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<PAGE>

                                                                    EXHIBIT 10.4

 

                      FIRM TRANSPORTATION SERVICE AGREEMENT

 

      THIS AGREEMENT is made and entered into this 26th day of October, 1993, by

and between

 

      PACIFIC GAS TRANSMISSION COMPANY, a California corporation (hereinafter

referred to as "PGT),

 

                                       and

 

      PACIFIC GAS AND ELECTRIC COMPANY, a corporation existing under the laws of

the State of California, (hereinafter referred to as "Shipper").

 

      WHEREAS, PGT owns and operates a natural gas pipeline transmission system

which extends from a point of interconnection with the pipeline facilities of

Alberta Natural Gas Company Ltd. (ANG) at the International Boundary near

Kingsgate, British Columbia, through the states of Idaho, Washington and Oregon

to a point of interconnection with Pacific Gas and Electric Company at the

Oregon-California border near Malin, Oregon; and

 

      WHEREAS, Shipper desires PGT, on a firm basis, to transport certain

quantities of natural gas from Kingsgate, British Columbia to Malin, Oregon for

ultimate delivery to Shipper, a local distribution company; and

 

      WHEREAS, pursuant to FERC Order No. 636, et seq., PGT will unbundle its

firm transportation and sales services, and PGT and Shipper will execute a new

service agreement for unbundled firm transportation service; and

 

      WHEREAS, this Agreement will supersede and prior agreements between PGT

and Shipper for firm gas sales or firm transportation, and will incorporate the

transportation rights thereunder into this Agreement; and

 

      WHEREAS, PGT is willing to transport certain quantities of natural gas for

Shipper, on a firm basis,

 

      NOW, THEREFORE, the parties agree as follows:

 

                                        I

                             GOVERNMENTAL AUTHORITY

 

      1.1 This Firm Transportation Agreement ("Agreement") is made pursuant to

the regulations of the Federal Energy Regulatory Commission (FERC) contained in

18 CFR Part 284, as amended from time to time.

<PAGE>

                                        I

                             GOVERNMENTAL AUTHORITY

                                   (CONTINUED)

 

      1.2 This Agreement is subject to all valid legislation with respect to the

subject matters hereof, either state or federal, and to all valid present and

future decisions, orders, rules, regulations and ordinances of all duly

constituted governmental authorities having jurisdiction.

 

      1.3 Shipper shall reimburse PGT for any and all filing fees incurred by

PGT in seeking governmental authorization for the initiation, extension, or

termination of service under this Agreement and Rate Schedule FTS-1. Shipper

shall reimburse PGT for such fees at PGT's designated office within ten (10)

days of receipt of notice from PGT that such fees are due and payable.

Additionally, Shipper shall reimburse PGT for any and all penalty fees or fines

assessed PGT caused by the negligence of Shipper in not obtaining all proper

Canadian and domestic import/export licenses, surety bonds or any other

documents and approvals related to the Canadian exportation and subsequent

domestic importation of natural gas transported by PGT hereunder.

 

                                       II

                      QUANTITY OF GAS AND PRIORITY OF SERVICE

 

      2.1 Subject to the terms and provisions of this Agreement and PGT's

Transportation General Terms and Conditions contained in PGT's FERC Gas Tariff

First Revised Volume No. 1-A (Transportation General Terms and Conditions)

applicable to Rate Schedule FTS-1, daily receipts of gas by PGT from Shipper at

the point(s) of receipt shall be equal to daily deliveries of gas by PGT to

Shipper at the point(s) of delivery; provided, however, Shipper shall deliver to

PGT an additional quantity of natural gas at the point(s) of receipt as

compressor station fuel, line loss and unaccounted for gas as specified in the

Statement of Effective Rates and Charges of PGT's FERC Gas Tariff First Revised

Volume No. 1-A which by this reference is made a part hereof. Any limitation of

the quantities to be received from each point of receipt and/or delivered to

each point of delivery shall be as specified on the Exhibit A attached hereto.

 

      2.2 The maximum quantities of gas to be delivered by PGT for Shipper's

account at the point(s) of delivery are set forth in Exhibit A.

 

      2.3 In providing service to its existing or new customers, PGT will use

the priorities of service specified in Paragraph 18 of PGT's Transportation

General Terms and Conditions on file with the FERC.

 

      2.4 Prior to initiation of service, Shipper shall provide PGT with any

information required by the FERC, as well as the information identified in

Paragraphs 21, 28, and 29 of PGT's Transportation General Terms and Conditions

applicable to Rate Schedule FTS-1.

<PAGE>

                                       III

                                TERM OF AGREEMENT

 

      3.1 This Agreement shall become effective November 1, 1993, and shall

continue in full force and effect until October 31, 2005. Thereafter, this

Agreement shall continue in effect from year to year unless Shipper gives PGT

twelve (12) months prior written notice of termination of this Agreement. The

Agreement shall terminate twelve (12) months after such notice.

 

                                       IV

                         POINTS OF RECEIPT AND DELIVERY

 

      4.1 The primary point of receipt of gas deliveries to PGT is as designated

in Exhibit A, attached hereto.

 

      4.2 The primary point of delivery of gas to Shipper is as designated in

Exhibit A, attached hereto.

 

      4.3 Shipper shall deliver or cause to be delivered to PGT the gas to be

transported hereunder at pressures sufficient to deliver such gas into PGT's

system at the point(s) of receipt. PGT shall deliver the gas to be transported

hereunder to or for the account of Shipper at the pressures existing in PGT's

system at the point(s) of delivery.

 

      4.4 Pursuant to Paragraph 29 of PGT's Transportation General Terms and

Conditions, Shipper may designate other receipt and/or delivery points as

secondary receipt or delivery points.

 

                                        V

                               OPERATING PROCEDURE

 

      5.1 Shipper shall conform to the operating procedures set forth in PGT's

Transportation General Terms and Conditions.

 

      5.2 Nothing in Section 5.1 shall compel PGT to transport gas pursuant to

Shipper's request on any given day. PGT shall have the right to interrupt or

curtail the transport of gas for the account of Shipper pursuant to PGT's

Transportation General Terms and Conditions applicable to Rate Schedule FTS-1.

 

                                       VI

                          RATE(S), RATE SCHEDULES, AND

                      GENERAL TERMS AND CONDITIONS OF SERVICE

 

      6.1 Shipper shall pay PGT each month for services rendered pursuant to

this Agreement in accordance with PGT's Rate Schedule FTS-1, or superseding rate

schedule(s), on file with and subject to the jurisdiction of FERC.

<PAGE>

                                       VI

                          RATE(S), RATE SCHEDULES, AND

                     GENERAL TERMS AND CONDITIONS OF SERVICE

                                   (CONTINUED)

 

      6.2 Shipper shall compensate PGT each month for compressor station fuel,

line loss and other unaccounted for gas associated with this transportation

service provided herein in accordance with PGT's Rate Schedule FTS-1, or

superseding rate schedule(s), on file with and subject to the jurisdiction of

the FERC.

