Eastern Shore Natural Gas Company

Second Revised Volume No. 1

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Effective Date: 11/01/2002, Docket: RP00-393-002, Status: Effective

First Revised Sheet No. 165 First Revised Sheet No. 165 : Effective

Superseding: Original Sheet No. 165

EASTERN SHORE NATURAL GAS COMPANY

GENERAL TERMS AND CONDITIONS

(Continued)

23. Balancing of Transportation Services (Continued)

(d) Adjustments to be Scheduled with Seller

Any adjustments to receipts and deliveries by Buyer shall

be coordinated with Seller's transportation and

scheduling department and shall be in accordance with

Section 21 of the General Terms and Conditions of

Seller's FERC Gas Tariff.

(e) Seller May Issue Operational Flow Orders

Seller may issue Operational Flow Orders pursuant to

Section 24 of the General Terms and Conditions of

Seller's FERC Gas Tariff to require adjustments to

Buyer's receipts and/or deliveries if, in its reasonable

discretion, Seller determines that such action is

required in order to alleviate operating conditions which

threaten the integrity of Seller's system. A Buyer shall

not incur penalties for complying with the provisions of

an Operational Flow Order(s).

(f) Imbalances shall be "Cashed Out"

Each Month Buyer and Seller shall "cash out" any

imbalances between total receipts and total deliveries

for all Buyer's scheduled transactions. Seller shall pay

the "Buy" price for excess receipts and Buyer shall pay

the "Sell" price for excess deliveries. The price at

which Buyer's imbalance will be "cashed out" depends on

whether Buyer elected Swing Transportation Service for

the Month pursuant to Section 4 of Seller's Rate Schedule

ST. For any Buyer that provided Third Party Swing Supply

pursuant to Section 4 of Rate Schedule ST the imbalance

shall be "cashed out" at the Swing Price as determined in

accordance with Section 23(f)(4) and Section 23(f)(5)

below. For any Buyer that did not elect Swing

Transportation Service for the Month pursuant to Section

4 of Seller's Rate Schedule ST the imbalance shall be

"cashed out" at the Index Price as determined in

accordance with the procedures described in Section

23(f)(1), Section 23(f)(2) and Section 23(f)(3) below.