of
receipt point capacity set forth in Article VII, Section 2 of this
Settlement, as more fully described in Tab 1 hereto.
5. FGT agrees to amend Section 3 of its General Terms and
.
Conditions to recognize current operating conditions on its system
by restating the standard delivery pressure from 100 psig to 250
psig, subject to the other provisions of existing Section 3. The
Commission's order approving this Settlement shall constitute the
Commission's approval of such tariff amendment as set forth in
VOlume-.I, Exhibit P hereto.
FGT will also reflect such tariff
amendment in its Order No. 636 compliance filing in Docket No.
RS92-16-000, and will make such other tariff filings, if any, as
may be required to effectuate this agreement.
ARTICLE XI
EFFECTIVENESS
This Stipulation and Agreement shall not become effective
unless and until the Commission has issued an order approving all
the terms and conditions of this Stipulation and Agreement without
modification or conditions, and such order becomes final and no
longer subject to appeal; provided however, that FGT may waive the
condition that such order be final and no longer subject to appeal.
Icb\Crt2.182.$I;'"
27
J"4ftprn l: 8118192
..:.,C>I..
.,,:,,'1f,~.~OO ..
.. ,. .:~y~~:;~~~~~~~~~~~~e~~~ftjJ~~~~~r~~i~i~.~:;:(~iI~~.~~~':~:.~
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This stipulation and Agreement shall continue in effect through the
Effective Period of the Settlement as defined in Article II hereof,
except as otherwise specifically stated herein.
ARTICLE XII
RESERVATIONS
1. This Stipulation and Agreement is submitted pursuant to
Rule 602 of the Commission's Rules of Practice and Procedure and
all parties agree that unless it becomes effective in accordance
with Article XI above, it shall be privileged and shall not be
admissible in evidence or in any way described or discussed in any
proceeding.
2.'~ The various provisions of this Settlement are expressly
agreed to be not severable.
ARTICLE XIII
INCORPORATION BY REFERENCE
Each Exhibit attached hereto is incorporated herein by
IctnCP92.182.S6.A
28
J48pm II 81181112
., ~C;;~~~t' ~'~~,.;...
~~;:""~~~~~~~t.'i"",,;.;!,~~~.P~~4"'":"~-T.,^~";"'''''~'o/ ;4ii~..r!~t~~.r"':~~'~".~~~~~'\r;;!'.!!.,:~':::'~-~:-~~~.~"r.l:.:.~;"lfift'~"~-h.'~':~~~;-f~~~~: ;_~~'-l
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I
I
reference and made a part hereof as if fully set forth in the text-
of this Stipulation and Agreement.
Dated this ?~th day of August, 1992.
Respectfully submitted,
FLORIDA GAS TRANSMISSION COMPANY
Deborah A. Macdonald
Vice President and
General Counsel
steven J. Kean
Assistant General Counsel
Thomas C. Briggs
Senior Counsel
1400 smith street
Houston, Texas 77002
(713) 853-1618
SIGNATORY PARTIES:
fc:b\CP92.182.S&A
29
148pm t: 8118192
:f':;i~:"~, _~~i'f~,r~.~~~\.~~~~~~~~~... "
.: _''T~f-~~~?,l'~~*,,~
I
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TAB 1
SUPPLY AREA AND
RECEIPT POINT CAPACITY ALLOCATION
The Phase III facility design provides average incremental
mainline capacity to FGT's production zones as follows [MMBtu per
day, inclusive of fuel reimbursement]:
CAPACITY
BY ctM.JI.ATIVE
ZONE ZONE CUMULATIVE PERCENT
1. Origin to station 7: 107 107 19.4
2. station 7 to station 8: 193 300 54.5
3 . station 8 to Station 11: 250 550 100.0
To accommodate the supply area capacity needs of both existing
Shippers with remaining conversion rights and Phase III shippers,
FGT will allocate existing and incremental mainline supply area
capacity and receipt point capacity in the following manner:
1) Existing sales customers will be given an opportunity to
nominate receipt points on FGT' s existing system for
their remaining Maximum Daily Contract Quantities
("MDCQ") yet to be converted to transportation service.
Sales Customers that have not utilized the first three
years of their conversion rights shall have the
opportunity to nominate receipt points for any portion of
their MDCQ not yet converted. As conversion rights
accrue over the two remaining conversion years, the
customers will receive gas at their nominated receipt
points.ll Supply area capacity will be allocated
pursuant to the proportional allocation methodology
established in FGT's settlement in Docket No. RP89-50,
et ale The commencement date and other terms of the
nomination process will be determined in FGT' s
restructuring proceeding in Docket No. RS92-16-000.
Nominations received on a timely basis shall receive
priority over the nominations of Phase III Shippers under
paragraph 2 below on FGT's existing system.
2) Each Phase III shipper will be allocated a pro rata share
of the incremental supply area mainline capacity within
llFGT's third conversion year commenced on August 1, 1992,
allowing customers cumulative conversion rights of fifty percent of
the MDCQ. Unless altered by the restructuring proceedings, in the
fourth and fifth conversion years, customers will be allowed to
convert twenty-five percent of their MDCQ each year.
