Horizon Pipeline Company, L.L.C.

Original Volume No. 1

Effective Date: 04/18/2002, Docket: CP00-129-001, Status: Effective

Original Sheet No. 236 Original Sheet No. 236 : Effective

GENERAL TERMS AND CONDITIONS

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(1) First, the Penalty Funds will be used to

compensate Horizon for any extraordinary out-of-pocket costs it

has incurred (including any compensation Horizon agreed to provide

for voluntary actions) to alleviate the conditions which resulted

in the Critical Time.

(2) Second, the Penalty Funds will be used to

compensate Shippers that were not penalized and that complied with

Operational Flow Orders resulting in the Shipper going out of

balance to the benefit of the system, that were adversely affected

by curtailment of any firm service, that had their gas

confiscated, or that took voluntary actions to aid the system

(collectively, "Complying Shippers"). To the extent sufficient

Penalty Funds are available, the compensation for a Complying

Shipper will be equal to the volumes by which the Complying

Shipper was out of balance to the benefit of the system plus the

volumes of the curtailment, confiscation or voluntary action,

multiplied by the greater of (i) $15.00 or (ii) the sum of three

hundred percent (300%) of the highest authorized overrun rate

which can be applicable to an FTS Agreement on Horizon's system

pursuant to Section 10 of these General Terms and Conditions plus

three hundred percent (300%) of the highest Weekly Index Price

used to determine the Average Monthly Index Price (determined in

accordance with Section 11) for the month in which the Complying

Shipper's beneficial imbalance, curtailment, confiscation or

voluntary action took place. If there are insufficient Penalty

Funds [before or after the collection from the additional billings

provided for in subsection (b) hereof] to fully compensate the

complying Shippers as described herein, the remaining Penalty

Funds will be prorated among the Complying Shippers based on the

volumes by which the Complying Shipper was out of balance to the

benefit of the system plus the volumes of the curtailment,

confiscation or voluntary action.

(3) Last, any remaining Penalty Funds will be

refunded pro rata based on confirmed nominations to all Complying

Shippers and other Shippers using the system during the Critical

Time that did not incur penalties or Balancing Service Charges.