Southern Natural Gas Company

Seventh Revised Volume No. 1

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Effective Date: 09/01/2009, Docket: RP09-427-000, Status: Suspended

Second Revised Sheet No. 146 Second 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 firm Rate

Schedules for transportation service (including storage). In addition, COMPANY may

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

bulletin board and may, in its posting:

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

that COMPANY may accept;

(ii) choose to reject bids that allow SHIPPER to withdraw all or part of its

prepayment prior to the time in which the amount of prepayment would be

reduced through the ordinary course of COMPANY's billing process;

(iii) set a reserve price indicating the highest discount (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; and

(vi) limit the period of time, forms of payment, and other terms and conditions

that COMPANY is willing to consider in evaluating bids.

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).

(b) Evaluation of Prepayment Offers

In the event COMPANY does not reject SHIPPER's bid, and the bid(s) in the aggregate

offer to prepay more than the maximum amount set out by COMPANY in its solicitation,

then the bid(s) will be evaluated using objective criteria. The maximum aggregate dollar

amount of bids that COMPANY will accept will be allocated to the valid bid(s) that

generate the highest net present value ("NPV") to COMPANY. When two or more bids for

prepayment are being evaluated under this section, bids evaluated at the same time shall

be considered together under the same criteria. NPV will be determined based on the

discounted cash flow of revenues to COMPANY produced, lost, or affected by the bid(s).