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. 228 Original Sheet No. 228 : Effective

EASTERN SHORE NATURAL GAS COMPANY

GENERAL TERMS AND CONDITIONS

(Continued)

38. Transition Cost Recovery Mechanism (Continued)

(b) Recovery of Gas Supply Realignment Costs (Continued)

Seller shall make a limited filing with the Commission

under Section 4 of the Natural Gas Act. Seller's initial

filing will cover the period of November through

December, 1997. Seller will file quarterly to adjust

the costs, and the surcharge, as necessary. Seller shall

file such adjustments at least thirty (30) days prior to

the proposed effective date. Seller shall make the

filing according to Commission regulations together with

all supporting computations.

(1) Ninety percent (90%) of the GSRC shall be charged to

Buyers receiving service under Rate Schedule FT and

ST by means of a GSRC demand surcharge per MDTQ and

MDSTQ respectively, based on the proportion of each

Buyer's MDTQ and MDSTQ compared to the sum of all

Rate Schedules FT and ST, MDTQs and MDSTQs,

respectively.

(2) Ten percent (10%) of the GSRC shall be included in

revised rates for service under Rate Schedule IT.

Such volumetric GSRC surcharge shall be designed to

recover such costs over the subsequent twelve (12)

month period.