Southern Natural Gas Company

Seventh Revised Volume No. 1

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Effective Date: 09/01/2009, Docket: RP09-427-002, Status: Effective

Third Revised Sheet No. 146 Third Revised Sheet No. 146

Superseding: First Revised Sheet No. 146

GENERAL TERMS AND CONDITIONS

(Continued)

Section 15.3 (continued)

such failure. If any such failure to make payment continues for twenty (20) days

or more, COMPANY may suspend the further transportation of gas upon ten (10) days'

prior written notice to SHIPPER and the Commission, but the exercise of such right

shall be in addition to any other remedy available to COMPANY; provided, however,

that if SHIPPER, in good faith, has disputed the amount of any such bills or parts

thereof and paid COMPANY in a timely manner such amounts as it concedes to be

correct and, at any time thereafter within thirty (30) days of a demand made by

COMPANY, shall furnish a good and sufficient surety bond in an amount and with

sureties satisfactory to COMPANY conditioned upon the payment of any amounts

ultimately found due upon such bills after a final determination, which may be

reached either by agreement or judgment of the courts, as the case may be, then

COMPANY shall not be entitled to suspend further delivery of gas unless and until

default be made in the conditions on such bond. In the event it is finally

determined or agreed that no payments were due from SHIPPER on such disputed bills,

then COMPANY will reimburse SHIPPER for the cost of procuring the surety bond

within ten (10) days after receipt of a detailed invoice therefor from SHIPPER.

15.4 Prepayment in the Event of Default:

Upon default in payment for a period in excess of twenty (20) days, COMPANY may

require as a condition to the continuation or recommencement of transportation

services a deposit or other acceptable credit arrangement in an amount equal to not

more than three estimated maximum monthly bills for transportation services.

15.5 Mutually Agreeable Prepayments

(a) Mutual Agreement of Prepayment

COMPANY may, from time to time in a manner not unduly discriminatory, mutually

agree with SHIPPERS to pay in advance for reservation rate charges under one

or more existing firm service agreement(s), or package(s) thereto or portion

thereof, for transportation service (including storage) or COMPANY may solicit

such bids for such prepayment requests through a posting on its electronic

bulletin board. In either case, COMPANY will post an open season to provide

any SHIPPER the opportunity to bid on prepaying its reservation charges. Such

posting will:

(i) set the minimum and maximum individual and aggregate dollar amount

of bids that COMPANY may accept;

(ii) set forth whether contingent bids would be allowed for SHIPPER to

withdraw all or part of its prepayment prior to the time in which

the prepayment would be credited to SHIPPER's contract under the

ordinary course of COMPANY's billing process;

(iii) set a reserve price (as either a percentage or dollar amount) from

the otherwise applicable reservation charges that SHIPPER would pay;

(iv) describe the conditions on bids (e.g., financing arrangements,

regulatory approvals, board or managerial consent, market

conditions) that COMPANY will and will not consider prior to

evaluating bids;

(v) provide a standard format for bids to be received from SHIPPERS;

(vi) limit the payment period, number of payments, forms of payment, and

other terms and conditions that COMPANY is willing to consider in

evaluating bids; and

(vii) specify the maximum term for which the prepayment would apply under

SHIPPER's contract.

Neither this provision nor any solicitation or negotiation by COMPANY under

this provision shall obligate COMPANY to accept any request for prepayment.

COMPANY reserves the right to reject, in a manner not unduly discriminatory,

a bid that contains terms, conditions or other provisions that qualify or

limit the offer from SHIPPER. COMPANY also reserves the right not to accept

any bid(s).