Equitrans, L. P.

Original Volume No. 1

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Effective Date: 05/16/2010, Docket: RP10-616-000, Status: Effective

Second Revised Sheet No. 311 Second Revised Sheet No. 311

Superseding: First Revised Sheet No. 311

GENERAL TERMS AND CONDITIONS (Continued)

37. SECURITY COST TRACKER (SCT) MECHANISM

37.1 Generally. This section sets forth a limited mechanism for the recovery

of certain extraordinary costs incurred by Equitrans pursuant to (i) the

Commission's policy statement in Docket No. PL01-6-000 issued on

September 14, 2001, and/or (ii) any other federal, state or local

mandate requiring investment in similar security related infrastructure

to enhance the security on the Equitrans' system and reduce

vulnerability to malicious damage. The costs recoverable through the

SCT surcharge shall include the pretax return and depreciation expense

associated with such capital additions. The SCT surcharge shall be

expressed in dollars per Dth and shall be calculated based on projected

throughput under Rate Schedules, FTS, STS-1, ITS, and NOFT on a point-

to-point basis. Equitrans shall separately track all capital

expenditures related to system security made on and after December 31,

2005, the accumulated provisions for depreciation and deferred income

taxes, and the depreciation expense related thereto. Equitrans shall

use a fifteen percent (15%) pre-tax return on total invested capital for

the purpose of calculating the return component of any SCT surcharge

filing made pursuant to this section. All issues related to the

prudence of cost incurrence, qualification of the claimed costs for

recovery under this surcharge mechanism, and calculation of the charges

are preserved for protest and resolution in the annual filings to be

made under Section 37.2.

37.2 Filing of the SCT. Equitrans shall file the initial SCT surcharge and

all subsequent changes in such surcharge at least thirty (30) days prior

to April 1st of each year ("Effective Date"). Equitrans shall include

with each SCT filing an updated Statement of Rates setting forth the SCT

surcharge, the nature of the work undertaken, including a description of

such work and work papers detailing the calculation of such surcharge in

accordance with this Section 37.

37.3 Applicability. The SCT surcharge shall be assessed on a per dekatherm

basis and apply to all receipts by Equitrans, pursuant to Customer

nominations and after fuel retainage, under Rate Schedules FTS, STS-1,

ITS, and NOFT on a point-to-point basis. Equitrans will not apply the

SCT surcharge to gas nominated under Rate Schedule NOFT to the extent

that the volumes have been surcharged under Rate Schedules FTS, STS-1 or

ITS.

37.4 Calculation of the SCT Surcharge

a. Equitrans shall initially determine the amount of security costs

to be recovered in its SCT by calculating its actual cost of

investment in security-related gross plant, accumulated provisions

for depreciation and deferred income taxes, and depreciation

expense recorded on the books, as of each December 31st preceding

each Effective Date. The SCT-related gross plant balance as of

each December 31st shall be reduced by the corresponding

accumulated provisions for depreciation and deferred income taxes

to arrive at a SCT Rate Base. The SCT Rate Base shall be

multiplied by a fifteen percent (15%) pre-tax return on total

invested capital to arrive at a SCT Pre-Tax Return Amount. The

SCT Pre-Tax Return Amount shall be added to the security-related

depreciation expense recorded since the previous SCT calculation.