Document: OS001 Status: Closed

Honeoye Storage Corporation


Announcement of Part 284 Open Access Firm Storage Service

Open Season: July 1-31, 2000
Service Available: August 2000

final cover

Honeoye Storage Corporation

EBB Address:
www.honeoye-gas-storage.com

For Information Contact:
Richard A. Norman
One State Street
Suite 1200
Boston, MA 02109
Tel: (617) 367-0032
Fax: (617) 367-3796
Email: hsc@essexhydro.com

David A.T. Donohue
535 Boylston Street
Boston, MA 02116
Tel: (617) 267-7600
Fax: (617) 536-4396
Email: ddonohue@ihrdc.com

Contents
Open Season Announcement
Storage Service Request Form
Form of FSS Service Agreement



Management Summary

Honeoye Storage Corporation ("Honeoye") recently received approval from the Federal Energy Regulatory Commission (FERC) to expand the storage capacity and deliverability of its Honeoye gas field and to offer storage service on an open access basis at market-based rates as specified in Part 284, subpart G of the Commissions regulations. This brochure has been prepared to announce the open season.

Summary of Part 284 Service Available During 2000-2001

The Honeoye gas field will be expanded over a two-year period. During the first season (August 2000 ­ March 31, 2001), Honeoye will have available for Part 284 Service up to 1,000 MDth of firm storage service, 12,500 Dth/d of maximum withdrawal capacity and 12,500 Dth/d of maximum injection capacity. This service will be sold during an open season to be held during July 2000. Customer's will have the right to make daily and intraday nominations for injection and withdrawal througout the contract term.

Honeoye may make available additional Part 284 interruptible storage
service during the 2000/2001 season depending upon field performance. This service will be sold by competitive bid via Honeoye's EBB after the open season period closes and during the 2000/2001 season.

Part 284 Service Available in 2001
Beginning April 1, 2001 Honeoye will increase the Part 284 Service to 2,426 MDth of firm storage capacity, 20,100 Dth/d of firm withdrawal and 15,000 Dth/d of firm injection capacity. This service will be sold by competitive bid via Honeoye's EBB prior to the 2001/2002 season. Firm service customers during 2000-2001 will have certain priority rights to contract for this service as specified in the Tariff.

Tariff and Minimum Quantities

Potential customers must elect to contract for Part 284 firm and/or interruptible service under terms of Honeoye's Original Volume No. 2 FERC Gas Tariff. Nominations should be made for at least 25,000 Dekatherms of Maximum Quantity Stored for both FSS and ISS service. Honeoye will provide all necessary cushion gas.

Transportation Arrangements

A customer must make arrangements for gas transportation to and from Honeoye's existing interconnection with Tennessee Gas Pipeline in Ontario County, New York. An alternative exists for customers to contract with New York State Electric and Gas Company to deliver and accept a modest
volume of gas at their interconnection with the Honeoye pipeline near Canandaigua, New York.

Submitting a Formal Bid for Firm Service

A formal bid for the Part 284 service may be made by completing and returning the Storage Service Request Form, to be found herein, together with the supplemental documents and payments specified on that form.



Background on Honeoye
Honeoye Development
Honeoye Storage Corporation ("Honeoye") was formed in 1974 for the
purpose of converting a depleted gas field in Honeoye, New York into an underground gas storage facility. Honeoye began operations in mid-1975 and provided 3.0 BCF of Part 157 storage service from the Honeoye Field to three customers: Consolidated Edison Company of New York, Brooklyn Union Gas Company, and Long Island Lighting Company. Each of these companies was also a shareholder of Honeoye. The other shareholders were the field developers.

Honeoye Storage Facilities
The Honeoye storage zone consists of a Medina age sandstone reservoir, found at a depth of 2750 feet. The field is approximately 12 miles east-west and six miles north-south in extent. There are 27 injection/withdrawal and eight observation wells. An extensive gathering system joins the field to a 2750 hp compression station. The compression station is joined to the Tennessee Gas Pipeline to the honeoye north by a 10.5-mile pipeline. The Honeoye pipeline also interconnects with the New York Gas and Electric Company System near Canandaigua, NY. The Honeoye facilities have demonstrated excellent integrity and provided full design capability during its 25 years of operation.

