K N Interstate Gas Transmission Co.

First Revised Volume No. 1-C

Effective Date: 12/02/1994, Docket: RP95- 35-002, Status: Effective

Substitute Original Sheet No. 40 Substitute Original Sheet No. 40 : Superseded

Superseding: Original Sheet No. 40

RATE SCHEDULE IT-BW - continued

Imbalance as Rate as a % of Average Market Index*

% of Actual Deliveries KNI Charge KNI Credit

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

0 to 3% 100% 100%

Over 3% - less than 5% 105% 95%

5% - less than 10% 110% 90%

10% - less than 20% 120% 80%

20% or more 130% 70%

* Average of the first of the month index and the

mid-point of the aftermarket range for ANR, El Paso,

NGPL, NorAm, PEPL, Transwestern, and WNG as reported

by "Inside FERC Gas Market Report", for the month in

which the imbalance occurred.

c. DAILY VARIANCE CHARGE.

(1) If the sum of actual receipts at all physical Receipt

Points under the Service Agreement varies from the

aggregate Approved Daily Nomination at such Receipt

Point or the sum of all deliveries at all physical

Delivery Points varies from the aggregate Approved

Daily Nomination at such Delivery Points by 7% or 50

MMBtu, whichever is greater (hereinafter called the

Tolerance Level), a Daily Variance Charge shall be

assessed. The Daily Variance Charge shall be applied

to each Service Agreement with respect to which actual

receipts or deliveries vary from the aggregate

Approved Daily Nomination in excess of the Tolerance

Level. The Daily Variance Charge shall be $0.09 per

MMBtu for each MMBtu of receipts or deliveries in

excess of the tolerance level, on a daily basis.