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MEMORANDUM
To: Mayor, City Council, City Manager
From: Mark T. Sokolow, City Attorney ~ ~/- /
Date: April 21, 2006
Subject: P. O. No. 5597 - April 25, 2006 Council Meeting
Attached is P. O. 5597 pertaining to the requested rate
increase of Texas Gas Service (a Division of Oneok, Inc.).
Apparently, the cities of Groves and Nederland are in the process
of approving a settlement of the rate increase as recommended by
Dan Lawton. Port Neches has already approved the rate increase.
The increase in the base revenue that is being recommended by Dan
Lawton is $1,600,000 per year instead of the $2,444,462 per year
that was originally requested by the company. The company also
asked for customer rate classifications similar to the rate
structure for Nederland, Groves, and Port Neches. An analysis of
the existing rates and classes and the proposed rates and classes
by Texas Gas Service is attached.
MTS:gt
Attachment
cc: VIA FACSIMILE (409) 963-7134
Mr. Daniel White, Area Manager
TEXAS ~AS SERVICE
VIA FACSIMILE (512) 370-8440
Ms. Stacy McTaggart
TEXAS ~AS SERVICE
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Po O. No. 5597
04/2~/06 g~
0RDI;~CS ~0.
~ 0RDI~ANCE PERTAINING TO TRB R~QUSSTED RATS
INCREASE OF TEXAS GAS SERVICE (A DIVISION OF
ONEOK, INC.)
WHEREAS, on or about November 23, 2005, Texas Gas Service (a
Division of ONEOK, Inc.) filed a Statement of Intent to Change
Rates; and,
WHEREAS, Texas Gas Service {a division of ONEOK, Inc.) has
indicated that the rate increase will reflect an increase of base
revenue of $2,444,462 per year; and,
WHEREAS, Texas Gas Service is also proposing a change in rate
structure per classification; and,
WHEREAS, the City of Port Arthur suspended implementation of
the proposed rates per Ordinance No. 05-88; and
WHEREAS, Texas Gas Service has agreed to an extension as to
the review of their new rates and the implementation date as per
Ordinance No. 06-11; and
WHEREAS, Texas Gas Service has received or is in the process
of receiving approval of a partial rate increase of $1,600,000 (for
the South Jefferson County Service Area) in the cities of Groves,
Nederland, and Port Neches as delineated in Exhibit "A"; and
NOW THEREFORE, BE IT OI~DAINED BY TEE CITY COUNCIL OF THE CITY
OF PORT ARTHUR, TEXAS:
z.po5597 i
Section 1. That the facts and opinions in the preamble are
true and correct.
Section 2. That the City Council herein approves the
increase in base revenue as delineated in Exhibit UA" with the
proposed changes in rates per class of customers as delineated in
Exhibit "B".
Section 3. That Texas Gas Service has agreed that
customers in the City of Port Arthur will receive a most favored
nations clause and that the City of Port Arthur and the Company's
customers located in the City of Port Arthur will receive the
benefits of any lower rate that is charged in any other city or any
rate class in the South Jefferson County Service Area.
Section 4. That all other relief requested by Texas Gas
Service is herein denied.
Section 5. That this Ordinance shall be effective on April
27, 2006.
Section 6. That a copy of the caption of this Ordinance be
spread upon the Minutes of the City Council.
READ, ADOPTED AND APPROVED on this __ day of
, A.D., 2006, at a Meeting of the City Council of
the City of Port Arthur, Texas, by the following vote: AYES:
Mayor
Councilmembers '
2
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NOES:
MAYOR
ATTEST:
CITY SECRETARY
APPROVED AS TO FOI~M:
CITY ATTORNEY
APPROVED FOR ADMINISTRATION:
CITY MANAGER
z.po5597 3
EXHIBIT "A"
TEXAS GAS SERVICE
Greg A. Phillips
April 12, 2006
Mr. Dan Lawton
P&L Concepts, Inc.
12113 Roxie Drive, Suite 120
Austin, TX 78729
Dear Mr. Lawton:
Thank you for meeting with Texas Gas Service yesterday as legal representative for the
Cities of Groves, Nederland and Port Neches (the "Cities").
After meeting and discussing various settlement options, it is the understanding of Texas
Gas Service and the Cities that we have agreed to the following adjustments to the original
filed request:
· Reduction of overall revenue requirement by $844,462 (from $2,444,462 to
$1,600,000), by proportionate revenue reductions for all classes of service
· Residential customer charge of $11.50 per month
· Use of proposed weather normalization adjustment clause
· Stipulated return on equity of 11.00% and return on long-term debt of 6.18%
resulting in an overall stipulated return on investment of 8.408%
· Stipulated depreciation rates as included in the Company's original filing
· Incremental federal income tax rate of 35%
· Inclusion of gas-cost-related bad debts in the proposed cost of gas clause as
specified in the original filing
· No moratorium on GRIP filings
· Reimbursement of the Cities' reasonable consulting and legal expenses related to
this matter, expected to be in the $36,000 range (not to be surcharged but imbedded
in the revenue increase)
· Texas Gas Service agrees that if it settles its pending rate request with the City of
Port Arthur and such settlement results in:
o an overall revenue requirement less than agreed to by this settlement letter,
or;
o a lower stipulated return on investment than agreed to by this settlement
letter, or;
o a modification or elimination of the gas-cost-related bad debt provision
agreed to by this settlement letter,
then Texas Gas Service will be required to offer to the Cities these lower terms of
settlement.
1501 S. MoPac Lxpressway, Suite 400 · Austin, Texas 78746
(512) 477-5852
w~v. texasgasservice.com
2
If you agree that the above-referenced settlement terms represents the terms of the agreement
reached yesterday, subject to city council approval of the Cities, please affirm by signing
below.
On behalf of Texas Gas Service Company, a division of ONEOK, Inc., I agree to the terms
outlined above.
On behalf of the Cities of Groves, Nederland and Port Neehes, I agree to the terms outlined
above (subject to city council approval of the Cities).