First Field Expansion

In 1983, Honeoye completed its first expansion by increasing reservoir pressure. This increased the working gas capacity to 4.8 BCF. Two additional Part 157 customers were added: Boston Gas Company and Energy North.

On March 31, 1997, Long Island Lighting, after 22 years of service, ended its long-standing service agreement. One half of its terminated service was immediately contracted to Providence Gas Company; the other half to Consolidated Edison Solutions, Inc. In 1999 Providence notified Honeoye that it was electing to terminate its service effective March 31, 2000.

Second Field Expansion

Soon after Providence gave notice that it elected to terminate its service, Honeoye, recognizing the changing nature of the natural gas industry in the eastern United States, decided to seek approval from the FERC to expand the field a second time and offer both the expanded and the terminated capacity to the storage market on an open access, market-based rate basis (Part 284 service). It also asked that service to existing customers remain as Part 157 service but, when it is relinquished in the future, it will be converted to Part 284 service. The FERC filing was made in early 2000.

The FERC order, received on June 6, 2000, authorized Honeoye to expand the capacity of the field by increasing the reservoir pressure to 1100 psia. It also authorized Honeoye to modify certain facilities and to purchase cushion gas for the field.

The reservoir pressure, and, thus, the field expansion, is to be accomplished over a two-year period. Fieldwork began immediately after the FERC order was issued and the field will be ready to render Part 284 storage service on August 1, 2000. Injection can begin at that time provided FERC has approved Honeoye's proforma Part 284 gas service tariff. Such approval is expected during August.

New Field Capacity and Available Service
When the expansion is completed in 2001, the field will have a maximum capacity of 11,018 MDth consisting of 6,718 MDth of working gas and 4,300 of base gas. The working gas includes 2,426 MDth of Part 284 capacity and 4,292 MDth of Part 157 capacity.

Part 284 Open Access Service
The 2000-2001 Part 284 open access service during 2000-2001will consist of up to 1,000 MDth of storage capacity and injection/withdrawal deliverability of 12,500 Dth/d. By April 1, 2001 the full field expansion will be completed and the total authorized Part 284 service will become available. It will consist of up to 2,426 MDth of storage capacity, 20,100 Dth/d of maximum withdrawal and 15,000 Dth/d of maximum injection service. Honeoye is conducting this open season during July, 2000 for storage service to be available for the 2000/2001 season. Interruptible service for 2000/2001 and firm and interruptible service for the 2001/2002 season and beyond will be sold by competitive bid on Honeoye's EBB (www.honeoye-gas-storage.com).

Transportation, Base Gas and Fuel Use

Part 284 customers need not supply cushion gas. It will be provided by Honeoye. Customers, however, will be required to arrange gas transportation service to and from Honeoye's existing interconnections with Tennessee Gas Pipeline Company or New York State Gas and Electric Company near Canandaigua, New York. Customers also will be required to provide fuel for compression use at a rate of one (1) percent of gas withdrawn and
gas injected.

On the cover of this brochure is a map showing the location of the Honeoye field and its interconnections with the Tennessee and NYSG&E systems, the potential points of receipt and delivery for the Honeoye volumes.



Open Season Schedule
The following schedule summarizes the key milestones of the open season and the initiation of Part 284 service.


FERC Approval of Field Expansion and Part 284 Service June 6, 2000
Start of Construction June 23, 2000
Start of Open Season July 1, 2000
End of Open Season July 31, 2000
Field Ready to Provide Storage Service August 1, 2000
FERC Approval of Tariff Est. August, 2000
Initial Service Upon Receipt of FERC Approval




Firm Storage Service Offering (FSS Storage Service)
A complete description of Part 284 Firm Storage Service that is being made available by Honeoye is contained in the Honeoye Storage Corporation FERC Gas Tariff, Original Volume 2 which is available on Honeoye's EBB (www.honeoye-gas-storage.com) or upon request.

Part 284 Firm Storage Service

Honeoye has available for sale for the 2000/2001 season (August 2000 through March 31, 2001) the following storage service:

Storage quantity
Maximum Storage Quantity (MSQ) Up to 1,000 MDth*
(*Note: Minimum MSQ - 25MDth)

Deliverability
Maximum Daily Withdrawal Quantity (MDWQ) 12,500Dth/d
Maximum Daily Injection Quantity (MDIQ) 12,500Dth/d

A customer, purchasing Part 284 Firm Storage Service, will have the right to inject and withdraw from the Honeoye field in proportion to its share of the total Part 284 MSQ.