Icb\CP92.182.S&A
1
3:48pm II 8/1 B/92
'~~';:'<~~"l1<;~~"".'llr..~~~~7.
~~~~~~W~~~~~~~Pi~~:'f-i~~f~~~~,~,", .
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I
I
TAB 1
each production zope. Commencing on the earlier of i)
thirty (30) days after the date set for receipt point
nominations of the existing customers, or (ii) the date
FGT provides written notification to the Commission that
it will accept the order on settlement in this
proceeding, FGT shall conduct a sixty-day open season for
receipt point nominations of Phase III shippers.
During the open season, each Phase III shipper will be
able to nominate individual receipt point capacity within
its pro rata share of production zone capacity.~ The
Mobile Bay and Southern capacity will be allocated within
Zone 3. Receipt point capacity will be allocated on a
pro rata basis. After the open. season, receipt point
capacity will be allocated on a first-come, first-served
basis for both existing and Phase III Shippers.
3) Phase III shippers desiring Southern capacity will
designate the Southern system along with the specific
receipt points on Southern's system. After the above-
described open season for Phase III shippers, FGT will
establish a first-come, first-served priority queue for
individual receipt point capacity on Southern's system,
and will request such receipt points under the FT Service
Agreement to be entered into by FGT and Southern.
Once the initial allocation of supply area capacity to both
existing and Phase III Shippers is completed, FGT will accommodate
trading of receipt point and production zone capacity among
shippers to accommodate nominations of primary receipt points
within production zones in excess of the respective proportional
mainline supply area capacity. Also, prior to the in-service date
of the Phase III facilities, existing shippers shall have the right
to use the receipt point capacity nominated by Phase III shippers
on either a primary or alternate basis.
Upon the in-service date of the Phase III facilities, existing
shippers shall have the right to utilize Mobile Bay and Southern
capacity on a primary or alternate basis.
FGT will use all reasonable efforts to act as a clearing house
to facilitate trades of supply area mainline capacity among Phase
III and existing firm transportation shippers in an effort to
accommodate requests by shippers to the maximum extent practicable.
~All Phase III shippers will have the option to leave all or
a portion of their firm receipt point capacity at Compressor
Station 11 and have suppliers aggregate supplies to the in-line
transfer point for receipt under the FTS-2 Service Agreement.
lc.b\CP92-182.S6A
2
3:48.... II 8/1 8/92
I
1
TAB 1
SimilarlY, FGT will use all reasonable efforts to facilitate and
accommodate trades of constrained receipt point capacity among
Phase III shippers and existing shippers.
Icb\CP92.' 82.SA.
3
3:48c:wn : I 8J181a2
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1
TAB 2
SPECIFIC PRE-ASSIGNMENT PROVISIONS
During the course of the Phase III contract negotiations,
special arrangements were designed for various customers in order
to insure their participation in the Phase III Expansion. FGT
worked closely with each customer and devised specific contract
provisions that will allow their projects to go forward. However,
each specific arrangement requires express Commission authorization
to complete the respective deals. Accordingly, Commission approval
of this Settlement shall constitute the Commission's grant of any
and all waivers and/or authorizations deemed necessary to
effectuate the agreements reached by the parties in the
arrangements detailed below.
1.... Reedv Creek Improvement District and Orlando CoGen
Limited. L.P.
Orlando CoG en Limited, L.P. (OCL) is a developer of a
cogeneration project located near Orlando, Florida. OCL's project
is being'developed to produce electricity for, among others, the
Reedy Creek Improvement District (Reedy Creek).
A provision of the Power Purchase Agreement between OCL and
Reedy Creek recognizes the concern that OCL may fail to perform
under the Agreement or fail to provide electricity either at some
point prior to the commercial operation of OCL's project or at some
point during the life of the project.
To ensure its ability to
"
obtain the electricity in the event of such failure, the Power
Purchase Agreement provides that Reedy Creek would be able to
tcbICP92-182.S&A
1
011/18/92 (3:4lIpm)
~~~~~~~~;?;;~:?:~~~~~~~~W~;;t.~;'~,(~~-.tgt"1.t~~~~~~~~.i#~4~1~f~~:':~..
1
I
TAB 2
utilize the Phase III firm capacity contracted for by OCL for its
own power project.
In order to implement this Agreement, FGT, Reedy Creek, and
OCL took the following steps. Orlando Cogen (II), Inc., ("OCII"),
an affiliate of OCL, executed a separate Phase III service
agreement for 10,700 MMBtu per day which would provide capacity to
transport gas which OCII will sell to OCL to generate power for
Reedy creek~li That service agreement provides that if the Power
Purchase Agreement between Reedy Creek and OCL is terminated, OCII
shall have the right to add a new delivery point to the agreement,
with such new delivery point to be~~ocated in the vicinity of Reedy
Creek's existing system.~ A subsidiary of the Disney o~ganization
could then acquire the stock of OCII, thus allowing Reedy Creek to
continue utilizing Phase III capacity to generate electricity.
To provide Reedy Creek and OCL the assurance that this
transaction will be implemented, the Commission's order approving
the settlement will constitute grant of any and all waivers and/or
authorizations necessary to allow the addition of a new delivery
liThe remainder of OCL's gas supply will be transported
pursuant to a Phase III service agreement between FGT and another
OCL affiliate, Orlando CoGen Fuel, Inc.
