Eastern Shore Natural Gas Company

Second Revised Volume No. 1

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

First Revised Sheet No. 220 First Revised Sheet No. 220 : Effective

Superseding: Original Sheet No. 220

EASTERN SHORE NATURAL GAS COMPANY

GENERAL TERMS AND CONDITIONS

(Continued)

34. Discounting

(a) Discount Policy

Seller may at any time selectively discount the rate

applicable to any Buyer under the Rate Schedules set

forth in this Tariff; provided, however, that such

discounted rate(s) shall not be less than the minimum

rate for the applicable service as set forth in the

currently effective rate sheets of this Tariff, which

may be changed from time to time. Any rate discount

provided to any Buyer shall be applied to the components

of the rate in following order: (i) base tariff rate for

the applicable service including fuel retention; and (ii)

applicable surcharges under Section 33 of the General

Terms and Conditions of Seller's FERC Gas Tariff. Seller

and Buyer shall enter into a written agreement describing

the terms of any such discounting of rate(s) to Buyer.

(b) Discount Retention Policy and Procedures

A Buyer with an existing discount rate with Seller

limited to service at a specific receipt point and

Delivery Point Area ("DPA") can request that it be

permitted to retain that discount rate when seeking to

use an alternate point, as part of its segmentation,

capacity release, or use of its flexible receipt and

delivery point rights under this tariff. Seller will

process request to retain discounts within two hours of

the request is made more than two hours prior to the 6:00

p.m. Evening Nomination. For requests made two hours or

less prior to the 6:00 p.m. Evening Nomination, Seller

will process the request by 8:30 a.m. CCT the next

morning. In such cases, a discount rate will not be

retained by the Buyer if Seller can demonstrate that is

has not granted a discount with respect to a similarly

situated Buyer at that point. If the discount is to be

retained, the Buyer will pay the higher of its

contractual discounted rate or the discount rate

applicable to the similarly situated Buyer receiving a

discount at that point.