Canyon Creek Compression Company

Third Revised Volume No. 1

Effective Date: 11/01/2001, Docket: RP00-347-002, Status: Effective

Substitute Original Sheet No. 198 Substitute Original Sheet No. 198 : Effective

GENERAL TERMS AND CONDITIONS

----------------------------

36. USE OF PENALTY FUNDS

All amounts collected by Canyon commencing November 1, 2001

for Unauthorized Overrun charges and amounts collected under the

cash-out provision of this tariff shall be allocated and

distributed to Canyon's customers. Any such charges for the

period of November 1, 2001 through the end of the year 2001 shall

be distributed within ninety (90) days after the end of 2001. For

each subsequent year commencing 2002 the distribution shall be

made within 90 days after the end of that year. Distribution

shall be made as set out in this Section 36.

36.1 These amounts will first be used to compensate Canyon

for any cash-out expenses and for any prudent and reasonable

actual incremental costs it has incurred to alleviate the

conditions which resulted in or were created by the unauthorized

overrun. If these amounts are not adequate to reimburse Canyon

for its cash-out expenses and costs, the unrecovered expenses

and/or costs shall be carried forward to future years until

recouped.

36.2 Any remaining amounts after the application of Section

36.1 shall be refunded to all Shippers, both firm and interruptible.

The refund will be made in the form of a credit to billings wherever

practicable. In calculating refunds, Canyon shall determine the

penalty revenue for each month of the year net of costs and expenses

under Section 36.1. For each month, such net amount shall be

refunded pro rata, based on the total reservation and commodity

charges paid that month, to all Shippers, excluding any Shipper

which had an Unauthorized Overrun that month. The total annual

refunds for any Shipper shall be the sum of the monthly refunds

allocated to that Shipper. Where capacity has been released,

amounts shall be distributed to the original Shipper, except in the

case of a permanent release where amounts shall be distributed to

the Replacement Shipper.