Southern Natural Gas Company

Seventh Revised Volume No. 1

Effective Date: 04/01/1999, Docket: RP98-363-000, Status: Effective

Fourth Revised Sheet No. 139A Fourth Revised Sheet No. 139A : Effective

Superseding: Third Revised Sheet No. 139a

GENERAL TERMS AND CONDITIONS

(Continued)

14. RESOLUTION OF IMBALANCES AND ADJUSTMENT

14.1 Resolution of Monthly Imbalances:

(a) All imbalances accrued by SHIPPER under its transportation and

supply pool balancing agreements shall be resolved on a

monthly basis pursuant to the provisions herein. After

each month of transportation on COMPANY'S system, COMPANY will

calculate the imbalance which exists between the quantities of

gas allocated each day to SHIPPER for its account at the Receipt

Points during that month and the quantities of gas allocated each day

to SHIPPER for its account at the Delivery Points during that month.

Except with respect to imbalances accrued under a Liquefiables

Transportation Agreement which shall be resolved pursuant to Section

14.1(h) below, all such imbalances (overdeliveries and underdeliveries

to COMPANY) accrued by SHIPPER under each of its transportation

or supply pool balancing agreements (or any such agreements under which

SHIPPER has been appointed imbalance aggregation agent with authority to

make and receive payments under this section) will be combined to derive

a "Net Monthly Imbalance" (in Dth) for purposes of the following

calculations. SHIPPER'S Net Monthly Imbalance then will be divided

by the lesser of (i) the actual Dth's of gas received or (ii) the

actual Dth's of gas delivered under all such agreements during the

month to produce SHIPPER'S Net Imbalance Percentage for the month. If

SHIPPER has elected to be allocated the variances in deliveries at

specified Delivery Points under a Swing PDA, then such

SHIPPER'S Net Imbalance Percentage shall be

determined by dividing its Net Monthly Imbalance by the sum of (i) the

lesser of the actual Dth's received or delivered under all of said

SHIPPER'S agreements during the month, and (ii) the actual Dth's

allocated to third-party SHIPPERS' transportation agreements at the

Delivery Points where SHIPPER has elected to be allocated the variance

in deliveries during the month. In the event the Net Monthly Imbalance

calculated above under SHIPPER'S Service Agreement(s) varies from the

estimated imbalance(s) posted by COMPANY for such agreement(s) during

the month, then COMPANY shall also calculate an "Estimated Imbalance

Percentage" for that month as follows for purposes of determining the

maximum percentage at which SHIPPER'S Net Monthly Imbalance shall