Northern Natural Gas Company

Original Volume No. 2

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Effective Date: 04/01/1992, Docket: RP91-181-004, Status: Effective

Seventh Revised Sheet No. 1E Seventh Revised Sheet No. 1E : Effective

Superseding: Substitute Sixth Revised Sheet No. 1E

GENERAL TERMS AND CONDITIONS

1. Rate Adjustment to Reflect Changes in Gas Purchased Costs.

(Continued).

1.2 Definitions. (Continued)

(d) Total System Sales - the sum of all Volume 1 tariff firm sales and

Volume 2 tariff sales on Northern's system including the ethane and

shrinkage sales to Enron Gas Products Company at Bushton, Kansas.

All sales will be determined on a 1,000 Btu equivalent basis.

(e) Monthly Deferrals - each month, Account 191 shall be debited

(underrecovery) or credited (overrecovery) with an amount equal to

the difference between the total gas purchased costs incurred each

month and the total gas purchase expense recovered through sales

revenue. Total commodity gas purchased costs will be adjusted to

reflect storage activity, nonconcurrent exchange activity, gas used

in construction, the effect of concurrent exchange activity and the

cost of ethane and/or ethane mixtures (E/P mix) injected into its

system supply as purchased gas costs.

The demand and commodity amount deferred into account 191 each month

shall be adjusted by the exit fee assessed on any abandonment of

firm sales entitlement as set forth in Section 1.7 of the tariff.

(f) Current Adjustment - is the current weighted average projected

purchased gas costs (as reflected in the current PGA rate) less the

weighted average projected purchased gas costs reflected in the

effective period of the previous scheduled PGA. The cumulative

adjustment is the current weighted average projected purchased gas

costs (as reflected in the current PGA) less the base tariff rate as

defined above in Section 18.2(c).

1.3 Frequency of Change in Base Average Gas Purchased Cost.

(a) Northern's Base Average Gas Purchased Cost will be adjusted on a

quarterly basis according to the following schedule: