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2001-047-ORD AFTER REASONABLE NOTICE AND HEARING, TXU GAS DISTRIBUTION'S RATES AND CHARGES WITH COP SHOULD BE CHANGED ORDINANCE NO. 2001-047 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS, FINDING, AFTER REASONABLE NOTICE AND HEARING, THAT TXU GAS DISTRIBUTION'S RATES AND CHARGES WITHIN THE CITY SHOULD BE CHANGED; DETERMINING JUST AND REASONABLE RATES; ADOPTING GENERAL SERVICE RATES, INCLUDING RATE ADJUSTMENT PROVISIONS AND MISCELLANEOUS SERVICE CHARGES TO BE CHARGED FOR SALES AND TRANSPORTATION OF NATURAL GAS TO RESIDENTIAL, COMMERCIAL AND INDUSTRIAL CUSTOMERS; PROVIDING FOR RECOVERY OF RATE CASE EXPENSES; PRESERVING REGULATORY RIGHTS OF THE CITY; PROVIDING FOR REPEAL OF CONFLICTING ORDINANCES; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; Aj'\j1) PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City of Paris , Paris, Texas ("City"), acting as a regulatory authority, has previously suspended the effective date of TXU Gas Distribution's ("Company") application to increase rates in the City in order to study the reasonableness of that application; and, WHEREAS, the City of Paris, in a reasonably noticed public hearing considered the Company's application, a report from the City's consultants who were retained to evaluate the merits of the Company's application and a settlement agreement negotiated with TXU Gas Distribution by a Steering Committee of Cities on the East Region Distribution System; and, WHEREAS, the City has determined that the Company's rates within the City should be changed and that the Company's application should be granted, in part, and denied, in part; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PARIS, PARIS, TEXAS: Section 1. That the findings set out in the preamble to this ordinance are hereby in all things approved. Section 2. That on March 2, 2001, TXU Gas Distribution, a division of TXU Gas Company ("Company") filed with the City Council of the City of Paris a Statement of Intent to Change Residential, Commercial and Industrial Rates charged to consumers within this municipality. Also filed was the Tariff for Gas Service in the East Region Distribution System ("Tariff for Gas Service") and the supporting Cost of Service Schedules ("Schedules"). -1- Section 3. That the existing rates and charges of TXU Gas Distribution are hereby found, after reasonable notice and hearing, to be unreasonable and shall be changed as hereinafter ordered. The changed rates resulting from this Ordinance are hereby determined to be just and reasonable rates to be observed and in force within the City. Section 4. That the Company has agreed to modify the rates proposed in its Statement of Intent and the modified rates are reflected in the revised Tariff for Gas Service attached hereto as Exhibit A. Section 5. That the maximum general service rates for sales and transportation of natural gas rendered to residential, commercial and industrial consumers within the city limits ofthe City of Paris, Texas by TXU Gas Distribution, a division ofTXU Gas Company, a Texas corporation, its successors and assigns, are hereby fixed and approved as set forth in the revised Tariff for Gas Service attached hereto as Exhibit A. The rates reflected in the attached Rate Schedules entitled Residential Service, Commercial Service, Industrial Sales, Industrial Transportation and Industrial Sales & Transportation are found to be reasonable. Section 6. That the Rate Adjustment Provisions set forth in the revised Tariff for Gas Service attached hereto as Exhibit A and entitled Gas Cost Adjustment, Tax & Franchise Fee Adjustment, and Weather Normalization Adjustment are approved. Section 7. That the Company shall have the right to collect such reasonable charges as are necessary to conduct its business and to carry out its reasonable rules and regulations. Such miscellaneous service charges are identified in Rate Schedules 900 1 through 9007 of the attached revised Tariff for Gas Service. Section 8. That the Cities' rate case expenses are found to be reasonable and shall be reimbursed by the Company. The Company is authorized to recover the rate case expenses reimbursed to Cities and the Company's rate case expenses (at an amount not to exceed $85,000) through a per Mcf surcharge based upon total system sales as set forth in the Rider entitled Surcharges in the attached revised Tariff for Gas Service. Section 9. That the aforesaid rate schedules and riders herein approved shall be effective for bills rendered on or after approval of this Ordinance. Section 10. That the rates set forth in this Ordinance may be changed and amended by either the City or Company in any other manner provided by law. Service hereunder is subject to the orders of regulatory bodies having jurisdiction, and to the Company's Rules and Regulations currently on file with the City. Section 11. That unless otherwise noted herein, other than TXU Gas Distribution (a named party), no person or entity has been admitted as a party to this rate proceeding. -2- Section 12. That it is hereby found and determined that said meeting at which this ordinance was passed was open to the public, as required by Texas law, and that advance public notice of the time, place and purpose of said meeting was given. Section 13. That this ordinance shall be served on TXU Gas Distribution by U. S. Mail to the Company's authorized representative, Autry Warren, Rates Manager, TXU Business Services, 1601 Bryan Street, Dallas, Texas 75201-3411. Section 14. That nothing contained in this Ordinance shall be construed now or hereafter as limiting or modifying, in any manner, the right and power of the City under law to regulate the rates and charges of TXU Gas Distribution. Section 15. That all ordinances, resolutions, or parts thereof, in conflict with this Ordinance are repealed to the extent of such conflict. To the extent Public Authority Rates are in effect in the city, those rates are specifically repealed as Public Authority Rates, are now a part of the Commercial rates, and are calculated in accordance with the revenue requirement for Commercial customers. Section 16. That this ordinance shall be effective September 1, 2001, or earlier to the extent otherwise provided herein. PASSED AND ADOPTED this 13th day of August, 2001. ~?~~, Michael J. Pfiester, ayo ATTEST: .~ ~~".-!l.J~. "~.-r $\. Mattie Cunningham, City Clerk ~ AS TO FORM: . Schenk, Cit Attorney -3- TARIFF FOR GAS SERVICE INTHE EAST REGION DISTRIBUTION SYSTEM TXU GAS DISTRIBUTION EXHIBIT A TO ORDINANCE NO. ~OOl-04"7 Tariff for Gas Sarvlce TXU Gas Distribution RATE SCHEDULE: Index of Rates & List of Cities No. 4200 . , APPLICABLE TO: East Region Distribution System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 1 of 4 RATES: 4200 Index 01 Rates and List of East Region Distribution System Cities 4201 Residential Service 4202 Commercial Service 4204 Industrial Transportation 4211-13 Industrial Sales 4221 Industrial Sales & Transportation RATE ADJUSTMENT PROVISIONS: 4208-1 Gas Cost Adjustment 4208-2 Tax & Franchise Fee Adjustment 4208-3 Weather Normalization Adjustment MISCELLANEOUS SERVICE CHARGES: 9001 Connection Charge 9002 Read for Change Charge 9003 Returned Check Charges 9004 Delinquent Notification Charge 9005 Main Line extension Rate 9006 Excess Flow Valve Charge 9007 Certain Stand-by Gas Generators SURCHARGES: 4206 Surcharge Rider Tariff for Gaa Service TXU Gas Distribution RATE SCHEDULE: Index of Rates & List of Cities No. 4200 i APPLICABLE TO: East Region Distribution System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 2 OF 4 LIST OF EAST REGION DISTRIBUTION SYSTEM CITIES: Alba Alma Angus Anna Annona Athens Avery Bardwell Barry Bells Blooming Grove Blossom Blue Ridge Bogata Bonham Brownsboro Caddo Mills Campbell Canton Celeste Celina Chandler Chapel Hill Clarksville Collinsville Commerce Como Cooper Crandall Cumby Dawson Denison Deport Detroit Dodd City Ector Edom Emhouse Emory Ennis Eustace Farmersville Fate Ferris Forney Frankston Frost Gainesville Tariff for Gas Service TXU Gss Distribution RATE SCHEDULE: Index of Rstes & List of Cities No. 4200 APPLICABLE TO: East Region Distribution System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 3 OF 4 Garrett Goodlow Gunter Heath Honey Grove Howe Ilaly Josephine Kaufman Kemp Kerens Knollwood Ladonia Leonard Lindsay Lone Oak Mabank MalakoH Maypearl Melissa Midlothian Mildred Milford Mobiie City Muenster Murchison Nevada Palestine Palmer Paris Pecan Gap Pecan Hill Point Pottsboro Powell Poynor Princeton Quinlan Quitman Ravenna Red Oak Reno (Lamar County) Retreat Rice Richiand Roxton Royse City Sadler Savoy Sherman Southmayd Star Harbor Tariff for Gas Servlca TXU Gas Distribution RATE SCHEDULE: Index 01 Rates & Ust of Cities No. 4200 APPLICABLE TO: East Region Distribution System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 4 OF 4 Sulphur Springs Sun Valley Terrell Tioga Toco Tom Bean Trenton Trinidad Tyler Valley View (Cooke County) Van Alstyne Waxahachie Westminster Whitehouse Whnesboro Whnewright Windom Wone City Yantis Tariff lor Gas Service TXU Gas Distribution RATE SCHEDULE: Residential Service No. 4201 APPLICABLE TO: East Region Distribution System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 1 OF 1 RESIDENTIAL SERVICE Monthly Rate: Subject to applicable adjustments, the following rates are the maximum applicable to residential consumers per meter per month or for any part of a month for which gas service is available at the same location. Customer Charge (Minimum Bill) All Consumption $ @ 7.0000 1.2108 Per Met If the service period is less than 28 days in a month the customer charge is $.2857 times the number of days service. If the consumption contains a portion of an Mcf, a pro rata portion of the per Met charge will be made. Bills are due and payable when rendered and must be paid within fifteen days from monthly billing date. APPLICABLE RATE SCHEDULES/RIDERS Rate Adjustment Provisions: 4208-1 Gas Cost Adjustment 4208-2 Tax & Franchise Fee Adjustment 4208-3 Weather Normalization Adjustment MiscellaneouslServlce Charges: 9001 Connection Charge 9002 Read for Change Charge 9003 Returned Check Charges 9004 Delinquent Notification Charge 9005 Main Line Extension Rate 9006 Excess Flow Valve Charge Surcharges: 4206 Surcharge Rider Tariff for Gaa Sarvlce TXU Gas Distribution RATE SCHEDULE: Commercial Service No. 4202 APPLICABLE TO: East Region Dlatrlbutlon System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 1 OF 1 COMMERCIAL SERVICE Monthly Rate: Customer Charge (Minimum Bill) First 20 Mcf Next 30 Mcl Over 50 Mcl $ 12.0000 @ @ @ 1.2108 Per Mcl 0.9108 PerMcf 0.7608 Per Mcl II the service period is less than 28 days in a month the customer charge is $.5000 times the number 01 days service. II the consumption contains a portion 01 an Met, a prorata portion of the per Met charge will be made. Bills are due and payable when rendered and must be paid within lifteen days from monthly billing date. APPLICABLE RATE SCHEDULES/RIDERS Rate Adlustment Provisions: 4208-1 Gas Cost Adjustment 4208-2 Tax & Franchise Fee Adjustment 4208-3 Weather Nonnalization Adjustment MlscellaneouslServlce Chargea: 9001 Connection Charge 9002 Read lor Change Charge 9003 Returned Check Charges 9004 Delinquent Notilication Charge 9005 Main Line Extension Rate 9006 Excess Flow Valve Charge 9007 Certain Stand-By Gas Generators Surcharges: 4206 Surcharge Rider Tariff lor Gas Service TXU Gas Distribution RATE SCHEDULE: Industrial Transl>ortation No. 4204 , APPLICABLE TO: Esst Region Distribution System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 1 OF 1 INDUSTRIAL TRANSPORTATION Monthly Rstes: The maximum fee for industrial transportation service on the East Region Distribution System is $ .7411 per MMBTU delivered plus applicable taxes exclusive of the backup lee. The above transportation fees include both the fees incurred to move the gas from the receipt point on the transmission system to the city gate and the fee incurred to move the gas from the city gate to the customer's facility. If the fees for transportation service on the transmission system change, the revised fees will be included in the overall transportation rate charged to customers. 100% of the increase in transportation fees incurred to move the gas from the city gate to the customer's facility is to accrue to the benefit of TXU Gas Distribution. Rate Schedule No. 4204 is closed to new customers as of the effective date of this tariff. Current customers taking service pursuant to this tariff will no longer be eligible for this service upon contract termination. Current customers may convert their existing contract to new Rate Schedule No. 4221. When the final contract subject to Rate Schedule No. 4204 expires or is terminated, Rate Scheduie No. 4204 will be cancelled. APPLICABLE RATE SCHEDULES/RIDERS Rate Adjustment Provisions: 4208-2 Tax & Franchise Fee Adjustment Surcharges: 4206 Surcharge Rider Tariff for Gas Sarvlce TXU Gas Distribution RATE SCHEDULE: Industrial Sales Nos. 4211-4213 APPLICABLE TO: East Region Distribution System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 1 OF 1 INDUSTRIAL SALES Monthly Rates: Industrial Rates-N is hereby amended and revised as foiiows: Subject to Company's Iimttations on the availability of each rate, Customer shall receive service under its choice of one of the following rates in accordance wtth the rate selected by Customer as provided in the contract: RATE 4211 First 125 Mcf or less $ 226.29 Allover 125 Mcf @ $ 1.767 per Mcf . " -c- .. . RATE4212 First 600 Mcl or less $1,012.17 Allover 600 Mcl @ $ 1 .621 per Me! ., , >.' , '. ..%TE 4213 ;. .>. . First 1,250 Mcl or less $ 1,954.57 All over 1,250 Mcl @ $ 1.561 per Mcf In all other respects, Industrial Rates-N shall remain in effect as filed with the Ctties in the East Region Distribution System. 100% 01 the increase in industrial margin is to accrue to the benelit of TXU Gas Distribution. Industrial Rate N Is closed to new customers as of the effective date 01 this tariff. Current customers taking service pursuant to this tariff will no longer be eligible lor this service upon contract termination. Current customers may convert their existing contract to new Rate Schedule No. 4221. When the final contract subject to Industrial Rate N expires or is terminated, Industrial Rale N schedule will be cancelled. APPLICABLE RATE SCHEDULESIRIDERS: Rate Adjustment Provisions 4208-2 Tax & Franchise Fee Adjustment Miscellaneous Service Charges: 9005 Main Une Extension Rate Surcharges: 4206 Surcharge Rider Tariff lor Gas Service TXU Gas Distribution RATE SCHEDULE: Industrial Sales Bo. TransDortatlon No. 4221 APPLiCABLE TO: East Region Distribution System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 1 OF 2 INDUSTRIAL SALES AND TRANSPORTATION Monthly Rates: Customer Charge (Minimum Bill) $200.00 per meter Btu transported per month RatelMMBtu First 600 MMBtu $0.6684 Next 650 MMBtu $0.5274 Next 48,750 MMBtu $0.4694 Over 50.000 MMBtu $0.3883 Availability: These rates are available to gas customers who elect to take service under the terms and cond~ions of this Industrial Gas Sales or Gas Transportation Contract and all schedules applicable to the service selected. attached as Industrial Gas Sales or Gas Transportation Contract and Schedules A, B, C, and D. Adjustment for Gas Cost: Each industrial sales custome~s monthly bill shall be adjusted for gas cost as follows: The weighted average cost of gas (as defined below) times the volume factor (as described in Rate Schedule 4208-1 (1 )(a)). The weighted average cost of gas purchased shall be computed by dividing the total amount paid or accrued by TXU Gas Distribution (as reflected by the company's Gas Purchase Accounts), including a production, severance, dedication or gathering tax paid or accrued by company directly or by way of reimbursement to hs gas suppliers, to producers, processors, transporters, or other sellers of gas in the latest available fiscal month by the total volume of pipeline quality gas in MMBtu purchased bycompanyduring said period. In applying the gas cost adjustment clause, the adjustment shall be computed to the nearest one- hu ndredth of one cent. Company, from time to time, may be required by the terms of a gas purchase contract (including an agreed settlement of disputed claim) or by a determination of a regulatory body or court to make additional payments with respect to gas previously purchased by Company. In such case, appropriate adjustments to compensate therefore shall be made in the price payable for gas hereunder as soon as practicable after the time of such payment so that the customer shall bear a proportionate part of any such payment which has not been previously included in the weighted average cost of gas purchased as defined above. Tariff for Gas Service TXU Gas Distribution RATE SCHEDULE: Industrial Sales & TransDortatlon No. 4221 APPLICABLE TO: East Region