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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
Commission File Number 333-42578
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
(Exact name of registrant as specified in its charter)
Delaware 06-1285387
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
One Corporate Drive
Suite 600
Shelton, Connecticut 06484-6211
(Address of principal executive (Zip code)
offices)
(203) 925-7200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
IROQUOIS GAS TRANSMISSION SYSTEM, L.P. AND SUBSIDIARY
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statements of Income -
Three Months Ended March 31, 2003 and 2002 3
Consolidated Balance Sheets - March 31, 2003
and December 31, 2002 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2003 and 2002 5
Consolidated Statement of Changes in Partners'
Equity - Three Months Ended March 31, 2003 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
ITEM 3. Quantitative and Qualitative Disclosures About
Market Risk 9
ITEM 4. Controls and Procedures 10
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 11
ITEM 5. Other Information 11
ITEM 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Certifications 13
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IROQUOIS GAS TRANSMISSION SYSTEM, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands)
(Unaudited)
Three Months Ended
March 31
2003 2002
OPERATING REVENUES $37,615 $32,882
OPERATING EXPENSES
Operation and maintenance 5,722 5,520
Depreciation and amortization 6,014 5,890
Taxes other than income taxes 3,156 2,781
Operating expenses 14,892 14,191
OPERATING INCOME 22,723 18,691
OTHER INCOME/(EXPENSES)
Interest Income 51 93
Allowance for equity funds
used during construction 1,415 359
Other, net (5) (12)
Other income/(expenses) 1,461 440
INTEREST EXPENSE
Interest Expense 8,246 6,326
Allowance for borrowed funds
used during construction (1,653) (457)
Net Interest Expense 6,593 5,869
INCOME BEFORE TAXES 17,591 13,262
PROVISION FOR TAXES 7,002 5,314
NET INCOME 10,589 7,948
The accompanying notes are an integral part of these consolidated
financial statements.
PART I. FINANCIAL INFORMATION (Continued)
ITEM 1. FINANCIAL STATEMENTS (Continued)
IROQUOIS GAS TRANSMISSION SYSTEM, L.P. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31, December 31,
ASSETS 2003 2002
(Unaudited)
CURRENT ASSETS
Cash and temporary cash investments $ 18,637 $ 21,620
Accounts receivable - trade, net 7,316 6,384
Accounts receivable - affiliates 5,191 5,470
Other current assets 2,598 3,838
Total Current Assets 33,742 37,312
NATURAL GAS TRANSMISSION PLANT
Natural gas plant in service 800,300 796,647
Construction work in progress 169,724 125,951
970,024 922,598
Accumulated depreciation and amortization (307,091) (301,123)
Natural Gas Transmission Plant, Net 662,933 621,475
OTHER ASSETS AND DEFERRED CHARGES
Regulatory assets - income tax related 14,861 14,080
Regulatory assets - other 1,614 1,661
Other assets and deferred charges 14,237 14,857
Total Other Assets and Deferred Charges 30,712 30,598
TOTAL ASSETS $ 727,387 $ 689,385
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 7,626 $ 16,703
Accrued interest 13,900 6,839
Current portion of long-term debt 22,222 22,222
Accrued property tax 1,582 3,780
Other current liabilities 1,445 3,999
Total Current Liabilities 46,775 53,543
LONG-TERM DEBT 411,444 385,000
OTHER NON-CURRENT LIABILITIES
Unrealized loss-interest rate hedge, net of tax 4,432 4,635
Other 2,235 2,281
Total Other Non-Current Liabilities 6,667 6,916
AMOUNTS EQUIVALENT TO DEFERRED INCOME TAXES
Generated by Partnership 104,769 100,355
Payable by Partners (89,908) (86,275)
Related to Other Comprehensive Income (2,148) (2,227)
Total Amounts Equivalent to Deferred
Income Taxes 12,713 11,853
Commitments and Contingencies - -
Total Liabilities 477,599 457,312
Partners' Equity 249,788 232,073
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 727,387 $ 689,385
The accompanying notes are an integral part of these consolidated financial
statements.
PART I. FINANCIAL INFORMATION (Continued)
ITEM 1. FINANCIAL STATEMENTS (Continued)
IROQUOIS GAS TRANSMISSION SYSTEM, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
2003 2002
OPERATING ACTIVITIES:
Net Income $ 10,589 $ 7,948
Adjusted for the following:
Depreciation and amortization 6,014 5,890
Allowance for equity funds used during construction (1,415) (359)
Deferred regulatory asset-income tax related (781) (89)
Amounts equivalent to deferred income taxes 781 89
Income and other taxes payable by partners 7,002 5,314
Other assets and deferred charges 620 624
Other non-current liabilities (46) 45
CHANGES IN WORKING CAPITAL:
Accounts receivable (653) (194)
Other current assets 1,240 1,128
Accounts payable (9,077) (5,316)
Accrued interest 7,061 4,365
Other current liabilities (4,752) (3,569)
NET CASH PROVIDED BY OPERATING ACTIVITIES 16,583 15,876
INVESTING ACTIVITIES:
Capital expenditures (46,010) (3,772)
NET CASH USED FOR INVESTING ACTIVITIES (46,010) (3,772)
FINANCING ACTIVITIES:
Long-term debt borrowings 32,000 --
Repayments of long-term debt (5,556) (5,556)
NET CASH PROVIDED BY/(USED FOR)
FINANCING ACTIVITIES 26,444 (5,556)
NET (DECREASE)/INCREASE IN CASH AND TEMPORARY
CASH INVESTMENTS (2,983) 6,548
CASH AND TEMPORARY CASH INVESTMENTS AT
BEGINNING OF YEAR 21,620 21,715
CASH AND TEMPORARY CASH INVESTMENTS AT
END OF PERIOD $ 18,637 $ 28,263
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest $ 778 $ 1,780
The accompanying notes are an integral part of these consolidated financial
statements.
PART I. FINANCIAL INFORMATION (Continued)
ITEM 1. FINANCIAL STATEMENTS (Continued)
IROQUOIS GAS TRANSMISSION SYSTEM, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the Three Months Ended March 31, 2003
(In Thousands)
(Unaudited)
PARTNERS' EQUITY
BALANCE AT DECEMBER 31, 2002 $232,073
Year-to-date net income 10,589
Taxes payable by Partners 7,002
Other comprehensive income, net of tax 124
PARTNERS' EQUITY
BALANCE AT MARCH 31, 2003 $249,788
The accompanying notes are an integral part of this consolidated
financial statement.
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
IROQUOIS GAS TRANSMISSION SYSTEM, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated financial statements included herein have been prepared
by Iroquois Gas Transmission System, L.P., ("Iroquois" or "Company") without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, they reflect all adjustments which are, in the
opinion of management, necessary for a fair presentation of the financial
results for the interim periods. Certain information and notes normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the financial
statements and the notes thereto included in Iroquois' Annual Report on Form
10-K for the year ended December 31, 2002 ("Iroquois' Form 10-K").
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make assumptions and estimates that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. Comprehensive income consisted of the following:
(in thousands) Three months ended
March 31,
2003 2002
Net income $10,589 $7,948
Other comprehensive income
Unrealized gain on interest rate
hedge, net of tax 124 368
Comprehensive income $10,713 $8,316
3. FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
of Others" is effective for the year ended December 31, 2002. FASB
Interpretation No. 45 elaborates on the disclosures to be made by a
guarantor about its obligations under certain guarantees it has issued.
It also clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The initial recognition and initial
measurement provisions of FASB Interpretation No. 45 are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002.
The application of this Interpretation did not have a material impact on
the financial position, results of operations, or cash flows of the Company.
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The Company owns an interstate natural gas pipeline system extending from the
United States-Canada border near Waddington, New York through Connecticut to
South Commack, Long Island, New York. Iroquois' pipeline system commenced
full operations on January 25, 1992, and is operated by the Company's wholly
owned subsidiary, Iroquois Pipeline Operating Company.