 

      6.3 This Agreement in all respects shall be and remains subject to the

applicable provisions of Rate Schedule FTS-1, or superseding rate schedule(s)

and of the applicable Transportation General Terms and Conditions of PGT's FERC

Gas Tariff First Revised Volume No. 1-A on file with the FERC, all of which are

by this reference made a part hereof.

 

      6.4 PGT shall have the unilateral right from time to time to propose and

file with FERC such changes in the rates and charges applicable to

transportation services pursuant to this Agreement, the rate schedule(s) under

which this service is hereunder provided, or any provisions of PGT's

Transportation General Terms and Conditions applicable to such services. Shipper

shall have the right to protest any such changes proposed by PGT and to exercise

any other rights that Shipper may have with respect thereto.

 

                                       VII

                                  MISCELLANEOUS

 

      7.1 This Agreement shall be interpreted according to the laws of the State

of California.

 

      7.2 Shipper agrees to indemnify and hold PGT harmless for refusal to

transport gas hereunder in the event any upstream or downstream transporter

fails to receive or deliver gas as contemplated by this Agreement.

<PAGE>

                                       VII

                                  MISCELLANEOUS

                                   (CONTINUED)

 

      7.3 Unless herein provided to the contrary, any notice called for in this

Agreement shall be in writing and shall be considered as having been given if

delivered by registered mail or telex with all postage or charges prepaid, to

either PGT or Shipper at the place designated below. Routine communications,

including monthly statements and payment, shall be considered as duly delivered

when received by ordinary mail. Unless changed, the addresses of the parties are

as follows:

 

                 "PGT" PACIFIC GAS TRANSMISSION COMPANY

                 160 Spear Street

                  Room 1900

                 San Francisco, California 94105-1570

                 ATTENTION:   President & CEO

 

                 "SHIPPER"    PACIFIC GAS & ELECTRIC COMPANY

                             77 Beale Street, Room 1611

                             Mail Code B16A, P. O. Box 770000

                             San Francisco, CA 94177

                             ATTENTION:   Mgr. Gas Services Dept.

 

      7.4 A waiver by either party of any one or more defaults by the other

hereunder shall not operate as a waiver of any future default or defaults,

whether of a like or of a different character.

 

      7.5 This Agreement may only be amended by an instrument in writing

executed by both parties hereto.

 

      7.6 Nothing in this Agreement shall be deemed to create any rights or

obligations between the parties hereto after the expiration of the term set

forth herein, except that termination of this Agreement shall not relieve either

party of the obligation to correct any quantity imbalances or Shipper of the

obligation to pay any amounts due hereunder to PGT.

 

      7.7 Exhibits A and C attached hereto are incorporated herein by reference

and made a part hereof for all purposes.

<PAGE>

      IN WITNESS WHEREOF the parties have caused this Agreement to be executed

as of the day and year first above written.

 

 

                            PACIFIC GAS TRANSMISSION COMPANY

 

                            By:   /s/ Paula G. Rosput

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

 

                             Name:   Paula G. Rosput

 

                            Title:   Senior Vice President

 

                            Date:   October 26, 1993

 

 

                            PACIFIC GAS & ELECTRIC COMPANY

 

                            By:   /s/ William R. Mazotti

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

 

                            Name:   William R. Mazotti

 

                            Title:   Vice President - Gas Services & Operations

 

                             Date:   October 26, 1993

<PAGE>

                                    EXHIBIT A

 

                                     TO THE

                      FIRM TRANSPORTATION SERVICE AGREEMENT

                        DATED____________________BETWEEN

                         PACIFIC GAS TRANSMISSION COMPANY

                                       AND

                         PACIFIC GAS & ELECTRIC COMPANY

 

<TABLE>

<CAPTION>

RECEIPT                DELIVERY              MAXIMUM DAILY QUANTITY (MDQ)

POINT (1)               POINT(1)                  (DELIVERED) MMBTU/D

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

                                            SUMMER(2)        WINTER(3)

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

<S>                    <C>                    <C>              <C>

KINGSGATE              MALIN                  1,023,120(4)     1,081,990

</TABLE>

 

(1) Pursuant to Paragraph 29 of PGT's Transportation General Terms and

Conditions, Shipper may designate other receipt and delivery points as

"secondary receipt" and "secondary delivery" points. For example, Shipper may

designate Stanfield, Oregon and/or Spokane, Washington as secondary receipt

points.

 

(2) Summer- - months of May through October.

 

(3) Winter - - months of November through April,

 

(4) In accordance with FERC's October 1, 1993 order at Docket n. RS92-46

Shipper's firm Summer MDQ (Delivered) may exceed 1,023,120 MMBtu/d to the extent

firm capacity is available on PGT's original system. However, under no

circumstances may Shipper's firm Summer MDQ (Delivered) exceed 1,081,990

MMBtu/d.

<PAGE>

                                    EXHIBIT C

 

                                     TO THE

                      FIRM TRANSPORTATION SERVICE AGREEMENT

                         DATED____________________BETWEEN

                        PACIFIC GAS TRANSMISSION COMPANY

                                       AND

                         PACIFIC GAS & ELECTRIC COMPANY

 

Type of Replacement Service:

 

Replacement Shipper:

 

Receipt Point:

 

Delivery Point:

 

Maximum Daily Quantity:

 

Commencement of Credit:

 

Termination of Credit:

 

Level of Credit:             _____percent of the maximum rate defined as

                            ________________________________________________

                             ________________________________________________

 

                            Applicable for service under Rate Schedule FTS-1

 

Other Terms and Conditions:

 

1)__________________________________________________________________________

 

2)__________________________________________________________________________

 

3)__________________________________________________________________________

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                              Original Sheet No. 30

Third Revised Volume No. 1-A

 

                               RATE SCHEDULE FTS-1

                           FIRM TRANSPORTATION SERVICE

 

1.        AVAILABILITY

 

         This rate schedule is available to any party (hereinafter called

         "Shipper") qualifying for service pursuant to the Commission's

         Regulations contained in 18 CFR Part 284, and who has executed a Firm

         Transportation Service Agreement with GTN in the form contained in this

         FERC Gas Tariff, Third Revised Volume No. 1-A.

 

2.        APPLICABILITY AND CHARACTER OF SERVICE

 

         This rate schedule shall apply to firm gas transportation services

         performed by GTN for Shipper pursuant to the executed Firm

         Transportation Service Agreement between GTN and Shipper. GTN shall

         receive from Shipper such daily quantities of gas up to the Shipper's

         Maximum Daily Quantity as specified in the executed Firm Transportation

         Service Agreement between GTN and Shipper plus the required quantity of

         gas for fuel and line loss associated with service under this Rate

         Schedule FTS-1 and redeliver an amount equal to the quantity received

         less the required quantity of gas for fuel and line loss. This

         transportation service shall be firm and not subject to curtailment or

         interruption except as provided in the Transportation General Terms and

         Conditions.

 

         Firm transportation service shall be subject to all provisions of the

         executed Firm Transportation Service Agreement between GTN and Shipper

         and the applicable Transportation General Terms and Conditions.

 

3.        RATES

 

         Shipper shall pay GTN each month the sum of the Reservation Charge,the

         Delivery Charge, plus any applicable Extension Charge, Overrun Charge

         and applicable surcharges for the quantities of natural gas delivered.

