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Original Sheet No. 162 Original Sheet No. 162 : Superseded

RATE SCHEDULE RCS

FIRM TRANSPORTATION SERVICE - RELEASED CAPACITY

(continued)

9. AWARDING OF RELEASED CAPACITY:

Released Capacity shall be awarded to a Bidding Shipper

in accordance with the following:

(a) If the bid is to acquire all or a portion of the

Released Capacity at the maximum rates and term,

and upon all of the conditions specified in the

Capacity Release Notice, then the quantity of

Released Capacity bid for will be awarded to the

submitting Bidding Shipper. If more than one such

bid is received, and the aggregate capacity bid

for is in excess of the capacity to be released,

then capacity shall be awarded by lottery until

all Released Capacity is awarded to Bidding

Shippers. A Bidding Shipper may reject an award

of a lesser quality of Released Capacity than it

bid for. The Releasing Shipper shall not be

entitled to reject any bid selected as set forth

herein.

(b) If bids are at less than the maximum rates or

term, or do not meet all of the other conditions

specified in the Capacity Release Notice, then the

bids shall be subject to meeting the minimum

conditions specified in the Capacity Release

Notice. Release Capacity will be awarded to the

Bidding Shipper(s) submitting the best offer(s)

according to the terms specified by the Releasing

Shipper in its Notice, or, in the absence of such

specified terms, the following:

Net Present Value - the calculation of the net

present value of the reservation charge, as

follows:

NPV = R x C

(1 + I)n

where: NPV = Net Present Value

R = Reservation Charge bid

C = Capacity, stated in MMBTU

I = Commission interest rate

n = exponent signifying term of

release, in months.