##### 



Exhibit 10(w)
 STORAGE SERVICE AGREEMENT
 BY AND BETWEEN
 BAY GAS STORAGE COMPANY, LTD.
 AND
 FLORIDA POWER CORPORATION
 d/b/a PROGRESS ENERGY FLORIDA, INC.
 CONTRACT NUMBER FPEF-08




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TABLE OF CONTENTS
 ARTICLE
    
    
    PAGEI.
    
    Conditions Precedent
    
    1II.
    
    Commencement of Operations
    
    3III.
    
    Gas to be Received, Stored and Delivered
    
    3IV.
    
    Performance Obligations
    
    5V.
    
    Point(s) of Receipt and Delivery
    
    5VI.
    
    Title, Risk of Loss and Insurance
    
    6VII.
    
    Term
    
    7VIII.
    
    Default and Termination
    
    8IX.
    
    Rates
    
    9X.
    
    Taxes
    
    9XI.
    
    Notices
    
    10XII.
    
    Nominations
    
    11XIII.
    
    General Terms and Conditions;Statement of Conditions for Gas Storage
    
    12XIV.
    
    Miscellaneous
    
    12




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Exhibits
 Exhibit A  Points of Receipt and Points of Delivery
 Exhibit B  General Terms and Conditions
 Exhibit C  Amended Statement of Conditions
 Exhibit D  Sample Nomination Form
 Exhibit E  Form of Assignment Consent




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W I T N E S S E T H:
      CONDITIONS PRECEDENT
 Conditions Precedent.




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(a)
    
    Satisfactory financing for the construction of New Storage Facilities to
provide services to Shipper as provided herein (it being understood and agreed 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.
  Commitment Notice.
 Shippers Termination Right.
 Bay Gas Termination Right.
 2




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COMMENCEMENT OF OPERATIONS
 Commencement Date
  GAS TO BE RECEIVED, STORED AND DELIVERED
 Contract Quantities
 (a)
    
    Firm Storage  a Firm Maximum Storage Quantity (FMSQ) in the Storage
Facilities equal to 500,000 MMBtu.(b)
    
    Firm Withdrawal  a Firm Maximum Daily Withdrawal Quantity (FMDWQ) of ****
MMBtu per day;(c)
    
    Firm Injection  a Firm Maximum Daily Injection Quantity (FMDIQ) of ****
MMBtu per day.
 Gas Tendered
 3




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Gas Received and Delivered
 Additional Volumes
 Gas to be Withdrawn on Termination
 Option to Expand Capacity at Agreed Rates
 4




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PERFORMANCE OBLIGATION
 Firm Service
 Interruptible Service
 Non-Subordination
  POINT(S) OF RECEIPT AND DELIVERY
 Point(s) of Receipt
 Point(s) of Delivery
 5




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Addition/Deletion of Point(s) of Receipt or Delivery
  TITLE, RISK OF LOSS AND INSURANCE
 Title
 No Encumbrance on Stored Gas
 Control and Possession
 Insurance
 6




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TERM
 Primary Term; Renewal.
 (a)
    
    this Contract shall be binding between the Parties as of its date of execution,
and shall be effective with respect to services rendered as of the Commencement Date;
and(b)
    
    upon the occurrence of the Commencement Date, this Contract shall continue in
full force and effect for a period of five (5) years (Primary Term).
  7




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DEFAULT AND TERMINATION
 Default and Termination.
 Prejudice.
 Survivability.
 8




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RATES
 Storage Charges
 (a)
    
    Firm Services Monthly Demand Charge  **** per MMBtu of Shippers FMSQ for each
month of the Primary Term of the Contract;(b)
    
    Injection and Withdrawal Charges  **** per MMBtu 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).(c)
    
    Fuel Charge  Bay Gas shall retain **** of all volumes of gas scheduled by
Shipper for injection at the Storage Facilities. The remaining **** shall be applied
to computing compliance with the FMSQ and computing the amount of Shippers Gas Storage
Inventory.
 Suspension of Payments.
 Payment Exceptions
  TAXES
 Payment of Taxes
 9




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(a)
    
    all taxes charged to Bay Gas after the Commencement Date hereof with respect
to the quantities of gas stored 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 after the effective date hereof, with respect to the quantities of gas
stored 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 attributable to the quantities of its
gas stored hereunder.(b)
    
    Except as expressly provided in Section 10(a) above, Shipper shall have no
liability for any taxes assessed against Bay Gas.
  NOTICES
 Notices.
 Notices and Contract Matters:Bay Gas:
    
    ContactBay Gas Storage Company, Ltd.
    
    Greg Welch /David HaydenPost Office Box 1368
    
    Telephone: (251) 450-4749Mobile, Alabama 36633
    
    Fax: (251) 476-8292Shipper:
    
    Contact:Progress Energy Florida
    
    Attn: Contract Administration410 S. Wilmington St. PEB 16CA
    
    Telephone: 919-546-5164Raleigh, NC 27601
    
    Fax: 919-546-3258Invoices:Bay Gas:
    
    ContactBay Gas Storage Company, Ltd.
    
    Greg Welch / David HaydenPost Office Box 1368
    
    Telephone: (251) 450-4749
 10




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Mobile, Alabama 36633
    
    Fax: (251) 476-8292Shipper:
    
    Contact:Progress Energy Florida
    
    Attn: Back Office410 S. Wilmington St. PEB 10A
    
    Telephone: (919) 546-7518Raleigh, NC 27601
    
    Fax: (919) 546-3258Delivery Notifications, Nominations:Bay Gas:
    
    ContactBay Gas Storage Company, Ltd.
    
    David Hayden/Brandy ClarkPost Office Box 1368
    
    Telephone: (251) 450-4746Mobile, Alabama 36633
    
    Fax: (251) 476-8292Nights/Weekends:Fax :Shipper:
    
    Contact:Progress Energy Florida
    
    Attn: Front Office410 S. Wilmington St. PEB 10A
    
    Telephone: (919) 546-3252Raleigh, NC 27601
    
    Fax: (919) 546-2922
 Confirmation in Writing.
 Revisions
  NOMINATIONS
 Nominations.
 11




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Availability.
 Written Confirmations
 Failure to Receive.
  GENERAL TERMS AND CONDITIONS;  STATEMENT OF CONDITIONS FOR GAS STORAGE
   MISCELLANEOUS
 Amendment.
 Assignment
 12




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Invalid Provision
 Regulatory Approvals
 Creditworthiness
 Entire Agreement
 Governing Law.
 Confidentiality
 13




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BAY GAS:WITNESS:
    
    
    
    BAY GAS STORAGE COMPANY, LTD.By MGS Storage Services, Inc., its managing general
partner/s/ Brandy Clark
    
    
    
    By:
    
    /s/ Greg WelchIts:
    
    PresidentDate: 4/19/06SHIPPER:WITNESS:
    
    
    
    Florida Power Corporationd/b/a Progress Energy Florida, Inc./s/Rick Rhodes
    
    
    
    By:
    
    [Illegible]Its:
    
    Vice PresidentDate: 4/13/06
 14




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EXHIBIT A
 
 FMDIQPOINT(S) OF RECEIPT
    
    (MMBtus)Interconnection between the Storage
Facilities and the pipeline facilities of
FGT in Mobile County, Alabama
(Bay Gas Interconnect ID: BG- 1002; FGT DRN: 163885)
    
    ****Interconnection between the Storage
Facilities and the pipeline facilities of
Gulf South Pipeline Company near Whistler, Alabama
(Bay Gas Interconnect #BG  1008; Gulf South ID: 11817)
    
    ****
  FMDWQPOINT(S) OF DELIVERY
    
    (MMBtus)Interconnection between the Storage Facilities and
the pipeline facilities of FGT in Mobile County, Alabama
(Bay Gas Interconnect ID: BG-1002; FGT DRN: 163884)
    
    ****Interconnection between the Storage
Facilities and the pipeline facilities of
Gulf South Pipeline Company near Whistler, Alabama
(Bay Gas Interconnect #BG  1008; Gulf South ID: 21111)
    
    ****




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EXHIBIT B




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SECTION
    
    DESCRIPTION
    
    PAGEI.
    
    Definitions
    
    
    1II.
    
    Nominations, Balancing And
Excess Deliveries
    
    
    3III.
    
    Construction of Facilities
    
    
    7IV.
    
    Rate Adjustment
    
    
    7V.
    
    Regulatory Requirements
    
    
    8VI.
    
    Pressures
    
    
    8VII.
    
    Measurement
    
    
    8VIII.
    
    Measuring Equipment and Testing
    
    
    9IX.
    
    Quality
    
    
    11X.
    
    Billing, Accounting, Taxes and Reports
    
    
    11XI.
    
    Possession and Non-Odorization of Gas
    
    
    13XII.
    
    Warranty
    
    
    14XIII.
    
    Government Regulations
    
    
    14XIV.
    
    Force Majeure
    
    
    15XV.
    
    Notices
    
    
    16XVI.
    
    Creditworthiness
    
    
    16XVII.
    
    Miscellaneous
    
    
    17




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GENERAL TERMS AND CONDITIONS
  Definitions
 A.
    
    The term, gas, as used herein, shall mean natural gas as produced in its natural
state that meets the quality standards contained in these General Terms and Conditions.B.
    
    The term, new taxes, as used herein, shall mean any tax, license, fee or charge
hereafter levied, assessed or made by any governmental authority on the gas itself or on the
act, right or privilege of producing, severing, gathering, storing, transporting, handling,
selling or delivering gas which is measured by the volume, value, or sales price of the gas.C.
    
    The term, cubic foot of gas, as used herein, for the purpose of measurement of the
gas delivered hereunder is the amount of gas necessary to fill a cubic foot of space when the
gas is at an absolute pressure of fourteen and seventy-three hundredths (14.73) pounds per
square inch and at a base temperature of sixty (60) degrees Fahrenheit.D.
    
    The term, BTU, as used herein, shall mean British Thermal Unit and, where
appropriate, the plural thereof, and the term, MMBtu, shall mean one million
(1,000,000) BTU.E.
    
    The term, MCF, as used herein, shall mean one thousand (1,000) cubic feet of gas.F.
    
    The term, day, as used herein, shall mean a period of twenty-four (24) consecutive
hours beginning and ending at 9:00 a.m., Central Clock Time.G.
    
    The term, thermally equivalent, as used herein, shall mean an equal amount of
heating value, expressed in BTU and measured under the specifications and conditions contained
hereunder.H.
    
    The term, month, as used herein, shall mean a period beginning on, and including,
the first (1st) day of the calendar month and extending to but not including the first (1st)
day of the following calendar month.I.
    
    The term, Storage Service Agreement, as used herein, shall mean an agreement for
the provision by Company of firm or interruptible storage services; and the term,
Transportation Service Agreement, as used herein, shall mean an agreement for the
provision by Company of firm or interruptible transportation services.




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J.
    
    The term, Maximum Daily Injection Quantity, as used herein, shall mean the maximum
volume of gas that Company will accept for injection into storage for Shipper in any one day,
as provided for in the Storage Service Agreement.K.
    
    The term, Maximum Daily Withdrawal Quantity, as used herein, shall mean the maximum
volume of gas that Company will deliver from storage for Shipper in any one day, as provided
for in the Storage Service Agreement.L.
    
    The term, Maximum Storage Quantity, as used herein, shall mean the maximum volume
of gas that Company will store for Shipper at any one time, as provided for in the Storage
Service Agreement.M.
    
    The term, Maximum Daily Transportation Quantity, as used herein, shall mean the
maximum volume of gas that Company will take delivery of, and transport for redelivery, in any
one day, as provided for in the Transportation Service Agreement.N.
    
    The term, Point(s) of Receipt, as used herein, shall mean the point at which
Shipper delivers to Company certain quantities of gas for injection into storage or for
transport to a Point(s) of Delivery.O.
    
    The term, Point(s) of Delivery, as used herein, shall mean the point at which
Company delivers to Shipper certain quantities of gas that have been withdrawn from storage or
transported from a Point(s) of Receipt.P.
    
    The term, processed gas, as used herein, shall mean natural gas from which gas
liquids have been extracted.Q.
    
    The term, Unit Rate, as used herein, shall be defined for interruptible storage
service Shippers as follows:Unit Rate = {[ MDC x IMSQ x (12 or PT if < 12)] + Rev.} / IMSQ)Where:
 MDC
    
    equals the Monthly Demand ChargeIMSQ
    
    equals the Interruptible Maximum Storage QuantityPT
    
    equals the Primary Term of the AgreementREV
    
    equals all other storage revenues
excluding Fuel Charges assessed for interruptible services for the last 12 billed months
 R.
    
    The term, work day or working day, as used herein, shall mean the days
 2




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Monday through Friday, inclusive, but excluding any federal holidays.
  Nominations, Balancing and Excess Deliveries
 A.
    
    Nominations. Shipper shall furnish to Company a nomination on a form acceptable to
Company. All quantities shall be expressed in MMBtu per Day and shall separately state Points
of Receipt, Points of Delivery or Points of Redelivery.
 1.
    
    Shipper must deliver the nominations to Company by 11:30 A.M. Central Clock
Time the working day prior to gas flow. Shipper may submit nominations after such
deadline up to 1:00 P.M. Central Clock Time for the upcoming gas day. However, if
acceptance of Shippers nomination submitted between 11:30 and 1:00 P.M. Central Clock
Time would exceed Shippers Maximum Daily Injection Quantity or Maximum Daily
Withdrawal Quantity or Maximum Storage Quantity or Maximum Daily Transportation
Quantity, or would cause interruption of another shippers scheduled service, then such
nomination will be accepted or rejected by Company at Companys sole discretion.2.
    
    Shipper may submit, and Company will accept, nominations after 1:00 P.M. for
the upcoming gas day or during the current gas day on a best efforts basis. If
acceptance of Shippers nomination for service would exceed Shippers Maximum Daily
Injection Quantity or Maximum Daily Withdrawal Quantity or Maximum Storage Quantity or
Maximum Daily Transportation Quantity, or would cause interruption of another shippers
scheduled service, then such nomination will be accepted or rejected at Companys sole
discretion.3.
    
    Nominations made in accordance with this Section II A shall not become
effective until Company has confirmed the nominated storage receipts (injections) and
deliveries (withdrawals), or transportation deliveries and redeliveries, with upstream
and downstream parties. Shipper shall designate the appropriate person(s) with
authority to confirm nominations and to resolve allocation issues on a 24-hour-basis.4.
    
    The parties intend that the volumes of gas received or delivered or redelivered
will be equal to the confirmed nominations. To the extent that gas quantities actually
received or delivered or redelivered may be greater than or less than the confirmed
nominations, the parties intend that such variance will be treated in accordance with
an Accounting Allocation
 3




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Agreement entered into between the parties.5.
    
    Company shall not be obligated, during any hour, to receive or to deliver or to
redeliver a total volume of gas in excess of one twenty-fourth (1/24th) of
the lesser of (a) Shippers aggregate Maximum Daily Injection Quantity or Maximum Daily
Withdrawal Quantity, or Maximum Daily Transportation Quantity or (b) Shippers accepted
nomination volumes. The parties intend that from time to time Shipper and Company may
mutually agree to a flow rate above or below a uniform hourly rate.
 B.
    
    Balancing. Company will accept for storage injection or deliver for withdrawal, or
for transportation delivery and redelivery, on a daily basis, volumes thermally equivalent to
volumes nominated and scheduled, less appropriate compressor fuel and lost-and-unaccounted-for
gas (collectively called Company Use) charges, unless otherwise mutually agreed to in
writing. All imbalances between actual and nominated injection volumes or withdrawal volumes,
or between delivery volumes and redelivery volumes, shall be treated as imbalance under, and
received in accordance with, the Storage or Transportation Service Agreement(s) under which
the gas in question is delivered to or from the storage or transportation facilities. Gas
delivered to Company for withdrawal or redelivery hereunder on each day shall be at constant
uniform rates as practicable throughout such day.
 1.
    
    If Shipper is advised by any upstream third party of the need to reduce or
suspend deliveries of gas scheduled for delivery to or from storage, or for
transportation delivery and redelivery, Shipper shall immediately notify Company
orally, and shall confirm such notification in writing, of such reduction or
suspension.2.
    
    Nothing in this Section II B shall limit Companys right to take action as may
be required to adjust injections or withdrawals of gas, including suspending storage
services or to adjust deliveries and redeliveries, including suspending transportation
services, in order to alleviate conditions that threaten the integrity of its system.3.
    
    In the absence of an executed Accounting Allocation Agreement between Shipper
and Company as described in Section II A. 4, balancing procedures shall be as specified
in this Section II B. If an Accounting Allocation Agreement is in effect between
Shipper and Company, such Agreement shall take precedence over the provisions specified
in this Section II B.4.
    
    If there is more than one supply source (whether at a single or at multiple
Points of Receipt or Delivery) nominated to be received for Storage or Transportation,
the nomination will identify how and which supply
 4




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source(s) should be allocated by means of a Receipt Pre-Determined Allocation
(RPDA) specified in the nomination. In accounting for the volumes delivered or
redelivered by Company, in circumstances where multiple services are provided at any
Point of Delivery or Redelivery, the sequence of volumes delivered shall be
determined by the Delivery Pre-Determined Allocation (DPDA) specified by Shipper
in its most recent nomination. The nomination will identify which supply source(s)
should be allocated in the event gas is not or cannot be delivered or redelivered as
nominated.5.
    
    To the extent feasible, all volumes received by or delivered to Company at a
Point of Receipt or Delivery shall be allocated in accordance with the confirmed
nominations for that point. In the event the actual volumes received by Company do not
equal the confirmed nominations for that point, any underage or overage will be
allocated as follows:
 (a)
    
    First, in accordance with the effective RPDAs
submitted by Shipper (or Shippers suppliers). Shipper agrees that such
an allocation is binding on Shipper.(b)
    
    Then, if there is no effective RPDA, pro rata
to the extent applicable based on confirmed nominations, as applicable.
Shipper agrees that such an allocation is binding on Shipper.
 6.
    
    To the extent feasible, all volumes delivered or redelivered by Company at a
Point of Delivery or Redelivery shall be allocated in accordance with the confirmed
nominations for that point. In the event the actual volumes delivered by Company do not
equal the confirmed nominations for that point, any underage or overage will be
allocated as follows:
 (a)
    
    First, in accordance with the effective DPDAs
submitted by Shipper (or Shippers suppliers). Shipper agrees that such
an allocation is binding on Shipper.(b)
    
    Then, if there is no effective DPDA, pro rata
to the extent applicable based on confirmed nominations, as applicable.
Shipper agrees that such an allocation is binding on Shipper.
 7.
    
    Each Shipper shall be responsible for ensuring that its suppliers submit
re-Determined Allocations (PDAs, which include RPDAs or DPDAs) as provided herein
using a form acceptable to Company. Unless otherwise agreed, all PDAs must be
submitted to Company via facsimile or other agreed upon electronic means on or before
the date the PDA is to be effective. Such PDA shall specify how any underage or
overage from the confirmed nominated volumes should be allocated among the entities
 5




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listed on the PDA. Company shall acknowledge receipt and acceptance of the PDA by
returning acknowledgment of the PDA to Shipper via mutually agreeable means. Company
acceptance is contingent on Company being able to administer the allocation
submitted by the Shipper.8.
    
    To the extent that actual injections or actual withdrawals, or actual
deliveries or actual redeliveries, for each Shipper do not exactly match confirmed
nominations for any day, Company will attempt to balance any such differences among
Company and the upstream or downstream entities, without impacting Shipper, whenever
possible. If an upstream or downstream entity requires a Balancing Agreement for which
any fee is required, Shipper agrees to reimburse Company for any incurred expenses.
 C.
    
    Storage Balance Reconciliation. To the extent Shipper and Company agree, in writing,
that imbalances may be accounted for under the Shippers Storage Service Agreement, and to the
extent Shipper has sufficient storage capacity, Company will issue a formal storage balance
notice to Shipper by the 20th of the month following the injection/withdrawal month (the
Notice Month), reflecting the effect of Shippers storage balance or any imbalance. Shipper
understands and agrees to contact or cause to be contacted, the parties that deliver injection
volumes to Company, or receive withdrawal volumes from Company, for the Shippers account to
confirm any imbalance.Following the termination of the Storage Service Agreement, Shipper shall be required to
either (a) transfer title to any volumes of gas in storage to a third party with whom
Company has a Storage Service Agreement, with such transfer to be subject to any injection
conditions or charges applicable to such third party, or (b) withdraw such volumes from
storage within a sixty (60) day balancing period after the determination by Company that any
such volumes exist, or within such longer period of time mutually agreed upon by Shipper and
Company. Shipper agrees that at the end of the above sixty (60) day balancing period,
Company will, for any storage volumes not withdrawn, take title to such gas and such title
is to pass automatically without cost to Company.D.
    
    Excess Deliveries. In the event that Shipper, from time to time, desires to have
injected into or withdrawn from storage, or to have transported, quantities of gas in excess
of the Maximum Daily Injection Quantity or Maximum Daily Withdrawal Quantity, or Maximum Daily
Transportation Quantity, respectively, which Company is obligated to accept or deliver or
redeliver under storage or transportation arrangements for Shipper on any day under a Storage
or Transportation Service Agreement, Shipper may request injection or withdrawal or
transportation of such excess gas, and Company in its sole discretion may accept or deliver or
redeliver all or any part of such gas subject to the restrictions
 6




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##### 



of these General Terms and Conditions.
  Construction of Facilities
   Rate Adjustment
 A.
    
    Rates charged for services shall be negotiated between Company and Shipper. Company reserves
the right to seek authorization from the Federal Energy Regulatory Commission (FERC) or
other appropriate agency to increase, decrease or restructure the rates (including market
based rates), and Company Use charges in effect at any time as may be found necessary to
assure Companys right to charge and collect fair and equitable rates within the meaning of
Section 311 (a)(2) of the Natural Gas Policy Act of 1978 (NGPA) and the FERCs rules and
regulations thereunder. Nothing herein contained shall be construed to deny any Shipper any
rights which it may have under FERC rules and regulations, including the right to participate
fully in rate proceedings by intervention or otherwise to contest changes in rates and Company
Use charges in whole or part. In addition to the rates above, Shipper shall pay in advance
all applicable state and federal filing, reporting and application fees incurred by Company
for providing such services.B.
    
    Company may at any time provide firm or interruptible storage services at different rates
from the market based rates approved by the FERC for Companys NGPA Section 311(a)(2)
services. Nothing herein shall obligate or require, or be construed to obligate or require,
Company to offer or continue such different rates.
 7




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##### 



Regulatory Requirements
  Right to Terminate
Services
  Pressures
   Measurement
 A.
    
    The gas received for injection or delivered for withdrawal at the storage facilities, or
delivered or redelivered at the transportation facilities, shall be measured with
 8




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##### 



meters constructed and installed, and whose computations of volume are made, in accordance
with the provisions of ANSI-API 2530-AGA-3, latest revision as adopted by Company.B.
    
    The temperature of the gas shall be determined by a recording thermometer so installed that
it will record the temperature of the gas flowing through the meters. The average of the
record to the nearest one degree (1o) Fahrenheit, obtained while gas is being delivered, shall
be the applicable flowing gas temperature for the period under consideration. For all
measurement of gas required in this Section, the BTU content per cubic foot shall be
determined for a cubic foot of gas at a temperature of sixty degrees (60o) Fahrenheit, at an
absolute pressure of fourteen and seventy-three hundredths (14.73) pounds per square inch on a
dry basis.C.
    
    The BTU, specific gravity, carbon dioxide, and nitrogen content of the gas shall be
determined by the use of an on-line chromatograph or by a chromatographic analysis of the gas
obtained by a continuous sample or spot sampling method. The results of any sample taken with
an on-line chromatograph shall be applied to the month in which the sample was taken.D.
    
    Adjustment for the effect of supercompressibility shall be made according to the provisions
of the latest version of either NX-19 or AGA Committee Report No. 8, as required by Paragraph
A. of this Section and as adopted by Company, for the average conditions of pressure, flowing
temperature, and specific gravity at which the gas was measured during the period under
consideration and with the proportionate values of carbon dioxide and nitrogen in the gas
delivered included in the computation of the applicable supercompressibility factors.E.
    
    If at any time during the term hereof a new method or technique is developed with respect to
gas measurement or the determination of the factors used in such gas measurement, such new
method or technique may be substituted for the gas measurement set forth in this Section on
the date such method or technique is adopted by Company.
  Measuring Equipment and Testing
 A.
    
    General. The construction, ownership, operation and maintenance of any measuring
equipment necessary to accomplish the storage receipt of gas for injection by Company for the
account of Shipper and the delivery of gas withdrawn by Company for the account of Shipper, or
the transportation delivery of gas to Company for the account of Shipper and the redelivery of
gas by Company for the account of shipper shall be the responsibility of Company.
 9




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##### 



Shipper shall at all reasonable times have access to the premises of Company for
inspections, insofar as such premises are connected with any matter or thing covered hereby.
The operation of measuring equipment and changing of charts shall be done only by the
employees or agents of Company.B.
    
    Testing and Repair of Equipment.
 1.
    
    Company shall keep its own measuring equipment accurate and in repair, making
periodic tests to verify the condition of meter tubes, orifice plate, and chart
recorder or flow computer. Company agrees to give Shipper(s) seven (7) calendar days
notice prior to such tests of the measuring equipment so that, if desired, Shipper(s)
may have its representative present. Shipper(s) shall have the right to challenge the
accuracy of Companys equipment, and when challenged, the equipment shall be tested,
calibrated and, if required, repaired by Company, the cost of such special test to be
borne by Company if the percentage of the inaccuracy is found to be more than two
percent (2%), but if the percentage of inaccuracy is found to be two percent (2%) or
less, the cost of such special test shall be borne by the Shipper(s). If upon any test
the percentage of inaccuracy is found to be in excess of two percent (2%),
registrations thereof shall be corrected for a period extending back to the time such
inaccuracy occurred, if such time is ascertainable, and if not ascertainable, then back
one-half (1/2) of the time elapsed since the last date of calibration. Any measuring
equipment found to be measuring inaccurately by one percent (1%) or more shall be
adjusted at once to read accurately.2.
    
    If, for any reason, the meter(s) are out of service or out of repair so that
the amount of gas received or delivered cannot be ascertained or computed from the
readings thereof, the gas received or delivered during the period such meter(s) are out
of service or out of repair shall be estimated and agreed upon by the parties hereto by
the use of the first applicable of the following methods:
 (a)
    
    By comparative utilization of any like check measuring
equipment if such check measuring equipment can be proven and verified to be
measuring accurately; or(b)
    
    By computing the error if the percentage of error is
ascertainable by calibration, test or mathematical calculation; or(c)
    
    By estimating the quantity received or delivered by reference
to actual receipts or deliveries during preceding periods under similar
conditions when Companys measuring equipment was registering accurately.
 10




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C.
    
    Inspection of Charts and Records. The charts and records from the measuring
equipment shall remain the property of Company and shall be kept on file for a period of time
not less than two (2) years from the end of the calendar year in which the charts and records
were generated or prepared. At any time within such period, upon written request by Shipper,
records or charts from the measuring equipment, together with calculations therefrom, will be
submitted for Shippers inspection and verification subject to return to Company within thirty
(30) days from receipt thereof. All inquiries regarding this Section VIII, including but not
limited to, measurement charts, records or audits of charts and records, shall be directed to
Company.
  Quality
   Billing, Accounting, Taxes and Reports
 A.
    
    Billings and Payments.
 1.
    
    For the purpose of billing and accounting for the gas delivered hereunder, the
day shall begin at 9:00 a.m. Central Clock Time and extend to 9:00 a.m. the following
day, and the month (hereinafter called billing month) shall begin at 9:00 a.m.
Central Clock Time on the first (1st) day of the calendar month and extend to 9:00 a.m.
on the first (1st) day of the following calendar month.2.
    
    Company shall render to its Shippers, by mail or facsimile, on or before the
first (1st) day of each month an invoice setting forth the demand charges as
applicable. Within ten (10) days from the date of the invoice, Shipper agrees to make
payment to Company by wire transfer to the AmSouth Bank of Alabama, crediting Companys
account number 83794638 for such firm demand charges for the account of Shipper at the
Delivery Point(s) during the current month.3.
    
    On or before the fifteenth (15th) day of each calendar month, Company shall
render or cause to be rendered, by mail or facsimile, to all Shippers
 11




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an invoice of the amount due for the preceding month setting forth the total
quantity of gas (1) received by Company from Shipper for injection into the storage
facilities, or delivered by shipper to Company for transportation; (2) delivered by
Company to Shipper for withdrawal from the storage facilities, or redelivered by
Company to Shipper after transportation; (3) gas balance at the beginning and end of
the injection/withdrawal, or transportation, month and (4) the rates and charges for
storage or transportation services hereunder during such billing month. Billings
for volumes transported shall be determined on a dry basis.4.
    
    Within ten (10) days from the date of the fifteenth (15th) day invoice, Shipper
shall pay Company the amount due for all gas injected, withdrawn or stored, or
transported, by Company for the account of Shipper during the injection/withdrawal, or
transportation, month. Payments to Company shall be made either by wire transfer to
the AmSouth Bank of Alabama, crediting Companys account number 83794638, or by check
such that funds are available to Company on or before the tenth (10th) day after the
date of the invoice. If rendering of an invoice by Company is delayed after the
fifteenth day of the month, then the time of payment shall be extended accordingly
unless Shipper is responsible for such delay.
 B.
    
    Late Payment. In the event Shipper shall fail to pay any amount due Company when the
same is due, Company shall have the option of accruing interest at a varying rate per annum
(based on a year of 365 or 366 days, as the case may be) which shall be one hundred fifteen
percent (115%) of the prime rate charged by the AmSouth Bank of Alabama to its largest and
most creditworthy commercial borrowers on ninety (90) day commercial loans (but in no event
greater than the maximum rate of interest permitted by law) with adjustments in such rate, for
any period during which the same shall be overdue, such interest to be paid when the amount
past due is paid. Shipper shall not be required to pay interest on any amount billed which is
in good faith disputed in writing by Shipper and is ultimately determined to be in error;
provided, however, interest shall be due if such amount billed is found not to be in error.
If a portion of an invoice is disputed, Shipper shall pay when due the portion of the invoice
not in dispute. If such failure to pay continues for thirty (30) days after the payment due
date, Company may suspend deliveries of gas, subject to Company providing forty-eight (48)
hours written notice, during normal working hours, of such intention to suspend deliveries;
provided, however, that if Shipper, in good faith, disputes the amount of any such bill or
part thereof and pays to Company such amounts as Shipper concedes to be correct, conditioned
upon the payment of any amounts ultimately found due upon such bills after a final
determination, then Company shall not be entitled to suspend further delivery due to failure
to pay such bills. In the event Shippers financial position significantly deteriorates from
that on the execution date of the Storage or Transportation Service Agreement,
 12




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advance cash payments or acceptable security (including but not limited to an irrevocable
letter of credit from a financial institution in an amount acceptable to Company) shall be
given by Shipper upon demand of Company. Company may, without waiving any other rights or
remedies it may have, withhold further delivery until such payment is received. In the
event Company pursues collection on late payment, Shipper shall be liable for all expenses
and costs, including court costs and attorneys fees, incurred as a result of such failure
to pay on time.C.
    
    Tax Reimbursement. Shipper agrees to reimburse Company for all new taxes (federal,
state, local or other) that may be levied upon or paid by Company, with respect to the
services performed hereunder.D.
    
    Examination of Books, Records and Charts. Each party shall have the right during
reasonable working hours to examine the books, records and charts of the other party to the
extent necessary to verify the accuracy of any statement, payment calculations or
determinations made pursuant to the provisions contained herein. If any such examination shall
reveal, or if either party shall discover, any error in its own or the other partys
statements, payment calculations or determinations, then proper adjustment and correction
thereof shall be made as promptly as practicable thereafter. The accuracy of any statement,
payment calculations or determinations made pursuant to the provisions contained herein shall
be conclusively presumed to be correct after two (2) years from the end of the calendar year
in which the charts and records were generated or prepared if not challenged in writing prior
thereto.
  Possession and Non-Odorization of Gas
  13




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Warranty
   Government Regulations
 A.
    
    All of the provisions of any Storage or Transportation Service Agreement are hereby expressly
made subject to all present and future applicable federal or state laws, orders, rules and
regulations of governmental authorities having jurisdiction. Except as otherwise provided
herein, in the event any provision of a Storage or Transportation Service Agreement or of
these General Terms and Conditions is found to be inconsistent with or contrary to any such
law, order, rule or regulation, the latter shall be deemed to control, and the Storage or
Transportation Service Agreement and these General Terms and Conditions, to the extent
possible, shall be regarded as modified accordingly and as so modified shall continue in full
force and effect.B.
    
    The parties hereto recognize that a Storage or Transportation Service Agreement has been
entered into by Company in the good faith understanding that all acts, obligations and
services performed by Company hereunder, and the charges therefore, are exempt from the
regulation of FERC or any successor federal governmental authority, except as presently
provided by Section 311(a)(2) of the NGPA and FERCs relevant regulations thereunder. Company
reserves the right to terminate a Storage or Transportation Service Agreement immediately if,
in the opinion of counsel for Company, any act shall occur or be seriously threatened which is
in any way inconsistent with such understanding.C.
    
    Equal Employment Opportunity. Company and Shipper agree to comply with any and all
applicable executive orders and acts pertaining to equal employment opportunity.
 14




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Force Majeure
 A.
    
    In the event of either party being rendered unable, wholly or in part, by reason of force
majeureto carry out its obligations under any Storage or Transportation Service Agreement
(other than the obligation to make payment of amounts due hereunder), it is agreed that such
party shall give notice and reasonably full particulars of such force majeure, in writing or
by facsimile, to the other party within a reasonable time after the occurrence of the cause
relied on, and the obligations of the party giving such notice, so far as they are affected by
such force majeure, shall be suspended during the continuance of any inability so caused, but
for no longer period, and such cause shall, so far as possible, be remedied with all
reasonable dispatch.B.
    
    The term, force majeure, as employed herein shall mean acts of God; strikes, lockouts, or
other industrial disturbances; conditions arising from a change in governmental laws, orders,
rules or regulations; acts of public enemy; wars; blockades; insurrections; riots; epidemics;
landslides; lightning; earthquakes; fires; storms; floods; washouts; arrests and restraints of
governments and people; civil disturbances; explosions; breakage or accident to machinery or
lines of pipe; the necessity for making repairs, tests or alterations to machinery or lines of
pipe; freezing of wells or lines of pipe; partial or entire failure of wells, processing or
gasification and gas manufacturing facilities; and any other causes, whether of the kind
herein enumerated or otherwise, not within the control of the party claiming suspension, and
which by the exercise of due diligence, such party is unable to prevent or overcome. Such
term shall likewise include: (a) those instances where either Company or Shipper is required
to obtain servitudes, rights-of-way, grants, permits or licenses to enable such party to
fulfill its obligations under a Storage or Transportation Service Agreement; the inability of
such party in acquiring, at reasonable costs, and after the exercise of reasonable diligence,
such servitudes, rights-of-way, grants, permits or licenses, and (b) those instances where
either Company or Shipper is required to furnish materials and supplies for the purpose of
constructing or maintaining facilities or is required to secure permits or permissions from
any governmental agency to enable such party to fulfill its obligations under a Storage or
Transportation Service Agreement; the inability of such party to acquire, or the delays on the
part of such party in acquiring, at reasonable costs, and after the exercise of reasonable
diligence, such materials and supplies, permits and permissions. Force majeureshall not
include failure of gas supply due to pricing considerations.C.
    
    It is understood and agreed that the settlement of strikes or lockouts shall be entirely
within the discretion of the party having the difficulty, and that the above
 15




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##### 



requirement that any force majeureshall be remedied with all reasonable dispatch shall not
require the settlement of strikes or lockouts by acceding to the demands of the opposing
party when such course is inadvisable in the discretion of the party having the difficulty.
  Notices
   Creditworthiness
 provided
 16




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##### 



Miscellaneous
 A.
    
    Headings and Subheadings. The headings and subheadings contained in the Storage or
Transportation Service Agreement are used solely for convenience and do not constitute a part
of the Storage or Transportation Service Agreement between the parties hereto, nor should they
be used to aid in any manner in construing the Storage or Transportation Service Agreement.B.
    
    Successors and Assigns. The Storage or Transportation Service Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns of the parties
hereto, but no assignment shall relieve any party of its obligations hereunder unless such
party is expressly released in writing from said obligations by the party to which it is
obligated.C.
    
    Entire Agreement. The Storage or Transportation Service Agreement, the Statement of
Conditions for NGPA Section 311(a)(2) for Gas Storage and Transportation Services, and these
General Terms and Conditions constitute the entire agreement of the parties hereto as to the
matters contained herein, and there are no oral promises, agreements or warranties affecting
same.D.
    
    Non-Waiver. The waiver of any default or right to require performance under a
Storage or Transportation Service Agreement shall not operate as a waiver of any future
default or right to require performance, whether of like or different character or nature.E.
    
    Jurisdiction and Venue. The parties agree that a Storage or Transportation Service
Agreement shall be governed by and construed in accordance with the laws of the State of
Alabama, excluding any conflicts of law, rule or principle that
 17




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##### 



might refer such construction to the laws of another state and that venue shall be in the
State of Alabama for services performed in Alabama, with respect to any cause of action
brought under or with respect to a Storage or Transportation Service Agreement.F.
    
    Confidentiality. The terms of any Storage or Transportation Service Agreement shall
be kept confidential by the parties except to the extent that any information must be
disclosed to a third party as required by law, for either partys financial needs or for the
purpose of effectuating any Storage or Transportation Service Agreement.
 18




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EXHIBIT C




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##### 



SECTION
    
    DESCRIPTION
    
    PAGEI.
    
    Bay Gas Basic Status and Function
    
    
    1II.
    
    Qualified Shippers
    
    
    1III.
    
    Capacity Availability, Scheduling and Allocations
And Curtailments
    
    
    2IV.
    
    Minimum Storage Service Volume
    
    
    5V.
    
    Receipt and Delivery
    
    
    6VI.
    
    General Terms and Conditions for Gas Storage
And Transportation
    
    
    6VII.
    
    Right To Terminate Services
    
    
    6VIII.
    
    Compliance With Laws and Survivability
    
    
    7IX.
    
    Changes to This Statement of Conditions
    
    
    7X.
    
    Authority of Statement of Conditions
    
    
    7




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BAY GAS BASIC STATUS AND FUNCTION
   QUALIFIED SHIPPERS




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##### 



CAPACITY AVAILABILITY, SCHEDULING AND ALLOCATIONS  AND CURTAILMENTS
 A.
    
    Capacity Availability
 1.
    
    Storage service shall be conditioned on availability of sufficient injection
rate capacity, field storage capacity and withdrawal rate capacity (collectively called
Capacity, and including pipeline transportation service capacity) to perform the
service in accordance with the terms and conditions set forth in this Statement of
Conditions without detriment or disadvantage to services by or for the account of Bay
Gas. Transportation service shall be conditioned on availability of sufficient
Capacity to perform the service in accordance with the terms and conditions set forth
in this Statement of Conditions without detriment or disadvantage to services by or for
the account of Bay Gas. Bay Gas reserves all rights to retain sufficient Capacity for
its intrastate, non-Federal-jurisdictional firm and interruptible services and for its
operational swings attributable to firm and interruptible storage services prior to
making Capacity available by contract to NGPA Section 311 (a)(2) Shippers. Once
Capacity is made available to NGPA Section 311 (a)(2) Shippers, such Capacity shall be
scheduled, allocated or curtailed only as set forth in Sections III. B and C here.2.
    
    Storage service availability further shall be conditioned on Bay Gas receiving
an acceptable market value, in Bay Gas sole judgment, for such storage services,
determined when a request for storage service is received. Bay Gas reserves all rights
to refuse a request for storage service that, in Bay Gas sole judgment, might provide
less than market value. Apart from such Bay Gas judgment as to market value, Bay Gas
judgment shall be exercised on a non-discriminatory basis.3.
    
    Criteria applied to requests for NGPA Section 311 (a)(2) services shall be the
same as criteria applied to requests for intrastate, non-Federal-jurisdictional
services.4.
    
    Shipper shall be responsible for making all arrangements for its transportation
of gas to be injected into or withdrawn from storage through
 2




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##### 



Bay Gas storage services. Bay Gas reserves all rights to refuse storage service
for any otherwise qualified Shipper if Bay Gas determines that such storage would be
detrimental to Bay Gas storage operations in any way, including, without
limitation, Bay Gas storage compression and affected processing operations.
 B.
    
    Scheduling and Allocations
  1.
    
    Nomination deadlines shall be as prescribed in Bay Gas General Terms and
Conditions.2.
    
    Bay Gas will be under no obligation to schedule the injection of gas into
storage or the withdrawal of gas from storage until Bay Gas has confirmed the
availability of Shippers transportation service to or from Bay Gas storage services
for the gas concerned. Subject to the foregoing subsection 1. and this subsection
2., firm storage and transportation services shall be scheduled before interruptible
services in all instances, regardless of the relative service rates to be paid.3.
    
    In-field transfer of title (transfer of gas balances in the storage field
between storage service agreements) may be made only with Bay Gas approval.4.
    
    Interruptible storage service Shippers paying a higher Unit Rate, as defined in
Bay Gas General Terms and Conditions, shall be scheduled ahead of interruptible
storage service Shippers paying a lower Unit Rate. If, because of changes in available
Capacity at any time, Bay Gas is required to reschedule interruptible Shippers that are
injecting, storing or withdrawing gas and are paying the same Unit Rate, then the
Capacity shall be rescheduled pro ratabased on applicable contract quantities for said
Shippers.5.
    
    Bay Gas reserves the right to interrupt service to an interruptible Shipper
injecting, storing or withdrawing gas, in order to enable Bay Gas to provide service to
another, bumping, interruptible Shipper injecting, storing or withdrawing gas, if such
Shipper is paying a higher Unit Rate to Bay Gas.6.
    
    All overrun volumes in excess of a storage service Shippers contract
quantities nominated for delivery by Shipper shall be scheduled according to the above
subsections 4. and 5. only after all other storage service Shippers nominated
volumes equal to or less than each Shippers Maximum Daily Injection Quantity or
Maximum Daily Withdrawal Quantity are scheduled.
 3




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7.
    
    Bay Gas may reschedule Capacity on a daily basis, or on such other periodic
basis as is necessary for Bay Gas to recognize the priority of new storage or
transportation service Shippers or any changes in the priorities of existing such
Shippers, and to conform to its storage system operational requirements. Such
priorities or changes will include, but will not be limited to, those instances
involving a storage service Shipper paying a higher Unit Rate for interruptible service
and firm storage service Shippers changing volumes within their Maximum Daily Injection
Quantity or Maximum Daily Withdrawal Quantity. However, such changes in scheduling
shall not at any time bump any existing firm Shipper.
 C.
    
    Curtailments
 1.
    
    General. If curtailment of storage or transportation service is required,
volumes shall be curtailed in the reverse order of the priority in effect at the time
of curtailment established during scheduling as set forth in Section III. B above.
Intrastate, non-Federal-jurisdictional firm and interruptible services shall be
curtailed in a manner determined solely by Bay Gas, but in no event shall such
curtailments have a different priority than similar types of services for NGPA Section
311 (a)(2) Shippers.2.
    
    Reduction of Services.Without limitation to the foregoing, Bay Gas shall have
the right to reduce receipts, deliveries, injections or withdrawals of gas on any day
below a storage service Shippers Maximum Daily Injection Quantity or Maximum Daily
Withdrawal Quantity, or below the storage rights applicable, for repair, overhaul,
replacement or construction of pipelines, compressors, metering, regulating or other
production, gathering and transmission facilities and equipment, or to maintain system
integrity; provided, however, that with respect to routine repair and maintenance, Bay
Gas will implement restrictions for scheduling purposes only, not for curtailment, and
will attempt to schedule such activity during a period when it will not result in
limitation of firm service or when such limitation will be minimized, and after
consulting with the Shippers that could be affected.3.
    
    Notice of Curtailment.For shippers under all firm services, Bay Gas shall
provide notice of any curtailment as far in advance as feasible. Services reserved by
Bay Gas for system operations shall be curtailed last, in consideration of the need to
preserve system integrity. If capacity is curtailed and two or more firm Shippers have
the same priority according to this Section III. C, firm Shippers shall be allocated
their pro ratashare of capacity based on their Maximum Daily Injection Quantity or
Maximum Daily Withdrawal Quantity or Maximum Daily Transportation Quantity, as
allocated pro rataamong those firm Shippers with unsatisfied
 4




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##### 



nominations. All non-firm Shippers shall be allocated their pro rataapplicable. If
firm Shippers nominate fewer than their respective curtailment period entitlements,
the difference shall be share of Capacity based on their nominations in effect at
the time of the curtailment.4.
    
    Limitation of Firm Services. While firm services are not ordinarily interrupted
by nominations for firm service within Shippers Maximum Daily Injection Quantity or
Maximum Daily Withdrawal Quantity or Maximum Daily Transportation Quantity, Bay Gas may
decline to schedule firm service for any of the following reasons:
 (a)
    
    if Shipper tenders gas which does not conform to applicable
pressure requirements of the Storage or Transportation Service Agreement(b)
    
    if Shipper tenders gas which does not conform to the gas
quality requirements of both the upstream and downstream entities gas quality
requirements(c)
    
    for reasons of force majeure(d)
    
    due to routine repair and maintenance to be reasonably
determined by Bay Gas(e)
    
    due to delinquency in payment by Shipper(f)
    
    to rectify imbalances or to conform physical flows to nominations(g)
    
    to maintain system integrity, or(h)
    
    if there is a dispute over title, ownership or right to tender,
receive or deliver gas.
  MINIMUM STORAGE SERVICE VOLUME
  5




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RECEIPT AND DELIVERY
   GENERAL TERMS AND CONDITIONS  FOR GAS STORAGE AND TRANSPORTATION
   RIGHT TO TERMINATE SERVICES
  6




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COMPLIANCE WITH LAW AND SURVIVABILITY
   CHANGES TO THIS STATEMENT OF CONDITIONS
   AUTHORITY OF STATEMENT OF CONDITIONS
  7




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##### 



EXHIBIT D
 
 NOMINATION FORM
 Nomination To:
    
    Bay Gas StorageNomination From:
    
    Progress Energy Florida
 DailyNom
    
    Start
    
    
    End
    
    
    Volume
    
    
    Delivery
    
    
    Delivery
    
    
    UpstreamType
    
    Date
    
    
    Date
    
    
    (MMBtu)
    
    
    Pipe
    
    
    Point
    
    
    ContractInjectDAILYTOTAL:
 DailyNom
    
    Start
    
    
    End
    
    
    Volume
    
    
    Delivery
    
    
    Delivery
    
    
    UpstreamType
    
    Date
    
    
    Date
    
    
    (MMBtu)
    
    
    Pipe
    
    
    Point
    
    
    ContractWithdrawalDAILYTOTAL:




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EXHIBIT E
 
 FORM of ASSIGNMENT CONSENT




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##### 



(i)
    
    The Subject Agreement has not been amended, modified or altered
and is in full force and effect and neither the Customer nor, to the Customers
best knowledge, the Company is in default thereunder;(ii)
    
    The Customer will not assign any of its obligations under the
Subject Agreement to any entity unless it shall deliver to the Trustee a
certificate from the Customer certifying that the long term senior debt of the
assignee is rated BBB- or better by Standard and Poors or an equivalent
investment-grade or better rating by another nationally recognized credit rating
agency; and(iii)
    
    The Customer will provide such financial information to the
Trustee as may from time to time be reasonably requested by the Company.
      2




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ByIts
 3