         The rate(s) set forth in GTN's current Effective Rates and Charges for

          Transportation of Natural Gas in this FERC Gas Tariff, Third Revised

         Volume No. 1-A are applied to transportation service rendered under

         this rate schedule.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                              Original Sheet No. 31

Third Revised Volume No. 1-A

 

                               RATE SCHEDULE FTS-1

                           FIRM TRANSPORTATION SERVICE

                                   (Continued)

 

3.        RATES (Continued)

 

         3.1        Reservation Charge

 

                  The Reservation Charge shall be the sum of the Mileage and the

                  Non-Mileage Component:

 

                      (a)       Mileage Component

 

                      The Mileage Component shall be the product of the

                      currently effective Mileage Rate as set forth on Effective

                      Tariff Sheet No. 4, the distance, in pipeline miles, from

                      the Primary Point(s) of receipt to the Primary Point(s) of

                       Delivery on Mainline Facilities as set forth in Shipper's

                      Contract, and the Shipper's Maximum Daily Quantity at such

                      Point(s).

 

                      (b)       Non-Mileage Component

 

                       The Non-Mileage Component shall be the product of the

                      currently effective Non-Mileage Rate as set forth on

                      Effective Tariff Sheet No. 4 and the Shipper's Maximum

                      Daily Quantity at Primary Point(s) of Delivery on Mainline

                      Facilities.

 

                      (c)       Mitigation Revenue Recovery Surcharge

 

                      If Shipper is a Subject Shipper, the Mitigation Revenue

                      Recovery Surcharge for the Mileage and Non-Mileage

                      Components as set forth on Effective Tariff Sheet No. 4

                      shall be included in, and become a part of, the maximum

                      Mileage and Non-Mileage Base Reservation Rates used for

                      computing the Mileage and Non-Mileage Components of the

                      Reservation Charge. The Mileage Component shall be

                      designed to recover, on the basis of the mileage billing

                       determinants of the Subject Shippers underlying GTN's

                      currently effective rates, mileage mitigation revenues not

                      recovered from other shippers in accordance with Article

                      IV, Section 1(b) of the Stipulation and Agreement in

                      Docket No. RP94-149-000, et al., and the Non-Mileage

                      Component shall be designed to recover, on the basis of

                      the Non-Mileage billing determinants of the Subject

                      Shippers underlying GTN's currently effective rates,

                      Non-Mileage mitigation revenues not recovered from other

                      shippers in accordance with Article IV, Section 1(b) of

                       the Stipulation and Agreement in Docket No. RP94-149-000,

                      et al.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 32

Third Revised Volume No. 1-A

 

                                RATE SCHEDULE FTS-1

                           FIRM TRANSPORTATION SERVICE

                                   (Continued)

 

3.        RATES (Continued)

 

3.1       Reservation Charge (Continued)

 

         (d)       Competitive Equalization Surcharge

 

         The Mileage and Non-Mileage components of the Competitive Equalization

         Surcharge as set forth on Effective Tariff Sheet No. 4 shall be

         included in, and become a part of, the maximum Mileage and Non-Mileage

         Base Reservation Rates used for computing the Mileage and Non-Mileage

         Components of the Reservation Charge of shippers that have contracted

         for service utilizing, in whole or in part, CES Capacity under a Firm

         Transportation Service Agreement having a term of one year or more and

         shippers that have obtained service rights from such shippers pursuant

         to Section 28 of the General Terms and Conditions of this FERC Gas

         Tariff. The Mileage Component shall be equal to the Mileage Component

         of the Mitigation Revenue Recovery Surcharge and the Non-Mileage

         Component shall be equal to the Non-Mileage Component of the Mitigation

         Revenue Recovery Surcharge. Shippers to which the Competitive

         Equalization Surcharge applies, other than shippers that have obtained

         service pursuant to Section 28 of the General Terms and Conditions of

         this FERC Gas Tariff, shall be identified on Effective Tariff Sheet No.

         11.

 

                                                                      (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 33

Third Revised Volume No. 1-A

 

                               RATE SCHEDULE FTS-1

                           FIRM TRANSPORTATION SERVICE

                                    (Continued)

 

3.        RATES (Continued)

 

3.1       Reservation Charge (Continued)

 

         (e)       Shipper's obligation to pay the Reservation Charge and

                  applicable Reservation Surcharge is independent of Shipper's

                   ability to obtain export authorization from the National

                  Energy Board of Canada, Canadian provincial removal authority,

                  and/or import authorization from the United States Department

                  of Energy, and shall begin with the execution of the Firm

                  Transportation Service Agreement by both parties. The

                  Reservation Charge and Reservation Surcharge due and payable

                  shall be computed beginning in the month in which service is

                  first available (prorated if beginning in the month in which

                  service is available on a date other than the first day of the

                  month). Thereafter, the monthly Reservation Charge and

                   Reservation Surcharge shall be due and payable each month

                  during the Initial (and Subsequent) Term(s) of the Shipper's

                  executed Firm Transportation Service Agreement and is

                  unaffected by the quantity of gas transported by GTN to

                  Shipper's delivery point(s) in any month except as provided

                  for in Paragraphs 3.10 and 3.11 of this rate schedule.

 

3.2       Delivery Charge

 

         The Delivery Charge shall be the product of the Delivery Rate as set

         forth on Effective Tariff Sheet No. 4, the quantities of gas delivered

         in the month (in Dth) (excluding Authorized Overrun) at point(s) of

         delivery on Mainline Facilities, and the distance, in pipeline miles,

         from the point(s) of receipt to point(s) of delivery on Mainline

         Facilities.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 34

Third Revised Volume No. 1-A

 

                                RATE SCHEDULE FTS-1

                           FIRM TRANSPORTATION SERVICE

                                   (Continued)

 

3.        RATES (Continued)

 

         3.3       Extension Charge

 

                  If Shipper designates a Primary Point of delivery on an

                  Extension Facility, then in addition to all other charges that

                  are applicable, Shipper shall pay the Extension Charge, which

                  shall consist of a reservation and delivery component.

 

                  (a)       The reservation component of the Extension Charge

                           shall be the product of Shipper's Maximum Daily

                           Quantity at the Primary Point(s) of delivery on the

                            Extension Facility, the applicable Extension

                           reservation rate as set forth on Effective Tariff

                           Sheet No. 4, and the distance, in pipeline miles,

                           from the Receipt Point(s) on the Extension Facility

                           to the Primary Point(s) of delivery.

 

                  (b)       The delivery component of the Extension Surcharge

                           shall be the product of the quantities delivered at

                            the point(s) of delivery on the Extension Facility,

                           the applicable Extension delivery rate as set forth

                           on Effective Tariff Sheet No. 4, and the distance, in

                            pipeline miles, from the Receipt Point(s) on the

                           Extension Facility to the point(s) of delivery.

 

         3.4       Authorized Overrun Charge

 

                  Quantities in excess of Shipper's MDQ shall be transported

                   when capacity is available on the GTN system and when the

                  provision of such Authorized Overruns shall not effect any

                  Shipper's rights on the GTN System. Authorized Overruns are

                  interruptible in nature. The rate charged shall be the same as

                  the rates and charges for interruptible transportation under

                  Rate Schedule ITS-1 as set forth on effective Tariff Sheet No.

