1. Customer Select Supply/Storage
Effective May 2009

2. Service Territory Nicor Gas Territory Area: 17,000 square miles
Crystal
Lake
Rockford
Schaumburg
DeKalb
Oak Brook
Joliet
Kankakee
Bloomington
Naperville
Nicor Gas Territory
Area: 17,000 square miles
Population: 5.7 million (est.)
Communities Served: 640
Customers: 2.2 million

3. Gas Supply and Storage Network
Rockford
Chicago
Nicor Gas Service Territory
Major Gas Main
Underground Gas Storage Field
Major Cities
Natural Gas Pipeline Company of America
Northern Natural Gas Company
Midwestern Gas Transmission Company
Panhandle Eastern Pipe Line Company*
ANR Pipeline
Alliance Pipeline
Northern Border
Horizon
*limited demand and take-away capability
Gas Distribution
Interstate Pipeline Transporters
Naperville
Joliet
Peoria
Bloomington
Springfield

4. High-Level Overview Suppliers have control over pool delivery volumes.
Suppliers have flexibility in managing pool’s storage injections and withdrawals within specified target ranges.
Suppliers are responsible for managing their storage balances to maintain desired rights.
We provide a “daily delivery range” for each pool along with estimated daily usage.
Deliveries above or below the estimated usage will either be injected or withdrawn from storage. There are some injection rights in the winter and withdrawal rights in the summer (+/- 10% range).

5. Glossary of Terms
Base Factor: The cumulative base use factors (30-day) for customers within a pool used to estimate a pool’s non-heat usage, grossed up for the unaccounted-for-gas adjustment.
Heat Factor: The cumulative heat sensitive factors for customers within a pool used to estimate a pool’s heat usage, grossed up for the unaccounted-for-gas adjustment.
Estimated Use: The combination of estimated base use and heat use for the forecast day.
Delivery: Volume of gas nominated to city-gate.
Critical Day Delivery Requirement: Minimum volume of gas to be nominated to city-gate when company has declared a Critical Day.
Winter: November 1 through April 30
Summer: May 1 through October 31

6. Glossary of Terms (cont.)
Storage Capacity: 31 times the group’s MDCQ. Additional balancing capacity of 6 times the group’s MDCQ will be cycled annually. The combined storage capacity of 37 times the group’s MDCQ will be used for calculating the monthly storage inventory target levels and the daily storage injection capacity.
Storage Inventory Target Levels (end of month):
Nov: 55% - 100% of storage capacity
Dec: 55% - 75% of storage capacity
Jan: 35% - 60% of storage capacity
Feb: 15% - 35% of storage capacity
Mar: 0% - 35% of storage capacity
Apr: 0% - 35% of storage capacity
May: 15% - 100% of storage capacity
Jun: 15% - 100% of storage capacity
Jul: 45% - 100% of storage capacity
Aug: 45% - 100% of storage capacity
Sep: 45% - 100% of storage capacity
Oct: 95% - 100% of storage capacity

7. Delivery Requirements
Prior to the beginning of each month (around the 20th of the prior month), Nicor Gas communicates the group’s estimated daily use based on normal weather. We will also include a forecasted delivery range – a min and max delivery for each day of the month based on normal weather. (30-day forecast)
The 30-day forecast considers the accounts in the supplier’s pool 30 days out from the date it is created. It is assumed that all pending effective contracts are active and all pending drops are dropped for the entire month (when actually customers come into and out of the pool as they are read throughout the month). Please keep this in mind if you are adding or dropping a lot of customers.
During the month, on the business day before each gas day, Nicor Gas communicates the group’s estimated usage and the daily delivery range for the next five days based on the current forecast of heating degree days. (5-day forecast)
A pool’s estimated use and delivery range will fluctuate during the month based on customers coming into and out of the pool along with forecasted weather.
Any deliveries above or below the estimated use will impact your storage. Supplier is responsible for tracking storage inventory during the month.

8. Delivery Requirements (cont.)
Estimated Use: Based on the pool’s cumulative heat use and base use factors.
Daily Delivery Ranges:
Winter Max Delivery = group’s estimated use + 10%.
Winter Min Delivery = group’s estimated use - 10% - group’s daily storage withdrawal capacity right.
Summer Max Delivery = group’s estimated use + 10% + group’s storage injection capacity right.
Summer Min Delivery = group’s estimated use - 10%.

