Transcolorado Gas Transmission Company LLC

Second Revised Volume No. 1

Effective Date: 12/28/2007, Docket: RP08-167-000, Status: Effective

Original Sheet No. 235 Original Sheet No. 235 : Effective

GENERAL TERMS AND CONDITIONS

6. CAPACITY RELEASE BY FIRM SHIPPERS (Continued)

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EXAMPLE (2) The assumptions remain the same as in Example (1), except

that we assume that Bid (c) has a Minimum Bid Volume of 85,000.

Winning Qualified Bids: Again, there is only one combination of bids with the

Winning Bid Value. Therefore, Bid (c) receives its Maximum Bid Volume

(85,000) plus Bid (a) receives 15,000.

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EXAMPLE (3) The assumptions remain the same as in Example (1), except

that we assume that Bid (a) has a Minimum Bid Volume of 20,000 and Bid (c) has

a Minimum Bid Volume of 85,000.

Winning Qualified Bids: Again, there is only one combination of bids with the

Winning Bid Value. Therefore, Bids (b) and (c) each receive their Maximum Bid

Volumes. This combination leaves 5,000 unallocated, which stays with the

Releasing Shipper.

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EXAMPLE (4) Assume:

Capacity Release Request = 100,000/day for 5 years Qualified Bids:

Maximum Bid Unit Bid Minimum

Volume Term Value Bid Volume

----------- ------- -------- ----------

Bid (a) 60,000/day 5 years $.18 0

Bid (b) 60,000/day 5 years $.18 0

Bid (c) 70,000/day 5 years $.18 45,000

Bid (d) 50,000/day 5 years $.18 15,000

Bid (e) 30,000/day 5 years $.18 10,000

Bid (f) 40,000/day 5 years $.17 0

Winning Qualified Bids: Bid (a) receives 30,000; Bid (b) receives 30,000; Bid

(d) receives 25,000; and Bid (e) receives 15,000.

Explanation: There are many combinations of Bids (a), (b), (c), (d)

and (e) with the same Winning Bid Value. Each Bid has the same Unit

Bid Value. There is insufficient capacity being released to provide

all the Maximum Bid Volumes for Bids (a), (b), (c), (d) and (e).

Pursuant to Section 6.10(d)(2), a pro rata allocation is attempted.

This would result in each bidder receiving 100/270 of its Maximum Bid

Volume. In the case of Bid (c), Bid (c) would receive 70,000 (100/270) =

25,925 Dth. Since this figure is below Bid (c)'s Minimum Bid Volume of 45,000,

Bid (c) must be discarded. Bids (a), (b), (d) and (e) are able to be allocated

capacity based on a 100/270 pro rata factor. With Bid (c) discarded, the pro

rata allocation factor is now 100/200 (i.e., one-half) so that Bids (a), (b),

(d), and (e) each receive half of their Maximum Bid Volumes. Bid (c) receives

zero (0) because its Minimum Bid Volume was too high for the initial pro rata

allocation.