Valero Interstate Transmission Company

First Revised Volume No. 2

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

Original Sheet No. 35 Original Sheet No. 35 : Superseded

(a) Interstate shall directly bill Buyer in one lump sum, twenty-

five percent (25%) of its take-or-pay buy-out and buy-down costs within

fifteen (15) days following the date payment is made by Interstate. Buyer

shall pay to Interstate this lump sum within fifteen (15) days of receipt

of invoice from Interstate.

(b) Interstate shall bill Buyer, on a monthly basis over thirty-six

(36) months a Take-or-Pay Commodity Rate Surcharge as defined in the

provisions filed as Exhibit (E) in Docket No. RP90-187-000, which shall be

calculated to recover fifty percent (50%) of Interstate's take-or-pay

buy-out and buy-down costs. Such Commodity Rate Surcharge shall include

carrying charges determined in accordance with Section 154.67 of the

FERC's Regulations. Upon termination of thirty-six (36) months from the

date of first delivery under this Agreement the then current unpaid balance

of fifty percent (50%) of Interstate's take-or-pay buy-out and buy-down

costs in the unrecovered take-or-pay cost account shall become due and

payable 60 days after expiration of the thirty-six (36) month period.

Buyer shall pay this amount within fifteen (15) days of receipt of invoice

from Interstate. Such invoice shall include a statement showing the

derivation of the unpaid balance.

3. On or before the twentieth (20th) day of each calendar month after

deliveries of gas are commenced hereunder, Interstate shall render a

statement to Buyer showing the volume of gas delivered during the preceding

calendar month, and the amount due therefor. Buyer shall pay any amounts

due prior to the first day of the following month.

4. If Buyer should fail to pay the full amount due Interstate when, the

same is due, as herein provided, and Interstate incurs expenses resulting

from the failure of Buyer to pay, then Buyer shall reimburse Interstate for

the interest paid by Interstate arising from those expenses. If such

failure to pay continues for sixty (60) days, Interstate may suspend

deliveries of gas hereunder or cancel this Agreement, but the exercise of

such right shall be in addition to any and all other remedies available to

Interstate.

5. Each party shall have the right at all reasonable times to examine

the books, records, and charts of the other party to the extent necessary

to verify the accuracy of any statement, charge, computation, or demand

made under or pursuant to any of the provisions of this Agreement.