Texas Eastern Transmission Corporation

Sixth Revised Volume No. 1

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Effective Date: 11/01/1996, Docket: RP96-378-000, Status: Effective

First Revised Sheet No. 544 First Revised Sheet No. 544 : Effective

Superseding: Original Sheet No. 544

GENERAL TERMS AND CONDITIONS

(Continued)

9. SEGMENT CAPACITY ENTITLEMENTS

9.1 This Section sets forth the terms and conditions regarding the

Base and Operational Segment Capacity Entitlements for Customers paying

Reservation Charges under Section 3.2 of Rate Schedules CDS, FT-1 and SCT

(such Customers hereinafter referred to as "Entitlement Holders"). The

Operational Segment Capacity Entitlements shall be controlling for the

scheduling of gas within the Access Area subject to this Section 9 and

Section 4.3. Pipeline shall recalculate on an annual basis in a not unduly

discriminatory manner Customer's Operational Segment Capacity Entitlements

based on information provided by Customer or Pipeline projections,

including the peak day receipts of gas by Pipeline and deliveries of gas by

Pipeline. Such recalculated Operational Segment Capacity Entitlements,

along with supporting documentation explaining the basis for any change(s),

shall be filed with the Commission each September 1 to be effective the

following November 1, subject to Commission approval. Adjustments to

entitlements pursuant to this Section 9.1 will be applied to capacity

obtained by Replacement Customers pursuant to Section 3.14, each November,

as applicable. Adjustments will be applied pro rata between each Customer

and Replacement Customer, or such other method mutually agreeable to the

affected parties. The Operational Segment Capacity Entitlements as well as

the input distribution of Operational Segment Capacity Entitlements at each

compression station site and pipeline junction are displayed in the LINKþ

System. Operational Segment Capacity Entitlements as displayed in the

LINKþ System will be updated as required to include changes in entitlements

pursuant to Section 3.14 and Sections 9.1 and 9.9. These updated

Operational Segment Capacity Entitlements will serve as the basis for

scheduling and curtailment of service in accordance with Section 4 and this

Section 9. The Base Segment Capacity Entitlements represent the

distribution of capacity to Entitlement Holders calculated by assuming that

all quantities flowing through each segment enters such segment at the

furthermost upstream point and exits such segment through the furthermost

downstream point. Base Segment Capacity Entitlements are included as a

reference to assist Entitlement Holders in understanding the impact of

modifying the location of a Point of Receipt on the capacity of a given

segment.

An Entitlement Holder may cause in the aggregate quantities of natural

gas to be received into each of Pipeline's zones under Rate Schedules CDS,

FT-1 and SCT up to its Operational Segment Capacity Entitlements. To the

extent that receipt by Pipeline of quantities in excess of the Operational

Segment Capacity Entitlements for one Customer will not impair Pipeline's

ability to receive quantities of gas up to the Operational Segment Capacity

Entitlements requested by any other Customers or impair Pipeline's ability

to meet its other firm obligations, such excess quantities (herein called

"Preferential Capacity") may be utilized by such Customer. Entitlement

Holders are permitted to use such Preferential Capacity to source from the

Access Area the lesser of Customer's MDQ or an aggregate quantity of gas

equal to the sum of Customer's ETX/M1 Zone Boundary Entry Quantity, ELA/M1

Zone Boundary Entry Quantity (which includes Customer's Transportation Path

entitlement from Kosciusko, Mississippi), TGC STX/M1 Zone Boundary Entry

Quantity, TGC WLA/M1 Zone Boundary Entry Quantity, TXG ETX/M1 Zone Boundary

Entry Quantity and TXG WLA/M1 Zone Boundary Entry Quantity. In the event

gas tendered by more than one Entitlement Holder who has Operational

Segment Capacity Entitlements must be reduced, such reduction shall be pro