K N Interstate Gas Transmission Co.

Second Revised Volume No. 1-B

Effective Date: 11/01/1994, Docket: RP94-397-003, Status: Effective

Substitute Second Revised Sheet No. 66 Substitute Second Revised Sheet No. 66 : Superseded

Superseding: First Revised Sheet No. 66

GENERAL TERMS AND CONDITIONS - continued

for (1) Production Area 4, and (2) all other production and market

areas combined. In this regard, the costs assigned to IT services

and the revenues received under Rate Schedule IT for Production

Area 4 shall be separately maintained and isolated from other

production and market area amounts for the purpose of applying the

provisions of this section.

a. By December 30 of each year, Transporter shall submit to the

FERC a reconciliation filing setting forth a comparison of

revenues received from Rate Schedule IT (excluding

transition cost surcharges, the variable cost component of

the Rate Schedule IT rate in effect when the revenues were

generated and applicable surcharges including, but not

limited to ACA and GRI) to the costs allocated to Rate

Schedule IT transportation service for the twelve (12) month

period ended on September 30, excluding transition cost

surcharges and variable costs allocated to Rate Schedule IT

service. Rate Schedule IT revenues received in excess of

such allocated costs shall be considered excess revenues and

be subject to the provisions of Subsection 27.1.b. hereof.

b. To the extent the revenues received from Rate Schedule IT

service, as described in Subsection 27.1.a. above, exceed

the costs allocated to such service, certain of the excess

revenues shall be refunded through a direct payment. A

refund allocation factor for each FT and NNS customer shall

be calculated by dividing the actual FT reservation

revenues, including the imbedded FT reservation revenues

within NNS, for each customer by the total FT reservation

revenues inclusive of the imbedded FT reservation revenues

within NNS during the preceding twelve (12) month period

ending on the anniversary date of this provision. The

reservation revenues used to calculate the refund allocation

factor shall be net of all applicable surcharges including,

but not limited to, ACA and GRI surcharges. The resulting

refund allocation factor shall be multiplied by ninety

percent (90%) of the excess revenues as defined in

Subsection 27.1.a. to arrive at the applicable direct

payment for each FT and NNS customer.