Kern River Gas Transmission Company

Second Revised Volume No. 1

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

Original Sheet No. 38 Original Sheet No. 38 : Effective

RATE SCHEDULE KRF-L1

HIGH DESERT LATERAL FIRM TRANSPORTATION SERVICES

(Continued)

7. ESTABLISHMENT AND MAINTENANCE OF CREDIT (Continued)

7.2 Short Term. (Continued)

(3) Shipper should not be subject to the uncertainty of

pending liquidation or regulatory proceedings in state

or federal courts which could cause a substantial

deterioration in its financial condition, which could

cause a condition of insolvency, or the ability to

exist as an ongoing business entity.

(4) If Shipper has an ongoing business relationship with

Transporter, no delinquent balances should be

consistently outstanding for Transportation services

made previously by Transporter and Shipper must have

paid its account in the past according to the

established terms and not made deductions or withheld

payment for claims not authorized by contract.

(5) No significant collection lawsuits or judgments are

outstanding which would seriously reflect upon the

business entity's ability to remain solvent.

(d) If a Shipper fails to satisfy the credit criteria, such

Shipper may still obtain service hereunder if it elects one

of the following options:

(1) to prepay in advance each Month for one (1) Month

service;

(2) to provide a standby irrevocable letter of credit

drawn upon a bank acceptable to Transporter, in an

amount equal to Transporter's estimate of providing

three (3) months of the service requested by Shipper;