                  4, and such Authorized Overruns shall be subject to the

                  priority of service provisions of Paragraph 19 of the

                  Transportation General Terms and Conditions.

 

         3.5       Applicability of Surcharges

 

                  Shipper shall pay all reservation and usage surcharges

                  applicable to the service provided to such Shipper as set

                  forth in GTN's FERC Gas Tariff, Third Revised Volume No. 1-A.

                  such surcharges shall be deemed to be part of Shipper's

                  reservation and Delivery Charges.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 35

Third Revised Volume No. 1-A

 

                               RATE SCHEDULE FTS-1

                            FIRM TRANSPORTATION SERVICE

                                   (Continued)

 

3.        RATES (Continued)

 

         3.6       Shipper shall pay the Maximum Reservation Charge, and the

                  Maximum Delivery Charge for service under this Rate Schedule

                  unless GTN offers to discount the Mileage Rate components or

                  the Non-Mileage Rate components of the Reservation Rate or the

                  Delivery Rate or the GRI surcharge under this rate schedule.

                   If GTN elects to discount any such rate, GTN shall, up to

                  forty-eight (48) hours prior to such discount, by written

                  notice, advise Shipper of the effective date of such charges

                  and the quantity of gas so affected; provided, however, such

                  discount shall not be anticompetitive or unduly discriminatory

                  between individual shippers. The rates for service under this

                  rate schedule shall not be discounted below the Minimum

                  Reservation Charge, the Minimum Delivery Rate, and applicable

                  ACA Surcharge.

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                           Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 36

Third Revised Volume No. 1-A

 

                               RATE SCHEDULE FTS-1

                            FIRM TRANSPORTATION SERVICE

                                   (Continued)

 

3.        RATES (Continued)

 

         3.7       Reserved

 

         3.8       Backhauls (as defined in Paragraph 1.30 of the Transportation

                  General Terms and Conditions) shall be subject to the same

                  charges as forward haul (as defined in Paragraph 1.29 of the

                  Transportation General Terms and Conditions) except that no

                  gas shall be retained by GTN for compressor station fuel, line

                  loss and other unaccounted-for gas. Backhauls are subject to

                  the operating conditions of GTN's pipeline and will not be

                  made available to Shipper if GTN determines, in its sole

                  discretion, that such transportation is operationally

                  infeasible or otherwise not available.

 

         3.9       Reserved

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                           Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 37

Third Revised Volume No. 1-A

 

                               RATE SCHEDULE FTS-1

                           FIRM TRANSPORTATION SERVICE

                                   (Continued)

 

3.        RATES (Continued)

 

         3.10      Capacity Release

 

                  (a)       Releasing Shippers:

 

                           Shipper shall have the option to release capacity

                           pursuant to the provisions of GTN's capacity release

                           program as specified in the Transportation General

                           Terms and Conditions. Shipper may release its

                           capacity, up to Shipper's Maximum Daily Quantity

                           under this rate schedule, in accordance with the

                           provisions of Paragraph 28 of GTN's Transportation

                            General Terms and conditions of this FERC Gas Tariff,

                           Third Revised Volume No. 1-A. Shipper shall pay a fee

                           associated with the marketing of capacity by GTN (if

                            applicable) in accordance with Paragraph 28 of the

                           Transportation General Terms and Conditions. This fee

                           shall be negotiated between GTN and the Releasing

                           Shipper.

 

                   (b)       Replacement Shippers:

 

                           Shipper may receive released capacity service under

                           this rate schedule pursuant to Paragraph 28 of the

                           Transportation General Terms and Conditions and is

                           required to execute a service agreement in the form

                           contained for capacity release under Rate Schedule

                           FTS-1 in this Third Revised Volume No. 1-A.

 

                            Shipper shall pay GTN each month for transportation

                           service under this rate schedule and as set forth in

                           GTN's current Statement of Effective Rates and

                           Charges in this Third Revised Volume No. 1-A. Charges

                           to be paid shall be the sum of the Reservation

                           Charge, Delivery Charge, and other applicable

                           surcharges or penalties.

 

                            The rates paid by Shipper receiving capacity release

                           transportation service shall be adjusted as provided

                           on Exhibit R in the executed Transportation Service

                            Agreement For Capacity Release between GTN and

                           Shipper.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 38

Third Revised Volume No. 1-A

 

                               RATE SCHEDULE FTS-1

                           FIRM TRANSPORTATION SERVICE

                                   (Continued)

 

3.11      Reservation Charge Credit - Malin Primary Delivery Point

 

         If GTN fails to deliver to Malin, Oregon ninety-five percent (95%) or

         more of the aggregate Confirmed Daily Nominations (as hereinafter

         defined) of all Shippers with a Malin primary delivery point receiving

         service under this rate schedule (hereinafter referred to as the

         "Non-Deficiency Amount") for more than twenty-five (25) days in any

         given Contract Year, then for each day during that Contract Year in

         excess of twenty-five (25) days that GTN so fails to deliver the

         Non-Deficiency Amount (a "Credit Day") Shipper, as its sole remedy,

         shall be entitled to a Reservation Charge Credit calculated in the

         manner hereinafter set forth.

 

         For the purpose of this Paragraph 3.10, Confirmed Daily Nomination

         shall mean for any day, the lesser of (1) Shipper's Maximum Daily

         Quantity or (2) the actual quantity of gas that the connecting pipeline

         upstream of GTN is capable of delivering for Shipper's account to GTN

         at Shipper's primary point of receipt(s) on GTN less Shipper's

         requirement to provide compressor fuel and line losses under the

         Statement of Effective Rates and Charges of GTN's FERC Gas Tariff,

         Third Revised Volume No. 1-A or (3) the quantity of gas that Pacific

          Gas And Electric Company (PG&E) is capable of accepting at Malin for

         Shipper's account or (4) Shipper's nomination to GTN.

 

         The Reservation Charge Credit for each Credit Day for a particular

         Shipper shall be computed as follows:

 

              Reservation Charge       A              B - C

              Credit for Each         -----      x     ------

              Credit Day           = (30.4 )         (   B    )

 

         where   A =    Shipper's Monthly Reservation Charge

 

                B =    Shipper's confirmed daily nomination for the

                      Credit Day

 

                C =    Actual quantity of gas delivered by GTN to PG&E Malin

                      for Shipper's account for the Credit Day

 

         Except as provided for in Paragraph 3.11 of this rate schedule, this

         Reservation Charge Credit is Shipper's sole remedy for nondelivery of

         gas by GTN.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 39

Third Revised Volume No. 1-A

 

                               RATE SCHEDULE FTS-1

                           FIRM TRANSPORTATION SERVICE

                                   (Continued)

 

3.12      Reservation Charge Credit - Other than Malin Primary Delivery Point

 

         If GTN fails to deliver Forward-haul service on a Primary Path to a

         primary delivery point on its system other than Malin, Oregon,

         ninety-five percent (95%) or more of the aggregate Confirmed Daily

         Nominations (as hereinafter defined) of all Shippers at such primary

         delivery point other than Malin receiving service under this rate

         schedule (hereinafter referred to as the "Non-Deficiency Amount") for

         more than twenty-five (25) days in any given Contract Year, then for

         each day during that Contract Year in excess of twenty-five (25) days

         that GTN so fails to deliver the Non-Deficiency Amount (a "Credit Day")

         Shipper, as its sole remedy, shall be entitled to a Reservation Charge

         Credit calculated in the manner hereinafter set forth.