During the later part of 1999, the Company held negotiations with its
shippers, which led to the settlement of certain remaining issues from
previous rate cases between the Company and its shippers. The settlement
received Federal Energy Regulatory Commission ("FERC") approval on February
10, 2000. The settlement provides for a schedule of rate reductions through
the year 2003, generally precludes additional rate cases during this period
initiated by Iroquois or by any shipper that was a settling party, and
resolves all rate matters outstanding from the Company's previous two rate
cases.
Results of Operations
The components of Operating Revenues and Volumes Transported are provided in
the following table:
Three months ended
Revenues and Volumes Delivered March 31,
2003 2002
Revenues (dollars in millions)
Long-term firm reserved service $ 30.9 $ 30.3
Short-term firm/interruptible/other (1) 6.7 2.6
Total revenues $ 37.6 $ 32.9
Volumes delivered (million dekatherms)
Long-term firm reserved service 72.4 76.6
Short-term firm/interruptible/other 21.7 10.9
Total volumes delivered 94.1 87.5
____________________
(1) Short-term firm represents firm service contracts of less than one year.
Other revenue includes deferred asset surcharges, park and loan service
revenue and marketing fees.
The Company receives revenues under long-term firm reserved transportation
service contracts with shippers in accordance with service rates approved by
the FERC. The Company also has interruptible transportation service revenues
which are at the margin and thus can have a significant impact on net income.
Such revenues include short-term firm reserved transportation service
contracts having terms of less than one year as well as standard
interruptible transportation service contracts. While it is common for
pipelines to be obligated under their FERC-approved rate structures to share
some of their interruptible transportation service revenues with long-term
firm reserved service shippers, Iroquois is not currently obligated to do so
under the terms of the rate settlement described above. However, there can
be no assurance that this will be the case in the future.
Three-month period ended March 31, 2003 compared to the three-month period
ended March 31, 2002.
Revenues. Total revenues for the three-month period ended March 31, 2003
increased $4.7 million or 14.3% compared to the three-month period ended
March 31, 2002. The increase in long-term firm revenues of $0.6 million was
primarily attributable to additional capacity provided by Eastchester
upstream facilities and a new negotiated rate long-term firm contract,
partially offset by the rate decrease effective January 1, 2003 of
approximately $0.01 per Dekatherm. The increase in short-term
firm/interruptible/other revenues of approximately $4.1 million was
attributable primarily to increased volumes for short-term firm and
interruptible services resulting from stronger market demand for natural gas
due to colder weather during the three-month period ended March 31, 2003 as
compared to the same period in 2002.
Other Income/(Expenses). Other income/(expenses) include certain investment
income and the net of income and expense adjustments not recognized
elsewhere. Other income/(expenses) increased $1.0 million for the three-
month period ended March 31, 2003 compared to the three-month period ended
March 31, 2002 primarily due to an increase in the allowance for equity funds
used during construction ("equity AFUDC"). The increase in the equity AFUDC
related primarily to Iroquois' expenditures for the Eastchester Extension.
Interest Expense, Net. Interest expense, net increased $0.7 million for the
three-month period ended March 31, 2003 compared to the three-month period
ended March 31, 2002 due to an increase in interest expense of $1.9 million,
partially offset by an increase in interest expense capitalized of $1.2
million. The increase in interest expense reflects an increase in the
Company's average debt balance due primarily to the $170.0 million bond
offering which was completed in August of 2002, as well as additional bank
borrowings under the partnership's amended credit agreement. The increase in
interest expense capitalized was primarily due to Iroquois' expenditures for
the Eastchester Extension.
Provision for Taxes. Income tax expense increased approximately $1.7 million
for the three-month period ended March 31, 2003 as compared to the same
period in 2002. This increase was due primarily to an increase in taxable
income.
