Document:

Exhibit 10.9

 

SERVICE AGREEMENT

 

APPLICABLE TO FIRM TRANSPORTATION
SERVICE

 

UNDER RATE SCHEDULE
FS-1

 

THIS AGREEMENT made and entered
into this 11th day of September, 2001, by and between:

 

TransCanada PipeLines Limited, a body
corporate, having an office and carrying on business in the City of Calgary, in
the Province of Alberta, (hereinafter referred to as “Company”),

 

- and -

 

Cascade Natural Gas Corporation., a body corporate,
having an office and carrying on business in the City of Seattle, in the State
of Washington, (hereinafter referred to as “Shipper”)

 

WHEREAS, Company’s Facilities extend from a point of interconnection
with the pipeline facilities of NOVA Gas Transmission Ltd. (NGTL) at the
Alberta-British Columbia border, near the NGTL Coleman delivery point, through
southeast British Columbia to a point of interconnection with the pipeline
facilities of PG&E Gas Transmission, Northwest Corporation (PG&E GTNW)
at the international border near Kingsgate, British Columbia; and

 

WHEREAS, Shipper desires
Company, on a firm basis, to transport certain quantities of natural gas
through Company’s Facilities from Alberta/British Columbia border near Coleman,
Alberta to British Columbia/U.S. international border near Kingsgate, B.C.; and

 

WHEREAS, Company is willing to transport certain quantities of natural
gas for Shipper, on a firm basis;

 

 

NOW, THEREFORE, the parties
agree as follows:

 

1.                                       This agreement is subject to all valid
legislation with respect to the subject matters hereof, either provincial or
federal, and to all valid present and future decisions, orders, rules, and
regulations of all duly constituted governmental authorities having
jurisdiction.

 

2.                                       Shipper acknowledges receipt of a current
copy of Company’s Gas Transportation Service Documents (GTSD) and Company
agrees to provide Shipper with any amendments thereto.

 

3.                                       The terms used herein shall have the same
meanings as are ascribed to corresponding terms in the General Terms and
Conditions contained in the GTSD (General Terms and Conditions).

 

4.                                       Shipper hereby requests, and Company agrees
to provide Service pursuant to Service Schedule FS-1 in accordance with the
attached Schedule A which is incorporated into and forms part of this
Agreement, such Service to commence on the Service Availability Date and to
terminate, subject to the provisions hereof, on the Service Termination Date.

 

5.                                       Shipper agrees to make gas available for
Shipper’s share of Company Use Gas, or pay for such gas, pursuant to Section
8.5 of the General Terms and Conditions.

 

6.                                       Company undertakes to redeliver to Shipper,
and Shipper agrees to accept, at the Delivery Point, a quantity of gas
equivalent in heat content to the quantity received by Company from Shipper,
expressed in Gigajoules (GJs), at the Receipt Point, after deducting a quantity
of gas, if any, provided by Shipper for Company Use Gas.

 

7.                                       In providing service to its existing or new
Shippers, Company will use the priority of service specified in Section 8.11 of
Company’s General Terms and Conditions.

 

8.                                       Prior to the Service Availability Date,
Shipper shall provide Company with all information identified in Company’s
Request for Transportation Form.

 

9.                                       Shipper agrees to pay, during the period
commencing from the Service Availability Date, and in accordance with Schedule FS-1,
the General Terms and Conditions, the Statement of

 

 

Effective
Rates and Charges and Schedule “A” attached hereto (all as may be amended from
time to time), the rates, tolls and charges fixed by Company from time to time,
in respect of each month, and portion thereof that this Firm Service Agreement
and any renewal thereof is in effect.

 

In
the event that the Service Availability Date occurs on any day other than the
first day of a month, then the demand charge payable for such month under
Sub-section 4.3.1 of Service Schedule FS-1 shall be the product resulting from
multiplying the demand charge otherwise payable for such month by a fraction,
the numerator of which shall be the number of days in such month subsequent to
and including the Service Availability Date and the denominator of which is the
total number of days in such month.

 

10.                                 Shipper covenants that it will make timely arrangements
for upstream and downstream transportation, gas supply and markets and all
necessary governmental authorizations and that it will advise the upstream and
downstream transporters of the receipt and delivery points under this Agreement.

