Southern Natural Gas Company

Seventh Revised Volume No. 1

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Effective Date: 10/01/2004, Docket: RP04-523-000, Status: Effective

Sixth Revised Sheet No. 140 Sixth Revised Sheet No. 140 : Effective

Superseding: Fifth Revised Sheet No. 140

GENERAL TERMS AND CONDITIONS

(Continued)

be resolved below. The Estimated Imbalance Percentage shall be

equal to the sum of the estimated imbalances

(over-deliveries and under-deliveries) in effect for each of

SHIPPER'S above-referenced Service Agreements at the end of

the month, as posted on SoNet, ("Estimated Monthly

Imbalance") divided by the lesser of (i) the quantity of

gas deemed to be received or (ii) the quantity of gas

deemed to be delivered under all such agreements during the

month. If Shipper has elected to be allocated the

variances in deliveries at specified Delivery Points under

the Swing PDA, then such SHIPPER'S Estimated Monthly Imbalance Percentage

shall be determined by dividing its Estimated Monthly Imbalance

by the sum of (i) the lesser of the quantity of gas deemed

to be received or delivered under all of said SHIPPER'S

agreements during the month, and (ii) the quantity of gas

deemed to be delivered under third-party SHIPPERS'

transportation agreements at the Delivery Points where SHIPPER has

elected to be allocated the variances in deliveries during the month.

It is provided, however, that the denominator used in the calculation of

SHIPPER'S Net Imbalance Percentage and its Estimated Monthly Imbalance

Percentage shall exclude, if applicable, (i) any volumes allocated from

SHIPPER'S Tier I Supply Pool Balancing Agreements to the same SHIPPER'S Tier II

Supply Pool Balancing Agreements, and (ii) any volumes allocated from SHIPPER'S

Tier I or Tier II Supply Pool Balancing Agreements to the same SHIPPER'S

transportation agreements.

(b)(1) Subject to the provisions of subsections (e), (f) and (g) below, if SHIPPER

has accrued a Net Monthly Imbalance such that the total quantities

of gas received by COMPANY for SHIPPER'S account during the month

are less than the total quantities of gas delivered by

COMPANY for SHIPPER'S account during the month ("Negative

Imbalance") and such Net Monthly Imbalance is greater than

5,000 Dth, SHIPPER shall pay COMPANY for SHIPPER'S Net

Monthly Imbalance at the following prices specified for

each stated percentage that SHIPPER'S deliveries exceed its

receipts; provided, however, that the cash out price

applicable to SHIPPER'S Net Monthly Imbalance shall be the

price resulting from the lower of (i) SHIPPER'S Estimated

Imbalance Percentage for the month or (ii) SHIPPER'S actual

imbalance percentage for the month as defined in Section 14.1(a).

Percentage of Excess

Deliveries Price

0 to 2% 100% of High Price

>2 to 5% 100% of High Price

>5 to 10% 115% of High Price

>10 to 15% 125% of High Price

>15 to 20% 140% of High Price

>20% 150% of High Price