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. 691 Original Sheet No. 691 : Effective

RATE SCHEDULE DVS (Continued)

DELILVERY VARIANCE SERVICE

FORM OF SERVICE AGREEMENT

levels are actually achieved or only with respect to Quantities below

a specified level; (c) only during specified time periods; (d) only

to specified Point(s) of Delivery, mainline segments, transportation

paths or defined geographical areas; (e) in a specified

relationship to the Quantities actually delivered (i.e., that the

rates shall be adjusted in a specified relationship to Quantities

actually delivered at the specified Point of Delivery); or (f) based

on published index prices for specific receipt or delivery points or

other agreed upon pricing reference points for price determination

(Such discounted rate may be based on the published index price point

differential or arrived at by formula. Any service agreement

containing an index based discount will identify what rate component

is discounted. To the extent the firm reservation charge is

discounted, the index price differential rate formula shall be

calculated to state a rate per unit of MDVQ.); provided, however,

that any such discounted rate set forth above shall be between the

Maximum Rate and Minimum Rate applicable to the service provided

under this Agreement. In addition, the discount agreement may

include a provision that if one rate component which was at or below

the applicable Maximum Rate at the time the discount agreement was

executed subsequently exceeds the applicable Maximum Rate due to a

change in Panhandle's Maximum Rates so that such rate component must

be adjusted downward to equal the new applicable Maximum Rate, then

other rate components may be adjusted upward to achieve the agreed

overall rate, so long as none of the resulting rate components exceed

the Maximum Rate applicable to that rate component. Such changes to

rate components shall be applied prospectively, commencing with the

date a Commission order accepts revised tariff sheets. However,

nothing contained herein shall be construed to alter a refund

obligation under applicable law for any period during which rates

which had been charged under a discount agreement exceeded rates

which ultimately are found to be just and reasonable. Any

discount(s) shall be effective only on a prospective basis and as

specified in the written agreement between Panhandle and DVS Party.

From time to time Panhandle and Shipper may agree to a

Negotiated Rate for a specified term for service hereunder.

Provisions governing such Negotiated Rate and term shall be set forth

on Exhibit A hereto.

ARTICLE 4 - FUEL REIMBURSEMENT

In addition to collection of the rates and charges provided for

in Article 3, Panhandle shall retain the percentage provided pursuant

to Rate Schedule DVS of the Quantity of Gas applied to the Delivery

Variance Service each Day, for reimbursement in kind from DVS Party

for fuel usage and unaccounted-for line loss.