Scg Pipeline Inc.

Original Volume No. 1

Effective Date: 11/01/2003, Docket: RP03-611-000, Status: Effective

Original Sheet No.122 Original Sheet No.122 : Superseded

GENERAL TERMS AND CONDITIONS

(continued)

In the event either of these publications or specific postings contained

therein is discontinued, Pipeline will revise this Section 12.7(d) to

substitute another price index generally accepted in the natural gas industry.

Until Pipeline receives approval from the Commission to use such substitute

index, Pipeline will continue to calculate the Index Price each Month based on

the remaining index.

Pipeline shall not calculate Shipper's Net Imbalance Percentage under

Section 12.7(a) above for a Month until all trades for such Month are

completed pursuant to Section 12.4.

12.8 System Balancing Cost Reconciliation Mechanism.

(a) The purpose of this Section 12.8 is to establish a mechanism to

reconcile through surcharges or credits, as appropriate, differences between

the amounts Pipeline receives for gas arising out of both the purchase and

sale of gas in order to resolve Shipper imbalances as provided for pursuant to

the this Section 12 and the operational balancing occurred on an upstream

pipeline.

(b) Pipeline shall maintain a System Balancing Cost

Reconciliation Mechanism (referred to in this Section 12 as the "Deferred

Account") in the manner described in this Section 12.8. Pipeline shall

calculate the difference between (a) the cost per Dt (i) of any sale or

purchase of gas to resolve imbalances and any other form of balancing

agreement between Pipeline and a pipeline operator entered into to facilitate

the allocation of Shippers' gas at pipeline interconnections, respectively,

and (ii) any assignment to or from Pipeline of gas to resolve Shipper

imbalances. If the difference is positive, the amount shall be credited to

the Deferred Account, and if negative, shall be debited (as a positive number)

to the Deferred Accounts.