The Project is expected to be ready for commercial service on November 1, 2018.

Transcription

1 Spire STL Pipeline LLC Announces Open Season for Firm Natural Gas Transportation Service August 1, 2016 Overview Spire STL Pipeline LLC ( Spire ) announces the commencement of an open season ( Open Season ) for firm natural gas transportation service on a proposed new interstate natural gas pipeline that will serve the energy needs of residential, commercial and industrial customers in the St. Louis metropolitan area and surrounding counties in Missouri and southwest Illinois ( Project ). The Project as proposed will consist of approximately 60 miles of new pipeline that will receive gas at the Rockies Express Pipeline LLC ( REX ) interstate natural gas pipeline in Scott County, Illinois and terminate at a bi-directional point of interconnection with the Enable Mississippi River Transmission, LLC ( MRT ) interstate natural gas pipeline in St. Louis County, Missouri. Proposed delivery points include the interconnections with MRT and Laclede Gas Company ( LGC ) in Missouri and Panhandle Eastern Pipe Line Company, LLC ( Panhandle ) in Illinois. In addition, Spire invites proposals for additional points of delivery that are supported by firm transportation service subscriptions. The Project is expected to be ready for commercial service on November 1, This Open Season will commence on Monday, August 1, 2016 and close at 5:00 p.m. CDT on Friday, August 19, 2016 ( Open Season Period ). To be considered for service on the new pipeline, interested parties ( Prospective Shippers ) must submit via a completed non-binding Service Request Form and information regarding creditworthiness, before the Open Season Period ends, to: Mr. Scott Jaskowiak Vice President Spire STL Pipeline LLC STLPipelineBids@SpireEnergy.com To the extent that capacity remains available in the Project following completion of negotiations with all qualifying Prospective Shippers in the Open Season, Spire reserves the right to negotiate mutually acceptable precedent agreements with any potential shippers for the remaining capacity upon request, irrespective of deadlines herein for execution of precedent agreements. 1

2 General Description of Project As proposed, the Project will consist of approximately 60 miles of new build 24-inch-diameter steel pipeline originating at an interconnection with REX in Scott County, Illinois, extending south through Greene and Jersey Counties in Illinois before crossing the Mississippi River and extending east in St. Charles County, Missouri until crossing the Missouri River and tying into an existing 9-mile, 20-inchdiameter steel transmission pipeline ( Line 880 ) in St. Louis County, Missouri that is currently owned and operated by Spire s local distribution company affiliate, LGC. As part of the proposed Project and subject to LGC s receipt of approval from the Missouri Public Service Commission ( MPSC ), Spire plans to purchase from LGC Line 880, which will be used to connect the new build part of the Project to the MRT pipeline in St. Louis County, Missouri. The total length of the entire Project will be approximately 70 miles. The purpose of the Project is to meet the needs of the Project s Foundation Shipper, LGC, as well as the needs of other shippers in eastern Missouri and southwest Illinois. In particular, the Project will (a) provide an additional source of natural gas to the St. Louis metropolitan area to support LGC s local distribution service obligations to its approximately 650,000 residential, commercial, and industrial customers in Missouri; (b) provide shippers with access to cost effective natural gas from the prolific Appalachian Basin; (c) support enhanced natural gas transportation reliability for the region that the pipeline will serve; (d) create new commercial and industrial development opportunities in the St. Louis metropolitan area; and (e) provide opportunities for new natural gas infrastructure in southwest Illinois that will help support future commercial and industrial growth as well as residential natural gas service. The overall design capacity of the pipeline is expected to be 400,000 dekatherms per day ( Dth/d ). The final size and scope of the Project and the amount of capacity to be made available will be fully defined based on definitive commitments reached under precedent agreements with Prospective Shippers following the Open Season. Spire reserves the right to increase the capacity of the Project or to prorate bids received prior to execution of definitive precedent agreements based on maximum available capacity. Spire will be a natural gas company subject to the jurisdiction of the Federal Energy Regulatory Commission ( FERC ) under the Natural Gas Act. The offering of transportation services as contemplated in this Open Season is explicitly subject to and conditioned upon, among other things, Spire s receipt of all applicable regulatory approvals, from FERC and other governmental authorities with jurisdiction over the Project, in form and substance acceptable to Spire. Potential Receipt and Delivery Points As proposed, the Project will include the following receipt and delivery points: Primary receipt point rights will be available at REX and the interconnection of Line 880 with MRT known as Chain of Rocks. Primary delivery point rights are currently anticipated to include various points of interconnection between Spire and LGC as well as the interconnection of Line 880 with MRT at Chain of Rocks and the planned interconnect in southwest Illinois with Panhandle. Primary delivery rights at Chain of Rocks are anticipated to be fully subscribed by Spire s Foundation Shipper(s). Interconnect REX Panhandle LGC - Laclede Aggregate [R] Receipt [D] Delivery [B] Bi-directional R D D 2

