Natural Gas Pipeline Company Of America

Seventh Revised Volume No. 1

Effective Date: 04/18/2008, Docket: RP08-319-000, Status: Effective

Original Sheet No. 494 Original Sheet No. 494 : Pending

GENERAL TERMS AND CONDITIONS

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38. RECOVERY OF ORDER NO. 636 GAS SUPPLY REALIGNMENT COSTS AND UPSTREAM

SUPPLIER TRANSITION COSTS

38.1 APPLICABILITY

This Section sets forth procedures pursuant to

Commission Order Nos. 636, et seq., for Natural to assess charges to

compensate it for Supply Realignment Costs and transition costs

assessed by upstream pipelines. Assessments under this Section 38,

ceased as of December 1, 2001 except for any remaining amounts under

Section 38.5.

38.2 DEFINITIONS

(a) SUPPLY REALIGNMENT COSTS

Supply Realignment Costs shall mean Contract

Reformation Costs, Auction Costs or Pricing Differential Costs. The

method of establishing Supply Realignment Costs shall be determined

by Natural as to each contract in its reasonable discretion

exercised to minimize costs. Natural may not include as Supply

Realignment Costs any punitive or exemplary damages, any costs or

category of costs already reflected in Natural's base rates or any

assessment of the costs of other parties.

(1) Contract Reformation Costs shall mean amounts

in cash or other consideration prudently incurred by Natural to

terminate, buydown or modify contracts or settle claims by suppliers

related to elimination or modification of supply commitments in

effect on November 30, 1993, to the extent that such amounts are

associated with a period subsequent to November 30, 1993. Such

amounts shall include payments to suppliers to buyout or buydown

contract volumes or prices under gas supply contracts; to terminate

such contracts; to reform volume, take-or-pay, minimum take, price

or any other pertinent terms of any gas purchase contract; to

satisfy damage awards to suppliers arising out of litigation related

to gas supply contracts to the extent such awards relate to periods

subsequent to November 30, 1993; or to cover the costs incurred by

such suppliers to third parties related to such contracts to the

extent recoverable from Natural under the terms of such contracts.

(2) Auction Costs apply where a contract is

assigned pursuant to an auction as provided by Section 4 of these

General Terms and Conditions, in which case the best bid shall

establish the level of Supply Realignment Costs.