Southern Natural Gas Company

Seventh Revised Volume No. 1

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Effective Date: 01/01/1997, Docket: RP97-125-000, Status: Effective

First Revised Sheet No. 403C First Revised Sheet No. 403C : Effective

Superseding: Original Sheet No. 403c

PRO FORMA

PIPELINE BALANCING AGREEMENT

(Continued)

or received. Pipeline Operator shall use all reasonable efforts to ensure that the

quantities actually delivered or received by it at the Interconnection Point are equal

to the scheduled nominations. Southern shall use all reasonable efforts to ensure

that the quantities actually received or delivered by it at the Interconnection Point

are equal to the scheduled nominations. Each Party agrees to allocate volumes to

be delivered and received at the Interconnection Point each day to each Party's

respective shippers based upon the scheduled nominations set forth in Section 1.1

above.

1.3 Allocation of Variances - The sum of the daily differences between the scheduled

nominations set forth in Section 1.1 above for each day and the actual quantity

delivered and/or received at the Interconnection Point on each day during the

calendar month shall be the Monthly Pipeline Imbalance. Any Monthly Pipeline

Imbalances will be resolved in accordance with Section 2.2 herein, unless mutually

agreed otherwise.

1.4 Penalties - If Southern is experiencing operational difficulties because of the variance

between scheduled nominations and actual flows at the Interconnection Point,

Southern will give Pipeline Operator at least twenty-four (24) hours notice prior to

the start of any contract day on which Pipeline Operator shall be subject

to the following scheduling penalty if it varies the flow at the Interconnection

Point from the total scheduled quantities of gas at the Interconnection

Point on that day. If during a day when such notice is in effect the

actual metered flows at such point vary by more than four percent (4%) from the

total scheduled nominations, then Southern may charge Pipeline Operator a

scheduling penalty equal to the maximum interruptible transportation rate under

Southern's currently effective Volume No. 1 of its FERC Gas Tariff multiplied by

each Dth of gas in excess of the allowed variance. If So uthern has specified in

its notice that scheduled services at the Interconnection Point are subject to

limitation, then the penalty assessed on any such day hereunder shall be equal to

$15.00 per Dth multiplied by each Dth of gas in excess of the allowed

variance. Southern will not assess a scheduling penalty to Pipeline Operator for any

day in which the variance between the scheduled quantities of gas at the

Interconnection Point and the actual metered flows is caused by operational

conditions existing on Southern's system.