Southern Natural Gas Company

Seventh Revised Volume No. 1

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

Fourth Revised Sheet No. 140A Fourth Revised Sheet No. 140A : Effective

Superseding: Third Revised Sheet No. 140A

GENERAL TERMS AND CONDITIONS

(Continued)

If the System Negative Imbalance (N) exceeds the

System Positive Imbalance (P) ("Majority Imbalance"), then the

cashout price shall be the High Price or a percentage of the

High Price as set forth above. If P>N ("Minority Imbalance")

then the cashout price shall be the Index Price.

For purposes of determining the tier at which a Majority

Imbalance will be cashed out, the price will apply

only to quantities within a tier. For example, if there

is a 6% imbalance, quantities that comprise the first 2%

of the imbalance are priced at 100% of the High

Price, quantities comprising the next 3% of the imbalance are priced

at 100% of the High Price, and quantities comprising

the remaining 1% of the imbalance are priced at 115%

of the High Price.

(2) Subject to the provisions of subsections (e), (f) and

(g) below, if SHIPPER'S Net Monthly Imbalance is less

than or equal to 5,000 Dth, SHIPPER shall pay COMPANY

for SHIPPER'S Net Monthly Imbalance at the Index Price.

PER has accrued a Net Monthly Imbalance such that the total quanti-

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

month are greater than the total quantities of gas delivered by

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

Imbalance") and such Net Monthly Imbalance is greater than 5,000 Dth,

COMPANY shall pay SHIPPER for its Net Monthly Imbalance at the

following prices specified for