Carolina Gas Transmission Corporation

Original Volume No. 1

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Effective Date: 11/01/2006, Docket: CP06- 71-001, Status: Effective

Original Sheet No. 126 Original Sheet No. 126 : Effective

(iii) Surety Bond. A surety bond provides an

acceptable form of collateral to Pipeline for

the full value of the collateral requirement

when issued by a surety company that holds

certificates of authority as acceptable surety,

has an A.M. Best credit rating of “A” or

better, or is otherwise acceptable to Pipeline.

The surety bond must renew automatically unless

the issuing surety provides notice to Pipeline

at least 30 days prior to the surety bond’s

expiration of the surety’s decision not to

renew the surety bond, or such term to which

Pipeline reasonably may agree. If the bond

amount falls below the collateral requirement

because of a claim for payment, such surety

bond must be replenished within ten (10)

Business Days; otherwise, Pipeline may declare

Shipper to be in default under one (1) or more

of the related Service Agreements. If actual

obligations to Pipeline exceed those

anticipated, Shipper must obtain a revised

surety bond that equals the actual Pipeline

obligations. The form, substance, and provider

of the surety bond must be acceptable to

Pipeline. The bond shall specify that funds

will be disbursed, in accordance with the bond

provision, within ten (10) Business Days after

notice is given to the surety by Pipeline. All

costs associated with obtaining a surety bond

and meeting the guideline provisions are

Shipper’s responsibility.

(iv) Cash Deposit. A cash deposit from Shipper in

an amount required by Pipeline is acceptable

collateral. If it is necessary to use all or a

portion of the cash deposit to pay Shipper’s

obligation, the original cash deposit must be

replenished to the required level within ten

(10) Business Days of notification; otherwise,

Pipeline may declare Shipper to be in default

under the related Service Agreements. In the

event actual Shipper obligations exceed the

collateral requirement, Shipper must increase

its cash deposit to the required level within

ten (10) Business Days of notification. The

cash deposit will be held by Pipeline and

interest earned will accrue to Shipper at the

rate in 18 C.F.R. § 154.501(d). Pipeline may

liquidate all account balances at its

discretion to meet Shipper’s obligations to

Pipeline when a default has occurred and the

cure period has expired.