Valero Interstate Transmission Company

First Revised Volume No. 2

Effective Date: 11/01/1991, Docket: GT91- 42-000, Status: Effective

Original Sheet No. 11 Original Sheet No. 11 : Superseded

PURCHASED GAS ADJUSTMENT CLAUSE

-------------------------------

(continued)

(b.) Monthly Deferrals of Under or Over Recovered Purchased

Gas Costs: The Unrecovered Purchased Gas Costs Account

shall be debited or credited each month by Vitco with the

deviation in monthly cost of purchased gas from Vendors

under contracts applicable to Buyer. The Monthly

deviation in cost of purchased gas (increase or decrease)

shall be the difference obtained by subtracting (1) Vitco's

total MMBtu sales quantity for each month times the

Purchased Gas Cost Rate determined in accordance with

paragraph (4)(d) from; (2) the actual net monthly

Purchased Gas Costs as defined in Section 154.302(j),

adjusted for exchange transactions and transportation

imbalances as required under Section 154.305(j).

(c.) Refunds: Following the procedures outlined under Section

154.305(i) Vitco shall (1) maintain a separate refund

subaccount in which the jurisdictional portion of Vendors

refunds, billing adjustments, and revenue credits are

recorded; (2) compute carrying charges each month based

on the prior month's subaccount balance of Account 191

using procedures specified in paragraph 5(d) herein; (3)

make a lump sum disbursement to its jurisdictional

customers within ninety (90) days of the end of the month

when the refund subaccount balance reaches the refund

disbursement level of the lesser of $2 million, or one

cent per MMBtu of the most recent 12 months of sales; (4)

at the end of a deferral period the remaining amounts in

the refund subaccount shall be disbursed either by making

a cash refund or by transferring the amount to the

current deferral subaccount balance to be amortized as

part of the surcharge balance; (5) file an annual PGA

refund report.