*North Baja Pipeline, LLC*

*Original Volume No. 1*

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Effective Date: 07/30/2008, Docket: RP09-208-000, Status: Effective

**Second Revised Sheet No. 174 **Second Revised Sheet No. 174

Superseding: First Revised Sheet No. 174

GENERAL TERMS AND CONDITIONS OF SERVICE

(Continued)

19. CAPACITY RELEASE (Continued)

`

19.7 Allocation of Parcels (Continued)

(a) Primary Allocation (Continued)

Option 2 - Present Value

Bids will be given priority based on the net present value

per Dth for the term of the bid according to the following

formula:

n

(1 + i) -1

Present Value per = P * R * __________

n

i (1 + i)

where:

P = percent of the maximum authorized rate or charge that

the Replacement Shipper is willing to pay.

R = Rate or charge calculated as: The maximum authorized

reservation charge [or a volumetric equivalent of the

maximum reservation charge applicable to the Parcel on a

one hundred percent (100%) load factor basis] in effect

at the time of the bid for service from the same receipt

point to the same delivery point under the Releasing

Shipper's rate schedule.

For short-term capacity releases not subject to a rate

cap, P * R shall equal a Replacement Shipper's bid in

terms of absolute dollars and cents per Dth.

i = FERC's annual interest rate divided by 12.

n = number of periods for which the bidder wishes to

contract, not to exceed the maximum periods to be

released by the Releasing Shipper. For releases greater

than or equal to one (1) month, the period is the number

of months. For releases less than one (1) month the

period is the number of days.

A bid queue will be maintained for each individual

Parcel.

(Continued)