Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 08/01/2009, Docket: RP09-723-000, Status: Effective

Third Revised Sheet No. 150 Third Revised Sheet No. 150

Superseding: Second Revised Sheet No. 150

. GENERAL TERMS AND CONDITIONS .

(Continued)

15. CAPACITY RELEASE PROGRAM (Continued)

15.6 Determination of Successful Bidder. (Continued)

The Release Request must specify one of the following

methodologies for determining the award from the bids

submitted: (1) highest rate, (2) net revenue, (3) present

value, or (4) other shipper-defined, nondiscriminatory

methodology agreed to by Transporter. NAESB WGQ 5.3.4: "When

the capacity release service provider makes awards of

capacity for which there have been multiple bids meeting

minimum conditions, the capacity release facilitator should

award the bids, best bid first, until all offered capacity

is awarded." If applied methodology, for any reason, cannot

be effectively applied to permit Transporter to determine

the successful Bidder, then Transporter will use a lottery

to choose between bids of equal value.

(1) Highest Rate methodology: the highest rate bid that

meets the minimum terms and conditions of the release

(2) Net Revenue methodology: R x N x V = Net Revenue

where: R = the reservation charge and reservation

surcharge

N = term of the agreement, in Days

V = Quantity, stated in Dth

(3) Present Value methodology:

1 - (1+i) -n

R x ______________ x V = Present Value

where: R = the reservation charge(s) and reservation

surcharge(s)

n = term of agreement, in Days

i = the annual rate of interest prescribed by FERC as

computed in accordance with the formula set forth

in 18 C.F.R. Section 154.501(d)

V = Quantity stated in Dth