Iroquois Gas Transmission System, L.P.

FIRST REVISED VOLUME NO. 1

Effective Date: 09/01/1993, Docket: RS92- 17-004, Status: Effective

Original Sheet No. 83 Original Sheet No. 83 : Effective

19. CONSTRUCTION OF LATERAL FACILITIES POLICY

Transporter may invest in lateral and appurtenant

facilities necessary to increase service to existing Shippers

or to allow Transporter to provide service to a new Shipper

on a non-discriminatory basis under the following conditions:

(a) Annual service revenues generated from such new

or increased service shall be sufficient to at least

equal the cost of service associated with such

facilities. Such cost of service shall be calculated

to include, without limitation, the following:

(i) the cost of service associated with

transporting gas to the proposed facilities

on Transporter's mainline;

(ii) the incremental operating expenses

Transporter may incur in operating the

proposed facilities, including but not

limited to administrative, operation and

maintenance, and ad valorem and other taxes

consistent with those reflected in

Transporter's most recent rate filing;

(iii) the estimated capital cost of the proposed

facilities, which shall be calculated using

the following objective criteria: the cost

of materials shall be estimated based on

recently obtained quotes from major

industry recognized materials sources, and

the cost of construction will be estimated

based on per-mile construction costs

experienced by Transporter during

construction in areas with similar

geographical, geological and demographic

characteristics, adjusted for the year of

the proposed construction and any site-

specific characteristics, which capital

costs shall be assumed to be depreciated

over the life of the proposed new service;

and,