Dauphin Island Gathering Partners

First Revised Volume No. 1

Effective Date: 07/01/2003, Docket: RP00-346-001, Status: Effective

First Revised Sheet No. 198 First Revised Sheet No. 198 : Effective

Superseding: Original Sheet No. 198

16. PENALTY WAIVERS AND CREDITING MECHANISM

16.1 Waivers

In recognition of the fact that each penalty provision in this FERC Gas

Tariff is intended to promote conscientious operations by the Shipper

such that service to other Shippers is not impaired in any way,

Transporter may waive any penalty charges incurred by Shipper if

Transporter determines, in its reasonable judgment, that Shipper was

conducting its operations in a responsible manner at the time the

penalty charges were incurred and that Shipper's conduct did not impair

service to another Shipper. Transporter must grant waivers under this

Section on a non-discriminatory basis, but the waiver of any penalty

charges shall not constitute an automatic waiver of any future penalty

charges.

Transporter shall maintain a record of all waivers granted under this

Section 16 and shall make such record available upon request to the

Commission and to any Shipper.

16.2 Crediting Mechanism

Transporter shall refund unauthorized overrun and OFO penalty revenues

net of costs, plus interest pursuant to Section 154.501 of the Code of

Federal Regulations, to non-offending shippers on an annual basis, based

on the penalty revenues collected during the previous calendar year.

The collected penalty revenues, net of costs, shall be allocated to non-

offending shippers monthly, based upon the non-offending shipper's

allocated volume.

Transporter shall flow through to Shippers or carry forward for each

annual billing period any excess of revenues received over costs

incurred under the cash-out provisions in Section 13.3. The annual rate

adjustment period shall be the twelve month period commencing each May

1, and ending the following April 30. If the net revenues received

exceed the costs incurred, then Transporter shall credit such due amount

plus applicable interest pursuant to Section 154.501 of the Code of

Federal Regulations to Shippers on a pro rata basis in accordance with

the volumes transported for each Shipper. If the net revenues are less

than the costs incurred, then Transporter shall carry forward the net

underrecoveries to the subsequent annual billing period.