Kinder Morgan Illinois Pipeline LLC

Original Volume No. 1

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Effective Date: 12/01/2007, Docket: RP08- 34-000, Status: Effective

Original Sheet No. 145 Original Sheet No. 145 : Effective






(a) These amounts shall be used first to compensate

KMIP for any cashout expenses and for any extraordinary out-of-

pocket costs it has incurred (including any compensation KMIP

agreed to provide for voluntary actions) to alleviate the

conditions which were created by the imbalance or the Unauthorized

Overrun or other violation or which resulted in the issuance of an

Operational Flow Order or the declaration of Critical Time or other

operational action taken by KMIP under Section 32 of these General

Terms and Conditions. Costs that may be netted against penalty

revenue may include only actual, verifiable and prudent incremental

costs incurred to resolve the reliability concerns actually caused

by the particular party or parties against which the penalty has

been assessed and must relate to a circumstance which resulted in

the penalty revenue to be credited under this provision. If these

amounts are not adequate to reimburse KMIP for cashout expenses,

the unreimbursed cashout expenses shall be carried forward to

future Years until recouped.


(b) (1) Any remaining amounts will be refunded pro

rata to all Shippers, except as provided below, through a credit to

current billing wherever feasible, based on the ratio of a

Shipper's total base reservation and base commodity charges paid

during each Month to all such charges paid by all Shippers during

such Month; provided, however, that such calculation shall exclude

charges paid by any Shipper during any Month in which such Shipper

failed to comply with an Operational Flow Order or had an

Unauthorized Overrun. The refunds in the prior sentence shall be

calculated on a Monthly basis but distribution of the credit shall

be annual. If the costs to be netted against penalty revenue exceed

the penalty revenue in any Month, the excess costs may be carried

forward to be applied against penalty revenue in subsequent months.

Thus, while distribution is made annually, the net penalty revenue

credit shall be calculated on a Monthly basis, subject to the carry

forward of costs as stated in the prior sentence. A Shipper which

failed to comply with an Operational Flow Order or which had an

Unauthorized Overrun shall be excluded from distribution of net

penalty revenues only for the Month in which that violation

occurred. In the event that, for any Month, no penalty revenues

were distributed because all Shippers failed to comply with

Operational Flow Orders for that Month, then the amount of the

penalty revenue for that Month shall be held by KMIP for

application under Section 9.7(a) for a period of up to two (2)

years, at the end of which time the remaining amount will be

included in the amount for distribution in the then current annual