<PAGE>   1
PORTIONS OF THIS EXHIBIT IDENTIFIED BY "***" HAVE BEEN DELETED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AND THE FREEDOM OF INFORMATION ACT.


                                                                 EXHIBIT 10(b)-2


                            STORAGE SERVICE AGREEMENT


                                 BY AND BETWEEN


                          BAY GAS STORAGE COMPANY, LTD.

                                       AND

       SOUTHERN COMPANY SERVICES, INC. AS AGENT FOR ALABAMA POWER COMPANY,
    GEORGIA POWER COMPANY, GULF POWER COMPANY, MISSISSIPPI POWER COMPANY AND
                       SAVANNAH ELECTRIC AND POWER COMPANY




                             CONTRACT NUMBER FMSE00



<PAGE>   2



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                         PAGE
<S>                                                                             <C>
I.        CONDITIONS PRECEDENT                                                   2


II.       COMMENCEMENT OF OPERATIONS                                             3


III.      GAS TO BE RECEIVED, STORED AND DELIVERED                               4


IV.       PERFORMANCE OBLIGATIONS                                                5


V.        DELIVERY PRESSURE                                                      6


VI.       POINT(S) OF RECEIPT AND DELIVERY                                       6


VII.      TITLE AND RISK OF LOSS                                                 6


VIII.     TERM                                                                   7


IX.       DEFAULT AND TERMINATION                                                7


X.        RATES                                                                  8


XI.       TAXES                                                                  9


XII.      NOTICES                                                               10


XIII.     NOMINATIONS                                                           11


XIV.      GENERAL TERMS AND CONDITIONS;
          STATEMENT OF CONDITIONS FOR GAS STORAGE;                              12


XV.       MISCELLANEOUS                                                         12
</TABLE>



<PAGE>   3



                            STORAGE SERVICE AGREEMENT



         THIS STORAGE SERVICE AGREEMENT (this "Contract" or "Agreement") is made
and entered into as of the 1st day of August, 2000, by and between BAY GAS
STORAGE COMPANY, LTD ("Bay Gas"), an Alabama limited partnership, and SOUTHERN
COMPANY SERVICES, INC. as agent for Alabama Power Company, Georgia Power
Company, Gulf Power Company, Mississippi Power Company and Savannah Electric and
Power Company ("Shipper").


                                  WITNESSETH:

         WHEREAS, Bay Gas intends to develop certain new underground gas storage
facilities (the "New Storage Facilities") to be constructed in connection with
existing underground gas storage facilities located near McIntosh, Alabama which
are owned and operated by Bay Gas (the "Existing Storage Facilities"; the
Existing Storage Facilities and New Storage Facilities being referred to herein
collectively as the "Storage Facilities"); and

         WHEREAS, Shipper desires to contract for a portion of the storage
capacity of the Storage Facilities, and desires that Bay Gas receive at the
Point(s) of Receipt specified on Exhibit "A" attached hereto and made a part
hereof, certain quantities of gas from the pipeline facilities identified
therein for the purpose of injecting and storing such gas for Shipper (or for
its account) in the Storage Facilities, and that Bay Gas deliver such gas into
the pipeline facilities identified on Exhibit "A" at the Point(s) of Delivery
therein specified; and

         WHEREAS, Bay Gas desires to perform such services for Shipper, all to
be provided pursuant and subject to the terms and conditions hereof.


         NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Bay Gas and Shipper hereby agree as follows:


                                    ARTICLE I

                              CONDITIONS PRECEDENT

          1.1 Following the date of this Agreement, Bay Gas shall exert its best
efforts to obtain:

                  (a) Satisfactory financing for the construction of New Storage
         Facilities to provide services to Shipper as provided herein (it being
         understood and agreed


                                       2
<PAGE>   4


         that the determinations of what New Storage Facilities shall be
         constructed and what financing is satisfactory shall be in the sole
         discretion of Bay Gas); and

                  (b) All permits, authorizations, certificates and approvals,
         as deemed necessary or desirable by Bay Gas, from all appropriate
         local, state or federal agencies having jurisdiction over the
         construction, operation or rates charged for services, to enable it to
         perform its obligations and receive the benefits provided for
         hereunder.

