The Commission's specific statutory authority to promulgate these rules is found in , C.R.S.

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1 GAS TRANSPORTATION RULES 1.1 BASIS, PURPOSE, AND STATUTORY AUTHORITY The basis and purpose for these rules is to provide guidance to public utilities regarding the Commission's requirements for the transportation of natural gas in intrastate commerce in the State of Colorado. It is the goal of these rules, among other things, to set forth guidelines for the development of rates, terms, and conditions for the provision of natural gas transportation. Such rates, terms, and conditions shall be in the public interest, as determined by the Commission. The principles used to develop such rates, terms, and conditions should be uniformly applied to public utilities. The Commission's specific statutory authority to promulgate these rules is found in , C.R.S. 1.2 APPLICABILITY The provisions of these rules shall apply to the rates, terms, and conditions of transportation by a public utility of natural gas owned by a purchaser. These rules shall not apply to wellhead, gathering, processing, or storage facilities and services. 1.3 DEFINITIONS (a) AffiliateThe phrase affiliate of a public utility means the same as defined in (4}(b), C.R.S. (b) CommissionThe term Commission means the Public Utilities Commission of the State of Colorado. (c) CPCNThe abbreviation CPCN means a certificate of public convenience and necessity issued by the Commission. (d) CurtailmentThe term curtailment means the inability of the transportation customer to receive natural gas, or the inability of a sales customer to receive natural gas, due to a shortage of natural gas supply. (e) InterruptionThe term interruption means a public utility's inability to provide transportation to a transportation customer, or inability to serve a sales customer, due to constraints on the public utility's pipeline system. (f) Interstate pipelinethe term interstate pipeline means any person engaged in natural gas transportation subject to the jurisdiction of the Federal Energy Regulatory Commission under the Natural Gas Policy Act of (g) Intrastate Wholesale PipelineThe term intrastate wholesale pipeline means any utility or any other person engaged in natural gas transportation for compensation to or for another person in intrastate commerce in the State of Colorado using transmission facilities, rather than low pressure distribution facilities. An intrastate wholesale pipeline does not include any part of the pipeline primarily used for storage or gathering or low pressure distribution of natural gas. (h) Local Distribution CompanyThe term local distribution company means any utility or any other person, other than an interstate pipeline or intrastate wholesale pipeline, engaged in transportation or local distribution of natural gas and the sale of natural gas for ultimate consumption, but shall not include any part of the pipeline primarily used for storage or gathering of natural gas. (i) Point of DeliveryThe term point of delivery means that point on a public utility's system at which natural gas owned or controlled by a transportation customer leaves the public utility's system.

2 (j) Point of ReceiptThe term point of receipt means that point on a public utility's system at which natural gas owned or controlled by a transportation customer first enters the public utility's system. (k) PurchaserThe term purchaser means the person, including & public utility, who has taken title to natural gas. (1) Quality of GasThe phrase quality of gas refers to the quality standards for natural gas required by the public utility for the system in which the transportation is being provided. (m) Sales CustomerThe term sales customer means one who purchases natural gas from a public utility. (n) SellerThe term seller means any person who conveys title to natural gas, or otherwise has the legal authority to sell the natural gas to a purchaser. (o) Standby CapacityThe term standby capacity means the daily volumetric amount of capacity reserved in the public utility's system for use by a transportation customer. (p) Standby SupplyThe term standby supply means the daily volumetric amount of natural gas reserved by a public utility for the use by a transportation customer should that customer's supply fail. (q) TransportationThe term transportation means the exchange, fronthaul, backhaul, flow reversal, or displacement of natural gas between a seller on the one hand, and a transportation customer on the other hand using a public utility's pipeline system. (r) Transportation CustomerThe term transportation customer means one who purchases natural gas transportation from a public utility. (s) RulesThe term Rules means the Rules Governing the Transportation of Natural Gas within the State of Colorado. 1.4 CERTIFICATION Every public utility providing facilities for natural gas transportation that does not hold an existing CPCN granted by this Commission shall obtain a CPCN from the Commission to do so. 2.0 TRANSPORTATION 2.1 NATURAL GAS TRANSPORTATION All Intrastate Wholesale Pipeline (IWP) or Local Distribution Company (LDC) shall provide transportation in a manner which is not unjustly discriminatory or preferential to any transportation customer, subject to available capacity as specified in these rules, and subject to the terms and conditions specified in these rules. All IWPs and LDCs shall file all rules, regulations, terms, conditions, and rates and charges for gas transportation in their tariffs, as is required for all other utility services they provide. 2.2 TRANSPORTATION REQUESTS The information required by a public utility to process a request for transportation shall be clearly set forth on an application form, which shall be made available at the time of the request to the transportation customer requesting transportation. (a) The form shall be filed with this Commission in the public utility's transportation tariffs.

