1. Meter Error – NTS Revenue Flows Gas TCMF – 2 nd December 2010

2. Process - UAG Costs Initially Met Via SO Commodity Charge UAG Quantity NG Shrinkage Account NG SO Allowed/ Collected revenue Procure Shrinkage SO Cost Shippers SO Commodity Charge  UAG quantities forecast by shrinkage provider (SO)  Shrinkage provider procures gas to meet forecast UAG  UAG costs are an allowed SO revenue  UAG costs are paid for by shippers via SO commodity charges.

3. Process – Meter Error Revenue Flows (under-read) UAG Quantity NG Shrinkage Account NG SO Allowed/ Collected revenue SO Commodity Charge Procure Shrinkage SO Cost Shippers 1. Meter Error (under read) 2. Energy Reconciliation 3. SO Commodity Charge 4. Reconciliation Credit 5. SO Cost  1. Meter error identified & quantities calculated  2 & 3. Invoices sent to shippers for energy (2) and transportation (3) = Increase in revenue  4. Credit to the shrinkage account  5. Unaccounted for gas (UAG) reduced & reduction in allowed revenue

4. Process – Impact on SO Commodity Charge UAG Quantity NG Shrinkage Account NG SO Allowed/ Collected revenue SO Commodity Charge Procure Shrinkage SO Cost Shippers 1. Meter Error (under read) 2. Energy Reconciliation 3. SO Commodity Charge 4. Reconciliation Credit 5. SO Cost  Reduced SO Commodity charges required going forward due to;  Reduction in forecast UAG costs going forward due to meter error removal  Reduction in SO Allowed Revenue (UAG Costs incurred) from meter error period  Additional collected SO Commodity Revenue from meter error period