K N Interstate Gas Transmission Co.

Second Revised Volume No. 1-B

Effective Date: 11/01/1994, Docket: RP94-397-000, Status: Effective

First Revised Sheet No. 59 First Revised Sheet No. 59 : Superseded

Superseding: Original Sheet No. 59

GENERAL TERMS AND CONDITIONS FOR SERVICES - continued

26.2 UPSTREAM PIPELINE TRANSITION COSTS.

To the extent Transporter assigns its upstream capacity to its

customers, such customers will be responsible for all costs related

to that capacity. Costs related to any capacity not assigned will

be collected from all FT customers through a demand-based surcharge

mechanism.

26.3 GAS SUPPLY REALIGNMENT TRANSITION COSTS.

Beginning March 1993, Transporter will make available for review

its gas supply contracts which Transporter has determined are not

required to provide MSS Service. Within seven (7) business days

after the Commission issues an order accepting Transporter's

revised Compliance Filing in Docket No. RS92-19, all parties are

free to submit to Transporter, written notice of their binding

election to take direct assignment of specific Transporter supply

contracts. Parties have the right to take assignment of

Transporter's non-CAM gas, to the extent that parties also takes

assignment of the same percentage of net present value share of CAM

gas. Full assignment of contracts will become effective upon

implementation of Transporter's Compliance Filing under Order Nos.

636, 636-A and 636-B. After seven (7) business days from the date

the Commission issues an order accepting Transporter's revised

Compliance Filing in Docket No. RS92-19, Transporter may buyout or

realign its remaining CAM gas supply contracts which have not been

assigned. GSR costs shall include buyout, buydown or other

reformation costs relating to CAM gas contract activity plus

carrying charges.

a. DEFINITIONS.

(1) CAM Gas - Gas which K N has under contract and is

currently priced at or above $2.50 per MMBtu delivered

into K N pooling receipt point and for which K N has no

contractual right to terminate the contract, market out,

reduce takes, or control production.