Southern Star Central Gas Pipeline, Inc.

Original Volume No. 1

Effective Date: 05/01/2003, Docket: RP03-352-000, Status: Effective

Original Sheet No. 303 Original Sheet No. 303 : Effective

GENERAL TERMS AND CONDITIONS

31. Negotiated Rates

31.1 Availability: Southern Star and Shipper may mutually agree to

negotiate rates under any Part 284 Rate Schedule that expressly

provides for a negotiated rate and references this Section 31.

Southern Star's maximum effective rate (maximum base rate plus all

applicable surcharges) for service under any such rate schedule is

available as a recourse rate for any Shipper that does not desire

to negotiate a rate hereunder.

31.2 Definition: Negotiated rates shall be mutually agreed and set

forth in writing. A negotiated rate is a rate (i)which is greater

than the maximum rate, or (ii)which is less than the minimum rate,

or (iii)which is determined from a formula where the rate arrived

at could be above or below the maximum rate, or (iv)which uses a

rate design other than the one used to establish the applicable

recourse rate (e.g., straight fixed variable). A negotiated rate

which involves a volumetric or usage rate may include a minimum

quantity.

31.3 Capacity Allocation: In evaluating bids for firm service, in any

capacity auction or in otherwise allocating capacity among

competing requests for firm service where one or more bids uses a

negotiated rate or negotiated rate formula, Southern Star will

consider, in assigning value to such bid(s), only reservation or

demand charge revenue or other revenue which is guaranteed to be

received by Southern Star. Guaranteed revenue shall mean a

volumetric or usage rate bid along with a minimum quantity

commitment. For capacity evaluation purposes, the net present

value of any such bid for firm service shall be capped by the net

present value of the maximum applicable reservation rate for such

service over the contract term bid. In performing a net present

value evaluation of a negotiated rate bid proposing a volumetric

or usage rate along with a minimum throughput commitment, Southern

Star shall consider only the fixed costs proposed to be recovered

through the volumetric or usage rate bid, in addition to any

reservation rate included in the bid.

31.4 Capacity Release:

(a) A negotiated rate shall not apply as a price cap for

capacity release transactions under Section 11 of the

General Terms and Conditions.

(b) Southern Star and a Releasing Shipper may, in connection

with their agreement to a negotiated rate hereunder, agree

upon payment obligations and credit mechanisms that vary

from or are in addition to those set forth in Section 11.7

of the General Terms and Conditions.