Pacific Interstate Offshore Company

Second Revised Volume No. 1

Effective Date: 01/01/1994, Docket: RS92- 73-001, Status: Effective

Original Sheet No. 59 Original Sheet No. 59 : Effective

GENERAL TERMS AND CONDITIONS (cont'd)

17. CAPACITY RELEASE (Cont'd)

17.6 Calculation of Economic Value: The economic value

of each bid hereunder shall be determined by

multiplying the bid rate per MMBTU of capacity times

the bid amount of capacity times the term of the

bid. If the bid term is longer than one year, the

amounts bid for each succeeding year shall be

discounted through use of a net present value

calculation using as a discount factor the currently

effective interest rate calculated by the Commission

for refunds pursuant to 18 C.F.R. 154.67(c) (2)

(iii) (A).

17.7 Term: Any release under this Section shall be for

a minimum term of one Day and may have a maximum

term up to the earlier of (a) the expiration date

of this Tariff provision; (b) the expiration of the

remaining term of the underlying FT-1 Service

Agreement; or (c) termination of Transporter's

capacity release program by the Commission.

17.8 Scheduling: The Replacement Shipper shall be

responsible for all scheduling of capacity released

to a Replacement Shipper except that, for any firm

release of capacity subject to the right by

Releasing Shipper for recall, Releasing Shipper may

assume scheduling responsibility upon notice

received by Transporter during normal business hours

for gas receipts/deliveries for that day. Upon

receipt of such notice, Transporter shall follow

scheduling instructions only from Releasing Shipper

until Transporter's receipt of written notice from

Releasing Shipper that it no longer is assuming

scheduling responsibility. Transporter shall treat

written notice from Releasing Shipper as conclusive

evidence that the released capacity has been

recalled.