~The Reedy Creek generating facility would be located in the
vicinity of Reedy Creek's existing lateral which in turn is close
to OCL's generating plant. Therefore, the mainline facilities
necessary to delivery the gas to the Reedy Creek point would
already be in place. The only new facilities necessary to delivery
directly to Reedy Creek would be delivery point and metering
facilities, which can be construed under FGT's blanket construction
certificate.
tcbICm-J82.S&A
2
08/J8/92 (3:48pm)
1
I
TAB 2
po~nt to the OCII Phase III service agreement in the event the
Power Purchase Agreement between OCL and Reedy Creek is terminated.
Because the capacity is being utilized to generate electricity for
Reedy Creek, the same end user and ultimate recipient of electric
power, the transaction is distinguishable from capacity brokering
and consistent with other waivers granted on the FGT system
permitting changes in delivery point to serve the same end-user.
Furthermore, the addition of such new delivery points will not
impact service to any other firm customer.
FGT's Exhibit I to the April 15 certificate amendment lists
two separate service agreements executed by Reedy Creek. One
agreement is for service to Reedy Creek's residential and theme
park divisions and requires 3771 MMBtu per day and 2990 MMBtu per
day in the winter and summer seasons respectively.
The other
agreement requires service of 13,964 MMBtu and 10,700 MMBtu in the
winter and summer seasons.
However, 10,700 MMBtu of the second
agreement is to be utilized only in the event the Commission fails
to provide the necessary authorizations in order to implement the
transaction described above.
If for any reason the Commission does not grant such waiver,
FGT requests authorization to provide transportation service to
Reedy Creek pursuant to both FTS-2 Service Agreements. Conversely,
if the Commission grants the authorizations necessary for the
transaction with OCL~.ReedY Creek may request FGT to reduce the
contract quantity of the second Reedy Creek contract by 10,700
tcb\CP9Z-I81.S&A
3
08118/92 0:48pm)
..';~>:-;!.~~~4f.
... ~ . ... ."" '~",c""'i:""';"'._""'~Y_~=''''''~~:...'!fi}''h~<<;~.~;;i~'~",-;';:.F,..
~~~. ~~ _..". .#~~4~,~...,.;~.->~~,~?$~~.t~~'1'fV"'2't~~.j.~~~~~~lC:..e~~i%:;;"?-~~"""_'~"';!"~~'" ,_' "
I
I
TAB 2
MMBtu per day. FGT will then provide service to Reedy Creek under
the second agreement for 3,264 MMBtu (13,964-10,700) per day in the
winter season.
2. El Dorado Enerqy Company
El Dorado Energy Company (El Dorado) is a developer of a
power project located in the Auburndale area.
In addition to
providing power to various parties pursuant to power sales
agreements, El Dorado is also obligated to provide steam to certain
steam hosts located wi thin the general vicinity of El Dorado's
proposed generating facility.
As discussions between FGT, El Dorado, and the prospective
steam hosts progressed, El Dorado expressed its desire to have gas
delivered to its steam hosts during times of scheduled plant
maintenance or during unexpected plant outages.
To accomplish
this, El Dorado agreed to lease the boilers of its steam hosts only
-
during periods of unexpected outages and scheduled maintenance, and
FGT agreed to deliver gas to El Dorado's leased facilities pursuant
to the fTS-2 Service Agreement.
At the time Phase III Service Agreements were due, El Dorado
and a third-party steam Host ("steam Host") had not yet finalized
the terms of their steam purchase agreement, Therefore, steam Host
entered into a separate Phase III agreement, with FGT to insure
itself a place in FGT's expansion. However, once steam Host and El
Dorado finalize their steam purchase agreement, the Phase III
Service Agreement provides Steam Host with the one-time option to
tcb\CP92-182.S&A
4
0lI/18/92 0:48pm)
'~':'
':.'.....
..i~ii~~~~~~~~~~~~'lJ~~~-
- . .. -. .-- OW'"...~~'ThQ..~"~~~"'~'i'i1i~"'..".;;:-,:;>.,"'k;1;~"i
~. ~~Ji.~lW't];~i.%~"<.~"'''~~~~(4..~_~1''.~.''''''','!W~-''<~~~~~'%-,.~~.'~...~''''~<t'.".'
I
,
TAB 2
assign all or a portion of its firm capacity to El Dorado. In
addition, if El Dorado defaults on its obligation to provide steam
to steam Host, then the assigned capacity shall revert back to
steam Host.
To provide El Dorado and steam Host with the assurance that
the contemplated transaction will be implemented, approval of this
Settlement will constitute the grant of any authorizations and/or
waivers deemed necessary to permit the outlined assignments to
occur.
3 .
Coca-Cola Foods.
section 10.2 (k)
of the FTS-2
Supplemental Agreement between FGT and Coca-Cola Foods states that
upon execution of a steam Purchase Agreement between Coca-Cola and
a third-party cogenerator, Coca-Cola shall have a one-time option
to assign a portion of 11 ~ Agreement to the Cogenerator. The
Agreement also provides that in the event the Cogenerator defaults
on its steam obligation to Coca-Cola, then the FTS-2 capacity shall
automatically revert back to~coca Cola Foods.
Section 10.2(k) and the assignments contemplated therein is
subject to express Commission authorization.
The Commission's
order approving this Settlement shall;Jcontinue the grant of any and
all authorizations or waivers necessary to effectuate the provision
of section 10.2(k) to the FTS-2 Agreement.
4. Hardee Power Partners Limited
Included in the FTS-2 Service Agreements filed in the
April 15, 1992 certificate amendment is an FTS-2 Service Agreement
tcb\CI'92-182.S&A
5
011/18/92 (3:.allpm)
~~;;"~~~~~~;:~-).!:~ji;-;;;;~~,;:.~~~~::\~;r4'~~~~~~~~l'~~;.",!. .
I
,
TAB 2
with citrus Marketing, Inc., an FGT marketing affiliate, to serve
Hardee Power Partners Limited ("Hardee").
certain assignment
provisions of that agreement merit the Commission's review and
authorization in this proceeding. Hardee is building a plant now
nearly complete, for the gas-fired generation of electricity. On
December 12, 1990, well before the issuance of Order No. 636 Mega
NOPR and well before Phase III began in earnest, FGT entered into
an agreement contemplating a firm direct sale contract between FGT
and Hardee. Under that agreement, Hardee was to pay a commodity
rate only, for a bundled gas sales service. Hardee did not assume
the risk of underutilization of the firm capacity associated with
the direct sale.
The direct sale arrangement contemplated in the FGT-Hardee
contracts does not fit the current regulatory environment. Rather
than approach the Commission in this application with a bundled
direct sale on an otherwise unbundled, transportation-only project,
Hardee chose to execute a gas purchase contract with a supplier of
Hardee's choice that also would agree to execute an FTS-2 agreement
with FGT.
Hardee approached citrus Marketing, Inc. which executed a
supply arrangement with Hardee and executed an FTS-2 Service
Agreement with FGT.
Hardee has reserved the right in the
renegotiated transaction to terminate its supply arrangement with
citrus Marketing and take assignment of the FTS-2 Service
Agreement:
tcb\CP92-182.S&A
6
08118/92 0:48pm)
- . .. ... . .. -- ..-....-.~"',~.-A!i''?'l:''';;c,~.,..,~,.'Y.cN.:.i>r....,-:t9'';;;;;::;.i',.G'.
~~~l~~~t;~r~~~v;~:~'k~:-;,l:?:~,1Il'i)~,~~~~~~~_::."(._re..;;~'(t~~~~.,;'1~ii~~!~,J^_~.~:~:-~..~;-',
... .;~r"!'~~~~~ ...~~.-*~~~~'...~'";'!?!:.':~..:..:.;r.. ::".-".i~'..'~""~"""-',,"~'."" . " __-...: ','.., :.,.-,.,:,... .
"
.I
I
,
TAB 2
In the event the Gas Sales Agreement between Shipper and
Hardee Power Partners is terminated, Transporter agrees
to permit the assignment of this Agreement to Hardee.
Such assignment shall not constitute a request for new
service. If such assignment becomes effective on or
before December 31, 2002, Transporter agrees to permit
Hardee to reassign the Agreement to Shipper, and such
reassignment shall not constitute a request for new
service. Such reassignment is subj ect to one year's
prior notice to Transporter and must be effective on or
before December 31, 2002. If Hardee fails to exercise
its right to reassign the Agreement to Shipper, effective
on or before December 31, 2002, Hardee's automatic right
to reassign the Agreement shall be void and any
assignment by Hardee thereafter shall be governed by
Section 11.1. of this Agreement.
The Commission's order approving this Settlement shall provide
any and all authorizations or waivers necessary to effectuate such
provisions.
tcbICP92-182.S&A
7
011/18/92 (3:411pm)
;~".-
~;;:_~~w~~~~_ ;
,~~~l~r}~"~~~~j;};;:~>::i(~~~~P~(~~~~,~~~~t::~}:f~~;#'E~i~f~~~~?'~;.:i
I
I
TAB 3
ACCOUNTING FOR PHASE III EXPENSES
POST-PHASE III IN-SERVICE
Costs of various operations and functions within Florida Gas
Transmission Company ("FGT") are accounted for through the use of
responsibility centers ("RC's"). FGT's pipeline system is operated
and maintained by a number of district offices. Each of these
district offices has been assigned a separate RC. Each of these
district offices is responsible for a separate geographic region of
the FGT system. Within each district, RC operations are further
divided into functions (~, pipeline operations, compressor
station
operations,
measurement
operations,
communications
(including automatic EFM & SCADA) operations, and electrical
operat1ons). These functions once segregated are further assigned
separate RC categories to capture and record the costs of each of
these functional units within the districts.
PHASE III OPERATION AND MAINTENANCE EXPENSES
.
