Bluewater Gas Storage, LLC

Original Volume No. 1

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Effective Date: 12/01/2006, Docket: CP06-351-001, Status: Effective

Original Sheet No. 120 Original Sheet No. 120 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

(c) BLUEWATER shall evaluate the bids in accordance with

the provisions of Section 4.7 and determine the best bid in

accordance with the timelines set forth in Section 4.3 herein.

BLUEWATER shall notify Releasing Customer, the best bidder, and any

designated Pre-arranged Replacement Customer of such determination

in accordance with the timelines set forth in Section 4.3 herein.

If there is a designated Pre-arranged Replacement Customer, it may

exercise its right to match such best bid by providing written

notice of such exercise to BLUEWATER and Releasing Customer in

accordance with the timelines set forth in Section 4.3 herein.

After the Replacement Customer is selected, BLUEWATER will finalize

an appropriate Addendum to the Capacity Release Umbrella Agreement

in the form contained in this FERC Gas Tariff. BLUEWATER will

provide a copy of this Addendum to the Replacement Customer via

facsimile, at which time the Replacement Customer will have the same

rights and obligations as any other existing Customer on BLUEWATER's

system. Following implementation of the release, BLUEWATER shall

post notice of the winning bidder on the Internet Web Site.

4.7 Best Bid. When BLUEWATER makes awards of capacity for

which there have been multiple bids meeting minimum conditions,

BLUEWATER shall award the bids, best bid first, until all offered

capacity is awarded. The capacity being awarded represents the

Maximum Daily Injection Quantity, Maximum Daily Withdrawal Quantity,

or Maximum Storage Quantity. These quantities are separate parts of

the capacity and are awarded until one of the quantities is fully

awarded, at which point all capacity is deemed to be fully awarded.

BLUEWATER shall evaluate and determine the best bid among those

otherwise consistent with any terms and conditions specified by the

Releasing Customer as follows:

(a) BLUEWATER shall apply the standard or criteria for

such determination specified by the Releasing Customer, including

the standard to be used for breaking ties. Any standard or criteria

so specified must be objective, economic, not unduly discriminatory,

not contrary to applicable provisions of this FERC Gas Tariff,

applicable to all prospective Replacement Customers and require

BLUEWATER in applying such standard to exercise no more than a

ministerial function. The Releasing Customer shall indemnify and

hold BLUEWATER harmless from and against all demands, losses,

claims, expenses, causes of action and/or damages suffered or

incurred by BLUEWATER arising out of or related to any determination

of a "best bid" pursuant to a standard specified, supplied, approved

or provided by Releasing Customer.

(b) In default of Releasing Customer specifying a bid

evaluation standard, BLUEWATER shall determine the bid or bids

generating the highest net present value, using a 10% discount

factor, based on the rate bid (reservation or demand component), the

applicable quantity(ies) and term or period bid upon. In default of

Releasing Customer specifying a method to break ties priority will

be given first to the bid with the shortest term, and next to the

bid submitted first in time.