Eastern Shore Natural Gas Company

Second Revised Volume No. 1

Effective Date: 10/01/2002, Docket: RP02-449-001, Status: Effective

First Revised Sheet No. 216 First Revised Sheet No. 216 : Effective

Superseding: Original Sheet No. 216

EASTERN SHORE NATURAL GAS COMPANY

GENERAL TERMS AND CONDITIONS

(Continued)

31. Fuel Retention Adjustment

(a) This Section 31 of the General Terms and Conditions of

Service Provider's FERC Gas Tariff is applicable

to all transportation service under which Service

Provider retains fuel. In addition to the payments by

Service Requester to Service Provider for

transportation services pursuant to Service

Provider's Rate Schedules, Service Requester shall

reimburse Service Provider in accordance with the

Fuel Retention Percentage ("FRP") applicable to each such

transaction.

For in-kind fuel reimbursement methods, Service Providers

should provide, if applicable, a fuel matrix for receipt

and delivery point combinations. The Service Requesters

should not be responsible for calculating and totaling

fuel based on each zone or facility traversed.

(b) With no less than thirty (30) calendar days prior notice,

Service Provider shall file with the FERC revised

tariff sheets containing a redetermined FRP for the

affected Rate Schedules. The revised tariff sheets will

take effect each July 1 subsequent to the effective date

of this provision, or at such other times as

Service Provider in its reasonable discretion determines

necessary based upon operating or other conditions. For

current in-kind fuel reimbursement procedures, fuel rates

should be made effective only at the beginning of the

month. Such FRP shall be designed to reimburse

Service Provider for the cost of its Gas Required for

Operations ("GRO"). Service Provider's GRO

shall consist of (I) gas used for compressor fuel, and

(ii) gas otherwise used, lost or unaccounted for, in

Service Provider's operations.

applicable to the affected transportation Rate Schedules

in accordance with the following procedure.

Service Provider shall calculate GRO quantities

attributable to system wide operations for the affected

Rate Schedules using the last twelve (12) Month period

for which data is available. Such GRO quantity shall then

be divided by the transportation commodity quantities