Transwestern Pipeline Company

Second Revised Volume No. 1

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Effective Date: 06/01/1994, Docket: RP94-227-000, Status: Effective

9th Revised Sheet No. 87 9th Revised Sheet No. 87 : Superseded

Superseding: Substitute 8th Revised Sheet No. 87

GENERAL TERMS AND CONDITIONS

(continued)

25. TRANSITION COST RECOVERY MECHANISM (TCR MECHANISM)

25.1 Purpose and Applicability: The following establishes alternative

Transition Cost Recovery Mechanisms which Seller may implement:

a. This Section 25(a) establishes a Transition Cost Recovery

Mechanism (TCR Mechanism) for the purpose of recovering

Transition Costs, as defined below, not absorbed by Seller,

through a TCR Fee and a TCR Surcharge applicable to

quantities of natural gas sold or transported under any of

Seller's Rate Schedules in Volume No. 1 of Seller's FERC Gas

Tariff. Such costs shall be defined as either (1) any costs

as defined in Section 25.2(a), actually paid or (2) all

payments made which qualify under the Litigation Exception.

Seller agrees to absorb 25% of such Transition Costs as long as

Seller is permitted to collect by a fixed charge 25% of

Transition Costs. Such fixed charge shall be allocated among

Seller's jurisdictional and non-jurisdictional firm sales

and transportation customers pursuant to Section 25.3 and

shall be charged to Seller's jurisdictional firm sales and

transportation customers through the TCR Fee pursuant to

Section 25.4. The remaining 50% of such TCR costs shall be

charged to all applicable sales and transport customers through

the TCR Surcharge A or B, as applicable, pursuant to Sections

25.5, 25.6, and 25.7, where applicable.

b. This Section 25(b) establishes a Transition Cost Recovery

Mechanism (TCR Mechanism) for the purpose of recovering

Transition Costs, as defined above,through a TCR Surcharge

applicable to quantities of natural gas sold or transported

under any of Seller's applicable Rate Schedules in Volume No. 1

of Seller's FERC Gas Tariff. Seller shall absorb 25% of such TCR

costs and shall be permitted to collect the remaining 75% of

such TCR costs from all applicable sales and transportation

customers through the TCR Surcharges B and C pursuant to

Sections 25.5, 25.6, and 25.7. For purposes of this procedure,

only the following Sections shall apply: 25.2 a,d,e,f,g, 25.4

(where applicable), 25.5,25.6, 25.7, 25.8 and 25.9.