~
]
Direct Assiqnment
FGT will account separately for operation and maintenance
("O&M") expenses directly attributable to its Phase III and pre-
Phase III facilities. Such O&M expenses will be recorded onFGT's
books by the district office and RC's under such offices'
management as follows:
1) Non-labor O&M expenses will be charged to unique
subaccounts set up to capture Phase III and pre-Phase III
costs appropriately.
tcbICP92-182.S&A
1
08/18/92 0:48pm)
~ __ , _ _. _ ',' '_.. ,..., ....., . '.......' '~'FY~ - ",:,C~.i~ . "'-j;.,-- ----, .~. ""~- ,c;E.j.,'\;" '~+~~~r+~~~~~.~:.:~~;~~.~i"':4f-.~..:~~~~i
~~~"+~-<<'~~~~~.~k~1'~.~~';:"'~~~~~~}~';'ft':~~"~~';'-i"'~~~~""<~~~~-?~'",-~~r.~~~~~.~:~.rY~~~""~' .,,:<~~Ff!J~.*~~_~~~~H~~'l;.._...~ """
_,~~";'.!:l!~'r~~~f..~~'t;~~~.~~~:\.-<,_'.~'~ "';'-:'~'::t:f::!'" "~" ,';.."1"-"--"1_'," -'.' ,. "l . -' '-,. "I:v,....:.~.:. ': "';' ',"." ...,. ~:- , - '. ..~.. ~
I
I
TAB 3
2) Labor expenses will be recorded on individual time
reports according to the time devoted to Phase III and
pre-Phase III facilities.
3) Benefit expenses and payroll taxes will be charged in the
same proportion as labor expenses.
Allocations
During the first year of operation of the Phase III
Facili ties, and to the extent O&M expenses are not directly
assignable or are general or common to a district or to the entire
system, costs will be allocated between the existing system and
Phase III facilities as follows:
1) Costs common to an entire district will be allocated
based upon the previous month's overall ratio of Phase
III expenses directly assigned by each of the RC's within
the district to total expenses recorded by the district.
2) Expenses not directly identifiable and incurred by
supervisory personnel within the district operating units
will be allocated using the corresponding unit's ratio of
expenses directly assigned to Phase III to total expenses
recorded by the RC in the previous month.
3) Costs incurred by FGT's Technical operations department
will be allocated between Phase III and pre-Phase III
services based on a percentage derived from a 33/33/34
weighing of a) the overall ratio of Phase III facilities
calculated in inch-miles to total pre-Phase III
tcb\CI'92-182.S&A
2
08/18/92 O:48pml
,7Ai
~~~~~,:;.>. ., '.,
.c~w.~~~~at~ "'"
I
I
TAB 3
facilities plus Phase III facilities calculated in inch-
miles, b) the overall ratio of Phase III compressor
horsepower to total pre-Phase III compressor horsepower
plus Phase III compressor horsepower, and c) the ratio of
Phase III direct payroll costs for each of the district
RC's to total district payroll costs recorded in the
previous month.
4) Costs charged to Transmission Expense Account No. 851,
system Control and Load Dispatching will be allocated as
in 3) above.
The ratios established during the first year of operation of
the Phase III Facilities will continue to be used to allocate costs
in the- -succeeding period and will be revised periodically as
necessary using the formula set forth above.
ADMINISTRATIVE AND GENERAL EXPENSES
In all future FGT rate proceedings involving the Phase III
and/or pre-Phase III services, a portion of FGT's administrative
and general ("A&G") expenses will be allocated to Phase III using
one of the fo~lowing allocation factors or a combination thereof:
1) Property Factor - The simple average of two equally
weighted percentages derived from the ratios of: a) Phase
III equivalent inch-miles of pipe to total system inch-
miles, and b) Phase III compressor station horsepower to
total system horsepower.
Equivalent inch-miles are
tcblC 1"92.1 82.S&A
3
08/18/920:48pml
:
,
111,
."1 '~
n )w2.~~.
'~'1"'i~,~<~ri~"i .
I
I
TAB 3
derived by multiplying the_inside nominal diameter of
pipe by the length of the pipe.
2) Payroll Factor - The ratio of Phase III O&M labor costs
to systemwide O&M labor costs recorded during the
prescribed base period.
The preceding factors will be used as follows:
ACCOUNT
NO.
920
921
922
923
924
925
926
928
930.1.
930.2
931
935
tcb\CI"92-182.S&^
DESCRIPTION
Administrative & General Salaries
Office Supplies and Expenses
Administrative Expenses Transferred
outside Services Employed
Property Insurance
Injuries and Damages
Employee Pensions and Benefits
Regulatory commission Expense
General Advertising Expense
Miscellaneous and General Expenses
Rents
Maintenance of General Plant
4
FACTOR
USED
Payroll
Property/Payroll
Property/Payroll
Payroll
Property
Payroll
Payroll
Property/Payroll
Property/Payroll
Property/Payroll
Property/Payroll
Property
0ll/11I/92 (3:4lIpm)
.~~~~~'1~~~'~~_'~"
.~
1
,
TAB 4, Part 1
RATE CAP 1
Rate Cap 1 has been elected by the following Phase III
Shippers:
Pursuant to the terms of this Settlement, FGT and the above-
listed Phase III Shippers will amend Article 3.1 of their Service
Agreements to provide for the following:
During the first twenty (20) years of service under this
Agreement, Shipper shall pay Transporter the lower of (1)
the rates established under Transporter's Rate Schedule
FTS-2, as filed with and approved by the FERC and as said
Rate Schedule may hereafter be legally amended or
superseded, or (2) the Final Rate Cap as determined
below:
(i) Commencing on thein-service date of the
Phase III facilities and continuing for a
period of twelve months, the Final Rate
Cap shall be the Initial Base Rate Cap
equal to $0.786 per MMBtu.
