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TSP/TSP Name:  6931794-NATURAL GAS PIPELINE CO. Critical: N
Notice Type Desc (1):  TSP CAPACITY OFFERING Notice Type Desc (2):  TSP CAP OFFERING
Notice Eff Date/Time:  05/23/2019 9:00:24AM Notice End Date/Time:  12/31/2049 9:00:00AM
Post Date:  5/23/2019 9:00:24 AM Notice ID: 40094
Reqrd Rsp:  5 Notice Stat Desc:  INITIATE Prior Notice: 
Subject:  Net Present Value Formula
Notice Text:



NPV Formula - The net present value of any bids submitted in an Open Season under GTC Section 5.1 of Natural's FERC Gas Tariff shall be determined by the following formula:


        A           MR1           MR2                    MRn

NPV = ------   +  ------     +  ------     + . . .  +  ------
             md0         md1           md2                     mdn
    (1+i/365)   (1+i/365)     (1+i/365)               (1+i/365)


NPV           = net present value of bid
MR1, MR2, ..  = guaranteed revenue for each month in the bid term
md0, md1, md2 = cumulative number of days in bid term for 

                specific month evaluated
mdn           = cumulative number of days in the bid term
i             = currently effective Annual FERC Discount Rate
A             = guaranteed revenue from any Advance Payment

                (to the extent applicable)


The following criteria apply to the award of capacity in an Open Season:


Bid Aggregation

In order to determine the successful Bidders, Natural shall aggregate acceptable bids (including prorated bids to the extent applicable) if aggregation would achieve the highest NPV in relation to the available capacity.  


Determination of Highest Economic Value and Prorationing


In any situation where the capacity associated with acceptable bids exceeds the available firm capacity, including situations in which the highest NPV is determined using bid aggregation, then any available capacity will be allocated among bids, up to the MDQ bid, to achieve the optimal solution (highest aggregate NPV for capacity available).  In order to determine the highest economic value of all acceptable bids received, Natural will calculate the NPV of all such bids in two ways: 1) assuming prorationing of bid capacity by one or more Bidders to the extent required to achieve the optimal solution regardless of any bid's stated minimum acceptable quantity and 2) assuming prorationing of bid capacity by all Bidders down to the minimum acceptable quantity set out in the respective bids.  If a bid indicates that the Bidder is not willing to prorate to the extent required by the optimal solution, the available capacity will first be allocated (Initial Allocation) among other bids which indicate that the Bidders are willing to prorate to the extent required by the optimal solution.  The Initial Allocation shall be consistent with the optimal solution for the Bidders participating in the Intial Allocation.  The Bidder(s) not willing to prorate to the extent required by the optimal solution will be afforded the opportunity (irrespective of any stated minimum acceptable quantity) to take any capacity, up to MDQ bid, not allocated to other Bidders under the Initial Allocation.  If allocation of capacity among Bidders in the preceding sentence is required, allocation will be implemented in order to achieve the optimal solution for the capacity remaining to be allocated (irrespective of any stated minimum acceptable quantity), provided that the quantity allocated to a Bidder may not exceed the MDQ bid by that Bidder.  In applying the above procedures, in the event that Natural receives two (2) or more acceptable bids or sets of acceptable bids for service, which produce the same NPV (and produce the highest aggregate NPV), then available capacity will be allocated prorata based on MDQ bid.


NPV Tiebreaker Methodology

If a tie between bids or sets of bids remains at the end of the prorationing process, Natural will apply the Tiebreaking procedures set forth in Natural's FERC Gas Tariff at Section 5.1(d)(6) of the General Terms and Conditions.  


Notwithstanding the foregoing regarding the Net Present Value Formula and criteria for the allocation of capacity, where receipt and delivery points are not available to form a transportation path in an Open Season, such Open Season will only be applicable to bidders whose primary path under an existing transportation agreement would permit a point change at the maximum rate.  In such Open Season, bids on capacity will be allocated pro-rata on the basis of the MDQ bid as a percentage of the MDQ for all bids received in the Open Season.