Southern Natural Gas Company

Seventh Revised Volume No. 1

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Effective Date: 03/01/2005, Docket: RP04-523-000, Status: Effective

Sixth Revised Sheet No. 101 Sixth Revised Sheet No. 101 : Effective

Superseding: Fifth Revised Sheet No. 101

GENERAL TERMS AND CONDITIONS

(Continued)

(x) The affiliation, if any, of SHIPPER with COMPANY.

(b) Allocation of Capacity: Firm capacity on COMPANY'S system that is

available or turned back to COMPANY from time to time shall be allocated

pursuant to the following procedures:

(i) Subject to all requirements for submitting a valid request for

firm service herein and subject to the requirements of Section 20

of the General Terms and Conditions hereto, firm capacity will be

allocated to the valid request(s) that generate the highest net

present value ("NPV") to COMPANY. When two or more requests for

service are being evaluated under this section, requests evaluated

at the same time shall be considered together under the same criteria.

Net present value will be determined based on the discounted cash flow

of revenues to COMPANY produced, lost, or affected by the request(s)

for service. In determining the highest net present value, COMPANY

will consider objective criteria only. Such criteria may include,

without limitation, the Transportation Demand requested, the duration

of the service requested, the date on which the requested service

would commence, the applicable Reservation Charge, and such other

factors available based on the requests for service received by

COMPANY, including the cost(s) or cost of service attributable to

any facilities required by COMPANY to provide the service. COMPANY

may calculate the NPV on a per unit basis by dekatherm or on a

total revenue basis. The NPV shall include only revenues generated by the

reservation rate component or other form of revenue guarantee, as proposed

by the bidder(s). With respect to evaluating bids at less than

the maximum lawful rate, COMPANY reserves the right to evaluate bids

based on the percent of the maximum rate bid. For negotiated rate bids

proposing a reservation rate or other form of revenue guarantee, which

exceeds the maximum applicable reservation rate, the net present value

calculated for the bid may not exceed a net present value that is

calculated assuming that the maximum applicable reservation rate shall be

in effect during the full term proposed in the bid, in place of the

reservation rate(s) or other revenue guarantee(s) proposed in the bid. As

used in this Section, "revenue guarantee" shall mean a volumetric or usage

rate bid along with a minimum throughput commitment. In performing a net

present value evaluation of a negotiated rate bid proposing a volumetric

or usage rate along with a minimum throughput commitment, Seller shall

consider only the fixed costs proposed to be recovered through the

volumetric or usage rate bid in addition to any reservation rate included

in the bid. The net present value discount factor used by COMPANY will be

applied consistently to all requests for capacity being evaluated at the

same time. COMPANY may specify a maximum term to be bid. For purposes of

its NPV evaluation, COMPANY may consider the aggregate NPVs of two or more

bids.