(ii) Commencing on the second year of service,
and again on the third year of service
("Anniversary Date")" the Final Rate Cap
to be effective for the subsequent
twelve-month period shall be determined
as the sum of (a) forty percent (40%) of
the Initial Base Rate Cap and (b) sixty
percent (60%) of the Initial Base Rate
Cap escalated (but not decreased) through
use of the GDP Implicit Price Deflator
(or any substitute index that the parties
mutually agree to in writing) determined
by multiplying sixty percent (60%) of the
Initial Base Rate Cap by a fraction, the
numerator of which is the GDP Implicit
Price Deflator for the last calendar
quarter immediately preceding the
lcb\CP92-182.S&A
1
08/18/92 (3:48pm)
I.
",~~~~~~Jt~j~X~:."f7~~fME'~~~~6~~~~'l.~*~ii
I
I
TAB 4, Part 1
Anniversary Date and the denominator of
which is the GDP Implicit Price Deflator
for the calendar quarter immediately
preceding the in-service date of the
Phase III facilities. Provided, however,
that the Rate Cap during the second and
third service years shall escalate by a
minimum of the Rate Cap which was for the
previous service year ("Prior Rate Cap")
mUltiplied by three percent.
(iii) Commencing on the fourth year of service
and continuing through the end of the
primary term of this Agreement, the Final
Rate Cap shall be calculated as follows:
On each Anniversary
(Anniversary Date), the
Rate Cap to be effective
for the subsequent
twelve-month period shall
be determined as the sum
of (a) seventy percent
(70%) of the Rate Cap
which was effective
during the third service
year ("Subsequent Base
Rate Cap") and (b) thirty
percent (30%) of the
"Subsequent Base Rate
Cap" escalated (but not
decreased) through use of
the GDP Implicit Price
Deflator (or any
substitute index that the
parties mutually agree to
in writing determined by
mUltiplying thirty
percent (30%) of the
Subsequent Base Rate Cap
by a fraction, the
numerator of which is the
GDP Implicit Price
Deflator for the last
calendar quarter
immediately preceding the
Anniversary Date and the
denominatOr of which is
the GDP Implicit Price
Deflator for the last
lcblCP92-132.s.tA
2
08/18/92 (3:48pm)
~
.
~;~'1
- .... . .. . ....,.., ....,~""~""._'+---",..c:;~~:l.~,'"
., ''''''''A'''~'''~~W~-''''~'1r~o$'i.,-'V'~~~~~~~~''!.1::iv<~o:....~.;,,,,~,,,,,'.'li:',,,.~..i~A'''
. -?:.:.f~_ _~~',"'Jc:__ ..<.....:_..:., ":"~.. "_. .f-!l",.- . ..2~.",~~!': _. - ,":.".,. '-",~: - _ ~... ' '. '_ ' .'. '.~~",,_._.:,..: "",; '.:' '.- '(-'- '" . ......'- - . -
I
1
TAB 4, Part 1
calendar quarter of the
third service year.
The initial Base Rate Cap and all Final Rate Caps to be
calculated hereunder are stated in nominal dollars and
are 100 percent load factor rates, exclusive of all
applicable surcharges and fuel. The Initial Base Rate
Cap assumes the levelized rate methodology which
Transporter filed for approval in the Offer of Settlement
and stipulation and Agreement of the parties in Docket
No. CP92-182, et al., on August 2.2., 1992 (" Settlement") .
The Initial Base Rate Cap and any subsequent Rate Cap
used in the calculation of a Final Rate Cap hereunder
shall be adjusted for the impact of changes in state and
Federal income tax rates by adding or subtracting from
the applicable Rate Cap the difference between the
applicable Commission approved rate and such rate as
adjusted to include changes in State and/or Federal
income tax rates utilizing the cost of service underlying
such rate. In the event of changes in State and/ or
Federal income tax rates prior to the effectiveness of
initial FTS-2, the Rate Cap adjustment shall be
determined by adding or subtracting the difference
between the initial rates and the initial rates as
recalculated to include the State and Federal income tax
rates as included in the April 15, 1992 filing in Docket
No. CP92-182-001.
Rate cap adjustments shall be implemented on the date of
effectiveness of tariff sheets filed by Transporter
incorporating changes in State and/or Federal income tax
rates.
~
The Initial Base Rate Cap is based on $23.5 million of
pipeline rehabilitation costs allocated to the existing
cost-of-service. In the event more than $23.5 million of
rehabilitation costs are allocated to the existing cost
of service, then the Initial Base Rate Cap and any
subsequent Rate Cap used in the calculation of a Final
Rate Cap shall be adjusted downward by $.Q006 per every
$lJ\million (or portion thereof) allocated to the existing
cost of service. In the event less than $23.5 million of
rehabilitation costs are allocated to the existing cost-
of-service, then the Initial Base Rate Cap and any
subsequent Rate Cap used in the calculation of a Final
Rate Cap shall be adjusted upward by $.~006 per every $1^
million (or portion thereof) allocated to the Phase III
cost-of-service.
