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Unbundled Services and Order of Deliveries

Greater savings may be realized by customers who choose to reduce their services under an unbundled transportation rate. However, there are risks that customers assume by reducing purchase of backup service (i.e. any amount less than 100%), and customers need to understand a few important restrictions associated with that risk:

Critical Day
Nicor Gas will declare a Critical Day when it is necessary to maintain the operational integrity of the company's system. A Critical Day will occur only between November 1 and April 30. On these days, storage withdrawals will be limited (unless you have 100% backup service) and use of company supplies will depend on your service selections.

Operational Flow Order (OFO)
Nicor Gas may declare an Operational Flow Order (OFO) shortage or surplus day, depending on the actions of transportation customers. Similar to a Critical Day, an OFO would be issued if a portion of the company's delivery system becomes inadequate to provide service due to an over delivery of gas supplies or an under delivery of gas supplies. In these instances, Nicor Gas will request that transporters assist in rectifying the situation by voluntarily increasing or decreasing their deliveries to the system. If voluntary action does not solve the problem, the company will impose additional restrictions on transporters.

Firm Backup Service (FBS)
With this service, customers can contract for an amount of company-supplied gas on a Critical Day or an OFO Shortage Day in addition to the 1.7 percent of the customer's SBS capacity times any applicable Storage Withdrawal Factor (SWF).

Storage Banking Service (SBS)
Rate 74, 75, 76 and 77 customers can select their level of storage capacity. A selection of at least one MDCQ day is required and a bank of 28 MDCQ days (31 MDCQ days beginning June 1, 2009) is available to all customers. SBS customers will be allowed Critical Day or an OFO Shortage Day withdrawal rights of 1.7 percent of their SBS capacity times their Storage Withdrawal Factor (SWF).

Storage Withdrawal Factor
Cycling gas in and out of our storage fields insures the continual efficient operation of the Nicor Gas storage system. Therefore, unbundled rate transportation customers have an incentive to fill to at least 90 percent of their selected storage capacity by November 1 of each year. If a transporter does not reach this goal, Nicor Gas will proportionally reduce the transporter's storage withdrawal rights on a Critical Day or OFO Shortage Day. In other words, customers will have less than 1.7 percent of their storage capacity available on a Critical Day or OFO Shortage Day if they do not have 90 percent of their capacity filled by November 1.

Recording Devices
Customers selecting unbundled transportation service will have their use and nominations balanced daily through the use of a recording device installed by Nicor Gas. The recording device requires a telephone line that must be provided by the customer.

About Our Gas Accounting Procedures

Gas is accounted for in the following order:
  1. Requested Authorized Use
  2. Deliveries of customer-owned gas
  3. Customer-owned gas withdrawn from storage
  4. Company-supplied gas under FBS
  5. Authorized Use
  6. Unauthorized Use or OFO non-performance

Important Note
On a non-critical day, if customer use is greater than deliveries, the remainder of gas requirements are met first from customer gas withdrawn from storage. Next, supplies are provided by Nicor Gas under Firm Backup Service (FBS) and charged at the Commodity Gas Cost (CGC). Finally, supplies are accounted for as Authorized Use and charged at the higher of either the Gas Cost (GC) or the market price on that day.

On a Critical Day, requirements are met in the same order, but with some limits. Customers can only withdraw 1.7 percent of their SBS capacity times any applicable SWF from storage. Additionally, Authorized Use – charged at the GC – is limited to company supplies up to the remainder of unused SBS withdrawal rights. The balance of any company supplies will be charged as Unauthorized Use at $6 per therm plus the higher of the GC or the market price on that day.