Transcolorado Gas Transmission Company LLC

Second Revised Volume No. 1

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

Original Sheet No. 236 Original Sheet No. 236 : Effective

GENERAL TERMS AND CONDITIONS

6. CAPACITY RELEASE BY FIRM SHIPPERS (Continued)

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EXAMPLE (5) 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 60,000

Bid (b) 60,000/day 5 years $.18 50,000

Bid (c) 70,000/day 5 years $.18 65,000

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 (c) receives 70,000. Bid (d) receives 30,000.

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

and (e) with the same Winning Bid Value. Pro rata allocation won't work,

because each Bid would receive 100/270 of the capacity; only Bids (d) and (e)

have low enough Minimum Bid Volumes for a pro rata allocation, and the sum of

Bid (d)'s and Bid (e)'s Maximum Bid Volumes is less than 100,000. Under

Section 6.10(d)(iii)(1)), we then look to the combinations of Bid(s) (a), (b),

(c), (d) and (e) to identify the Bid with the highest Maximum Bid Volume.

This is Bid (c). We allocate the highest volume to Bid (c) consistent with

creating the Winning Bid Value, so 70,000 is allocated to (c). This leaves

30,000 to be allocated. Bids(a) and (b) have the next highest Maximum Bid

Volume (60,000), but the Minimum Bid Volumes of Bids (a) and (b) are each too

high to receive the remaining capacity. The next highest available Maximum

Bid Volume is in Bid (d), which is allocated the remaining capacity of 30,000.

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