Tennessee Gas Pipeline Company

FIFTH REVISED VOLUME NO. 1

Effective Date: 06/01/1997, Docket: RP97- 60-002, Status: Effective

Second Revised Sheet No. 332 Second Revised Sheet No. 332 : Effective

Superseding: Second Sub First Revised Sheet No. 332

GENERAL TERMS AND CONDITIONS (continued)

(f) All Bids must be for the receipt and delivery points specified in the

Release Request. The receipt and delivery points awarded a Replacement

Shipper in accord with this section shall be specified in its Transportation

Service Agreement. Replacement Shipper shall be eligible for the use of

secondary points in accord with the priority afforded the released

transportation under Section 5, Article III of these General Terms and

Conditions.

11.6 Determination of Successful Bidder for Transportation Rights

The determination of the successful Bidder shall be effected in accordance with

the following procedures:

(a) Bid Evaluation Methodologies: The Releasing Shipper shall specify in the

Release Request one of the following bid evaluation methodologies: (i)

highest rate, (ii) net revenue, or (iii) present value. A Release Request

submitted specifying one of these methods shall be accorded the timeline

treatment described in Section 11.7. However, the Releasing Shipper may

choose another bid evaluation method which shall be accorded the timeline

treatment described in Section 11.7 of this Article. Transporter shall

apply the method chosen to determine the successful Bidder. Transporter's

application of Releasing Shipper's bid evaluation method shall result in as

many successful bidders as mandated thereby, provided that the volumes

released to each successful bidder shall be no less than one dekatherm. If

the Releasing Shipper desires to award to more than one winner, the

Releasing Shipper should allow for the acceptance of partial TQ bids.

(b) If the present value method is chosen, then Transporter shall determine the

bid or bids having the Highest Present Value ("PV") using the following

formula:

PV = (Bid Rate) x (Bid TQ) x (1+i) -1

---------

i(1+i)

where

Bid Rate = the daily charge which the Bidder has agreed

to pay; for reservation rate bids, the charge

is calculated by dividing the bid rate

received from the Bidder by 30.4 days per

month (average days in a 365-day year).