Valero Interstate Transmission Company

First Revised Volume No. 2

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

Original Sheet No. 12 Original Sheet No. 12 : Superseded

PURCHASED GAS ADJUSTMENT CLAUSE

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(continued)

(d.) Carrying Charges: (1) Shall be computed at a rate equal

to the applicable calendar quarterly rate stated on an

annual basis and carrying charges shall be compounded

quarterly as specified in Section 154.67(c)(2)(iii) of

the Commission Regulations; (2) The rate for computation

of carrying charges shall be computed monthly following

the procedures prescribed in Section 154.305(h)(4) of the

Commission Regulation and; (3) The carrying charge base

for computing monthly carrying charges shall be the prior

months ending balance adjusted for any applicable

deferred income taxes recorded consistent with Section

154.303(c)(3) of the Commission Regulations and; (4) any

other applicable adjustments specified in Section

154.305(h)(3) provided however, that the carrying charge

base is subject to the three percent (3%) assessment of

past performance test specified in Section 154.306 of

the Commission Regulations.

(e.) Amortization of the Unrecovered Purchased Gas Cost

Account Balance: The Unrecovered Purchased Gas Cost

Account shall be debited or credited each month to

reflect the amortization of the balance accumulated in

the current deferral subaccount of Account 191 during

Vitco's annual deferral period ending January 31st unless

Section 154.310 is applicable. The amount of monthly

amortization shall be equal to the product of (1) Vitco's

MMBtu sales quantity to Buyer during the month and (2)

the current Unrecovered Purchased Gas Cost Amortization

rate defined in paragraph 5(f) herein. Account 191 shall

be subdivided so that the accumulated Unrecovered

Purchased Gas Cost for each period and the amortization

thereof through the Purchase Gas Cost Amortization Rate

will be accounted for separately. Any balance, positive

or negative, of Unrecovered Purchased Gas Cost remaining

at the end of the amortization period shall be transferred

forward to the current accumulation period.