Transwestern Pipeline Company

Second Revised Volume No. 1

Effective Date: 04/01/1999, Docket: RP99-245-000, Status: Effective

Fourth Revised Sheet No. 91B Fourth Revised Sheet No. 91B : Effective

Superseding: Third Revised Sheet No. 91B

GENERAL TERMS AND CONDITIONS

25. TRANSITION COST RECOVERY SURCHARGE (TCR II)

A. Purpose and Applicability: The following establishes a transition

cost recovery surcharge (TCR II Reservation Surcharge") for the

purpose of recovering eligible transition costs under Order No. 528,

et al., as defined below.

B. Such TCR II Reservation Surcharge shall be applicable to the following

Current Firm Shippers: Citizens Utilities Company, Conoco, Inc.,

Duke Energy Trading and Marketing, L.L.C., El Paso Energy Marketing

Company, Pacific Gas and Electric Company (Gas), Texaco Natural Gas

Inc. and Southern California Gas Company.

C. TCR II Amounts: The TCR II Amounts to be recovered through the TCR II

Reservation Surcharge are eligible transition costs that Transporter

actually incurs on or before December 31, 1997, but shall not exceed

$16.5 million. Transporter shall be entitled to recover 100% of the

principal of TCR II Amounts as described herein but Transporter shall

not collect any interest on such amounts, excluding interest which may

accrue to an individual Shipper on delinquent payment of TCR II

Reservation Surcharges. Transporter waives recovery of any such

transition costs incurred after December 31, 1997.

D. TCR II Reservation Surcharge: The TCR II Reservation Surcharge will be

based on an Allocation Factor which will be calculated initially for

purposes of Transporter's first TCR II filing and then will be

recalculated to be effective on each subsequent November 1, during

the Amortization Period. The TCR II Reservation Surcharge will be

calculated in the following manner:

1) Allocation Factor:

a) The numerator of the Allocation Factor will be equal to the MAXDTQ for

Previously Held Capacity and to each Current Firm Shipper's MAXDTQ for

the West of Thoreau area plus five times the Current Firm Shipper's

actual deliveries (including released capacity volumes transported under

the Current Firm Shipper's Service Agreement) in the West of Thoreau

area during the previous twelve (12) months. If a Current Firm

Shipper's Service Agreement terminates before its allocated share of the

TCR II costs are fully amortized, the numerator of such Current Firm

Shipper's Allocation Factor will be fixed at its average numerator for

the three years preceding the termination of its Service Agreement, and

that numerator will continue to be used until the TCR II costs are fully

amortized;

b) The denominator of the Allocation Factor will be the sum of the

numerators of all the Current Firm Shippers and all Previously Held

Capacity;