Southern Natural Gas Company

Seventh Revised Volume No. 1

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

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

Superseding: Original Sheet No. 403e

PRO FORMA

PIPELINE BALANCING AGREEMENT

(Continued)

ARTICLE II

CORRECTION AND RESOLUTION OF PIPELINE IMBALANCES

2.1 Corrections in Flow Rates During A Month - Adjustments in nominations and/or

scheduled deliveries or receipts at the Interconnection Point shall be made by

Pipeline Operator and Southern during the transportation month, if necessary, to

control imbalance levels by confirming such adjustments with the other Party

pursuant to the procedures established in Section 1.1. If either Party fails to take

such corrective action, the other Party may, upon prior written notice, terminate this

Agreement at the end of the current calendar month.

2.2 Resolution of Imbalances -

(a) Each Monthly Pipeline Imbalance shall be resolved in the following month by

dividing the Monthly Pipeline Imbalance by the actual Dth's metered

during the month at the Interconnection Point. Such percentage

determined above shall be Pipeline Operator's Net Imbalance Percentage

for the month and shall be used to resolve Pipeline Operator's Monthly

Pipeline Imbalance as follows:

(i) If the Monthly Pipeline Imbalance results from either (A) the total net

quantities of gas delivered by Pipeline Operator at the Interconnection

Point during the month being greater than the total of scheduled

nominations, or (B) the total net quantities of gas delivered by

Southern at the Interconnection Point during the month being less than

the total scheduled nominations, Southern shall pay Pipeline Operator

for its Monthly Pipeline Imbalance (per Dth) at the following