Eastern Shore Natural Gas Company

Second Revised Volume No. 1

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

Original Sheet No. 229 Original Sheet No. 229 : 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)

(3) Any Buyer accepting assignment of its full pro rata

share of the Seller's daily gas purchase agreements

shall not be subject to the GSRC reservation

surcharge as described above. Such pro rata share

shall be based on the proportion of each Buyer's

firm sales entitlement with Seller on the day before

the effective date of Seller's service

restructuring. Any Buyer which accepts assignment

of less than its full pro rata share of Seller's

daily gas purchase agreements shall be subject to

the GSRC reservation surcharge but will be charged

an adjusted GSRC reservation surcharge. Buyer's

unit adjusted GSRC reservation surcharge will be the

full GSRC reservation surcharge multiplied by the

ratio which is such Buyer's actual accepted quantity

divided by its full pro rata quantity.

Any GSRC actually recovered from Buyers receiving service

under Rate Schedules FT and ST but subsequently required

by the Commission to be refunded shall be refunded,

together with applicable interest calculated pursuant to

Section 154.501(2)(d)(1) of the Commission's regulations,

to such Buyer within sixty (60) calendar days after the

date of a final Commission order requiring such refunds

based on the proportion of each Buyer's MDTQ and MDSTQ to

the sum of all such Buyers' MDTQs and MDSTQs for the time

period during which such costs were allocated. Any GSRC

actually recovered from Buyers receiving service under

Rate Schedule IT shall be credited, together with

applicable interest calculated pursuant to Section

154.501(2)(d)(1) of the Commission's regulations, to the

GSRC to be included in the IT rates for the next

quarterly filing.