Distribution System REVISION: II DATE: EFFECTIVE DATE: PAGE: 2 OF 2 APPLICABLE RATE SCHEDULES: Rate Adjustment Provisions 4208-2 Tax & Franchise Fee Adjustment Surcherges: 4206 Surcharges OPTIONAL INDUSTRIAL GAS SALES OR GAS TRANSPORT A nON CONTRACT LS-MC# (For Cerra in Indusrrial Customers Served Inside a City Through Distribution System O"ly) This Contract is entered into effective the da of .20 "Customer:" TXU Gas Distribution, a division of SEND NOTICES TO: TXU Gas Company, "TXUGD:" Address: SEND NOTICES TO: Attention: 301 S. Harwood Street. Suit. 4<;0 Sou,h Dall.... Texas 75201 Fax: eMail: AM: Contract Administration SEND INVOICES TO: F..: (214) 875.3584 Address: eMail: Attention: SEND PAYMENTS TO: eMail: P.O. Box 910255 Dall.... Tnas 75391-0255 SERVICEOPIlON: For the first Contract Year Customer may choose. subject to TXUGO's agreement. sales service with or without plant protection supply service or transportation service with or without plant proteCtion supply service; and the quantities of gas to be purchased or transponed each relevant period. as set out in the Selection of Service Fonn anached hereto as Schedule "A." subject to the tenns set QUI herein. Each annual Selection of Service Fonn agreed upon by Customer and TXUaO will become pan of this Contract. TERM: This Contract win be effective for a Primary Tenn of one (1) Conttact Year. and will continue from Contract Year to Contract Year thereafter. subject to termination under terms seJ: ou[ in Schedule "B.n The first Conll'aCt Year will commence at 9:00 A.M. central clock time on me first day of the month after initial deliveries of gas to Customer are measured through TXUGO's measurement facilities and will end at 9:00 A.M. centtal clock time on the same month and day one year thereafter. or at 9:00 A.M.central clock time: on the day of billi-na months. .20_, whichever is later. Each ContraCt Year after the tint Contract Year will consist of twelve (12) SALES SERVICE RATE: Customer will payTXUGD for the volumes of gas purchased and received by Customer and sold and delivered by TXUGD at the Delivery Point at the latest effective Schedule o(Optional Industrial Rates for gas sales service established for the city in which the Delivery Point is located as they may be chanaed from time to time. In addition Customer will pay TXUGD the Monthly Meter Charge and tax reimbursement as described in Schedule "B." lRANSPORTATION SERVICE RATE: Customer will pay TXUGD for g... delivered at the Delivery Point each billing month at the latest effective Schedule of Optional Industrial Rates for gas transponation service established for the city in which the Delivery Point is locate4 as they may be changed from time to time. In addition Customer will pay TXUGD the Monthly Meter Charge; retention of a percentage of the 2as received far tran5oortatian. as described below: and tax reimbursement as described in Schedule "B." PLANT PROTEcnON SUPPLY RATE: Customer will payTXUGD for the Plant Protection Supply Valume of gas at the latest effective Schedule of Optional Industrial Rates for gas sales service established for the city in which the Delivery Point is located as they may be chanO'ed from time to time, whether Customer takes such volume of aas or not. MONTHLY PLANT PRO'reCllON SUPPLY CHARGE: Customer will pay TXUGD for Plant Protection Supply Service a monthly charge calculated by multiplying the Plant Protection Supply Volume times the number of days in the billing month times the difference between the margin in the first block of the Commercial Rate and the margin in the first block of the Optional Industrial Rate for gas sales service established for the citY in which the OelivM"V Point is located as such difference may chan~e from time co time. RETENTION: TXUGD may retain a percentage of the gas received for transporc (the "Retention Volume") and will take title to such volume of gas as a pare of the Transportation Service Rate. Such percentage will be TXUGD's most recently established companywide distribution lost and unaccounted for gas percentage calculated as provided in 16 TAC Section 7.52(3)(B) treating all TXUGO distribution systems 85 one system. MONTHLY METER CHARGE: Customer wilJ pay TXUGD $200.00 per meter per month as a pare of the Sales Service Rate and the Transnortation Service Rate. RECEIPT POINT(S): The Receipl Point for gas trallsporcation service win be at the Receipt Point as defined in paragraph 8 of Schedule 0 for the City of . Texas, located at and at any active city gate on such distribution system hereafter mutually agreed to in writing by TXUGD and Customer. DELIVERY POINT: The Delivery Point for gas sold or transported will be inside me City of on TXUGD's distribution system downstream from the above city gate at the point of interconnection between TXUGO's measurement facilities and Customer's facilities at Cuslomer's Facility located at COST OF NEW F ACIUTIES: Customet will pay TXUGD S for anv -reauired new or additional facilities oricr to commencement of anv service under this Contract. (Customer's Company Name] TXU Gas Distribution, a division of TXU Gas Company By By Signature Signarorc PrimcdNamc as Anomey.in-Fact for TXU Gas Distribution Prinled Name as Title Signature Page Rev OS/25/01 Attach. to Rate Sch. 4221 01 SCHEDULE "A" TO OPTIONAL INDUSTRIAL GAS SALES OR GAS TRANSPORTATION CONTRACT Selection of Service Form I. Customer gives notlce to TXU Gas Distribution ('1"XUGO") thai Customer. during: the Contract Year beginning at 9:00 A.M central clock time on the _ day of .20_. and ending at 9:00 A M. central clock. time on the _ day of 20_. under the tenns of that certain Optional Industrial Gas Sales or Gas Transportation Contract. dated the _ day of 20_. between Customer and TXUGD (me ''Contract''), electS to receive [CHECK ONLY ONE): ] Sales Service without Plaat ProtectiOIl Supply Senice. Customer agrees to purchase. receive and pay for gas during the Contract Year in accordance with TXUGO's la1eSt effective Schedule of OptionallndusuiaJ Rates for gas sales service in the city in which the Delivery Point is 10000ed (which schedule is incorporated by reference and made a pan hereoO. together with all additional fees. charges and COSlS provided for in this Contract. Having selected sales service without plant protection supply service, Customer aifCCS thaC the gas sold and the related gas sales service provided under the terms of this Contract wiU be subject to the priority of service for c:unailment provided in the Schedule of Optional Industrial Rates and thai TXUGD will have no duty or obligation to provide plant protection supply gas or standby gas supply for Customer. [ ] Sales Service with Plant Protection Supply Service. Customer agrees 10 purchase, receive and pay for gas during the Contract Year in accordance with TXUOO's latest effective Schedule of Optional Industrial Rates for gas sales service in the city in which the Delivery Point is located (which schedule is incorporated by reference and made a part hereof). to pay the Monthly Plant Protection Supply Charge, to pay the Plant protection Supply Rate for the Plant Protection Supply Volume and to pay all the additional related fees, charges and costs provided for in this Contract. Customer agrees that the g:as sold and the related gas sales service provided under the terms of this ContraCt will be subject to the priority of service for cunailment provided in the Schedule o( Optional Industrial Rates. except that Plant Protection Supply Volumes will be subject to cunailment only for reasons of force majeure. . ] Transportation Senice without Plant Protection Supply Senice. Customer agrees 10 receive and pay (or gas transponation service during the Contract Year in accordance with TXUGO's latest effective Schedu-Ie of Optional Industrial Rates for gas transportation service in the city in which the Delivery Point islocatcd (which schedule is incorporated by reference and made a part hereof), and to pay all additional fees, charges. tax reimbursement and coslS provided for in this ContraCt. but Customer does not elect to receive plant protection supply service. Customer, having made this choice, recognizes, understands and agrees that TXUGO will have no duty or obligation to provide Customer or its third-pany gas suppliers with plant protection supply gas, "standby gas supply:' a "back-up" gas supply or any other gas. supply beyond the transportation of Customer' 5 gas under the transportation terms of this ConU3CL [ ] Transportation Senice with Plaut PrOtectiOD Supply Service. Customer agrees to receive and pay for gas transportation service during the Contract Year in accordance withTXUGD's latest effective Schedule of Optional Industrial Rates for gas transportation service in the city in which the Delivery Point is located (which schedule is incorporated by reference and made a part hereof). to pay all additional fees. charges, tax reimbursement and costs provided for in this Contract, to pay the Monthly Plant Protection Supply Charge. to pay the Plant Protection Supply Rate for the Plant Protection Supply Volume and to pay all additional fees. charges, taX reimbursement and costs provided (or in this Contract. Customer agrees that the Plant Prolection Supply Volumes will be subject to cunailment for reasons of force majeure. 2. The undersigned Customer does hereby propose. subject to the agreemenl ofTXUGD expressed by its execution of this Selection of Service Form. the following contraCt quantities: Minimum Monthly Quantity (MinMQ):= 125 decathenns; Maximum Annual Quantity [Per Contract Year] (MAQ) = Maximum Daily Q'uantity (MDQJ = decatherms; dccathenns: Maximum Hourly Quantity (MHQ) = decathenns: and Plant protection Supply Volume := decatherms per day. 3. Customer understands, acknowledges and agrees that TXUGD cannot and does not guarantee a constant delivery of sales gas under this ContraCt. 4. The present Optional Industrial Rate for gas sales service is SO,_ <- It) per decathcrm for the first 600 decatherms; SO._ <-~) per decathenn for the next 650 dccathenns; $0._ <- ~) per deeathenn for the next 48,750 dccathenns; SO._ <- ~) per decatherm for gas transported in excess of 50,000 dc:cathcrms; plus adjusted gas costs as described therein; plus the charge to TXUaD to have the gas transported to the applicable city gate. S. The present Optional Industrial Rate for ttansponation service is 50._ L-. tt) per decatherm (or the first 600 decatherms: SO._ C- tt) per dec:atherm for the next 650 decathenns: 50._ L- tt) per decatherm for the next 48,750 decatherms; $0._ L- tt) per decatherm for gas transponed in excess of 50,000 decatherms. 6. The present difference between the margin in the first block ofche Commercial Rate and the margin in the first block of the Industrial Rate used in the calculation of the Monthly Plant Protection Supply Charge as such difference may change from time to time. The present difference in such margins is Rev OS/25/01 Attach. to Rate Sch. 4221 02 7. RETENTION: TXUGO may retain a percentage of the gas received for U3IlSpon (the "Relention Volume") and will uke title to such volume of gas as a part of the Transponation Service Rate. Such percentage will be TXUGO's most recently established companywide disuibution lost and unaccounted for Bas percentage calculated as provided in 16 T AC Section 7.52(3 )(8) lre3tin[! all TXUGO distribution systems as one system. The presently established percentq:c is q.. 8. If Customer electS uansportation service hereunder. Customer a~s: (a) that TXUGD's receipt and delivery of uanspon gas under the terms and provisi9ns of this Contract is subject 10 limitation. interruption or discontinuation and TXUGO will never be liable in damages or otherwise on account of having sa interrupted or discontinued such receipts or deliveries of las~ (b) to assume any and all risks. including. but not limited la, Ion profits. damaged or destroyed fadlitics;loSl or dama!!ed production, dama~cd or destroyed machinery and/or equipment, and the failure of Customer's facility andlor business due to an interruption or discontinuance of Customer's transport gas supply or of the transportation of such gas under this ContraCt; and (c) to indemnify and hold TXUaO harmless from and against any and all damages. costs, losses and expenses (including: reasonable attorneys' fees) thar. may be sustained by TXUOD due to any claim. demand. suit or action brouaht against TXUGD (whether or not the claim, demand, suit or action is found to be valid) by any penon or entity arising out of, resulting from or connected, in whole or in pan, vtith an interruption or discontinuation of the supply of U'llnsport gas or me transportation of such gas. 9. TXUGO's latest effective Schedule of Optioaallndustrial RIlles in the city in which the Delivery Point is located, including: the terms of me lIi&natul"e Pille, Schedule "A," Scbedule "8" and Schedule "C" for gas sales service; and the signature page, Schedule wA." Schedule "B" aDd Schedule "D" (or gas transportation service, are hereby incorporated by reference and made a part of this Contract. (Customer's Company Name] TXU Gas Distribution, a division of TXU Gas Company By By SilfWure Slpa~ Printed Name Printed Name as Anomey-in-Pact for TXU Gas Distribution as Title ... END OF SCHEDULE "A"... 2 Rev OS/25/01 Attach. to Rate Sch. 4221 03 SCHEDULE "B" TO OPTIONAL INDUSTRIAL GAS SALES OR GAS TRANSPORTATION CONTRACT GENERAL TERMS AND CONDITIONS APPLICABLE TO BOTH SALES SERVICE AND TRANSPORTATION SERVICE 1. Qualification (a) In order to qualify as a Customer and receive service under this Contract a customer must: (i) be served from a connection to a TXUGD distribution system downstream from a city gate and inside the boundaries of a city: (ii) be served without exceeding the capacity ofTXUGD's existing facilities: and (Hi) qualify to receive service as an industrial customer under TXUGD's Rate Schedule No. 200 issued in April of 1999; however, such customer may not be an electric generation customer, and must consume at least 1500 decathenns as an annual average instead of not less than 125 mcfper month of its Connet Year. (b) A customer, other than a residential customer, that is otherwise qualified. but does nol have a minimum gas usage of 1500 decatherms as an annual average. may choose commercial class gas sales service. (c) Service under this Contract will not be available to a customer that has another existing gas sales or transportation contract or agreement related to those facilities described on the signature page of this Contract for gas service from TXUGD's distribution facilities. Nanual gas transportation or sales service under this Contract will only be available to such customers upon the tennination of such other contracts. . (d) Customer must have entered a written agreement with TXUGD in the form of the Contract that is a pan of the approved tariff applicable hereto. (e) Customer must have selected one of the service options and other variable terms and provisions that are agreeable to TXUGD, as provided on the signature page of this Contract and on the Selection of Service Form. which is included as Schedule "A." Such a signature page and such Selection of Service Form will, when agreed to by TXUGD, become a pan of this Contract and incorporated herein. (t) This Contract, including all applicable Schedules and tariffs, constitutes the entire contract between Customer and TXUGD with respect to Customer's facilities described on the signature page for the purposes herein designated. (g) Service under this Contract will only be available where Optional Industrial Rates are in effect. 2. Definitions (a) "Agreement" or "mutual agreement" as used in this Contract in regard to an agreement of the parties on a variable term or provision of this Contract., at inception or in the future, mean an agreement thar will not be unreasonably withheld by either pany; however, the agreement ofTXUGD will necessarily be dependent upon the relevant distribution system operating conditions. which TXUGD will not be required to change, and TXUaD will not be required to change the capacity of its system or add new facilities. (b) "Billing month" means that period of time beginning at 9:00 A.M. central clock time on the first calendar day of a calendar month and ending at 9:00 A.M. cenaal clock time, on the first calendar day of the following calendar month for which TXUGD submits a statement to Customer for the services, fees, tax reimbursement. costs, charges and compensation due to TXUGD under the provisions of this Contract. (c) "Contract Year" means the period of time beginning at 9:00 A.M. central clock time on the first day of the month after initial deliveries of gas to Customer are measured through TXUGO's measurement facilities and ending at 9:00 A.M. central clock time on the same day and month one (1) year thereafter, or as otherwise set forth on the signature page of this Contract. (d) "Day" means the period of time beginning at 9:00 A.M. central clock time on one calendar day and ending at 9:00 A.M. central clock time on the following calendar day. (e) "Decatherm" has the meaning set forth in paragraph 8(a) of this Schedule "B." (0 "Delivery Point" has the meaning set forth on the signature page of this Contract. Rev OS/25/01 Attach. to Rate Sch. 4221 04 (g) "Gas" means natural gas produced from gas wells, vaporized natural gas liquids. gas prodl'ced in association with oil (casinghead gas) and/or the residue gas resulting from processing casinghead gas and/or gas well gas. (h) "Hour" means a sixty. minute period of time. "Hourly" will mean within an hour or over t.le period of an hour. as may be appropriate in the context. 