Paiute Pipeline Company

Second Revised Volume No. 1-A

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Effective Date: 12/07/2003, Docket: RP04- 51-000, Status: Effective

Second Revised Sheet No. 88 Second Revised Sheet No. 88 : Effective

Superseding: First Revised Sheet No. 88

GENERAL TERMS AND CONDITIONS

(Continued)

5. OVERRUN AND UNDERRUN, BALANCING AND PENALTY PAYMENTS (Continued)

5.3 Balancing: (Continued)

(1) If an upstream pipeline indicates that the total

quantities delivered to Paiute from such pipeline

during the month have created a cumulative imbalance

such that cumulative delivered quantities are less

than ninety-five percent (95%) or greater than one

hundred five percent (105%) of the total of the cumu-

lative daily quantities scheduled for receipt by Paiute

at the applicable Receipt Point under Paiute's Rate

Schedules FT-1 and IT-1 at the end of that month, the

following shall apply:

a. Any Shipper whose cumulative monthly imbalance falls

outside a tolerance range of plus or minus five per-

cent (5%) of the sum of Shipper's daily scheduled

quantities at the end of the month shall be notified

by Paiute. Shipper shall have forty-five (45) days

after notification by Paiute to reduce its cumulative

imbalance to a level that is within such acceptable

tolerance range. The makeup of imbalance gas in the

forty-five (45) day period shall include any further

monthly cumulative imbalance quantities incurred

after the notification to Shipper through the forty-

fifth (45th) day.

b. In the event Shipper fails to reduce its cumulative

imbalance as prescribed pursuant to Section

5.3(d)(1)a hereof, Shipper shall be assessed a

penalty, but only in the event that Paiute is

assessed penalties by the upstream pipeline for a

cumulative monthly imbalance. In such event, Paiute

shall recover from its Shippers an amount of penalty

revenues equal to the amount that Paiute has been

assessed by the upstream pipeline. Paiute shall

allocate such penalty amount among its Shippers on a

pro rata basis, based upon each Shipper's remaining

imbalance quantity that is outside of the tolerance

range specified in Section 5.3(d)(1)a hereof.

(2) If the upstream pipelines indicate that the total

quantities delivered to Paiute from each pipeline at

the end of the month are within a tolerance range of

ninety-five percent (95%) to one hundred five percent

(105%) of the total of the daily quantities scheduled

for receipt by Paiute at the applicable Receipt Point

under Paiute's Rate Schedules FT-1 and IT-1 at the end

of that month, no penalties shall apply.