Liquidity and Capital Resources
For the first quarter of 2003, the Partnership's primary source of financing
has been bank borrowings under the Partnership's amended credit agreement and
cash flow from operations. The Partnership's ongoing operations will require
the availability of funds to service debt, fund working capital, and make
capital expenditures on the Partnership's existing facilities and expansion
projects.
Net cash provided by operating activities increased to $16.6 million
in the first quarter of 2003 compared to $15.9 million in the first quarter
of 2002, primarily due to an increase in net income, partially offset by a
decrease in working capital. Net cash flow related to financing activities
increased by $32.0 million during the first three months of 2003, as compared
to the same period in 2002, due to bank borrowings under the Partnership's
amended credit agreement.
The Partnership also is party to a $10.0 million, 364-day, variable
rate revolving line of credit to support working capital requirements. As of
March 31, 2003 and December 31, 2002, there were no borrowings outstanding
under this facility.
Capital expenditures for the first quarter of 2003 were $46.0 million,
compared to $3.8 million in the first quarter of 2002, reflecting primarily
the increased construction activity related to the Eastchester Extension
during the period.
Total capital expenditures for 2003 are estimated to be approximately
$135.0 million, including approximately $125.0 million for the Eastchester
Extension. The remaining capital expenditures planned for 2003 are primarily
for the purchase of land for a compressor site, a meter station and
interconnect, and various general plant purchases. The Partnership expects to
fund its 2003 capital expenditures through additional borrowings under its
existing credit facilities, and internal sources, including cash from
operations and increased equity contributions (by limiting distribution to
partners) in accordance with the partnership agreement. The Partnership's
management makes recommendations to the partnership management committee
regarding the amount and timing of distributions to partners. The amount and
timing of distributions is subject to internal cash requirements for
construction, financing and operational requirements. Distributions and cash
calls require the approval of the management committee. There were no cash
distributions to partners during the first three months of 2003 or during the
same period in 2002.
Off-Balance Sheet Transactions
At March 31, 2003, the Partnership had no off-balance sheet transactions,
arrangements, or other relationships with unconsolidated entities or persons
that would adversely affect liquidity, availability of capital resources,
financial position, or results of operations.
Information Regarding Forward Looking Statements
This quarterly report contains various forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements are based on current expectations, are not guarantees of future
performance and include assumptions about future market conditions,
operations and results. They are made in reliance on the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. Iroquois
can give no assurance that such expectations will be achieved. Among the
many factors that could cause actual results to differ materially from those
in the forward-looking statements herein are: future demand and prices for
natural gas; availability of supplies of Canadian natural gas; regulatory,
political, legislative and judicial developments, particularly with regard to
regulation by the Federal Energy Regulatory Commission; the timing and cost
of Iroquois' expansion projects, including the Eastchester Extension;
competitive conditions in the marketplace; changes in the receptivity of the
financial markets to Iroquois or other oil and gas credits similar to
Iroquois and, accordingly, our strategy for financing any such change in
business strategy or expansion. A discussion of these and other factors
which may affect our actual results, performance, achievements or financial
position is contained in the "Risk Factors" section of Iroquois' Annual
Report on Form 10-K, which is on file with the United States Securities and
Exchange Commission.
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in interest
rates and prices. The following discussion of the Partnership's risk
management activities includes forward-looking statements that involve risks
and uncertainties. Actual results could differ materially from those
contemplated in the forward-looking statements. The Partnership handles
market risks in accordance with established policies, which may include
various derivative transactions.
The financial instruments held or issued by the Partnership are for purposes
other than trading or speculation. The Partnership is exposed to risk
resulting from interest rate changes on its variable-rate debt. The
Partnership uses interest rate swap agreements to manage the risk of
increases in certain variable rate issues. It records amounts paid and
received under those agreements as adjustments to the interest expense of the
specific debt issues. The Partnership believes that there is no material
market risk associated with these agreements. As of March 31, 2003, the
Partnership had $63.7 million of variable-rate debt outstanding, of which
approximately $34.7 million is fixed under the interest rate swap
agreements. Holding other variables constant, including levels of
indebtedness, a one-percentage point increase in interest rates would impact
pre-tax earnings by approximately $0.3 million.
