CUSTOMER INVOLVING A FIXED FORWARD
PRICE UNLESS PRIOR TO, OR CONTEMPORANEOUSLY WITH, ENTERING INTO ANY SUCH SALE
TRANSACTION, PARTY B SHALL HAVE ENTERED INTO A SWAP TRANSACTION, OPTION
TRANSACTION OR PHYSICAL FORWARD TRANSACTION WITH PARTY A IN RESPECT OF AN EQUAL
NOTIONAL OR ACTUAL QUANTITY OF GAS
(UNLESS PARTY A DETERMINES THAT A LOWER
QUANTITY IS APPROPRIATE TO TAKE INTO ACCOUNT SUCH FACTORS AS PARTY A DETERMINES
REASONABLE, INCLUDING PARTY A'S FORECAST OF PARTY B'S CUSTOMER ATTRITION/CHURN,
STORAGE SUPPLY, OR FORECAST MODIFICATIONS), WITH A LOWER FIXED FORWARD PRICE
WITH RESPECT TO PHYSICALLY SETTLED TRANSACTIONS OR WITH A FLOATING PRICE INDEX
WITH RESPECT TO A SWAP TRANSACTION THAT HEDGES THE MARKET PRICE OF GAS AT THE
RELEVANT DELIVERY POINT OF SUCH SALE TRANSACTION, ALL IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO PARTY A;
(B)
NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, PARTY B SHALL NOT (1) INCUR ANY OBLIGATION TO SELL GAS TO A CUSTOMER
WITH A TERM OF GREATER THAN 365 DAYS, OR (2) TAKE A LONG FIXED FORWARD PRICE
POSITION IN GAS PURSUANT TO THE EXCEPTION TO PART 12(A)(XIV) UNLESS PRIOR TO, OR
CONTEMPORANEOUSLY WITH, THE INCURRENCE OF ANY SUCH OBLIGATION, PARTY B SHALL
HAVE OFFSET THE EXPOSURE ASSOCIATED WITH THE PORTION OF THE TERM OF SUCH
OBLIGATION IN EXCESS OF 365 DAYS (THE "EXCESS TERM") WITH PARTY A (X) BY HAVING
PARTY A PURCHASE ONE OR MORE PUT OPTIONS FOR GAS WITH RESPECT TO THE EXCESS TERM
WITH A NOTIONAL AMOUNT TO BE DETERMINED BY PARTY A, OR (Y) PROVIDED THAT SUCH
OBLIGATION HAS NOT ALREADY BEEN HEDGED PURSUANT TO PART 12(A)(XIV) BY PURCHASING
CALL OPTIONS FROM PARTY A FOR THE EXCESS TERM WITH A NOTIONAL AMOUNT TO BE
DETERMINED BY PARTY A, OR (Z) IN SOME OTHER MANNER ACCEPTABLE TO PARTY A.
PARTY
B ACKNOWLEDGES AND AGREES THAT IN THE EVENT THAT PARTY A PURCHASES PUT OPTIONS
PURSUANT TO THIS PART 13(B)(IV)(B), PARTY B SHALL PAY TO PARTY A A FEE EQUAL TO
THE AMOUNT OF THE PREMIUM PAID BY PARTY A FOR SUCH PUT OPTIONS WHICH FEE SHALL
BE PAID ON THE NEXT GAS SETTLEMENT DATE FOLLOWING THE DATE SUCH PUT OPTION WAS
ENTERED INTO BY PARTY A.
PARTY B FURTHER ACKNOWLEDGES AND AGREES THAT PARTY A
SHALL HAVE NO OBLIGATION TO PURCHASE ANY PUT OPTIONS OR ENTER INTO ANY CALL
OPTION WITH PARTY B PURSUANT TO THIS PART 13(B)(IV)(B) AND THAT ANY SUCH
TRANSACTIONS SHALL BE ENTERED INTO BY PARTY A IN ITS SOLE DISCRETION.
(V)
FIXED PRICE CONTRACT MIX.
PARTY B SHALL
NOT, DURING ANY TWELVE MONTH PERIOD, ENTER INTO ANY NEW FIXED PRICE CONTRACTS
WHERE THE RESIDENTIAL CUSTOMER-EQUIVALENTS OF SUCH CONTRACTS ARE GREATER THAN
75% OF ALL THE RESIDENTIAL CUSTOMER-EQUIVALENTS OF ALL NEW CONTRACTS ENTERED
INTO IN A CONTRACT YEAR.
(VI)
LIMIT ON TRANSACTION SIZE.
WITHOUT THE PRIOR
WRITTEN CONSENT OF PARTY A, PARTY B SHALL NOT DIRECTLY OR INDIRECTLY SELL GAS TO
ANY PERSON IF THE REASONABLY FORECASTED PURCHASES OF SUCH PERSON INDICATE
PURCHASES FROM PARTY B OF MORE THAN (A) 1500 MMBTUS