Norteño Pipeline Company

First Revised Volume No. 1

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Effective Date: 04/01/1996, Docket: CP96- 81-007, Status: Effective

Original Sheet No. 117 Original Sheet No. 117 : Superseded

RATE SCHEDULE FT-S

FIRM TRANSPORTATION SERVICE - SOUTHERN DIVISION

(Continued)

5. RATES:

5.4 For purposes of Section 5.3(f), the term "new

facilities" is defined as facilities required for

Norte¤o to either receive or deliver gas under

this Rate Schedule and which facilities are not

existing on the date Shipper executes an FT-S

Service Agreement for service hereunder. Section

5.3(f) pertains to facilities at receipt and

delivery points only. It is not intended to limit

which party may own, operate, install, or pay for

facilities upstream of a receipt point or

downstream of a delivery point.

(a) New facilities may be installed by either

Norte¤o or Shipper as follows:

(1) Norte¤o will install, at its own

expense, any new facilities which, based

on Norte¤o's estimates, will generate

annual revenues equal to or greater than

the annual cost of service associated

with such facilities. Revenues will be

based on projected annual incremental

volumes of throughput and peak usage for

each year for the depreciable life of

the facilities to be built or for the

number of years under the initial term

of the operable service agreement,

whichever is shorter, and the currently

effective rate for the service

contemplated.

(2) In calculating the incremental cost of

service, Norte¤o shall utilize the

methodologies for calculating cost of

service which underlies its currently

effective transportation rates.