Transwestern Pipeline Company

Second Revised Volume No. 1

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Effective Date: 11/01/1996, Docket: RP95-271-007, Status: Effective

3rd Revised Sheet No. 5B.01 3rd Revised Sheet No. 5B.01 : Effective

Superseding: 2nd Revised Sheet No. 5B.01

FOOTNOTES (cont.)

9/The Maximum FTS-1 Reservation Charge and FTS-1 Commodity Charge

applicable to the Current Firm Shippers listed below on

Transporter's system, during the term of their respective FTS-1 Firm

Service Agreements, ("Settlement Base Rates") shall be calculated and

charged as set forth below.

The Settlement Base Rates shall increase beginning November 1, 1998 on

an annual basis by sixty percent (60%) of the increase in the implicit

price deflator to the Gross Domestic Product ("GDP") or a mutually agreed

similar indicator should the GDP no longer be available on a continuing

periodic basis; provided, however, such annual increase shall not be less

than two percent (2%) or greater than five percent (5%) of the prior

year's Settlement Base Rates. This Settlement Base Rate adjustment will be

determined on the latest four quarters of initial data published by the U.S.

Government which is available prior to each November 1.

The amount of the Settlement Base Rates Reservation Charge as determined

under the foregoing escalator provision shall be reduced, every November 1

during the primary term of each Current Firm Shipper's FTS-1 Firm Service

Agreement, by $0.0030 per MMBtu of each Current Firm Shipper's MAXDTQ in

each Area (East of Thoreau, West of Thoreau, and/or San Juan Lateral, as

applicable), as set forth in each Current Firm Shipper's FTS-1 Firm Service

Agreement. The rate reduction shall be applied after the applicable

escalated Settlement Base Rates are determined in order to calculate the

actual rates to be paid during the particular period. In calculating

subsequent Settlement Base Rates Reservation Charges to be made effective on

November 1 of each year under the escalator provision, the rate which is

escalated shall be the prior year's escalated Settlement Base Rates

Reservation Charge before subtracting the $0.0030 per MMBtu. Such rate

reduction shall accrue notwithstanding the two percent (2%) escalator floor

provided herein.

An example of the Settlement Base Rate Reservation Charge rate reduction

calculation is provided below. This example does not reflect the actual

rates to be paid by any Current Firm Shipper.

SBR = Settlement Base Rates, including Reservation and Commodity,

Docket Nos. RP95-271-000 and RP95-271-003.

GDP = Gross Domestic Product as published by the U.S. Government.

Change in GDP = The increase in the implicit price deflator to the

GDP based on the latest four (4) quarters of initial data published by

the U.S. Government and which is available prior to each November 1. Such

increase shall be subject to a two percent (2%) floor and a five percent

(5%) ceiling.

Escalation Factor = Percentage rate (%) at which to escalate the SBR on

an annual basis. Specifically, sixty percent (60%) of the current year's

Change in GDP. Escalation Factor = [60% X (Change in GDP from Prior Year/

Prior Year GDP)]

Year 1

Escalated SBR Reservation Charge = [Prior Year's SBR Reservation

Charge X (1+ Escalation Factor)]

Rate Reduced Escalated SBR Reservation Charge = (Year 1 Escalated

SBR Reservation Charge - $0.003)

Year 2-8

Escalated SBR Reservation Charge = [Prior Year's SBR Reservation

Charge X (1+Escalation Factor)]

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