Talked with John Hodge further about the Transco Expansion from Zone 3 to 4 
(Mommentum).  Transco tossed out a rate of $.32 (100% load factor) plus 2.35% 
fuel plus $.026 commodity.  If you assume fuel on a gas cost of $4.00 ($.095 
fuel), then the total rate is $.44.  

Assuming the aforementioned rate, Southern Co.'s can pay Transco $.44 or 
purchase gas from Elba and backhaul on Sonat at a rate of $.22 which would 
netback to Elba at Hub +$.22.  If you assume a basis of $.04 for gas on 
Transco Zone 3, then the netback goes up to Hub plus $.26.  Note that a hard 
negotiation with Transco could net a better rate than $.44 and that this is 
only what they are proposing.

However, I do not think we will get anywhere close to that with Southern Co. 
given that they can site generation in Zone 2 (Alabama) vs. Zone 3 
(Georgia).  Additionally, most power developers will not commit to a baseload 
quantity given that they will serving a peaking market.  Our alternative is 
to sell to existing firm shippers on the Sonat system that would view Elba as 
a savings on variable cost on their FT agreement.  The net is a Hub +$.10 at 
Elba assuming a basis of $.04 at Destin.  

Southern Co. has stated that a price of Hub +$.20 was out of the question.  
Probably between their bid of $.12 vs. Hub + $.20 is where we could strike a 
deal with them.