Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 09/06/2004, Docket: RP04-444-000, Status: Effective

First Revised Sheet No. 182 First Revised Sheet No. 182 : Effective

Superseding: Original Sheet No. 182

. GENERAL TERMS AND CONDITIONS .

(Continued)

23. NEGOTIATED RATES

23.1 Availability. Shipper and Transporter may agree to Negotiated

Rates, as defined in Section 1 of the General Terms and

Conditions of this tariff, for a specific term of service under

any rate schedule contained in this tariff. The rates as shown

on Transporter's Statement of Rates are available as Recourse

Rates for any Shipper that does not negotiate a rate with

Transporter.

23.2 Applicability.

(a) Existing Service. Notwithstanding anything to the contrary

contained in this tariff, Transporter and Shipper may

mutually agree to negotiate rates and contract term for all

or any portion of the capacity under any existing service

agreement, provided that Shipper has not acquired its

capacity through a capacity release. If only a portion of

the capacity under any existing service agreement will be

priced at Negotiated Rates, the original service agreement

must first be bifurcated, and Recourse Rates will continue

to apply to the service agreement not subject to the

Negotiated Rates.

(b) New Service.

(1) Requests for Service. Transporter and Shipper may

mutually agree to negotiated rates and contract term

for any available capacity that is requested by

Shipper in accordance with Section 3.1 of Rate

Schedule KRF-1, provided that such capacity has been

posted for informational purposes, but is not posted

for bid at the time of Shipper's request.

(2) Bids on Posted Capacity. If available capacity is

posted for bid and Transporter has determined that it

is willing to consider bids at Negotiated Rates,

Transporter must specify in its posting that it will

consider Negotiated Rate bids in addition to Recourse

Rate and discounted Recourse Rate bids.

right-of-first-refusal as outlined in Section 27.5 of the

General Terms and Conditions may retain all or a portion of