Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 02/01/2006, Docket: RP06-160-000, Status: Effective

Third Revised Sheet No. 110-C Third Revised Sheet No. 110-C : Effective

Superseding: Second Revised Sheet No. 110-C

GENERAL TERMS AND CONDITIONS

(Continued)

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

12.12 Electric Compressor Fuel Surcharge. (Continued)

(c) Electric Compressor Fuel Deferral Account. Each month,

following the in-service date of the Daggett compressor,

Transporter will determine the difference between the total

amount payable by Shippers for collection by Transporter

through the electric compressor fuel surcharge during the

previous month and the previous month's electricity costs

incurred at the Daggett compressor. Transporter will record

such difference in an electric compressor fuel deferral

account.

(d) Transporter's share of the total monthly electricity cost

will be allocated between rolled-in rate service and

incremental rate service pro rata, based on the estimated

electricity costs underlying the initial surcharges for the

rolled-in and incremental surcharges (i.e. rolled-in costs

of $2,350,843 and incremental costs of $1,050,544). The

differences between the allocated electricity costs and the

surcharges payable by each rate group will be reflected

separately in the electric compressor fuel deferral account.