Texas Gas Transmission, LLC

Third Revised Volume No. 1

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Effective Date: 09/15/2008, Docket: RP08-392-000, Status: Effective

Original Sheet No. 3201 Original Sheet No. 3201 GENERAL TERMS AND CONDITIONS Section 20 (Cont'd) Based on the above listed criteria, a project shall be economically beneficial when the projected first year incremental revenues equal or exceed the projected first year incremental cost of service. When the project is determined to be economically beneficial, Texas Gas will pay for the cost of the contemplated facilities. When the delivery point facilities do not qualify under the economic test of this section, the facilities shall be installed at Customer's expense. When Texas Gas has previously paid for all or a portion of delivery point facilities under this facilities reimbursement policy, Customer shall, nevertheless, promptly pay Texas Gas for Texas Gas' net book value of such facilities when either of the following events occurs: (1) when Texas Gas' ability to fully recover such costs is denied in any Section 4 or Section 5 rate proceeding, or (2) when Customer ceases operations at the delivery point where the facilities were installed. (b) Texas Gas shall not construct or modify any facilities hereunder which will result in an increase or decrease in Texas Gas' mainline capacity, or which may compromise the operational integrity of Texas Gas' pipeline system. For those facilities which Texas Gas agrees to construct, Texas Gas will construct those facilities (1) pursuant to and subject to the authorization granted in Subpart F of Part 157 of the Regulations of the Federal Energy Regulatory Commission or (2) where the prior authorization of the Federal Energy Regulatory Commission is not required to construct such facilities. Texas Gas reserves the right to seek a waiver of the foregoing facilities reimbursement policy, for good cause shown, during any proceeding before the Commission instituted under Section 7 of the Natural Gas Act. Nothing in this policy statement shall require Texas Gas to file an application for a certificate of public convenience and necessity under Section 7(c) of the Natural Gas Act or from contesting an application for service filed pursuant to Section 7(a) of the Natural Gas Act. This Section 20.1 pertains to laterals or facilities at delivery points only. It is not intended to limit who may own, operate, install or pay for facilities downstream of a delivery point. It is the Customer's responsibility to assure that all facilities installed and owned by Customer or any other party downstream of a delivery point comply with all applicable governmental regulations and design requirements for their intended use (i.e., pressure, control, etc.). Texas Gas shall install, own, operate, and maintain such equipment unless otherwise agreed to in writing by Texas Gas and Customer. Unless otherwise agreed, Customer shall reimburse or cause Texas Gas to be reimbursed for the cost of such facilities. Such costs include, but are not limited to, operating and maintenance expenses, administrative and general expenses, gross-up for state and federal income taxes, taxes other than income taxes, depreciation costs and the time value of money.