El Paso Natural Gas Company

Second Revised Volume No. 1A

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Effective Date: 04/01/2010, Docket: RP10-454-001, Status: Effective

Fifth Revised Sheet No. 323 Fifth Revised Sheet No. 323

Superseding: Fourth Revised Sheet No. 323

TRANSPORTATION GENERAL TERMS AND CONDITIONS

(Continued)

14. PENALTIES

14.2 Crediting of Penalties

(e) Hourly Scheduling Penalty.

(i) Should Transporter collect non-Critical and/or Critical

Condition hourly scheduling penalties, Transporter shall

credit the collected penalties to all firm and

interruptible Shippers by invoice credit, if available,

if not, then by check. However, Transporter will first

retain certain amounts for service if a Shipper would

have incurred a daily unauthorized overrun penalty if

not for being billed an hourly scheduling penalty

pursuant to the higher-of-test of footnote 7 contained

on the Statement of Rates. The amount to be retained

shall be equal to the applicable 100% load factor rate

for the applicable rate schedule multiplied by the daily

unauthorized overrun penalty quantities that were

compared under the computation supporting the higher-of-

test. Credits to Shippers shall be made on a pro rata

basis, based on a Shipper's transportation service

revenues paid each Month. The sum of the monthly

credits for a calendar year shall be made annually no

later than the March statement subsequent to the end of

the annual period.

(f) MDO/MHO Violation Penalties.

(i) Should Transporter collect non-Critical and/or Critical

Condition MDO/MHO violation penalties pursuant to Rate

Schedule OPAS, Transporter shall credit the collected

penalties to all firm and interruptible Shippers by

invoice credit, if available, if not, then by check.

However, Transporter will first retain certain amounts

for service where the DP Operator and the Shipper are

the same and where a Shipper would have incurred a daily

unauthorized overrun penalty if the DP Operator had not

been billed an MDO/MHO violation penalty pursuant to the

higher-of-test requirement of Section 4.4 of Rate

Schedule OPAS. The amount to be retained shall be equal

to the applicable 100% load factor rate for the

applicable transportation rate schedule multiplied by

the daily unauthorized overrun penalty quantities that

were compared under the computations supporting the

higher-of-test. Credits to Shippers shall be made on a

pro rata basis, based on a Shipper's transportation

service revenues paid each Month. The sum of the monthly

credits for a calendar year shall be made annually no

later than the March statement subsequent to the end of

the annual period.