Dan Lawton, counsel for Cities Date
EXHIBIT "B"
Schedu)e H
TEXA~ GAS SERVICE COMPANY
SOUTH JEFFERSON COUNTY SERVICE AREA
TWELVE MONTHS ENDED JUNE 30, 2005
Proposed Rate Design
AS AS AS REVENUE AT
PROPOSED ADJUSTED ADJUSTED ADJUSTED PROPOSED
Una RATES SILLS VOLHME$ TY REV RATES
RESIDENTIAL
1 Customer Chaise $ 11.50 372,906 $ 4,288,442
2 All Ccf ~ 0.16650 12,508,299 $ 2,082,632
3 $
372,908 12,508,299 $ 4,965,194 $ 6,371,074
COMMERCIAL
4 Customer Charge $ 31.25 15,214 $ 475,438
5 Volumetric Charge - Step l (First 250 Ccf) ~ 0.10290 1,071,421 $ 110,249
6 Vo[umetric Charge - Step 2 (Over 250 Cc'f) 0.07530 1,719,409 $ 129,471
15,214 2,790,829 $ 524,162 $ 715,158
PUBLIC AUTHORITY AND SCHOOLS
7 Customer Charge $ 30.00 2,104 $ 63,120
8 Volumetric Charge - Step 1 (First 250 Ccf) ~ 0.17590 224,749 $ 39,533
9 Volumetric Charge- Step 2 (Over 250 Ccf) 0.15010 692,085 $ 103,082
2,104 916,834 $ 160,972 $ 206,535
TRANSPORTATION - COMMERCIAL
10 Customer Charge $ 300.00] 60 $ 18,000
11 Volumetric Charge- Step 1 (First 250 Ccr~ $ 0.10290] 14,831 $ 1,526
12 Volumetric Cha~ge - Step 2 (Over 250 Ccf) $ 0.07530 655,354 $ 49,348
60 670,105 $ 111,228 $ 68,874
13 SPECIAL CONTRACT REVENUE $ 2~4,279 $ 284,279
14 FORFEITED DISCOUNTS $ $
15 SERVICE CHARGES & OTHER REV $ 226,882 $ 226,882
16 VARIANCE TO GENERAL LEDGER $ (13,989} $ (13,969)
17 TOTAL REVENUES $ 6,~58,749 $ 7,858,834
18 TY REVENUE INCREASE $ 1,600,085
TEXAS GAS SERVICE COMPANY RATE SCHEDULE NO. 1-1-INC
South Jefferson Count~ Service Area Page 1 of 4
COST OF GAS CLAUSE
A. APPLICABILITY
This Cost of Gas Clause shall apply to all general service rate schedules of Texas Gas
Service Company ("The Company") in the incorporated areas of its South Jefferson
County Serv/ce Area.
B. DEFINITIONS
1. Cost of Gas - The rate per billing unit or the total calculation under this clause,
consisting of the commodity cost, a reconciliation component, and other purchased
gas expenses.
2. Commodity Cost - The Cost of Purchased Gas multiplied by the Pumhase Sales
Ratio.
3. Cost of Purchased Gas - The estimated cost for gas purchased by the Company
from its supplier or the estimated weighted average cost for gas purchased by the
Company from all sources where applicable. Such cost shall include not only the
purchase cost of natural gas, but shall also include all reasonable fees for services
such as gathering, treating, processing, transportation, capacity and/or supply
reservation fees, storage, balancing, and swing services necessmy for the
movement of gas to the Company's city gate delivery points. The Cost of
Purchased Gas shall also include gains or losses from the utilization of natural gas
financial instruments that are executed by the Company for the purpose of
mitigating high prices and price volatility.
4. Reconciliation Component - The amount to be returned to or recovered from
customers each month from October through June as a result of the Reconciliation
Audit.
5. Reconciliation Audit - An annual review of the Company's books and records for
each twelve month period ending with the production month of June to determine
the amount of over or under collection occurring during such twelve month period.
The audit shall determine: (a) the total amount paid for gas purchased by the
Company (per Section B(3) above) to provide service to its general service
customers during the period, (b) the revenues received from operation of the
provisions of this cost of gas clause,
Supersedes Same Sheet Dated Meters Read On and After
8/27/04 (Cities of Nederland, Groves & Por~ Neches) April 28, 2006
& 12/23/02 (City of Port Arthur)
TEXAS GAS SERVICE COMPANY RATE SCHEDULE NO. 1-1-INC
South Jefferson County Service Area Page 2 of 4
COST OF GAS CLAUSE
(Continued)
5. (cont.) (c) the total amount of refunds made to customers during the period and any
other revenues or credits received by the Company as a result of relevant gas
purchases or operation of this Cost of Gas Clause, (d) the total amount accrued
during the period for imbalances under the transportation rate schedule(s) net of
franchise fees and applicable taxes, (e) the total amount of uncollectible accounts
that are attributable to charges calculated under this tariff during the period, and
an adjustment, if necessary, for lost and unaccounted for gas during the period in
excess of five (5) percent of purchases.
6. Purchase/Sales Ratio - A ratio determined by dividing the total volumes purchased
for general service customers during the twelve (12) month period ending June 30
by the sum of the volumes sold to general service customers during the same
period. For the purpose of this computation all volumes shall be stated at 14.65
psia. Such ratio as determined shall in no event exceed 1.0526 i.e. 1/(1 - .05)
unless expressly authorized by the appropriate regulatory authority.
7. Reconciliation Account - The account maintained by the Company to assure that
over time it will neither over nor under collect revenues as a result of the operation
of the cost of gas clause. Entries shall be made monthly to reflect, (a) the total
amounts paid to the Company's supplier(s) for gas applicable to general service
customers as recorded on the Company's books and records (per Section B(3)
above), (b) the revenues produced by the operation of this Cost of Gas Clause, and
(c) refunds, payments, or charges provided for herein or as approved by the
regulatory authority. (d) the total amount accrued during the period for imbalances
under the transportation rate schedule(s) net of franchise fees and applicable taxes,
(e) the total amount of uncollectible accounts that are attributable to charges
calculated under this tariff during the period, and (f) an adjustment, if necessary,
for lost and unaccounted for gas during the period in excess of five (5) percent of
purchases.
