Granite State Gas Transmission, Inc.

Third Revised Volume No. 1

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Effective Date: 03/22/2001, Docket: RP99-509-000, Status: Effective

Original Sheet No. 339 Original Sheet No. 339 : Superseded

GENERAL TERMS AND CONDITIONS

(continued)

35. NEGOTIATED RATES

Pipeline and Customer may mutually agree on a negotiated rate formula with respect to

rates, rate components, charges, or credits differing from the otherwise applicable recourse

rate under Rate Schedules FT-1, FT-NN, and IT-1.

35.1 Definition

A negotiated rate may be less than, equal to, or greater than the maximum recourse

rate; shall not be less than the minimum recourse rate; may be a rate design other

than straight fixed-variable; and may include a minimum quantity.

35.2 Limitations

This Section 35 does not authorize the negotiation of terms and conditions of service.

35.3 Recourse Rate Availability

The recourse rate will be available to any customer that does not wish to

negotiate a rate.

35.4 Allocation of Capacity

Under any circumstances where allocation of capacity is determined by the rate being

paid, a negotiated rate Customer paying a rate higher than the maximum recourse rate

will be deemed to be paying a rate equal to such maximum recourse rate.

35.5 Bidding for Capacity

The cap for bidding for capacity under the right of first refusal provisions in

Section 30 of the General Terms and Conditions of this FERC Gas Tariff is the

maximum recourse rate.

35.6 Capacity Release

The release of capacity under a negotiated rate agreement is capped at the maximum

recourse rate; provided, however, the negotiated rate Customer will continue to be

obligated to pay Transporter the difference by which the negotiated rate exceeds the rate

paid by the Replacement Customer. Transporter and a negotiated rate Customer may agree

upon payment obligations and crediting mechanisms which vary from or are different

from those set forth in Transporter's capacity release provisions.

35.7 Accounting Treatment

Transporter will establish a new sub-account to record the revenues received from any

negotiated rate transactions and shall maintain supporting information at a level of

detail that would be sufficient for Natural Gas Act Section 4 rate change filing

purposes. Transporter will keep separate and identifiable each volume transported,

billing determinant, rate component, surcharge, and revenue associated with a

negotiated rate to permit filings in the form of Statements G, I, and J in future rate

proceedings.

35.8 Filing Requirement

Transporter will file, prior to the commencement of service under a negotiated rate

agreement, a tariff sheet reflecting the customer's name, rate schedule, negotiated

rate, contract quantities, and points of receipt and delivery. Such sheet also affirms

that actual negotiated rate agreements do not deviate in any material respect from the

form of service agreements.