Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 07/01/2000, Docket: RP00-288-000, Status: Effective

Original Sheet No. 184 Original Sheet No. 184 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

23. NEGOTIATED RATES (Continued)

23.3 Bid Evaluation and Award Criteria. (Continued)

(c) For bid evaluation purposes, the value of a Negotiated Rate

bid will be capped at the value of such bid at Transporter's

Recourse Rate.

(d) Subject to Section 23.3(c) above, capacity will be awarded

to the Shipper that submits the bid with the highest value,

regardless of whether such bid is a Recourse Rate, a

discounted Recourse Rate or a Negotiated Rate bid, provided

that the highest bid meets or exceeds the lowest rate that

Transporter is willing to accept for the capacity.

(e) If more than one bid has the same value, Transporter will

notify the tying bidders, and those bidders will have an

opportunity to improve their bids by submitting tie-breaker

bids via fax within 24 hours of notification by Transporter.

If a tie still exists, Transporter will allocate the

available capacity on a pro rata basis to all tying bidders

that have indicated in their tie-breaker bids their

willingness to accept a proportionate share of such

capacity.

23.4 Filing Requirement. Transporter will submit to the Commission a

tariff sheet stating the name of the Shipper, the Negotiated Rate,

the rate schedule, the receipt and delivery points, the contract

quantities and the term applicable to any Negotiated Rate service

agreement. Unless Transporter executes and files a non-conforming

service agreement, such tariff sheet will contain a statement that

the Negotiated Rate service agreement does not deviate in any

material aspect from the form of service agreement in the tariff

for the applicable rate schedule.

23.5 Rate Treatment. Transporter will not seek in future general rate

proceedings discount-type adjustments to demand charge billing

determinants for capacity converted from Recourse Rate service

agreements to Negotiated Rate service agreements, unless the

Recourse Rate had already been discounted. In those situations

where Transporter had granted a market-justified discount to the

Recourse Rate and subsequently converted the service agreement to

a Negotiated Rate service agreement, Transporter may seek a

discount-type adjustment, based on the greater of: (a) the