Panhandle Eastern Pipe Line Company, LP

THIRD REVISED VOLUME NO. 1

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Effective Date: 06/30/2004, Docket: RP04-321-000, Status: Effective

Original Sheet No. 311 Original Sheet No. 311 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

(2) The GSR Reservation Surcharge during the Initial

GSR Cost Collection Period shall be designed to

recover the applicable GSR Costs over the three

(3) year Initial GSR Cost Collection Period using

the applicable firm service design determinants

underlying Panhandle's then effective rates for

service under Rate Schedules FT, EFT, SCT, LFT

and HFT.

The GSR Reservation Surcharge shall be based on

one-third (1/3) of the applicable GSR Costs to be

recovered pursuant to this Section 18.3. Such

GSR Costs shall include carrying charges for the

Initial GSR Cost Collection Period.

The GSR Reservation Surcharge shall be adjusted

annually during the Initial GSR Cost Collection

Period to reflect changes in the effective

billing determinants under Rate Schedules FT,

EFT, SCT, LFT and HFT. Such revisions to the

GSR Reservation Surcharge will become effective

twelve (12) months after the effective date of

the rate filing to establish the Initial GSR Cost

Collection Period or subsequent adjustment to the

GSR Reservation Surcharge. At least thirty (30)

Days prior to the effective date of the annual

adjustment to the GSR Reservation Surcharge,

Panhandle shall file with the Federal Energy

Regulatory Commission and post, as defined in

Section 154.2(d) of the Commission's Regulations,

Tariff Sheet Nos. 4, 5, 6, 15 and 17, together

with supporting computations.

(3) Rates for interruptible service under Rate

Schedules IT and EIT shall be adjusted to permit

the recovery of the applicable GSR Costs during

the three (3) year Initial GSR Cost Collection

Period using the applicable interruptible service

design determinants underlying Panhandle's