Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 11/01/2003, Docket: RP04- 4-000, Status: Effective

Fifth Revised Sheet No. 135 Fifth Revised Sheet No. 135 : Effective

Superseding: Fourth Revised Sheet No. 135

GENERAL TERMS AND CONDITIONS

(Continued)

15. CAPACITY RELEASE PROGRAM

15.1 Applicability.

(a) This Section 15 implements Section 284.8 of the FERC's

regulations and is applicable to any Shipper that holds

rights to firm Transportation service pursuant to an

executed Transportation Service Agreement under Rate

Schedule KRF-1, KRF-L1, CH-1, MO-1, UP-1 or SH-1 contained

in this Tariff ("Base Transportation Service Agreement"),

who elects to release on a permanent or temporary basis all

or any portion of such firm Transportation rights

("Releasing Shipper"). A Releasing Shipper will have the

right to permanently release any volumetric portion of its

firm Transportation rights and/or to segment and temporarily

release any portion of its Transportation rights, but only

to the extent that the Transportation rights so released are

acquired by another party pursuant to the provisions of this

Section 15 which executes a Released Transportation Service

Agreement in the form set forth in this Tariff ("Replacement

Shipper"). Any party which desires to bid on and obtain

Transportation rights released under the provisions of this

Section 15 will be known as a "Bidder." Unless expressly

prohibited by the Releasing Shipper, a Bidder which

successfully becomes a Replacement Shipper also may release

any or all of the rights it has acquired hereunder as

reflected in its Released Transportation Service Agreement,

subject to the terms and conditions of this Section 15, and

will be deemed a "Releasing Shipper" with respect to such

proposed release. For purposes of this Section 15, the

service agreement under which a Releasing Shipper releases

Transportation rights, whether a Base Transportation Service

Agreement or a Released Transportation Service Agreement,

will be referred to at times in this Section 15 as the

"Releasing Shipper's Service Agreement."