Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 11/01/2004, Docket: RP04-619-000, Status: Effective

First Revised Sheet No. 160 First Revised Sheet No. 160 : Effective

Superseding: Original Sheet No. 160

GENERAL TERMS AND CONDITIONS

(Continued)

15. CAPACITY RELEASE PROGRAM (Continued)

15.10 Invoicing and Payment. (Continued)

Except in the case of a permanent release where Transporter

has agreed to relieve Releasing Shipper of future payment

liability pursuant to Section 15.10(a), in the event of

failure by the Replacement Shipper to pay timely all or any

portion of any invoice from Transporter, the Releasing

Shipper will likewise be entitled to recall temporarily or

permanently all of its Transportation rights which were

released to the Replacement Shipper under the relevant

Release, provided, however, that the Releasing Shipper must

provide both Transporter and the Replacement Shipper with

not less than two (2) Days prior written notice of its

intent to exercise such recall.

(e) Except in the case of a permanent release where Transporter

has agreed to relieve Releasing Shipper of future payment

liability pursuant to Section 15.10(a), any and all

increases in the applicable Tariff Reservation Rate or the

applicable Tariff Reservation Surcharges will remain the

primary responsibility of the Releasing Shipper to the

extent provided in the Releasing Shipper's Service

Agreement; provided, however, that the Releasing Shipper may

provide in its Release Request that the Release Reservation

Rate and the Release Reservation Surcharges will increase in

accordance with any corresponding increases in the

applicable Tariff Reservation Rate or the applicable Tariff

Reservation Surcharges. Any refunds or credits of any rates

or charges ordered by the FERC will be paid by Transporter

solely to the Base Shipper, subject however to Transporter's

right to seek relief at the FERC or in the courts from the

obligation to make any such refunds or credits. Any Base

Shipper which receives such refunds or credits will be

solely responsible for determining what portion, if any, of

such refunds or credits must be additionally refunded to any

and all Releasing Shippers and Replacement Shippers who

received directly or indirectly a release of Transportation

rights under such Shipper's Base Transportation Service

Agreement; provided, however, that in the case of a

permanent release, any refunds or credits that accrue for

service on the released capacity on or after the effective

date of the release will be paid by Transporter to the

Replacement Shipper.