9. Delivery Requirements (cont.)
Daily Storage Withdrawal Capacity: In the winter, up to 1.6% times group’s 11/1 storage inventory.
Reduced to 1.2% if end of month storage inventory is less than 40% of 11/1 inventory.
Reduced to 0.9% if end of month storage inventory is less than 25% of 11/1 inventory.
Daily Storage Injection Capacity: In the summer, 0.8% of storage capacity assigned to the group.
End of Month Storage Inventory:
Unknown until approx. 4-5 business days into the next month.
The 11/1 inventory and/or storage withdrawal factor used in the daily delivery range calculations will change as soon as billing is complete to reflect updated information.
Could cause a larger impact on delivery ranges than day-to-day changes in base and heat factors for the pools or heating degree days.

10. Daily Delivery Range Calculation
November through April (Winter)
Assumptions:
11/1 Inventory 900,000 MMBtu
Daily Storage Withdrawal Capacity 1.6% * 11/1 Inventory = 14,400
Pool’s Estimated Daily Use 30,500 MMBtu
Delivery Calculations:
Max Delivery (est. use + 10%): 30,500 * 110% = 33,550
Min Delivery (est. use - 10% - SWC): 30,500 * 90% - 14,400 = 13,050

11. Daily Delivery Range Calculation
November through April (Winter with Reduced Withdrawal Rights)
Assumptions:
11/1 Inventory 900,000 MMBtu
Storage Inventory from Prior Month 350,000 MMBtu (<40% of 11/1 Inv.)
Daily Storage Withdrawal Capacity 1.2% * 11/1 Inventory = 10,800
Pool’s Estimated Daily Use 30,500 MMBtu
Delivery Calculations:
Max Delivery (est. use + 10%): 30,500 * 110% = 33,550
Min Delivery (est. use - 10% - SWC): 30,500 * 90% - 10,800 = 16,650

12. Daily Delivery Range Calculation
November through April (Winter with Reduce Withdrawal Rights)
Assumptions:
11/1 Inventory 900,000 MMBtu
Storage Inventory from Prior Month 100,000 MMBtu (<25% of 11/1 Inv.)
Daily Storage Withdrawal Capacity 0.9% * 11/1 Inventory = 8,100
Pool’s Estimated Daily Use 30,500 MMBtu
Delivery Calculations:
Max Delivery (est. use + 10%): ,500 * 110% = 33,550
Min Delivery (est. use - 10% - SWC): 30,500 * 90% - 8,100 = 19,350

13. Daily Delivery Range Calculation
May through October (Summer)
Assumptions:
Storage Capacity ,000 MMBtu
Daily Storage Injection Capacity % * Storage Capacity = 7,200
Pool’s Estimated Daily Use ,620 MMBtu
Delivery Calculations:
Max Delivery (est. use + 10% + SIC): 3,620 *110% + 7,200 = 11,182
Min Delivery (est. use - 10%): ,620 * 90% = 3,258

14. Other Considerations
Pools entering or leaving the program will be treated using the same delivery requirement calculations. Pools entering the program after 11/1 will not have an 11/1 inventory balance. (minimum daily delivery will be the pool’s estimated daily use during the winter months)
November Forecasts:
30-Day Forecast: 11/1 inventory is unknown when the November forecasts are created (on or around 10/20) because October billing is not complete until approx. the 4th – 5th business day of the month. Therefore, 11/1 inventory for the November 30-Day Forecast will be based on 95% of the pool’s current capacity and the maximum withdrawal factor of 1.6%
5-Day Forecast (daily nom file): Until October billing is complete (approx. 4th-5th business day in November), a pool’s 11/1 inventory will be forecast based on 95% of the pool’s current capacity and the maximum withdrawal factor of 1.6%.
Actual 11/1 inventory will be used as soon as October billing is complete.

15. Critical Day Requirements
Critical Day delivery requirement is the greater of:
Firm Supply Requirement as of Oct. 1, which is 34% of group’s MDCQ (66% storage withdrawals); or
34% of group’s current MDCQ.
The Critical Day delivery requirement will be communicated in the 5-day forecast file.
The minimum delivery volume will be the Supplier’s Critical Day requirement (the minimum to avoid penalty).
Suppliers can deliver more than their Critical Day requirement. The maximum delivery volume of 999,999,999 in the 5-day forecast file denotes infinite maximum delivery.