8. General Service Customers - those customers served under general service rate
schedules.
C. COST OF GAS
In addition to the cost of service as provided under its general service rate schedules, the
Company shall bill each general service customer for the Cost of Gas incurred during the
billing period. The Cost of Gas shall be clearly identified on each customer bill.
Supersedes Same Sheet Dated Meters Read On and After
8/27/04 (Cities of Nederland, Groves & Port Neches) April 28, 2006
& 12/23/02 (City of Port Arthur)
TEXAS GAS SERVICE COMPANY RATE SCHEDULE NO. 1-1-INC
South Jefferson County Service Area Pa§e 3 of 4
COST OF GAS CLAUSE
(Continued)
D. DETERMINATION AND APPLICATION OF THE RECONCILIATION COMPONENT
If the Reconciliation Audit reflects either an over recovery or under recovery of revenues,
such amount, plus or minus the amount of interest calculated pursuant to Section E below,
if any, shall be divided by the general service sales volumes, adjusted for the effects of
weather, growth, and conservation for the period beginning with the October billing cycle
last preceding through the June billing cycle. The Reconciliation Component so
determined to collect any revenue shortfall or to return any excess revenue shall be
applied for a nine (9) month period beginning with the next following October billing
cycle and continuing th_rough the next following June billing cycle at which time it will
terminate until a new Reconciliation Component is determined
E. PAYMENT FOR FUNDS
Concurrently with the Reconciliation Audit, the Company shall determine the amount by
which the Cost of Gas was over or under collected for each month including any cost of gas
invento~ in storage within the period of audit. If, on the average, the Company had
overcollected during the period, it shall credit into the Reconciliation Account during
September an amount equal to the average balance multiplied by nine percent (9%). If on
the average, the Company had undercolleoted during the period, it shall debit into the
Reconciliation Account during September an amount equal to the average balance
multiplied by nine percent (9%).
F. SURCHARGE OR REFUND PROCEDURES
In the event that the rates and charges of the Company's supplier are retroactively reduced
and a refund of any previous payments is made to the Company, the Company shall make
a similar refund to its general service customers. Similarly, the Company may surcharge
its general service customers for retroactive payments made for gas previously delivered
into the system. Any surcharge or refund amount will be included in the Reconciliation
Account.
Refunds or charges shall be entered into the Reconciliation Account as they are collected
from or returned to the customers. For the purpose of this Section F, the entry shall be
made on the same basis used to determine the refund or charge component of the Cost of
Gas and shall be subject to the calculation set forth in Section (E) Payment for Funds,
above.
Supersedes Same Sheet Dated Meters Read On and After
8/27/04 (Cities of Nederland, Groves & Port Neehes) April 28, 2006
& 12/23/02 (City of Port Arthur)
TEXAS GAS SERVICE COMPANY RATE SCHEDULE NO. 1-1-INC
South Jefferson County Service Area Page 4 of 4
COST OF GAS CLAUS]]
(Continued)
G. COST OF GAS STATEMENT
The Company shall file a Cost of Gas Statement with the Regulatory Authority by the
beginning of each billing month. (The Company shall file such initial statement as soon as
is reasonably possible). The Cost of Gas Statement shall set forth (a) the estimated Cost of
Purchased Gas; Co) that cost multiplied by the Purchase/Sales Ratio; (c) the amount of the
cost of gas caused by any surcharge or refund; (d) the Reconciliation Component; and (e)
the Cost of Gas calculation. The statement shall include all data necessary for the
Regulatory Authority to review and verify the calculation of the Cost of Gas. The date on
which billing using the Cost of Gas is to begin (bills prepared) is to be specified in thc
statement.
H. ANNUAL RECONCILIATION REPORT
The Company shall file an Annual Reconciliation Report with the Regulatory Authority
which shall include but not necessarily be limited to:
1. A tabulation of volumes of gas purchased and costs incurred listed by account or type
of gas, supplier and source by month for the twelve months ending June 30.
2. A tabulation of gas units sold to general service customers and related Cost of Gas
Clause revenues.
3. A description of all other costs and refunds made during the year and their effect on
the Cost of Gas Clause to date.
4. A description of the imbalance payments made to and received from the Company's
transportation customers within the service area, including monthly imbalances
incurred, the monthly imbalances resolved, and the amount of the cumulative
imbalance. The description should reflect the system imbalance and imbalance
amount for each supplier using the Company's distribution system during the
reconciliation period.
5. A tabulation of the uncollectible accounts attributable to charges calculated under this
tariff, including monthly amounts charged off, and monthly charged off amounts later
collected, if any.
This report shall be filed concurrently with the Cost of Gas Statement for October.
Supersedes Same Sheet Dated Meters Read On and After
8/27/04 (Cities of Nederland, Groves & Port Neches) April 28, 2006
& 12/23/02 (City of Port Arthur)
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE 10
RESIDENTIAL SERVICE RATE
APPLICABILITY
Applicable to residential consumers for all purposes.
TERRITORY
Incorporated areas served in Jefferson County, Texas including Port Arthur, Nederland, Groves and
Port Neches, Texas.
COST OF SERVICE RATES
During each monthly billing period:
A Customer Charge of $11.50 plus
All Ccf~ $ 0.1665 per Ccf
OTHER ADJ]3'STMENTS
Cost of Gas Component: The basic rates for cost of service set forth above shall be increased by
the amount of the Cost of Gas Component for the billing month computed in accordance with the
provisions of Rate Schedule 1-1-1NC.
Weather Normalization Adjustment: The billing shall reflect adjustments in accordance with the
provisions of the Weather Normalization Adjustment Clause, Rate Schedule WNA.
Taxes: Plus applicable taxes and fees (including franchises fees) related to above.