0) "Incorporated herein by reference," "made a pan oflhis Contract" and other words to the same effect mean incorporated within and made a pan of this Contract. (j) "Margin" means the per unit charge in the flfst step or block ofTXUGD's effective Commerdal Rate for gas sales or in the first step or block. ofTXUGD's Optional Industrial Rate for gas sales, exclusive of any gas costs. (k) "Maximum Daily Quantity" has the meaning sel forth in the effective Selection of Service Form. (I) "Mcr' has the meaning sel forth in paragraph g(l) of this Schedule "B." (m) "Month" means the period of time beginning at 9:00 A.M. central clock time on the first day of a calendar month and ending at 9:00 A.M. central clock time on the flTSI day of the succeeding calendar month. (n) "Monthly Plant Protection Supply Charge" has the meaning set fonh on the signature page of this Contract. (0) "Planl Protection Supply Volumes" means Ihe quantity of gas agreed upon in the applicable.Solection of Service Form. (p) "Plant Protection Supply Rate" has the meaning sel forth on the signature page of this Conlfact. (q) "Retention Volume" has the meaning set forth on the signature page of this Conlfact. (r) "Taxes" has the meaning set forth in paragraph ll(b) of this Schedule "B." (s) "Variable lerms and provisions" means those terms and provisions of this Conlracl agreed upon by TXUGD and an individual Customer, that may be unique to that Customer, in order to complete the blanks in the Conn of the signature page or a Selection of Service Form. attached as Schedule "A." that becomes a pan of this Contract. (t) "Year" means the period of time beginning al9:oo A.M. central clock time on any day oCa calendar month and ending at 9:00 A.M. central clock time on the same day of the succeeding calendar year. 3. Cution Customer will have the option for the fltSt Contract Year and each Contract Year thereafter, subject to the agreement of TXUGD, to choose between sales service with or without planl protection supply service and transportation service with or without plant protection supply service subject to the terms of this Contract. as provided in the Selection of Service Form in the form set out in Schedule "A," at least ninety (90) days prior to the beginning of such subsequent ContraCt Year. If Customer fails to make such a selection, or fails to make a timely selection for such a subsequent Conlract Year. the Iype of service provided by TXUGD during Ihe subsequent Contract Year will, subject 10 the ag=ment of TXUGD, remain the same as the service provided during lhe prior Conlract Year. 4. Plant Protection SUUDlv Service (a) A Customer selecting plant protection supply service. as may be mUlually agreed to by TXUGD in Schedule "A," may take up to the Plant Prolection Supply Volume as purchased plant protection supply gas each day during the term of this Contracl. exceplto the extent that TXUGD is unable 10 deliver such gas for reasons of fo",e majeure; however, Customer will pay TXUGD for a volume of planl protection supply gas equal to the Plant Protection Supply Volume agreed 10 in Schedule" A" for each day during the term ofthis Conlract whether such volume of gas is lClually taken by Customer or not. The volume of planl prolection supply gas actually taken by Customer may be less than, but may not exceed Ihe Plant Protection Supply Volume mutually agreed upon by TXUGD and Customer in Schedule uA." (b) Customer will pay for planl protection supply gas al a rate equal to the per unit charge in the latest effective Schedule of Optional Industrial Rates for gas supply service established for the cily in which the Delivery Point is localed as they may change from time to time. 2 Rev OS/25/01 Attach. to Rate Sch. 4221 05 (c) The term "plant protection" means the protection of Customer's Facilitydescribed on the signature page of this ContraCt and the production and processes in Customer's Facility, during: the period of any cunailment of sales service or interruption of lransponation service, to the extent necessary to avoid damage to: (1) Customer's Facility. (2)the product during the manufacturing process, (3) or the material used to ma~ufacture the product during the manufacturing process. "Manufacture." "manufacturing," and "production" may include processes involving Customer's uses of the 'gas sold or transponed that make a product suitable for sale or use and may not he limited to the making of a product from raw materials. (d) For measurement, accounting and billing purposes the last volumes of gas delivered each day are deemed to be plant prolection supply gas. The remainder of the gas delivered, if any, is deemed to be gas transported under the transportation service provisions afthis Contract, giving due consideration to the Retention Volume. for a transportation service Customer and deemed 10 be gas sold and delivered under the sales service provisions of this Contract for a sales service Customer. (e) The delivery and sale of plant protection supply gas will only be curtailed to less than the Planl Proteclion Supply Volume by TXUaO for reasons of force majeure as provided in Schedule "B," paragraph 13. (0 During periods in which a curtailment of gas sales service or interruption of gas transportation service is in effect. a Customer receiving plant protection supply service that has standby fuel must use the standby fuel unless by reasons of force majeure such Customer is unable to do so. During such a period, in which such a Customer is unable to use its standby fuel for reasons of force majeure, TXUOO will provide Customer with plant protection supply service gas, except to the extent TXUaO is unable to do so for reasons of force majeure. _' (g) Notwithstanding any other provision of this Contract, to the extent a Customer receiving plant protection supply service takes less than the Plant Protection Supply Volume during a period of curtailment of gas sales service, a period of interruption of gas transponation service or a period in which TXUGD is unable to deliver plant protection supply gas for reasons of force majeure, Customer will not be required to pay for the portion of the Plant Protection Supply Volume that TXUOO did not deliver and the Customer did not take. (h) Customer will not have a right to take or purchase plant protection supply gas in excess of the Plant Protection Supply Volume during any day. (i) If Customer should take gas in excess of the Plant Protection Supply Volume during a day in a period when TXUOO has no force majeure in effec~ but has placed a curtailment down to or below plant prolection levels in effecI for other reasons, Customer will pay TXUOO for such volumes in excess of the Plant Protection Supply Volume at a rate equal to the greater of the highest price paid for gas by TXUOO during that monthly period or 200% of the highest daily Houston Ship Channel price during that monthly period, as reported in Gas Daily. (j) If the reasons of force majeure that prevent the sale or deHvery of plant protection supply gas to a transponation service Customer by TXUGO are such that TXUGO remains capable of transporting a transportation Customer's gas from the Receipt Point(s) 10 the Oelivery Point, TXUOO will transport such gas to the extent it is capable. giving due regard to the Retention Volume. (k) Plant protection supply gas actually taken and the Plant Protection Supply Volume will not be considered in any calculation of an imbalance in transportation volumes except in order to exclude such purchased volumes from having an effect upon such transponation imbalances. (I) Billing for the sales and purchases of plant protection supply gas will be in the manner described in Schedule "B." paragraph 12. S. Laws. Re2ulations and Warrantv (a) This Contract will be subject to all applicable state and federal laws. orders, directives, rules and regulations of any governmental body, official or agency having jurisdiction over the subject matter hereof: therefore, TXUGD's obligations and liabilities hereunder will be limited accordingly. (b) TXUOO's Schedule OfOplional1ndustrial Rates may be revised or replaced from time to time in the future by a regulatory authority with jurisdiction. Any such revised or new Schedule of Optional Industrial Rates, when lawfully established, will immediately become effective and be applicable to gas sales service, gas transportation service and plant protection supply service under this Contract commencing with gas delivered after the effective date of such change. Should new or different rates, or terms and conditions of service, be established for any service under this 3 Rev OS/25/01 Attach. to Rate Sch. 4221 06 Conlracl by a regulatory authority with jurisdiction, such rate(s) or lenns and conditions of service will supersede conflicting provisions of this Contract. Company will give Customer notice of any such change. togelher with :1 copy of the revised Schedule of Optional Industrial Rates. The notice herein provided for will be deemed to have been given when forwarded by the party giving the same addressed to Customer althe address shown in this Conlract by fltst class mail, postage prepaid. separately or in Customer's billing statement. (c) Customer warrants. to TXUGD that its or'its agent's facilities utilized for the acceptance. receipt. Iransportation or delivery of gas hereunder are not subject to the Natural Gas Act of 1938. as amended. (the "NGA"). As a materia! representation. without which TXUGD would not have been willing to execute this ConO'acl. Customer warrants to TXUGD that Customer and its agents will take no action nor commit any act of omission that will subject this Iransaction. the facilities of TXUGD, or gas that TXUGD has title to or possession of to the jurisdiction of the Federal Energy Regulatory Commission ("FERC") or its successor governmental agency under the terms of the NGA.the Natural Gas Policy Act of 1978. as amended (the "NGPA"'). or any other law. The gas accepted, received, transponed or delivered hereunder shall not have been nOT shall be purchased, sold. transported or otherwise utilized in a manner that will subject TXUGD, its gas. its facilities or gas it has possession of, to the terms of the NGA or the NGPA or any other act causing TXUGD, its gas. its facilities or gas it has possession of to become subject to the jurisdiction of the FERC or a similar federal agency. In addition to, and without excluding any remedy that TXUGD may have at law or in equity, if Customer breaches the above warranties and representations Customer will be liable to TXUGD for all damages. injury and reasonable expense thaI TXUGD may sustain by reason of any breach hereof. Funher, should Customer or its agents Lhrough any act or omission cause any gas or facilities involved in the performance of this Contract to become regulated by or subject to jurisdictional authority of Lhe FERC, a successor governmental authority or the jurisdiction of any other federal regulatory agency, under the terms of the NGA or NGPA or any other law affecting the benefits Qf value of this Conuact, this Conuact will automatically terminate on the day before the date of such occurrence; provided, however such termination will never be construed so as to impair any rights ofTXUGD with regard to such breach of conlract. Customer hereby waives any defense for breach of this paragraph that TXUGD could avoid NGA jurisdiction under the provisions of Section l(c) of such Act. 6. Imn (a) This Contract will remain in full force and effect, subject to the terms and provisions hereof, for a primary term as specified on the signature page of this Contract, and from Contract Year to Contract Year thereafter until canceled by either party giving the other party written notice at least thirty (30) days prior to the end of the primary tenn or prior to the end of any Contract Year after the end of the primary term. However, any termination, cancellation or expiration of this Conb'act will never operate to extinguish the obligation to make payment for monies due hereunder. (b) Service will not commence under this Contract until after 9:00 A.M. on the day of installation of the electronic measurement facilities, related telemetry equipment and an operational telephone line for and compatible with TXUGD's electronic gas measurement facilities and related telemetry equipment at the Delivery Point. 7. Pressures at Points of Receiot and Deliverv (al Customer (or its designee) will deliver gas to TXUGD at the Receipt Point(s) at pressures sufficient to enter TXUGD's pipeline system at such point(s); provided, however, that Customer's delivery pressure into TXUGD's system at the Receipt Point(s) will not exceed TXUGD's maximum allowable operating pressure, as such may vary from time to time, at any such point(s), or cause the pressure at such point(s) to exceed TXUGD's maximum allowable operating pressure. (b) TXUGD will deliver gas to Customer at TXUGD's operating pressure, as such may vary from time to time, at the Delivery Point. 8. Measurements (a) The unit of measurement of gas for all purposes will be the "decathenn." The tenn "decatherm" as used in Ihis Conlract means a volume of gas that contains a sufficient number of British thennal units ("BlUS") per cubic foot of gas such that the product of the volume multiplied by the number of Btu per cubic foot of gas equals one million 0.000,000) Btu, or one (1) MMBtu. determined at a temperature of sixty (60) degrees Fahrenheit. saturated with water vapor and under a pressure equivalent to that of thirty (30) inches of mercury at thirty-two (32) degrees Fahrenheit converted to base conditions of sixty (60) degrees Fahrenheit and an absolute pressure of founeen and sixty-five one hundredths (14.65) pounds per square inch and adjusted to reflect actual water vapor content. Gas measurements will be computed by the measuring party into such units in accordance with the Ideal Gas Laws for volume variations 4 Rev OS/25/01 Attach. to Rate Sch. 4221 07 due to metered pressure and corrected for deviation using average values of recorded relative density and flowing temperature, or by using the calculated relative density detennined by the method mentioned in paragraph (c) below. In no circumstance will the average value of flowing temperature or relative density be determined for a period of less than one day. , (b) The facilities installed for measurement of gas hereunder will be installed and operated. and gas measurement computations will be made. in accordance with current industry standards. Orifice metering will be done in accordance with the latest version of A.G.A. Report No.3- ANSUAPI 2530. Positive displacement and turbine metering will be done in accordance with the latest version of A.G.A. Repon No.7. Electronic Gas Measurement (EGM) will be done in accordance with the latest version of API Manual of Petroleum Measurement Standards Chapter 21 - Row Measurement Using Electronic Metering Systems. (c) TXUGO may at its expense properly install and operate a device of standard make to continuously determine or record flowing temperature. The temperature values shall be used in gas measurement computations. With respect to relative density (specific gravity) of the gas, such shall be detennined by (i) [on-site] sampling and laboratory analysis: or (ii) any other method which is of standard industry practice; (Hi) provided, however. that eilher party may at its own expense properly install and operate a recording relative density instrUment of standard make and in this event the relative density as recorded shall be used in the gas measurement computations. (d) The average heating value (in Btu) and relative density of the gas delivered hereunder by either party may be dete""ined by the use of recording instruments of standard type. which may be installed and operated by TXUGO al the measuring point, or at such other point or points as are mutually agreeable to both parties; provided. however. if there is no Btulrelative density instrument at a particular Receipt or Delivery Point specified herein or agreed upon hereunder. then the healing value and relative density of the gas at such point may be determined by [on-site] sampling and laboratory analysis. (e) The terms "decathenn" and "MMBtu" may be used interchangeably in this Contract as a measure of volume or heat content under the conditions stated in paragraph 8(a), and may be convened from one to the other in accordance with the Ideal Gas Laws under those conditions when necessary. (f) The te"" "Mcr' means one thousand (1,000) cubic feet of gas under the conditions stated in paragraph 8(a). (g) In gas measurement computations the detenninations for the average values for meter pressure. relative density and flowing temperature values will be detennined only during periods of time when gas is actually flowing through the measuring facilities. 