K N Wattenberg Transmission LLC

First Revised Volume No. 1

Effective Date: 06/01/1999, Docket: RP99-288-000, Status: Effective

Original Sheet No. 89A Original Sheet No. 89A : Effective

GENERAL TERMS AND CONDITIONS FOR SERVICES - continued

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EXAMPLE (5) Assume:

Capacity Release Request = 100,000/day for 5 years

Qualified Bids:

Maximum Bid Unit Bid Minimum

Volume Term Value Bid Volume

----------- ------- -------- ----------

Bid (a) 60,000/day 5 years $.18 60,000

Bid (b) 60,000/day 5 years $.18 50,000

Bid (c) 70,000/day 5 years $.18 65,000

Bid (d) 50,000/day 5 years $.18 15,000

Bid (e) 30,000/day 5 years $.18 10,000

Bid (f) 40,000/day 5 years $.17 0

Winning Qualified Bids: Bid (c) receives 70,000. Bid (d) receives

30,000.

Explanation: Again, there are many combinations of Bids (a), (b),

(c), (d) and (e) with the same Winning Bid Value. Pro rata

allocation won't work, because each Bid would receive 100/270 of the

capacity; only Bids (d) and (e) have low enough Minimum Bid Volumes

for a pro rata allocation, and the sum of Bid (d)'s and Bid (e)'s

Maximum Bid Volumes is less than 100,000. Under Section

31.10(d)(3)(A), we then look to the combinations of Bid(s) (a), (b),

(c), (d) and (e) to identify the Bid with the highest Maximum Bid

Volume. This is Bid (c). We allocate the highest volume to

Bid (c) consistent with creating the Winning Bid Value, so 70,000 is

allocated to (c). This leaves 30,000 to be allocated. Bids(a) and

(b) have the next highest Maximum Bid Volume (60,000), but the

Minimum Bid Volumes of Bids (a) and (b) are each too high to receive

the remaining capacity. The next highest available Maximum Bid

Volume is in Bid (d), which is allocated the remaining capacity of

30,000.

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