Northern Natural Gas Company

Fifth Revised Volume No. 1

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Effective Date: 11/01/1993, Docket: RS92- 8-004, Status: Effective

Original Sheet No. 241 Original Sheet No. 241 : Effective

GENERAL TERMS AND CONDITIONS

D. Payment to Successful Bidders. Northern shall remit the amount of

the winning bid to the successful bidder in the Reverse Auction in

pro rata installments within sixty (60) days after the end of each

remaining contract year, with appropriate carrying charges as

determined in accordance with Section 154.38(d) of the Commission

regulations. However, in the event that the other party or

parties to the assigned contract notify Northern of the assignee's

non-performance under the contract within thirty (30) days after

the end of a contract year, then Northern will retain the pro rata

installment until such non-performance is rectified or the

dispute regarding such non-performance under the contract is

resolved.

E. Recovery of Reverse Auction Costs. The unpaid balance in each

Responsible Shipper's Reverse Auction Account, and associated

carrying costs, as determined in Section 154.38(d) of the

Commission regulations, will be direct billed over a period of no

more than five (5) years.

The Responsible Shipper and Northern may agree to a direct bill

of the Reverse Auction Account over a period of less than five (5)

years or pay the amount as a lump sum.

Billing and payment of the amounts will be accordance with

Section 8 of these GENERAL TERMS AND CONDITIONS.

F. Prudence Challenges. By May 17, 1993 any Responsible Shipper may

challenge the prudence of an underlying contract subject to the

Reverse Auction process by filing such challenge with the

Commission in Docket No. RS92-8. This challenge relates only to

the underlying contract and does not relate to prudence challenges

set forth in Section 22.F. In such event, Northern will request

the Commission to establish an expedited proceeding to resolve any

prudence challenge prior to November 1, 1993. Where consent of a

party to a contract subject to the Reverse Auction is necessary

for assignment, such party shall not be obligated to provide its

consent to or disapproval of the assignment until any pending

prudence challenge is resolved by the Commission.

In the event a prudence challenge is not resolved by the

Commission prior to November 1, 1993, and the party or parties to

a contract that has been challenged refuse to consent to

assignment until such resolution, Northern will continue to pay

costs incurred under the challenged contract to meet its minimum

contractual obligations. Northern will pass through any Account

No. 858 Costs as Stranded Account No. 858 Costs pursuant to

Section 24 of the GENERAL TERMS AND CONDITIONS and will pass

through any price differential associated with the purchase and

resale of gas under a Canadian gas supply contract subject to the

Reverse Auction process under the GSR Cost Recovery Mechanism

pursuant to Section 25 of the GENERAL TERMS AND CONDITIONS.

However, Small Customers and any Shippers who have taken their

initial allocation of a contract in the Reverse Auction, will be

exempt from such costs. Any charges found to be imprudent shall

be subject to refund with carrying charges. Any price

differentials associated with a challenged contract recovered

under the GSR Cost Recovery Mechanism shall not count toward the

GSR Cost Cap provided for under Section 25 of the GENERAL TERMS

AND CONDITIONS.