9. Measurin2 Eauinment and Testin2 (a) The gas delivered to TXUGO (or its designee) at the Receipt Point(s) for transportation by TXUGD will be measured by means of gas measuring devices of standard type that wiJI be installed. operated and maintained by TXUGO (or its designee) and gas delivered to Customer at the Delivery Poin~ whether sold or transported, will be measured by electronic gas measurement facilities of standard type that will be installed. operated and maintained by TXUGD (or its designee). Gas measurement devices and equipment will be tested and adjusted for accuracy on a regular schedule by TXUGD (or its designee). (b) If adequate measuring facilities are already in existence at the Receipt Point(s) and adequate electronic measuring facilities are already in existence at the Delivery Point hereunder. such existing measuring facilities will be used for so long as. in TXUGD's sole opinion. they remain adequate and the pany having title to such facilities will retain title to such facilities. (c) It is agreed that it will be necessary forTXUGD to install electronic gas measurement facilities at the Delivery Point in order to comply with the various measurement and monitoring provisions of this Contract, if. in TXUGD's sole judgement, adequate electronic gas measurement facilities are not already located at the Delivery Point. (d) If new or additional facilities are required to effectuate the receipt or delivery of gas hereunder. Cuslomer agrees to reimburse TXUGD. within thirty (30) days from the date of receipt ofTXUGO's invoice, for the cost of any tap valves. measuring facilities and associated equipment and all labor and overhead expenses (including applicable federal income tax imposed as a result of installation of such facilities), attributable to the installation of such equipment. If the invoiced amount is not paid when due. interest on all unpaid amounts will accrue at the rate of one and one-half percent (1-1/2%) per month, or the highest rate allowed by law, whichever is less. from the date such amount is due TXUGO. IfTXUGO does not receive total reimbursement through the payment of such invoice 5 Rev OS/25/01 Attach. to Rate Sch. 4221 08 within sixty (60) days from Customer's receipt ofTXUGO's invoice. TXUGO may suspend andlor tenoinate this Contract. (e) It is agreed that it will be necessary for TXUGD to install elecD'onic gas measurement facilities at the Deliverv Point in qrder to comply with the various measurement and monitoring provisions of this Contract. if. in TXUGD:s sole judgement. adequate elecD'onic gas measurement facilities are not already located at the Delivery Point. (I) If TXUGD installs any new eleCD'onic gas measurement facilities. related communications equipment or telemetry equipment. Customer agrees to pay TXUGD the amount specified in the Cost oCNew Facilities section of the signature page of this Contract within ninety (90) days of the date of initial deliveries under this Contract. to cover the initial cost of all such facilities (including applicable federal income tax imposed as a result of installation of such facilities) and related sel-up expenses related to all such new facilities. All such facilities will be the sole property ofTXUGD and will be operated and maintained by TXUGD at TXUGD's expense. If any amounts due under this paragraph are not paid when due, interest on all unpaid amounts will accrue at the rate of one and one.halr percent (1-1/2%) per month. or the highest rate allowed by law, whichever is less. from the date such amount is due TXUGD. IfTXUaO installs new electronic gas measurement facilities, TXUGO agrees to provide and maintain a telephone connection to, and a compatible and operational telephone line for, TXUGD's electronic gas measurement facilities. (g) If at any time after the date of initial deliveries hereunder TXUGD determines that additional facilities are required to effectuate the receipt or delivery of gas hereunder, Customer will reimburse TXUGO, within 30 days from the date of receipt of TXUGD's invoice, for the cost of any tap valves, measuring facilities and associated equipment and all labor and overhead expenses (including applicable federal income tax imposeq as a result of installation of such facilities), attributable to the installation of such equipment. If the invoiced amount is not paid when due. interest on all unpaid amounts will accrue at the rate of 1- J/2% per month, or the highest rale allowed by law, whichever is less, from the date such amount is due TXUGO. IfTXUGD does not receive total reimbursement through the payment of such invoice within 60 days from Customer's receipt of TXUGD's invoice, TXUaD may suspend and/or terminate this Contract. (h) It is understood and agreed that although Customer will reimburse TXUGD for any tap valves, measuring facilities and all associated costs (including income taxes) incurred by TXUGD in establishing any Receipt Point(s) and/or the Delivery Point hereunder, Customer may. in such event, receive only the ownership of such measuring facilities, but TXUGD will receive ownership of all tap and tap valve installations and aU associated equipment. TXUOD will be solely responsible for all activities in connection with said measuring facilities and aU tap and tap valve installations and all associated equipment, including. but not limited to. operation, testing, calibration, adjusting, repair and replacement (at Customer's expense), and maintenance, necessary for performance of this Contract until TXUGD disconnects and removes the measuring facilities after termination of this Contract. After such disconnection and removal. Customer will have the right to claim and take possession of such measuring facilities (previously paid for by Customer) from TXUGD. Customer's failure to so claim and take possession of such measuring facilities within ninety (90) days of TXUGD's notice of disconnection and removal thereof, will constitute a waiver by Customer of any right, title or interest in and to such measuring facilities and the transfer of all right, title and interest therein to TXUGD. TXUGD will retain ownership of all equipment associated with tap and tap valve installations. (i) The Customer will have access to observe TXUOD's Delivery Point measuring facilities at all times, but all maintenance, calibration and adjustment of the Delivery Point measuring facilities will be done only by the employees or agents ofTXUGD. Records from all such measuring facilities will remain the property ofTXUGD and will be kept on file by TXUGD for a period of not less than two (2) years. However. upon request of Customer within such two (2) year period, TXUGD will make the measurement records from the measuring facilities, together with any calculations therefrom, available to Customer for inspection and verification, subject to return by Customer to TXUGD within thirty (30) days after receipt thereof. (j) Customer may. at its option and expense, install and operate measuring facilities. check meters and related instruments. and equipment. in a manner which will not interfere with TXUGD's equipment. to check TXUGO's Delivery Point measuring facilities, instruments and equipment, but the measurement of gas for the purpose of this Contract, both at the Delivery and Receipt Points, will be by the facilities ofTXUGD (or its designee) only, except as hereinafter specifically provided. The gas measurement facilities, check meters, instruments, and equipment installed by each pany at the Delivery Point will be subject at all reasonable times to inspection or examination by the other party, but the calibration and adjustment thereof, as well as those at the Receipt Point(s), will be done only by the installing pany. 6 Rev OS/25/01 Attach. to Rate Sch. 4221 09 (k) TXUGD will. at Customer's written request. give to Customer notice of the time of all tests ,,r the Receipt Point or Delivery Point electronic gas measuring facilities. as may be applicable. sufficiently in adVa\lCe cf such tests so that Customer may conveniently have its representatives present; provided. however. that ifTXUGD has given such notice to Customer and Customer is not present at the time specified. then TXUGD may proceed with the tests as though Customer were present. TXUGD will give notice to Customer's Receipt Point or Delivery Point Designee (who is responsible for the physical receipt or delivery of gas at the point), as may be applicab.e, of the time of all tests of such eleco-onic "gas measwing facilities sufficiently in advance of such tests so that Customer's desi1!nee may conveniently be present; provided. however. that ifTXUGD has given such nouce to Customer's designee and Customer's designee is not present at the time specified. then TXUGD may proceed with the test as though Customer's designee were present. (I) Gas measurements computed by TXUGD (or its designu) will be deemed to be correct except where the gas measurement facilities are found to be inaccurate by more than one percent (1%), fast or slow, or to have failed to register, in either of which cases TXUGD will repair or replace the measurement facilities. The quantity of gas delivered while the measurement facilities were inaccurate or failed to register will, at TXUGD's dis,cretion be determined by: (i) the readings of Customer's check meter, if installed and in good operating condition; (ii) by correcting the error if the percentage of error is ascertainable by calibration or mathematical calculation; or (Hi) by estimating the quantity on a basis of deliveries under similar conditions when the measurement facilities were registering accurately, (m) It is understood and agreed that Customer's transportation gas will be part of and will be measuled as a part of a commingled stream of gas by the measuring pany at the Receipt Point(s) such that the quantity 0: gas delivered by Customer to TXUGD (or its designee) at the Receipt Point(s) for transponation under this Contra,et may be determined by an allocation methodology provided for in balancing provisions in this Contract or in another agreement between: (A) Customer and Customer's transporter that delivers such gas to the Receipt Point(s); (B) TXUGD and Customer's transporter that delivers such gas to the Receipt Poinl(s); Dr (C) TXUGD and Customer. 10. Easement. Access. Removal Customer will provide, in accordance with TXUGD's specifications, the necessary service lines on Customer's premises to connect with TXUGD's lines and suitable space and an easement for TXUGD's lines and other equip- ment, including, but not limited to, a telephone line and associated equipment related to elecuonir. gas measurement facilities and telemetry equipment. Customer will use due care to protect TXUGD's propeny that is located on Customer's premises from damage and will pennit no person other than an agent ofTXUGD, or a person otherwise lawfully authorized, to tamper with, inspect or remove same. All property belonging to TXUGD and localed on Customer's premises will be removable by TXUGD at any time during the term of this Contract and within a reasonable time after its termination or after reasonable notice of Customer's desire to have such propeny removed, title thereto remaining in TXUGD at all times. TXUGD will have full and free ingress to and egress from Customer's premises for the consauction, inspection, maintenance, repair and removal ofTXUGD's property thereon or for any purpose connected with the service provided under this Contract. 11. Taxes (a) Customer agrees to pay TXUGD, by way of reimbursement. all Taxes paid by TXUGD with respect to the sales service, the transportation service, the plant protection supply service and any other commodity or service provided hereunder, and that may be related to any associated facilities involved in the performance of this ContracL If any such Taxes paid by TXUGD to any governmental authority are calculated based upon the value of or price paid for the gas transported hereunder, Customer will disclose to TXUGD the purchase price of such gas to enable TXUGD to calculate and pay all such fee. and taxes to appropriate governmental authorities in a timely manner. If Customer fails or refuses to disclose the purchase price of such gas within sixty (60) days from the date the related lransponation service is provided, TXUGD will have the right to pay such fees and taxes based upon the highest prices reported for the period in Gas Daily for gas purchased or gas sold in the Stale of Texas and to be reimbursed by customer. ]n any event. Customer agrees to indemnify TXUGD for, and hold TXUGO harmless from, any and all claims, demands. losses or expenses, including attorneys' fees, which TXUGD may incur as a result of Customer's failure or refusal to disclose the purchase price of gas transported hereunder. 7 Rev OS/25/01 Attach. to Rate Sch. 4221 10 (b) The lenn ''Taxes'' as used herein means all taxes and fees levied upon andlor paid by TXUGD (other than ad valorem. capital stock. income or excess profit taxes (except as provided herein), general franchise taxes imposed on corporations on account of their corporate e~stcnce or on their right to do business within the state as a foreign corporation and similar taXes), including, but notlimitcd to, gas utility taX. street and alley rental fees set out in franchise ordinances, licenses. fees and other charges levied, assessed. or made by any governmental authority on the act, right or privilege of selling, transponing, handling or delivering gas. which taxes or fees are based upon the volume, heat content. ...alue or sales/purchase price of the gas. or transponation fee payable hereunder. any other fee. charge or payment hereunder and applicable federal income tax imposed as a result of installation of equipment at the Delivery Point or Receipt Point(s) under the terms of this Contract. Any income laX costs of TXUaO that have been reimbursed to TXUGD by Customer under paragraphs 9(d) and 9<0 will not be reimbursed to TXUGD by CUSlomer under this paragraph 11. 