Phillips Gas Pipeline Company

First Revised Volume No. 1

Effective Date: / / , Docket: RS92- 47-002, Status: Effective

Original Sheet No. 24 Original Sheet No. 24 : Superseded

3.5 Imbalance Penalties - The following penalties may be charged

by PGPL to the extent applicable to the specific services

provided herein:

(a) Balancing Penalty - A Penalty as stated in paragraph (b)

below, shall be levied by PGPL and paid in dollars or

gas, as applicable, by any Shipper who, upon notification

by PGPL of the existence of an overage in deliveries

and/or redeliveries, fails to correct such imbalance on

a prospective basis within 48 hours of receipt by Shipper

of PGPL's notification. Such penalty shall apply on an

individual service agreement basis. Nothing herein shall

limit PGPL's right to take such actions of whatever

nature as may be required to correct imbalances which

threaten the integrity of its system, including

maintenance of service to other customers. Any cash

balancing provided for herein shall be based on the sum

of the actual volumes which are out of balance; i.e.,

daily receipts of natural gas under a Shipper's

transportation service agreement as compared to the

actual daily deliveries (pipeline receipts minus pipeline

deliveries).

The applicable penalty shall be applied to the quantities

which exceed the limits specified below, on a

prospective basis 48 hours following initial notification

by PGPL, in the following instances:

(i) Shipper delivers or causes to be delivered to PGPL

a quantity which exceeds by more than 5% or

50 MMBtu, whichever is greater, Shipper's Interruptible

Transportation Quantity; or

(ii) Shipper delivers or causes to be delivered to PGPL

a quantity which, after appropriate reductions, exceeds

by more than 5% or 50 MMBtu, whichever is greater,

the quantities taken from PGPL; or

(iii) The Shipper takes quantities from PGPL which

exceed by more than 5% or 50 MMBtu, whichever is

greater, the quantities received by PGPL after

appropriate reductions.