3 (b) The contents of the forms should insure that the public utility has the information reasonably necessary for it to determine whether it can provide the requested transportation. (c) All requests for transportation shall be processed, approved or rejected, by the public utility within sixty (60) days after receiving a written application from a transportation customer. (1) If the request is rejected, a written notice detailing the reasons for rejection shall be given to the transportation customer at the time of rejection, as well as an explanation of what changes would have to be made to make the application acceptable. A copy of the notice shall be provided to the Commission at the time the notice is sent to the applicant. (2) If the request is approved, the public utility shall transmit to the transportation customer written notification that it will provide the transportation. 2.3 DETERMINATION OF AVAILABLE CAPACITY The obligation to provide transportation shall be subject to reasonable capacity constraints. (a) In determining whether capacity is available to provide requested transportation, a public utility shall take into account all conventional methods of delivering natural gas through its system, including fronthaul, compression, exchange, flow reversal, backhaul, and displacement. The public utility is not required to perform exchanges or displacements over segments of its system which are not physically connected. (b) In the event that available capacity is inadequate to provide the requested transportation, the public utility shall provide the necessary facilities pursuant to an agreement by the parties for payment consistent with the public utility's extension policies. (c) In the event of a dispute between a transportation customer and a public utility over the adequacy of capacity required to provide requested transportation, the Commission shall resolve the dispute through its complaint procedures. 2.4 INTERRUPTIONS AND CURTAILMENTS OF NATURAL GAS SERVICES (a) An interruption shall be in accordance with the same system of class-by-class priorities as is applicable to sales customers under the public utility's sales tariffs. (b) Within each class, a transportation customer may be interrupted on an equitable basis, consistent with system constraints. Within a locale, a transportation customer shall be interrupted on a fair and reasonable basis consistent with local conditions. (c) Curtailment of services resulting from natural gas supply shortages from sources supplying natural gas to sales customers shall be established by the public utility's tariffs, and this shortage shall not be made up using the transportation customer's supplies unless agreed to by the transportation customer. (d) Curtailment of services resulting from natural gas supply shortages from sources supplying natural gas to transportation customers who have contracted for standby supply service from the public utility shall be in accordance with the same system of class-by-class priorities for curtailments of natural gas supply service to sales customers established by the public utility's tariffs. (e) Within each class, a transportation customer who has contracted for standby supply service may be curtailed on an equitable basis, consistent with system constraints. Within a locale, a transportation customer shall be interrupted on a fair and reasonable basis consistent with local

4 conditions. (f) Transportation customers who have not purchased standby supply service from the public utility and are experiencing natural gas supply shortages may receive, if available, supplies from the public utility under applicable sales tariffs. 2.5 DELIVERY TO OR BY THE PUBLIC UTILITY (a) It is the responsibility of the transportation customer to make arrangements for payment, point of delivery, and point of receipt of the natural gas. 2.6 CURRENT SALES CUSTOMERS (a) Any current sales customer of public utility may obtain transportation from that public utility, pursuant to the rates, terms, and conditions described in these rules. (b) Any reduction to natural gas purchases by a current sales customer of a public utility, who replaces said purchases with transportation, proportionately reduces the public utility's obligation to provide natural gas to that customer on both a peak day and on an annual volume basis. The customer may retain rights to natural gas supplies by electing to pay for standby capacity service and standby supply service. (c) Any reduction in natural gas purchases by a current interruptible sales customer of a public utility, who replaces said purchases with transportation gas, proportionately reduces the public utility's obligation to provide natural gas supplies to that customer on an annual volume basis, unless that customer has elected to pay for standby supply service. (d) If a sales customer converts all, or a portion of its service to transportation, and if it does not elect standby supply service, then the customer must reapply for natural gas sales service in the future if it wishes to convert the transportation portion of its service back to sales service. The public utility may charge that customer fees equivalent to those charged a new sales customer. The public utility has no gas service obligation to those transportation customers who are solely responsible for their own natural gas procurement, unless those customers have elected to pay for standby supply service. 2.7 RIGHT OF FIRST REFUSAL FOR PIPELINE CAPACITY (a) The utility's customers shall have a right of first refusal for any upstream capacity that the utility has contracted for on another utility or pipeline systems when the utility intends to broker, sell, assign, reduce, or relinquish its capacity entitlement on these other utilities or pipeline systems. (b) Customers of the utility may apply for the assignment of this upstream capacity by submitting nominations in writing to the utility. 3.0 AGREEMENTS 3.1 EXISTING TRANSPORTATION AGREEMENTS All transportation agreements which were executed and effective prior to the date of these rules shall be exempt from the requirements of these rules until the earlier of: (1) the initial exploration date; (2) any renewal date; (3) any amendment to the agreement; or (4) not more than one year for the effective date of these rules. 3.2 MODIFICATION AND TRANSPORTATION AGREEMENTS

