In February through April of 2008 Wyoming Interstate Company, Ltd. (“WIC”) conducted an Open Season for capacity resulting from proposed modifications of its pipeline facilities that would permit transportation from points of receipt on the WIC Mainline between Wamsutter and the Cheyenne Hub to points of delivery at Wamsutter or Opal (the Open Season also addressed other capacity expansions which are not included in this Supplemental Open Season). This Supplemental Open Season provides interested parties an opportunity to acquire this capacity at WIC’s current maximum recourse rates. The capacity offered in this Supplemental Open Season is hereinafter referred to as the “WIC System Enhancement Capacity.”
LENGTH OF OPEN SEASON
This Supplemental Open Season will commence on July 1, 2009 and will close at 4:00 p.m., Mountain Time, on July 14, 2009. Precedent Agreements and Offer Sheets must be received by WIC prior to the close of the Supplemental Open Season.
Questions concerning the Supplemental Open Season or requests to obtain Precedent Agreements and Offer Sheets should be directed to:
Craig Coombs (719) 520
Description of THE WIC System Enhancement Capacity
The WIC System Enhancement Capacity offered in this Supplemental Open Season involves primary points of receipt on the WIC Mainline between Wamsutter and the Cheyenne Hub and primary points of delivery at Opal (utilizing off-system capacity to be acquired by WIC on the Questar Overthrust Pipeline (“Overthrust”)), or Wamsutter (into the Overthrust Pipeline) or for deliveries into Rockies Express Pipeline ("REX") at the existing Bitter Creek Meter Station.
The WIC System Enhancement Capacity will be provided by minor pipeline re-piping to permit east-to-west flows of gas on the WIC mainline and the installation of approximately three miles of pipeline and the modification of compression facilities at Wamsutter, and by the acquisition of off-system transportation capacity on the Overthrust pipeline.
Service on the WIC System Enhancement Capacity facilities may commence as early as late 2010 to early 2011, subject to the timely receipt of necessary regulatory approvals. However, interested parties may request a later start date for a portion of their requested capacity (but no later than February 1, 2015).
DESCRIPTION OF SERVICE
WIC proposes to make the WIC System Enhancement Capacity available under Rate Schedule FT in the WIC FERC Gas Tariff.
Existing shippers with capacity on WIC that could be used in lieu of some or all of the proposed facility enhancements should notify WIC prior to the close of the Supplemental Open Season if they wish to permanently turnback their capacity through a release to prospective shippers in this Supplemental Open Season. Those who wish to so release their capacity should notify WIC of the amount, the term, and any other conditions that would be necessary to effectuate such a release of their capacity, prior to the close of this supplemental open season.
SUBMISSION OF BIDS
To submit a bid in this Supplemental Open Season, one or more completed Offer Sheets executed by the prospective shipper must be attached to one or more executed Precedent Agreements and must be provided prior to the close of the Supplemental Open Season in the manner provided herein. The Offer Sheet must state the desired contract term, maximum delivery quantity (MDQ), receipt point, delivery point, and bid rate for the term of the agreement. Applicable commodity charges, ACA, FL&U, and any other authorized surcharges, including the surcharge for any off-system capacity, will be in addition to the bid rate.
WIC is offering the capacity on the WIC Mainline from points of receipt at the Cheyenne Hub with deliveries to Overthrust or REX at Wamsutter on a rolled-in basis at WIC’s existing recourse monthly reservation rate of $2.9414/Dth and a commodity rate of $0.0026/Dth (equivalent to $0.0993/Dth when calculated on a 100% load factor basis). WIC will consider proposed discounted rates monthly reservation from other points on the WIC mainline between the Cheyenne Hub and Wamsutter. The fuel charge for this will be the WIC mainline fuel rate, which is currently 0.87%.
If a Bidder requests a point of delivery at Opal, Bidder shall also pay all additional rates and charges that WIC is required to pay to Overthrust for off-system capacity to Opal. It is anticipated that this cost will be fixed at a monthly reservation rate of $2.2569/Dth ($0.0742/Dth on a 100% load factor basis), plus applicable surcharges and fuel and L&U (if applicable).
WIC will require at least 10 year bids to support the construction of the facility modifications described above.
Interested parties are permitted to place multiple bids, but each bid shall be a binding bid. If shipper desires to place bids at different rates, or with different conditions, separate bids should be submitted.
One Offer Sheet should be submitted with each executed Precedent Agreement. In submitting bids, please return two (2) originals of the Offer Sheet(s) and executed Precedent Agreement(s). Upon the award of capacity the originals will be executed by WIC and one set of fully executed documents will be returned for your files.
CREDITWORTHINESS REQUIREMENTS Bidders in the Supplemental Open Season must commit to the satisfaction of the following creditworthiness provisions: Bidder providing evidence of creditworthiness to WIC. Satisfactory evidence of creditworthiness may include:
a demonstration that: (i) Bidder’s senior unsecured debt securities are rated at least BBB- by Standard & Poor's Corporation ("S&P") or Baa3 by Moody's Investor Service ("Moody's") (In the event Bidder is rated differently by multiple agencies, the lowest rating shall be used); and (ii) Bidder is not under review for possible downgrade by S&P and/or Moody’s; and (iii) a sum of 12 months of anticipated charges under the FTSA is less than 10% of Bidder's tangible net worth; or
a demonstration that the sum of 60 months of anticipated charges is less than 10% of Bidder's tangible net worth, and a demonstration that the Bidder’s credit and financial history and outlook are acceptable to WIC. Such determination shall be based upon WIC's evaluation of: (i) Bidder’s financial statements and auditors notes, annual report to shareholders, and annual report to regulators; (ii) trend analysis of financial ratios; (iii) bank and trade references or other information obtained that is relevant to Bidder’s current and future financial strength and its ability to pay its obligations in a timely manner; (iv) Bidder’s payment history to WIC for services provided to Bidder; (v) whether Bidder is subject to any proceedings under any laws pertaining to bankruptcy, insolvency, liquidation, or debt reduction procedures and (vi) whether Bidder is subject to any recently filed substantial litigation either against Bidder or affecting Bidder’s business prospects.