 

         For the purpose of this Paragraph 3.12, Confirmed Daily Nomination

         shall mean for any day, the lesser of (1) Shipper's Maximum Daily

         Quantity or (2) the quantity of gas that the connecting downstream

         pipeline(s), local distribution company pipeline(s), or end-user(s)

         is/are capable of accepting for Shipper's account at Shipper's point(s)

         of primary delivery on GTN or (3) the quantity of gas that the

         connecting pipeline upstream of GTN is capable of delivering to GTN for

         Shipper's account to GTN at Shipper's primary point of receipt(s) on

         GTN less Shipper's requirement to provide compressor fuel and line

          losses under the Statement of Effective Rates and Charges of GTN's FERC

         Gas Tariff, Third Revised Volume No. 1-A or (4) Shipper's nomination to

         GTN.

 

         The Reservation Charge Credit for each Credit Day for a particular

          Shipper shall be computed as follows:

 

            Reservation Charge       A              B - C

            Credit for Each         -----      x     ------

            Credit Day           = (30.4 )         (   B    )

 

          where   A =    Shipper's Monthly Reservation Charge

 

                 B =    Shipper's confirmed daily nomination for the

                       Credit Day

 

                 C =    Actual quantity of gas delivered by GTN to a Shipper's

                       primary delivery point(s) (other than Malin) for

                       Shipper's account for the Credit Day

 

         Except as provided for in Paragraph 3.10 of this rate schedule this

         Reservation Charge Credit is Shipper's sole remedy for nondelivery of

         gas by GTN.

 

                                                                      (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 40

Third Revised Volume No. 1-A

 

                               Rate Schedule FTS-1

                           Firm Transportation Service

                                    (Continued)

 

3.        RATES (Continued)

 

         3.13      NEGOTIATED RATES

 

                  Notwithstanding any provision of GTN's Tariff to the contrary,

                  GTN and Shipper may mutually agree in writing to a Negotiated

                   Rate (including a Negotiated Rate Formula) with respect to the

                  rates, rate components, charges, or credits that are otherwise

                  prescribed, required, established, or imposed by this Rate

                  Schedule or by any other applicable provision of GTN's Tariff.

 

                  Such Negotiated Rate shall be set forth in Attachment B to the

                  Firm Transportation Service Agreement and GTN shall make any

                  filings with the Commission necessary to effectuate such

                  Negotiated Rate.

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 41

Third Revised Volume No. 1-A

 

                               RATE SCHEDULE FTS-1

                           FIRM TRANSPORTATION SERVICE

                                    (Continued)

 

4.        FUEL AND LINE LOSS

 

         For all Forward Hauls, Shipper shall furnish to GTN quantities of gas

         for compressor station fuel, line loss and other utility purposes, plus

         other unaccounted for gas used in the operation of GTN's combined

         pipeline system between the International Boundary near Kingsgate,

         British Columbia and the Oregon-California boundary for the

         transportation quantities of gas delivered by GTN to Shipper, based

          upon the effective fuel and line loss percentages in accordance with

         Paragraph 37 of the General Terms and Conditions. No fuel charge shall

         apply to transactions that do not involve a forward haul movement of

         gas.

 

5.         TRANSPORTATION GENERAL TERMS AND CONDITIONS

 

         All of the Transportation General Terms and Conditions are applicable

         to this rate schedule, unless otherwise stated in the executed Firm

         Transportation Service Agreement between GTN and Shipper. Any future

         modifications, additions or deletions to said Transportation General

         Terms and Conditions, unless otherwise provided, are applicable to firm

         transportation service rendered under this rate schedule, and by this

         reference, are made a part hereof.

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 41

Third Revised Volume No. 1-A

 

                             Reserved For Future Use

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                           Effective on: October 6, 2003

 

<PAGE>

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 100

Third Revised Volume No. 1-A

 

                  TRANSPORTATION GENERAL TERMS AND CONDITIONS

                               TABLE OF CONTENTS

 

<TABLE>

<CAPTION>

Paragraph No.                        Provision                                Sheet No.

<S>             <C>                                                           <C>

    1            Definitions                                                      101

    2           Gas Research Institute Charge Adjustment Provision               108

    3           Quality of Gas                                                   110

    4           Measuring Equipment                                              112

    5           Measurements                                                     114

    6           Inspection of Equipment and Records                              116

    7           Billing                                                           117

    8           Payment                                                          118

    9           Notice of Changes in Operating Conditions                        119

    10          Force Majeure                                                     120

    11          Warranty of Eligibility for Transportation                       121

    12          Possession of Gas and Responsibility                             121

    13          Indemnification                                                   121

    14          Arbitration                                                      122

    15          Governmental Regulations                                         122

    16          Miscellaneous Provision                                           123

    17          Transportation Service Agreement                                 123

    18          Operating Provisions                                             125

    19          Priority of Service, Scheduling and Nominations                  142

    20          Curtailment                                                      159

    21          Balancing                                                        160

    22          Annual Charge Adjustment (ACA) Provision                          170

    23          Shared Operating Personnel and Facilities                        170

    24          Complaint Procedures                                             171

    25          Information Concerning Availability and Pricing

                of Transportation Service and Capacity Available for

               Transportation                                                   172

    26          Market Centers                                                   173

    27          Planned GTN Capacity Curtailments and Interruptions              174

    28          Capacity Release                                                 175

    29          Flexible Receipt and Delivery Points                             200

    30          Gas Supply Restructuring Transition Costs                        202

    31          Negotiated Rates                                                 208

    32          Equality of Transportation Service                               210

    33          Right of First Refusal Upon Termination of

               Firm Shipper's Service Agreement                                 211

    34          Electronic Communications                                        216

    35          Competitive Equalization Surcharge Revenue Credit                 221

    35A         Crediting of Interruptible Transportation Revenues for

               Extensions                                                       222

    36          Discount Policy                                                  225

    37           Adjustment Mechanism for Fuel, Line Loss and Other

               Unaccounted For Gas Percentages                                  227

    38          Reserved                                                         229

    39          Sales of Excess Gas                                              230

    40          Gas Industry Standards                                           231

</TABLE>

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                           Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 101

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                   (Continued)

 

1.        DEFINITIONS

 

         1.1       Gas Day: In accordance with NAESB Standard 1.3.1, Version 1.5,

                  the term "Gas Day" shall be 9:00 a.m. to 9:00 a.m. Central

                  Clock Time (7:00 a.m. to 7:00 a.m. Pacific Clock Time).

 

         1.1.1     Business Day: The term "Business Day" shall mean Monday

                  through Friday, excluding U.S.Federal Banking Holidays for

                  transactions in the United States and similar holidays for

                  transactions occurring in Canada and Mexico.