 

Shipper
acknowledges and agrees with Company that Company is relying upon the covenant
contained in this clause and agrees that if any such arrangements or
authorizations are not in place prior to the Service Availability Date, such
will not affect the Shipper’s obligation to pay any demand charge, surcharge,
or any other amount payable to Company.

 

11.                                 If Shipper elects to exercise its option to
terminate this Firm Service Agreement as provided for in Section 4.9 of Service
Schedule FS-1, it shall execute and serve upon Company a termination notice not
less than 12 months prior to the Service Termination Date as such date may be
extended from time to time.

 

12.                                 Shipper agrees not to make demand or bring
action against Company for Company’s refusal to transport gas hereunder in the
event that any upstream or downstream transporter fails to receive or deliver
gas as contemplated by this agreement provided that such failure was not directly
caused by the negligence of Company.

 

 

13.                                 Subject to Section 8.9 of the General Terms
and Conditions of this GTSD, any notice or any request, demand, statement, bid
or bill (for the purpose of this paragraph, collectively referred to as “Notice”)
provided for by the Service Schedules, the Service Agreements and the General
Terms and Conditions, or any notice which either Shipper or Company may wish to
give to the other, shall be in writing and shall be directed as follows:

 

	
  Shipper:

  	
   

  	
  Cascade Natural Gas
  Corporation

  
	
   

  	
   

  	
  222 Fairview Avenue North

  
	
   

  	
   

  	
  Seattle, Washington

  	
  98109

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  Mr. King Oberg

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  E-mail Address: koberg@cngc.com

  
	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
  TransCanada PipeLines
  Limited

  
	
   

  	
   

  	
  111 Fifth Avenue S.W.

  
	
   

  	
   

  	
  Calgary, Alberta, Canada

  
	
   

  	
   

  	
  T2P 4K5

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  Leader,

  
	
   

  	
   

  	
  Customer Services

  

 

Subject to Section 8.9 of the General Terms
and Conditions of this GTSD, any notice may be given by telecopier or other telecommunication
and any such Notice shall be deemed to be given four (4) hours after
transmission. Notice may also be given by personal delivery or by courier and
any such Notice shall be deemed to be given at the time of delivery. Any Notice
may also be given by prepaid mail and any such Notice shall be deemed to be
given four (4) Business Days after mailing. In the event regular mail service,
courier service, telecopier or other telecommunication shall be interrupted by
a cause beyond the control of the parties hereto, then the party sending the
Notice shall utilize any service that has not been so interrupted to deliver
such Notice.  Each party shall provide
Notice to the other of any changes of address for the purposes hereof.  Any Notice may also be given by
telephone followed immediately by personal delivery, courier, prepaid mail,
telecopier, or other telecommunication, and any such Notice so given shall be
deemed to be given as of the date and time of the telephone Notice.

 

14.                                 The terms and conditions of Service Schedule FS-1
and the General Terms and Conditions are, by this reference, incorporated into
and made part of this Service Agreement.

 

 

15.                                 A waiver by either party of one or more
defaults by the other hereunder shall not operate as a waiver of any future
default or defaults, whether of a like or different character.

 

16.                                 This Agreement may be amended only by an instrument in writing executed by both
parties hereto.

 

17.                                 Nothing in this Agreement shall be deemed to
create any rights or obligations between the parties hereto after the
expiration of the term hereof, as same may be extended from time to time,
except that termination of this Agreement shall not relieve either party of the
obligation to correct any gas quantity imbalances or of the obligation to pay any
amounts due hereunder.

 

 

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the day and year first written above.

 

 

	 
	
  Cascade Natural Gas
  Corporation

  	
  TransCanada PipeLines
  Limited

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
   

  	 

	 
	
  /s/ King Oberg

  	
   

  	
  /s/ Stephen M. V. Clark

  	
   

  	 

	 
	
  (signature)

  	
  (signature)

  	 

	 
	
   

  	
   

  	 

	 
	
  KING OBERG - VICE
  PRESIDENT

  	
   

  	
  Stephen M. V. Clark

  Vice-President, Gas Development

  and Director, Sales & Marketing

  	
   

  	 

	 
	
  (name/title)

  	
  (name/title)

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
   

  	
  /s/ J. D. Bell

  	
   

  	 

	 
	
  (signature)

  	
  (signature)

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
   

  	
  Manager, Western End Users and Interconnects

  	
   

  	 

	 
	
  (name/title)

  	
  (name/title)

  	 

	 
	
   

  	
   

  	 

	
   

  	
   

  	
  Standard Form Contact

  	
   

  
	
   

  	
   

  	
  Business

  	
  /s/ J.D.B.

