Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 01/01/2004, Docket: RP04- 68-000, Status: Effective

First Revised Sheet No. 32 First Revised Sheet No. 32 : Effective

Superseding: Original Sheet No. 32

RATE SCHEDULE KRF-L1

HIGH DESERT LATERAL FIRM TRANSPORTATION SERVICES

(Continued)

5. RATES AND CHARGES (Continued)

5.7 Incidental Charges. Where applicable, Transporter will charge

Shipper an amount to reimburse Transporter for 100% for any

facilities, filing costs or similar fees which have not been

previously paid by Shipper which Transporter incurs in

establishing or rendering service. If service requires

construction of new delivery facilities, Transporter may collect a

contribution in aid of construction or incremental facility charge

as provided in Section 20 of the General Terms and Conditions.

5.8 Imbalance Charge and Scheduling Penalty. Transporter will charge

Shipper an Imbalance Charge and Scheduling Penalty as provided in

Section 10 of the General Terms and Conditions.

5.9 Discounted Recourse Rates. Transporter reserves the right to

discount at any time the Recourse Rates for any individual Shipper

under any service agreement without discounting any other Recourse

Rates for that or any other Shipper; provided, however, that such

discounted Recourse Rates will not be less than any applicable

Minimum Rates set forth on Sheet No. 7 of Transporter's effective

tariff, or any superseding tariff. Such discounted Recourse Rates

may apply to specific volumes of Gas (such as volumes above or

below a certain level or all volumes if volumes exceed a certain

level), volumes of Gas transported during specific time periods,

and volumes of Gas transported from specific receipt points and/or

to specific delivery points, or within other defined geographical

areas. If Transporter discounts any Recourse Rates to any

Shipper, Transporter will file with the FERC any required reports

reflecting such adjusted rates.

Downward adjustment to any rate will be for a specified term. At

the expiration of such term, unless otherwise agreed upon, the

rate for transportation service will revert to the Maximum Daily

Reservation/Demand Rate and associated commodity rate under this

Rate Schedule.