East Tennessee Natural Gas Company

Second Revised Volume No. 1

Effective Date: 12/01/1996, Docket: RP97- 34-000, Status: Effective

First Revised Sheet No. 216 First Revised Sheet No. 216 : Superseded

Superseding: Substitute Original Sheet No. 216

BALANCING AGREEMENT (continued)

2.3 Allocation of Variances - The difference on any day between the Scheduled

Quantities and the actual quantity delivered at the Delivery Point(s) shall be

the Daily Variance and shall be allocated to this Agreement. The difference

between the sum of the Scheduled Quantities during a calendar month and the

total actual quantity delivered at the Delivery Point(s) during the calendar

month shall be the Monthly Operational Imbalance. Any Monthly Operational

Imbalances will be resolved in accordance with Article III.

2.4 Unauthorized Overruns - On any day which Balancing Party takes gas in excess of

the daily variance tolerance for the delivery point as established in an

operational Flow order issued pursuant to Transporter's General Terms and

Conditions, the Balancing Party shall be subject to an Unauthorized Overrun

Charge for all such excess volumes in accord with Section 14.8 of General Terms

and Conditions of Transporter's FERC Gas Tariff.

2.5 Reports on Actual Deliveries - Should Transporter not have the ability to

monitor actual deliveries at any Delivery Point on a daily basis, Balancing

Party shall provide to Transporter the best available information compiled on a

daily basis on the actual deliveries at such Delivery Point(s) within two

business days after the date of delivery. Nothing in this section will require

Balancing Party to install metering devices where none currently exist.

ARTICLE III

CORRECTION OF OPERATIONAL IMBALANCES

3.1 Corrections in Flow Rates During a Day - Balancing Party will be able to request

adjustments to actual deliveries at its Delivery Points at any time during the

production day by coordinating with Transporter's gas dispatchers. Transporter

will use reasonable efforts to accomodate those changed quantities when the

operating conditions on Transporter's system permits, taking into consideration

the nominations made by firm customers on Transporter's system.