  	
   

  
	
   

  	
   

  	
  Legal

  	
  /s/ DAS

  	
   

  
										

 

 

SCHEDULE A

to the Firm Service Agreement

Dated
September 11, 2001 Between

 

TransCanada
PipeLines Limited

AND

Cascade Natural Gas Corporation
(Shipper)

 

	
  1.

  	
  Receipt Point:

  	
   

  	
  Alberta/British Columbia
  Border near Coleman, Alberta

  Minimum Pressure Available 4200 kPa

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Delivery Point:

  	
   

  	
  British Columbia/U.S.
  international border near Kingsgate, B.C.

  Maximum Pressure Available 5500 kPa

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Shipper’s Haul Distance

  	
   

  	
  170.7
  Km

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Shipper’s Compression
  Utilization

  	
   

  	
  170.7
  Km

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Maximum Day Delivery Quantity (MDDQ)

  	
   

  	
  (Winter)
  22,771 GJ/d

  
	
   

  	
   

  	
   

  	
  (Summer)
  22,771 GJ/d

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Service Availability Date

  	
   

  	
  November
  1, 2003

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Service Termination Date

  	
   

  	
  25
  years from and including the Service Availability Date

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Surcharge Amount:

  	
   

  	
   

  	
  For
  Special Facilities

  	
  Dollars/Month

  
	
   

  	
   

  	
   

  	
   

  	
  For
  Other

  	
  Dollars/Month

  
	
   

  	
   

  	
   

  	
   

  	
  Total
  Surcharge

  	
  Dollars/Month

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Schedule A Effective Date

  	
   

  	
  September
  11, 2001

  
								

 

 

	
  Cascade Natural Gas
  Corporation

  	
  TransCanada PipeLines
  Limited

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ King Oberg

  	
   

  	
  /s/ Stephen M. V. Clark

  	
   

  
	
  (signature)

  	
  (signature)

  
	
   

  	
   

  
	
  KING OBERG - VICE
  PRESIDENT

  	
   

  	
  Stephen M. V. Clark

  Vice-President, Gas Development

  and Director, Sales & Marketing

  	
   

  
	
  (name/title)

  	
  (name/title)

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ J. D. Bell

  	
   

  
	
  (signature)

  	
  (signature)

  
	
   

  	
   

  
	
   

  	
   

  	
  Manager, Western End Users and Interconnects

  	
   

  
	
  (name/title)

  	
  (name/title)

  

 

	
   

  	
   

  	
  Standard Form Contact

  	
   

  
	
   

  	
   

  	
  Business

  	
  /s/ J.D.B.

  	
   

  
	
   

  	
   

  	
  Legal

  	
  /s/ DAS

  	
   

  

 

 

Schedule of
Service

 

SCHEDULE
OF SERVICE

 

RATE
SCHEDULE FT-D

 

	
  SCHEDULE NO:

  	
  2002-94659-4 (REVISION)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  CUSTOMER

  	
  Cascade Natural Gas Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXPORT DELIVERY POINT NAME:

  	
  Alberta-B.C. Bdr (Chart Accounting)

  
	
   

  	
   

  
	
  EXPORT DELIVERY POINT NO:

  	
  2000

  
	
   

  	
   

  
	
  EXPORT DELIVERY POINT LOCATION:

  	
  09-11-008-05-W5M

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXPORT DELIVERY CONTRCT DEMAND:

  	
  610.4 103 m3/d

  
	
   

  	
   

  
	
  MAXIMUM DELIVERY PRESSURE:

  	
  6205 kPa

  
	
   

  	
   

  
	
  SERVICE TERMINATION DATE:

  	
  October 31, 2028

  
	
   

  	
   

  
	
  SURCHARGE:

  	
  N/A

  
	
   

  	
   

  
	
  ADDITIONAL CONDITIONS:

  	
  N/A

  

 

 

THIS SCHEDULE FORMS PART OF THE SERVICE AGREEMENT
DATED August 23, 2001 AND SHALL
BE DEEMED TO BE ATTACHED THERETO.

