DATE: NOVEMBER 24, 2015 TIME: 1:30 P.M. CST
TO: ALL TENNESSEE GAS PIPELINE COMPANY, L.L.C. CUSTOMERS
RE: BINDING OPEN SEASON #1024
Tennessee Gas Pipeline Company, L.L.C. (“Tennessee”) hereby announces the commencement of this binding open season (“Open Season”) for the firm transportation capacity described below in Section II of this Open Season. This Open Season shall commence at 4:45 P.M. CST, Monday, November 2, 2015, and shall conclude at 4:45 P.M. CST, Friday, December 4, 2015 (the “Open Season Period”).
In this Open Season, Tennessee will accept binding bids for transportation of up to a maximum of 245,000 Dth/day to Tennessee's Zone 1 Station 87 Pool (Meter #420828), 180,000 Dth/day from Station 110 and 65,000 Dth/day from Zone 3 Dominion BR Cornwell (Meter #420044) (the “Offered Capacity”).
The following table provides a segment-by-segment breakdown of the maximum amount of Offered Capacity available for bid in this Open Season:
Deliveries to:
Zone 4 Leg 300 Pool (Meter #420891)
Zone 4 Leg 200 Pool (Meter #420867)
Station 110**
Zone 1 Station 87 Pool (Meter #420828)
Receipts from:
Station 321*
50,000
---------------
180,000
Zone 3 Dominion BR Cornwell (Meter #420044)
65,000
*Any Receipt Meter between Station 321 and Zone 4 Leg 300 Pool (Meter #420891).
**Any Delivery Meter between Station 110 and, as applicable, Zone 4 200 Leg Pool (Meter #420867) or Zone 3 Dominion BR Cornwell (Meter #420044).
The figure in each box in the table above represents the total amount of Offered Capacity available in the described segment. To the extent a potential bidder elects to receive gas upstream of a particular segment, the amount of Offered Capacity that will remain to be awarded in downstream segments will be reduced on a one-to-one basis. For example, if 50,000 Dth/day of capacity is awarded from Station 321 to the Zone 1 Station 87 Pool (Meter #420828), the amount of capacity remaining to be awarded from the Zone 4 Leg 300 Pool (Meter #420891) to the Zone 1 Station 87 Pool (Meter #420828) will be reduced to 130,000 Dth/day (180,000 Dth/day minus 50,000 Dth/day).
Subject to the reservations set forth below in Section IV of this Open Season, the Offered Capacity will be available for up to a twenty (20) year term beginning on August 1, 2016. Tennessee will not accept any bids in this Open Season for service commencing earlier than August 1, 2016, or ending later than July 31, 2036.
The firm transportation service proposed herein will be provided under Rate Schedule FT-A of Tennessee's FERC Gas Tariff, as may be in effect from time to time (“Tariff”). All shippers awarded capacity following this Open Season will have rights regarding secondary service and capacity segmentation as provided in Tennessee's Tariff.
Tennessee's shippers are advised that the Offered Capacity is not existing capacity on Tennessee's system, but rather can only be made available by Tennessee for subscription by Tennessee's shippers if Tennessee commits to make certain facility investments or pay certain costs and/or charges to one or more third parties.
Subject to the reservations set forth below in Section IV of this Open Season, a potential shipper submitting a Service Request Form (“SRF”) in this Open Season pursuant to Section V below may propose in its SRF to pay either: (i) the maximum reservation rate under Rate Schedule FT-A of Tennessee's Tariff applicable to the proposed capacity path (the “Maximum Reservation Rate”); or (ii) a negotiated reservation rate equal to or greater than the Maximum Reservation Rate.
Subject to the reservations set forth below in Section IV of this Open Season, a potential shipper submitting an SRF in this Open Season may propose in its SRF to pay either: (i) the maximum applicable commodity rate under Rate Schedule FT-A of Tennessee's Tariff (the “Maximum Commodity Rate”); or (ii) a negotiated commodity rate equal to the Maximum Commodity Rate.
To the extent any Offered Capacity is awarded to a potential shipper electing to pay a negotiated rate for the proposed service, then the applicability of the negotiated rates to segmented quantities, point amendments or secondary points will be provided for in such shipper's Negotiated Rate Agreement, which will be negotiated on a not unduly discriminatory basis. Any such Negotiated Rate Agreement will also provide for conditions on the pass through of the negotiated commodity rates to replacement shippers to whom capacity is released and to asset managers using the capacity.
