K O Transmission Company

Original Volume No. 1

Effective Date: 06/01/1997, Docket: RP97-339-000, Status: Effective

First Revised Sheet No. 067 First Revised Sheet No. 067 : Effective

Superseding: Original Sheet No. 067

GENERAL TERMS AND CONDITIONS (continued)

6. Operating Conditions (con't.)

Shipper that, within ten (10) days after receipt of notice from Transporter, fails

to comply with any of the terms of the applicable Rate Schedule and Service

Agreement with Transporter; provided however that Shipper's failure to comply

with the billing and payment requirements of this Tariff shall be governed by the

provisions of Sections 10 (Billing) and 11 (Payment) of the General Terms and

Conditions. Other provisions of such Rate Schedule notwithstanding, Transporter

shall have the right to take unilateral action to protect the integrity of its system

in the event Transporter, in its reasonable discretion, determines that immediate or

irreparable harm to facilities or operations will be caused by Shipper's failure to

comply with any of the terms of the applicable Rate Schedule, the terms of the

Shipper's Service Agreement with Transporter, and/or the General Terms and

Conditions of this Tariff.

6.5 Balancing at Termination of Service Agreement

(a)

Following the termination of a Service Agreement, Shipper under that Service

Agreement shall be required to correct any outstanding imbalance in receipts and

deliveries within sixty (60) days after Transporter determines, and notifies Shipper,

that such an imbalance exists, or within such longer period of time agreed to by

Shipper and Transporter (the "balancing period"). If, after the end of the balancing

period, Transporter determines that an imbalance continues to exist in Shipper's

account, Transporter shall resolve such imbalance as set forth below.

(b)

If Transporter determines that it delivered quantities to or for Shipper in excess

of the quantities tendered to Transporter by or for Shipper, Transporter shall

assess and collect from Shipper a penalty. Shipper shall pay Transporter

a penalty for each Dth of such outstanding imbalance, grossed up for the

Retainage percentages applicable. The penalty shall be the sum of: (i) 120% of

the Spot Market Price for the Month during which such quantities are made up by

Transporter; plus (ii) the cost of transporting such quantities at the total

effective maximum rate under Columbia Gulf Transmission Company's ITS-1 Rate

Schedule and Transporter's ITS Rate Schedule.

"Spot Market Price", for purposes of this Section, shall mean, for the

applicable month, the contract index price last published during the applicable

Month for gas delivered to Columbia Gulf Transmission Company at Rayne