www.kindermorgan.com Model Comparisons NAESB Nomination Model used in PASSKEY = Pathed (threaded) – “Threaded” refers to linking a shipper’s specific commercial counterparties at receipt and delivery locations to a specific pathed transport nomination line item, and to each other. – Ranking are inputted at receipt and delivery ends of path. Ranks are used in applying scheduling cuts (of within same level of priority), balancing transactions caused by receipt and delivery reductions (both during confirmations and pipeline balancing) across all of a shippers contracts at a scheduling restriction or balancing location. – Once a path is determined to be cut the linked market (or supply) must be cut. There is no flexibility to allow shippers to unthread their transactions. NAESB Nomination Model used in DART= Pathed Non-threaded – Allows a shipper to separate commercial counterparty (buy/sell) transactions at specific locations from transportation transactions between locations. – Gives shippers more flexibility of their business via ranks. Shippers can individually rank supplies and markets, receipt and delivery locations, and paths between receipt and delivery locations. This model also inherently supports cross-contract ranking for balancing transactions caused by receipt and delivery reductions (both confirmations and pipeline balancing). Path ranks are used to apply scheduling restrictions among all the paths within a given contract. – Once a path is cut, the shippers ranks dictate which market (or supply) gets cut. There is no linked supply to market forced cuts. 2 Example of Pathed Non-threaded (DART) This activity is pathed because a specific receipt location is tied to a specific delivery location on each line item. Up ID AAAAA Up ID BBBBB Up ID CCCCC Up ID DDDDD Delivery Point B Receipt Point A Delivery Point C Delivery Point D Down ID XXXXX Down ID YYYYY Down ID ZZZZZ Down ID YYYYY This activity is not threaded because commercial counterparties at the either end of the path are not specifically linked to each other. For example: receipt reductions of upstream suppliers is fully in the control of the shipper via separately identified ranks all the way to the ultimate downstream markets. 3 Example of Pathed Non-threaded (DART) – with Ranks Receipt Rank (Downstream Transport Line Item at Point A); ranking paths across contracts for cuts coming from suppliers to delivery paths across contracts. Delivery Rank (Upstream Transport Line Item at each Point B, C, & D); ranking paths across contracts for cuts coming from markets to receipt paths across contracts. Atmos 40 2 41 BP Energy 30 31 A: 420999 20 10 2 1 42 20 B: 420207 Mahwah 10 C: 420285 Mendon 21 11 Midwest 1 10 10 Elm Gas D: 420101 Rivervale Elm Gas 32 Hess Cherry Nat 22 12 Sequent Down KT Path rank; ranking which path within a KT for cuts arising from pipeline scheduling (within a priority of service) Upstream Rank (Buy Line Items at Point A); ranking suppliers for cuts coming from delivery points Downstream Rank (Sell Line Items at each Point B, C, & D); ranking markets for cuts coming from receipt points 4 5 6 7 8 9 Example of Segment Scheduling Sch = 0 Upstream (Buy) rank Atmos KT Path rank 40 PT A Sch = 70 Sch = 10 30 BP Energy 420999 20 Sch = 30 Midwest Sch = 30 2 420207 Mahwah 32 1 420285 Mendon 1 420101 Rivervale Sch = 5 Hess Sch = 30 Cherry Nat 2 10 Elm Gas Sch = 5 Elm Gas 22 Sch = 30 Sequent Assumptions: Segment Cut – All SOP Total Nominated = 120 All Up/Dn Parties Nom = 30 Total Scheduled = 70 10