Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 01/01/2003, Docket: RP00-337-003, Status: Effective

Second Revised Sheet No. 105 Second Revised Sheet No. 105 : Effective

Superseding: First Revised Sheet No. 105

GENERAL TERMS AND CONDITIONS

(Continued)

10. OPERATING AND BALANCING PROCEDURES (Continued)

10.6 Balancing of Transportation Quantities. (Continued)

service under Rate Schedule KRI-1, the scheduling penalty

rate will be that customer's Interruptible Transportation

Rate then in effect. For customers receiving service under

Rate Schedule KRF-1, the scheduling penalty rate will be

that customer's transportation/commodity rate then in

effect. Transporter will waive scheduling penalties if, in

its reasonable judgment, Shipper's actions have not

jeopardized system integrity. Penalties or waivers of said

penalties will be applied uniformly and in a non-

discriminatory manner. Penalties resulting from

interruptible service being bumped by firm nominations in

the Intraday 1 nomination cycle will be waived during non-

critical periods. NAESB 1.3.51: "Intraday bump notices

should indicate whether daily penalties will apply for the

gas day for which quantities are reduced." The scheduling

penalty will be calculated daily and invoiced monthly.

(d) Imbalance Penalty. Any Shipper which fails to correct any

imbalances within sixty (60) days may be assessed a penalty

calculated as the product of: five dollars, times either (i)

the Quantity, in Dekatherms, by which Shipper's takes of

Gas from Transporter's system exceed Shipper's deliveries of

Gas to Transporter's system less fuel used and lost and

unaccounted-for gas or (ii), the Quantity, in Dekatherms, by

which Shipper's deliveries of Gas to Transporter's system,

less fuel used and lost and unaccounted-for gas, exceed

Shipper's takes of Gas from Transporter's system.

Transporter will waive imbalance penalties if, in its

reasonable judgment, Shipper's actions have not jeopardized

system integrity. Penalties or waivers of said penalties

will be applied uniformly and in a non-discriminatory

manner.