Southern Natural Gas Company

Seventh Revised Volume No. 1

Effective Date: 02/01/2001, Docket: RP01-205-001, Status: Effective

Substitute Third Revised Sheet No. 208 Substitute Third Revised Sheet No. 208 : Effective

Superseding: Third Revised Sheet No. 208

GENERAL TERMS AND CONDITIONS

(Continued)

34. NEGOTIATED RATE PROVISIONS

34.1 Notwithstanding anything to the contrary provided in COMPANY's FERC Gas Tariff,

COMPANY and SHIPPER may negotiate a rate for transportation service under any rate

schedule (Negotiated Rate). Said Negotiated Rate or Negotiated Rate formula shall

be set forth on Exhibit D or Exhibit F to the applicable Service Agreement

executed by COMPANY and SHIPPER. At the commencement of transportation service

pursuant to any Negotiated Rate or Negotiated Rate formula or prior to such

commencement, COMPANY shall file with the Commission either the contract or a

revised tariff Sheet No. 23 setting forth the name of SHIPPER, the contract

number, contract date and the Negotiated Rate or Negotiated Rate formula

applicable to such agreement. The maximum rate set forth in COMPANY's rate

schedules applicable to the service to which the Negotiated Rate applies (Recourse

Rate) shall be available for any SHIPPER that does not desire a negotiated rate

with COMPANY.

Negotiated Rate shall mean a rate for transportation service agreed upon by

COMPANY and SHIPPER. Such Negotiated Rate may be greater than or less than the

maximum charges stated in COMPANY's rate schedule for that service. For purposes

of allocation of capacity pursuant to Section 16 of the General Terms and

Conditions, SHIPPERS paying a Negotiated Rate which, when calculated on a 100%

load factor basis exceeds COMPANY's maximum rate for that service, would be deemed

to have paid the maximum Recourse Rate. In the event that a SHIPPER desires to

exercise its right of first refusal to continue service beyond the expiration date

of its firm service agreement pursuant to Section 20 of the General Terms and

Conditions, the highest rate that a SHIPPER must match is the maximum rate

applicable to such service as set forth in COMPANY's rate schedule for such

service.

34.2 Notwithstanding any provision of COMPANY's effective FERC Gas Tariff to the

contrary, COMPANY and SHIPPER may mutually agree in writing to rates, rate

components, charges, surcharges, or credits for services that differ from those

rates, rate components, charges, surcharges, or credits that are otherwise

prescribed, required, established or imposed by any applicable provision of

COMPANY's effective FERC Gas Tariff. If COMPANY agrees to such differing rates,

rate components, charges, or credits, then the Negotiated Rate(s) shall be

effective only for the period agreed upon by COMPANY. During such period, the

Negotiated Rate shall govern and apply to the SHIPPER's service and the otherwise

applicable rate, rate component, charge, or credit, which the parties have agreed

to replace with the Negotiated