Reliant Energy Gas Transmission Company

Fifth Revised Volume No. 1

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Effective Date: 12/01/2002, Docket: RP03- 60-000, Status: Effective

Second Revised Sheet No. 320 Second Revised Sheet No. 320 : Effective

Superseding: First Revised Sheet No. 320

GENERAL TERMS AND CONDITIONS

(continued)

5.7 Balancing (continued)

To the extent that any unresolved Net

Undersupplies Quantity remains thereafter,

the same process will be repeated, using

the Day with an aggregate imbalance

comprised of Undersupplies and the next

highest Daily Index Price for such Month,

and the same premium factor, and so forth,

until the entire Net Undersupplies

Quantity has been resolved.

(2) A. Transporter may use proceeds received from

cash-outs in accordance with

Section 5.7(c)(ii) to purchase, at any

time and from time to time, quantities of

Gas for system operation purposes. Gas

purchased by Transporter pursuant to this

Section 5.7(c)(ii)(2)A. may be utilized by

Transporter to satisfy such operational

requirements as are necessary on its

system from time to time, or may be

disposed of by sale. Transporter shall

establish accounts in which to book

payments made to or by Transporter under

the procedures specified in this Section

5.7.

B. Transporter shall calculate the total net

revenues or net costs attributable to the

cash-out provisions of this Tariff for

each 12 Month period ending January 31,

beginning with the 12 Month period ending

January 31, 1996 ("Accrual Period"),

including interest, in accordance with

Section 154.501 of the Commission's

regulations, on the appropriate amounts

calculated from the end of the Accrual

Period to the end of the calendar quarter

in which the adjustment for such Accrual

Period is made.