Portland Natural Gas Transmission System

Second Revised Volume No. 1

Effective Date: 09/01/2006, Docket: RP06-449-000, Status: Effective

Original Sheet No. 328 Original Sheet No. 328 : Effective

GENERAL TERMS AND CONDITIONS (Continued)

Notwithstanding any other provision in this Section, with

regard to service under Rate Schedule IT, Transporter reserves the right,

after one (1) Business Day's notice, to subordinate service to a Shipper with

respect to any service provided to that Shipper under a discounted rate or

negotiated rate(s) in order to provide service to another Shipper if such

subordination would result in a higher unit rate to Transporter. Transporter

will afford any Shipper whose service is being subordinated pursuant to this

provision an opportunity to renegotiate its Gas Transportation Contract to

increase its unit rate, during the period the Shipper's service is being

subordinated, to maintain its priority; provided, however, if a Shipper who is

paying a discount rate or negotiated rate(s) chooses to increase the unit rate

in response to the higher offer, it must do so within one (1) Business Day,

and Transporter is obligated to accept any such increase that equals or

exceeds the higher offer. Once Shipper exercises its right to pay the higher

rate and matches or exceeds the higher offer, then it retains its priority as

between Shippers requesting service at the same rate, and priority shall be

determined as in paragraph (b)(3) if the maximum rate will be paid, or

paragraph (b)(4) above if a rate less than the maximum rate will be paid. If

Shipper is unwilling to pay the higher rate, it may not offer at a later date

to pay the higher rate and reclaim its priority.

Where multiple Nominations have the same scheduling

priority as determined by this Section 7.4(b), Transporter will allocate

capacity by the ranking provided by Shipper in accordance with Section 7.

7.5 Scheduling.

Shipper's Nomination shall be deemed to be the Scheduled Quantity

if Transporter determines, pursuant to Section 7.4 above, that adequate

capacity is available to accommodate such Nomination.

(b) In the event that Transporter determines in accordance with

Section 7.4 above that it is unable to accept all or any part of any Shipper's

Nomination, Transporter shall advise Shipper by the time set forth in Section

7.2 for each Nomination cycle of the quantity of Gas, if any, that Transporter

is prepared to make available at each Receipt and Delivery Point under each

Gas Transportation Contract.

Shipper may provide an Intra-day Nomination to Transporter which shall be no

greater than the available capacity for each Receipt and Delivery Point. The

least of Shipper's revised Nomination, original Nomination, revised

Transporter's response to that Nomination or Shipper's Intra-day Nomination

for each Receipt and Delivery Point shall be deemed the Scheduled Quantity.