Southern Natural Gas Company

Seventh Revised Volume No. 1

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

Original Sheet No. 212K Original Sheet No. 212K

GENERAL TERMS AND CONDITIONS

(Continued)

43. Hurricane Surcharge

43.1 Purpose:

The purpose of this Section 43 is to establish a mechanism to recover through a volumetric

surcharge the costs incurred by COMPANY resulting from any hurricane or tropical storm named

by the U.S. National Oceanic and Atmospheric Administration or the U.S. National Weather

Service ("Hurricane"), or successor agency, as such costs are eligible pursuant to Section

43.2.

43.2 Definition of Eligible Costs

The costs eligible for reimbursement through the Hurricane Surcharge ("Eligible Costs") are

the capital and operations and maintenance expenses including the cost of labor, material,

rental equipment, governmental charges, and any fees associated with the repair, remediation

and prevention of such damage related to Hurricane damage, prevention and remediation for

COMPANY facilities, including, without limitation: cost incurred to repair or replace

COMPANY's facilities and equipment; costs to prevent Hurricane damage; costs to maintain

system reliability including service from third parties; retrieval and removal of COMPANY

facilities and equipment including dewatering and disposal cost; raising or lowering the

height or improving the durability of COMPANY's facilities; pipeline burials or retrenching;

preventative measures such as arranging for standby ships, divers, personnel and equipment;

cost incurred to provide temporary housing for COMPANY's personnel; diving vessels and

equipment, radiographic equipment, pipeline pigging operations or other inspection measures to

assess potential damage to COMPANY's pipelines; installation of fencings, mattings and

embankments; and miscellaneous expenses associated with having personnel available to repair,

operate or maintain COMPANY's system other than measures taken in the ordinary course of

business.

43.3 Hurricane Surcharge Account

COMPANY shall establish and maintain a Hurricane Surcharge Account consisting of the sum of

three separate subaccounts; the Capital Subaccount, the O&M Subaccount, and the Revenue

Subaccount. These Subaccounts will be updated on a monthly basis as follows:

(a) the O&M Subaccount shall be

(1) debited by the amounts of Eligible Costs, which are classified as operations

or maintenance expenses under the FERC's Uniform System of Accounts (USOA)

which have been incurred that month, and/or

(2) credited by any amounts of proceeds from COMPANY's insurance carriers or

third parties which are attributable to Eligible Costs classified as

operations or maintenance expenses under FERC's USOA which have been

received that month;

(b) the Capital Subaccount shall be debited with the product of

(1) the cumulative Eligible Cost, which are classified in capital accounts under

FERC's USOA, incurred since the effective date of COMPANY's rates under its

most recent NGA General Section 4 or 5 proceeding, less any proceeds

received from COMPANY's insurance carriers or third parties and less

associated accrued depreciation since the effective date of COMPANY's rates

under its most recent NGA General Section 4 or 5 proceeding and

(2) a capital factor equal to the sum of a pretax rate of return component of

0.17 and a depreciation component of 0.02 divided by 12 months;

(c) the Revenue Subaccount shall be credited by the revenue received from the Hurricane

Surcharge during the month;

(d) the balance in the Hurricane Surcharge Account shall be debited or credited, as

appropriate by carrying charges calculated at the FERC prescribed interest rate on

the monthly balance of the Hurricane Surcharge Account.