Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 06/01/2002, Docket: RP02-248-000, Status: Effective

Original Sheet No. 213 Original Sheet No. 213 : Effective

GENERAL TERMS AND CONDITIONS

(Continued)

27. AVAILABLE CAPACITY (Continued)

27.5 Right of First Refusal. (Continued)

(b) If a Shipper chooses to exercise a right of first refusal

for only a portion of its capacity, or chooses to extend the

primary term of its agreement pursuant to a contractual

rollover or evergreen provision for only a portion of its

capacity, Shipper's MDQ, aggregate Maximum Receipt Volume

entitlements and aggregate Maximum Delivery Volume

entitlements all must be retained by the same percentage.

(c) If an existing Shipper chooses not to match the economic

value of the best bid(s) as determined by Transporter,

capacity will be awarded to the selected bidder(s), and the

existing Shipper's right of first refusal will expire.

(d) If no creditworthy bids are submitted for any portion of the

capacity, an existing Shipper will be entitled to continue

its existing service for any portion of the capacity, for

any term desired, provided Transporter and Shipper agree to

mutually acceptable rates for the service at a level within

the posted maximum and minimum tariff rates for the

applicable service or at a mutually acceptable Negotiated

Rate for the applicable service. If Transporter and Shipper

fail to agree on rates within thirty (30) days of the bid

close date, Shipper's right of first refusal will be deemed

to have terminated.

27.6 Notwithstanding anything to the contrary set forth in this

Section 27, Transporter will not be required to provide service at

any rate less than the maximum rate for Rate Schedule KRF-1, as

such rate may vary from time to time.