Western Gas Interstate Company

Fourth Revised Volume No. 1

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Effective Date: 04/01/1996, Docket: CP96- 81-006, Status: Effective

Original Sheet No. 118 Original Sheet No. 118 : Effective

RATE SCHEDULE FT-N

FIRM TRANSPORTATION SERVICE - NORTHERN DIVISION

(continued)

(1) Western will install, at its own

expense, any new facilities which,

based on Western's estimates, will

generate annual revenues equal to

or greater than the annual cost of

service associated with such

facilities.

Revenues will be based on projected

annual incremental volumes of

throughput and peak usage for each

year for the depreciable life of

the facilities to be built or for

the number of years under the

initial term of the operable

service agreement, whichever is

shorter, and the currently

effective rate for the service

contemplated.

(2) In calculating the incremental cost

of service, Western shall utilize

the methodologies for calculating

cost of service which underlies its

currently effective transportation

rates.

(3) The projected costs and revenues in

nominal dollars will be evaluated

using a standard discounted cash

flow analysis, with a discount rate

equal to the most recently approved

overall rate of return for Western.

Western will undertake projects for

which the internal rate of return

is positive by greater than 3%.