 

	
  Cascade Natural Gas
  Corporation

  	
   

  	
  NOVA Gas Transmission
  Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
   

  	
   

  	
   

  	
  Per:

  	
  /s/ Darryl Ness

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/ Patricia A. Grable

  	
   

  	
   

  	
  Per:

  	
  /s/ Barbara Miles

  	
   

  
	
  Senior Director Gas Supply

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TARIFF

  	
   

  	
  Effective Date: April 1, 2000, as per EUB Decision 2000-6

  

 

 

	
  April 24, 2003

  

  REF:                       2002-94659-4

  	
   

  	
  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  III - 5th Avenue S.W. 

  
	
   

  	
   

  	
  P.O. Box 1000, Station M

  
	
   

  	
   

  	
  Calgary, Alberta, Canada
  T2P 4K5

  

 

Cascade Natural Gas Corporation

222 - Fairview Avenue North

Seattle, Washington, USA

98109

 

 

	
  Attention:

  	
   

  	
  Ms. Patricia Grable

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SUBJECT:

  	
   

  	
  REVISION TO SCHEDULE OF SERVICE RATE FT-D
  2001-98058-4 AT ALBERTA-B.C. BDR

  (CHART ACCOUNTING) #2000

  

 

Enclosed is your copy of the executed document of the above mentioned
revision.

 

Should you require further information, please contact the undersigned
at 403-920-5839 (Fax 403-920-2446).

 

Yours truly,

 

NOVA Gas Transmission Ltd.

 

 

	
  /s/ Darryl Ness

  	
   

  
	
  Darryl Ness

  
	
  Customer Sales and Service

  

 

 

BI/eims

Enclosure(s)

 

Acknowledgement of
Executed Agreement

 

TransCanada PipeLines
Limited

 

 

SERVICE
AGREEMENT

 

RATE
SCHEDULE FT-D

 

BETWEEN:

 

NOVA Gas Transmission
Ltd., a body corporate having an office in the City of Calgary, in the Province
of Alberta (“Company”)

 

— and —

 

Cascade Natural Gas
Corporation, a body corporate having an office in the City of, in the Province
of (“Customer”)

 

IN CONSIDERATION of the premises and the covenants and
agreements in this Service Agreement, the parties covenant and agree as
follows:

 

1.                                       Customer
acknowledges receipt of a current copy of the Tariff.

 

2.                                       The
capitalized terms used in this Service Agreement have the meanings attributed
to them in the General Terms and Conditions of the Tariff, unless otherwise defined
in this Service Agreement.

 

3.                                       Customer
requests and Company agrees to provide Service pursuant to Rate Schedule FT-D
in accordance with the attached Schedules of Service. The Service will commence
on the Billing Commencement Date and will terminate, subject to the provisions
of this Service Agreement, on the Service Termination Date.

 

	
  TARIFF

  	
   

  	
  Effective Date: April 1, 2000, as per EUB Decision 2000-6

  

 

 

 

4.                                       Customer
agrees to pay to Company each Billing Month, for all Service rendered under
this Service Agreement, an amount equal to the aggregate charges for Service
described in Rate Schedule FT-D.

 

5.                                       Customer
shall:

 

(a)                                  provide
such assurances and information as Company may reasonably require respecting
any Service to be provided pursuant to this Rate Schedule FT-D including,
without limiting the generality of the foregoing, an assurance that necessary
arrangements have been made among Customer, producers of gas for Customer,
purchasers of gas from Customer and any other Person relating to such Service, including
all gas purchase, gas sale, operating, processing and common stream
arrangements; and

 

(b)                                 at
Company’s request provide Company with an assurance that Customer has provided
the Person operating facilities downstream of any Delivery Point in respect of
which Customer has the right to receive service with all authorizations
necessary to enable such Person to provide Company with all data and
information reasonably requested by Company for the purpose of allocating
volumes of gas delivered by Company among Company’s Customers and to bind
Customer in respect of all such data and information provided.

 

If Customer fails to
provide such assurances and information forthwith following request by Company,
from time to time, Company may at its option, to be exercised by notice to
Customer, suspend the Service to which such assurances and information relate
until such time as Customer provides the assurances and information requested,
provided however that any such suspension of Service shall not relieve Customer
from any obligation to pay any rate, toll, charge or other amount payable to
Company.

