Eastern Shore Natural Gas Company

Second Revised Volume No. 1

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

Original Sheet No. 168 Original Sheet No. 168 : Effective

EASTERN SHORE NATURAL GAS COMPANY

GENERAL TERMS AND CONDITIONS

(Continued)

23. Balancing of Transportation Services (Continued)

(f) Imbalances shall be "Cashed Out" (Continued)

(3) Imbalance due Buyer with Index Price basis

In the event of an imbalance caused when actual

total deliveries at the Point(s) of Delivery and/or

Delivery Point Area(s) are less than scheduled total

receipts at the Point(s) of Receipt, Seller shall

make a "cash out" payment to Buyer for such excess

receipt. Such payment will be based on the Index

Price for the relevant Month multiplied by one of

the following factors:

Imbalance Level Factor

Greater than 0% but less

than or equal to 5% 1.00

Greater than 5% but less

than or equal to 10% .80

Greater than 10% but less

than or equal to 15% .70

Greater than 15% but less

than or equal to 20% .60

Greater than 20% .50

The applicable imbalance percentage for purposes of

determining the applicable "cash out" price factor

shall be determined by dividing the amount of the

excess receipts by the scheduled total receipts.

However, in the case where a portion of Buyer's

imbalance resulted from Seller increasing receipts

for Buyer's account, such portion shall be excluded

from Buyer's imbalance for the purpose of

calculating the imbalance percentage. This portion

is, however, subject to "cash out".