:::::::-
tcbICP92-182.s.lA
3
08/18/92 (3:48pm)
,.
\L;l
... .. c _. . .., . . ,. "....."...,~"'~_vo'c..,,~~~.,,~~.JJl'",.q~~~~
"'.:7>,,;,....,.li'!'..'''' ...'Ii~S}'~~~Jt,~~~~~~f~"'>~:;;:.,..,.....;,"<<....';t;.~;:~,~":'!:~~'>~SF~~r.4:) .*~,?]"!;~~
:'~1~~" _y,....~:'~.. _..;.-,....) "'_",P'':'';:':'.l:_.t'.~~~J.~~ -, ~-" ~. ',"_ ',- - . . _' - - ....
I
I
TAB 4, Part 1
Shipper agrees that it shall not avail itself of any
other Rate Cap that may be made available to it by the
Commission.
lcb\CP92.182.S&A
4
08/18/92 (3:48pm)
'"
-~~~~".. - - .
.~-t~~;:~
I,'.
I
I
TAB 4, Part 2
RATE CAP 2
Rate Cap 2 has been elected by the following Phase III
Shippers:
Pursuant to the terms of this Settlement, FGT and the above-
listed Phase III Shippers will amend ArticLe 3.1 of their Service
Agreements to provide for the following:
During the first twenty (20) years of service under this
Agreement, a Rate Target shall be established as a
benchmark from which to calculate the rates to be charged
under this Agreement. For the first twelve months of
service, the Rate Target shall be the Base Rate Target
equal to $0.786 per MMBtu and shall escalate annually
thereafter as follows:
On each Anniversary (Anniversary Date), the Rate Target
to be effective for the subsequent twelve-month period
shall be determined as the sum of (a) seventy percent
(70%) of the Base-Rate Target and (b) thirty percent
(30%) of the Base Rate Target escalated (but not
decreased) through use of the GDP Implicit Price Deflator
(or any substitute index that the parties mutually agree
to in writing) determined by multiplying thirty percent
(30%) of the Base Rate Target by a fraction, the
numerator of which is the GDP Implicit Price Deflator for
the last calendar quarter immediately preceding the
Anniversary Date and the denominator of which is the GDP
Implicit Price Deflator for the calendar quarter
immediately preceding the in-service date of the Phase
III facilities.
If at any time during the first twenty (20) years of
service under this Agreement the rates established under
Transporter's Rate Schedule FTS-2, as filed with and
approved by the FERC and as said Rate Schedule may
hereafter be legally amended or superseded, is greater
than the effective Rate Target, then Transporter shall
discount the effective rate to a Final Rate Cap equal to
the Rate Target plus 66.66 percent of the difference
t.cb\CP92-182.S&A
1
08/18/92 (3 :48pm)
.~
,
.tt.
. ,
'"
,)
"
I
I
TAB 4, Part 2
between the FERC approved rate and the effective Rate
Target.
The initial Base Rate Cap and all Final Rate Caps to be
calculated hereunder are stated in nominal dollars and
are 100 percent load factor rates, exclusive of all
applicable surcharges and fuel. The Initial Base Rate
Cap assumes the levelized rate methodology which
Transporter filed for approval in the Offer of Settlement
and Stipulation and Agreement of the parties in Docket
No. CP92-182, et al., on August 22.t 1992 ("Settlement").
The Initial Base Rate Cap and any subsequent Rate Cap
used in the calculation of a Final Rate Cap hereunder
shall be adjusted for the impact of changes in State and
Federal income tax rates by adding or subtracting from
the applicable Rate Cap the difference between the
applicable Commission approved rate and such rate as
adjusted to include changes in state and/or Federal
income tax rates utilizing the cost of service underlying
such rate. In the event of changes in State and/or
Federal income tax rates prior to the effectiveness of
initial FTS-2, the Rate Cap adjustment shall be
determined by adding or sUbtracting the difference
between the initial rates and the initial rates as
recalculated to include the State and Federal income tax
rates as included in the April 15, 1992 filing in Docket
No. CP92-182-001.
Rate Cap adjustments shall be implemented on the date of
effectiveness of tariff sheets filed by Transporter
incorporating changes in state and/or Federal income tax
rates.
The Initial Base Rate Cap is based on $23.5 million of
pipeline rehabilitation costs allocated to the existing
cost-of-service. In the event more than $23.5 million of
rehabilitation costs are allocated to the existing cost
of service, then the Initial Base Rate Cap and any
subsequent Rate Cap used in the calculation of a Final
Rate Cap shall be adjusted downward by $.~006 per every
$:!ftmillion (or portion thereof) allocated to the existing
cost of service. In the event less than $23.5 million of
rehabilitation costs are allocated to the existing cost-
of-service, then the Initial Base Rate Cap and any
subsequent Rate Cap used in the calculation of a Final
Rate Cap shall be adjusted upward by $.~006 per every $1~
million (or portion thereof) allocated to the Phase III
cost-of-service.
~
!cblCP92-! K2.S&A
2
CJ.il/J8/92 (.U9pm)
.>
. .
_:.,.