As an alternative Bidder may satisfy its creditworthiness obligation by providing and maintaining, at its option: (i) an irrevocable letter of credit acceptable to WIC; or (ii) a deposit in advance; or (iii) an irrevocable, unconditional guarantee acceptable to WIC issued by another person or entity which satisfies the creditworthiness standards set forth in this section. Such letter of credit, deposit, or guarantee shall be equal to one year of the anticipated charges.
WARDING OF CAPACITY
Capacity will be awarded separately for each of the blocks of capacity offered in this Supplemental Open Season in the manner outlined below:
Capacity shall be allocated based on the per unit present value of the annual reservation charges associated with the WIC system enhancement facilities of each offer (i.e., bid rates associated with off-system capacity will not be included in the NPV calculation for purposes of any necessary capacity allocation), using the formula below:
R X ---------- = present value of the annual reservation charges per Dth
Where: R = monthly reservation rate attributable to the WIC facilities X 12
i = annual interest rate using the rate of return on equity most recently approved for WIC
n = term of the agreement in years
Prior to awarding capacity, the bidder must have satisfied the creditworthiness requirements set forth above.
Bids that are not at the maximum recourse rate or which are for a term shorter than WIC believes necessary to support the proposed project may not be accepted.
If a bid is determined to be acceptable, the bidder will be notified of an award of capacity on or before July 17, 2009. Fully executed Precedent Agreements, with accepted Offer Sheets, will be returned to the successful bidders no later than 30 days after the close of the Supplemental Open Season.
This Transportation Precedent Agreement ("TPA") dated July 14, 2009, states an agreement between Wyoming Interstate Company, Ltd. ("WIC") and __________________ ("Shipper"). In consideration of the mutual promises of the parties, WIC and Shipper agree as follows:
1. Transportation Service
A. WIC agrees to construct new and/or expand existing facilities and to acquire off-system capacity as necessary to provide firm transportation service from the Point(s) of Receipt described herein to the Point(s) of Delivery identified on the attached Offer Sheet; and
B. WIC agrees to provide Shipper with firm transportation service, as detailed herein, under WIC's Rate Schedule FT in WIC's Federal Energy Regulatory Commission ("FERC") Gas Tariff Second Revised Volume No. 2, as the same may be amended from time to time ("WIC's Tariff").
2. Rates and Surcharges
Shipper shall be responsible for the rates set forth on the attached Offer Sheet.
Should the FERC or a court with jurisdiction issue a ruling that has the effect of prohibiting or modifying the rate provisions contained herein, then the parties agree to enter into a substitute lawful arrangement, such that the parties are placed in the same economic positions as if the rate provisions contained herein were approved.
In addition to the reservation and commodity rates, Shipper shall pay applicable fuel and L&U charges, ACA, and all other surcharges applicable to transportation under the Tariff.
3. Quantity, Term, Receipt and Delivery Points
The contract Maximum Delivery Quantity (MDQ) and term are as stated on the attached Offer Sheet. The term specified in the Offer Sheet will begin with the in-service date of the system enhancement facilities required to provide the service requested by Shipper. The Primary Receipt and Delivery Point(s) are those set forth in the Offer Sheet.
4. Conditions to WIC's Obligations
WIC's obligation to provide firm transportation service and to expand its system, as described above, are subject to the following conditions:
A. Compliance by the Shipper with the applicable provisions of WIC's FERC Tariff;
B. The receipt and acceptance by WIC of a FERC Certificate of Public Convenience and Necessity for the necessary system enhancement facilities, as well as receipt by WIC of all necessary regulatory approvals, permits, and other authorizations in a form and substance satisfactory to Transporter in its sole discretion; and
C. WIC must successfully acquire any necessary off-system capacity, and all conditions to the obligations of the off-system capacity providers to provide such capacity must have been satisfied.
5. Shipper's Obligations
A. Shipper shall execute a Firm Transportation Service Agreement ("FTSA") containing terms consistent with this TPA, within thirty (30) days after tender by WIC. The FTSA shall be in the form prescribed by WIC's Tariff for firm transportation service under Rate Schedule FT.
B. Shipper must demonstrate creditworthiness in accordance with the terms of the open season for the capacity and must maintain creditworthiness, or provide credit assurance in an amount equal to twelve (12) months of charges for the primary term of the FTSA.
Performance hereunder is subject to all valid laws, orders, decisions, rules, and regulations of duly constituted governmental authorities having jurisdiction or control of the matter related hereto. Should either of the parties, by force of any such law, order, decision, rule, or regulation, at any time during the term of this TPA be ordered or required to do any act inconsistent with the provisions hereof, then for the period during which the requirements of such law, order, decision, rule, or regulation are applicable, this TPA shall be deemed modified to conform with the requirement of such law, order, decision, rule, or regulation; provided, however, nothing herein shall alter, modify, or otherwise affect the respective rights of the parties to cancel or terminate this TPA under the terms and conditions hereof.
7. Applicable Law
AS TO ALL MATTERS OF CONSTRUCTION AND INTERPRETATION, THIS TPA SHALL BE INTERPRETED, CONSTRUED, AND GOVERNED BY THE LAWS OF THE STATE OF COLORADO, EXCEPT WHERE THE APPLICATION OF FEDERAL LAW GOVERNS.