NEW DELIVERY POINT - ACLOTE LATERAL - CLEARWATER-MITCHELL BOULEVARD
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Florida Gas Transmission Company
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P. O. Box 1188 Houston, Texas 77251-1188 (713) 853-6161
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December 16, 1998
Mr. Terry Neenan
Clearwater Gas System
Post Office Box 4748
Clearwater, FL 34618-4748
Re: New Delivery Point - Anclote Lateral- Clearwater-Mitchell Boulevard
Dear, Terry:
Clearwater Gas System ("Customer") has requested that Florida Gas Transmission
Company ("FGT") provide a new delivery point on the proposed Anclote Lateral near the
intersection of Mitchell Avenue and Trinity Oaks Boulevard in Pasco County, Florida. The
capacity of this delivery point will be up to 5,000 MMBtu/day. The attachment sets forth the
description of the facilities and incidentals that require reimbursement ("Reimbursement
Facilities") and the estimated cost of the Reimbursement Facilities. Customer and FGT agree as
follows with respect to the ownership, construction, operation and reimbursement of the
Reimbursement Facilities and certain other facilities to be built by Customer.
1) Absent events offorce majeure or circumstances which make the project uneconomic for
FGT and subject to required approvals, FGT or its agent shall construct, operate and own
the Reimbursement Facilities listed in the Attachment.
2) FGT shall take the appropriate actions to obtain all permits, licenses, authorizations, or
certificates necessary for the construction and operation of the Reimbursement Facilities.
Customer agrees to provide any information needed in preparation of any applications for
such and agrees to support FGT in its efforts to obtain any necessary authorizations.
Upon receipt of all necessary approvals, waivers, and permits which are satisfactory to
FGT and Customer, FGT shall commence construction and, absent events of force
majeure or circumstances which made the project uneconomic for FGT, shall pursue such
construction to completion.
3) Customer shall reimburse FGT for all costs and expenses incurred directly and indirectly
relating to construction of the Reimbursement Facilities including but not limited to, the
cost of permits, materials, installation, surveying, inspection, x-ray, environmental studies,
regulatory filings, attorneys' fees, and other expenses or overhead that may be required
("Actual Cost"). To the extent such reimbursement qualifies as a contribution in aid of
construction ("CIAC") under ~ 118(b) of the Internal Revenue Code (as amended by ~
824 of the Tax Reform Act of 1986), Customer agrees to reimburse or "gross-up" FGT
for income taxes incurred by FGT because of the CIAC income. The gross-up
requirement will be waived if Customer receives a Private Letter Ruling ("PLR") from the
An ENRON/MNAT Affiliate
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Mr. Terry Neenan
Clearwater Gas System
December 16, 1998
Page 2
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Internal Revenue Service stating that FGTs costs in constructing the Reimbursement
Facilities do not constitute a CIAC. Customer agrees that it will bear all the costs of
seeking any such PLR. The estimated total cost, inclusive of tax impact, of the
Reimbursement Facilities is $68,000 as detailed in the Attachment and incorporated herein
("Estimated Cost"). Notwithstanding the Estimated Cost, Customer agrees to pay the
Actual Cost even if such amounts exceed the Estimated Cost, after written notice by FGT
to Customer that Actual Costs exceeds Estimated Cost..
4) In the event customer chooses to build any facilities in conjunction with the
Reimbursement Facilities, Customer agrees that FGT shall have the right to have an
inspector present at locations and times which FGT deems appropriate. Customer further
agrees to reimburse FGT for the cost of such inspector at the rate of $325 per day. The
cost of FGTs inspector is separate and apart from the cost of Reimbursement Facilities,
discussed elsewhere in this agreement, and shall be invoiced and paid separate and apart
from the cost of Reimbursement Facilities. FGT shall invoice Customer for inspection
costs ten (10) days after completion of Customer construction and Customer shall pay said
invoice within ten (10) days from receipt.