         1.2 Promptly following the attainment by Bay Gas of satisfactory
financing, and all permits, authorizations, certificates and approvals as set
forth in Section 1.1(a) and 1.1(b) consistent with the terms of this Agreement
(or the waiver thereof by Bay Gas and Shipper), Bay Gas shall provide Shipper
with written notice (the "Commitment Notice") to such effect. In the event Bay
Gas has not given the Commitment Notice within *** months after the date of this
Agreement, Shipper shall have the option to terminate this Agreement upon
providing not less than sixty (60) days advance written notice ("Termination
Intent Notice") of its intended termination date (the "Intended Termination
Date"); provided that no such notice of intent to terminate may be given after
the date a Commitment Notice is given (even if such date is later than ***
months after the date of this Agreement), and further provided that if Bay Gas
gives a Commitment Notice within sixty (60) days of the date the Termination
Intent Notice is given, the Termination Intent Notice shall be deemed withdrawn.


                                   ARTICLE II

                           COMMENCEMENT OF OPERATIONS

          2.1 If Bay Gas provides the Commitment Notice described in ARTICLE I,
Bay Gas shall thereafter provide Shipper written notice when facilities to
provide the services specified herein are to be operational, and shall state in
such notice a date upon which Bay Gas will be ready to receive gas for storage
and otherwise provide to Shipper the services specified herein (hereinafter
referred to as the "Commencement Date"). Except in the case of force majeure as
described in Bay Gas' General Terms and Conditions, attached as Exhibit "B",
such notice shall specify a Commencement Date not later than *** months from the
date of the Commitment Notice, nor earlier than June 1, 2002. In the event of
such Force Majeure the *** months prescribed in the preceding sentence shall be
increased by a period of time equal to the time of the force majeure, but in no
event shall such*** month period, as it may be increased hereby, be a period
greater than *** months. If Bay Gas has not specified a Commencement Date or if
the New Storage Facilities have not been placed in service within the time
required hereby either Party may terminate this contract by written notice to
the other.

         2.2 For a period not to exceed *** days following the Commencement Date
(such period to be referred to hereinafter as the "Start-up Period"), the amount
of firm and

                                       3

<PAGE>   5


interruptible injection capacity available to Shipper shall be provided in
accordance with the volumes set forth in Article 3.1 (e) and (f) below.


                                   ARTICLE III

                    GAS TO BE RECEIVED, STORED AND DELIVERED

         3.1 Contract Quantities. Subject to the terms and conditions
established herein and in Bay Gas' General Terms and Conditions, attached as
Exhibit "B", and made a part hereof, and Statement of Conditions, attached as
Exhibit "C" and made a part hereof, Bay Gas shall provide the following
capacities to Shipper, provided that under no circumstances will Bay Gas be
obligated to provide to Shipper capacities in excess of the maximum quantities
set forth below:

         (a)      Firm Withdrawal - a Firm Maximum Daily Withdrawal Quantity
                  ("FMDWQ") of *** MMBtu per day;

         (b)      Firm Storage - a Firm Maximum Storage Quantity ("FMSQ") in the
                  Storage Facilities equal to 3,200,000 MMBtu.

         (c)      Firm Injection - a Firm Maximum Daily Injection Quantity
                  ("FMDIQ") of *** MMBtu per day.

         (d)      Interruptible Injection - an Interruptible Maximum Daily
                  Injection Quantity ("IMDIQ") of *** MMBtu per day.

         (e)      Firm Injection During Start-Up Period - a Firm Maximum Daily
                  Injection Quantity of *** MMBtu per day, but not more than a
                  total of *** MMBtu in any consecutive *** day period during
                  the Start-Up Period.

         (f)      Interruptible Injection During Start-Up Period In the event
                  injection nominations exceed a total of *** MMBtu for any
                  consecutive *** day period, Shipper shall have the right to
                  nominate daily interruptible injection for the quantity that
                  exceeds *** MMBtu, up to a total amount of daily Injection
                  equal to *** MMBtu during the Start-Up Period.


         3.2 Gas Tendered. Shipper shall tender or cause to be tendered to Bay
Gas at the Point(s) of Receipt specified on Exhibit "A" any gas which Shipper
desires to have injected into storage hereunder. The obligation of Bay Gas to
receive gas shall not exceed: (a) at any Point of Receipt the lesser of, (i) the
Injection Quantities for such Point of Receipt, or (ii) the total daily volume
that Shipper or its designee is able and willing to tender at such Point of
Receipt; or (b) the aggregate Injection Quantities for all Points of Receipt.
Shipper shall also receive or cause to be received gas requested to be withdrawn
from storage at the Point(s) of Delivery herein specified on Exhibit "A" upon
tender for delivery by Bay Gas.


                                       4
<PAGE>   6

         3.3 Gas Received and Delivered. Subject to the operating conditions of
the pipeline(s) delivering or receiving gas for Shipper's account and the terms
hereof, Bay Gas shall receive gas for injection from Shipper at the Point(s) of
Receipt and deliver gas to Shipper at the Point(s) of Delivery specified on
Exhibit "A" as scheduled by Shipper from time to time; provided that Bay Gas
shall not be obligated to receive for injection any quantity of gas if the
injection of the same would cause the quantity of gas stored in the Storage
Facilities for Shipper's account ("Shipper's Gas Storage Inventory") to exceed
the total of Shipper's FMSQ as stated above; nor shall Bay Gas be obligated at
any time to deliver more gas to Shipper than Shipper has in its then-current
Shipper's Gas Storage Inventory.

         3.4 Gas to be Withdrawn on Termination. Shipper must have all of its
gas withdrawn by the end of the term of this Contract. If at any time service
pursuant to this Contract is canceled or terminated prior to the end of the term
specified herein, Shipper shall be required to withdraw its gas within a sixty
(60) day balancing period after the determination by Bay Gas that any
unwithdrawn volumes exist, the maximum number of days allowed for withdrawal to
be determined by dividing: (i) the volume of gas Shipper is required to
withdraw, by (ii) fifty percent (50%) of Shipper's FMDWQ. If Bay Gas is unable
to withdraw any volume requested by Shipper, up to fifty percent (50%) of
Shipper's FMDWQ, the period shall be extended accordingly. If the gas is not
withdrawn within the specified time period, Bay Gas shall take title to such gas
not withdrawn.


                                   ARTICLE IV

                             PERFORMANCE OBLIGATION

         4.1 Firm Service. All Firm service rendered under this Contract shall
be provided to Shipper except in the case of force majeure as described in Bay
Gas' General Terms and Conditions attached as Exhibit "B". Bay Gas shall not be
obligated to provide capacities in excess of those stated in Section 3.1 of this
Contract.

         4.2 Interruptible Service. Interruptible injection service rendered
under this Contract shall be fully interruptible and shall be offered in
accordance with the provisions established in the Statement of Conditions
attached as Exhibit "C".

         4.3 Curtailed Capacity. In the event Bay Gas curtails firm storage
service hereunder in accordance with the provisions of this Agreement Bay Gas
shall, pursuant to the Statement of Conditions attached as Exhibit "C", provide
available capacity pro rata based on Shipper's FMDIQ or FMDWQ, as applicable.
Shipper's pro rata share shall be determined by comparing Shipper's FMDIQ or
FMDWQ to the lesser of 100% of Bay Gas' corresponding daily capacities, or the
total amount of daily corresponding capacity contracted to firm customers of Bay
Gas.


                                       5
<PAGE>   7



                                    ARTICLE V

                                DELIVERY PRESSURE

         Delivery Pressure. Shipper is obligated to deliver gas at the Point(s)
of Receipt identified in Exhibit "A" at a pressure sufficient for Bay Gas to
transport such gas to its storage facility recognizing that the amount of such
pressure required may vary based on the operations of the Bay Gas pipeline;
provided however, Shipper is not required to deliver gas at the Point(s) of
Receipt at pressure(s) greater than stated as "MINIMUM PRESSURE" in Exhibit "A".


                                   ARTICLE VI

                        POINT(S) OF RECEIPT AND DELIVERY

         6.1 Point(s) of Receipt. The Point(s) of Receipt for all gas to be
tendered by Shipper to Bay Gas for injection into the Storage Facilities shall
be as specified on Exhibit "A", and the maximum daily quantity of gas which Bay
Gas is obligated to receive from Shipper at each individual Point of Receipt
shall not exceed the maximum stated thereon.

         6.2 Point(s) of Delivery. The Point(s) of Delivery for all gas to be
tendered by Bay Gas to Shipper for delivery pursuant to the terms hereof shall
be as specified on Exhibit "A", and the maximum quantities of gas which Bay Gas
is obligated to deliver to Shipper at each such Point of Delivery shall not
exceed the maximum stated thereon.

         6.3 Addition / Deletion of Point(s) of Receipt or Delivery. Bay Gas and
Shipper may add or delete Point(s) of Receipt or Delivery from time to time by
mutual agreement evidenced by a signed amendment to Exhibit "A".

                                   ARTICLE VII

                             TITLE AND RISK OF LOSS

         7.1 Title. Title to the natural gas stored by Bay Gas and delivered to
Shipper hereunder shall, at all times, be in Shipper's name. Bay Gas makes no
warranty of title whatsoever. Shipper warrants for itself, its successors and
assigns, that it will have at the time of delivery of gas for storage hereunder
good title or valid right to deliver such gas stored hereunder. Shipper warrants
for itself, its successors and assigns, that the gas it delivers hereunder shall
be free and clear of all liens, encumbrances, or claims whatsoever; and that it
will indemnify Bay Gas and save it harmless from all claims, suits, actions,
damages, costs and expenses arising directly or indirectly from or with respect
to the title to gas tendered to Bay Gas hereunder.

         7.2 No Encumbrance on Stored Gas. Bay Gas covenants that it shall
neither cause nor allow any cloud or encumbrance of any nature to arise by,
through or under Bay


                                       6
<PAGE>   8



Gas with respect to Shipper's title to any gas tendered to Bay Gas for storage,
and agrees to deliver such gas pursuant to this Agreement free from all liens
and adverse claims arising by, through or under Bay Gas, and that it will
indemnify, protect, and save Shipper harmless from all claims, suits, actions,
damages, costs and expenses arising directly or indirectly from the same.

         7.3 Control and Possession. As between Shipper and Bay Gas: Shipper
shall be in control and possession of the gas prior to delivery to Bay Gas for
injection at the Point(s) of Receipt and after delivery by Bay Gas to Shipper at
the Point(s) of Delivery, and shall indemnify and hold Bay Gas harmless from any
damage or injury caused thereby except for damages and injuries caused by the
sole negligence of Bay Gas; and, Bay Gas shall be in control and possession of
the gas after the receipt of the same for injection at the Point(s) of Receipt
and until delivery by Bay Gas to Shipper at the Point(s) of Delivery, and shall
indemnify and hold Shipper harmless from any damage or injury caused thereby,
except for damages and injuries caused by the sole negligence of Shipper. The
risk of loss for all gas injected into, stored in and withdrawn from the Storage
Facilities shall be and remain with the Party having control and possession of
the gas as herein provided.


                                  ARTICLE VIII

                                      TERM

         8.1 Primary Term; Renewal. This Contract shall be effective as of its
execution, subject to termination in accordance with the provisions of ARTICLE I
or ARTICLE II, and shall continue in full force and effect for a period of ***
years beginning on the Commencement Date ("Primary Term"). Following the Primary
Term the Contract shall automatically renew for successive *** terms (each a
"Renewal Term") unless terminated at the end of the Primary Term, or the end of
any Renewal Term (or earlier terminated in accordance with Section 9.1) by
written notice delivered by either Party to the other not less than *** prior to
the end of the Primary Term or any Renewal Term as the case may be.


                                   ARTICLE IX

                             DEFAULT AND TERMINATION

         9.1 If either Party hereto shall fail to perform any of the covenants
or obligations imposed upon it by virtue of this Contract (except where such
failure shall be excused under any of the provisions of this Agreement or except
where other termination remedies have been established under this Agreement),
then in such event the other Party may, at its option, terminate this Contract
by proceeding as follows: the Party not in default shall cause a written notice
to be served upon the Party in default, stating specifically the cause for
terminating this Contract and declaring it to be the intention of the Party
giving the notice to terminate the same; whereupon, the Party in default shall
have thirty (30) days


                                       7
<PAGE>   9




after receipt of the aforesaid notice within which to remedy or remove the cause
or causes of default stated in the notice of termination and if, within said
period of thirty (30) days, the Party in default does so remedy and remove such
cause or causes, and fully indemnifies the Party not in breach, then such notice
shall be nullified and this Contract shall continue in full force and effect. In
the event the Party in default does not so remedy and remove the cause or causes
of default, or does not fully indemnify the Party giving the notice for such
Party's actual damages as a result of such breach within said period of thirty
(30) days, then this Contract shall terminate after the expiration of said
period; provided, however, that if such default be remedied but no
indemnification therefor has been made due to a bona fide dispute between the
Parties as to the amount thereof, then this Contract shall not terminate, but
the Party not in default shall have the right to seek recovery of its actual
damages as provided by law. Notwithstanding any provision to the contrary in the
Statement of Conditions or the General Terms and Conditions, any termination for
breach of this Contract shall be carried out strictly in accordance with this
section.

         9.2 Any cancellation of this Contract pursuant to the provisions of
this Article IX shall be without prejudice to the right of the Party not in
default to collect any amounts then due it and without waiver of any other
remedy or performance to which the Party not in default may be entitled.

                                    ARTICLE X

                                      RATES

         10.1 Storage Charges. In accordance with the billing procedures
described in the General Terms and Conditions, attached as Exhibit "B" beginning
with the month in which the Commencement Date occurs, Shipper shall pay to Bay
Gas during the Primary Term or any Renewal Term of the Contract the following
charges, which include all taxes in effect on the date of this Contract:

         (a)      Firm Services Monthly Demand Charge - *** per MMBtu of
                  Shipper's FMSQ for each month of the Primary Term and Renewal
                  Term of the Contract; provided, however, that during the
                  Start-Up Period the Firm Services Monthly Demand Charge shall
                  be *** plus;

         (b)      Injection and Withdrawal Charges - *** per MMBt of gas
                  received by Bay Gas for injection into storage hereunder
                  (excluding gas retained by Bay Gas as fuel) ("Injection
                  Charge") and *** for each MMBtu of gas delivered by Bay Gas to
                  Shipper hereunder ("Withdrawal Charge") during the Primary
                  Term and Renewal Term of the Contract. Bay Gas reserves the
                  right to exchange gas in lieu of physically injecting or
                  withdrawing nominated gas volumes, and gas so exchanged shall
                  be accounted and charged for as having been injected or
                  withdrawn as nominated.

         (c)      Fuel Charge - A Fuel Charge shall be paid by permitting Bay
                  Gas to retain *** of all volumes of gas tendered by Shipper
                  for injection at the Storage


                                       8
<PAGE>   10




                  Facility during the Primary Term and Renewal Term of the
                  Contract. Upon measurement of volumes tendered by Shipper for
                  a given day, *** of the total amount measured shall be
                  retained by Bay Gas to satisfy Shipper's fuel cost obligation
                  hereunder, and the remaining *** shall be applied to computing
                  compliance with the applicable FMDIQ and FMSQ, and computing
                  the amount of Shipper's Gas Storage Inventory.

         10.2 Suspension of Payments. In the event that Bay Gas is, due to an
event of force majeure as defined in the General Terms and Conditions attached
as Exhibit "B" unable to provide storage services, or a portion thereof, under
this Contract for a consecutive thirty (30) day period, then the obligation of
Shipper to make payment hereunder for such unavailable services, or a portion
thereof, shall thereafter be suspended, to the extent of the unavailable
services, until such service is again made available hereunder. Any subsequent
curtailment or excused failure to provide storage services hereunder during the
same calendar year shall result in a pro-rata reduction in the monthly charges
to be paid by Shipper for the month or months in which the failure occurred.


                                   ARTICLE XI

                                      TAXES

         11.1 (a) Shipper agrees to pay to Bay Gas, by way of reimbursement,
within twenty (20) days of receipt of an invoice for same, all taxes levied or
imposed upon Bay Gas after the date hereof; and any increases in existing taxes
which may be made effective after the date hereof, with respect to the storage
of gas hereunder. Bay Gas agrees to pass through to Shipper in its monthly
billings any savings resulting from decreases in existing taxes which may be
made effective after the date hereof, with respect to the storage of gas
hereunder. In the event that any additional taxes or increases in taxes are
imposed and, should Bay Gas elect not to challenge the same, then Shipper shall
be subrogated to Bay Gas' rights to challenge the same. In no event shall
Shipper be required to pay any tax in a greater amount than its pro-rata share.

               (b) Shipper shall reimburse Bay Gas for Shipper's pro-rata
portion of all ad valorem taxes, property taxes and/or other similar taxes.

         11.2 The term "taxes" as used in Section 11.1 shall mean all taxes
which are now in existence or which may in the future be levied upon Bay Gas, or
its facilities or the storage of gas hereunder (other than, capital stock,
income or excess profit taxes, or general franchise taxes imposed on
corporations on account of their corporate existence or on their right to do
business within the state as a foreign corporation and similar taxes),
including, but not limited to, gross receipts tax, street and alley rental tax,
licenses, fees and any other taxes, charges or fees of any kind levied, assessed
or made by any governmental authority on the act, right or privilege of
transporting, handling or delivering


                                       9
<PAGE>   11


gas or using Bay Gas' Storage Facilities, or any fee in respect to the gas or
the storage, transportation or other handling thereof.


                                   ARTICLE XII

                                     NOTICES

         12.1 Whenever any notice, request, demand, statement, nominations or
payment is required or permitted to be given under any provision of this
Contract, unless expressly provided otherwise, such shall be in writing, signed
by or on behalf of the person giving the same, and shall be deemed to have been
given and received upon the actual receipt thereof (including the receipt of a
telecopy or facsimile of such notice) at the address of the Parties as follows:


<TABLE>
<S>                                       <C>
NOTICES AND CONTRACT MATTERS:

Bay Gas:                                   Contact
Bay Gas Storage Company, Ltd.              Gordon Royce / Harris Oswalt
Post Office Box 1368                       Telephone:  (334) 450-4688
Mobile, Alabama  36633                     Fax:  (334) 476-8292

Shipper:
Southern Company Services, Inc.
14N-8162
600 North 18th Street
Birmingham, AL  35203
 Attn: Vice President , Fuel Services

INVOICES:
Bay Gas:                                   Contact
Bay Gas Storage Company, Ltd.              Gordon Royce / Harris Oswalt
Post Office Box 1368                       Telephone:  (334) 450-4688
Mobile, Alabama  36633                     Fax:  (334) 476-8292

Shipper:                                   Contact
Southern Company Services, Inc             Attn:  Tracy Autrey
GS - 8259
600 North 18th Street
Birmingham, AL.  35203
</TABLE>



                                       10
<PAGE>   12


<TABLE>
<S>                                       <C>
DELIVERY NOTIFICATIONS, NOMINATIONS:

Bay Gas:                                   Contact
Bay Gas Storage Company, Ltd.              Gordon Royce / Harris Oswalt
Post Office Box 1368                       Telephone:  (334) 450-4688
Mobile, Alabama  36633                     Fax:  (334) 476-8292
                                           Nights/Weekends: (334) 476-2120
                                           Fax  (334) 450-4758

Shipper:                                   Contact:
Southern Company Services, Inc.            Ken Damsgard:  (205) 257-5887
600 North 18th Street                      Pager:  (888) 631-1416
Birmingham, AL  35291                      Vicki Gaston:  (205)257-7194
Attn: Fuel Scheduling                      Scott Teel:  (205) 257-5803
                                           Generation Desk:  (205) 257-6301
</TABLE>

         12.2 Operating communications made by telephone or other mutually
agreeable means shall be confirmed in writing or by telecopy within two (2)
hours following same if confirmation is requested by either Party. To facilitate
such operating communications on a daily basis, lists of names, telephone and
telecopy numbers of appropriate operating personnel shall be exchanged by and
between Bay Gas and Shipper before commencement of service under this Contract.
Such lists shall be updated from time to time.

         12.3 Either party may revise its addresses by giving notice in
accordance herewith, designating in such writing the new address of such Party.


                                  ARTICLE XIII

                                   NOMINATIONS

         13.1 Bay Gas shall accept intra-day nominations until 10:00 AM central
clock time. Scheduled quantities resulting from such intra-day nominations will
be effective at 5:00 PM that day. Such intra-day nominations from firm Shippers
will bump any previously scheduled interruptible quantity.

After the 10:00 AM deadline, Bay Gas shall continue to accept intra-day
nominations until 5:00 PM. Scheduled quantities resulting from such intra-day
nominations will be effective at 9:00 PM. Bumping of previously scheduled
interruptible quantities is not allowed for such nominations.

         13.2 Bay Gas will maintain personnel and equipment available to receive
and act upon nomination changes and confirmations twenty-four (24) hours per
day.



                                       11
<PAGE>   13


         13.3 Written nominations and confirmations of verbal nominations will
be made on the nomination form attached hereto as Exhibit "D".

         13.4 In the event that Bay Gas fails to obtain confirmation from
Shipper's transportation service of Shipper's nomination, Bay Gas shall notify
Shipper of such failure as soon as practicable.


                                   ARTICLE XIV

                          GENERAL TERMS AND CONDITIONS;
                     STATEMENT OF CONDITIONS FOR GAS STORAGE

         The following are hereby incorporated herein and made a part of this
Contract as if fully set forth herein: (a) the General Terms and Conditions
attached hereto as Exhibit "B" (the "General Terms and Conditions"); and the
Statement of Conditions for NGPA Section 311(a)(2) Gas Storage Services attached
hereto as Exhibit "C" (the "Statement of Conditions"). In the event of any
conflict or inconsistency between the terms hereof and the terms of the General
Terms and Conditions or the Statement of Conditions, such conflict or
inconsistency shall be resolved in favor of the terms hereof (it being the
intent of this Agreement that the foregoing language is an exception to the
provisions of Article X of the Statement of Conditions).


                                   ARTICLE XV

                                  MISCELLANEOUS

         15.1 Amendment. Neither this Contract nor any provisions hereof may
ever be amended, changed, modified or supplemented except by an agreement in
writing, duly executed by the Party to be charged with the same.

         15.2 Assignment. Either party may assign its rights, titles or
interests hereunder to any individual, bank, trustee, company or corporation
("Lender") as security for any note, notes, bonds or other obligations or
securities of such assignor. In the event of such an assignment by Bay Gas,
Shipper shall provide such financial information to the Lender which is the
assignee of Bay Gas as may be reasonably requested by Bay Gas. Except as
specified in the first sentence of this Section 15.2, no assignment shall be
made without the written consent of the other party hereto, which consent shall
not be unreasonably withheld. No assignment provided for hereunder shall in any
way operate to enlarge, alter or change any obligation of the other party hereto
nor shall the assignee be relieved of its obligations hereunder without the
express written consent of the non-assigning party.

         15.3 Invalid Provision. In the event one or more of the provisions
contained herein shall be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision hereof and this Agreement shall be


                                       12
<PAGE>   14






construed as if such invalid, illegal, or unenforceable provision had never been
contained herein, provided that the deletion of such invalid, illegal or
unenforceable provision does not materially change the intended nature and risk
of the services provided hereunder.

         15.4 Alabama Public Service Commission. This Contract shall be subject
to the approval of the Alabama Public Service Commission in accordance with
Section 1.2.

         15.5 Entire Agreement. This Agreement and the exhibits attached hereto
contain the entire agreement between the Parties and there are no
representations, understandings or agreements, oral or written, between the
Parties which are not included herein.

         15.6 Governing Law. As to all matters of construction and
interpretation, this Contract shall be interpreted, construed and governed by
the laws of the State of Alabama, excluding any conflict of laws rule which
would direct the application of the law of another jurisdiction.

         15.7 Agent's Authority. Southern Company Services, Inc. warrants its
authority to act as agent for Alabama Power Company, Georgia Power Company, Gulf
Power Company, Mississippi Power Company and Savannah Electric and Power Company
in the execution of this Agreement, and to bind each of these electric utility
companies, individually, to the terms and conditions of this Agreement. Shipper
agrees to provide evidence of such authority as may be reasonably required by
Bay Gas.

Following any failure by Shipper to perform any obligations hereunder, upon
request by Bay Gas, Southern Company Services, Inc. shall designate in writing
which of the foregoing electric utility companies is responsible for such
failure. In the event Southern Company Services, Inc. does not provide such
designation within five business days of a request by Bay Gas, Bay Gas shall be
entitled to presume conclusively that the responsible party is the electric
utility company with the highest credit rating (or if two or more have the same
credit rating Bay Gas shall be entitled to presume conclusively that such
electric utility companies are responsible on a pro-rata basis).

         15.8 Previous Contract Termination. Shipper and Bay Gas agree to
terminate their storage contract Number FSMC99, dated April 1, 1999 (including
all amendments), on the Commencement Date of this Contract as defined herein.

         15.9 General Services Administration Regulation. Bay Gas agrees to
comply with the provisions attached hereto as Exhibit "E" and made a part
hereof.



                                       13
<PAGE>   15


         IN WITNESS WHEREOF, the Parties have executed, or caused to have
executed, this Contract in one or more copies or counterparts, each of which
shall constitute and be an original of this Contract effective between the
Parties as of the date first-above written.


                                BAY GAS:

WITNESS:                        BAY GAS STORAGE COMPANY, LTD.
                                By MGS Storage Services, Inc., its managing
                                general partner


/s/ Catherine E. Korte          By:   /s/ W. G. Coffeen, III

                                Its:   Vice President



                                SHIPPER:

WITNESS:                        SOUTHERN COMPANY SERVICES, INC., as
                                agent for, Alabama Power Company, Georgia
                                Power Company, Gulf Power Company,
                                Mississippi Power Company and Savannah
                                Electric and Power Company


/s/ Alan M. Kilpatrick          By:  /s/ Anthony J. Topazi

                                Its:  Vice President


                                       14


<PAGE>   16




                                   EXHIBIT "A"

TO STORAGE AGREEMENT ("CONTRACT") BETWEEN BAY GAS STORAGE COMPANY, LTD. AND
SOUTHERN COMPANY SERVICES, INC. AS AGENT FOR ALABAMA POWER COMPANY, GEORGIA
POWER COMPANY, GULF POWER COMPANY, MISSISSIPPI POWER COMPANY AND SAVANNAH
ELECTRIC AND POWER COMPANY

<TABLE>
<CAPTION>
                                                                                                 MINIMUM
POINT(S) OF RECEIPT                                                     FMDIQ                    PRESSURE
-------------------                                                     -----                    --------
                                                                       (MMBtus)                   (PSIG)
<S>                                                                    <C>                     <C>
Interconnection between the Storage
Facilities and the pipeline facilities of
FGT in Mobile County, Alabama                                            ***                         625
(Interconnect ID: BG-1002)

Interconnection between the Storage
Facilities and the pipeline facilities
of Koch Gateway in Mobile County,
Alabama (Interconnect ID: BG-1003)                                       ***                         575
</TABLE>


Gas may be scheduled for receipt at either or all of the Points of Receipt, in
quantities up to the maximum quantities indicated for each such Point, but the
cumulative total of receipts at all Points of Receipt shall not exceed the total
maximum quantity indicated in Article III herein for firm and interruptible
injection, unless otherwise agreed by Bay Gas.

<TABLE>
<CAPTION>
                                                                                                   FMDWQ
                                                                                                  --------
                                                                                                  (MMBtus)
<S>                                                                                            <C>
POINT(S) OF DELIVERY
Interconnection between the Storage Facilities and
the pipeline facilities of FGT in Mobile County, Alabama                                             ***
(Interconnect ID: BG-1002)

The weld connection between the Storage Facilities and Alabama Power Company's
pipeline downstream of the Bay Gas metering facility at Plant Barry in
Mobile County, Alabama (Interconnect ID: BG-1006)                                                    ***

Interconnection between the Storage
Facilities and the pipeline facilities
of Koch Gateway in Mobile County,
Alabama (Interconnect ID: BG-1003)                                                                   ***
</TABLE>



                                       15
<PAGE>   17



<TABLE>
<CAPTION>
                                                                                                     FMDWQ
                                                                                                    --------
                                                                                                    (MMBtus)
<S>                                                                                               <C>
Interconnection between the Storage
Facilities and the facilities of FGT at
Olin in Washington County, Alabama                                                                    ***
(Interconnect ID: BG-1005)
</TABLE>

Gas may be scheduled for delivery at either or all of the Points of Delivery, in
quantities up to the maximum quantities indicated for each such Point, but the
cumulative total of deliveries at all Points of Delivery shall not exceed the
total maximum quantity indicated in Article III herein for firm withdrawal,
unless otherwise agreed by Bay Gas.



                                       16

<PAGE>   18


                                   EXHIBIT "D"

Nomination To:                Bay Gas Storage

Nomination From:              Southern Company Services


<TABLE>
<CAPTION>
                                                     DAILY
      NOM            START           END            VOLUME              DELIVERY             DELIVERY                UPSTREAM
      TYPE           DATE           DATE            (MMBtu)               PIPE                POINT                  CONTRACT
---------------  -------------  ------------  -------------------  -----------------  ----------------------  --------------------
<S>              <C>            <C>           <C>                  <C>                <C>                     <C>


  Inject

DAILY
TOTAL:



</TABLE>




<TABLE>
<CAPTION>
                                                     DAILY
      NOM            START           END            VOLUME              DELIVERY             DELIVERY                UPSTREAM
      TYPE           DATE           DATE            (MMBtu)               PIPE                POINT                  CONTRACT
---------------  -------------  ------------  -------------------  -----------------  ----------------------  --------------------
<S>              <C>            <C>           <C>                  <C>                <C>                     <C>

     Withdrawal


DAILY
TOTAL:

</TABLE>



                                       17


<PAGE>   19



                                   EXHIBIT "E"



                              COMPLIANCE WITH LAWS

Shipper is a government contractor under an Area-Wide Utilities Service Contract
with the General Services Administration of the United States Government. Bay
Gas agrees that the provisions contained in the Federal Acquisition Regulation
referred to below shall, as if set forth herein in full text, be incorporated
into and form a part of this Contract and Bay Gas shall comply therewith, if the
amount of such Contract and the circumstances surrounding its performance meet
the criteria set out in each of the provisions referred to below, for
incorporation of the provision(s) into contracts between Shipper and others:


               (1) 52.203-6   Restrictions on Subcontractor Sales to
                              the Government

               (2) 52.203-7   Anti-Kickback Procedures

               (3) 52.222-26  Equal Opportunity

               (4) 52.223-2   Clean Air and Water

               (5) 52.223-14  Toxic Chemical Release Reporting


Upon request, Shipper will provide the full text of any of the above provisions
or clauses incorporated herein by reference. Bay Gas hereby warrants that Bay
Gas is not debarred, suspended or proposed for debarment as a contractor or
subcontractor to any department, agency or other division of the U.S.
Government.




                                       18