CONDITIONS
Subject to all applicable laws and orders, and the Company's rulgs and regulations on file with the
regulatory authority.
Supersedes Rate Schedules Meters Read On or After
10 - 8/27/04 (Cities of Nederland, Port Neches and Groves) April 28, 2006
12 - 12/23/02 (City of Port Arthur)
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE 20
COMMERCIAL SERVICE RATE
APPLICAB]I,ITY
Applicable to commercial consumers for all purposes and all other consumers not otherwise specifically
provided for.
TERRITORY
Incorporated areas served in Jefferson County, Texas including Port Arthur, Nederland, Groves and Port
Neehes, Texas.
COST OF SERVICE RATES
During each monthly billing period:
A Customer Charge of $31.25 plus
The First 250 Ccf~ $ 0.1029 per Ccf
All Over 250 Ccf~ $ 0.0753 per Ccf
OTHER ADJUSTMENTS
Cost of Gas Component: The basic rates for cost of service set forth above shall be increased by the
amount of the Cost of Gas Component for the billing month computed in accordance with the
provisions of Rate Schedule 1-1-1NC.
Weather Normalization Adjustment: The billing shall reflect adjustments in accordance with the
provisions of the Weather Normalization Adjustment Clause, Rate Schedule WNA.
Taxes: Plus applicable taxes and fees (including franchises fees) related to above.
CONDITIONS
Subject to all applicable laws and orders, and the Company's rules and regulations on file with the
regulatory authority.
Supersedes Rate Schedules Meters Read On and After
20 - 8/27/04 (Cities of Nederland, Port Neches and Groves) April 28, 2006
23 & 24 - 12/23/02 (City of Port Arthur)
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE 40
PUBLIC AUTHORITY AND SCHOOLS SERVICE RATE
APPLICABILITY
Applicable to all public and parochial schools and colleges, and to all facilities operated by
Governmental agencies not specifically provided for in other rate schedules or special contracts. This
rate is only available to full requirements customers of Texas Gas Service Company.
TERRITORY
Incorporated areas served in Jefferson County, Texas including Port Arthur, Nederland, Groves and
Port Neches, Texas.
COST OF SERVICE RATES
During each monthly billing period:
A Customer Charge of $30.00 plus
The First 250 Ccf~ $ 0.1759 per Ccf
All Over 250 Ccf~ $ 0.1501 per Ccf
OTHER ADJUSTMENTS
Cost of Gas Component: The basic rates for cost of service set forth above shall be increased by the
amount of the Cost of Gas Component for the billing month computed in accordance with the
provisions of Rate Schedule 1- I-INC.
Weather Normalization Adiustment: The billing shall reflect adjustments in accordance with the
provisions of the Weather Normalization Adjustment Clause, Rate Schedule WNA.
Taxes: Plus applicable taxes and fees (includ'mg franch/ses fees) related to above.
CONDITIONS
Subject to all applicable laws and orders, and the Company's rules and regulations on file with the
regulatory authority.
Supersedes Rate Schedules Meters Read On and After
40 - 8/27/04 (Cities of Nederland, Port Neches and Groves) April 28, 2006
25, 44, 45 & 46 - 12/23/02 (City of Port Arthur)
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE C-1
Page 1 of 2
ELECTRICAL COGENERATION AND ENERGY CONSERVATION SERVICE RATE
APPLICABILITY
Service under this rate schedule is available to any customer who enters into a contract
with the Company to use natural gas for the purpose of cogeneration. Cogenoration is
defined as the use of thermal energy to produce electricity with recapture of by-product
heat in the form of steam, exhaust heat, etc. for industrial process use, space heating, food
processing or other purposes.
TERRITORY
This rate shall be available throughout the Company's Jefferson County Service Area
including Port Arthur, Port Neches, Nederland, and Groves.
COST OF SERVICE RATE
During each monthly billing period:
Nov. - Apr. May - Oct.
Winter Summer
A Customer Charge of $300.00 per meter plus -_
For the first 5,000 Ccf/Month - $. 1162 $ .0930
For the next 15,000 Ccf/Month - $. 1107 $ .0886
For the next 30,000 Ccf/Month - $. 1052 $ .0842
All Over 50,000 Ccf/Month - $ .0997 $ .0798
COST OF GAS
In addition to the cost o£service set forth above, each customer's bill shall include the
Cost of Gas for the billing month determined in accordance with the provisions of the
Cost of Gas Clause, Rate Schedule No. 1-1 and 1-1-INC.
OTHER ADJUSTMENTS
Taxes: Plus applicable taxes and fees (including franchise fees) related to above.
Supersedes Same Sheet Dated Meters Read On and After
December 23, 2002 (City of Port Arthur only) April 28, 2006
August 27, 2004 (Cities of Nederland, Groves & Port Neches)
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE C-1
Page 2 of 2
ELECTRICAL COGENERATION AND ENERGY CONSERVATION SERVICE RATE
(Continued)
CONDITIONS
1. Gas taken under this rate shall be used exclusively for the purpose of cogeneration as
defined in the Applicability section of this rate schedule and not for other purposes.
The gas taken under this rate will be separately metered.
2. This rate will not be available for standby use.
3. For the purpose of this rate, the annual load factor must be 60 percent or greater. The
annual load factor is defined as the customer's total annual consumption divided by
the customer's peak month consumption times twelve. If less than a 60 percent load
factor occurs for a twelve month period, the rate charged will revert back to the rate
that the customer would have otherwise been served under. A continuous twelve
month period of 60 percent or better load factor must precede a return to the
cogeneration rate.
4. To qualify for the summer discounts, the customer's peak summer month% load must
be at least 75% of the customer's peak winter month's load. Failure to meet this
requirement will result in an adjustment to the customer's October bill equal to the
difference between the winter and summer rates times that years total May through
September consumption by that customer.
5. The curtailment priority of any customer served under this rate schedule shall be the
same as the curtailment priority which would pertain if gas were used directly to
provide energy for uses as defined and listed in paragraph 14.2 of the Company's
Texas Rules of Service.