12, BiIlim!. Accountiml and Reoons (a) On approximately Ihe fifteenth (15th) day of each month, TXUGD will render to CUSlomer a Slatement for compensation for all fees. charges. costs. tax reimbursement and services payable under Ihis Contract for the preceding month. showing either the number of Btu or the number of decatherms delivered at the Receipt Point(s) and Delivery Point. the amount of compensation due to TXUaD under this Contract, including tax reimbursement. other reasonable and peninent information that is necessary to explain and support the same and any adjustments made by TXUaD in determining the amount billed. TXUGD may deliver to Customer such statements of amounts owed to TXUaD by United States mail (first class. registered or certified), postage prepaid. fax. electronic medium, email or delivery service at the mailing address or elecU'onic medium address provided on the signatW'C page of this Contract. The fax. email. mailing address and electronic medium address provided on the signatqte page of this Contract may be changed at any time by either pany upon thiny (30) days prior wrillen nOlice to the other pany. (b) Customer will pay TXUGD withina period often (10) days from the date TXUGD's statement selling out the compensation due under this Contract for all fees. charges, costs is deposited prepaid in the United States mail. or as to paymenr which is otherwise due, according to the measurements, computations and rates herein provided. TXUGD hereby agrees. however. that Customer may pay any such statement by bank wire transfer by directing the bank wire transfer 10 TXUGD at Chase Texas Bank. Dallas. Texas. ABA No. 113000609. for deposit to TXUGD Account No. 08805016795. To assure proper credit. Customer should designate the company name, invoice number and amount being paid in the Fedwire Text Section. If the invoiced amount of any payment due is not paid when due, interest on all unpaid amounts will accNe at the rate of one and one half percent (1-1/2%) per monlh. or the highest rate allowed by law. whichever is less, from the date such amount is due TXUGD; provided, however no interest will accrue on unpaid amounts when failure to make payment is the result of a bona fide dispute between the parties hereto regarding such amounts (and Customer timely pays aU amounts not in dispute), unless and until it is ultimately detennined that Customer owes such disputed amount, whereupon Customer will pay TXUGD thai amount. plus interest computed back to the original payment due dare, immediately upon such determination. The designated banks. addresses and accounts for wire transfer may be changed at any time by TXUGD upon thirty (30) days prior Mitten notice to Customer. (c) Notwithstanding any other provision of this Contract. Customer will make payments for all gas service under this Contract beginning with initial deliveries. (d) If Customer fails 10 pay bills for service within twenty (20) days from the date they are rendered hereunder or otherwise defaults under this Contract. Company may suspend service and deliveries of gas and such suspension will not prevent enforcement by Company of any of its legal rights. Waiver by Company of a particular default hereunder will nOI be deemed a waiver of subsequent defaults whether similar or dissimilar. (e) Each party hereto will have the right at all reasonable times to examine the measurement records and charts of the other party, or its agent/designee if any. to the extent necessary to verify the accuracy of any statement. charge, computation or demand made under or pursuant to any of the provisions in this Contract. If any such examination reveals any inaccuracy in such previous billing, the necessary adjustments in such billing and payment will be made; provided. that no adjustments for any billing or payment will be made for any inaccuracy claimed oftu thtlap.. of twenty five (25) monrhsfrom the rendition a/the invoice relating thereto. (f) If Ihe credit worthiness or financial responsibility of Customer should, in the sole opinion ofTXUGD. ever become unsatisfactory, then upon request by TXUGD at any time and from time to time during the term of this Contract, Customer will deposit wilh TXUGD (i) such amount of money requested by TXUGD. or (ii) a letter of credit in a fonn acceptable to TXUGD from a financial institution acceptable 10 TXUGD in an amount requesled by TXUGD, to guarantee the payment of statements and invoices hereunder. as wen as any possible imbalances 8 Rev OS/25/01 Attach. to Rate Sch. 4221 11 hereunder. Upon the tennination of this ConO'acl. any money so deposited, less any amount due TXUGD by Customer, will be refunded to Customer. 13. Force Maieure (a) In the event either pany is rendered unable, wholly or in pan. by force majeure to carry out its obligations under this Contract. except the obligation to pay monies due hereunder. it is agreed that. on such pany's giving notice and reasonably full paniculars of such force majeure, in writing or by fax. email. elecO'onic transfer or telecopy, to the other party within a reasonable time after the occurrence of the cause relied on, the obligations of the pany giving such notice. to the extent they are affected by such force majeure. will be suspended during the continuance of any inability so caused, but for no longer period, and such cause will, so far as possible. be remedied with all reasonable dispatch. Inability or failure of TXUGO to deliver or TXUGD to receive gas or perform under this Contract may not be the basis of claims for damages sustained by either party or for breach of contract when due to force majeure. (b) The term "force majeure," as employed herein, means acts efGod; the elements; strikes. lockouts or other labor troubles or industrial disturbances; acts of the public enemy. wars. blockades. insurrections. civil disturbances and riots. and epidemics: landslides. lightning, earthquakes. fires. storms. floods and washouts; acts. arrests, orders. directives. restraints and requirements of the government and governmental agencies. whether federal. state. civil or military; accidents: explosions; breakage. accident or obstructions involving a pipeline. machinery or lines of pipe; repairs or outages (shutdowns) of power plant equipment or lines of pipe for inspection, maintenance. change or repair: freezing of lines of pipe; depletion or failure ofTXUGO's gas supply; fluctuations in gas pressure; demands in excess of the capacity of TXUGO's equipment. pipelines or TXUGO's sources of gas supply; and any other causes. whether of the kind enumerated or otherwise. not reasonably within the control of the p~y claiming suspension. It is understood and agreed that the handling of litigation with third parties of any fact or issue and the senlement of strikes or lockouts will be entirely within the discretion and control of the party involved, and that the above reasonable dispatch will not require any particular action or the settlement of strikes or lockouts by acceding to the demand of the opposing party when such course is deemed to be inadvisable or inappropriate in the discretion of the pany involved. 14. Waiver of Breaches. Defaults or Rillhts. Performance duriml Defaull No wai ver by either party hereto of anyone or more breaches, defaults or rights under any provision of this Contract will operate or be construed as a waiver of any orner breaches. defaults or rights. whether of a like or of a different character. By providing \\triuen notice to the other pany. either pany may assen any right not prcviously asserted hcreunder or may assert its right to object to a default not previously protested. Except as specifically provided herein. in the event of any dispute under this Contract, the panies will. notwithstanding the pendency of such dispUle. diligently proceed with the performance of this Contract withoUl prejudice to the rights of either parry. 15. Remedv for Breach Except as otherwise specifically provided herein, if either party fails to perform any of the covenants or obligations imposed upon it in this Contract (except where such failure is excused under the Force Majeure provisions hereoO, then the other party may. at its option (without waiving any other remedy far breach hereoO. by notice in writing specifying the facts giving rise to the default has occurred. indicate such party's election to terminate this Contract due to such failure. However, Customer's faiJureto pay TXUGO within a period often (\0) days following Customer's receipt of written notice from TXUOO advising of such failure to make payment in full within the time specified previously herein. will be a default that wi)) give TXUGO the right to immediately terminate this Contract, unless such failure to pay such amounts is the result of a bona fide dispute between the panies hereto regarding such amounts hereunder and Customer timely pays all amounts not in dispute. With respect to any other matters. the pany in default will have thirty (30) days from receipt of such notice to remedy such default. and upon failure to do so, the party sending the notice of default may terminate this Contract from and after the expiration of such thirty (30) day period by sending the other parry a notice of termination within thirty (30) days from the end of the prior thirty (30) day period. Such tennination will be an additional remedy and will not prejudice the right of the party not in default to conect any amounts due hereunder for any damage or loss suffered by it and will not waive any other remedy to which the pany not in default may be entitled for breach of this Contract. 16. DisfJute Resolution Pursuant to the Federal Arbitralion Act, tM parties hereby agree that any controversy, claim or alleged breach, including but not limited to torts and statutory claims, arising out of or related to this Contract shaU be settled by binding arbitration administered by the American Arbitration Association ("AM ") 9 Rev OS/25/01 Attach. to Rate Sch. 4221 12 in accordam:e with its Commercial Arbitration Ruler. Demand for arbitration may be /Mde no later than the time that such aCMn would be permitted under the applicable Texas statute of limitation. Any disputes regarding the timeliness of the demandfor arbitrolion sluzJJ be decided by the arbitraJor(s). Judgment upon the award rendered by the arbitrator(s) may be entered in any Court having jurisdiction thereofin order to obtain compliam:e therewith. Any case in which any cuum, or combination of clain}s, exceeds $500,000 wiU be subject to the AM 's Large, Complex Case Procedures and decided by Ihe majority of a panel of three (3) neutral arbitrtJJors, In rendering the award, the arbitrator(s) wiU determine the rights and obligations oflhe parties eu:cOrding to the laws of the SltJJe of Texas (excluding any conflict of law principles), but punitive and exemplary damages may not be awarded. The arbitrolion proceedings and hearings wiU be conducted at the Dallas Regional Office of the AM or tJJ such other place as may be selected by mutual agreement. No party nor the arbitratorl,s) may disclose the existence, content or results of any arbitration hereunder withoul the prior wrinen consent of aU parties. 17. Pioeline and Facilitv Safety Customer's piping and facilities downstream from or connected to the Delivery Point may be subject to potential hazards such as corrosion and leakage. Consequently. such piping and facilities should be inspected periodically for leaks and damage. If metallic materials are used. they should be regularly inspected for corrosion damage. If any deterioration or unsafe conditions are discovered. they should be repaired or the affected facility replaced. Additionally. when any excavation work is planned. all buried facilities and piping in the area sho~1d be located before beginning such work. Operators of underground facilities and piping on Customer's property, including TXUGD, should be notified of the planned excavation activities by contaCting the Texas "One CaU" service at (800) 344-8377. If the excavation is in the vicinity of any gas piping or facilities, they should be localed prior to beginning work and excavation near the piping or facilities should be accomplished by hand digging. Plumbers and heating contractors can assist in locating, inspecting and repairing Customer's buried piping and facilities. 18. Confidentialitv TXUGD and Customer agree to keep the tenns and provisions of this Contract confidential and to not disclose the terms of this Contract to any third parties. If disclosure is sought through process of a coun. a government or a city. state or federal regulatory agency. the party from whom disclosure is sought will resist disclosure through all reasonable means and will immediately notify the other party to allow it the opportunity to participate in such proceedings. However, each party will have the right to make such disclosures, if any. to governmental agencies and to its own attorneys, auditors, accountants and shareholders that will in turn maintain its confidentiality. TXUaD and Customer agree to cooperate to maintain confidentiality of this Contract and to obtain a reasonable protective order or agreement to maintain that confidentiality under circumstances in which disclosure becomes necessary . 19. Miscellaneous (a) All notices, requests, demands and statements provided for in this ContraCt must be given in writing, directed to the party to whom given, and mailed to, or delivered at. such pany's address as specified on the signature page of this Contract or at such address as each party may by like notice later give to the other. Such mailed notices will be deemed to have been given when deposited in the United States mail (first class, registered or certified), postage prepaid, or sent by fax, electronic medium. cmail or independent delivery service at the mailing address provided herein. In the case of hand delivery, notices will be deemed to have been given when delivered to a representative of either party by a representative of the other party. (b) This Contract constitutes the entire agreement between the parties covering the subject matter hereof, and there are no agreements, modifications, conditions or understandings, written or oral. express or implied, pertaining to the subject matter hereof that are not contained herein. No representation or statement of any representative ofTXUGD will be a part of this Contract nor an inducement to the execution hereof unless incorporated fully herein and this Contract may not be amended except in writing duly executed by the parties. (c) Modifications of this Contract will be or become effective only upon the mutual execution of appropriate supplemental agreements or amendments hereto in writing by duly authorized representatives of the respective parties. 10 Rev OS/25/01 Attach. to Rate Sch. 4221 13 (d) The captions or headings preceding the various pans of this Contract arc inserted and included solely for convenience and will never be considered or given any effect in consuuing this Contract or any part of this Conlracl, or in connection with the intent. duties. obligations or liabilities of the panics hereto. (e) This Contract wilt be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns: provided. however, that this Contract may Jot be transferred or assigned by Customer without the prior written consent of TX1JGD. and such consent may not be unreasonably withheld. Any purported transfer or assignment without such consent will be null and void and will not operate to release any obligation of Customer under this Contract. (f) TXUGD and Customer intend to be legally bound by the terms and provisions set out in this Contract. Both TXUGD and Customer intend, acknowledge and agn:e that this Contract is entered into solely for the respeclive benefit ofTXUGD and Customer. No provision of this Contract. either express or implied, will be interpreted or construed as conferring any rights. remedies or claims upon any person or entity not a party to this Contract. except for a successor or assignee consented to as provided herein. (g) This Contract is made in the Stale or Te.... and will be governed by the laws or the State or Texas, without regard to conniet 01 laws provisions. (h) If any dispute under this Contract is not resolved by arbitration and results in litigation in the courts, Dallas County, Texas, will be the proper venue Cor such litigation. (i) TXUGD will not be liable for any loss. damage or injury resulling from the gas or its use aft~r it flows out of facilities or equipment owned by TXUGD, or its agent or designee, and into facililies or equipment owned by Cuslomer, or its agent or designee, althe Delivery Point. all risks Ihereof and therefrom being hereby assumed by Customer. ... END OF SCHEDULE "B" ... II Rev OS/25/01 Attach. to Rate Sch. 4221 14 SCHEDULE "C" TO OPTIONAL INDUSTRIAL GAS SALES OR GAS TRANSPORTATION C(lSTRACT GENERAL TERMS AND CONDmONS APPLICABLE TO SALES SERVICE I. TXUGD agrees to sell and deliver natural gas to Customer and Customer agrees 10 purchase and receive such gas from TXUGD to meet Customer's natural gas requirements at Customer's premises described on the signature page of this Contract. Customer agrees to pay for such volumes of gas at TXUGD's latest effeCli"e Schedule of Optional Industrial Rates for gas sales service established for the city in which the Delivery Poin. is located. subject to and in accordance with an the tcnns and conditions conlained in this Contracl. 2. This Contract covers Customer's entire natural gas requirements at the aforesaid premise!;- and Customer will not use gas under this Contract for service other than that classified so that Customer is qualifaed for service under this Contract. 3. TXUGD's Schedule of Optional Industrial Rales for gas sales service may be revised from lime to lime in the future and the rates contained in any such revised or new Schedule of Oplional Industrial Rates for gas sales service. when lawfully established, will be applicable to gas purchased and sold under this Contract commencing with ga... delivered after the effective date of such change. Company will give Customer wriuen notice of ii'lny such change. together with a copy of the revised Schedule of Optional Industrial Rates for gas sales service. The notice herein provided for will be deemed to have been given when sent by Company to Customer at the address shown on the signalure page of this Contracl by ftrst class mail. postage prepaid. or included with a monthly statemenl. 4. Customer agrees to keep its gas-using or burning equipment and appurtenances located on the aforesaid premises in good condition and in conformity with the requirements of any applicable city ordinance, stale or federal law or rule and any applicable order or regulation of any governmental authority having jurisdiction. Customer agrees to comply with all of Company's reasonable rules and regulations. 5. Tille to and ownership of the gas sold and delivered by TXUGD to Customer at the Delivery Point will vest in Customer at that point. 