5 All transportation agreements shall contain the following: This agreement, and all its rates, terms and conditions, shall at all times be subject to modification by order of the Commission upon notice and hearing and a finding of good cause therefor. In the event that any party to this agreement requests the Commission to take any action which could cause a modification in the conditions of this agreement, that party shall provide written notice to the other parties at the time of filing the request with the Commission. 4.1 RATES, TERMS AND CONDITIONS FOR SERVICE FOR LOCAL DISTRIBUTION COMPANIES, AND INTRASTATE WHOLESALE PIPELINES Each LDC and IWP shall file with the Commission within sixty (60) days after the effective date of these rules, tariffs setting forth the rates, or rate design methodology, terms, and conditions for providing gas transportation. The filing shall be deemed approved by the Commission within thirty (30) days from the date of filing unless the Commission suspends them and sets the tariffs for hearing. (a) LDCs and IWPs shall offer transportation rates which are just, reasonable, and not unduly discriminatory. (b) All workpapers, data, and calculations which support and demonstrate the proposed rates and charges in the filed tariffs shall be provided to the Commission with the tariffs. 4.2 CRITERIA GOVERNING TRANSPORTATION RATES AND CHARGES (a) Rates for transportation service shall: (1) Be no lower than the minimum rate determined by the Commission to be just and reasonable; and (2) Be no greater than the maximum rate determined by the Commission to be just and reasonable. (b) Rates for transportation service may: (1) Include or have a separate standby capacity charge; (2) Include or have a separate standby supply charge; (3) Include or have a separate administration charge(s); (4) Include or have a separate service and facilities charge(s); and (5) Include or have a separate charge for the LDC's avoidable purchased natural gas commodity costs; (c) Each LDC and IWP shall file with the Commission proposed maximum rates, or methodologies used to determine maximum rates. In addition, each LDC and IWP desiring price flexibility shall file its minimum rates, or methodologies used to determine minimum rates. (d) The LDC and IWP may negotiate rates lower than its maximum rates with individual transportation customers, but at no time shall the minimum transportation rates be less than the minimum rate as established pursuant to Rule 4.2(c) above. (e) Tariffs filed pursuant to these rules must, at a minimum, containing the following:

6 (1) Maximum rates for transportation must be based on fully allocated cost methods. Maximum rates shall include an allowance for return on allocated rate base equal to the last rate of return authorized by the Commission for the utility. (2) Terms and conditions for transportation shall include, among other pertinent information, the following: (A) Requirements associated with Rule 2.3 above; (B) Nomination requirements; (C) Measurement requirements; (D) Any gas supply cost provisions; (E) Interruption and curtailment priorities; (F) Balancing provisions; (G) Quality of gas requirements; and (H) Line extension policy. (g) All transportation rates and policies with respect thereto shall be applied without undue discrimination or preference, whether to an affiliate of a public utility or a nonaffiliate. 5.1 ADDITIONAL REPORTING REQUIREMENTS In addition to the reporting requirements recited in these rules, a public utility who provides gas transportation shall provide the Commission with the following information: (a) Within sixty (60) days of the end of each calendar quarter, the total natural gas transported in Mcf or MMBTU and the associated total revenue. (b) Within ninety (90) days after the close of the calendar year a summary indicating any costs which the public utility has incurred as a result of sales customers becoming transportation customers. (c) Logs showing all requests for transportation shall be maintained for two years by the public utility. The log shall include the identity of the party making the transportation request, the date of request, the volume requirements, duration, receipt and delivery points, type of service and the disposition of the request. 6.1 PROHIBITION OF ANTICOMPETITIVE CONDUCT, DISCRIMINATORY BEHAVIOR, AND PREFERENTIAL TREATMENT BY A PUBLIC UTILITY (a) The following standards of conduct shall apply to any LDC or IWP that transports gas for others which is affiliated with a natural gas marketing or brokering entity and which conducts transportation transactions with its affiliated marketer or broker. (b) Any contract to transport natural gas for a marketing or brokering affiliate of a public utility shall be an arm's-length agreement containing no terms which are unavailable to other transportation customers. A utility is prohibited from anticompetitive conduct, discriminatory behavior, and preferential treatment in transporting natural gas.

