Kinder Morgan Interstate Gas Transmission LLC

Fourth Revised Volume No. 1-B

Effective Date: 12/28/1999, Docket: GT00- 19-000, Status: Effective

Original Sheet No. 52J Original Sheet No. 52J : Effective

GENERAL TERMS AND CONDITIONS - continued

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EXAMPLE (4) Assume:

Capacity Release Request = 100,000/day for 5 years

Qualified Bids:

Maximum Bid Unit Bid Minimum

Volume Term Value Bid Volume

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

Bid (a) 60,000/day 5 years $.18 0

Bid (b) 60,000/day 5 years $.18 0

Bid (c) 70,000/day 5 years $.18 45,000

Bid (d) 50,000/day 5 years $.18 15,000

Bid (e) 30,000/day 5 years $.18 10,000

Bid (f) 40,000/day 5 years $.17 0

Winning Qualified Bids: Bid (a) receives 30,000; Bid (b) receives

30,000; Bid (d) receives 25,000; and Bid (e) receives 15,000.

Explanation: There are many combinations of Bids (a), (b), (c), (d)

and (e) with the same Winning Bid Value. Each Bid has the same Unit

Bid Value. There is insufficient capacity being released to provide

all the Maximum Bid Volumes for Bids (a), (b), (c), (d) and (e).

Pursuant to Section 23.10(d)(2), a pro rata allocation is attempted.

This would result in each bidder receiving 100/270 of its Maximum Bid

Volume. In the case of Bid (c), Bid (c) would receive 70,000

(100/270) = 25,925 Dth. Since this figure is below Bid (c)'s Minimum

Bid Volume of 45,000, Bid (c) must be discarded. Bids (a), (b), (d)

and (e) are able to be allocated capacity based on a 100/270 pro rata

factor. With Bid (c) discarded, the pro rata allocation factor is now

100/200 (i.e., one-half) so that Bids (a), (b), (d), and (e) each

receive half of their Maximum Bid Volumes. Bid (c) receives zero (0)

because its Minimum Bid Volume was too high for the initial pro rata

allocation.

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