Southern Natural Gas Company

Seventh Revised Volume No. 1

Effective Date: 03/01/2005, Docket: RP04-523-004, Status: Effective

Third Revised Sheet No. 240 Third Revised Sheet No. 240 : Effective

Superseding: Second Revised Sheet No. 240

GENERAL TERMS AND CONDITIONS

APPENDIX D

(Continued)

1.3 Any Imbalances accrued under this Agreement shall be resolved pursuant to the

provisions of Section 14 of the General Terms and Conditions. This Agreement

specifically shall be subject to the penalty provisions applicable to shippers under

Section 41.4 of the General Terms and Conditions with respect to both current and make-up

activity under this Agreement which provisions and any future revisions thereto

are incorporated herein by reference.

1.4 As prescribed by Section 14.2 of the General Terms and Conditions, as said charge may be

changed from time to time, Seller shall pay each month under this Service Agreement

Company's Storage Cost Reconciliation Mechanism (SCRM) Surcharge. The SCRM Surcharge shall

be applied as either a credit or a debit to the applicable Transportation Volumes as

defined in Section 14.2.

ARTICLE II

NOMINATIONS

2.1 Seller shall nominate gas for receipt into its Supply Pool and delivery out of its

Supply Pool pursuant to the procedures of Section 12 of the General Terms and

Conditions with such nominations submitted in the format set forth in Exhibit I

hereto. Seller's nominations shall be used to confirm nominations for receipts

under Service Agreements. Seller's nominations at the Receipt Points shall be

subject to the prior notice scheduling penalty set forth in Section 41.3 (a-b) of the

General Terms and Conditions.

2.2 If Seller has requested a Tier I Supply Pool, as set forth in Section 2.2 of the

General Terms and Conditions, Seller may nominate gas for receipt into such