16. Operational Flow Order Requirements
OFOs may be called when the operation of the system is impeded or threatened due to:
Insufficient volumes
Excess volumes
Insufficient volumes at certain receipt points
Daily delivery requirement may be adjusted to address the company’s operational concerns.

17. Month-End Delivery Tolerance
Winter:
Supplier total deliveries for the month cannot be more than the group’s total estimated daily use +5%.
Suppliers can inject some during the winter (10% of use/day or 5% of monthly use).
Suppliers can deliver less than the group’s estimated use as long as they’re within the daily range.
Summer:
Supplier total deliveries for the month cannot be less than the group’s total estimated daily use -5%.
Suppliers can withdraw some during the summer (10% of use/day or 5% of monthly use).
Suppliers can deliver more than the group’s estimated use as long as they’re within the daily range.

18. Imbalance and Cash-Out on Monthly Pool Bill
Imbalance is the difference between the group’s month-end inventory and the storage inventory target level for the month.
The imbalance will be 0 if the month-end inventory is within the storage inventory target level for the month.
Any imbalance is cashed-out (purchased from or sold to the group).
The cash-out price = then current first of month price index published in Inside F.E.R.C.’s Gas Market Report for Chicago City-Gates. For example, any imbalance on the June pool bill, will be cashed out at the July FOM price.

19. Cash-Out Calculation Cash-Out Amount (Ex. 1):
Month-End Storage Inventory 5,000,000
Storage Inventory Target Level 4,850, ,000,000
Imbalance
Cash-Out Amount 0
Cash-Out Amount (Ex. 2):
Month-End Storage Inventory 4,000,000
Imbalance (850,000)
Cash-Out Amount (850,000)
Supplier buys this amount from Nicor Gas.
Cash-Out Amount (Ex.3):
Month-End Storage Inventory 13,500,000
Imbalance ,000
Cash-Out Amount ,000
Nicor Gas buys this amount from Supplier.

20. Non-Performance Charges
Daily Non-Performance Charges
Under deliveries below the daily delivery range are sold to supplier at 110% of the high price for gas
Over deliveries above the daily delivery range are bought from supplier at 90% of the low price for gas
Month-End Non-Performance Charges
Winter: $1 for each therm exceeding +5% of group’s total adjusted estimated daily use for the month
Summer: $1 for each therm less than -5% of group’s total adjusted estimated use for the month
Critical Day Non-Performance Charges
Under deliveries are sold to supplier at sum of $6 per therm plus the higher of the GSC or the Market Price
OFO Non-Performance Charges
Under deliveries are sold to supplier at 200% of the high price for gas
Over delivers are bought from suppliers at 50% of the low price for gas

21. Firm Supply Requirement
Suppliers are required to provide annual proof, by affidavit, of firm supply to the Company’s interconnection with a pipeline sufficient to provide a minimum of 34 percent of the group’s maximum daily contract quantity as of October 1, for the period Nov. 1 through March 31.
Firm supply requirement will be calculated on Oct. 1 of each year and communicated to the supplier shortly thereafter.
Firm Supply Affidavit is due by Nov. 1 of each year.
If the supplier doesn’t provide the Firm Supply Affidavit by Nov. 1 of each year, the customer will be charged Nicor Gas’ Non- Commodity Gas Cost multiplied by the customer’s usage from November 1 through March 31.

22. Nominations
The daily nomination file (which gives your Daily Delivery Range) will be posted to a supplier’s web site directory by 8:30 a.m. Central Time every business day.
The daily nomination file name will include the date to help distinguish one day’s file from another.
Supplier must make all nominations electronically by using the Gas Exchange System.
On non-critical day weekends or holidays, the appropriate day’s estimate from the most recently received file should be used as the nomination requirement. The requirements will not change from the estimated values unless an Operational Flow Order is called or Critical Day is declared.
If on any given day no nomination file is found, use the appropriate day’s estimate from the most recently received nomination file as the nomination requirement. You should contact the Nicor Gas nomination desk to confirm this at