K N Interstate Gas Transmission Co.

Third Revised Volume No. 1-B

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Effective Date: 01/01/1997, Docket: RP97- 81-001, Status: Effective

First Revised Sheet No. 36 First Revised Sheet No. 36 : Superseded

Superseding: Original Sheet No. 36

GENERAL TERMS AND CONDITIONS FOR SERVICES - continued

When any Shipper bids the maximum rate, such Shipper is

only required to bid up to the maximum rate for its

requested receipt and delivery points, not the maximum

rate which may apply to different receipt and delivery

points which could be charged for such service.

Multiple bids (defined as different bids made for

different portions of the total capacity) will be

permitted.

18.4 BEST OFFER

Transporter will determine which bid constitutes the

best offer by determining the highest economic unit

value (per MMBtu of capacity) to Transporter. A

calculation based on the formula and interest rate set

forth in section 23.5 will be used to determine the

highest economic unit value. The comparative economic

unit value of each bid will be determined by

calculating the Net Present Value (NPV) of the

reservation charges or other form of revenue guarantee of each

offer over either the term of the offer or five (5) years,

whichever is less, and then dividing by the quantity of the

respective bid. However, if the bid is at maximum rate and the

term is more than five (5) years, the entire term will be

considered in determining the economic unit value. For a

Shipper's bid with a reservtion rate or other form of revenue

guarantee which exceeds the maximum Recourse Rate during all or

any portion of the bid term, the NPV calculated for the bid may

not exceed the NPV calculated assuming that the maximum

Recourse Rate shall be in effect during the full term of the

bid.

In the event equivalent offers are submitted, the

capacity will be made available on a pro rata basis to

the equal bidders. Should any one of the equal bidders

veto their pro rata allocation of the capacity,

Transporter will then conduct a lottery to select the

winning bidder, who will then, if the bid is not

matched under Section 18.5 below, be allotted its

requested capacity. The remainder of said capacity, if

any, will be available to the other equal bidder(s) on

a pro rata basis, which will again trigger the

veto/lottery selection process.

Transporter will post the name of the winning bidder of

the gas for a period of no less than five (5) work

days.