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. 315 Original Sheet No. 315 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

18.4 Treatment of Other Transition Costs

This Section 18.4 establishes procedures by which

Panhandle will recover the costs of restructuring its

services in accordance with FERC Order No. 636, Order No.

636-A and Order No. 636-B and 18 C.F.R. Part 284 other

than Gas Supply Realignment Costs, the recovery of which

shall be governed by Section 18.3 of these General Terms

and Conditions.

(a) Costs of New Facilities

Panhandle shall be entitled to file under Section 4

of the Natural Gas Act and the Commission's

Regulations and recover the capital costs and other

costs incurred for, and in connection with providing

the restructured services in accordance with Order

No. 636, Order No. 636-A and Order No. 636-B.

(b) Stranded Costs

Panhandle has incurred costs associated with

facilities and contracts to provide services under

its Former Tariff. In the event the facilities and

contracts related to these costs cease to be required

as a result of the restructuring of service,

Panhandle shall be entitled to file under Section 4

of the Natural Gas Act and the Commission's

Regulations and recover such costs.

(c) Upstream Transition Costs

Panhandle shall be entitled to file under Section 4

of the Natural Gas Act and the Commission's

Regulations and recover the amounts it has been

billed by other pipelines attributable to their

service restructurings required by Order No. 636,

Order No. 636-A and Order No. 636-B to the extent

such costs are not recovered pursuant to Section 18.3

of these General Terms and Conditions.