Southern Natural Gas Company

Seventh Revised Volume No. 1

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

Fifth Revised Sheet No. 141 Fifth Revised Sheet No. 141 : Effective

Superseding: Fourth Revised Sheet No. 141

GENERAL TERMS AND CONDITIONS

(Continued)

each stated percentage that SHIPPER'S receipts exceed its deliveries;

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 Receipts Price

0 to 2% 100% of Low Price

>2 to 5% 100% of Low Price

>5 to 10% 85% of Low Price

>10 to 15% 75% of Low Price

>15 to 20% 60% of Low Price

>20% 50% of Low Price

If the System Negative Imbalance (N) exceeds the System Positive

Imbalance (P) ("Minority Imbalance"), then the cashout price shall be the Index

Price. If P>N ("Majority Imbalance"), then the cashout price shall be the Low Price

or a percentage of the Low Price as set forth above.

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

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

100% of the Low Price, and quantities comprising the remaining

1% of the imbalance are priced at 85% of the Low 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.

(3) It is agreed, however, that in the event SHIPPER owes COMPANY

any payments under subsection (b) above from a previous month which

are past due, COMPANY shall have the right hereunder to offset

payments it owes to SHIPPER under this subsection (c) by such past

due amounts (inclusive of interest).

(d) System Positive Imbalance ("P") is equal to the

absolute value ("abv") of the sum of all

SHIPPERS' Positive Imbalances accrued during

the month.

System Negative Imbalance ("N") is equal to the

absolute value ("abv") of the sum of all

SHIPPERS' Negative Imbalances accrued

during the month.