Southern Natural Gas Company

Seventh Revised Volume No. 1

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Effective Date: 10/01/2004, Docket: RP04-523-000, Status: Effective

Second Revised Sheet No. 403F Second Revised Sheet No. 403F : Effective

Superseding: First Revised Sheet No. 403F

PRO FORMA

PIPEINE BALANCING AGREEMENT

(Continued)

prices specified for each stated percentage level up to its Net

Imbalance Percentage:

Imbalance Percentage of

Percentage Index Price

0 to 5% 100%

> 5 to 10% 85%

>10 to 15% 75%

>15 to 20% 60%

>20% 50%

(ii) 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 less than the total scheduled

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

Southern at the Interconnection Point during the month being greater

than the total scheduled nominations, Pipeline Operator shall pay

Southern for Pipeline Operator's Monthly Pipeline Imbalance (per

Dth) at the following prices for each sta ted percentage level up to

its Net Imbalance Percentage:

Imbalance Percentage of

Percentage Index Price

0 to 5% 100%

> 5 to 10% 115%

>10 to 15% 125%

>15 to 20% 140%

>20% 150%

(b) The Index Price shall be determined pursuant to the procedures set forth in Section 14.1 of the

General Terms and Conditions to Southern's FERC Gas Tariff. It is further agreed that in addition

to the foregoing, Pipeline Operator shall pay Southern an