Any shipper awarded Offered Capacity following this Open Season shall pay, in addition to the reservation and commodity rates set forth in such shipper's SRF, the following charges and/or surcharges: (1) the applicable general system Fuel and Loss Retention Percentage and Electric Power Cost Rates under Rate Schedule FT-A of Tennessee's Tariff, and (2) all applicable surcharges as set forth in Tennessee's Tariff.
Without limiting or waiving any other rights that Tennessee may have with respect to this Open Season, Tennessee hereby reserves the following rights:
1. As noted above in Section II of this Open Season, Tennessee must commit to make certain facility investments or pay certain costs and/or charges to one or more third parties in order to make the Offered Capacity available. Potential shippers are advised that Tennessee will only commit to pay such costs and/or charges if it is ultimately able to execute Gas Transportation Agreements and Negotiated Rate Agreements that economically justify, in Tennessee's sole discretion, Tennessee's financial commitment. Accordingly, Tennessee reserves the right to reject and/or not award any Offered Capacity to any shipper submitting an SRF proposing to pay Tennessee's Maximum Reservation Rate for the Offered Capacity.
2. To the extent Tennessee fails to execute Gas Transportation Agreements and Negotiated Rate Agreements that economically justify, in Tennessee's sole discretion, Tennessee's financial commitment, Tennessee reserves the right to not commit to pay the costs and/or charges to one or more third parties necessary to create and/or obtain the Offered Capacity.
3. At any time during this Open Season, upon notice and in its sole discretion, to terminate this Open Season, to extend the Open Season Period, or to modify this Open Season.
4. To clarify and finalize SRFs containing non-specific and/or ambiguous bid information (including, without limitation, rate, term, and receipt or delivery points) or discrepancies in bid information, provided that Tennessee shall have no obligation to do so.
5. On a not unduly discriminatory basis, to reject any SRF that, in Tennessee's sole discretion, is incomplete, is inconsistent with the terms of this Open Season, contains additions or modifications to the terms of this Open Season, is otherwise deficient in any respect (including failure to provide credit support as Tennessee deems necessary), or requests service outside the scope of this Open Season.
6. To reject any bid with a term less than twenty (20) years.
7. To reject any bid that does not specify capacity within the paths posted above.
8. To award capacity to mutually agreeable alternate receipt or delivery points if capacity is unavailable at the meters specified in the bid.
9. To award capacity for a quantity less than the bid quantity, if sufficient capacity is not available to award the entire bid quantity.
10. To reject any bid that will result in a reduction of reservation charges.
11. To reject contingent bids.
12. Pursuant to Article V, Section 4.3 of the General Terms and Conditions of Tennessee's Tariff, to negotiate an extension to one or more existing Gas Transportation Agreements (each an “Existing Agreement”) between Tennessee and any shipper awarded all or any portion of the Offered Capacity to extend the path of such shipper's Existing Agreement(s) to include the awarded Offered Capacity; provided, however, Tennessee shall be under no obligation to extend any Existing Agreement for which the shipper is paying a discounted rate.
In order to participate in this Open Season, a potential shipper must submit a binding bid on a completed and executed SRF, in the form attached to this Open Season. In order to be considered eligible to be awarded any Offered Capacity following this Open Season, a potential shipper must submit an SRF that specifies terms, volumes, receipt points, and delivery points that are consistent with the respective dates, quantities and associated receipt and delivery zones outlined above. Available capacity volumes are contingent upon mainline, meter and lateral capacity. SRFs cannot request Offered Capacity in a given segment that exceeds the above-stated maximum volume for such segment. All SRFs should refer to Open Season #1024.
Any potential shipper participating in this Open Season may indicate in its SRF a desire to extend the path and term of one or more of its existing Gas Transportation Agreements (each an “Existing Agreement”) to include any Offered Capacity awarded to such party following this Open Season. In such case, the shipper's SRF must:
1. State the proposed term, volume, and path of the Offered Capacity for which it is bidding;
2. State the rate the shipper is offering for the Offered Capacity; and
3. Identify which Existing Agreement(s), by agreement number, it would like to extend to include any Offered Capacity awarded to such shipper.
