Southern Natural Gas Company

Seventh Revised Volume No. 1

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

First Revised Sheet No. 147 First Revised Sheet No. 147

Superseding: Original Sheet No. 147

GENERAL TERMS AND CONDITIONS

(Continued)

The objective criteria for evaluating NPV may include, without limitation, the quantity of

prepayment bid, the number of months' charges bid, the date on which the prepayment would be

received and applied to charges, and such other factors available and included in the bids

that COMPANY has chosen to evaluate. The NPV shall include only revenues generated by the

reservation rate component(s). With respect to evaluating bids at less than either the

recourse, negotiated or discounted rate otherwise applicable to SHIPPER's charges, COMPANY

reserves the right to evaluate bids based on the percent of the maximum rate bid. For

negotiated rate COMPANY may specify a maximum term to be bid. For purposes of its NPV

evaluation, COMPANY may consider the aggregate NPVs of two or more bids.

(c) Prorating of Prepayment Offers

If COMPANY receives two (2) or more bids that produce comparable net present values, then

aggregate amount of the prepayments to be accepted will be allocated to the comparable requests

on a pro rata basis. A party must specify in its request whether it is willing to accept a

prepayment on a pro rata basis pursuant to this Section. If any party declines to accept a

prorated prepayment, such party's request shall be null and void and COMPANY shall be entitled

to reallocate the prepayment among the other comparable requests.

(d) Acceptance of Prepayment Offers

COMPANY's posting, and any updates thereto, may specify the deadline for bids, the time that

COMPANY may take to evaluate and compare bids, and the manner in which offers will be accepted.

Unless specified otherwise in the posting, bids for prepayment are binding on shipper.

(e) Posting of Accepted Prepayments

COMPANY shall post a summary of the prepayment offer(s) accepted by COMPANY without disclosing

the identity of the SHIPPER.

(f) Other Provisions

Prepayments received by COMPANY under this section shall not qualify as security deposits for

purposes of creditworthiness, nor shall security deposits for purposes of creditworthiness be

considered as prepayments under this section.

16. ALLOCATION OF CAPACITY AND THE COMPANY'S MERCHANT SERVICE GAS SUPPLY

16.1 Applicability of this Section 16:

The allocation of capacity among all transportation services in times of transmission capacity

constraints and/or the allocation of gas among COMPANY'S sales services in times of gas supply

deficiencies in the COMPANY'S gas supply shall be governed by the provisions of this Section

16.

16.2 Allocation of Transmission Capacity to Firm and Interruptible Transportation

Services:

(a) If, on any day, the COMPANY determines it has insufficient transmission capacity to

serve all SHIPPERS' firm and interruptible transportation services for that day, the

COMPANY shall first allocate all of its available transmission capacity to firm

transportation services.

(b) If the COMPANY further determines that it has insufficient transmission capacity to

serve all of its firm transportation services on that day, the COMPANY shall allocate

all of its reduced transmission capacity to the firm transportation services only based

on the ratio of each SHIPPER'S total Transportation Demand to the total Transportation

Demand of all firm transportation SHIPPERS. Each firm transportation SHIPPER shall be

allocated its proportionate share of the available transmission capacity based on its

percentage share calculated from this ratio.