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

Superseding: First Revised Sheet No. 403G

PRO FORMA

PIPELINE BALANCING AGREEMENT

(Continued)

amount equal to Southern's maximum transportation rate under Rate

Schedule IT of its FERC Gas Tariff, plus applicable surcharges, per Dth

of gas taken by Pipeline Operator during the month in excess of total

scheduled nominations at the Interconnection Point.

(c) It is agreed that in the event Southern owes Pipeline Operator any payments

under Section 2.2(a)(i) above from a previous month which are past due,

Pipeline Operator shall have the right hereunder to offset payments it

owes to Southern under Section 2.2(a)(ii) above by such past due amounts

(inclusive of interest). It is agreed that in the event Pipeline Operator

owes Southern any payments under Section 2.2(a)(ii) above from a

previous month which are past due, Southern shall have the right hereunder

to offset payments it owes to Pipeline Operator under Section 2.2(a)(i)

above by such past due amounts (inclusive of interest).

(d) The Parties agree that _______________________ will be responsible for

billing the "cash out" amounts under this Agreement. Actual metered

volumes, adjusted for actual Btu content, shall be used for purposes of

determining the Monthly Pipeline Imbalance at the Interconnection Point.

Along with the invoice, ________ shall tender to the other Party a Monthly

Pipeline Imbalance Statement that contains information substantially similar

to that shown in Exhibit B attached hereto.

2.3 Corrections in Subsequent Periods - If either Party discovers any measurement errors

in the actual metered quantities of gas delivered and received at the Interconnection

Point which are required to be corrected by the measuring Party's FERC Gas Tariff,

then such error shall be corrected in the current calendar month by adding to the

Monthly Pipeline Imbalance Statement an adjustment reflecting the measurement

errors. Such adjustment in volumes resulting from such measurement errors shall be

cashed out by multiplying the adjustment by the lesser of (i) 100% of the Index Price

for the month in which the measurement error occurred, or (ii) 100% of the Index Price

for the month in which the measurement error was discovered. The correction of such

measurement error on Pipeline Operator's Monthly Imbalance Statement also