Document:

Exhibit 10.2

  
	

  Natural

  Gas Distribution Delivery Agreement

  
	

   

  

 

1.                                       This Natural

Gas Distribution Delivery Agreement (“Agreement”), for the distribution of

natural gas, is made and entered into by and between NorthWestern Services

Group, Inc. (“NorthWestern”) and Great Plains Ethanol, LLC (“Customer”) this

2nd day of Sept., 2002.  This Agreement

shall become effective on the date customer begins commercial operations

(“Plant Start-Up Date”), which is assumed to be March 2003.  Delivery of natural gas under this Agreement

requires a new Town Border Station (TBS) and new pipeline facilities between

NorthWestern and NNG.  The new TBS and

the new pipeline facilities will be constructed by NorthWestern.  In addition, the new TBS and new pipeline

facilities from the interconnection to the Plant shall be owned and operated by

NorthWestern.  The intent of this Agreement is for

Customer to repay NorthWestern for its initial Capital expenditures through the

Minimum Obligation described in Section 5, at a rate of $0.2575 per MMBtu with

the rate for all volumes in excess of the Minimum Total Obligation not to

exceed $0.085 per MMBtu as described in Section 4.

 

2.                                       NorthWestern

agrees to construct pipeline facilities, with a distribution pipeline of

approximately 14 miles in length from the NW/NNG interconnection to Customer’s

plant.  Facilities will operate with a

minimum delivery pressure of 275 psig and shall include all equipment and

facilities necessary to interconnect with NNG. 

All of such facilities to be constructed will remain the property of

NorthWestern, and NorthWestern shall have the right to serve other customers

from said pipeline facilities.

 

3.                                       Delivery

Quantities:

 

	

  Maximum Daily Quantity*

  	

   

  	

  8,400 MMBtu per day

  
	

   

  	

   

  	

   

  
	

  Average Minimum Daily

  Quantity*

  	

   

  	

  3,380 MMBtu per day

  

 

*NorthWestern

and Customer agree that the above stated volumes are estimates.  Plant volumes may change from time to time

and future expansion may occur prior to the end of this contract term.  Northwestern will maintain a maximum

capacity of 8,400 MMBtu per day available at the Great Plains Ethanol site for

Customer’s use throughout the term of this Agreement.  Nonetheless, NorthWestern agrees to offer the same prices as

stated in Section 5 below, so long as additional, significant Northwestern capital

improvements are not required to enable service under this agreement.  Northwestern agrees to provide Customer

Right-of-First Refusal (ROFR) for the Maximum Daily Quantity of 8,400 MMBtu as

defined above and Northwestern further agrees to notify Customer of this ROFR

provision not less than 12 months prior to the expiration of this agreement

during such time Customer shall have the right to exercise this ROFR.

 

4.                                       Service:  Firm Transportation Service on NorthWestern

Distribution Delivery Pipeline up to the maximum daily quantity in Section 3.

 

	

  a)

  	

  Distribution Delivery

  Service(*):

  	

  Natural gas distribution

  service shall be provided to customer by NorthWestern as follows:

  
	

   

  	

   

  	

   

  
	

   

  	

  The first 15,330,000 MMBtu

  	

  $.2575 per MMBtu plus applicable taxes

  
	

   

  	

   

  	

   

  
	

   

  	

  All gas delivered above 

  15,330,000 MBtu

  	

  $.085 per MMBtu plus applicable taxes

  
	

   

  	

   

  	

   

  
	

   

  	

  Customer charge:

  	

  $330.00 per month plus applicable taxes

  
	

   

  	

   

  	

   

  
	

  b)

  	

  Balancing Service:

  	

  NorthWestern will provide

  all local distribution customer services and daily balancing service to

  customer on both NorthWestern’s distribution system and NNG’s interstate

  pipeline transportation system.  Such

  services shall be included in the Distribution Delivery Service Fee listed

  above.  Customer shall also have the

  option to provide its own balancing service and, upon request, NorthWestern

  shall complete and file an End User Allocation Agreement with NNG.

