Central Kentucky Transmission Company

Original Volume No. 1

Effective Date: 05/01/2006, Docket: CP05- 48-002, Status: Effective

Original Sheet No. 109 Original Sheet No. 109 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

9.8 Balancing at Termination of Service Agreement. Following the

termination of a Service Agreement, or at Transporter's discretion in the

event Shipper fails to make prompt payment under Section 10 (Billing and

Payment) of the General Terms and Conditions, or if Transporter

redetermines Shipper's creditworthiness pursuant to Section 3.9 of the

General Terms and Conditions, Transporter may take the following steps:

(a) Shipper under that Service Agreement shall be required to correct

any outstanding imbalance in receipts and deliveries within 60 days after

Transporter determines, and notifies Shipper, that such an imbalance

exists, or within such longer period of time agreed to by Shipper and

Transporter (the balancing period). Shipper shall correct in-kind any

undertender imbalance by making arrangements upstream of Transporter for

delivery to Transporter to correct such undertender imbalance during the

balancing period. Shipper shall correct in-kind any overtender imbalance

by (i) obtaining a Service Agreement (e.g., under the ITS Rate Schedule)

from Transporter pursuant to the terms of this Tariff, and scheduling to

receive such overtender imbalance quantities from Transporter under such

Service Agreement pursuant to the terms of this Tariff, or (ii) otherwise

making arrangements pursuant to this Tariff to dispose of its overtender

imbalance. If, after the end of the balancing period, Transporter

determines that an imbalance continues to exist in Shipper's account,

Transporter shall resolve such imbalance as set forth below.

(b) If Transporter determines that it delivered quantities to or for

Shipper in excess of the quantities tendered to Transporter by or for

Shipper, Transporter shall assess and collect from Shipper a reimbursement

penalty. Shipper shall pay Transporter a penalty for each Dth of such

outstanding imbalance, grossed up for the Retainage percentages applicable

to Transporter's ITS Rate Schedule. The penalty shall be the sum of: (i)

150% of the Spot Market Price for the month during which such quantities

are made up by Transporter; plus (ii) the cost of transporting such

quantities. "Spot Market Price", for purposes of this Section, shall mean,

for the applicable Month, the contract price index, last published during

the applicable month for gas delivered to Columbia as reported in Natural

Gas Intelligence or successor publication. For purposes of calculating

Penalty Revenues pursuant to Section 19.6 of the General Terms and

Conditions, 100 percent of the Spot Market Price times the applicable

number of replenishment dekatherms plus the cost of transporting such

quantities shall be retained by Transporter. 50 percent of the Spot Market

Price times the applicable number of replenishment dekatherms shall be

treated as Penalty Revenues as defined in Section 19.6 of the General Terms

and Conditions. Upon payment of such charge, the imbalance shall be

removed from Shipper's account.