I
I
TAB 4, Part 2
Shipper agrees that it shall not avail itself of any
other Rate Cap that may be made available to it by the
Commission.
t.cb\CP92-182.S&:A
3
08/18/92 0:48pm)
. .,.~~~~_..
!..J
. ".
, -
I
I
TAB 4, Part 3
RATE CAP 3
Rate Cap 3 has been elected by the following Phase III
Shippers:
Pursuant to the terms of this Settlement, FGT and the above-
listed Phase III Shippers will amend Article 3.1 of their Service
Agreements to provide for the following:
During the first twenty (20) years of service under this
Agreement, Shipper shall pay Transporter the lower of (1)
the rates established under Transporter's Rate Schedule
FTS-2, as filed with and approved by the FERC and as said
Rate Schedule may hereafter be legally amended or
superseded, or (2) the Final Rate Cap as determined
below:
(i) For the first two years of service, the
Rate Cap shall be $0.80 per MMBtu.
(ii) Commencing on the third year of service
and extending for a period of one year,
the Rate Cap shall be $0.82 per MMBtu.
(iii) Commencing on the fourth year of service
and extending for a period of one year,
the Rate Cap shall be $0.84 per MMBtu.
(iv) Commencing on the fifth year of service
and extending to the end of the eighth
year of service, the Rate Cap shall be
$0.86 per MMBtu.
(v) Commencing on the ninth year of service
and extending to the end of the twentieth
year of service, the Rate Cap shall be
calculated as follows:
On each
(Anniversary
Final Rate
effective
Anniversary
Date), the
Cap to be
for the
\cblCP92-182.S&A
1
(Jll/Hl/92 0:48pm)
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I
I
TAB 4, Part 3
subsequent twelve-month
period shall be
determined as the sum of
(a) seventy percent (70%)
of the Rate Cap which was
effective for the eighth
year of service (Base
Rate Cap) and (b) thirty
percent (30%) of the Base
Rate Cap escalated (but
not decreased) through
use of the GDP Implicit
Price Deflator (or any
substitute index that the
parties mutually agree to
in writing) determined by
mUltiplying thirty
percent (30%) of the Base
Rate Cap by a fraction,
the numerator of which is
the GDP Implicit Price
Deflator for the last
calendar quarter
immediately preceding the
Anni versary Date and the
denominator of which is
the GDP Implicit Price
Deflator for the calendar
quarter immediately
Preceding the first month
of the eighth year of
service.
The initial Base Rate Cap and all Final Rate Caps to be
calculated hereunder are stated in nominal dollars and
are 100 percent load factor rates, exclusive of all
applicable surcharges and fuel. The Initial Base Rate
Cap assumes the levelized rate methodology which
Transporter filed for approval in the Offer of Settlement
and Stipulation and Agreement of the parties in Docket
No. CP92-182, et al., on August 2~ 1992 ("Settlement").
The Initial Base Rate Cap and any subsequent Rate Cap
used in the calculation of a Final Rate Cap hereunder
shall be adjusted for the impact of changes in State and
Federal income tax rates by adding or subtracting from
the applicable Rate Cap the difference between the
applicable Commission approved rate and such rate as
adjusted to include changes in State and/or Federal
income tax rates utilizing the cost of service underlying
II:bICP92-182.S&A
2
08/18/92 (4:20pm)
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-d_';~_'::-:~'~'~J:_..~~:' ",~~-~';;.~,-,.~:~",~'f:'Y:-:;-',iN.,_',~_'::",,;.-;-o:_ <' .',', " ;"'_". .,-....._:....:,..".7 _ -"...~-.-'r.,,_". ".-"'.'~', .'-u-': "'_:"'~ __~. ._,., _, ,.." ~
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I
I
TAB 4, Part 3
such rate. In the event - of changes in state and/or
Federal income tax rates prior to the effectiveness of
initial FTS-2, the Rate Cap adjustment shall be
determined by adding or subtracting the difference
between the initial rates and the initial rates as
recalculated to include the State and Federal income tax
rates as included in the April 15, 1992 filing in Docket
No. CP92-182-001.
Rate Cap adjustments shall be implemented on the date of
effectiveness of tariff sheets filed by Transporter
incorporating changes in state and/or Federal income tax
rates.
The Initial Base Rate Cap is based on $23.5 million of
pipeline rehabilitation costs allocated to the existing
cost-of-service. In the event more than $23.5 million of
rehabilitation costs are allocated to the existing cost
of service, then the Initial Base Rate Cap and any
subsequent Rate Cap used in the calculation of a Final
Rate Cap shall be adjusted downward by $..Q.006 per every
$lAmillion (or portion thereof) allocated to the existing
cost of service. In the event less than $23.5 million of
rehabilitation costs are allocated to the existing cost-
of:"service, then the Initial Base Rate Cap and any
subsequent Rate Cap used in the calculation of a Final
Rate Cap shall be adjusted upward by $.~006 per every $~
million (or portion thereof) allocated to the Phase III
cost-of-service.
~ipper agrees that it shall not avail itself of any other
Rate Cap that may be made available to it by the Commission.
II:bIC!'92-ISi.S&A
3
u8/! 8192 (3:48pm)
---~
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