6. TXUGD will have the right at any and all times 10 immediately discontinue, in whole or in part. the supply of gas hereunder. with or without notice, ifin the opinion ofTXUGD a continuation of the supply under this Contract would adversely affect, jeopardize or threaten adequate service to TXUGD's domestic or commercial customers or hazard, adversely affect, jeopardize or threaten adequate service to other customers having priority of service under TXUGD's latest.ffeclive Schedule of Optional Industrial Rates. and Customer hereby authorizes TXUGD 10 do so. Further, Customer agrees that TXUGD will never be liable in damages or otherwise on account of having exercised such rights. 7. When notified by TXUGD to do so, Customer agrees to curtail or discontinue the use of gas hereunder in con. formity with the service priority provided for in this Contract and in the latest effective Schedule of Optional Indusaial Rates. If Customer classifies its business and operations as being essential 10 the public health. and safety and considers continuity of its fuel service essential to the public welfare, then Customer will provide stand-by fuel and equipment adequate to meet its fuel requirements during periods of interruption of gas service under this Contract. TXUGD cannot and docs not guarantee a constant supply of gas hereunder. 8. In the event during any day Customer purchases or lakes volumes in excess of the Maximum Daily Quantity. in addition to all other fees and charges provided for in this Contracl, Cuslomer will pay TXUGD Sl.OO for each decathenn received by Customer in excess of the Maximum Daily Quantity. ... END OF SCHEDULE "C" ... Rev OS/25/01 Attach. to Rate Sch. 4221 15 SCHEDULE "D" TO OPTIONAL INDUSTRIAL GAS SALES OR GAS TRANSPORTATION CONTRACT GENERAL TERMS AND CONDITIONS APPLICABLE TO TRANSPORTATION SERVICE 1. Transoonation Service TXUGD agrees to transport gas for Customer and Customer agrees to purchase and receive gas uansponation service from TXUGD to meet Customer's natw"al gas requirements at Customer's premises described on the signature page of this Contract. subject to and in accordance with all the tcnns and conditions con13ined in this ConlfaCt. 2, Definitions (a) "ConlfaCt" means the signature page of this Contract. the effective Selection of Service form executed by Customer and TXUGD, Schedule "B" of this Contract and this Schedule "D." (b) "Day" means the period of time beginning at 9:00 A.M. central clock time on one calendar day and ending at 9:00 A.M. central clock time on the following calendar day. (c) "Decatherm" has the meaning set forth in paragraph Sea) of Schedule "B" of this Contract. - (d) "Delivery Point" has the meaning set forth on the signature page of this Contract. (e) "Gas" means natural gas produced from gas wells. vaporized natural gas liquids. gas produced in association with oil (casinghead gas) andlor the residue gas resulting from processing casinghead gas andlor gas well gas. (f) "Maximum Daily Quantity" has the meaning set forth in the applicable Selection of Service Form. (g) "Month" means the period of time beginning at 9:00 A.M. central clock time on the fllSt day of a calendar month and ending at 9:00 A.M. central clock time on the fU'St day of the succeeding calendar month. (h) "Receipt Point" has the meaning set forth on the signature page of this Contract. (i) "Retention Volume" has the meaning set forth on the signature page of this ConlfaCt. (j) "Taxes" has the meaning set forth in paragraph ll(b) of Schedule "B" of this ConlfaCt. (k) "Transponation" as used in this Contract includes the movement of gas by displacement and backhaul, and as such. the term "transponation" or "transport" as used herein includes the delivery of gas by TXUGD that is not the same gas received by TXUGD. (I) "Transport gas" means that volume of gas received by TXUGD for transportation to Customer Jess the Retention Volume. 3. Ouantitv Customer represents that it owns or controls certain quantities of natural gas. and Customer desires that TXUGD receive such gas from Customer (or its designee) at the Receipt Point(s); and deliver gas to the Delivery Point in quantities as agreed to by the parties herein. It is agreed that the quantity of gas to be transported under this Contract will not exceed the maximum annual, daily or hourly quantities specified on the effective Selection of Service Form. 4. Tide.-WatTantv &. Indemnity Customer warrants that at the time of delivery of gas hereunder to TXUGD for transponation, Customer will have good title or the right to deliver such gas, and that such gas will be free and clear of all liens and adverse claims. Customer agrees to indemnify TXUGD for, and hold TXUGD harmless from, all suits, actions, debts, accounts, damages, costs (including attorneys' fees), losses and expenses arising from or out of any adverse claims of any and Rev OS/25/01 Attach. to Rate Sch. 4221 16 all persons to or against said gas. Further, nei1her TXUGD nor Cuslomer will take any action thai changes or jeopardizes Customer's litle to the gas O'ansponed hereunder. 5. Oualitv I (aJ The natural gas delivered by Customer to TXUGD for O'ansportalion under this Contracl will be of merchantable qualir)' and commercially1ret from waru. hazardous substances. hydrocarbon liquids. bacteria alld other objectionable liquids, solids or gas components. In addition. any such gas will specifically contain not more than: (i) five one hundredths of one percent (.05%) oxygen; (ii) five(5) grains of total sulphur, consisting of no I more than one quarrer(l/4) grain of hydrogen sulfide and one( 1) grain of mere opt OIl sulphur per one hundred (100) cubic feet of gas; (Hi) cwo percent (2%) by volume of carbon dioxide: (iv) four percent (4%) by volume ofroral non-hydrocarbon and inerr gases (including carbon dioxide. niO'ogen. oxygen. helium. etc.); and (v) seven pounds (7#) of water vapor per one million (1,000,000) cubic feet of gas. The gas will be at temperatures not in excess of one hundred twent)' (/20) degrus Fahunheir nor less thanforf)' (40) degrus Fahrenheit. provided that the gas will have a hydrocarbon dew point nOl to exctedforry (40) degrees Fahrenheit at the delivery pressure. and will have a heat content of not less than nine hundredftfty (950) or more thane/even hundred (1,100) Btu per cubic foot under the conditions of measurement contained herein. TXUGD will nOl be obligated to accept any gas deli vered by Customer (or its designee) hereunder that is not interchangeable with other gas in TXUGO's distribution system at the applicable Receipt Point hereunder. TXUGO's qetermination of such interchangeability will be based upon a factor that is equivalent to the quotient obtained by dividing the loull heating value of such gas, expressed in Blu, by the square root of the specific gravity of such gas. Such factor must be within 7% of the inrerchange factor established by TXUGO for its system at the applicable Receipt Point hereunder. (b) If at any time the gas fails 10 meet the quality specifications enumerated herein. TXUGD will notify Cuslomer. and Customer will immediately correct such failure. If Customer is unable or unwilling to deliver gas according to such specifications, TXUGD may refuse to accept delivery of gas hereunder for so long as such condition exists. (c) NOlwithstanding anything contained herein. TXUGD reserves the right. at any time and from time to time, to unilaterally amend, on a nondiscriminatory basis. the quality specifications set forth above to conform with standard indusuy practices upon giving Customer at least thirty (30) days prior written notice of any such change(s). 6. Resoonsibilitv Customer or Customer's designee will be in control and possession of the gas to be transponed and will be responsible for and will indemnify TXUGD for, and hold TXUGD harmless from, any damage or injury caused thereby prior to such gas being delivered into a facility owned by TXUGD at the Receipt Point(s) and after such gas is delivered by TXUGD into a facility owned by Customer or Customer's designee at the Delivery Point. except for injuries and damages caused by the negligence ofTXUGD. TXUGD will be in conO'ol and possession of the gas it transpons hereunder, and will be responsible for and will indemnify Customer for, and hold Customer harmless from. any damage or injury caused thereby after receipt of the gas by TXUGD into a facilily owned by TXUGD at the Receipt Poinl(s) and until sucb gas is delivered into a facility of the Customer or Customer's designee at the Delivery Point, except for injwies and damages caused by the negligence of Customer or Customer's designee. However, gas will be received by TXUGD after it has passed out of the meter at a Receipt Point and until it is delivered by TXUGD to Customer or Customer's designee after it has passed out of the meter at a Delivery Point. The meter will be considered to be the meter tube for purposes of this provision. 7. Transoortation Rates (a> Commencing with initial deliveries of gas hereunder, Customer will pay to TXUGD each month the Transportation Service Rate set forth on the signature page of this Contract for transportation services provided hereunder during such month, at the rate(s) set foRb on the signatory page of this Contract. which will include TXUGD's right to retain and become the owner of the Retention Volume and the fees, charges, tax reimbursements and costs provided for in this Contract. (b) CUSlomer agrees to reimburse TXUGD for any Taxes as herein defined. 2 Rev OS/25/01 Attach. to Rate Sch. 4221 17 8. Receiot Points (a) Gas delivered by Customer (or its designee) to TXUGD hereunder will be delivered at the oullet of a city gate meter. referred to herein as the "Receipt Point," described on the signature page of this Contract. The Receipt Point will be at an active city gate on the TXUGD's disttibution system, described on the signature page of this Contract. provided, that ifTXUGD owns the applicable city gate, the Receipt Point will be the inlet of the city gate. It is agreed that Customer and TXUGD may mutually agree to additional receipt points under this Contract that will also be at active city gates on such distribution system. (b) Notwithstanding anything contained in this Contract that might be construed to the contrary, in the event of unfavorable operating conditions (as determined by TXUGD in its sole opinion). or a change of ownenhip of a specific Receipt Point or appunenant facilities, or if. in TXUGD's sole opinion. the receipt of gas from a specific Receipt Point ever becomes uneconomical for any reason whatsoever, then TXUGD will have the right (i) to immediately discontinue the receipt of gas from any such Receipt Point and/or (ii) upon thiny (30) days' prior wriuen nOlice to Customer, to delete any such Receipt Point from this Contract. However. Customer and TXUGD may agree to perform this Contract with reduced volumes. or Customer and TXUGD may agree that Customer will pay for the necessary increase in capacity of the facilities involved. 9. Interrurnible Service Customer hereby acknowledges that TXUGD's receipt and delivery of gas volumes hereunder will be on a wholly interruptible basis and subject to: (i) the most efficient and economic utilization of TXUGD's pipeline capacity as determined by TXUGO in its sole discretion; (H) pipeline capacity necessary to serve existing or fature sales customers under tariffs filed with applicable regulatory authorities or under negotiated contracts as determined by TXUGD in its sole discretion; and (Hi) the other terms and conditions contained in this Contract. Customer agrees that such transportation service may be interrupted. in whole or in pan. from time to time, without notice; however. TXUGD's dispatcher will endeavor to advise (by telephone or electronic medium) Customer's dispatcher or authorized representative of an interruption as soon as practicable, either before or after such interruption. but TXUGO will have no liability for any failure to give such notice. In no event will an interruption of transportation service pursuant to the terms. conditions and contingencies of this Contract constitute a breach of this Contract. and TXUGO will not be liable to Customer or third parties in damages or otherwise because of any interruption of such service. Customer agrees to indemnify TXUGD for, and hold TXUGD harmless from. any damages, causes of actions or claims asserted by any third parties as a result of any termination. suspension, or interruption of services hereunder by TXUGD for any reason. 10. Nominations (a) Customer will provide TXUGD with its frrst of the month nomination of volumes for receipt and delivery by TXUGn during a month no later than II :30 a.m. central clock llme on the second business day prior to the first calendar day of each month. giving due consideration to the Retention Volume. (b) Each such nomination by Customer will contain the nominated quantities for each Receipt Point and the Delivery Point, designation of the appropriate contract(s) covering such gas. and the identity by name and telephone number of individual(s) who have authority to confirm the gas volumes nominated at each Receipt Point and the Delivery Point. (c) Customer may change nominated volumes for the remainder of a month on any business day, provided such nomination change must be received by TXUaO prior to 10:00 a.m. central clock time of any business day to be effective the next business day. (d) If Customer fails to nominate volumes for receipt and delivery by TXUGD under this Contract for any month, TXUGD may suspend transportation service under this Contract for such month. Such interruption of service by TXUGD will not prevent enforcement by TXUGD of any of its other legal rights or remedies nor will the same be construed as a breach of the obligations of TXUGD under this ContracL (e) If Customer fails to nominate volumes for receipt and delivery by TXUGD under this ContraCl for three(3) consecutive months during the term of this Contract, TXUGD may upon thiny (30) days prior written notice to Customer tenninate this Contract; provided. the obligations to make payment for monies due under this Contract, including payments for any kind of imbalances, will not be extinguished. (f) Customer undentands and agrees that TXUGD may for operational reasons prorate and/or totally refuse to accept new nominations or honor then existing nominations at any existing Receipt Points and/or proposed Receipt 3 Rev OS/25/01 Attach. to Rate Sch. 4221 18 Points. at any time and from time to time and for any specified or unspecified time period(s). TXUGD will endeavor to notify Customer or Customer's designee of such refusal to accept or honor any nomination or nominations as soon as practicable, but TXUOD will not be liable for any failure to do so. (g) Notwithstanding the foregoing, Customer will not attempt to utilize the nomination process under this Contract to reserve or gain additional pipeline capacity by over nomination. In the event TXUGD. in its sole discretion, determines that Cuslomer has attempted to reserve or gain additional pipeline capacily by over nomination, Customer agrees that TXUOD will have the right, with or without prior notice. 10: (i) revise the nomination, (ii) suspend service under this Contract, andlor (iii) terminate this Contract. 