Southwest Gas Storage Company

First Revised Volume No. 1

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Effective Date: 05/25/2003, Docket: RP00-471-001, Status: Effective

Original Sheet No. 145A Original Sheet No. 145A : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

17. FLOWTHROUGH OF OFO PENALTIES

This Section 17 of the General Terms and Conditions sets for the

procedures under which Southwest will flowthrough to firm

shippers any penalties in excess of costs collected pursuant to

Section 5.3 of the General Terms and Conditions. Southwest will

reduce such penalties for reasonable incremental out-of-pocket

costs incurred as a direct result of the Shipper's conduct which

was penalized pursuant to Section 5.3.

17.1 Credit Period

The credit period applicable to this Section 17 shall be

monthly.

17.2 Procedure for Crediting Penalties

Southwest will net all revenues received pursuant to

Section 5.3 against reasonable incremental out-of-pocket

costs incurred for such revenues. Southwest will credit

the net amount to those Shippers under Rate Schedule FSS

that were not billed pursuant to Section 5.3 during the

applicable month ("Non-Offending Shippers"). Each

Non-Offending Shipper's credit shall be based on ratio of

actual revenue collected from Non-Offending Shipper for

the month to the actual revenues billed to all

Non-Offending Shippers. Each Non-Offending Shipper's

credit shall be paid with a billing adjustment, including

documentation, to the billing of charges for service

during the following month.