 

         1.2       Month: The word "month" shall mean a period extending from the

                  beginning of the first day in a calendar month to the

                  beginning of the first day in the next succeeding calendar

                  month.

 

         1.3       Maximum Daily Quantity: The term "Maximum Daily Quantity"

                  (MDQ)shall mean the maximum daily quantity in Dth of gas which

                   GTN agrees to deliver exclusive of an allowance for compressor

                  station fuel, line loss and other unaccounted for gas and

                  transport for the account of Shipper to Shipper's point(s) of

                  delivery on each day during each year during the term of

                  Shipper's Transportation Service Agreement with GTN.

 

         1.4       Marketing Affiliate: The term "marketing affiliate" shall mean

                  Pacific Gas and Electric Company and CEG Energy Options Inc.

 

         1.5       Gas: The word "gas" shall mean natural gas.

 

         1.6       Cubic Foot of Gas: The term "cubic foot of gas" is defined in

                  accordance with NAESB Standard 2.3.9, Version 1.5, as that

                  quantity of gas which measures one (1) cubic foot at standard

                  conditions of 14.73 dry psia, 60 degrees F. For gas volumes

                  reported in cubic meters, the standard conditions are 101.325

                  kPa, 15 degrees C. Standard 2.3.9, Version 1.5 states in full

                  "Standardize the reporting basis for Btu as 14.73 psia and 60

                  degrees F (101.325 kPa and 15 degrees C, and dry). Standardize

                  the reporting basis for gigacalorie as 1.035646 Kg/cm2 and

                  15.6 degrees C and dry. Standardize the reporting basis for

                  gas volumes as cubic foot at standard conditions of 14.73

                  psia, 60 degrees, F and dry. For gas volumes reported in cubic

                  meters, the standard conditions are 101.325 kPa, 15 degrees C,

                  and dry."

 

         1.7       Mcf: The term "Mcf" shall mean one thousand (1,000) cubic feet

                  of gas and shall be measured as set forth in Paragraph 5

                  hereof. The term "MMcf" shall mean one million (1,000,000)

                  cubic feet of gas.

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 102

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

 

1.        DEFINITIONS (Continued)

 

         1.8       Dekatherm: The term "Dekatherm" (or "Dth") is the quantity of

                  heat energy equivalent to one million (1,000,000 British

                  Thermal Units (MMBtu). Dth is the standard quantity for

                   Nominations, confirmations and Scheduled Quantities in the

                  United States. For purposes of this tariff and associated

                  Service Agreements, the terms MMBtu and Dth are synonymous.

 

         1.9       Btu: The term "Btu" shall mean British Thermal Unit. The term

                  "MMBtu" shall mean one million (1,000,000) British Thermal

                  Units. The reporting basis for Btu shall be standardized as

                  14.73 dry psia and 60 degrees (60o) Fahrenheit (101.325 kPa

                  and 15.6 degrees C).

 

         1.10      Gross Heating Value. The term "gross heating value" shall mean

                  the number of Btus in a cubic foot of gas at a temperature of

                  sixty degrees (600) Fahrenheit, saturated with water vapor,

                  and at an absolute pressure equivalent to thirty (30) inches

                  of mercury at thirty-two degrees (320) Fahrenheit.

 

         1.11      Psig. The term "psig" shall means pounds per square inch

                  gauge.

 

         1.12      Releasing Shipper: A firm transportation Shipper which intends

                  to post its service to be released to a Replacement Shipper,

                  has posted the service for release, or has released its

                  service.

 

         1.13      Replacement Shipper: A Shipper which has contracted to utilize

                  a Releasing Shipper's service for a specified period of time.

 

         1.14      Posting Period: The period of time during which a Releasing

                  Shipper may post, or have posted by the pipeline, all or a

                  part of its service for release to a Replacement Shipper.

 

         1.15      Release Term: The period of time during which a Releasing

                  Shipper intends to release, or has released all or a portion

                  of its contracted quantity of service to a Replacement

                  Shipper.

 

                                                                      (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                             Original Sheet No. 103

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                   (Continued)

 

1.        DEFINITIONS (Continued)

 

         1.16      Bid Period: The period of time during which a Replacement

                  Shipper may bid to contract for a parcel which has been posted

                  for release by a Releasing Shipper.

 

         1.17      Parcel: The term utilized to describe an amount of capacity,

                   expressed in Dth/d, from a specific receipt point to a

                  specific delivery point for a specific period of time which is

                  released and bid on pursuant to the capacity release

                  provisions contained in Paragraph 28 of these Transportation

                  General Terms and Conditions.

 

         1.18      Primary Release: The term used to describe the release of

                  capacity by a Releasing Shipper receiving service under a Part

                   284 firm transportation rate schedule.

 

         1.19      Secondary Release: The term used to describe the release of

                  capacity by a Replacement Shipper receiving service under a

                  Part 284 firm transportation rate schedule.

 

         1.20      Bid Reconciliation Period: The period of time subsequent to

                  the Bid Period during which bids are evaluated by GTN.

 

         1.21      Match Period: The period of time subsequent to the Bid

                  Reconciliation Period and before the notification deadline for

                  awarding capacity for Prearranged Deal C during which the

                  Prearranged Shipper may match any higher bids for the Parcel.

 

         1.22      Mainline Facilities: The term "Mainline Facilities" shall mean

                  the 36-inch and 42-inch mains and appurtenant facilities

                  extending from the interconnection with the pipeline

                  facilities of Alberta Natural Gas Company and Foothills Pipe

                  Lines (South B.C.) Ltd., near Kingsgate, British Columbia to

                  the interconnection with the pipeline facilities of Pacific

                  Gas and Electric Company near Malin, Oregon.

 

                                                                      (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 104

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                   (Continued)

 

1.        DEFINITIONS (Continued)

 

          1.23      Extension Facilities: The term "Extension Facilities" shall

                  mean the 12-inch mains and appurtenant facilities extending

                  from GTN's mainline facilities at Milepost 304.25 and the

                  16-inch and 12-inch mains and appurtenant facilities extending

                  from GTN's Mainline Facilities at Milepost 599.20 that were

                  authorized in Docket No. CP93-618-000. The term "Extension

                  Facility" shall mean one of the Extension Facilities.

 

         1.24      Subject Shipper: The term "Subject Shipper" shall mean the

                  Shippers identified in Appendix G of the Stipulation and

                  Agreement in Docket No. RP94-149-000, et al., and Shippers

                   that have obtained service rights from such Shippers.

 

         1.25      Nominations: A "Nomination" shall be the provision of

                  information to GTN necessary to effectuate a transportation

                  transaction. Specific Nomination procedures are set forth in

                  Section 19.4 of the General Terms and Conditions of

                  Transporter's FERC Gas Tariff.

 

         1.26      Intraday Nomination: An "Intraday Nomination" is a Nomination

                   submitted after the Nomination deadline whose effective time

                  is no earlier than the beginning of the Gas Day and runs

                  through the end of the Gas Day.

