Kentucky West Virginia Gas Company

Third Revised Volume No. 1

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Effective Date: 06/01/1997, Docket: RP97-104-001, Status: Effective

First Revised Sheet No. 167 First Revised Sheet No. 167 : Superseded

Superseding: Original Sheet No. 167

GENERAL TERMS AND CONDITIONS (Continued)

balance in Account No. 191. Any underrecoveries determined

after such nine-month period will not be recoverable. All

refunds received, however, even if after the termination of

Pipeline's PGA, will be refunded to the Customers that were

subject to the surcharge or credit.

(b) Gas Supply Realignment Costs

Gas supply realignment costs are those costs incurred by

Pipeline in reforming or terminating its existing gas supply

contracts in connection with its transition to an unbundled

transporter of natural gas under Order No. 636. Pipeline

shall be entitled to file a limited Section 4 filing under

the Natural Gas Act to collect 100% of its actual prudently

incurred gas supply realignment costs after the effective

date of this Section 31. Ninety percent (90%) of such

prudently incurred costs shall be recovered through a

reservation surcharge assessed against Part 284 firm service

Customers, and allocated on the basis of each customer's

currently effective maximum daily contract quantity

entitlement subject to adjustment as such entitlements are

changed during the period in which the surcharge will be in

effect. Ten percent (10%) of such costs shall be recovered

from Part 284 interruptible service Customers through

interruptible rates as a cost of providing such service.

(c) New Facilities Costs

New facilities costs are those costs incurred by Pipeline in

expanding and upgrading its facilities in order to meet the

operational and service requirements of Order No. 636.

Pipeline shall be entitled to file a general Section 4

filing under the Natural Gas Act to collect 100% of its new

facilities costs after the effective date of this Section.

(d) Stranded Costs

Stranded costs are those costs incurred by Pipeline in

connection with its former bundled sales services which

cannot be included in the base rate applicable to the new

unbundled services which Pipeline is required to offer under

Order No. 636. Pipeline shall be entitled to file a general

Section 4 filing under the Natural Gas Act to collect 100%

of its stranded costs after the effective date of this

Section.