 

 

6.                                       Customer
acknowledges that the Facilities have been designed based on certain
assumptions and forecasts described each year in Company’s Annual Plan, and
that interruption and curtailment of Service may occur if the aggregate gas
volume actually received or the aggregate gas volume actually delivered at the
Facilities is different than forecast.

 

7.                                       Every
notice, request, demand, statement, bid or bill (for the purpose
of this paragraph, collectively referred to as “Notice”) provided for in Rate
Schedule FT-D, this Service Agreement and the General Terms and Conditions, or
any other Notice which either Company or
Customer may desire to give
to the other, shall be in writing and each
of them and every payment provided for shall be directed to the Person to whom
given, made or delivered at such Person’s address as follows:

 

Customer:

 

Cascade Natural Gas
Corporation

222 Fairview Avenue North

Seattle, Washington  98109

 

Attention:  King
Oberg

 

 

or

 

Attention:                                         (as above)

Fax:  (206)
624-7215

 

 

Company:

 

NOVA Gas Transmission
Ltd.

P.O. Box 1000, Station
“M”

450 – 1st
Street S. W.

Calgary, Alberta

T2P 4K5

 

 

Attention:                                         Customer
Account Representative 

Fax:                                                                           (403)
920-2386

 

Notice may be given by
fax or other telecommunication and any such Notice shall be deemed to be given
four (4) hours after transmission. Notice may also be given by personal
delivery or by courier and any such Notice shall be deemed to be given at the time
of delivery. Any Notice may also be given by prepaid mail and any such Notice
shall be deemed to be given four (4) business days after mailing, Saturdays,
Sundays and statutory holidays excepted.  In the event of disruption of regular mail,
every payment not made electronically shall be personally delivered, and any
other Notice shall be given by one of the other stated means.

 

Any Notice for the
matters listed in the Notice Schedule for Electronic Commerce in Appendix “F”
of the Tariff shall be given via Company’s electronic bulletin board (“EBB”).  Company shall not accept any such Notice for
those matters listed in Appendix “F” via any other alternative means, unless
the EBB is inoperative or Customer is unable to establish connection with the
EBB, in which case Notice shall be given by any other alternative means set out
herein.  Any Notice given by the EBB
shall be deemed to be given one (1) hour after transmission.

 

Any Notice may also be
given by telephone followed immediately by EBB, fax, personal delivery, courier
or prepaid mail, and any Notice so given shall be deemed to have been given as
of the date and time of the telephone notice.

 

 

 

8.                                       The
terms and conditions of Rate Schedule FT-D, the General Terms and Conditions and
Schedule of Service under Rate Schedule FT-D are by this reference incorporated
into and made a part of this Service Agreement.

 

IN WITNESS WHEREOF the parties have executed this
Service Agreement by their proper signing officers duly authorized in that
behalf all as of the 11th day of September, 2001.

 

 

	
  Cascade Natural Gas Corporation

  	
  NOVA Gas Transmission Ltd.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/ King Oberg

  	
   

  	
  Per:

  	
  /s/ Max Fieldman

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
   

  	
   

  	
  Per:

  	
  /s/ Stephen M. V. Clark

  	
   

  
	
   

  	
   

  	
  Stephen M. V. Clark

  	
   

  
	
   

  	
   

  	
  Vice-President, Gas Development

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Standard Form Contact

  	
   

  
	
   

  	
   

  	
  Business

  	
  /s/ S.M.V.C.

  	
   

  
	
   

  	
   

  	
  Legal

  	
  /s/ DAS

  	
   

  

 

 

Schedule of
Service

 

SCHEDULE OF SERVICE

 

RATE SCHEDULE FT-D

 

	
  SCHEDULE NO:

  	
  2001-98058-4 (NEW)

  
	
   

  	
   

  
	
  CUSTOMER

  	
  Cascade Natural Gas Corporation

  
	
   

  	
   

  
	
  EXPORT DELIVERY POINT NAME:

  	
  Alberta-B.C. Border

  
	
   

  	
   

  
	
  EXPORT DELIVERY POINT NO:

  	
  2001

  
	
   

  	
   

  
	
  EXPORT DELIVERY POINT LOCATION:

  	
  09-11-008-05-W5M

  
	
   

  	
   

  
	
  EXPORT DELIVERY CONTRCT DEMAND:

  	
  610.4 103m3/d 21200 DKths/Day

  
	
   

  	
   

  
	
  MAXIMUM DELIVERY PRESSURE:

  	
  6205 kPa

  
	
   

  	
   

  
	
  SERVICE TERMINATION DATE:

  	
  October 31, 2028

  
	
   

  	
   

  
	
  SURCHARGE:

  	
  N/A

  
	
   

  	
   

  
	
  ADDITIONAL CONDITIONS:

  	
  N/A

  

 

THIS SCHEDULE FORMS PART OF THE SERVICE AGREEMENT
DATED Sept 11, 2001 AND SHALL BE DEEMED TO BE ATTACHED THERETO.