 

         1.27      Gas Industry Standards Board Standards: The term "Gas Industry

                  Standards Board Standards" or "GISB Standards" shall mean the

                  standardized business practices and electronic communication

                  practices promulgated by the Gas Industry Standards Board from

                  time to time and incorporated in the Code of Federal

                  Regulations by the Federal Energy Regulatory Commission.

 

         1.28      CES Capacity: The term "CES Capacity" shall mean the

                  additional firm capacity on GTN's Mainline Facilities between

                  the northernmost point near Kingsgate, British Columbia, and

                  points downstream thereof that was made available for

                  subscription on a firm basis as a result of the expansion of

                  GTN's system authorized in Docket No. CP98-167.

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 105

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                   (Continued)

 

1.        DEFINITIONS (Continued)

 

         1.29      Forward Haul: The term "Forward Haul" shall refer to

                  transportation service on GTN's system in which the nominated

                  direction of flow from receipt point to delivery point is in

                   the same direction as physical gas flow on the GTN system.

 

         1.30      Backhaul: The term "Backhaul" shall refer to transportation

                  service on GTN's system in the opposite direction of a Forward

                  Haul as defined in Section 1.29 above.

 

         1.31      Primary Path: The term "Primary Path" shall mean the

                  transportation path established by the receipt and delivery

                  points as set forth in Shipper's executed Service Agreement. A

                  shipper's Primary Path may be either a Forward Haul or a

                  Backhaul as defined in Sections 1.29 and 1.30 above.

 

         1.32      Reverse Path: The term "Reverse Path" shall mean the

                  transportation path that is in the opposite direction of that

                  Shipper's Primary Path as defined in Section 1.31 above. A

                  shipper's Reverse Path may be either a Forward Haul or a

                  Backhaul as defined in Sections 1.29 and 1.30 above. Reverse

                  Path transactions are subject to the operating conditions of

                  GTN's pipeline and will not be made available to Shipper if

                  GTN determines, in its sole discretion, that such

                   transportation is operationally infeasible or otherwise not

                  available.

 

         1.33      Negotiated Rate. The term "Negotiated Rate" shall mean a rate

                  (including a Negotiated Rate Formula) that GTN and a Shipper

                  have agreed will be charged for service under Rate Schedules

                  FTS-1, LFS-1, ITS-1, AIS-1 or PS-1 where, for all or a portion

                  of the contract term, one or more of the individual components

                   of such rate may exceed the maximum rate, or be less than the

                  minimum rate, for such component set forth in GTN's tariff for

                  the given service. Any Agreement entered into after the

                  effective date of this subsection which provides for a rate

                  under Rate Schedules FTS-1, LFS-1, ITS-1, AIS-1 or PS-1 other

                  than the applicable maximum rate shall contain a provision

                  setting out the mutual agreement of the parties as to whether

                  the pricing terms represent a discounted rate or a negotiated

                  rate.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 106

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                   (Continued)

 

1.        DEFINITIONS (Continued)

 

         1.34      Negotiated Rate Formula. The term "Negotiated Rate Formula"

                  shall mean a rate formula that GTN and a Shipper have agreed

                  will apply to service under a specific contract under Rate

                  Schedules FTS-1, LFS-1, ITS-1, AIS-1 or PS-1 which results in

                  a rate where, for all or a portion of the contract term, one

                  or more of the individual components of such rate may exceed

                  the maximum rate, or may be less than the minimum rate, for

                  such component set forth in GTN's Tariff for the given

                  service.

 

         1.35      Recourse Rate. The term "Recourse Rate shall mean the

                  applicable maximum rate that would apply to a service but for

                  the rate flexibility allowed under Section 31 of this Gas

                  Tariff.

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                                      Sheet No. 107

Third Revised Volume No. 1-A

 

                             Reserved For Future Use

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                           Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 108

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                    (Continued)

 

2.        GAS RESEARCH INSTITUTE CHARGE ADJUSTMENT PROVISION

 

         2.1       Purpose: GTN has joined with other gas enterprises in the

                  formation of, and participation in, the activities and

                  financing of the Gas Research Institute (GRI), an Illinois Not

                  For Profit corporation. GRI has been organized for the purpose

                  of sponsoring Research, Development and Demonstration (RD&D)

                   programs in the field of natural and manufactured gas for the

                  purpose of assisting all segments of the gas industry in

                  providing adequate, reliable, safe, economic and

                  environmentally acceptable gas service for the benefit of gas

                  consumers and the general public.

 

                  For the purpose of funding GRI's approved expenditures, this

                  Paragraph 2 establishes a GRI Adjustment Charge to be

                  applicable to GTN's Rate Schedules ITS-1, AIS-1, PS-1 and

                  FTS-1 in this FERC Gas Tariff, Third Revised Volume No. 1-A;

                  provided, however, such charge shall not be applicable in the

                  event gas is delivered to a downstream interstate pipeline

                  that is a member of GRI.

 

         2.2       Basis for the GRI Adjustment Charges: The rate schedule

                  specified in Paragraph 2.1 hereof shall include an increment

                  for a GRI Adjustment Charge for RD&D. Such GRI Adjustment

                  Charge shall be that increment, adjusted to GTN's pressure

                  base and heating value if required, which has been approved by

                  Federal Energy Regulatory Commission Orders approving GRI's

                  RD&D expenditures. The GRI Adjustment Charge shall be

                  reflected in the current Statement of Effective Rates and

                  Charges for Transportation of Natural Gas in this FERC Gas

                  Tariff, Third Revised Volume No. 1-A.

 

         2.3       Filing Procedure: The notice period and proposed effective

                  date of filings pursuant to this paragraph shall be as

                  permitted under Section 4 of the Natural Gas Act; provided,

                  however, that any such filing shall not become effective

                  unless it becomes effective without suspension or refund

                  obligation.

 

         2.4       Remittance to GRI: GTN shall remit to GRI, not later than

                  fifteen (15) days after the receipt thereof, all monies

                  received by virtue of the GRI Adjustment Charge or the Check

                  the Box procedure, less any amounts properly payable to a

                  Federal, State or Local authority relating to the monies

                  received hereunder.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 109

Third Revised Volume No. 1-A

 

                    TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                   (Continued)

 

2.        GAS RESEARCH INSTITUTE CHARGE ADJUSTMENT PROVISION (Continued)

 

         2.5       A high load factor Shipper is a Shipper with a load factor

                  greater than fifty (50) percent. A low load factor Shipper is

                  a Shipper with a load factor equal to or less than fifty (50)

                  percent. A Shipper's load factor for each service agreement

                  shall be determined annually using the most recent twelve (12)

                  months of actual throughput available (including throughput

                  using capacity released pursuant to Paragraph 28 of the

                  Transportation General Terms and Conditions). The Shipper's

                  load factor shall remain in effect during the calendar year.

                  In the event twelve (12) months of actual data does not exist,

                  the Shipper's load factor shall be determined monthly based on

                  the latest recorded throughput data. The appropriate GRI

                  demand surcharge is applied monthly until such time as twelve

                  (12) months of actual data is accumulated. At such time the

                   Shipper's load factor shall remain in effect during the

                  calendar year.

