West Texas Gas, Inc.

First Revised Volume No. 1

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Effective Date: 10/01/1996, Docket: RP96-377-000, Status: Effective

Original Sheet No. 32F Original Sheet No. 32F : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

19.5 Annual PGA filing (Continued):

(b) Treatment of change in cost of gas from various types

of suppliers. Seller shall apply changes in the cost of

purchased gas to its base tariff rates in the following manner:

(1) Producer rate changes shall be applied to the commodity

component of Seller's two-part rates or to the

volumetric rates of its one-part rates.

(2) Pipeline supplier rate changes shall be applied as

billed to Seller's two-part rates or applied to its

volumetric rates in a manner which maintains West

Texas Gas, Inc.'s one-part rate design.

(c) Determining the current adjustment - (1) Method for

projecting cost of purchased gas. Seller shall project its

purchased gas costs based on:

(i) The best estimate of the quantities of natural gas Seller

expects to purchase and to receive in nonconcurrent

exchange transactions during the three months beginning on

the effective date of the PGA; and

(ii) Known and measurable changes in the rate, based on

contractual obligations that are in existence on the date the

PGA is filed.

(2) Limitation on projecting cost of purchased gas. Seller

may only project its purchased gas costs based on gas supply attached

to its system as of the effective date of the PGA.