Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 09/01/2002, Docket: RP02-392-000, Status: Effective

Original Sheet No. 37 Original Sheet No. 37 : Effective

RATE SCHEDULE KRF-L1

HIGH DESERT LATERAL FIRM TRANSPORTATION SERVICES

(Continued)

7. ESTABLISHMENT AND MAINTENANCE OF CREDIT (Continued)

7.2 Short Term. (Continued)

(b) Transporter will not be required to accept a request for new

or additional service, or subject to the receipt of any

necessary regulatory authorization, to continue service on

behalf of any Shipper who is or has become insolvent or who

fails to maintain creditworthiness until such Shipper has

met a credit appraisal acceptable to Transporter, except as

provided in Section 7.2(c) below.

criteria:

(1) If current reports have not already been provided

pursuant to Section 7.2(a) above, Shipper will provide

current financial statements, annual reports, 10-K

reports or other filings with regulatory agencies, a

list of all corporate affiliates, parent companies and

subsidiaries, and any reports from credit reporting

agencies which are available. Transporter will apply

consistent evaluative practices to determine the

acceptability of the Shipper's overall financial

condition, working capital, and profitability trends.

(2) Shipper must not be operating under any chapter of the

bankruptcy laws and must not be subject to liquidation

or debt reduction procedures under state laws such as

an assignment for the benefit of creditors, or any

informal creditors' committee agreement. An exception

can be made for a Shipper who is a debtor in

possession operating under Chapter XI of the Federal

Bankruptcy Act, but only with adequate assurances that

the billing will be paid promptly as a cost of

administration under the federal court's jurisdiction.