6. Subject in all respects to applicable laws, rules and regulations from time to time in
effect.
Supersedes Same Sheet Dated Meters Read On and After
December 23, 2002 (City of Port Arthur only) April 28, 2006
August 27, 2004 (Cities of Nederland, Groves & Port Neches)
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE CNG-1
COMPRESSED NATURAL GAS SERVICE RATE
APPLICABILITY
Service under ~his rate schedule is available to any customer for usage where customer
purchases natural gas which will be compressed and used as a motor fuel. Service will be
separately metered.
TERRITORY
Incorporated areas served in Jefferson County, Texas including Port Arthur, Nederland,
Groves and Port Neches, Texas.
COST OF SERVICE RATE
During each monthly billing period:
A Customer Charge of $10.00 plus -
All Ccfper monthly billing period ~ $ .0850 per Ccf
COST OF GAS
In addition to the cost of service set forth above, each customer's bill shall include the
Cost of Gas for the billing month determined in accordance with the provisions of the
Cost o£Gas Clause, Rate Schedule No. l-l-INC.
OTHER ADJUSTMENTS
Taxes: Plus applicable taxes and fees (including franchise fees) related to above.
CONDITIONS
1. Subject in all respects to applicable laws, rules, and regulations from time to time in
effect.
2. Delivery of gas hereunder may be interrupted or curtailed at the discretion of the
Company, in case of shortage or threatened shortage of gas supply from any cause
whatsoever, to conserve gas for residential and other consumers served.
3. The Company's Budget Billing Plan is not available to customers taking this service.
Supersedes Same Sheet Dated Meters Read On and After
August 27, 2004 (Cities of Nederland, Groves & Port Neches) April 28, 2006
December 23, 2002 (City of Port Arthur)
TEXAS GAS SERVICE COMPANY RATE SCHEDULE T-4
South Jefferson County Service Area - Gulf Coast Region Page 1 of I
COMMERCIAL TRANSPORTATION SERVICE RATE
APPLICABILITY
Service under this rate schedule is available to any commercial customer and to Qualified Suppliers
supplying natural gas to be transported, pursuant to Rate Schedule T-GEN (General Charges,
Provisions and Conditions) for the transportation of customer owned natural gas through the
Company's South Jefferson County distribution system for use by customers within the Company's
South Jefferson County Service Area. The customer must arrange with its gas supplier to have
the customer's gas delivered to one of the Company's existing delivery receipt points for
transportation by the Company to the customer's facilities at the customer's delivery point.
The receipt points shall be specified by the Company at its reasonable discretion, taking into
consideration available capacity, operational constraints, and integrity of the distribution
system.
TERRITORY
Incorporated areas served in Jefferson County, Texas including Port Arthur, Nederland, Groves and
Port Neches, Texas.
RATE
This rate shall be the sum of Part A, Part B, and Part C as described below.
Part A: A customer charge of $300.00 per meter per month.
Part B: All volumes of natural gas transported during each month in accordance with this
schedule shall be billed at the following Ccfcharge:
The First 250 Ccf ~ $0.1029 per Ccf
All Over 250 Ccf~ $0.0753 per Ccf
Part C: "Additional Charges to Cost of Service Rate" pursuant to Rate Schedule T-GEN
(General Charges, Provisions and Conditions).
CONDiTIONS
See the "Special Provisions" and "Conditions" pursuant to Rate Schedule T-GEN (General
Charges, Provisions and Conditions)
Supersedes Rate Schedule Meters Read On and After
T-4 - August 27, 2004 (Cities of Nederland, Groves & Port Neches) May 1, 2006
T-3 - March 25, 2003 (City of Port Arthur)
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE T-GEN
Page 1 of 8
GENERAL CHARGES, PROVISIONS AND CONDITIONS
APPLICABILITY
Applicable to Transportation Rate Schedules.
TERRITORY
All areas served by the Company in its South Jefferson County Service Area.
ADDITIONAL CHARGES TO COST OF SERVICE RATE
During each monthly billing period, the following charges will be added in addition to any charges
specifically stated on the applicable rate schedule:
Plus:
A charge representing the customer's proportionate share of lost and unaccounted (LAUF) gas volume within
the Service Area. The customer's share of LAUF gas will be determined by multiplying (i) the actual
volumes delivered to the customer by (ii) the purchase/sales ratio, minus one, for the Service Area for the
twelve month period ended the preceding June 30, as defined in the Company's applicable Cost of Gas Clause
(Rate Schedule 1-1NC for the incorporated areas or Rate Schedule 1 for the unincorporated areas).
Pumhase/sales ratios will be recalculated annually with the filing of the annual reconciliation required by the
Company's Cost o£Gas Clause, for application to deliveries commencing in the succeeding October.
The LAUF factor as deterrdlned above shall in no event exceed .0526 i.e. [1/1-.05]-1 and must fall within the
range of zero (0) to 5.26%.
The Company will require the customer to satisfy its lost and unaccounted for obligation by payment in kind
("P]K"). PIK volumes will be added to the customer usage volume to equal the total amount of gas required
to be delivered at the Company's receipt points and shall be included for purposes of calculating imbalances
in accordance with Special Provision 6 below.
Plus:
A charge will be made each month to recover the cost of gross receipts taxes paid to the State of Texas
pursuant to the provision of Article 6060 TEX. REV. CIV. STAT., as such may be amended from time to
time, which are attributable to the Iransportation service performed hereunder.
Plus:
Any franchise fees, street rental fees, or other similar privilege fees attributable to the Company's services
under this tariffand payable to any municipality wherein the customer receives gas delivered hereunder.
Initial Rate Meters Read On and After
May 1, 2006
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE T-GEN
Page 2 of 8
GENERAL CHARGES, PROVISIONS AND CONDITIONS
(Continued)
SPECIAL PROVISIONS
1. Definitions: As used in this tariff, the following terms will have the meanings indicated:
Aggregation Pool - One or more transportation service accounts served by the same Qualified Supplier
and aggregated pursuant to Special Provision 3 of this tariff for operational purposes, including, without
limitation, nominating, scheduling and balancing gas deliveries at designated receipt points within the
service area.
