Centerpoint Energy Gas Transmission Company

Sixth Revised Volume No. 1

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Effective Date: 02/28/2003, Docket: RP03-239-000, Status: Effective

Original Sheet No. 407 Original Sheet No. 407 : Effective

GENERAL TERMS AND CONDITIONS

(continued)

5.7 Balancing (continued)

A. For a Net Oversupplies Quantity, the

amount will be calculated as follows:

beginning with the Day having the lowest

Daily Index Price of the Days on which,

after aggregating all of Shipper's Daily

Imbalances under its Service Agreements,

Shipper had an aggregate imbalance

comprised of Oversupplies for the

applicable Pooling Area and Month, the

amount of Shipper's aggregate imbalance

for such Day (to the extent such amount

does not exceed the amount of Shipper's

Net Oversupplies Quantity) shall be

multiplied by such Daily Index Price and

the discount factor applicable to the Net

Oversupplies Quantity. To the extent that

any unresolved Net Oversupplies Quantity

remains thereafter, the same process will

be repeated, using the Day with an

aggregate imbalance comprised of

Oversupplies and the next lowest Daily

Index Price for such Month and the same

discount factor, and so forth, until the

entire Net Oversupplies Quantity has been

resolved.

B. For a Net Undersupplies Quantity, the

amount of Shipper's payment will be

calculated as follows: beginning with the

Day having the highest Daily Index Price

of the Days on which, after aggregating

all of Shipper's Daily Imbalances under

its Service Agreements, Shipper had an

aggregate imbalance comprised of

Undersupplies for the applicable Pooling

Area and Month, the amount of Shipper's

aggregate Imbalance for such Day (to the

extent such amount does not exceed the

amount of Shipper's Net Undersupplies

Quantity) shall be multiplied by such

Daily Index Price and the premium factor

applicable to the Net Undersupplies

Quantity.