Southern Natural Gas Company

Seventh Revised Volume No. 1

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Effective Date: 04/01/2001, Docket: RP01-242-001, Status: Effective

Substitute Original Sheet No. 95H Substitute Original Sheet No. 95H : Effective

Superseding: Original Sheet No. 95H

RATE SCHEDULE PAL

PARK AND LOAN SERVICES (continued)

(ii) COMPANY's prevailing operations require

COMPANY to notify SHIPPER that all or part of

SHIPPER's loaned quantities must be returned

to COMPANY, and SHIPPER fails to comply

within the specified time frame; and/or

(iii) the PAL account reflects a negative balance

at the termination date of the executed PAL

Agreement and COMPANY and SHIPPER have not

otherwise agreed to extend the termination

date; and/or

(iv) SHIPPER does not comply with the terms of the

loaned transaction.

(b) If, pursuant to Section 7.2(a)(i), COMPANY notifies

SHIPPER that receipt of SHIPPER's loaned quantities

must be suspended or be reduced, only those

quantities loaned in violation of the

notification shall be sold to SHIPPER at 150% of

the highest weekly index price as provided above.

(c) In the event the operational conditions on

COMPANY's system permit, COMPANY, at its option,

may forego its rights under Section 7.2(a)(iii)

above provided that SHIPPER agrees to implement a

new PAL transaction at a new negotiated rate(s) for

a period specified by COMPANY. COMPANY's agreement

to enter into a new transaction for a new period as

provided above shall not forego COMPANY's rights

under this section at the termination date of the

new PAL transaction.

(d) In the event that a PAL account for Loan service

reflects a positive balance at the termination date

of the executed PAL Agreement, those overpaid

quantities shall become the property of COMPANY at

no cost to COMPANY free and clear of any adverse

claims.