Eastern Shore Natural Gas Company

Second Revised Volume No. 1

Effective Date: 11/01/1997, Docket: CP96-128-004, Status: Effective

Original Sheet No. 116 Original Sheet No. 116 : Effective

EASTERN SHORE NATURAL GAS COMPANY

GENERAL TERMS AND CONDITIONS

(Continued)

12. Construction of Facilities

Seller will evaluate all requests for new facilities based on

regulatory requirements, potential costs and revenues,

operational considerations and the impact on Seller's ability

to meet its existing service obligations. If the provision of

service requested pursuant to Section 11 of these General

Terms and Conditions requires the construction of facilities,

the following terms and conditions are applicable:

(a) Seller will construct, own and operate, with the consent

of Buyer, lateral pipelines, metering and regulating

facilities that include electronic measurement equipment

and data communication equipment necessary to receive,

monitor, measure, transport, or deliver gas for the

account of Buyer at new and/or additional Point(s) of

Delivery and/or Delivery Point Area(s) or at new and/or

additional Point(s) of Receipt , provided: (i) the

metering and regulating facilities shall be installed at

point(s) which, in Seller's reasonable judgment, is the

most practical, convenient and/or readily accessible

location; (ii) Buyer provides all information necessary

to support the proposed service for any needed Commission

proceedings, and (iii), except as provided in Section

12(c), Section 12(d) and Section 12(e) of these General

Terms and Conditions, Buyer contributes an aid-to-

construction amount to Seller which is equal to the cost

of the additional facilities including all costs involved

in filing applications, pursuing needed approvals and in

obtaining all licenses and permits required for the

services or construction and amounts necessary to

reimburse any costs, including without limitation, right-

of-way costs, loss of revenues if the installation

requires the interruption of any services, overhead

charges incurred as result of the installation of any

such facilities and any income taxes that may be incurred

by Seller as a result of the contribution. For the

purpose of this provision, lateral pipelines are defined

as any pipeline extension, other than a mainline

extension, built from an existing pipeline facility to

deliver gas for the account of Buyer, including new

Point(s) of Delivery and/or Delivery Point Area(s) and

enlargements or replacements of existing laterals.