The Partnership's pension plan assets are made up of equity and fixed income
investments. Fluctuations in those markets could cause the Partnership to
recognize increased or decreased pension income or expense.
PART I. FINANCIAL INFORMATION - (Concluded)
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures. Within the 90 days prior to the date of
filing of this report, an evaluation was carried out, under the supervision
and with the participation of the Company's management, including the
Company's principle executive officer along with the chief financial officer,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon
that evaluation, the Company's principle executive officer along with the
chief financial officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required to
be included in our periodic SEC filings.
Internal controls. There have been no significant changes in the Company's
internal controls or in other factors that could significantly affect
internal controls, including any corrective action with regard to significant
deficiencies and material weakness subsequent to the date this evaluation was
carried out.
PART II. OTHER INFORMATION
IROQUOIS GAS TRANSMISSION SYSTEM, L.P. AND SUBSIDIARY
ITEM 1. Legal Proceedings
A description of the Company's legal proceedings is contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 2002.
Eastchester Certificate Application (FERC Docket No. CP00-232)
On April 28, 2000, Iroquois filed an application with the Commission to
construct and operate its "Eastchester Extension Project". Under this
proposal, as subsequently modified, Iroquois would construct and operate
certain facilities, including additional compression facilities and
approximately 36 miles of pipeline and associated facilities from Northport,
Long Island to the Bronx, New York. Those proposed facilities would provide
230 MDth/d of natural gas per day to the New York City area. The Partnership
would provide firm transportation service to the shippers with whom it has
executed precedent agreements. On December 26, 2001, the Commission issued a
certificate authorizing the Partnership to construct and operate the
Eastchester facilities ("December 26 Order"). On January 25, 2002, the
Partnership accepted the certificate.
On April 19, 2002, the Company began constructing its Eastchester Expansion
Project, and a portion of the upstream facilities have been placed into
service. Construction of the Long Island Sound portion of the project
commenced in October, 2002. As a result of delays in obtaining certain
construction authorizations and permits and delays related to construction
incidents, the projected in-service date of the entire Eastchester Expansion
Project is now late summer or early fall of 2003. Management believes that
final project construction costs will likely exceed $265.0 million, rather
than the $210.0 million estimated during the Commission's certificate
process, and will likely reduce the Company's initial margins that were
anticipated when the project application was initially filed with the FERC.
Athens Project (FERC Docket No. CP02-20-000)
On June 3, 2002, the Commission issued a certificate authorizing Iroquois to
construct the Athens Project facilities. In light of various uncertainties
associated with the Athens Project, Iroquois has investigated alternative
means to provide the firm transportation service requested by the shipper.
As a result of that investigation, Iroquois intends to defer the commencement
of construction of the second Athens compressor unit. By letter dated April
22, 2003, Iroquois requested a 1-year extension from the Commission of the
deadline for completion of construction of the Athens Project, or until
December 3, 2004.
Brookfield Project (FERC Docket No. CP02-31-000)
On October 31, 2002 the Commission issued a certificate authorizing Iroquois
to construct the Brookfield facilities.
Based on communications with its prospective customers regarding the timing
of their needs of new firm transportation service, Iroquois has determined
that a temporary deferral of the construction of the Brookfield Project is
necessary. Specifically, Astoria Energy LLC ("Astoria"), the largest shipper
for the Brookfield Project, has requested that its service be deferred until
November 1, 2005. On February 28, 2003, Iroquois and Astoria executed an
amendment to its precedent agreements reflecting such a deferral. The other
original Brookfield Project shipper, PPL Energy Plus, LLC ("PPL"), has
elected to terminate its precedent agreement, and Iroquois is currently
marketing the Brookfield Project capacity entitlement relinquished by PPL to
other potential shippers. As a result of these developments, on April 22,
2003 Iroquois requested an eighteen month extension from the Commission to
extend the construction completion time of the Brookfield Project to
October 31, 2005.
