Canyon Creek Compression Company

Third Revised Volume No. 1

Effective Date: 07/01/2003, Docket: RP02-356-003, Status: Effective

First Revised Sheet No. 201 First Revised Sheet No. 201 : Effective

Superseding: Original Sheet No. 201

GENERAL TERMS AND CONDITIONS

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(d) Return on Rate Base - shall be computed by

multiplying one-half of Canyon's Overall Rate of Return by the

Rate Base calculated pursuant to Section 37.6 herein.

(e) Income Taxes - shall be calculated by multiplying

one-half the sum of Return on Rate Base and the Tax Adjustment, by

the Grossed-Up Tax Rate.

(i) Tax Adjustment shall mean the amount

calculated by multiplying one-half of the Depreciation Rate by the

Plant AFUDC - Equity.

(ii) Grossed-Up Tax Rate shall mean the factor

equal to 0.515152 that results from dividing the corporate federal

income tax rate of 34% by its reciprocal after-tax rate of 66%.

37.6 RATE BASE

The Rate Base shall be the sum of the balances for the

following items.

(a) Gas Plant in Service (Accounts 101 - 106);

(b) Accumulated Depreciation and Amortization

(Accounts 108 and 111);

154) and Prepayments (Account 165);

(d) Accumulated Deferred Income Taxes (Accounts 190,

282 and 283, except non-rate base items);

(e) Regulatory Assets (Account 182.3, except ACA); and

(f) Regulatory Liabilities (Account 254, except SFAS

109 - Excess Deferred Income Taxes).

(g) The principal amount of the unamortized excess

deferred income tax balance.