High Island Offshore System, L.L.C.

Third Revised Volume No. 1

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Effective Date: 01/04/2002, Docket: RP02-118-000, Status: Effective

Third Revised Sheet No. 172 Third Revised Sheet No. 172 : Effective

Superseding: Second Revised Sheet No. 172







25.4 Capacity Release and Right of First Refusal: A negotiated rate shall not


as a price cap for capacity release transactions. For purposes of exercising

rights to continue service pursuant to Section 16 of these General Terms and

Conditions, the highest rate that the existing Shipper capacity holder must

match if it desires to retain all or a portion of its capacity, is the

applicable maximum tariff rate, including surcharges, for such service.


25.5 Filing Requirements: No later than the business day on which Transporter

commences service at a negotiated rate (or if the day on which Transporter

commences such service is not a business day, then the next business day


Transporter commences such service), Transporter will file with the


either its negotiated rate agreement or a numbered tariff sheet stating the

name of the Shipper, the actual negotiated rate or the formula used to

calculate the rate, the applicable receipt and delivery points, the quantity

of gas to be transported, the applicable Rate Schedule for the service and


affirmation that the negotiated rate agreement does not deviate in any

material aspect from the applicable form of service agreement in




25.6 Accounting for Costs and Revenues: The allocation of costs to, and the

recording of revenues from, service at negotiated rate(s) will follow

Transporter's normal practices associated with all of its services under


Tariff. Transporter will maintain separate records of negotiated rate

transactions for each billing period. These records shall include the


transported, the billing determinants, the rates and surcharges charged and

the revenue received associated with such transactions. Transporter will

separately identify such transactions in Statement G, I and J (or their

equivalents) filed in any general rate proceeding.


25.7 Rate Treatment: Transporter shall have the right to seek in future general

rate proceedings discount-type adjustments in the design of its rates


to negotiated rate agreements. In these situations, Transporter may seek a

discount-type adjustment based upon the greater of the negotiated rate

revenues received or the discounted rate revenues which otherwise would have

been received.


25.8 Limitations: This Section 25 does not authorize Transporter to negotiate


and conditions of service.