East Tennessee Natural Gas, LLC

Third Revised Volume No. 1

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Effective Date: 07/01/2004, Docket: RP04-362-000, Status: Effective

Original Sheet No. 196 Original Sheet No. 196 : Effective

Rate Schedule LMS-PA

Load Management (Pooling Area) Service (Continued)

(B) If I < zero then:

- Price for negative imbalances =

(abv(I) x HP) + (P x AP)

_______ ________

N N

- Price for positive imbalances and

imbalances less than or equal to 1,000 Dth

= AP

(iii) For all Parties whose % monthly imbalance is greater

than 5% (as calculated according to Section 7.1 of

this Rate Schedule) and greater than 1,000 Dth, the

actual negative imbalance volumes shall be "cashed

out" according to the following formula:

Imbalance Tier Price

0 - 5% 100% of HP

> 5% - 10% 115% of HP

> 10% - 15% 130% of HP

> 15% - 20% 140% of HP

> 20% - 150% of HP

For purposes of determining the tier at which an

imbalance will be cashed out, the price will apply

only to volumes within a tier. For example, if there

is a 7% imbalance, volumes that make up the first 5%

of the imbalance are priced at 100% of the HP.

Volumes making up the remaining 2% of the imbalance

are priced at 115% of the HP.

(iv) For all Parties whose % monthly imbalance is greater

than 5% (as calculated according to Section 7.1 of

this Rate Schedule) and greater than 1,000 Dth, the

actual positive imbalance volumes shall be "cashed

out" according to the following formula:

Imbalance Tier Price

0 - 5% 100% of LP

> 5% - 10% 85% of LP

> 10% - 15% 70% of LP

> 15% - 20% 60% of LP

> 20% - 50% of LP

For purposes of determining the tier at which an

imbalance will be cashed out, the price will apply

only to volumes within a tier. For example, if there

is a 7% imbalance, volumes that make up the first 5%

of the imbalance are priced at 100% of the LP.

Volumes making up the remaining 2% of the imbalance

are priced at 85% of the LP.