Western Gas Interstate Company

Third Revised Volume No. 1

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Effective Date: 06/01/1993, Docket: RS92- 53-003, Status: Effective

Revised Original Sheet No. 126 Revised Original Sheet No. 126 : Superseded

RATE SCHEDULE FT-S

FIRM TRANSPORTATION SERVICE - SOUTHERN DIVISION

(continued)

(a) New facilities may be installed by either Western or

Shipper as follows:

(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 underly 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%.

(4) When Western has previously paid for all or a

portion of delivery point facilities under this

facilities reimbursement policy, Shipper shall,

nevertheless, within thirty days after receipt of

invoice prepared by Western, pay Western for

Western's net book value of such facilities when

either of the following events occurs: (1) When

Western's ability to fully recover such costs is

denied in any Section 4 or Section 5 rate

proceeding, or (2) when Shipper ceases operations

at the delivery point where the facilities were

installed.

(b) Any new facilities contemplated by Section 5.3(f)

which do not meet the economic test of Section

5.4(a)(3) shall be installed by Western at Shipper's

expense.