3 MRT - Chain of Rocks Additional Delivery Points - TBD B D Spire invites proposals for other potential delivery points along the proposed route to serve firm transportation service needs. Spire will consider such proposals as part of an otherwise qualifying and acceptable request for service on a not unduly discriminatory basis and to the extent such additional delivery points do not adversely affect project operations or the provision of firm service to any Prospective Shipper that has executed a precedent agreement. Prospective Shippers will be responsible for confirming availability of their requested receipt and delivery points with the point operators. Description of Service Type and Rates As a FERC-jurisdictional interstate natural gas pipeline, the applicability and character of firm transportation service to be offered by Spire pursuant to the terms of this Open Season will be governed by the terms and conditions of Spire s FERC NGA Gas Tariff. While this Open Season is requesting bids for firm transportation service, Spire may also request authorization from FERC to provide interruptible transportation service, interruptible park and loan service, and potentially other services, as well. A shipper transporting gas under a firm transportation service agreement will have firm rights to the agreed upon maximum daily transportation quantity ( MDTQ ). A cost-based recourse rate will be available for the firm transportation service provided by Spire under the Project. The initial daily maximum recourse reservation rate for firm transportation service is currently estimated to be approximately $0.23 to $0.27 per Dth/d. The actual maximum recourse reservation rate may be higher or lower than this estimate, and will be subject to adjustment pursuant to proceedings under the Natural Gas Act. Spire makes no representation or warranty of any kind at this time as to the actual maximum recourse reservation rate that will apply to firm transportation service. In addition to the reservation rate, firm transportation shippers will be responsible for the applicable usage rate, any applicable surcharges approved by FERC for firm transportation service, and the applicable fuel and losses retention factor (currently anticipated to be based solely on lost and unaccounted for volumes, to be determined through a tariff-governed tracking mechanism). In addition to the recourse rates, Spire will also consider entering into mutually agreeable negotiated rate agreements, which agreements must be finalized and executed in conjunction with the precedent agreement. Contract Terms for Transportation Services Subject to a minimum term requirement of 15 years for Prospective Shippers wishing to receive Foundation Shipper status, a 5-year minimum term is required for a service request to be considered a qualifying service request in the Open Season. While Spire may reject any service requests with shorter terms, it reserves the right to consider any such shorter-term service requests. Foundation Shipper Status and Benefits For agreeing to a contract term and level of capacity that will enable Spire to proceed with the Project, Spire proposes to offer appropriate rate and other incentives, as described here, to a category of Prospective Shipper known as Foundation Shipper. To be eligible for Foundation Shipper status, a Prospective Shipper must subscribe to a minimum of 150,000 Dth/d of firm transportation service on the Project for a term of not less than 15 years, commencing on the in-service date of the Project. 3

4 Foundation Shippers will be exempted from proration of their capacity subscriptions, unless prorationing is necessary to accommodate other Foundation Shippers. In addition, a Foundation Shipper: (a) Will have the right to enter into, at the conclusion of the primary term of its firm transportation service agreement, up to two successive unilateral five-year contract term extensions, with the option to elect to maintain the same negotiated rate in effect during the primary term or to change to the then-effective maximum recourse rate during those term extensions; (b) Will be eligible for a contractual right of first refusal in addition to the unilateral contract term extensions; (c) Will be offered risk sharing associated with potential Project cost changes; (d) Will have the right to obtain any foundation or anchor shipper status available in the event of any Spire expansion project; (e) Will have the right to reduce its MDTQ proportionately if Spire directly connects its pipeline facilities to an existing natural gas distribution customer of a Foundation Shipper that is a local distribution company; and (f) May receive other rate and rate-related benefits not available to non-foundation Shippers. Targeted In-Service Date The Project is expected to be in service starting on November 1, Creditworthiness To be eligible to execute a binding precedent agreement with Spire, a Prospective Shipper must meet certain minimum financial criteria. Specifically, a qualifying Prospective Shipper must demonstrate that it satisfies one of the creditworthiness requirements set forth below (the Creditworthiness Requirements ): (a) Prospective Shipper has a credit rating of at least BBB- by S&P, or Baa3 by Moody s, or any equivalent credit rating by any other rating agency to which the Parties may agree ( Investment Grade ); provided, however, that in the event that an entity has a credit rating from more than one such agency, such entity shall be deemed to have an Investment Grade credit rating only if all such credit ratings are Investment Grade credit ratings; or (b) Prospective Shipper furnishes to Spire a guaranty from a parent company or an affiliated third party that is Investment Grade, where the guaranty (1) extends for the term of the precedent agreement and the firm transportation service agreement, (2) guarantees all payment obligations of Prospective Shipper under the precedent agreement and the firm transportation service agreement, and (3) is in a form reasonably acceptable to Spire; or (c) At Prospective Shipper s cost, Prospective Shipper furnishes to Spire a standby irrevocable letter of credit (in a form reasonably acceptable to Spire) from a qualified institution (the Letter of Credit ) in an amount up to Prospective Shipper s proportionate share (as prorated based on the MDTQ among all customers that have a precedent agreement in effect with Spire and/or firm transportation service agreement for service on the Project that will be in effect on the In- Service Date) of the total costs associated with the Project as estimated by Spire, less depreciation following the in-service date; but not to exceed the net present value of Prospective Shipper s reservation rate responsibility for the primary term of its firm transportation service agreement. 4