11. Imbalances of Nominations and Volumes (a) It is recognized and understood that: (i) an exact day-to-day balance of the volume of gas nominated for receipt and delivery by TXUOD and the volume of gas delivered to (raken or used by) Customer at the Delivery Point may not be possible due to the inability of Customer to precisely predict or control such receipts or deliveries; and Iii) an exact day-to-day balance of the volume of gas delivered to TXUOD al the Receipt Points for transportation, less the Retenlion Volume, and the quantity of gas delivered 10 (raken or used by) Customer at the Delivery Point by TXUOD may not be possible due to the inability of Customer to control preciscly such receipts or deliveries. However, Customer will endeavor to nominate and deliver to TXUOD at the Receipt Point the v~lume of gas that is delivered to (raken or used by) Customer at the Delivery Point, plus the Retention Volume, during-any applicable period. (b) Customer will be obligated to monitor on both an hourly and a daily basis and, if necessary, adjust, or cause to be adjusted: (i) the volume of gas delivered to TXUOD at the Receipl Points for transportation; and (ii) the volume of transportation gas raken or received by Customer, or its designee, from TXUOD at the Delivery Point, in order to maintain both an hourly and a daily balance of receipts and deliveries at consistent flow rates throughout each day, giving due consideration to the related Retention Volume. Customer will advisc TXUOD of any situation wherein any kind of imbalance has occurred or may occur, Customer will endeavor to adjust its receipts andlor deliveries of transportation gas to the extent necessary to avoid any kind of imbalance, and promptly notify TXUOD of such adjustments. Any adjustments to receipts andlor deliveries by Customer, whether or not pursuanl to notification from either party, will be coordinated with TXUOD's gas control personnel. (e) TXUOD will not be obligaled 10 receive or deliver quantities of gas on any day in excess of the lesscr of: (i) those quanlities nominated by Customer for transportation hereunder on such day, giving due consideration to the Retention Volume; or (ii) thosc quantities received by TXUOD at the Receipt Points for transportation hereunder on such day, giving due consideration to the Retention Volume. However, TXUOD, to the extent practicable, will endeavor to deliver to Customer each day a quantity of gas equivalent to the quantity of gas received by TXUOD from Customer (or its designee) at the Receipt Points on such day, less the Retention Volume. (d) TXUOD will retain and become the owner of such Retention Volume 10 replace the normal gas lost, gas used as fuel and gas used in its day-te-day pipeline operations related to the volumes delivered by Customer to TXUOD. (e) Notwithstanding anything contained herein that might be construed to the contrary, TXUOD will always have the total and unrestricted right, but with no obligation whatsoever, at any time and from time to time, to restrict, interrupt or reduce its receipt andlor delivery of transport gas hereunder in order to maintain both an hourly and a daily balance of receipts and deliveries at consistenl flow rates throughout each day or to correct any imbalance belween receipts and deliveries hereunder. (I) Other provisions of this Contract notwithstanding, in the event the transportation of volumes of gas delivered to the Receipt Point are interrupted by TXUOD during any day for any reason, the volume interrupted, up to the Maximum Daily Quantity, will not be considered as a part of any imbalance for that day under the lerms of this Contract. 4 lev OS/25/01 Attach. to Rate Sch. 4221 19 12. Nomination Imbalance Payments (a) A nOnUnation imbalance will exist under this Contract when, during any applicable period (If the term hereof. there is a numerical difference between: , (i) the quantity of gas delivered by TXUGO to Customer; and (ii) the quantity of gas nOnUnated for that period by Customer. (b) To the extent Customer fails to avoid a monthly nOnUnation imbalance [as described in paragraph 12(a) above], and Customer's nominations for deliveries to TXUGO at the Receipt Point(s) during such monthly period are in excess of the transportation quantities actually, or deemed by allocation, delivered to TICUGO for transportation to Customer at the Delivery Point during said monthly period ("over nomination by Customer"): i) if the imbalance is greater than 0%, but 5% or less during such month, Customer wm pay to TXUGD a sum of money deternUned by the product of (A) SO. IS (15 cents) per decatherm multiplied by (B) the number of decatherms in such monthly imbalance, thereby eliminating such imbalance; (ii) if the imbalance is greater than 5%, bUIIO% or less during such month, Cuslomer will pay to TXUGD a sum of money delernUned by the product of (A) SO.30 (30 cents) perdecatherm multiplied by (B) Ihe number of decatherms in such monthly imbalance, thereby elinUnating such imbalance; (iii) if the imbalance is greater than 10%, but 15% or less during such month, Customer will pay to TXUGD a sum of money deternUned by the product of (A) SO.45 (45 cents) per deca'.herm multiplied by (B) the number of decatherms in such monthly imbalance, thereby elinUnating such imbalance; (iv) if the imbalance is greater than 15%, but 20% or less during such month, Customer will pay to TXUGO a sum of money deternUned by the product of (A) SO.60 (60 cents) per decatherm multiplied by (B) the number of decatherms in such monthly imbalance, thereby elinUnating such imbalance; or (v) if the imbalance is greater than 20% during such month, Customer will pay to TXUGD a sum of money deternUned by the product of (A) SO.75 (75 cents) per decatherm multiplied by (B) the number of decatherms in such monthly imbalance, thereby elinUnating such imbalance. (c) To the extent Customer fails to avoid a monthly nOnUnation imbalance [as described in paragraph 12(a) above], and Customer's nOnUnation for deliveries to TXUGD at the Receipt Point(s) during such monthly period are less than the transportation quantities actually, or deemed by allocation, delivered to TXUGD for transportation to Customer at the Oelivery Point during said monthly period ("under nOnUnation by Customer"), Cuslomer will pay TXUGD a sum of money deternUned by the product of (A) SO.05 (5 cents) per decatherm multiplied by (B) the number of decathenns in such monthly imbalance, thereby elinUnating such imbalance. (d) TXUGO will bill Customer for any such amounts owed to TXUGO by Customer under this paragraph 12 by including such amounts in the monthly slalement(s) rendered to Customer under paragraph 12 of Schedule "B" of this Contract, or by a separate Slatement whether or not this Contract has ternUnated. 13. Volume Imbalance Payments (a) A volume imbalance will exist under this Contract when, during any month of the term hereof, there is a numerical difference between: (i) the volume of gas delivered by TXUGD to Customer at the Delivery Point; and (ii) the volume of gas received by TXUGD from Customer (or its designee) at the Receipt Point(s),less the Retention Volume. Volumes received or delivered will for purposes of this Contract include volumes that are not separately metered, but are deemed received or delivered by allocation in situations in which Customer's gas is commingled with gas owned by others. (b) To the extent Customer fails to avoid a monthly volume imbalance [as described in paragraph 13(a) above], and Customer's deliveries to TXUGD at the Receipt Point(s) during such monthly period, less the Retention Volumes, are in excess of the transportation quantities delivered by TXUGD to Customer at the Delivery Point during said monthly period ("over deliveries by Customer creating an imbalance 'due' Customer"): 5 Rev OS/25/01 Attach. to Rate Sch. 4221 20 i) if the imbalance is greater than 0%, but 5% or less, of the tOlal gas volumes delivered to Customer at the Oelivery Point during such month, Customer will sell to TXUGO and TXUGO will purchase from Customer the decathenns of such monthly imbalance for a sum of money determined by the product of (Al the lesser of the lowest price paid for gas by TXUGO during that monthly period or the lowest daily Houston Ship Channel price during that monthly period, as reponed in the publication Gas Daily, multiplied by (B) the number of decatherms in such monthly imbalance. thereby elinUnating such monthly imbalance; ii) if the imbalance is greater than 5%, but 10% or less, of the total gas volumes delivered 10 Customer at the Delivery Point during such month, Customer will sell 10 TXUGD and TXUGO will purchase from Customer the decatherms of such monthly imbalance for a sum of money determined by the producl of (Al the lesser of the lowest price paid for gas by TXUGD during that monlhly period or 80% of the lowest daily Houston Ship Channel price during that monthly period, as reponed in the publication Gas Daily, multiplied by (B) the number of decathenns in such monthly imbalance, thereby elinUnaling suchmonlhly imbalance; Hi) if the imbalance is greater than 10%. bul 15% or less, of the total gas volumes delivered to Customer al the Delivery Poinl during such month, Customer will sell 10 TXUGO and TXUGO will purchase from Customer the decatherms of such monthly imbalance for a sum of money determined by the product of (A) the lesser of the lowest price paid for gas by TXUGO during thaI monthly period or 70% of the 10weSl daily Houston Ship Channel price during that monthly period. as reported in the publication Gas Daily, multiplied by (B) the number of decathenns in such monthly imbalance, thereby elimina~ing suchmonthly imbalance; iv) if the imbalance is greater than 15%, bUI 20% or less, of the tOlal gas volumes delivered 10 Customer at the Delivery Poinl during such month, Customer will sell to TXUGO and TXUGO will pttrChase from Customer the decathenns of such monthly imbalance for a sum of money detennined by the product of (A) the lesser of the lowest price paid for gas by TICUGO during that monthly period or 60% of the lowest daily Houston Ship Channel price during that monthly period, as reponed in the publication Gas Daily, multiplied by (B) the number of decatherms in such monthly imbalance, thereby elinUnaling suchmonlhly imbalance; and v) if the imbalance is greater than 20% of the total gasvolumes delivered to Customer at the Delivery Point during such month, Customer will sell to TXUGO and TXUGO will purchase from Customer the decatherms of such monthly imbalance for a sum of money deternUned by the product of (A) the lesser of the lowest price paid for gas by TXUGDduring thaI monlhly period or 50% of the lowest daily Houston Ship Channel price during that monthly period, as reponed in the publication Gas Daily, multiplied by (B) the number of decatherms in such monthly imbalance, thereby eliminaling such monthly imbalance. (c) To the extent Customer does not avoid a monthly volume imbalance [as described in paragraph 13(a) above], and Customer's deliveries to TXUGO at the Receipt Point(s) during such monthly period are less than the transportation quantities deliveredby TXUGO to Customer at the Delivery Point during said monthly period ("under deliveries by Customercreating an imbalance 'due' TXUGO"): i) if the imbalance is greater than 0%, but 5% or less, of the total gas volumes delivered Customer at the Delivery Point during such monlh, Cuslomer will purchase such imbalance gas volumes from TXUGD, and TXUGO will have the right to collect from Customer, a sum of money delernUned by the product of (A) thegreater of the highest price paid for gas by TXUGO during that monthly period or 100% of the highest daily Houston Ship Channel price during that monlhly period, as reponed in the publication Gas Daily, multiplied by (B) the number of decatherms in such monthly imbalance, thereby elinUnating such monthly imbalance; ii) if the imbalance is greater than 5%, but 10% or less, of the tOlal gas volumes delivered to Customer at the Delivery Point during such month, CuSlomer will purchase such imbalance gas volumes from TXUGO, and TXUGO will have the right to collect from Customer, a sum of money detennined by the product of (A) the greater of the highest price paid for gas by TXUGO during that monthly period or 125% of the highest daily Houslon Ship Channel price during that monthly period. as reported in the publication Gas Daily. multiplied by (B) the number of decathenns in such monthly imbalance, thereby elinUnating such monthly imbalance; 6 Rev OS/25/01 Attach. to Rate Sch. 4221 21 iii) if the imbalance is greater thanlO%. butl5% or less. of the total gas volumes delivered Cuslomer at the Delivery Point during such month, Customer will purchase such imbalance gas volumes from TXUGD. and TXUGD will have the right to collecl from Customer. a sum of money determined by the produC:1 of (A) the greater of the highest price paid for gas by TXUGD during that monthly period or 150% of the highest daily Houston Ship Channel price during that monthly period, as reponed in the publication Gas Daily, multiplied by (B) the number of decatherms in such monthly imbalance, thereby eliminating such monthly imbalance; iv) if the imbalance is greater thanl5%, but 20% or less, of the tOlal gas volumes delivered to Customer at the Delivery Point during such month, Customer will purchase such imbalance gas volumes from TXUGO. and TXUGO will have the right to collect from Customer, a sum of money deternUned by the product of (A) the greater of the highest price paid for gas by TXUGO during thaI monthly period or 175% of the highest daily Houston Ship Channel price during thaI monthly period, as reponed in the publicalion Gas Daily, multiplied by (B) the number of decatherms in such monthly imbalance, thereby eliminating such monthly imbalance: and v) if the imbalance is greater than 20% of the total gas volumes delivered to Customer at the Oelivery Point during such month, Customer will purchase such imbalance gas volumes from TXUGD. and TXUGD will have the right to collect from Customer, a sum of money determined by the product of (A) the greater of the highest price paid for gas by TXUGO during that monthly period or 200% of the highesl daily Houston Ship Channel price during that monthly period, as reponed in the publication Gas Daily, multiplied by (B) the number of decatherms in such monlhly imbalance, thereby eliminating suchmoillhly imbalance. (d) TXUGO will bill Customerfor any such amounts owed to TICUGO by Customer under this paragraph 13 by including such amounts in the monthly statemenl(s) rendered to Customer under paragraph 12 of Schedule "B" of this Contracl, or by a separate statemenl whether or not this Contract has tenninaled. TXUGD will credit Customer for any such. amounts owed to Customer by TXUGO under this paragraph 13 by crediting such amounts against amounts owed to TXUGO by Customer in any such Slatemenl(s) rendered to Customer. Otherwise, such amounts will be paid to Customer within lhiny (30) days from Ihe date Contract has terminated if the net account balance is an amount owed to Customer by TXUGO. 14. Misuse ofImbalance Provisions Cuslomer will not attempt to utilize the imbalance provisions hereunder to provide standby or backup service or plant protection supply gas for its Facility in the event its third party supplier(s) fail to deliver sufficient volumes of gas to TXUGD for redelivery hereunder to Customer's Facility for such purposes, with due consideration 10 the Retention Volume, or for any other purpose not expressly contemplated in the terms of this Contract. In the event TXUGO ever deternUnes that Customer has attempled to do so. Customer agrees that TXUGO will have the right to suspend and/or ternUnate this Contract. 15. Failure of Pricin2 Resource (a) In the evenl no Gas Daily is published or no "highest daily price" is published in the Gas Daily, the price used therefore will be the highest price published in Inside F.E.R.C. 's Gas Market Report for gas sold during the month in Texas. In the event no Gas Daily is published or no "lowest daily price" is published in the Gas Daily, the price used therefor will be the lowesl price published in the Inside F.E.R.C. 's Gas Market Report for gas sold during the month in Texas. (b) In the event no Gas Daily and no Inside F.E.R.C. 's Gas Market Report is published or no "highest daily price" is published in the Gas Daily or in the "Inside FERC," the price used therefore will be the highest price published by the New York Mercantile Exchange (NYMEX) for gas sold during the month in Texas. In the event no Gas Daily and no Inside F.E.R. C. 's Gas Market Report is published or no "lowest daily price" is published in the Gas Daily or in the "Inside FERC," the price used therefor will be the lowest price published by the New York Mercantile Exchange (NYMEX) for gas sold during the month in Texas. (c) In the event Gas Daily, Inside F.E.R.C. 's Gas Marlcet Report and the New York Mercantile Exchange (NYMEX) all three fail to repon a highest or lowest price for the month for use under the respeclive provisions of this Contraclthe parties may mutually agree upon the price or prices to be used. However, if the parties cannot agree on such a price or prices within Ihiny (30) days of such an event the appropriate price or prices will be established by arbitration as provided in this Contract. 