Nautilus Pipeline Company, LLC

Original Volume No. 1

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Effective Date: 12/01/1997, Docket: CP96-790-003, Status: Effective

Original Sheet No. 206 Original Sheet No. 206 : Effective

GENERAL TERMS AND CONDITIONS

28. POLICY WITH RESPECT TO FEES AND CONSTRUCTION OF LATERAL

FACILITIES con't

28.2 Economic Criteria

(a) For purposes of determining whether a project is

economically beneficial to Transporter,

Transporter will evaluate projects on the basis

of the incremental cost of service of the

facilities to be constructed by Transporter

(including the cost of real property rights

acquisition), and the incremental revenues which

Transporter estimates will be generated as a

result of constructing and/or modifying such

facilities. In estimating the revenues to be

generated, Transporter will calculate the

revenues based upon the applicable transportation

rates exclusive of any ACA charges, and the

projected incremental volumes expected to be

transported.

(b) The volumes will be deemed incremental if any of

the following criteria are met:

(1) the volumes proposed to be transported

through the contemplated facilities are in

excess of the volumes which could be

transported through existing facilities

considering both the capacity of the

existing facilities and currently effective

priorities of service through such

facilities; or

(2) the volumes which would be transported

would not otherwise flow through

Transporter's Pipeline Facilities, as

verified by Shipper's affidavit certifying

that unless Transporter pays for the

contemplated facilities, Shipper will not

ship the volumes through Transporter's

Pipeline Facilities.