Northern Natural Gas Company

Fifth Revised Volume No. 1

Effective Date: 12/27/1994, Docket: RP88-259-071, Status: Effective

First Revised Sheet No. 242 First Revised Sheet No. 242 : Effective

Superseding: Original Sheet No. 242

GENERAL TERMS AND CONDITIONS

If a Responsible Shipper with the consent of the other party or

parties to a challenged contract has taken assignment of its

allocated share of a contract subject to the Reverse Auction prior

to a Commission determination with respect to the prudence of the

contract, and the prudence of such contract is successfully

challenged, then any Responsible Shipper may reassign its portion

of the contract to Northern within thirty (30) days of a final

order of the Commission with respect to the prudence issue.

Northern will refund, with carrying costs, any Reverse Auction

Cost associated with such Contract which it has recovered under

this Section, and credit to the GSR cost balance with carrying

charges any portion of price differentials found to be imprudent

which it has recovered through the GSR Cost Recovery Mechanism as

set forth in Section 25 of these GENERAL TERMS AND CONDITIONS,

within thirty (30) days of such order.

Northern's payment of Reverse Auction Costs under the Reverse

Auction to successful bidders are not subject to a prudence

challenge except as provided in Section 22.F. Northern, for a

contract withdrawn from the Reverse Auction, can pass through as a

Reverse Auction Cost no more than the lowest bid posted during the

reverse auction.

G. Filing. Northern will make a limited Section 4 filing(s) to

obtain Commission approval for direct billing of Reverse Auction

Costs pursuant to the mechanism described in this Section as such

costs are actually incurred by Northern.

22B. EXCESS ROYALTY COST CAP

Northern may file a limited Section 4 filing(s) to recover Excess Royalty costs

incurred prior to November 1, 1998. However, such filing(s) must be made no later

than May 1, 1999, unless such contract is in litigation which is pending on

May 1, 1999. Northern shall absorb twenty-five percent (25%) of all excess royalty

costs for amounts up to $30 million. Northern shall absorb fifty percent (50%) of all

excess royalty costs for amounts greater than $30 million. Northern shall not be

permitted to file for recovery of Excess Royalty costs which exceed $50 million,

exclusive of carrying charges and inclusive of any portion Northern may absorb

pursuant to Order No. 528. The recovery mechanism will be proposed in such filing.

If Northern seeks Order No. 636 recovery, Northern will request that the recovery will

be in the same manner as the GSR Cost Recovery Mechanism as set forth in Section 25 of

these GENERAL TERMS AND CONDITIONS. Any party may challenge the prudence and

eligibility of the costs under the proposed recovery mechanism in the proceeding to

recover the costs. However, Northern's total absorption under this provision shall

not exceed $10 million.