Pacific Interstate Transmission Company

Original Volume No. 1

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Effective Date: 11/01/1996, Docket: GT97- 67-000, Status: Effective

Original Sheet No. 10 Original Sheet No. 10 : Effective

RATE SCHEDULE CQS-1 (Continued)

(Contract Quantity Service)

5. REDUCTION IN BILLING FOR COST OF SERVICE

5.1 General

During any month in which Northwest Pipeline Corporation is

required to make a Facility Charge Adjustment pursuant to

Section 5 of Rate Schedule T-1 of its FERC Gas Tariff, Volume

No. 1, other than for reasons of Force Majeure, Seller shall

also be required to reduce its billing for cost of service

pursuant to Section 4 hereof.

5.2 Computation of Reduction in Billing for Cost of Services

Subject to the Minimum Monthly Bill provisions in Section 6

hereof, Seller shall be required to reduce that portion of the

cost of service determined in this subsection in the same

proportion that Northwest Pipeline's Facility Charge is reduced.

The cost of service which shall be subject to reduction shall be

the total of the following costs: Other O & M (subsection

4.43), Depreciation (subsection 4.5), Taxes other Than Income

Taxes (subsection 4.6), Income Taxes (subsection 4.7),

Adjustments (subsection 4.8, except subsections 4.83 and 4.84)

and Return (subsection 4.9).

5.3 Recovery of Reduction in Billing for Cost of Service

Seller shall recover any reduction in its cost of service

billing, made pursuant to this Section 5, if it delivers makeup

volumes in excess of Buyer's Total Maximum Delivery Quantity

prior to the end of the second billing month following the

delivery deficiency causing the billing reduction. The amount

of such recovery for any billing month shall be determined by

multiplying the billing reduction by a fraction, the numerator

of which shall be the makeup volumes delivered in such billing

month and the denominator of which shall be the volume of such

delivery deficiency. Any makeup volumes shall be first applied

to the earliest of delivery deficiencies then eligible for cost

of service recoupment.

(continued)