5) Prior to the date construction is scheduled to commence, FGT shall notify Customer of
the construction schedule and shall invoice Customer for the Estimated Cost. FGT shall
refund Customer the difference between the Actual Cost and the Estimated Cost if the
Actual Cost is less than the Estimated Cost or invoice Customer for additional amounts if
the Actual Cost is greater than the Estimated Cost. Customer shall pay FGT within fifteen
(15) days of receipt of any invoice from FGT. Unless otherwise mutually agreed,
Customer shall submit such payment by wire transfer to:
NationsBank-Dallas
Account # 4140327972
ABA # 111000025
6) For purposes of this Reimbursement Agreement, construction shall be deemed complete
when all reports are submitted and all work orders are closed. Adequate documentation in
the form of invoices, work orders and receipts for all costs associated with the
Reimbursement Facilities shall be available to Customer for inspection at FGTs office
upon reasonable prior notice during business hours; provided, however, that if Customer
does not submit a written claim for adjustment or correction within one (1) year following
the date that construction of the Reimbursement Facilities was completed, work orders,
receipts and payments shall be deemed final and conclusively correct for all purposes
hereof
7) Should Customer fail to pay part or all of the amount of any invoice rendered by FGT,
interest shall accrue from the due date of such invoice until the date of payment received.by FGT at the lower of the effective prime rate charged by Chase Bank, N.A. plus two
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Mr. Terry Neenan
Clearwater Gas System
December 16, 1998
Page 3
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percent or the maximum allowable interest rate permitted by applicable law, calculated on
a compounded monthly basis.
8) Notwithstanding Paragraph 2 hereof, to the extent transferable, and at no cost to FGT,
Customer agrees to grant to FGT any and all suitable rights-of-way and easements
necessary and/or incidental for the installation, maintenance, operation and removal of the
Reimbursement Facilities and appurtenances deemed essential or desirable by FGT for the
construction, operation and removal of the Reimbursement Facilities and to facilitate the
receipt and/or delivery of gas through such facilities.
Customer agrees to design and operate its facilities downstream of the Reimbursement
Facilities to operate safely at FGT's line pressure.
Customer will maintain a minimum flow rate of 5 MMBtu/hour so that the meter will
operate properly.
Customer will install any and all equipment, including compression, heaters, separators,
and regulators, as needed to protect its facilities downstream of FGT's Reimbursement
Facilities.
9) Subject to any necessary regulatory approvals being obtained, Customer will construct,
own and operate the meter station, regulators and all piping and fencing at the gate station
including acquisition of the site itself ("Customer Facilities. ") These facilities will be
constructed and operated to the design and specifications provided by FGT which have
been mutually agreed to. FGT shall have the right to inspect the facilities during and after
construction, including any future revisions, and reject any facilities not meeting
specifications, United States Department of Transportation codes (Office of Pipeline
Safety), AGA standards, the State of Florida Public Service Commission requirements
and FGT's FERC Gas Tariff requirements. Customer will notify FGT forty-eight (48)
hours in advance of beginning the construction of its facilities so that FGT can arrange for
inspection by FGT personnel. Customer will provide FGT as-built drawings of the
facilities they construct under this Agreement.
10) Customer agrees to provide at no cost to FGT, requested electric service, telephone
service and housing needed for FGT to install Electronic Flow Measurement C'EFM")
equipment.
11) Customer will reimburse FGT, for all sales and use tax, or any other transaction or
privilege tax, associated with the construction and operation of this facility. Customer
shall hold harmless and indemnify FGT for any taxes due upon items and services supplied
by the "Customer" during or after construction, (including but not limited to such
equipment and services as are required in Paragraph 1 0 above) and until Customer's
service agreement under FGT's applicable rate schedule (or successor rate schedule) is
terminated.
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Mr. Terry Neenan
Clearwater Gas System
December 16, 1998
Page 4
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12) Subject to applicable laws and regulations, FGT will deliver gas to Customer at FGT's line
pressure.
13) FGT may require testing of meter facilities by the Customer at reasonable times for
accuracy and FGT may witness such testing. Testing shall occur consistent with FGT's
FERC Gas Tariff, ifapplicable. The cost of such testing shall be borne by the Customer.
14) Customer will comply with all Federal, State and local environmental laws and regulations
and, upon request, shall provide copies of all required permits applicable to the design,
construction, ownership and operation of the Customer Facilities.
15) CUSTOMER SHALL INDEMNIFY AND HOLD FGT HARMLESS FROM ALL
LIABILITIES, LOSSES, CLAIMS, EXPENSES, SUITS, ACTIONS, COSTS, AND
DAMAGES, INCLUDING ENVIRONMENTAL LIABILITY, (AND INCLUDING
ATTORNEYS' FEES, EXPENSES, AND COURT COSTS) ON ANY ACTIONS
INCLUDING INJURY TO AND DEATH OF PERSONS, ARISING FROM ANY ACT,
INCLUDING NEGLIGENCE OR ACCIDENT, IN CONNECTION WITH THE
CONSTRUCTION, INSTALLATION, OPERATION, AND MAINTENANCE OF THE
CUSTOMER FACILITIES AND THE REIMBURSEMENT FACILITIES, PROVIDED,
HOWEVER, THAT CUSTOMER SHALL NOT BE RESPONSffiLE FOR THE
NEGLIGENCE, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT OF: (1)
TIllRD PARTIES (OTHER THAN ANY OF CLEARWATER'S AGENTS
(INCLUDING, BUT NOT LIMITED TO, CONTRACTORS, SUBCONTRACTORS
AND THE LIKE)), (2) FGT OR (3) ANY OF FGT'S AGENTS (INCLUDING, BUT
NOT LIMITED TO, CONTRACTORS, SUBCONTRACTORS, AND THE LIKE).