 

	
  Cascade Natural Gas Corporation

  	
  NOVA Gas Transmission Ltd.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
  /s/ King Oberg

  	
   

  	
  Per:

  	
  /s/ Max Fieldman

  	
   

  
	
   

  	
   

  	
   

  
	
  Per:

  	
   

  	
   

  	
  Per:

  	
  /s/ Stephen M. V. Clark

  	
   

  
	
   

  	
   

  	
  Stephen M. V. Clark

  	
   

  
	
   

  	
   

  	
  Vice-President, Gas Development

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Standard Form Contact

  	
   

  
	
   

  	
   

  	
  Business

  	
  /s/ S.M.V.C.

  	
   

  
	
   

  	
   

  	
  Legal

  	
  /s/ DAS

  	
   

  

 

	
  TARIFF

  	
  Effective Date: April
  1, 2000, as per EUB Decision 2000-6

  

 

 

ATTACHMENT “1”

 

1)                                      This
Schedule of Service shall terminate and be of no further force or effect on the
day that is 25 years from the Billing Commencement Date for the Service
described herein.

 

2)                                      This
Schedule of Service becomes a binding obligation on Company only upon and not
prior to Company delivering a written notice to Customer setting forth the
Billing Commencement Date for the Service described herein (the “Commencement
Notice”).  Until Company delivers the
Commencement Notice to Customer, Company shall have no obligations whatsoever
under this Schedule of Service.  Company
may be delivering a written notice to Customer, terminate this Schedule of
Service, or cancel or revise the Export Delivery Contract Demand, at any time
prior to Company delivering the Commencement Notice to Customer.Exhibit 10.33

 

Cascade
Natural Gas Corporation

Key
Performance Incentive Plan for Fiscal 2005

September
29, 2004

 

Cascade
Natural Gas Corporation (Cascade) has an incentive plan designed to incent
management and professional employees to achieve outstanding performance by
rewarding effective accomplishment of goals (Key Performance Goals) in areas
that are key to outstanding company performance.

 

All
salaried employees grade 9 and above are eligible for the program, except for
consumer representatives who participate in the Consumer Representative Bonus
plan in lieu of this program.

 

The objectives of this plan are
to:

•                  Reward outstanding performance, organizationally
and individually

•                  Link to attaining business objectives

•                  Reinforce team culture

•                  Drive performance of management and professionals
as well as overall organizational performance

•                  Provide opportunity for market-competitive pay for
management and professionals.

 

Performance Measures:

•                  Earnings per Share (EPS) – 70% of the award will be
based on EPS

•                  Achievement of Key Performance Goals (KPG) as
defined by goals set in individual performance reviews. – 30% of the award will
be based on KPG’s.

 

•                  Key Performance Goals must tie to the Corporate Business Objectives.

 

•                  Key Performance Goals must be specific, measurable, achievable, results
oriented, and time-based. (SMART)

 

•                  Key Performance Goals are those which have an impact on the
shareholders, company, department, district, or
region, not just individual performance.

 

•                  A Key Performance Goal is not routine performance of the employee’s
job.

 

•                  Key Performance Goals must be consistent with a high level of
performance expected from the salary grade or management level of the employee.

 

Officers shall be
responsible to review and approve Key Performance Goals for employees in their
area while considering company-wide and department

 

 

consistency,
compliance with the criteria described above, and achievement. The Human
Resources Department shall review Key Performance Goals after they are approved
by officers in order to consider consistency,  compliance with plan criteria
described in this section and achievement.

 

Award Potentials

Employees
participating in the plan are eligible for an incentive payment.  The payment is calculated as a percentage of
the employee’s base pay and is dependent upon the achievement of the incentive
plan goals and company performance.  The
details of incentive payments are described below:

•                  The
midpoint award is calculated based on employee base pay and is expressed as a
percentage.