Cumulative Operational Imbalance (COI)- As of the effective date of this tariff, the initial COl for any
Aggregation Pool shall be determined by aggregating the cumulative imbalances of all accounts
participating in such Aggregation Pool, calculated as of the effective date of this tar/ff. Thereafter, the COI
shall be adjusted to include MOI volumes which have not been cashed out pursuant to Section 6 below.
Cumulative Tolerance Limit - With raspcct to any Aggregation Pool, five percem (5%) of historical
annual Deliveries to the participants of such pool for the most recent year ended on June 30. For new
participants having no historical delivery information, such calculation shall be based on forecasted
volumes which the Company determines to be reasonably reliable and reasonably accurate. The
Cumulative Tolerance Limit will be adjusted annually in October. Upon request of a Qualified Supplier,
prior to the commencement of any flow month, the Cumulative Tolerance Limit shall be adjusted
prospectively to reflect changes to the Aggregation Pool and other known changes to anticipated
volumetric loads that the Company determines to be reasonably reliable and reasonably accurate.
Deliveries - Volumes of natural gas delivered to the customer's premises pursuant to this tariff.
Imbalance Volumes - The volume by which the Qualified Supplier's MOI exceeds the Monthly Tolerance
Limit or the Qualified Supplier's COI exceeds the Cumulative Tolerance Limit.
Monthly Operational Imbalance (MOI)- For any month, the difference between the aggregate Receipts
for an Aggregation Pool and the sum of (i) the aggregate Deliveries for such Aggregation Pool during the
same time period, and (ii) the aggregate PR( Volumes assessed for such period. The resulting volume
shall be adjusted to reflect any PPA. Any PPA shall be included in the MOl calculation for the month
during which the PPA is reported and the prior period MOI will not be recalculated due to PPA unless the
PPA results in new or revised cash out charges.
Initial Rate Meters Read On and After
May 1, 2006
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE T-GEN
Page 3 of 8
GENERAL CHARGES, PROVISIONS AND CONDITIONS
(Continued)
Monthly Tolerance Limit - With respect to any Aggregation Pool, ten percent (10%) of the aggregate
Deliveries for such month.
PIK Volumes - Volumes of gas to be delivered by the customer to the Company in satisfaction of the
customer's LAUF gas obligation.
Prior Period Adjustment (PPA) - For any Aggregation Pool, a revision to the Receipts or Deliveries for
any prior flow month which would result in an increase or decrease to the previously stated MOl for such
month.
Receipts - Volumes of natural gas received into the Company's natural gas distribution system for delivery
to a customer pursuant to this tariff.
Qualified Supplier - A supplier of natural gas for transportation to customers through the Company's
natural gas dis~ibution system who meets the requirements of Section 8 of this tariff and has a currently
effective Supplier Service Agreement with the Company.
Supplier Service Agreement - a contract setting forth the terms upon which a supplier of natural gas may
make deliveries of customer-owned gas into the Company's distribution system for delivery to one or more
of the Company's customers taking service under this tariff.
Transportation Agreement - a contract between the Company and the customer detailing the terms and
conditions upon which the customer will receive service under this tariff.
Upstreatu Balancing Agreement - A con,act between a Qualified Supplier and its gas supplier whereby
such gas supplier agrees to retain imbalances upstream of the Company's natural gas distribution system.
2. Qualified Supplier Required - As a condition of receiving service under this Rate Schedule, the customer
must appoint no more than one Qualified Supplier for each account. The Qualified Supplier shall act on
behalf of the customer to procure gas supplies and to deliver them to the receipt points designated in the
relevant Transportation Agreement, and shall act as the Customer's agent with respect to nominations and
operational notices required under the Customer's Transportation Agreement and with respect to the
resolution of imbalances under this Rate Schedule. A customer that meets the requirements of Special
Provision 8 below may act as its own Qualified Supplier.
2.1 Change of Qualified Supplier - The customer may change its Qualified Supplier effective only
on the first day of the calendar month. The customer shall notify the Company in writing at least
thirty (30) days in advance of any change of Qualified Supplier.
Initial Rate Meters Read On and After
May 1, 2006
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE T-GEN
Pa~e 4 of 8
GENERAL CHARGES, PROVISIONS AND CONDITIONS
(Continued)
3. Aggregation Pool - The Qualified Supplier shall designate no more than one Aggregation Pool within the
Service Area, and shall notify the Company as to the identity of the customer accounts comprising such
Aggregation Pool. With respect to all accounts included in any Aggregation Pool, the Qualified Supplier
shall (i) make nominations on an aggregated basis at least six (6) business days prior to the first of the
calendar month; and (ii) resolve operational imbalances on an aggregated basis in accordance with SpeciaI
Provision 6 below.
4. Customer Volume Information - The Company shall supply to the Qualified Supplier, designated by the
customer, information as to such customer's delivery volumes each month, with the imbalance statements
described at Special Provision 6.4 below.
5. Imbalances
5.1 Monthly Imbalances - The Qualified Supplier shall not allow i~s MOI for any Aggregation Pool to
exceed the Monthly Tolerance Limit in any month. In the event the MOl exceeds the Monthly
Tolerance Limit, the parties shall resolve thc value of such Imbalance Volumes using the cashout
procedure set forth in Special Provision 6 below. MOI amounts that do not exceed the Monthly
Tolerance Limit shall be added to the Qualified Supplier's COl.
5.2 Cumulative Imbalances - Thc Qualified Supplier shall not allow its COI for any Aggregation
Pool to exceed thc Cumulative Tolerance Limit at any time. In the event the Qualified Supplier's
COl exceeds the Cumulative Tolerance Limit, the parties shall resolve the value of such Imbalance
Volumes using the cashout procedure set forth in Special Provision 6 below. The initial COl for
any Aggregation Pool shall be calculated using the imbalance volumes attributable to the
participants for the flow month immediately preceding the effective date hereof.
