Texas Eastern Transmission, L P

Seventh Revised Volume No. 1

Effective Date: 04/16/2001, Docket: GT01- 15-000, Status: Effective

Original Sheet No. 623 Original Sheet No. 623 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

Section 15.3, or (b) the balances in Account No. 188 included in

Pipeline's last prior R&D Adjustment under this Section 15.3. The balance

in Account No. 188, for the purpose of computing the R&D Adjustment, shall

be reduced by all monies recorded in Account No. 495 related to R&D

expenditures. The rate of return used to determine the rate effect of the

rate base treatment in Account No. 188 shall be the rate of return last

allowed by the Commission during the previous three year period. If there

has been no such rate of return allowed during the previous three year

period, then, in the absence of evidence submitted to the contrary, the

return utilized shall be the present interest rate used for computing

refunds as specified in Section 154.501(d) of the Commission's Regulations

under the Natural Gas Act.

(B) Procedure for Filing:

Rate changes under this Section 15.3 shall be computed and filed not more

frequently than semiannually. Any filing made hereunder to increase Pipeline's

rates shall meet the notice requirements of Section 154.207 of the Commission's

Regulations and shall be made at least forty-five (45) days prior to the date on

which any change(s) in its existing rates is to become effective.

Simultaneously with such filing, the company shall furnish the Commission,

jurisdictional Customers and interested State Commissions a report containing

detailed computations which clearly show the derivation of the proposed R&D

Adjustment. The effect upon jurisdictional rates shall be determined by

computing the unit change (either increase or decrease) based upon

jurisdictional transportation quantities for the twelve-month period ending

three months prior to the effective date of R&D Adjustment. Filings made under

this Section 15.3 shall include a statement as to the anticipated scope and

objective of the R&D and the relationship of such objective to the service for

which the R&D Adjustment is to apply. Each R&D Adjustment shall become

effective on the proposed effective date without suspension provided that any

rate of the balance increase shall be subject to reduction and refund of any

portion found after hearing to be unjustified by a final and non-appealable

Commission order. Pipeline shall not be required to reduce its rates under this

Section 15.3 by an increment exceeding the aggregate increases allowed

hereunder.

Rate changes made under this Section 15.3 shall be calculated exclusive of any

payments made to Gas Research Institute.