Allocation Overview The purpose of the Enterprise Services allocation process is to distribute corporate costs to the various business units in a transparent and equitable manner. During 2013, to the extent possible, corporate costs are assigned directly to the business unit for whom the work is being performed. For those costs not directly assignable, we will begin defining the cost drivers where feasible. If no specific cost driver can be assigned, we will utilize the commonly accepted Distrigas (Three factor method) for allocations.

Allocation Overview There are three basic methods of allocating our corporate support costs: Overheads - Certain defined costs, allowable for capitalization and incurred by the business as a whole, that are not directly attributable to a specific project or process, but are shared by all projects and processes. These costs are applied to all work based on certain cost elements as defined by the overhead. Direct Support - Costs expended by Corporate functions in support of a specific business unit. These costs are charged and settled directly to the business unit. Indirect Support - Costs expended by Corporate functions in support of the business as a whole. These costs are applied based on the settlement basis (driver) of the work. If no defined driver, these costs are settled based on the three factor method (Distrigas).

Allocation Objectives • Direct assignment of costs to the correct business unit or business activity where possible. • Assign drivers to costs that are not directly assigned for equitable spread across business units. • Establish responsibility and accountability for support provided. • Make costs visible.

Allocation Categories - Overhead • Purchasing – Costs related to the procurement of goods and services. • Warehousing – Costs related to the storage and movement of goods. • Facilities - Costs related to the upkeep of physical locations. • Computing Equipment - Cost of acquisition, operation, and maintenance of computing equipment, software, and data network. Includes acquisition and annual maintenance of each PC or server, other associated equipment and the operation and maintenance of the local and wide area networks, intra/inter net. • Information Systems - Costs related to general operation and maintenance of the Corporate Enterprise Solution including SAP/R3 (financial and work management systems), SAP/CCS (customer billing system), and CADS/OMS (outage management system). • Telephone- Costs related to the acquisition, operation, and maintenance of the telephone systems. • Radio - Costs related to the acquisition, operation, and maintenance of radio communication system.

Allocation Categories - Overheads Applied Detail All costs categorized as overheads are first assigned to either a specific business unit, or a non-specific cost collector. Those costs are then allocated across all projects and processes within that group. Purchasing Overhead Applied to all work projects and process, based on the dollars recorded against certain cost elements. The cost element Group PURCH-ALOC includes Non-Stock materials, Outside Services, Professional Services, Rentals, Communications, Fleet, etc. This group includes all cost elements for which Purchase Orders are created. Warehousing Overhead Applied based on the dollars recorded as stock materials, materials issued from the warehouse Facilities, Computing Equipment, Information Systems, Telephone, and Radio Overheads Applied based on the dollars recorded as internal labor. These items are all used in the day to day work of each employee, and therefore follow employee labor activity.

Allocation Categories Direct and Indirect Support The following functions charge costs both directly to a business unit, and have costs that are for the benefit of all business units. Each area has cost collectors that designate either direct or indirect cost charging and identify the driver and recipient of the charge. Executive Audit Corporate Secretary, Compliance, Security Legal Public Affairs Human Resources Accounting, Finance, Treasury Regulatory Strategy, Marketing Corporate Risk Information Technology Supply Chain Business Process Improvements

Driver Based Settlements The table below shows the indicator used to move Enterprise Services’ costs, how often the rule is updated and who has responsibility for updating. Each Cost Collector will have one rule assigned.

Three Factor (Distrigas) Allocations Distrigas method is used to calculate the split between the Utility and Enogex. The percentages calculated are based on three factors: Net Operating Revenue Gross Plant Payroll

Three Factor (Distrigas) Allocations

Total Allocations for 2013 Based on 2013 Budget $ in 000’s

Overheads Applied to Work Based on 2013 Budget $ in 000’s

Direct SupportBased on 2013 Budget ($ in 000’s) .

Indirect SupportBased on 2013 Budget ($ in 000’s) .

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