Southern Natural Gas Company

Seventh Revised Volume No. 1

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

Sixth Revised Sheet No. 148 Sixth Revised Sheet No. 148

Superseding: Fourth Revised Sheet No. 148

GENERAL TERMS AND CONDITIONS

(Continued)

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.

the COMPANY'S transmission system, the COMPANY'S allocation orders shall

also be limited to that portion or portions of the COMPANY'S transmission

system. For purposes of allocating the transmission capacity on each

limited portion of the COMPANY'S system, the COMPANY shall first allocate

its available transmission capacity to all firm transportation services up

to the extent of its transmission capacity in such portion or portions of

its system. If the COMPANY further determines that it has insufficient

transmission capacity on the constrained part or parts of its transmission

system to serve all of the firm transportation services on that portion or

portions on any day, the COMPANY shall allocate all of its reduced

transmission capacity on that portion or portions of its system to the firm

transportation services based (i) first on those specific package(s) that

have firm capacity on the path that is being limited; and (ii) second on the

ratio of each SHIPPER'S total MDDQ for its package(s) at the Delivery Points

located on or downstream of the constrained portion or portions of the

transmission system to the total Transportation Demand of all firm

transportation SHIPPERS in effect at such Delivery Points on or downstream

of the constrained portion or portions of the transmission system. Each

SHIPPER shall be allocated its proportionate share of the available

transmission capacity based on its percentage share calculated from this

ratio.

(d) If the COMPANY does not have to limit its firm transportation services on a

day, the COMPANY shall allocate the remaining transmission capacity on its

system to interruptible services. If the remaining transmission capacity is

insufficient to satisfy all of the nominations for interruptible services,

the interruptible SHIPPERS shall be served within the remaining capacity of

the COMPANY'S transmission system with capacity allocations made in the

following order of priority with limitations within each priority implemented

on a pro-rata basis on the basis of the nominations confirmed for each

service provided, however, COMPANY shall not be required to limit or allocate

any interruptible service under any interruptible rate schedule if COMPANY

determines that such service does not affect or otherwise cause the

limitation of other interruptible services: