Tennessee Gas Pipeline Company

FIFTH REVISED VOLUME NO. 1

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Effective Date: 11/09/2007, Docket: RP08- 22-000, Status: Effective

First Revised Sheet No. 405A.02 First Revised Sheet No. 405A.02 : Effective

Superseding: Sub Original Sheet No. 405A.02

GENERAL TERMS AND CONDITIONS (continued)

5.2 Net Present Value Standard

All bids provided during the open season held pursuant to Section 5.1

shall be submitted to Transporter either electronically through

PASSKEY, electronic mail if indicated in the posting, or by facsimile.

Transporter shall award capacity for such bids to shippers that meet

Transporter's creditworthiness standards (as set forth in Article

XXVIII, Section 4 of the General Terms and Conditions) and whose bids,

based upon Transporter's determination, have the highest net present

value (NPV). The NPV is the discounted cash flow of incremental

revenues per dekatherm to Transporter produced, lost or affected by the

requests for service and shall be based upon such factors as the term,

quantity, date on which the requested service is requested to commence,

and other factors determined to be relevant by Transporter. The NPV

shall also include only revenues generated by the reservation rate, or

other form of revenue guarantee, as proposed by the Bidder(s). For

purposes of its NPV evaluation, Transporter will consider the aggregate

NPVs of two or more bids for minimum bid packages, provided that if the

combined quantity of capacity under those packages exceed the maximum

capacity available for subscription then these bids will only be

considered if the Bidders have agreed to accept a prorated award of

capacity. Irrespective of whether a bid(s) has the highest NPV of the

bids received, Transporter may reject bids for service that (i) may

detrimentally impact the operational integrity of Transporter's system;

(ii) do not satisfy all the terms of the specified posting; or (iii)

contain terms and conditions other than those set forth in

Transporter's FERC Gas Tariff. For Bidders proposing a reservation

rate or other form of revenue guarantee which exceeds the maximum

applicable reservation rate during all or any portion of the term

proposed by the Bidder, the NPV calculated for the bid may not exceed

an NPV that is calculated assuming that the maximum applicable

reservation rate shall be in effect during the full term proposed by

the Bidder, in place of the reservation rate(s) or other revenue

guarantee(s) proposed by the Bidder.

As used in this Section 5.2, "revenue guarantee" shall include, but not

be limited to, revenue based on any minimum throughput commitment

proposed by a Bidder. For Bidders submitting bids which include

options to terminate the Service Agreement early and/or reduce the

capacity held thereunder for some portion of the term including

multiple periods within the term ("Reduction Option"), Transporter, in

its determination of the NPV of such a bid, will only consider the

minimum incremental revenue guaranteed under the Service Agreement if

the option is or is not exercised, including any exit payment that the

Bidder proposes to pay at the exercise of its option. Unless a shorter

notice period is specified in the open season posting pursuant to

Section 5.1 above, a Reduction Option will be under the requirement

that Transporter must be provided notice no less than thirty days prior

to its exercise for contracts of one year or less and no less than one

year prior to its exercise for contracts greater than one year.

Transporter will list in its open season posting acceptable terms for

any reduction option. If the option can be exercised prior to one full

year of service, any contract awarded will not be considered a long-

term contract regardless of whether the option is actually exercised.

For a Bidder proposing an exit payment, the NPV calculated for the bid

may not exceed the NPV cap set forth in this Section 5.2. Transporter

shall identify any termination and/or reduction options proposed by the

Bidder in its PASSKEY notice of the Successful Bidder pursuant to

Section 5.4 below, and reflect such options in the Bidder's Service

Agreement.