  

 

 

(*)  Customer reserves the right

to reduce the Distribution Delivery Fee (DDF) from $0.2575 to $0.23 in exchange

for payment of $234,000 at anytime during the first ten years of this

contract.  In the event of a NNG

contribution, said contribution will be credited to customers buy down

option.  The Customer contribution

required to reduce the rate to $0.23 per MMBtu shall be prorated based on then

current Minimum Obligation level as defined in Section 5.

 

5.                                       Customer agrees

to transport a minimum total obligation of 15,330,000 MMBtu of natural gas

under this agreement (the “Minimum Total Obligation”) during the first 10 years

from the Plant Start-Up Date, and a to transport a minimum annual volume of

1,533,000 MMBtu of natural gas under this agreement, calculated for each

twelve-month period following the Plant Start-Up Date (the “Minimum Annual

Obligation”).  Once the Minimum Total

Obligation is met, the Minimum Annual Obligation is no longer required.  In the event that Customer fails to use such

Minimum Total Obligation or Minimum Annual Obligation, or should this agreement

be terminated for any reason by Customer, other than for NorthWestern’s refusal

to perform its obligations, Customer shall not be relieved of its obligation to

pay its Minimum Total Obligation during such 10-year period or its Minimum

Annual Obligation during any year during the term of this agreement.  In the event of agreement termination by

Customer, NorthWestern shall bill Customer, within 45 days after the effective

date of such termination, a one-time charge for the entire outstanding balance

of Customer’s Minimum Total Obligation, and if Customer fails to pay such

remaining Minimum Total Obligation within the time period of Section 8,

NorthWestern may draw on the letter of credit, assurance bond or insurance

policy established by Customer pursuant to Section 6.  Similarly, if Customer fails to meet its Minimum Annual

Obligation in any year during the term of this agreement, NorthWestern shall

bill Customer, within 45 days after the end of that year, a one-time charge for

the remaining balance of the Minimum Annual Obligation at the rate provided per

MMBtu in Section 4, and if Customer fails to pay such remaining balance within

the time period of Section 8, NorthWestern may draw on the letter of credit or

assurance bond established by Customer pursuant to Section 6.  At no time shall the total of all funds

collected by NorthWestern under this Section exceed the then current

outstanding balance due under the Minimum Total Obligation.  In addition, any Minimum Annual Obligation

deficiency which is charged and paid, shall be counted toward the Minimum Total

Obligation.

 

2

 

                                                Furthermore,

all volumes taken in excess of the Minimum Annual Obligation volume in a given

year can be banked and applied to future years when and if the Minimum Annual

Obligation volumes are not taken. 

Similarly, volumes taken in excess of the Minimum Annual Obligation

volume in a given year can be applied to past years when the Minimum Annual

Obligation volume was not taken.  When

excess volumes are applied to past years, NorthWestern will provide a credit

equal to the excess volume times the deficiency rate.

 

6.                                       Customer will

obtain an irrevocable standby letter of credit, assurance bond, credit

insurance policy, or other credit arrangements satisfactory to NorthWestern

each year for a period of up to 10 years sufficient to cover the initial

estimated $1,600,000 construction of the pipeline declining each year as

follows:

 

	

  —

  	

   

  	

  It is the intent that the

  need for a letter of credit, assurance bond or credit insurance policy will

  be reviewed annually.

  
	

   

  	

   

  	

   

  
	

  —

  	

   

  	

  Each year the minimum

  usage requirements of this contract are met the amount required for a letter

  of credit, assurance bond or credit insurance will decline as if the initial

  estimated construction costs ($1,600,000) was amortized over a 10-year period

  at a rate of 8.5%.  If the minimum

  requirements of this contract are exceeded the amount in excess will be

  credited to the principal balance for the purposes of calculating the amount

  of the required letter of credit, assurance bond or credit insurance.

  

 

 

7.                                       Term:  15 years, beginning with the Plant Start-Up

Date.