5 Service Request Form and Follow-Up Process In order for a service request to be accepted for evaluation, a Prospective Shipper must complete the attached Service Request Form. Prospective Shippers submitting a proposal will be expressing a commitment to contract for firm transportation service on the Project, subject to the negotiation and execution of a precedent agreement with Spire. All proposals received will be treated as confidential, and will not be shared with other potential shippers. Upon execution of Spire s confidentiality agreement, any interested party may receive a form precedent agreement for the Project upon request. Once the Open Season Period has ended, Spire will begin the process of negotiating binding precedent agreements and finalizing the Project design and capacity. Any Prospective Shipper that wishes to enter into a binding precedent agreement with Spire must provide evidence that satisfies the creditworthiness requirements described above. After concluding commercial negotiation of all precedent agreements, Spire will again evaluate the total capacity requested for the proposed Project. If the total capacity requested exceeds the planned scope of the Project, Spire may revise the scope of the Project and/or allocate the available transportation capacity under the Project. If Spire allocates the available transportation capacity under the Project, then the capacity will be allocated as follows: (a) If requests from Foundation Shippers exceed the Project capacity, all capacity will be allocated to Foundation Shippers on a pro rata basis based on their requested capacity. (b) If requests from Foundation Shippers are less than the Project capacity, any remaining capacity after Foundation Shippers receive their full request will be allocated to the other Prospective Shippers on a not unduly discriminatory basis, which may include a net present value allocation based on rate, term, and quantity of those service requests or any combination of service requests with the highest net present value receiving priority to the capacity. Contact Information The information provided in this announcement is intended to assist Prospective Shippers in preparing the attached Service Request Form. All inquiries or requests for additional information or clarifications should be directed to: Mr. Scott Jaskowiak Vice President Spire STL Pipeline LLC Scott.Jaskowiak@SpireEnergy.com Reservations and Limitations Spire reserves the right to decline to proceed with the Project, to change its route or otherwise modify it, and/or to increase or decrease the capacity of the Project. Spire also reserves the right to reject any and all bids that do not satisfy the requirements set forth in this Open Season announcement, modify the terms of the Open Season or extend the Open Season to accommodate market interest. Without limiting the foregoing, Spire may, but is not required to, reject any request for service in which the Service Request Form is incomplete, is inconsistent with the terms and conditions outlined in this Open Season announcement, contains additional or modified terms, requests rates that do not meet Spire s financial objectives, or is otherwise deficient in any respect. Spire also reserves the right to reject 5

6 requests for service in the event Prospective Shippers are unable to meet applicable creditworthiness requirements. No request for service shall be binding upon Spire unless and until duly authorized representatives of both a Prospective Shipper and Spire have executed a binding precedent agreement. Spire reserves the right to reject any Prospective Shipper s valid Request for Service in the event Spire and that Prospective Shipper have not executed a binding precedent agreement within thirty (30) days following the end of the Open Season. 6

7 Exhibit A Project Map 7

8 Rockies Express Pipeline Scott Morgan Pike Greene Macoupin Jersey Calhoun St. Charles County Laclede Gas Company Storage St. Louis County Madison Enable MRT Pipeline Miles Sources: Esri, HERE, DeLorme, USGS, Intermap, increment P Corp., NRCAN, Esri Japan, METI, Esri China (Hong Kong), Esri (Thailand), MapmyIndia, OpenStreetMap St. Louis contributors, Cityand the GIS User Community

9 Exhibit B Service Request Form 8

10 Spire STL Pipeline LLC Open Season Service Request Form Prospective Shipper Information Company Name: Contact Name: Contact Title: Address: Firm Transportation Capacity Start Date: Project In-Service Date (estimated November 1, 2018) Other: Contract Term: years Maximum Daily Transportation Quantity: Dth/d Daily Reservation Rate: Maximum Recourse Rate Negotiated Rate: Dth/d Primary Receipt Point(s): Primary Delivery Points(s): Are you willing to accept an award of capacity for less than the amount above? If yes, what is the minimum amount you would be willing to accept? Additional information to clarify request: Credit Information Attached To be sent separately Signature Signature: Telephone: Name: 9