5.3 Upstream Imbalances - For purposes of Special Provisions 5 and 6 berein, no imbalances will be
attributed to a Qualified Supplier on account of volumes delivered subject to an Upstream
Balancing Agreement which has been acknowledged in writing by the upstream transporter
retaining the imbalance.
6. Cashout Procedure
6.1 Over Deliveries - For MOI's or COI's where receipts exceed deliveries by more than thc
applicable tolerance limit, the Company shall pay to the Qualified Supplier an amount equal to: (i)
the Imbalance Volume, stated in MMBtu, multiphed by 90% of the "Delivered Spot-Gas Prices
Houston Ship Channel/Beaumont, Texas" Index (large packages only) as published in the first
issue of Inside F.E.R.C. 's Gas Market Report for the month in which the applicable tolerance limit
was exceeded.
Initial Rate Meters Read On and After
May 1, 2006
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE T-GEN
Page 5 of 8
GENERAL CHARGES, PROVISIONS AND CONDITIONS
(Continued)
6.2 Under Deliveries - For MOI's or COI's where deliveries exceed receipts by more than the
applicable tolerance limit, thc Qualified Supplier shall pay to thc Company an mount equal to: (i)
the Imhalancc Volume, slated in MMBtu, multiplied by the Company's Cost of Purchased Gas,
stated in MMBtu, as defined by the Company's applicable Cost of Gas Clause (Rate Schedule 1-
INC for the incorporated areas or Rate Schedule 1 for the unincorporated areas) for the Service
Area and filed monthly with the appropriate regulatory antho~/ty for the month in which the
applicable tolerance limit was exceeded, plus (ii) any franchise fees assessed on such payment by
the municipality in which deliveries were made to participants in the Aggregation Pool which
generated the Imbalance, plus (iii) any other taxes, user fccs or other sums assessed on such
payment by any governmental authority.
6.3 Exemption from Fees and Taxes - If the Qualified Supplier claims that any Imbalance volumes
are exempt from franchise fees, taxes, user fees or other governmental assessments, the Qualified
Supplier shall provide to the Company such evidence of the exmxtption as the Company might
reasonably require. In addition, thc Qualified Supplier shall provide to the Company each month
such supporting documentation as the Company may reasonably require to determine what portion
of the payment described at Special Provision 6.2 above is exempt from such assessments.
6.4 Invoicing/Payment - For each flow month, within fifteen (15) days following the Company's
receipt of volume statements from the upstream pipelines making deliveries into the Company's
system for an Aggregation Pool, the Company shall provide to thc Qualified Supplier an imbalance
statement stating the MOI, COI, any resulting cashout payments as calculated pursuant to Sections
6.1 and 6.2 above, as well as usage and PIK volumes for each customer served by the supplier.
Payments shall be due no later than fifteen (15) days following the invoice date.
6.5 Effect of Cashout on PGA - All amounts accrued under this Special Provision 6 excluding
franchise fees and sales tax if found to be applicable shall be recorded to the PGA "Reconciliation
Account" as defined in Rate Schedule 1-1NC for the incorporated areas or Rate Schedule 1 for the
unincorporated areas.
6.6 Allocation to Pool Participants - The Qualified Supplier shall be responsible for collecting from or
remitting to its customers all funds received or paid under this Special Provision 6 that are due to
or from the customer.
7. Company's Liability for Cashout - The Company shall have no liability to any customer in connection
with the failure of the customer's Qualified Supplier to remit to the customer any cashout payment made by
the Company to the Qualified Supplier.
Initial Rate Meters Read On and ARer
May 1, 2006
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE T-GEN
Page 6 of 8
GENERAL CHARGES, PROVISIONS AND CONDITIONS
(Continued)
8. Supplier Qualifications - The Company may refuse to accept deliveries of gas into its system from any
supplier who has failed to meet the following conditions:
8.1 Financial Integrity - Thc Company shall have the right to establish reasonable financial and non-
discriminatory credit standards for Qualified Suppliers. Any supplier desiring to bccome a
Qualified Supplier must submit to thc Company an audited balance sheet and financial statements
for the previous three (3) years, along with two (2) trade and at least one (1) banking reference. To
the extent that such information is not publicly available, the supplier shall supply the Company
with a list of all corporate affiliates, parent companies, subsidiaries and affiliated parmerships.
Any supplier who becomes a Qualified Supplier must provide updated financial information at the
Company's request.
8.2 Credit Enhancement - In the event a supplier fails to demonstrate to thc Company's reasonable
satisfaction that it has met the Company credit standards, the Company shall require such supplier
to provide one of the following: (i) a cash deposit; (ii) an irrevocable letter of credit issued by a
commercial bank reasonably acceptable to the Company; (iii) a surety bond issued by a reputable
insurance company listed in AM Best's Insurance Ratings with a rating of "B+ VII" or better, and
authorized to engage in thc business of insurance in the State of Texas; or (iv) a financial guaranty
from a guarantor who meets the Company's credit standards.
8.3 Termination of Qualified Supplier - The Company shall have thc right to terminate a Qualified
Supplier's Supplier Service Agreement and its eligibility to make deliveries into the Company's
local distribution system in the event that such Qualified Supplier fails to comply with or perform
any of the obligations on its part established in this tariff or in thc Supplier Service Agreement.
Notice shall be given to the Qualified Supplier no less than ten days prior to the end of the calendar
month, and shall be effective upon the first day of the succeeding month unless, within such ten
day period, the Qualified Supplier shall remedy such failure to the full satisfaction of the Company.
Termination of such Qualified Supplier's eligibility and its Supplier Service Agreement shall not
release the Qualified Supplier from its obligation to make payments due to thc Company for
transactions occurring prior to thc effective date of termination.
