Panhandle Eastern Pipe Line Company, LP

THIRD REVISED VOLUME NO. 1

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

Original Sheet No. 336 Original Sheet No. 336 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

(i) Panhandle will net all revenues received pursuant to

Sections 9.5(b), 12.11(g) 12.11(h), 12.16 and 12.17

of the General Terms and Conditions, Section 3.6(c)

of Rate Schedules EFT, SCT and HFT, Section 3.6 of

Rate Schedule EIT, Sections 3.6(d) and (e) of Rate

Schedule LFT and Section 4(a) of Rate Schedule GDS

against the reasonable incremental out-of-pocket

costs incurred for such revenues. Panhandle will

credit the net amount to those Shippers under Rate

Schedules FT, EFT, SCT, LFT and HFT that were not

billed pursuant to Sections 9.5(b), 12.11(g)

12.11(h), 12.16 and 12.17 of the General Terms and

Conditions, Section 3.6(c) of Rate Schedules EFT,

SCT and HFT, Section 3.6 of Rate Schedule EIT,

Sections 3.6(d) and (e) of Rate Schedule LFT and

Section 4(a) of Rate Schedule GDS, during the

applicable month ("Non-Offending Shippers"). Each

Non-Offending Shipper's credit shall be based on (a)

0.5 times the ratio of the actual revenues billed

for services to the Non-Offending Shipper during the

month to the actual revenues billed for services to

all Non-Offending Shippers and (b) 0.5 times the

ratio of the MDCQ of the Non-Offending Shipper for

the month to the total MDCQ of all Non-Offending

Shippers. Each Non-Offending Shipper's credit shall

be paid with a billing adjustment, including

supporting documentation, to the billing of charges

for service during the following month. Panhandle

shall file a report with the Commission twelve (12)

months after this Section 25.2(c)(i) becomes

effective showing the penalty revenues, the costs

netted against the penalty revenues, and the

resulting penalty revenue credits for each of the

twelve months. For each type of penalty in such

report, Panhandle shall also (1) identify its

incremental out-of-pocket costs that were caused by

shipper misconduct and the shipper misconduct that

caused the costs; (2) account separately for such

costs; and (3) provide supporting documentation of

the costs and the shipper misconduct that caused

them.