East Tennessee Natural Gas, LLC

Third Revised Volume No. 1

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Effective Date: 04/20/2008, Docket: RP08-277-000, Status: Effective

First Revised Sheet No. 398 First Revised Sheet No. 398 : Effective

Superseding: Original Sheet No. 398

GENERAL TERMS AND CONDITIONS (Continued)

47. PENALTIES AND PENALTY CREDITING MECHANISM (continued)

47.5 Operational Flow Order Penalties

(a) Action Alert Penalty

If a Shipper/Balancing Party fails to comply with an Action

Alert pursuant to Section 14.8 of the General Terms and

Conditions of this FERC Gas Tariff, it shall be subject to an

Action Alert penalty equal to $0.98 per Dth for any volume of

gas by which it deviated from the requirements of the Action

Alert.

(b) Balancing Alert Penalty

If a Shipper/Balancing Party fails to comply with a Balancing

Alert pursuant to Section 14.8 of the General Terms and

Conditions of this FERC Gas Tariff, it will be subject to a

Balancing Alert Penalty of $15.00, plus an index price based

on the Henry Hub Spot Price published in Gas Daily's "Gas

Price Report" for each Dekatherm of gas by which it deviated

from the requirements of the Balancing Alert.

(c) To the extent that Action Alert Penalty or Balancing Alert

Penalty revenues are collected from LMS-MA Balancing Parties

and LMS-PA Balancing Parties pursuant to this Section 47.5,

Transporter will maintain separate accounts for such penalty

revenues and will credit those revenues, net of costs, as

follows:

(1) Penalty revenues collected pursuant to this Section 47.5

from LMS-MA Balancing Parties will be credited, net of

costs, to any LMS-MA Balancing that did not incur a

penalty pursuant to this Section 47.5 in the Month for

which revenues were received ("Non-Offending LMS-MA

Balancing Party"), based on the ratio of the actual

quantities taken by the Non-Offending LMS-MA Balancing

Party to the actual quantities taken by all Non-

Offending LMS-MA Balancing Parties.

(2) Penalty revenues collected pursuant to this Section 47.5

from LMS-PA Balancing Parties will be credited, net of

costs, to any LMS-PA Balancing Party that did not incur

a penalty pursuant to this Section 47.5 in the Month for

which revenues were received ("Non-Offending LMS-PA

Balancing Party"), based on the ratio of the actual

quantities delivered by the Non-Offending LMS-PA

Balancing Party to the actual quantities delivered by

all Non-Offending LMS-PA Balancing Parties.

Any credits required by this Section 47.5(c) shall be made

within 90 days following each anniversary of the

Implementation Date.