9. Withdrawal of Qualified Supplier - If a Qualified Supplier ceases for any reason (including the
Company's termination of the Supplier Service Agreement) to supply customers within the Service Arcs,
thc final COl for thc affected Aggregation Pool shall be calculated as of the end of the flow month in which
such cessation occurs, and shall be cashed out as follows:
9.1 Over Deliveries - For final COI's where receipts exceed dclivcrias, the Company shall pay to the
Supplier an amount equal to: (i) the final COl volume, stated in MMBtu, multiplied by 90% of thc
"Delivered Spot-Gas Prices Houston Ship Channel/Beaumont, Texas" Index (large packages only)
as published in the first issue of Inside F.E.R.C. 's Gas Market Report for the month for which thc
final COl was calculated.
Initial Rate Meters Read On and After
May 1, 2006
TEXAS GAS SERVICE COMPANY
gouth Jefferson County Service Area RATE SCHEDULE T-GEN
Page 7 of 8
GENERAL CHARGES, PROVISIONS AND CONDITIONS
(Continued)
9.2 Under Deliveries - For final COI's where deliveries exceed receipts limit, the Supplier shall pay
to the Company an amount equal to: (i) thc final COI volume, stated in MMBtu, multiplied by the
Company's Cost of Purchased Gas, stated in MMBtu, as defined by the Cost of Gas Clausc (Rate
Schedule 1-INC for the incorporated areas or Rate Schedule I for the unincorporated areas) for the
Service Area and filed monthly with the appropriate regulatory authority for the month in which
the month for which the final COl was calculated, plus (ii) any franchise fees assessed on such
payment by the municipality in which deliveries were made to participants in the Aggregation Pool
which generated the Imbalance, plus (iii) any other taxes, user fees or other sums assessed on such
payment by any governmental authority.
9.3 Invoicing/Payment - The final cashout payment shall be invoiced and paid in accordance with
Special Provision 6.4 above.
9.4 Continued Service - Upon the withdrawal of a Qualified Supplier, at the customer's request, the
Company shall provide continued service under the applicable general service rate schedule until
the customer designates a successor Qualified Supplier. In the event sales service commences on
any day other than the first day of a calendar month, all volumes delivered to the customer within
such month shall be deemed sales volumes for purposes of invoicing the customer and for
calculating the final COI. Such sales shall be subject to curtailment plans approved fi-om time to
hme by thc Railroad Commission of Texas or in the absence of an applicable plan, consistent with
Transporter's policies regarding curtailment and stand-by supplies of transport gas, as such policies
may change in Transporter's reasonable discretion.
CONDITIONS
1. Services rendered under this tariff are subject in all respects to applicable laws, rules, and regulations
fi-om time-to-time in effect.
2. Ail volumes of gas transported pursuant to this tariff shall be natural gas of equal or higher quality than
natural gas currently available from the Company's supplier(s). All gas delivered to the customer shall
be deemed to be the same quality as that gas received by the Company for transportation.
3. Service under this tariff is conditioned upon the customer's execution of and subject in all respects to the
terms and conditions of the Transportation Agreement and all amendments and modifications thereto.
Initial Rate Meters Read On and After
May 1, 2006
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE T-GEN
Page 8 of 8
GENERAL CHARGES, PROVISIONS AND CONDITIONS
(Continued)
4. Transportation of natural gas hereunder may be interrupted or curtailed to preserve the operational
safety, reliability, or integrity of the distribution system or in case of shortage or threatened shortage of
gas supply from any cause whatsoever, to conserve gas for residential and other higher priority
customers served. The curtailment priority of any customer served under this schedule shall be the same
as the curtailment priority established for other customers served pursuant to the Company's applicable
general service rate schedule which would otherwise be available to such customer.
5. The Company shall have the fight to terminate service under this tariff in the event the customer is no
longer served by a Qualified Supplier. Termination of service shall not relieve the customer of any
liability accrued prior to the effective date of such termination. The Company shall provide continued
service under the applicable general service rate schedule until the customer designates a successor
Qualified Supplier. In the event sales service commences on any day other than the first day of a
calendar month, all volumes delivered to the customer within such month shall be deemed sales volumes
for purposes of invoicing the customer and for calculating the final COl. Such sales shall be subject to
curtailment plans approved from time to time by the Railroad Commission of Texas or in the absence of
an applicable plan, consistent with Transporter's policies regarding curtailment and stand-by supplies of
transport gas, as such policies may change in Transporter's reasonable discretion.
6. If applicable, air conditioning equipment must be inspected and verified as safe and in service bY qualified
company personnel.
Initial Rate Meters Read On and ARer
May 1, 2006
TEXAS GAS SERVICE COMPANY
South Jefferson County Service Area RATE SCHEDULE WNA
WEATHER NORMALIZATION ADJUSTMENT CLAUSE
A. APPLICABILITY
The Weather Normalization Adjustment Clause (WNA) shall apply to the following
general service rate schedules of Texas Gas Service Company in the incorporated areas
served in Jefferson County, Texas including Port Arthur, Nederland, Groves & Port
Neches: 10, 20, and 40. The WNA shall be effective during the September through May
billing cycles.
B. PURPOSE
The WNA refunds over-collections or surcharges under-collections of revenue due to
colder or warmer than normal weather, as established in the Company's most recent rate
filing.
C. WNA MECHANISM
In order to reflect weather effects in a timely and accurate manner, the WNA adjustment
shall be calculated separately for each billing cycle and rate schedule. The weather
factor, determined for each rate schedule in the most recent rate case, shows the effect of
one heating degree day on consumption for that rate schedule. During each billing cycle,
the weather factor is multiplied by the difference between normal and actual heating
degree days for the billing period and by the number of customers billed. This WNA
volume adjustment is priced at the current cost of service rate per Ccft}) determine a
WNA revenue adjustment, which is spread to the customers in the billing cycle on a
promta basis.
D. FILING WITH THE CITIES
The Company will file with the Cities monthly reports showing the rate adjustments for
each applicable rate schedule. Supporting documentation will be made available for
review upon request. By each October 1, the Company will file with the Cities an annual
report verifying the past year's WNA collections or refunds.
Supersedes Same Rate Schedule Dated Meters Read On and After
August 27, 2004 April 28, 2006