 

8.                                       Billing and

Payment:            NorthWestern shall use

reasonable efforts to render invoices on or before the 10th day of

each month for all gas delivery commodity and monthly customer charges applicable

to gas deliveries to the Customer in the preceding month.  Customer shall pay NorthWestern on or before

the 25th day of each month for all charges reflected on the invoice

rendered by NorthWestern in the current month, and for any Minimum Obligation

or Minimum Annual Obligation due under Section 6.

9.                                       In the event

that this transaction needs the approval of the South Dakota Public Utilities

Commission, the obligations of NorthWestern hereunder are subject to such

approval.

 

	

  Great

  Plains Ethanol, LLC

  	

   

  	

  NorthWestern

  Energy, a division of

  
	

   

  	

   

  	

  NorthWestern

  Services Group, Inc.

  

 

 

	

  By

  	

  Darin Ihnen

  	

  By

  	

  Curt Pohl

  
	

   

  	

   

  
	

  Title

  	

  President

  	

  Title

  	

  V P Operations

  

 

 

3Exhibit 10.3

  
	

  Natural

  Gas Supply Agreement

  
	

   

  

 

1.                                       This Natural

Gas Supply Agreement (“Agreement”) is made and entered into by and between

NorthWestern Services Group, Inc. (“NorthWestern”) and Great Plains Ethanol,

LLC (“Customer”) this 2nd day of Sept, 2002. 

This Agreement shall become effective on the date customer begins

commercial operations (“Plant Start-Up Date”), which is assumed to be March

2003.  Delivery of natural gas under

this Agreement requires a new Town Border Station (TBS) and new pipeline

facilities between NorthWestern and Northern Natural Gas Company (“NNG”).  The new TBS and pipeline facilities will be

constructed by NorthWestern.  In

addition, the new TBS and pipeline facilities from the TBS to the Plant shall

be owned and operated by NorthWestern. 

Terms and conditions related to service on the TBS and the new pipeline

facilities are part of the Natural Gas Distribution Delivery Agreement dated

Sept. 2, 2002.

 

2.                                       Delivery

Quantities:

 

	

  Maximum Daily Quantity*

  	

   

  	

  8,400 MMBtu per day

  
	

   

  	

   

  	

   

  
	

  Average Minimum Daily

  Quantity*

  	

   

  	

  3,380 MMBtu per day

  

 

 

                                                *NorthWestern

and Customer agree that the above stated volumes are estimates.  Plant volumes may change from time to time

and future expansion may occur prior to the end of this contract term.  NorthWestern will have a maximum capacity of

8,400 MMBtu per day available at the Great Plains Ethanol site for their use

throughout the term of this Agreement.

 

3.                                       Gas Supply

Charge:                                       Per MMBtu

equivalent price as reported in the first of the month issue of Inside F.E.R.C.

Gas Market Report for NNG-Ventura published for the month of use.  Gas supply charge can be converted to a

fixed price for any month, at desired quantity of MMBtu’s, at any time during

the contract term.

 

4.                                       Term:  Date of initial Plant Start-Up through

October 31, 2004.

 

5.                                       Billing and

Payment:                                   NorthWestern

shall use reasonable efforts to render invoices on or before the 10th

day of each month for all gas delivery commodity and monthly customer charges

applicable to gas deliveries to the Customer in the preceding month.  Customer shall pay NorthWestern on or before

the 25th day of each month for all charges reflected on the invoice

rendered by NorthWestern in the current month.

 

	

  Great

  Plains Ethanol, LLC

  	

   

  	

  NorthWestern

  Energy, a division of

  
	

   

  	

   

  	

  NorthWestern

  Services Group, Inc.

  

 

 

	

  By

  	

  /s/ Darin Ihnen

  	

  By

  	

  /s/ Curt Pohl

  
	

   

  	

   

  	

   

  	

   

  
	

  Title

  	

  President

  	

  Title

  	

  VP Operations

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