U-T Offshore System, L.L.C.

Third Revised Volume No. 1

 Contents / Previous / Next / Main Tariff Index

Effective Date: 06/01/1997, Docket: RP97-146-001, Status: Effective

Second Revised Sheet No. 63 Second Revised Sheet No. 63 : Superseded

Superseding: First Revised Sheet No. 63

GENERAL TERMS AND CONDITIONS

(Continued)

(g) The Qualified Bid must commit to payment of the maximum commodity charge

for Rate Schedule FT service, as set forth on Sheet No. 4 of this tariff,

in connection with use of the capacity to be released, as well as all

other applicable add-on charges and surcharges under U-TOS' tariff,

including, but not limited to, any F.E.R.C. Order No. 636 commodity-based

transition cost recovery surcharge.

17.7 Procedures for Allocation of Released Capacity.

(a) U-TOS shall rank all bids and select the "best bid" or "better offer" as

defined in subsection 17.7(b) from among the bids received. However, if

more than one bidder submits the "best bid" or "better offer," the first

bidder in time, inclusive of the Prearranged Shipper, shall be selected

and posted as the "best bid" or "better offer," unless the Releasing

Shipper specifies another tie-breaking methodology in its Release

Proposal. If multiple bids meeting minimum conditions have been

submitted, bids shall be awarded best bid or better offer first, until all

offered capacity is awarded. Any bid submitted for released capacity

pursuant to Section 17.6 may state that its acceptance is contingent;

provided, the Release Proposal allows the submission of contingent bids

pursuant to subsection 17.4 of this Section 17. The Replacement or

Prearranged Shipper submitting the contingent bid shall have a reasonable

time, as specified by the Releasing Shipper, within which to eliminate the

contingency or withdraw its bid. The Replacement or Prearranged Shipper

may eliminate the contingency by notifying U-TOS of such elimination via

U-TOS' Electronic Delivery Mechanism no later than 3 p.m. Central Time on

the business day prior to the nomination deadline for the effective date

of the release. If the Replacement or Prearranged Shipper fails to notify

U-TOS that the contingency is not eliminated within such time, such

contingent bid shall be deemed rejected by U-TOS for failure to eliminate

the contingency in accordance with the Releasing Shipper's Release

Proposal. Any Replacement Shipper may make an upward revision to or

withdraw its bid during the bid period; provided, U-TOS will allow any

Prearranged Shipper to match, in accordance with subsection 17.7(c), the

"best bid" or "better offer" after the close of the bid period; however,

if the Replacement Shipper submits more than one bid for the same

capacity, the lower bid will automatically expire. Replacement Shipper

shall not have the opportunity to use its ability to withdraw its bid in

order to submit a lower bid, if its submitted bid is higher than necessary

to obtain the capacity.

(b) "Best Bid" or "Better Offer." The "best bid" or "better offer" shall be

(1) determined in accordance with the bid evaluation method specified by

the Releasing Shipper pursuant to subsection 17.4; or (2) in the event the

Releasing Shipper elects not to submit a bid evaluation method, the "best

bid" or "better offer" shall be selected from among the Qualified Bid(s)

received during the bid period, including any extension thereof, in

accordance with the following procedures:

(i) U-TOS shall calculate the Net Present Value of all Qualified Bids

and applicable Prearranged Transactions by applying the proposed

reservation charge to the amount of capacity proposed to be taken

for the proposed duration of the capacity release transaction, and

discounting resultant dollar figure to present value on the basis of

the Federal Energy Regulatory Commission interest rate described in

18 CFR 154.67(c)(2)(iii)(A) that is in effect on the date