NNG - Tariff - Fifth Revised Sheet No. 299
Northern Natural Gas Company Fifth Revised Sheet No. 299
FERC Gas Tariff Superseding
Fifth Revised Volume No. 1 Fourth Revised Sheet No. 299
GENERAL TERMS AND CONDITIONS
4) Best Offer
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Northern will determine which bid constitutes the best offer by determining
the highest economic unit value (per dekatherm of capacity) to Northern. A
calculation based on rate, term and quantity will be used to determine the
highest economic unit value, utilizing the FERC interest rate. The
comparative economic unit value of each bid will be determined by
calculating the Net Present Value (NPV) of the incremental revenues of each
offer over either the term of the offer or five (5) years, whichever is
less, and then dividing by the quantity of the respective bid. However, if
the bid is at maximum rate and the term is more than five (5) years, the
entire term will be considered in determining the economic unit value. The
best bid will be the bid with the highest net present value (NPV). The NPV
is the discounted cash flow of incremental revenues per dekatherm to
Northern for service. Incremental revenues are those revenues above and
beyond the current revenues which Northern already receives from
reservation charges being paid prior to the bid period. Northern will
utilize the NPV calculation based on rate, term and quantity to determine
the highest incremental revenues per dekatherm. The NPV calculation shall
include only revenues generated by the reservation rate or a guaranteed
throughput volume. In those cases where one or more bidders is willing to
pay the maximum recourse reservation rate, the NPV used in such cases is
capped at, and may not exceed, the NPV equal to the maximum reservation
rate available to recourse shippers.
For purposes of determining the best bid and allocating capacity, shippers
willing to pay more than the maximum tariff rate will be considered to be
paying the maximum tariff rate.
In the event equivalent offers are submitted, the capacity will be made
available on a pro rata basis to the equal bidders. Should any one of the
equal bidders veto their pro rata allocation of the capacity, Northern will
then conduct a lottery to select the winning bidder, who will then, if the
bid is not matched under Section 5) below, be allotted its requested
capacity. The remainder of said capacity, if any, will be available to
the other equal bidder(s) on a pro rata basis, which will again trigger the
veto/lottery selection process.
In the event that Northern is conducting an open season for generally
available FDD capacity at the same time as the FDD Right of First Refusal
process, Northern will allocate bids at maximum rates first to generally
available FDD capacity and then on a pro rata basis to FDD Right of First
Refusal capacity. Northern will include in the posting the allocation
parameters for bids at less than maximum rates. In no event will Northern
be required to enter into an Agreement at less than maximum rates.
Northern will post the name of the winning bidder on the website for a
period of no less than five (5) work days. The winning bidder must execute
a Service Agreement within fifteen (15) days of Northern's tender thereof.
Issued by: Mary Kay Miller, V.P. Regulatory & Government Affairs
Issued on: January 25, 2006 Effective: February 25, 2006
