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. 337 Original Sheet No. 337 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

(ii) Panhandle will net all revenues received pursuant to

Section 27.4(b) against the reasonable incremental

out-of-pocket costs incurred for such revenues.

Panhandle will credit the net amount to those Non-

Offending Shippers under Rate Schedules WS, PS and

FS that were not billed pursuant to Section 27.4(b),

during the applicable month. 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 MDWQ of the Non-Offending Shipper for the month

to the total MDWQ 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)(ii) 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. 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.