16) IT IS UNDERSTOOD AND AGREED THAT NOTIllNG IN TIllS AGREEMENT
SHALL CONSTITUTE A WAIVER BY CLEARWATER OF ITS RIGHTS UNDER
FLORIDA STATUTES, INCLUDING SECTIONS 218.70 AND 768.28 THEREOF.
17) CUSTOMER REPRESENTS TO FGT THAT IT HAS ADVISED FGT OF ANY AND
ALL THREATENED, PENDING OR SETTLED COURT OR AGENCY LITIGATION,
REGULATORY OR ADMINISTRATIVE PROCEEDINGS, ENVIRONMENTAL,
HEALTH OR SAFETY CONCERNS RELATED DIRECTLY OR INDIRECTLY TO
THE OBLIGATIONS OF CUSTOMER AND FGT HEREUNDER.
18) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY
LOST OR PROSPECTIVE PROFITS OR ANY OTHER SPECIAL, PUNITIVE,
EXEMPLARY, CONSEQUENTIAL, INCIDENTAL OR INDIRECT LOSSES OR
DAMAGES (IN TORT, CONTRACT OR OTHERWISE) UNDER OR IN RESPECT
OF TIllS AGREEMENT OR FOR ANY FAILURE OF PERFORMANCE RELATED
HERETO HOWSOEVER CAUSED, WHETHER OR NOT ARISING FROM SUCH
PARTY'S SOLE, JOINT, OR CONCURRENT NEGLIGENCE.
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Mr. Terry Neenan
Clearwater Gas System
December 16, 1998
Page 5
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19) In the event the FERC issues an order authorizing construction of the Facilities with
conditions unacceptable to FGT or Customer or without resolving the issue of reduction
rights, FGT shall notify Customer of such unacceptable order and shall have the right to
refuse to accept such certificate and either party may, within 15 days of issuance of said
order, terminate this Agreement, provided, however, in the event Customer terminates this
agreement, Customer shall reimburse FGT for all expenses incurred by FGT; including,
but not limited to costs for engineering, design, regulatory, attorneys and all other
administrative costs. Customer shall pay FGT within fifteen (15) days from receipt of
InVOice.
20) This Agreement and the Exhibit attached hereto contain the entire agreement between the
Parties and there are no representations, understandings or agreements, oral or written,
between the Parties which are not included herein.
If this Agreement correctly states our understanding, please indicate your concurrence by
signing in the space provided below on both originals and returning both originals to the
undersigned, whereupon a fully executed original will be returned to you for your records.
Sincerely,
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JAMES C. DOWDEN
Regional Vice President, Marketing
~~ED TO ~EPTED THIS
~ DAY OF' ,1991:
CITY OF CLEARWATER, FLORIDA
By:
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Michael Roberto, City Manager
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Approved as to fonn and legal
sufficiency:
Attest:
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S-o '-
John Carassas, Assistant City Attorney Fynthia E. Goudeau """:1ty Cl~(k. ..
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Attachment
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ATTACHMENT
To
Construction and Reimbursement Agreement
Dated June 10, 1998
Between the Clearwater Gas System
And Florida Gas Transmission Company
Reimbursement Facilities: Install a pipeline tap, EFM equipment, side valve and pipe
connection to Clearwater's gate station located on the proposed
Anclote Lateral near the intersection of Mitchell Avenue and Trinity
Oaks Boulevard in Pasco County, Florida. Delivery capacity is up
to 5,000 MMBtu/day at line pressure.
Estimated Cost:
Materials
Other
Taxes and Freight-Materials
Contractor
Right-of-Way - Direct Salaries
Engineering - Direct Salaries
Environmental:
Cultural Resources SHPO
T&E (U. S. Fish & Wildlife)
Coastal Zone Permit
Direct Salaries
District Labor
Construction - Direct Salaries
Drafting
As-Built Drawings
EOC Project Management
FGT Overhead
Contingency
Subtotal
Income Tax Gross-up.
Estimate
$10,989
500
1,758
11,770
600
3,000
800
800
1,200
600
7,500
600
2,000
1,200
421
4,212
3.324
$51,274
16.726
$68.000
· Includes income tax gross-up at 32.77%. Tax gross-up may increase as a result of pending
legislation increasing corporate tax.
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