Nautilus Pipeline Company, LLC

Original Volume No. 1

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Effective Date: 04/05/2010, Docket: RP10-475-000, Status: Effective

Original Sheet No. 224 Original Sheet No. 224

GENERAL TERMS AND CONDITIONS

40.1 PRECONDITIONS TO NEGOTIATED RATES (con't)

calculated. The tariff sheet must either incorporate a

statement that the Service Agreement does not deviate from

the form of Service Agreement in any material respect, or

Transporter shall file with the Commission a copy of the

non-conforming agreement.

40.2 CAPACITY ALLOCATION

(a) To the extent the revenue level pursuant to the Negotiated

Rate(s) or Negotiated Rate Formula provided for in Section

40.1 above, as calculated under Subsection (b) of this

Section 40.2, exceeds the comparable revenue level at the

Recourse Rate, the Shipper bidding or paying such Negotiated

Rate(s) or rate(s) under a Negotiated Rate Formula shall be

treated, for all capacity allocation purposes, as if the

rate(s) bid or paid had been equal to the Recourse Rate.

Any Shipper, existing or new, paying the Recourse Rate(s)

has the same right to capacity as a Shipper willing to pay

an equal or higher Negotiated Rate(s) or rate(s) under a

Negotiated Rate Formula. If the Negotiated Rate or the rate

under a Negotiated Rate Formula is higher than the

corresponding Recourse Rate, the Recourse Rate rather than

the Negotiated Rate will be used as the price cap for

release capacity pursuant to Section 22 of these General

Terms and Conditions and for the bidding of capacity

pursuant to Section 24 of these General Terms and

Conditions. Where the Negotiated Rate(s) or rate(s) under a

Negotiated Rate Formula results in revenue which is greater

than the Recourse Rate during certain portions of the

relevant evaluation period but less than the revenue at the

Recourse Rate during other portions of the relevant

evaluation period (but the revenue pursuant to the

Negotiated Rate(s) or rate(s) under a Negotiated Rate

Formula equals or exceeds that which would be generated at

the Recourse Rate for the entire evaluation period), the

value of bids and requests at the Negotiated Rate(s) or

rate(s) under a Negotiated Rate Formula shall be evaluated

as though the Recourse Rate applied under such bid or

request for the entire evaluation period. Where the

Negotiated Rate(s) or rate(s) under the Negotiated Rate

Formula result in revenue which is less than revenue at the

Recourse Rate over the relevant evaluation period, the value

of the bids or requests at the Negotiated Rate(s) or rate(s)

under the Negotiated Rate Formula shall be evaluated based

on such lower revenue and shall be afforded a

correspondingly lower priority than bids or requests at the

Recourse Rate.