Northern Natural Gas Company

Fifth Revised Volume No. 1

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Effective Date: 11/22/2003, Docket: RP03-398-000, Status: Effective

Third Revised Sheet No. 148 Third Revised Sheet No. 148 : Superseded

Superseding: Substitute Second Revised Sheet No. 148

RATE SCHEDULE SMS

SYSTEM MANAGEMENT SERVICE

1. AVAILABILITY

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This Rate Schedule is available to any Shipper with an effective Firm Throughput Service

Agreement as contained in Northern's FERC Gas Tariff ("Tariff"). The Shipper must also

have an effective System Management Service, Service Agreement (SMS Service Agreement) with

Northern in the form included in this Tariff prior to the commencement of service under

this Rate Schedule. All throughput related services and rates are applicable as provided

in this Tariff.

2. APPLICABILITY AND CHARACTER OF SERVICE

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System Management Service (SMS) is a companion service to Firm Throughput Service. SMS is

a delivery point service providing no-notice firm delivery above or below the Shipper's

daily scheduled amount under its corresponding Firm Throughput Agreement up to the

Shipper's SMS entitlement without incurring daily delivery variance charges. The SMS

entitlement begins after a five percent (5%) tolerance, or, for Small Customers, a

tolerance of the greater of five percent (5%) or 650 MMBtu ("tolerance") above and below

the scheduled volume is applied. To the extent Northern authorizes firm Throughput

Overrun, SMS will provide tolerance above or below the total scheduled quantity (firm

entitlement plus authorized overrun). However, Northern shall have the right to call a

System Overrun Limitation (SOL), a Critical Day or a System Underrun Limitation (SUL). The

SOL or Critical Day limits the ability for the SMS entitlement to be utilized above the

scheduled volume, including overrun, on any given day when such scheduled volume is in

excess of firm entitlement.

SMS volumes are the daily volume variance between (i) the amount scheduled at the delivery

point, plus or minus the tolerance, and (ii) the amount actually taken at the delivery

point unless Northern has called an SOL or Critical Day. If an SOL or Critical Day has been

called, SMS is not available above the MDQ, unless throughput overrun has been scheduled in

which case SMS is available below the scheduled level. If a SUL has been called, SMS is

available below the throughput scheduled and SMS is available above the scheduled level.

However, no five percent (5%) tolerance will apply below the Shipper's scheduled volume

before the positive DDVC's apply. However, Small Customers tolerance and negative DDVC

levels, as set forth above, apply at all times, even when an SUL is called. SMS volumes are

charged the SMS commodity charge. SMS service allows the Shipper to exceed its firm

entitlement, up to the SMS quantity, unless an SOL or Critical Day has been called. In

addition to the SMS demand and commodity charges, all applicable throughput charges will

also be assessed.

Also, see Section 48 of the GENERAL TERMS AND CONDITIONS of this Tariff, "Daily Delivery

Variance Charges (DDVC)," which sets forth how SMS service operates in conjunction with

DDVCs.

3. SMS QUANTITIES

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The Shipper may contract for any level of SMS (SMSQ) for an annual period up to a maximum

of the entitlement level of the corresponding Firm Throughput Agreement. SMS must be

designated for the zone or delivery points as stated in the corresponding Firm Throughput

Agreement and, upon written request prior to gas flow, is eligible at an alternate point(s).