7 (b) For purposes of this rule, anticompetitive conduct, discriminatory behavior, and/or preferential treatment by a public utility transporting natural gas includes but is not limited to: (1) a disclosure to a marketing or brokering affiliate of confidential information provided by nonaffiliated transportation customers; (2) a disclosure by a utility of its own confidential information to any transportation customer unless it is communicated contemporaneously to all current transportation customers; (3) a disclosure of information filed with transportation requests to any transportation customer unless it is communicated contemporaneously to all current transportation customers; (4) providing any false or misleading information or failure to provide information regarding the availability of capacity for transportation service; (5) tying an agreement to release gas to an agreement by the transportation customer to obtain services from the marketing or brokering affiliate of the utility or to an offer by the utility to provide or expedite transportation service to its affiliate for the released gas; (6) providing any false or misleading information about gas releases; (7) allowing marketing or brokering affiliates preferential access to released gas; all affiliate brokers and marketers and all transportation customers must be notified of gas releases at the same time in the same manner; (d) Within ninety (90) days after the close of the calendar year, a summary of all transactions with affiliates shall be made, indicating which affiliate, type of transaction, date, rates charged, and other relevant terms and conditions applicable to each transactions. (8) lending a marketing or brokering affiliate gas to meet balancing requirements except under terms available to other transportation customers; (9) directing potential customers to the utility's own marketing or brokering affiliate; the utility may provide a list of all registered gas marketers and brokers, including their affiliates; (10) charging lower rates to a transportation customer conditioned on the purchase of gas from the utility's marketing or brokering affiliate; (11) conditioning the availability of transportation service upon the use of the utility's marketing or brokering affiliate; (12) providing exchange or displacement services to one transportation customer without providing them to others on the same terms and conditions; (13) through a tariff provision or otherwise, giving its marketing affiliate preference over nonaffiliated customers in matters relating to transportation including, but not limited to, scheduling, balancing, transportation, storage, or curtailment priority; or (14) disclosing to its affiliate any information the utility received from a nonaffiliated transportation customer or potential nonaffiliated transportation customer. (c) To the extent a public utility transporting natural gas provides to a marketing affiliate information related to transportation of natural gas, or gas, sales or gas marketing, it must provide that information contemporaneously to all potential transportation customers, affiliated and nonaffiliated, on its system.

8 (d) If a utility offers a transportation discount to an affiliated marketer, it shall make a comparable discount available to all similarly situated nonaffiliated transportation customers. (e) A utility must maintain its books of account and records separately from those of its affiliate. (f) A utility must maintain and make available for copying on a daily basis a written log of waivers that the utility grants with respect to tariff provisions that provide for such discretionary waivers. (g) The Commission's complaint procedures shall be available to resolve any complaints and investigations arising out of the implementation of these rules, including but not limited to: (1) the utility's refusal or failure to promptly transport natural gas on the grounds of unavailable capacity, pipeline quality of the gas, or any other grounds; (2) the rates, terms, and conditions proposed by a utility for the services; or (3) interruptions of services. 7.1 EXEMPTION OR VARIANCE (a) Any public utility may file an application for an exemption or a variance from any requirement set forth in these rules. The application shall: (1) describe the situation necessitating the exemption or variance; (2) set out the effect of complying with the requirement on the public utility, or its customers, if the exemption or variance is not granted; (3) identify the portion(s) of these rules for which the variance or exemption is requested; (4) state how the exemption or variance will promote the purposes of these rules; and (5) state why no other reasonable alternative is available.