Puget Sound Energy, Inc.

Original Volume No. 1

Effective Date: 11/01/1998, Docket: CP98-250-002, Status: Effective

Original Sheet No. 38 Original Sheet No. 38 : Effective

Project, the Project Operator and Owners, from claims, losses,

liabilities, damages, costs and expenses arising out of personal

injury (including death) or property damage and loss that may

occur in connection with the operation of the Storage Project

under this Agreement. All insurance required to be maintained in

force and effect pursuant to the insurance program shall be placed

with such insurers, under such forms of policies and with such

coverage(s), limits, exclusions, deductibles, waivers of

subrogation and other policy provisions as may be specified by the

Committee.

5.8.1 Any Owner may maintain such additional insurance in its

sole judgment as it deems appropriate for the protection of its

Ownership Interest in the Storage Project from claims, losses,

liabilities, damages, costs and expenses arising out of personal

injury (including death) or property damage and loss that may

occur in connection with the operation of the Storage Project.

ARTICLE 6. PROJECT OPERATOR

6.1 Qualifications

The Committee will designate the Project Operator. Only an Owner

with at least a one-third (33-1/3%) Ownership Interest may be the

Project Operator, unless a 75% majority agreement of the Owners

agree otherwise.

6.2 Appointment

The Owners hereby designate PSE as the Project Operator of the

Storage Project. It is the intention of the Owners that, except as

provided in Section 6.3, PSE continue as the Project Operator of

the Storage Project, including any expansions and additions.

6.3 Removal or Resignation

6.3.1 If a Project Operator's Ownership Percentage is reduced to

less than one-third (33-1/3%) as a result of a transfer to an

unrelated Person pursuant to ARTICLE 2, then Project Operator

shall