TransColorado Gas Transmission Company

Original Volume No. 1

Effective Date: 11/01/2001, Docket: RP02- 5-000, Status: Effective

Original Sheet No. 130 Original Sheet No. 130 : Superseded

RATE SCHEDULE PALS

8.4 (a) In the event that Shipper still has gas parked at the

end of its contract term or because of failure to comply with the notice

pursuant to Sections 3 and 8.2 above, the remaining balance shall be

forfeited to TransColorado, free and clear of any adverse claims.

(b) Conversely, if the Shipper has not redelivered gas which

was loaned by TransColorado by the end of its contract term or within the

timeframe specified in the notice in Sections 3 and 8.2 above, the Shipper

must purchase the unreturned balance at 150% of the highest index price

from Inside FERC's Gas Market Report first of the month index for El Paso

Natural Gas, San Juan Basin, as published by McGraw-Hill Companies during

the term of the loan. In the event that the information used to determine

the Monthly Index Price for the term of the loan is not available, then

the Shipper must purchase the unreturned balance at 150% of the highest of

the Midpoint prices for New Mexico San Juan Basin, El Paso, Non-Bondad,

for each week (or the superseding reference if the publication titling is

revised), as publishued in Gas Daily, as published by Financial Times

Energy during the term of the loan. The amounts collected are subject to

crediting in accordance with Section 12.10 of the General Terms and

Conditions of this Tariff.

will be implemented by TransColorado on a non-discriminatory basis.

8.5 In circumstances where Shipper is unable to eliminate its PALS

RO balance because TransColorado is unable to accept the PALS RO

nomination, Shipper shall take any action to reduce the balance which

TransColorado can accommodate and Shipper shall be granted additional time

to eliminate its PALS RO balance corresponding to the time TransColorado

was unable to accept the PALS RO nomination. Shipper shall not incur any

penalty or daily fees as to that portion of the balance resulting from

TransColorado's inability to accept the PALS RO nomination. Such

extension shall only apply in instances where a Shipper's inability to

eliminate the PALS RO balance is attributable to TransColorado's inability

to accept and confirm PALS RO nominations. Shipper remains responsible to

nominate the appropriate level of transportation to meet TransColorado's

notification requirements.

9. GENERAL TERMS AND CONDITIONS

The applicable General Terms and Conditions of this Tariff are

hereby made a part of this Rate Schedule. To the extent that the General

Terms and Conditions are inconsistent with the provisions of this Rate

Schedule, the provisions of this Rate Schedule shall govern.