GENERAL TERMS AND CONDITIONS
                                           (Continued)
   
   
   
       18.   NEGOTIATED RATES
   
             18.1   Availability: Seller and Customer may mutually agree to negotiate rates
                    under any Part 284 Rate Schedule that expressly provides for a negotiated
                    rate and references this Section 18. Seller's maximum effective rate
                    (maximum base rate plus all applicable surcharges) for service under any
                    such rate schedule is available as a recourse rate for any Customer that
                    does not desire to negotiate a rate hereunder.
   
             18.2   Definition: Negotiated rates shall be mutually agreed and set forth in
                    writing.  A negotiated rate is a rate: which is determined from a formula
                    rather than a stated rate between the maximum and minimum on the filed
                    rate sheets; or which is a stated rate that is or may be greater than the
                    Maximum Rate; or which may have components which are less than the
                    minimum charge for such components on the filed rate sheets; or which
                    uses a rate design other than the one used to establish the applicable
                    recourse rate (e.g., straight fixed variable).  A negotiated rate may
                    include a minimum or maximum volume quantity for which charges will be
                    paid.  A negotiated rate may also include the ability to having varying
                    terms for capacity or the ability to buyout of the term for some or all
                    of the capacity.
   
             18.3   Capacity Allocation: In evaluating requests for firm service, where one or
                    more request uses a negotiated rate or negotiated rate formula, Seller will
                    consider, in assigning value to such requests, only reservation or demand
                    charge revenue or other revenue which is guaranteed to be received by
                    Seller.  Pursuant to a capacity evaluation under Section 10.1 (a) of these
                    General Terms and Conditions, the net present value of any such bid for
                    firm service shall be capped by the net present value of the maximum
                    applicable reservation rate for such service over the contract term bid. In
                    performing a net present value evaluation of a negotiated rate bid
                    proposing a volumetric or usage rate along with a minimum throughput
                    commitment, Seller shall consider only the amounts required to be paid
                    regardless of actual usage.