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. 32R Original Sheet No. 32R : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

19.6 Assessment of past performance (Continued):

(c) Gas costs requiring specific approval for surcharge

recovery. The amount of gas cost which requires specific ap-

proval by the Commission for surcharge recovery is the difference

obtained by subtracting Y from X, if greater than zero, where:

X= The actual cost of gas purchased in a test interval

determined in paragraph (d) of this section; and

Y= The test amount determined by multiplying the computed

projected gas costs, determined in Paragraph 19.6(e),

by 1.03.

(d) Actual cost of gas purchased. The actual cost of gas

purchased is the monthly amounts determined in Paragraph

19.5(g)(1) hereof for the gas purchased in the test interval:

(1) Less adjustments for exchange transactions and

transportation imbalances;

(2) Including only the gas cost components that were used

to compute the projected average cost of gas that is

compared in a test interval; and

(3) Excluding any demand costs permitted to be passed

through a pipeline's two-part rates on an as-billed basis

under Paragraph 19.5(b)(2).

(e) Computed projected cost of gas. Seller shall

calculate its computed projected gas costs by multiplying:

(1) The quantities of natural gas purchased and/or received

during a PGA effective period within a test interval by