Panhandle Eastern Pipe Line Company

First Revised Volume No. 1

Effective Date: 05/25/1996, Docket: RP96-214-000, Status: Effective

First Revised Sheet No. 310 First Revised Sheet No. 310 : Superseded

Superseding: Original Sheet No. 310

GENERAL TERMS AND CONDITIONS

(Continued)

18.7 GAS SUPPLY REALIGNMENT COSTS

(a) Purpose

This Section 18.7 establishes the means by which

Panhandle shall recover its Gas Supply Realignment

(GSR) Costs.

(b) Definitions

The following defines certain terms as they are used

in this Section 18.7:

(1)Gas Supply Realignment (GSR) Costs are actual

payments made in cash by Panhandle, or amounts

for which Panhandle has incurred a written

obligation or commitment to pay for buyouts,

buydowns, contract reformation, payments to

resolve or respond to litigation or arbitration

proceedings, or payments to assign contracts that

are attributable to customer elections made

pursuant to 18 C.F.R. 284.14(d) and carrying

charges, calculated in accordance with Section

154.501(d) of the Commission's Regulations, on

actual payments from the date such payments are

made to the effective date of the rate filing

made to recover such payments.

(2)Initial GSR Cost Collection Period will consist

of the three (3) years commencing with the

effective date of the rate filing to recover GSR

Costs.

(3)Carryover GSR Cost Collection Period will consist

of each annual extension in accordance with

Section 18.7(f) hereof to complete the full

recovery of Panhandle's GSR Costs.