7 !V OS/25/01 Attach. to Rate Sch. 4221 22 16. IntemJDrion. Reduction or Termination of Service Customer agrees that: (a) in the evenl of any interruption. reduction or lernUnation of service under this Contracl TXUGO's personnel may enter Customer's facility's prenUses and physically turn off the gas serving such facilit).; and (b) no one other than TXUGO's personnel will be permitted to turn the gas back on. ... END OF SCHEDULE "D" ... ) 8 ev OS/25/01 Attach. to Rate Sch. 4221 23 Tariff for Gas Service TXU Gas Distribution RATE SCHEDULE: Gas Cost Adlustment No. 4208-1 APPLICABLE TO: East Region Distribution System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 1 OF 1 GAS COST ADJUSTMENT Each residenlial and commercial monthly bill shall be adjusted for gas cost as follows: (1) The city gate rate increase or decrease applicable 10 current billing month residential and commercial sales shall be calculated to the nearest $0.0001 per Mcf based upon: (a) A volume factor of 1.0117 determined in establishing the above rate for the distribution system as the ratio of adjusted purchased volumes divided by adjusted sales volumes. Said factor shall be adjusted annually following determination of the acluallost and unaccounted for gas percentage, not to be less Ihan zero, based upon year ended June 30. (b) The city gate rate applicable to volumes purchased during the current calendar month, expressed to the nearesl $0.0001 per Mcf (shown below as 'Re'). (c) A base city gate rate of $0.0000 per Mcf. In summary, the gas cost adjustment (GCA) shall be determined to the nearest $0.0001 per Mcf as follows: GCA = ((1.0117) (Re - $0.0000)) Tariff for Gas Service TXU Gaa Diatributlon RATE SCHEDULE: Tax & Franchise Fee Adiuatment No. 4208-2 APPLICABLE TO: East Region Distribution Syatem REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 1 OF 1 TAX & FRANCHISE FEE ADJUSTMENT For customers inside the city limits of an incorporated city, each monthly billing, as adjusted, shall be adjusted for municipal franchise fees (street and alley rental assessments) and the state gross receipts taxes imposed by Sections 182.021 - 182.025 of the Texas Tax Code. Municipal franchise fees are determined by each city's franchise ordinance. Each monthly bill, as adjusted, shall also be adjusted by an amount equivalent to the proportionale part of any new tax, or any tax increase or decrease, or any Increase or decrease of any other govemmental impos~ion, rental fee, or charge (except state, county, city and special district ad valorem taxes and taxes on net income) levied, assessed or imposed subsequent 10 September 30, 2000, upon or allocated to the Company's distribution operations, by any new or amended law, ordinance or contract. Municipal franchise fees (street and alley rental assessments) and the state gross receipts taxes imposed by Sections 182.021 - 182.025 of the Texas Tax Code shall continue to be collected pursuant to individual industrial contracts. Tariff for Gaa Service TXU Gas Distribution RATE SCHEDULE: Weather Normalization Adluatment No. 4208-3 APPLICABLE TO: East Region Dlatrlbutlon System REVISION: 0 DATE: EFFECTIVE DATE: PAGE: 1 OF 1 WEATHER NORMALIZATION ADJUSTMENT Effective with bills rendered during the October 2001 through May 2002 billing months, and annually thereafter for the October through May billing months, the residential and commercial consumption rates for gas service, as adjusted, shall be subject to a weather nonnalization adjustment each billing cycle to reflect the impact of variations in the actual heating degree days during the period included in the billing cycle from the normal level of heating degree days during the period included in the billing cycle. The weather normalizalion adjustment will be implemented on a per Mcf basis and will be applicable 10 the heating load of each customer during the period included in Ihe billing cycle. It will be determined separately for residential and commercial customers based on heating degree data recorded at the official weather station for each town. The adjustment to be made for each billing cycle will be calculated according to the following formula: WNA NDD.ADD xMxAHL ADD Where: WNA = Weather nonnalization adjustment NOD = Normal heating degree days during the period covered by the billing cycle ADD = Actual heating degree days during the period covered by the billing cycle M = Weighted average margin per Mcf included in the commodity portion of the rates effective during the October through May billing months AHL = Actual heating load per customer The heating load to which the weather nonnalization adjustment is to be applied for residential and commercial customers is determined by subtracting the base load for the customer from the total volume being billed to Ihe customer. The base load of a cuslomer is the average level of non heating consumption. The weather nonnalization adjustment is subject to a 50% limitation factor based on temperatures being fifty percent warmer or colder than nonnal. The weather nonnalization adjustment will be calculated to the nearest $.0001 per Mcf. Tariff for Gaa Service TXU Gas Diatrlbutlon RATE SCHEDULE: Miacellaneous Service Chartles Nos. 9001 thru 9007 APPLICABLE TO: As Referenced REVISION: 0 EFFECTIVE DATE: As Referenced PAGE: 1 OF 2 MISCELLANEOUS SERVICE CHARGES: 9001 Connection Charge The following connection charges apply: Schedule (ResIdential & Commercial) Business Hours After Hours $ Charae 35.00 52.50 For each reconnection of gas service where service has been discontinued at the same premises for any reason, for the in~ial inauguration of service, and for each inauguration of service when the billable party has changed, wilh the following exceptions: (a) For a builder who uses gas temporarily during construction or for display purposes. (b) Whenever gas service has been temporarily interrupted because of system outage or service work done by Company; or (c) For any reason deemed necessary for company operations. 9002 Read For Change Charge (Residential & CommercIal) A read for change charge of $12.00 is made when ~ is necessary for a company employee to read the meter at a currently served location because of a change in the billable party. 9003 Returned Check Charges (Realdentlal & Commercial) A returned check handling charge of $16.25 is made for each check returned to the Company for any reason. 9004 Delinquent Notification Charge (Residential & Commercial) A charge of $4.75 shall be made for each trip by a Company employee to a custome~s residence or place of business when there Is an amount owed to the Company that is past due. This charge shall not be made when the trip is required for safety investigations or when gas service has been temporarily interrupted because of system outage or service work done by Company. 9005 Main Line ExtensIon Rate (Realdential, Commercial, & Induatrlal) The charge for extending mains beyond the free limit established by Franchise for residential, commercial, and industrial customers shall be based on the actual cost per foot of the extension. Tariff for Gas Service TXU Gas Distribution RATE SCHEDULE: Miacellaneoua Service Ch8rgea Nos. 9001 thru 9007 APPLICABLE TO: Aa Referenced REVISION: 0 EFFECTIVE DATE: Aa Referenced PAGE: 2 OF 2 9006 Charge for Inatalllng and Maintaining and Excess Flow Valve (Reaidential) A customer may request the Installation of an excess flow valve on a new service line or on a service line being replaced provided that the service line will serve a single residence and operate continuously throughout the year at a pressure of not less than 10 psig. The customer will pay the actual cost incurred to install the excess flow valve. That cost will include the cost of the excess flow valve, the labor cost required to install the excess flow valve, and other associated costs. The estimated total cost to Install an excess flow valve is $50.00. This cost is based on installing the excess fiow valve at the same time a service line is installed or replaced. The excess flow valve will be installed on the service line upstream of the customer's meter and as near as practical to the main. A customer requiring maintenance, repair, or replacement of an excess flow valve will be required to pay the actual cost of locating and repairing or replacing the excess flow valve. The cost to perform this service will normally range from $200.00 to $2,000.00, depending on the amount of work required. This cost will be determined on an individual project basis. This tariff is being filed in accordance with the U.S. Department of Transportation rule requiring the installalion of an excess flow valve, if requested by a customer, on new or replaced service lines that operate continuously throughout the year at a pressure of not less than 10 psig and that serve a single residence. The rule further states that the customer will bear all costs of installing and maintaining the excess flow valve. 9007 Recovery of Connection Costs Aasoclated with Certain Stand-By Gas Generators (Commercial) Commercial cuslomers installing stand-by gas generators to provide service in the event of an interruption in electric service In facilities where gas service is not otherwise provided will reimburse TXU Gas Distribution for the actual cosl of acquiring and installing the regulator, service line, and meter required to provide gas service for the stand-by generators. Gas service provided for the stand-by generators will be billed at the applicable commercial rate. Tariff for Gas Service TXU Gas Distribution RIDER: Surcharges No. 4206 APPLICABLE TO: East Region Distribution System. REVISION: 0 as Iiated below DATE: EFFECTIVE DATE: PAGE: 1 OF 1 SURCHARGES Rate Case Expense Surcharge Rider: TXU Gas Distribution is authorized to recover the current rate case expense through a surcharge designed for a six-month nominal recovery period. The surcharge per Mcf will be calculated by dividing the rale case expense to be recovered by one-half of the adjusted annual sales volume to residential, commercial, Industrial Sales, and Industrial Transportalion customers. TXU Gas Distribution will provide monthly status reports to Ihe City to account for the collection of rate case expense. The surcharge for the company's rate case expenses shall be pro-rated over the system as a whole. The cities rate case expenses shall be pro-rated among the cities who hired outside consultants and/or attorneys to represent them in this case. Other Surcharges: TXU Gas Distribution will recover other surcharges as authorized by the relevant municipality, the Raiiroad Commission of Texas or the Texas Utilities Code. Applicable only In the following East Region DistrIbution System Cities: Athens Bells Clarksville Crandall Denison Ennis Farmersville Gainesville Howe Kaufman Malakofl Maypsarl Midlothian Palestine Paris Pecan Hill Point Poynor Princeton Red Oak Sherman Sulphur Springs Trenton Waxahachie Whitewrlght EAST REGION RATE CASE DRAFT STAFF REPORT The City has original jurisdiction over TXU Gas Distribution's rates and services within the municipal limits. This does not include jurisdiction over the cost of natural gas. TXU is entitled to recover its reasonable actual cost of natural gas plus a profit as detennined exclusively by the Railroad Commission. The City's jurisdiction over distribution costs ~ommences when gas is delivered to the city gate. The rates set by the City may be appeakci to the Railroad Commission ifthe Company is dissatisfied with the City's consideration of its requested increase in rates. On March 2, 2001, TXU Gas Distribution filed a request to increase rates effective April 6, 2001. The City passed a resolution suspending the effective date for 90 days and authorized participation with other Cities in a review of the reasonableness of the Company's request. The Coalition of Cities reviewing TXU's request had assistance of legal counsel from Geoffrey Gay of Lloyd, Gosselink, Blevins, Rochelle, Baldwin & Townsend in Austin, Texas and rate consultants Bill McMorries, Connie Cannady and Stephen Hill. Following issuance of a consultants' report a series of settlement discussions were pursued with policy and strategic determinations being made by City representatives. Protracted good faith settlement discussions led the Company to extend its effective date and increase the City's jurisdiction by 30 days. A settlement has been reached between the Cities and the Company, and TXU has agreed to further extend its effective date to accommodate the schedules of the Cities in passing a rate ordinance that reflects the settlement. The current generic extension authorizes City action through August 31,2001. The Company originally requested an increase in annual revenues of $6,886,682 but disguised the percentage increase suggested to be 8.81 % by rolling all the cost of the commodity (natural gas) into the base rates. The real proposed increase in the portion of costs regulated by the City was substantially higher. Cities' consultants proposed an alternative revenue requirement deficiency of $2,977,000. A compromise was ultimately reached on an increase of $3,977,141. A comparison of the amount of additional dollars to be recovered from each customer class under the settlement with the amounts proposed by TXU is as follows: Rate Class Original TXU Filinl! Settlement Residential 2,847,681 1,391,427 Commercial 1,955,575 502,288 Industrial 2,067,336 2,067,336 Service Charl!es 16,090 16,090 TOTAL 6,886,682 3,977,141 The bill impact of the settlement on average residential and commercial customers will be as follows: I Present Settlement Increase % Change Residential @ 5 McfMo. $40.03 $40.49 $0.46 1.15% Commercial @ 30 McfMo. $208.31 $208.36 $0.05 0.02% The Company is in the process of consolidating more than 200 Lone Star distribution systems into six or seven regional distribution systems. This filing reflected consolidation of several old Lone Star systems. The Settlement results in common rates for each class of customers in all 121 affected clhes. Overall percentage changes by city vary wildly because of different existing rates (some existing rates are higher than the new rates requested by TXU and result in rate decreases) and different mixes of residential, commercial and industrial customers. No two Cities have the same percentage change, yet all residential, commercial and industrial customers will pay the same rate regardless of which of the 121 cities is called "home." A chart reflecting percentage changes for residential and commercial classes, with and without gas costs, for each of the 27 coalition cities is attached as Exhibit A. The 94 Cities that did not join the coalition are either very small or were disinterested because they would be entitled to a rate decrease, regardless of outcome. TXU proposed monthly customer charges of $8.00 for residential and $14.00 for commercial customers. The Cities' Settlement Committee directed that the customer charges be set at $7.00 and $12.00 respectively and that all other revenues be recovered through a volumetric charge. The new rates for residential and commercial customers will be: Residential Customer Charge All Consumption $7.00 $1.2108 per Mcf Commercial Customer Charge First 20 Mcf Next 30 Mcf Over 50 Mcf $12.00 @ $1.2108 per Mcf @ 0.9108 per Mcf @ 0.7608 per Mcf The large percentage increase for industrials proposed by the Company and recommended pursuant to the Settlement Agreement is attributable to historic under-allocation of fixed costs and an application of an allocation methodology that all parties agree would have a reasonable expectation of adoption by the Railroad Commission if this case were to be reviewed on appeal. The allocation is consistent with the allocation methodology approved by the Commission in a Dallas distribution case at the end of last year. Despite the large percentage increase in industrial rates, TXU cannot charge those rates until existing contracts with industrial customers expire. If a given industrial customer has competitive fuel options that customer may remain a customer of TXU under a lower negotiated contract rate, regardless of the tariffs approved in this case. Cities' consultants approved the proposed service charges, and these charges will result in $16,040 in additional system revenues. One final important note is that TXU's filing included all costs of natural gas in base rates. Cities' consultants recommended approving for base rate inclusion only the portion of gas. costs authorized by the Railroad Commission in TXU's last city gate rate proceeding. The Settlement removes all gas costs from base rates. That should be of benefit to Cities in the future in explaining to citizens that the Cities have no regulatory authority over the cost of the commodity (the price of which has become extremely volatile during the last year), but rather only over the costs of the delivery of the commodity from the city gate to the end user. Exhibit A Percentage Changes Resulting From Settlement % Change In RS % Change In Total % Change In % Change In Total Margin RS Commercial Margin Commercial ("as costs excluded) (gas costs included) ("as costs excluded) ("as costs included) Athens 41.32 12.22 61.02 9.5 Bells 14.89 -0.41 50.70 2.9 Clarksville -8.12 -5.76 24.50 0.88 Corsicana 19.78 3.81 -17 .D1 -6.13 Crandall 61.78 13.45 36.82 6.17 Denison 15.47 5.65 5.77 2.42 Ennis -1.30 1.61 -5.08 1.24 F armersville 4.16 0.42 9.51 0.85 Gainesville 48.24 11.16 -10.49 -3.14 Greenville 22.43 4.56 22.29 4.12 Howe 182.43 21.18 85.32 9.10 Kaufman 10.45 0.60 13.41 3.04 Malakoff 104.89 17.07 97.47 9.52 Mavoearl -4.01 -0.82 -7.94 -1.44 Midlothian -3.77 -0.66 -6.82 0.76 Palestine -28.53 -11.40 -39.33 -11.80 Paris 16.6 7.18 20.69 6.40 Pecan Hill -2.68 -0.22 0 0 Point 44.07 9.68 37.19 9.46 POYner 00.02 -3.96 40.56 4.63 Princeton 9.39 0.31 69.14 6.23 Red Oak -2.67 0.42 -5.86 0.27 Shennan 19.4 6.93 38.04 7.57 Sulohur Soring 12.06 5.11 17.84 5.31 Trenton 29.40 3.39 44.61 10.20 Waxahachie -0.81 1.81 -4.56 1.47 Whitewright 50.38 7.17 85.57 14.43 Note: This chart only includes the 27 cities that are participating in a review of TXU's application. Most of the 94 other cities receive rate reductions or are so small that they did not care to be involved in this case.