Eastchester Project Incident
On February 27, 2003, the New York Power Authority("NYPA"), informed Iroquois
that one of four cables that comprise its Y-49 facility, which is a 600
megawatt undersea electrical power interconnection between Westchester County
and Long Island Power Authority's ("LIPA") transmission system at Sands
Point, New York, allegedly sustained damage causing a rupture and leakage of
dielectric fluid. NYPA has suggested that the damage to the Y-49 cables may
have been caused by an anchor of Horizon Offshore Contractors, Inc.'s
pipeline lay barge, the Gulf Horizon while constructing the Eastchester
Extension. Iroquois is a party to an agreement with NYPA which provides,
among other things, that in the event of damage to Y-49 cables resulting from
Iroquois' or its contractor's negligence, acts, omissions or willful
misconduct, Iroquois will indemnify NYPA for repair costs and the costs of
replacement electrical capacity while the Y-49 cables are out of service,
subject to NYPA's duty to mitigate damages.
On March 25, 2003, Iroquois received a letter via electronic mail from
counsel representing NYPA and LIPA informing Iroquois that based on
information currently known, NYPA and LIPA intend to hold Iroquois, Horizon
Offshore Contractors, Inc. and Thales Geo Solutions, Inc. jointly and
severally liable and responsible for the extent of their damages including
emergency response costs, repair of the damaged electrical cables, loss of
use and disruption of services, and any other damages arising or related to
the incident. NYPA has not placed a specific dollar amount on the claim.
Iroquois is still in the process of investigating the incident and evaluating
its rights, obligations and responsibilities with regard to the incident.
Given the preliminary stage of this matter, at this time, Iroquois is unable
to assess the likelihood of an unfavorable outcome and/or the amount or range
of loss, if any, in the event of an unfavorable outcome. Under the terms of
the construction contract between Horizon and Iroquois, Horizon is required
to indemnify Iroquois for Horizon's negligence associated with the
construction of the Eastchester Extension. Pursuant to the contract, Horizon
named Iroquois as an additional named insured under their policies of
insurance. Iroquois understands that Iroquois is covered by such policies to
the extent that Horizon has assumed the liabilities under the contract with
Iroquois. Iroquois has placed Horizon and its underwriters on notice that it
intends to hold Horizon responsible and has requested Horizon to assume its
defense and hold it harmless, which Horizon has rejected.
Iroquois has placed its own underwriters on notice. Iroquois is currently
investigating the applicability of all available insurance coverage.
No further material legal proceedings or material developments have occurred
since December 31, 2002.
ITEMS 2-5 are not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits:
Index to Exhibits
Exhibit
Number
99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
1. The Company filed a Current Report on Form 8-K, dated February 7, 2003,
reporting the withdrawal of the Company's certificate application filed with
the Federal Energy Regulatory Commission to construct and operate its Eastern
Long Island Expansion project.
2. The Company filed a Current Report on Form 8-K, dated April 10, 2003,
reporting a press release announcing that effective April 15, 2003,
E.J. "Jay" Holm became the President of Iroquois Pipeline Operating Company.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
(A Delaware Limited Partnership)
Date: (May 13, 2003) By: Iroquois Pipeline Operating Company,
as its Agent
/S/ E.J. Holm
_________________
E.J. Holm
President
/S/ Paul Bailey
_________________
Paul Bailey
Vice President & Chief Financial Officer
I, E.J. Holm, the principle executive officer of the Company, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Iroquois Gas
Transmission System, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
DATE: MAY 13, 2003
_____________________________
/S/ E.J. HOLM
E.J. HOLM
PRESIDENT
I, Paul Bailey, the chief financial officer of the Company, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Iroquois Gas
Transmission System, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
DATE: MAY 13, 2003
_______________________
/S/ PAUL BAILEY
PAUL BAILEY
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER