Northern Natural Gas Company                                              Tenth Revised Sheet No. 303
FERC Gas Tariff                                                                           Superseding
Fifth Revised Volume No. 1                                                Ninth Revised Sheet No. 303







    54.  DISCOUNTING

     A.  ORDER OF DISCOUNTING

         Subject to the tariff limitations pursuant to the applicable minimum and
         maximum rates, the discounting of rates shall be done in the following
         order:

         1.  Base Tariff rate.

         2.  Carlton Surcharge, as provided in Section 29(c)4 of these General Terms
             and Conditions.


     B.  TYPES OF DISCOUNTS

             From time to time Shipper and Northern may agree in writing on a level
             of discount of the otherwise applicable rates and charges in addition to
             a basic discount from the stated maximum rates.  For example, Northern
             may provide a specific discounted rate:

             (1)  to certain specified quantities under the Service Agreement;
             (2)  if specified quantity levels are actually achieved or with respect
                  to quantities below a specified level;
             (3)  to production reserves committed by the Shipper;
             (4)  during specified time periods;
             (5)  to points of receipt, points of delivery, supply areas,
                  transportation paths or defined geographical areas; or
             (6)  in a specified relationship to the quantities actually transported
                  (i.e., that the rates shall be adjusted in a specified relationship
                  to quantities actually transported);
             (7)  to provide that if one rate component which was equal to or within
                  the applicable maximum and minimum rate at the time the discount
                  agreement was executed subsequently exceeds the applicable maximum
                  rate or is below the applicable minimum rate due to a change in
                  Northern's maximum rates and/or minimum rates, so that such rate
                  component must be adjusted downward or upward to equal the new
                  applicable maximum or minimum rate, then other rate components may
                  be adjusted upward or downward to achieve the agreed-upon overall
                  rate, so long as none of the resulting rate components exceed the
                  maximum rate or are below the minimum rate applicable to the rate
                  component.  Such changes to rate components shall be applied
                  prospectively, commencing with the date a Commission order accepts
                  revised tariff sheets.  However, nothing contained herein shall be
                  construed to alter a refund obligation under applicable law for any
                  period during which rates which had been charged under a discount
                  agreement exceeded rates which ultimately are found to be just and
                  reasonable; or
             (8)  based on a formula including, but not limited to, published index
                  prices for specific receipt or delivery points or other agreed-upon
                  pricing reference points for price determination.  Any service
                  agreement containing such a discount will identify what rate
                  component (i.e.  reservation charge or usage charge or both) is
                  discounted and any formula will produce a reservation rate per unit
                  of contract demand.
             (9)  that provides for increasing (or decreasing) a discounted rate for
                  service under one rate schedule to make up for a decrease (or
                  increase) in the maximum rate for a separate service provided under
                  another rate schedule.

             In all circumstances the discounted rate shall be between the maximum
             rate and the minimum rate applicable to the service provided.
 
Issued by: Mary Kay Miller,V.P. Regulatory & Government Affairs
Issued on: April 14, 2005                                                    Effective: May 15, 2005