Centerpoint Energy Gas Transmission Company

Sixth Revised Volume No. 1

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

Original Sheet No. 510 Original Sheet No. 510 : Effective

GENERAL TERMS AND CONDITIONS

(continued)

18.9.3 Results of Prudence Challenge.

(a) Unsuccessful Challenge: If the Challenger fails to

prove that CSC in an amount greater than that absorbed

by Transporter in calculating the Subject Eligible CSC

were incurred imprudently, the Challenger will be

required to make additional CSC payments to

Transporter. The amount of such payments will be

determined by multiplying the relevant Challenger's

Percentage, times the lesser of: (a) the Subject

Eligible CSC being challenged and not shown to be

imprudently incurred, or (b) the applicable Relevant

Absorption Level. This amount will be billed to the

Challenger as a direct bill payable either within

thirty (30) Days of the date of the Commission's final

order on such challenge, or at the option of the

Challenger, amortized on a monthly basis over the

remainder of the Recovery Period, with interest

calculated at the maximum rate authorized from time to

time pursuant to 18 C.F.R. §154.501 compounded

annually. No such payments shall excuse the

Challenger from making any and all other applicable

payments for any services received by such person from

Transporter.

(b) Successful Challenge: If the Challenger successfully

challenges the prudence of any CSC sought to be

recovered by Transporter and proves that the amount of

CSC imprudently incurred is greater than the Threshold

Difference, Transporter will adjust the maximum CSC

Charge otherwise applicable to the services provided

that customer. The amount of such adjustment will be

determined by (i) multiplying the Challenger's

Percentage by the amount of imprudent CSC which

exceeds the Threshold Difference, and then (ii)

dividing the resulting amount by the product of (A)

the successful Challenger's actual jurisdictional

throughput included within