K O Transmission Company

Original Volume No. 1

Effective Date: 04/01/2009, Docket: RP09-394-000, Status: Effective

Second Revised Sheet No. 41 Second Revised Sheet No. 41

Superseding: First Revised Sheet No. 41

GENERAL TERMS AND CONDITIONS (continued)

3. Auctions of Available firm Service

This Section governs the manner in which requests for firm transportation

service (FTS) shall be accommodated by Transporter when capacity is or becomes

available, unless otherwise indicated in the applicable Rate Schedule.

3.1 Circumstances under which Capacity becomes available

(a)

Termination of Short-Term Service Agreements. Upon the termination of any firm

Service Agreement having a term of less than one year, the capacity associated

with such terminated Service Agreement shall be made available for bidding under

the procedures described in Section 3.2 below, provided that: (i) the capacity

is not previously committed under the terms of this Tariff, and (ii) facility

capacity remains available.

(b)

Continuing Service under certain Long-Term Agreements. Six (6) months prior to

the completion of the term of any firm Service Agreement having a term of one

year or more (a long-term Service Agreement), Transporter shall provide the

Shipper written notification of the Agreement's forthcoming expiration. Shipper

shall have the right to continue receiving service beyond the initial expiration

date under the long-term Service Agreement if that Service Agreement is at the

maximum rate and (i) contains a provision that continues service absent notice

of termination by Transporter or Shipper (an evergreen provision) and neither

party has provided such notice, (ii) otherwise extends beyond that term

according to its terms, or (iii) does not provide for pregranted abandonment and

Shipper executes a new long-term Service Agreement at a maximum rate. If the

above requirements are not satisfied at the termination date of the primary term

of a long-term Service Agreement, service under that long-term Service Agreement

shall be subject to the termination and right of first refusal provisions set

forth in Section 3.1 (c) below.

(c)

Termination of Long-Term Service Agreements; Exercise of Right of First Refusal.

If Shipper's long-term Service Agreement does not extend according to its terms

or otherwise continue as described in Section 3.1(b) above, or Shipper declines

to extend the contract under the provisions described in paragraph (b) above,

Shipper may continue service upon termination of that Service Agreement by (i)

agreeing to match the highest value bid offered to Transporter for Shipper's

firm service, or any portion thereof, through the bidding process described in

Section