•                  In
order to earn an award under the plan, the goals outlined under each
performance measure must be attained. 
Performance at midpoint goals will produce midpoint award levels.

•                  Company
performance will modify all payments. 
The company must meet threshold earnings levels in order for the plan to
pay out.  Earnings goals are expressed as
earnings per share.  The size of the pool
will increase proportionately from the threshold to midpoint and from midpoint
to maximum with a maximum of 200% of midpoint, as is indicated in the table
below in the “Midpoint EPS” section.

•                  Key
Performance Goals must be submitted before December 31, 2004.  If goals are not submitted by this date,
participant will not be eligible for an award under the Plan.  Delayed submission of Goals because of
hardships due to unavoidable circumstances, such as illness, may be submitted
to the President and CEO for approval.

•                  Key
Performance Goals may be revised mid-year with approval by the responsible
officer and review by Human Resources.

 

Midpoint EPS

Definitions:

•                  Threshold
– The level that the plan would begin to pay out.

•                  Midpoint–   Achieving measures at midpoint levels result
in midpoint awards.

•                  Maximum
– The maximum level of payout for the plan – 200% of midpoint.

 

	
  Achievement

  Level

  	
   

  	
  Earnings per Share

  (net of Key Performance

  Incentive Plan, Team Incentive

  Plan and 401(k) Profit Sharing

  Plan)

  	
   

  	
  Funding Level

  	
   

  
	
  Threshold

  	
   

  	
  1.20

  	
   

  	
  0

  	
   

  
	
  Midpoint

  	
   

  	
  1.45

  	
   

  	
  100

  	
  %

  
	
  Maximum

  	
   

  	
  1.72

  	
   

  	
  200

  	
  %

  

 

 

Midpoint Awards as a Percentage
of Base Pay:

CEO – 50%

CFO – 45%

COO – 45%

Senior Vice President – 25%

All other Officers – 20%

Grade 14 (other than officers) – 10%

Grade 12 & 13 – 6%

Grade 9, 10, and 11 – 4%

 

The above midpoint awards
do not include the Team Incentive Plan which has a midpoint payment of 4% of
eligible pay.

 

Timing of the Award Payments

Awards
will be paid annually.  Payments will be
made to employees by January 15 of the following fiscal year.

 

Eligibility

Employee’s
performance must meet expectations for their job by attaining a performance
rating of 3.0 or better to receive the full award for which they are eligible
under the plan.  Awards for employees
with a performance rating between 2.81 to 2.99 shall be eligible to receive a
reduced award as shown in the table below:

 

	
  Performance Rating

  	
   

  	
  Percentage of Award

  	
   

  
	
  3.00 or greater

  	
   

  	
  100

  	
  %

  
	
  2.95 to 2.99

  	
   

  	
  87.5

  	
  %

  
	
  2.90 to 2.94

  	
   

  	
  75.0

  	
  %

  
	
  2.85 to 2.89

  	
   

  	
  62.5

  	
  %

  
	
  2.81 to 2.84

  	
   

  	
  50.0

  	
  %

  
	
  2.8 or below.

  	
   

  	
  0

  	
   

  

 

Employees
receiving a 2.8 performance rating or less will not be eligible to receive an
award under this plan.

 

All
awards will be pro-rated based on the length of service in that plan year.  Employees must have a minimum of three months
of service with Cascade in order to be eligible to participate in the plan.

 

Base Pay Definition

For
exempt employees, Annual base pay for the fiscal year will be the basis for
calculating Key Performance Plan incentive awards. For nonexempt employees,
base pay and overtime pay for the fiscal year will be the basis for calculating
incentive awards.

 

 

Benefits

Incentive
pay is included in the definition of pay for the purpose of matching and
employer contributions in the 401(k).

 

Terminations

Individuals
must be employed at the end of the fiscal year in order to be eligible to
receive an award.  Pro-rated awards will
be paid to those who terminate due to retirement, disability or death.

 

Disputes

If an employee has an
unresolved dispute or claim regarding the Key Performance Plan, the employee
may request that the matter be reviewed by a Board of Review per Company Policy
62.02.  If the employee is an officer,
the Board of Review shall be the Governance, Nominating and Compensation
Committee of the Board of Directors.

 

The
company reserves the right to alter, amend, or cancel this program at any time.

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