Contract Term

The contract term for Part 284 Firm Storage Service will normally begin on April 1, and end on March 31 of the following year and have a minimum term of one year. However, the contract term for this open season will begin upon receipt by Honeoye of FERC approval of the Part 284 Tariff, expected to be during August 2000, and end on March 31, 2001. Customers purchasing FSS service during this startup year will be granted the right of renewal of its service for the following year, as specified in Honeoye's Part 284 gas tariff.

Fuel Gas

Gas is retained from customer's delivered volumes to meet fuel use and operational needs at the rate of one percent (1%) of the gas injected on customer's behalf and one percent (1%) of the gas withdrawn on customer's behalf.

Base Gas

Honeoye will provide all base gas necessary for Part 284 gas service.



Part 284 Gas Tariff
Copies of HSC's Part 284 FERC Gas Tariff, Original Volume No. 2 are available upon request and available for inspection on Honeoye's EBB (www.honeoye-gas-storage.com). The more significant provisions of the Tariff are listed below:
  • The Maximum Storage Quantity (MSQ) means the greatest number of Dths seller is obligated to store for customer. Minimum MSQ - 25,000 Dth
  • The Maximum Daily Withdrawal Quantity (MDWQ) shall mean the quantity set forth in the Customer's FSS Service Agreement.
  • The Maximum Daily Injection Quantity (MDIQ) shall mean the quantity set forth in the Customer's FSS Service Agreement.
  • Injection rates in excess of the MDIQ during the initial fillup will be provided at no additional cost during the 2000/2001 injection season. Such access service is subject to operating condition limitations and nominations of all other customers.
  • The term of the Agreement shall begin on the later to occur of FERC authority to render service or August 1, 2000 and shall continue in force and effect until March 31, 2001.
  • There is no requirement that gas be removed from storage until the latter part of the 2000/2001 season. A late withdrawal penalty of $1.00/day shall be assessed for gas remaining in the Honeoye field after March 31, 2001 unless, of course, a Customer successfully extends its agreement to the 2001-02 season.
  • Changes to daily and intra-day nominations for withdrawals or injections can be made in accordance with the Part 284 gas tariff.
  • Gas can be exchanged with other Part 284 customers who purchase Part 284 service from Honeoye. Gas cannot be exchanged with Part 157 Honeoye customers.
  • Honeoye is obligated to provide Part 284 on a non-discriminatory basis.
  • LDC's affiliated with Honeoye are not eligible to purchase Part 284 Service.




Rate Structure
Part 284 storage service will be sold during this open season at market based rates. Honeoye is seeking offers for firm service (FSS) with bidding to be made by a prospective customer on the basis of the Capacity Reservation Rate, Injection and Withdrawal Rates. A customer's share of the MDIQ and MDWQ shall be in proportion to its share of the MSQ. The total MDIQ/MDWQ shall be 12,500 Dth/d, respectively, and the total MSQ shall be 1,000 MDth.

A customer, when completing the Storage Service Request Form should submit its bid for the three rates shown below. All bids will be evaluated, according to Section 10.2 of the Tariff, on the basis of the Capacity Reservation Rate applied to the potential customer's share of the MSQ.

The Injection Rate and the Withdrawal Rate shall be paid for each Dth of gas injected or withdrawn during the contract period that is in excess of the customer's Maximum Storage Quantity. In effect, the first turnover of a customer's share of the MSQ is included in the Capacity Reservation Rate.
 
  Units
Capacity Reservation Rate __________ $/Dth/mo
Injection Rate __________ $/Dth
Withdrawal Rate __________ $/Dth

Honeoye Storage Corporation
For further information on the Honeoye project, please contact:
Richard A. Norman
Vice President
Honeoye Storage Corporation
c/o Essex Hydro
One State Street
Boston, MA 02109
Tel: 617-367-0032
Fax: 617-367-3796
Email: honeoye@essexhydro.com		 David A.T. Donohue
President
Honeoye Storage Corporation
c/o Arlington Group
535 Boylston Street
Boston, MA 02116
Tel: 617-267-7600
Fax: 617-536-4396
Email: ddonohue@ihrdc.com