North Baja Pipeline, LLC

Original Volume No. 1

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Effective Date: 07/27/2005, Docket: RP05-518-000, Status: Effective

Second Revised Sheet No. 8 Second Revised Sheet No. 8 : Effective

Superseding: First Revised Sheet No. 8





Explanatory Footnotes for Negotiated Rates

Under Rate Schedule FTS-1


5/ The transportation rate under this Agreement is a negotiated rate

consisting of a monthly reservation fee equal to $0.1019 times 30.4 days

for each month, plus a delivery rate of $0.0031 per Dth, plus ACA.

Shipper shall reimburse Transporter for fuel, line loss, and other

unaccounted for gas in kind at a rate of 0.7%. This rate shall be fixed

for the term of this Agreement.


Rate Protection Provision:

(1) This provision applies only to gas that is delivered to NBP at

Ehrenberg, AZ. To the extent NBP and Gasoducto Bajanorte ("GB")

separately provide long-term (greater than 364 days) firm

transportation service to a Third Party Shipper in the Western Zone

at a combined rate that is lower than $0.270 per Dth on a 100% load

factor basis (excluding non-pipeline surcharges), or in the Mexicali

Zone at a combined rate that is lower than $0.245 per Dth, then the

rate applicable to Shipper for service on NBP shall be reduced in

accordance with the following formula:


NR = OR - ((CTR - TPR) x 0.4286)


Where: NR = New Rate level at which Shipper will receive service on

NBP. Resulting unit rate will be converted to a

reservation/delivery structure where the delivery rate

will equal three (3) percent of the NR;

OR = Shipper's negotiated Original Rate on NBP or $0.105 per

Dth on a 100% load factor basis;

CTR = Competitive Threshold Rate which is $0.270 per Dth for

the Western Zone and $0.245 per Dth for the Mexicali

Zone; and

TPR = Third Party Rate for the combined NBP and GP path.


The Western Zone is defined as 115 degrees, 41 minutes, 21 seconds

west longitude, west to the interconnection with Transportadora de

Gas Natural de Baja California;


The Mexicali Zone is defined as 115 degrees, 41 minutes, 21 seconds,

east to 115 degrees, 11 minutes, 50 seconds west longitude;


A Third Party Shipper is defined as a shipper that is either the

owner, operator, or fuel supplier to electric generation facilities,

or affiliates of NBP or GB.