Centerpoint Energy Gas Transmission Company

Sixth Revised Volume No. 1

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

Original Sheet No. 595 Original Sheet No. 595 : Effective

GENERAL TERMS AND CONDITIONS

(continued)

23. TRANSITION COSTS RECOVERY MECHANISM (continued)

Transporter shall compare total Rate Schedule ISS revenue during

the twelve (12) Months ended January 31 ("Accrual Period") against

the costs of service allocated to be recovered from Rate Schedule

ISS, less applicable surcharges and variable costs associated with

providing the service. The resulting amount defined as the

"Excess ISS Revenues", or the "Remaining ISS Costs", as

applicable, shall be netted in accordance with the procedure set

out in Section 23.7, hereof, to determine the amount of Excess

Interruptible Revenues, if any.

23.7 For purposes of the annual crediting filings set out in the

General Terms and Conditions, Sections 5.7(c)(ii)(2)(B) (Imbalance

Cash-Out), and Sections 23.2 (b)(iv) and 23.5 (IT and SBS Revenue

Crediting), Transporter shall net Cash-Out Excess Revenues or

Cash-Out Remaining Costs, Excess IT Revenues or Remaining IT

Costs, Excess ISS Revenues or Remaining ISS Costs and Carryover

Costs (as defined below). If the resulting net amount is an

excess of revenues, it shall be defined as the "Excess

Interruptible Revenues." If the Excess Interruptible Revenues are

less than or equal to the Excess IT Revenues, then the IT

Crediting Revenues shall be equal to the Excess Interruptible

Revenues. If the Excess Interruptible Revenues exceed the Excess

IT Revenues ("Remaining Interruptible Revenues"), then the IT

Crediting Revenues shall be equal to the Excess IT Revenues and

the "Cash-Out Crediting Revenues" shall be determined by

multiplying the Remaining Interruptible Revenues by a fraction,

the numerator of which is the Cash-Out Excess Revenues, if any,

and the denominator of which is the Cash-Out Excess Revenues plus

the Excess ISS Revenues. If the resulting net amount is an excess

of costs (Carryover Costs), such Carryover Costs, including

interest in accordance with Section 154.501 of the Commission's

regulations, calculated from the end of the Accrual Period

(defined in the Sections set out above) in which the Carryover

Costs were incurred until the end of the next Accrual Period,

shall be included in the next annual calculation performed under

this Section 23.7.