Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 05/01/2003, Docket: CP01-422-004, Status: Effective

Second Revised Sheet No. 110-A Second Revised Sheet No. 110-A : Effective

Superseding: First Revised Sheet No. 110-A

GENERAL TERMS AND CONDITIONS

(Continued)

12. REIMBURSEMENT OF FUEL USED AND LOST AND UNACCOUNTED-FOR GAS (Continued)

expected operational changes to determine projected system-wide

lost and unaccounted-for gas for the month in which the factor is

to be effective. The sum of the projected system-wide lost and

unaccounted-for gas and any required true-up adjustment will be

divided by total projected receipt quantities that month. (The

true-up adjustment is the difference between the system-wide Gas

that was lost and unaccounted-for and the net system-wide lost and

unaccounted-for gas reimbursed by Shippers two months earlier.)

12.7 The High Desert Lateral lost and unaccounted-for gas factor will

be determined monthly as follows: the historical High Desert

Lateral lost and unaccounted-for gas will be adjusted for known

and expected operational changes to determine projected High

Desert Lateral lost and unaccounted-for gas for the month in which

the factor is to be effective. The sum of the projected High

Desert Lateral lost and unaccounted-for gas and any required true-

up adjustment will be divided by total projected receipt

quantities associated with the High Desert Lateral that month.

(The true-up adjustment is the difference between the High Desert

Lateral Gas that was lost and unaccounted-for and the net High

Desert Lateral lost and unaccounted-for gas reimbursed by Shippers

two months earlier.)

12.8 Backhaul Shippers will reimburse Transporter for system-wide lost

and unaccounted-for gas, but will not reimburse Transporter for

compressor fuel.

12.9 Transporter will file an annual report with the Commission by

March 31 of each Year that supports the fuel and lost and

unaccounted-for gas factors used for the 12-month period beginning

January 1 of the prior Year.

12.10 If Shipper fails to nominate sufficient quantities to reimburse

Transporter for compressor fuel used and lost and unaccounted-for

gas, then Transporter will adjust the nomination accordingly and

Shipper will be notified prior to Gas flowing.