To the extent any Offered Capacity is awarded to a shipper that submitted an SRF requesting an extension of an Existing Agreement, Tennessee will endeavor in good faith and in a not unduly discriminatory manner to extend the shipper's Existing Agreement consistent with the shipper's SRF; provided, however, the expiration of the term under the Existing Agreement, as extended, must coincide with the expiration of the term of Offered Capacity awarded to the shipper; provided, further, Tennessee shall be under no obligation to agree to an extension to an Existing Agreement for a volume in excess of the volume of Offered Capacity awarded to the shipper pursuant to this Open Season; provided, further, that the reservation rate to be paid by the shipper shall be a negotiated reservation rate equal to shipper's existing reservation rate (or any other mutually agreeable alternative reservation rate for shipper's existing capacity under the Existing Agreement) plus the reservation rate the shipper agreed to pay for the awarded Offered Capacity.
Parties interested in this capacity should submit a binding SRF via e-mail to TGPBidroom@kindermorgan.com. Parties may confirm Tennessee's receipt of any binding SRF by contacting the Bidroom between 8 A.M. and 5 P.M., Monday through Friday.
All SRFs submitted during this Open Season may be replaced with a higher Net Present Value (“NPV”) bid during the Open Season Period; however, a binding SRF cannot be replaced with an SRF with a lower NPV. Upon completion of this Open Season, all SRFs will be considered binding until the earliest of: (i) [60] days following the completion of the Open Season Period; or (ii) the date on which Tennessee posts notice that all of the Offered Capacity has been awarded; or (iii) the date on which Tennessee posts notice that Tennessee has elected not to commit to pay the costs and/or charges to one or more third parties necessary to create and/or obtain the Offered Capacity.
All SRFs received during the Open Season will be evaluated on an NPV per dekatherm (“NPV /Dth”) basis using the following factors:
NPV/Dth = (En [R*(1 / (1+i)**n)] )/TQ
En = Summation of months 1 through n (Sigma)
n = term in months, which shall not exceed a maximum of 240 months (i.e. 20 years)
R = Incremental monthly revenue
i = Monthly Discount Factor of 0.8333%
TQ = Shipper's TQ under the proposed Gas Transportation Agreement
For purposes of evaluating the NPV/Dth of SRFs submitted in this Open Season, the variable “R” shall not be limited to a maximum value equivalent to Tennessee's Maximum Reservation Rate.
For purposes of evaluating the NPV/Dth of an SRF in which the shipper proposes to extend the path under an Existing Agreement, the NPV/Dth of such SRF shall be calculated based solely upon the term and rate proposed to be paid for Offered Capacity without respect to any other amounts to be paid or proposed to be paid under any Existing Agreement(s).
Tennessee reserves the right to accept any one bid or combination of bids that will result in the largest aggregate NPV for the Offered Capacity.
Ernesto Ochoa (713) 420-1734
Jason Connelly (713) 420-2446
Jim McCord (713) 420-5661
Alison Stringer (713) 420-5176
E-mail TGPBidroom@kindermorgan.com
Tennessee Gas Pipeline Company, L.L.C.
Service Request Form
Open Season #1024
Shipper Information:
Company
(Legal name of entity) ______________________________________________
Primary Contact ______________________________________________
Title ______________________________________________
Address ______________________________________________
Telephone ___________________
Fax ___________________
Email ___________________
Receipt Point [1]
Quantity (Dth/d)
Delivery Point(s)
Quantity (Dth/d)[1]
[1] The sum of receipt point quantities must equal the sum of delivery point quantities.
Contract Term: ___________________
Begin Date: ___________________
End Date: ___________________
Monthly Reservation Rate Information:
□ Recourse Rate □ Negotiated Rate: ________
Additional Information to Clarify Service Request (including minimum contract quantity, if applicable):
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Financial and/or Credit Information:
□ Attached □ Sent Separately
Submitted by:
Name ______________________________________________
Telephone ______________________________________________
Signature ______________________________________________
Signature of Duly Authorized Officer
Date ______________________________________________
Please return this Service Request Form to:
Attn: Ernesto Ochoa
1001 Louisiana Street, Suite 1000
Houston, TX 77002
Phone: 713-420-1734
Email: TGPBidroom@kindermorgan.com