Energy • Communications • Leadership

1. Segmentation Changes under RP00-17 Energy • Communications • Leadership

2. AGENDA • Segmentation Today Review • Segmentation 2000 - Timeline - Contract Family Concept - Tracking Capacity Rights - A Segmentation Example

3. Review of Segmentation Terms • Segmentation: the process of identifying by segment where a firm shipper has primary capacity • Primary Capacity: A shipper’sprimary rights are those segments within a zone where the shipper owns capacity • Secondary Capacity: A shippers secondary rights are those segments within a zone where the shipper DOESN’T own capacity

4. Shipper Rights through Segmentation • A shipper can release capacity between any valid receipt and delivery point within its primary capacity path • Gas nominated through a shipper’s secondary capacity is not firm, though it has a higher priority than gas scheduled on an interruptible contract • Secondary transportation, once scheduled and confirmed, is considered firm and not subject to being bumped • Secondary rights DO NOT EXTEND BEYOND THE ZONE BOUNDARY

5. The Master Contract Today • The Master Contract is used to aggregate individual releases to allow nominations, scheduling and allocations to be on one contract. • When the “FT” or “FT-R” contract capacity is released or purchased, primary rights on that contract are changed accordingly, with changes also reflected on the FT-R Master Contract

6. Segmentation Under RP00-17

7. Highpoints • Timeline • Contract Family Concept • Tracking Capacity Rights • A Segmentation Example

8. Why is Transco Changing the Rules? • Recent orders in Tennessee, Texas Gas and Transco allow pipelines to prevent inappropriate multiplication of capacity rights • Transco has received authority in Docket No. RP00-17 to restrict total nominations in a segment to the original contract TCQ

9. Proposed Time Line • Filed revised tariff sheets 6/30/00 • FERC Order on the filing was approved on 7/26/00 • Notify shippers of Master contract termination and demand contract changes - the week of August 1st • Implement changes effective with business on September 1, 2000

10. Master Contracts • Master Contracts Go Away • Replacement contracts (“FT-R Demand”) will not be rolled up to a Master Contact • Each“FT-R Demand” contract will be stand alone contracts for nominations, capacity allocations, scheduling and commodity billing

11. Contract Family Structure The Contract Family will be the tool to determine primary and secondary rights for all members of that contract family

12. Contract Family Example The maximum primary quantity that can be scheduled in any segment for this contract family is 10,000 dt/d

13. Tracking Capacity Rights • The sum of the nominated primary and secondary quantities of the original “FT” and all “FT-R’s” within the Contract Family cannot exceed the original “FT” capacity rights in any segment • If any part of a nomination is outside the primary path, the entire nomination is secondary • Available secondary space will be allocated on a pro rata basis across contracts within the contract family based on the secondary component of the nomination

14. Noms Outside the Primary Path

15. Noms Outside Primary Path

16. Multiple Noms in a Contract Family • Key Concepts: • The sum of the nominated primary and secondary quantities of the original “FT” and all “FT-R’s” within the Contract Family can not exceed the original “FT” capacity rights in any segment • If any part of a nomination is outside the primary path, the entire nomination is secondary • Secondary rights do not extend beyond the zone boundary

17. Segmentation Example

18. Segmentation Example

19. Segmentation Example

20. Segmentation Example

21. Summary • A Reminder: • Secondary capacity, once scheduled and confirmed, is considered primary • A nomination in the Timely cycle using secondary capacity will use space identified for a Contract Family Questions??