 

         2.6       For the purpose of funding GRI's approved expenditures, and

                  subject to the further terms and conditions set forth in the

                  Stipulation and Agreement Concerning the Post-1993 GRI Funding

                  Mechanism and the orders approving such Stipulation and

                  Agreement found at Gas Research Institute, 62 FERC P. 61,316

                   (1993) this Paragraph 2 establishes a GRI Funding Unit which

                  shall be collected for quantities of gas transported under

                  GTN's rate schedules provided, however, such charge shall not

                  be applicable to discounted transactions except where the

                  discounted rate is less than the GRI Funding Unit. In this

                  instance GTN shall remit that portion of the GRI Funding Unit

                  actually collected. For purposes of discounted transactions,

                  any GRI Funding Unit shall be considered to be the first

                  component of rates discounted. The GRI Funding Unit may be

                  discounted to zero and shall not be applied to the same

                   quantity of gas more than once.

 

         2.7       Voluntary GRI Contributions. GTN has agreed to be a collection

                  agent for shippers that voluntarily choose to support GRI

                  through a "check the box" procedure on GTN's invoices. Amounts

                  collected will be remitted to GRI in accordance with the

                  requirements of Section 2.4 of this FERC Gas Tariff. The

                  amounts collected pursuant to this procedure will not be part

                   of GTN's rates.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 110

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                    (Continued)

 

3.        QUALITY OF GAS

 

         3.1       Quality Standards: The gas which Shipper delivers hereunder to

                  GTN for transport (and the gas which GTN transports hereunder

                  for Shipper) shall be merchantable gas at all times complying

                  with the following quality requirements:

 

                  (a)       Heating Value: The gas shall have a gross heating

                           value of not less than nine hundred ninety-five (995)

                            Btus per standard cubic foot on a dry basis, but with

                           the consent of Shipper, GTN may deliver gas at a

                           lower gross heating value.

 

                  (b)       Freedom from Objectionable Matter: The gas:

 

                           (1)       Shall be commercially free from sand, dust,

                                    gums, crude oil, impurities and other

                                    objectionable substances which may be

                                     injurious to pipelines or which may

                                    interfere with its transmission through

                                    pipelines or its commercial utilization.

 

                           (2)       Shall not have a hydrocarbon dew-point in

                                    excess of fifteen degrees (15m) Fahrenheit

                                    at pressures up to eight hundred (800) psig.

 

                           (3)       Shall not contain more than one-quarter

                                    (1/4) grain of hydrogen sulfide per one

                                    hundred (100) standard cubic feet.

 

                           (4)       Shall not contain more than ten(10) grains

                                     of total sulphur per one hundred (100)

                                    standard cubic feet.

 

                           (5)       Shall not contain more than two percent (2%)

                                    by volume of carbon dioxide.

 

                           (6)       Shall not contain more than four (4) pounds

                                    of water vapor per one million (1,000,000)

                                    standard cubic feet.

 

                            (7)       Shall not exceed one hundred ten degrees

                                    (110m) Fahrenheit in temperature at the

                                    point of measurement.

 

                           (8)       Shall be as free of oxygen as it can be kept

                                    through the exercise of all reasonable

                                    precautions, and shall not in any event

                                    contain more than four-tenths of one percent

                                     (0.4%) by volume of oxygen.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 111

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                    (Continued)

 

3.        QUALITY OF GAS (Continued)

 

         3.2       Quality Tests:

 

                  (a)       The quality specifications of the gas received by GTN

                           hereunder shall be determined by tests which GTN

                           shall cause to be made at the International Boundary

                           or such other locations on GTN's system if required

                           accordance with this Paragraph 3.2.

 

                  (b)       The gross heating value of gas delivered hereunder

                           shall be determined from read-outs of continuously

                           operating measuring instruments. The method shall

                           consist of one or more of the following:

 

                           (1)       calorimeter

 

                           (2)       gas chromatograph

 

                           (3)       any other method mutually agreed upon by the

                                    parties.

 

                           Measurement of gross heating value with the

                           calorimeters shall comply with the standards set

                           forth in the American Society for Testing and

                           Materials' ASTM D 1826. Analysis of gas with gas

                           chromatograph shall comply with the standards set

                           forth in ASTM D 1945. Calculation of the gross

                           heating value from compositional analysis by gas

                           chromatography shall comply with the standards set

                           forth in ASTM D 3588.

 

                           GTN or its agent shall calibrate and maintain the

                           gross heating value measurement device at intervals

                           as agreed upon by GTN and Shipper. Shipper shall have

                           access to GTN's devices and shall be allowed to

                           inspect the sevices and all charts or other records

                           of measurement at any reasonable time.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates & Regulatory Affairs

Issued on: October 7, 2003                          Effective on: October 6, 2003

 

<PAGE>

 

Gas Transmission Northwest Corporation

FERC Gas Tariff                                            Original Sheet No. 112

Third Revised Volume No. 1-A

 

                   TRANSPORTATION GENERAL TERMS AND CONDITIONS

                                   (Continued)

 

3.        QUALITY OF GAS (Continued)

 

         3.2       Quality Tests (Continued)

 

                  (c)       Tests shall be made to determine the total sulphur,

                            hydrogen sulfide, carbon dioxide and oxygen content

                           of the gas, by approved standard methods in general

                           use in the gas industry, and to determine the

                           hydrocarbon dew-point and water vapor content of such

                           gas by methods satisfactory to the parties. Tests

                           shall be made frequently enough to ensure that the

                           gas is conforming continuously to the quality

                           requirements. Shipper shall have the right to require

                           GTN to have remedied any deficiency in quality of the

                           gas and, in the event such deficiency is not

                            remedied, the right, in addition to all other

                           remedies available to it by law, to refuse to accept

                           such deficient gas until such deficiency is remedied.

 

4.        MEASURING EQUIPMENT

 

          4.1       Installation: Unless GTN and Shippers agree otherwise, all gas

                  volume measuring equipment, devices and materials at the

                  point(s) of receipt and/or delivery shall be furnished and

                  installed by GTN at Shipper's expense including the tax-on-tax

                  effect. All such equipment, devices and materials shall be

                  owned, maintained and operated by GTN. Shipper may install and

                  operate check measuring equipment provided it does not

                  interfere with the use of GTN's equipment.

 

         4.2       Testing Meter Equipment: The accuracy of either GTN's or

                  Shippers measuring equipment shall be verified by test, using

                   means and methods acceptable to the other party, at intervals

                  mutually agreed upon, and at other times upon request. Notice

                  of the time and nature of each test shall be given by the

                  entity conducting the test to the other entity sufficiently in

                  advance to permit convenient arrangement for the presence of

                  the representative of the other entity. If, after notice, the

                  other entity fails to have a representative present, the

                  results of the test shall nevertheless be considered accurate

                  until the next test. If any of the measuring equipment is

                  found to be registering inaccurately in any percentage, it

                  shall be adjusted at once to read as accurately as possible.

                  All tests of such measuring equipment shall be made at the

                  expense of the entity conducting the same, except that the

                  other entity shall bear the expense of tests made at its

                  request if the inaccuracy is found to be two percent (2%) or

                  less.

 

                                                                     (Continued)

 

Issued by: John A Roscher, Director of Rates &a


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