Reliant Energy Gas Transmission Company

Fourth Revised Volume No. 1

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Effective Date: 12/31/1996, Docket: RP97-193-000, Status: Effective

First Revised Sheet No. 261 First Revised Sheet No. 261 : Effective

Superseding: Original Sheet No. 261

GENERAL TERMS AND CONDITIONS

(continued)

18.9.3 Results of Prudence Challenge.

(a) Unsuccessful Challenge: If the Challenger

fails to prove that CSC in an amount

greater than that absorbed by Transporter

in calculating the Subject Eligible CSC

were incurred imprudently, the Challenger

will be required to make additional CSC

payments to Transporter. The amount of

such payments will be determined by

multiplying the relevant Challenger's

Percentage, times the lesser of: (a) the

Subject Eligible CSC being challenged and

not shown to be imprudently incurred, or

(b) the applicable Relevant Absorption

Level. This amount will be billed to the

Challenger as a direct bill payable either

within thirty (30) Days of the date of the

Commission's final order on such challenge,

or at the option of the Challenger,

amortized on a monthly basis over the

remainder of the Recovery Period, with

interest calculated at the maximum rate

authorized from time to time pursuant to 18

C.F.R. 154.501 compounded annually. No

such payments shall excuse the Challenger

from making any and all other applicable

payments for any services received by such

person from Transporter.

(b) Successful Challenge: If the Challenger

successfully challenges the prudence of any

CSC sought to be recovered by Transporter

and proves that the amount of CSC

imprudently incurred is greater than the

Threshold Difference, Transporter will

adjust the maximum CSC Charge otherwise

applicable to the services provided that

customer. The amount of such adjustment

will be determined by (i) multiplying the

Challenger's Percentage by the amount of

imprudent CSC which exceeds the Threshold

Difference, and then (ii) dividing the

resulting amount by the product of (A) the

successful Challenger's actual

jurisdictional throughput included within