Panhandle Eastern Pipe Line Company

First Revised Volume No. 1

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Effective Date: 02/01/2002, Docket: RP00-395-003, Status: Effective

Original Sheet No. 272F Original Sheet No. 272F : Superseded

GENERAL TERMS AND CONDITIONS

(Continued)

schedules. A failure by one or more Shippers to comply

with an OFO may affect Panhandle's ability to provide such

deliveries and services. In such event and in addition to

other provisions hereof and not in lieu of any other

remedies or defenses available in law or at equity with

respect to any person, Panhandle will have no liability or

responsibility for its inability to provide deliveries and

services to any Shipper failing to comply with an OFO and

will be indemnified and held harmless by the Shipper(s)

failing to comply with Panhandle's FERC Gas Tariff and in

particular the provisions of this Section 12.17 against

any claims related to the failure to provide deliveries

and services, except to the extent such claims are the

result of Panhandle's negligence, bad faith or wilful

misconduct.

12.18 Third-Party Management Services

Subject to the conditions set forth in this Section, a Shipper

may obtain services from a third-party provider to manage

imbalances between actual receipts and deliveries; to manage

variances between scheduled and actual deliveries; and to supply

gas for overruns.

(a) Panhandle and the third-party provider have entered into an

agreement which defines how such provider will accommodate

Shipper's imbalances, scheduling variances, or overruns,

how the provider is to make the corresponding operational

changes, the limitations on the level of imbalances,

scheduling variances and overruns to be accommodated and

the consequences if such levels are exceeded or

operational changes are not made. The agreement must

provide Panhandle with the ability to call on the

third-party provider on a basis consistent with service

offered by the third-party provider to the Shipper. The

agreement must also specify a predetermined allocation

methodology and shall specify the extent to which and the

conditions under which the Shipper shall be kept whole

because the third-party provider is agreeing to take the

imbalance, scheduling variance or overrun. If there is an

operational balancing agreement at the point at which the

imbalance management service is to be provided, the

agreement must also provide that Panhandle shall not be

responsible for balancing within the agreed limits of the

management service.

(b) Panhandle and the Shipper have entered into an agreement

designating the Service Agreements for which the third-

party provider will take the imbalance, scheduling

variance, or overrun and designating the point(s) at which

the third-party provider will provide the imbalance

management service. The point(s) designated must have

electronic real-time metering or must be otherwise

agreeable to Panhandle.