K O Transmission Company

Original Volume No. 1

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Effective Date: 07/10/2004, Docket: RP00-394-003, Status: Effective

Second Revised Sheet No. 123 Second Revised Sheet No. 123 : Effective

Superseding: First Revised Sheet No. 123

GENERAL TERMS AND CONDITIONS (continued)

20. Penalties

The penalties set forth in this Section apply to Rate Schedules FTS and ITS,

unless otherwise indicated in this Section or in individual Rate Schedules.

20.1 Takes in Excess of Total Firm Entitlement (TFE)

If Shipper's takes on any day exceed 103 percent of the Total Firm Entitlement

(TFE), Shipper shall be assessed and pay a penalty of $10.00 per dekatherm for

quantities taken in excess of 103 percent of its TFE.

20.2 Failure to Interrupt Service

If Shipper fails to interrupt service as directed by Transporter pursuant to

Section 17 (Non-emergency Service Interruption) and Section 18 (Force Majeure

and Curtailment) of the Tariff's General Terms and Conditions, and thereby

delivers gas to or takes gas from Transporter in excess of 103 percent of the sum

of the lowered Scheduled Daily Receipt Quantity or Scheduled Daily Delivery

Quantity under all applicable Rate Schedules set by Transporter's Interruption

Order, Shipper shall be assessed and pay penalties of $5.00 per Dth on the first

three percent (3%) of quantities taken or delivered in excess of its Scheduled

Daily Receipt Quantity or Scheduled Daily Delivery Quantity, and $10.00 per Dth

for quantities taken or delivered in excess of 103 percent of its Scheduled Daily

Receipt Quantity or Scheduled Daily Delivery Quantity. The penalties set forth in

this Section and in Section 20.1 above shall not be both assessed for the same

actions by a Shipper.

20.3 Failure to Comply with Operational Flow Orders

If Shipper fails to comply with an operational flow order issued by Transporter

pursuant to Section 19 (Operational Flow Orders) of the General Terms and

Conditions, a penalty of $5.00 per Dth per day shall be assessed on all quantities

taken or delivered in violation of that operational flow order.

20.4 Miscellaneous

(a)

All penalties and charges assessed under this Section shall be paid in addition