Southern Natural Gas Company

Seventh Revised Volume No. 1

Effective Date: 09/22/2004, Docket: RP04-494-000, Status: Effective

Eighth Revised Sheet No. 194 Eighth Revised Sheet No. 194 : Effective

Superseding: Seventh Revised Sheet No. 194

GENERAL TERMS AND CONDITIONS

(Continued)

28.2 Basis for the Annual Charge Adjustment Charge:

The Rate Schedules specified in Section 28.1 hereof shall include an Annual Charge Adjustment

unit charge (ACA unit charge) applicable to each Dth of gas transported thereunder in the

amount specified on the applicable tariff sheet. The ACA unit charge shall be added to the

volumetric rate of any Rate Schedule with a reservation charge.

28.3 Filing Procedure:

Changes to the ACA unit charge must be filed annually to reflect the annual charge unit rate

authorized by the Commission each fiscal year and are subject to the notice requirements of

Section 154.22 of the Commission's Regulations.

29.GAS RESEARCH INSTITUTE CHARGE ADJUSTMENT PROVISION

29.1 Purpose:

(a) The COMPANY has joined with other gas enterprises in the formation of a participation

in the activities and financing of Gas Research Institute (GRI), an Illinois not for profit

corporation. GRI has been organized for the purpose of sponsoring Research,

Development and Demonstration (RD&D) programs in the field of natural and

manufactured gas for the purpose of assisting all segments of the gas industry in

providing adequate, reliable, safe, economic and environmentally acceptable gas service

for the benefit of gas consumers and the general public.

(b) For the purpose of funding of GRI's approved expenditures, this Section establishes,

except as provided in the following provision, (i) a GRI Adjustment Surcharge as shown on the

applicable tariff sheets for the volumetric portion of COMPANY'S Rate Schedules FT,

FT-NN and IT (ii) a GRI Adjustment Demand Surcharge as shown on the applicable

tariff sheets for pipeline customers with load factors exceeding 50% and a GRI

Adjustment Demand Surcharge for pipeline customers with load factors of 50% or less.

Each Demand Surcharge is applicable to SHIPPER'S Transportation

Demand under COMPANY'S Rate Schedule FT and FT-NN in Volume No. 1 of

this FERC Gas Tariff. A customer's load factor percentage is determined

on an annual basis using the most current 12-month data available at the

time COMPANY prepares its annual tariff filing to implement the following year's GRI

surcharge. The percentage is calculated by utilizing each customer's actual firm

throughput as a percent of its annualized firm contract entitlement. It is provided that the

GRI Adjustment Surcharge applicable to the volumes, up to the Transportation Demand,

taken by SHIPPERS paying the Small Shipper Charge under Rate Schedules FT and FT-

NN shall be shown on the applicable tariff sheets.