Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 10/01/2008, Docket: RP04-274-014, Status: Pending

Sub Ninth Revised Sheet No. 496 Sub Ninth Revised Sheet No. 496

Superseding: Eighth Revised Sheet No. 496

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NEGOTIATED RATE AGREEMENTS (continued)

FOOTNOTES:

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1/ Pursuant to the terms of Exhibit "B" to the June 5, 2003 Transportation

Service Agreement between Transporter and High Desert Power Trust, each month

Transporter will bill Shipper a negotiated rate in the form of a monthly

reservation charge, comprised of the sum of three components:

(1) Incremental Facility Charge $334,411

(2) Deferred Cost Recovery Surcharge 38,197

(3) Completion Incentive Charge 46,137*

*Based on an in-service date of September 1, 2002.

2/ Shipper will pay Transporter a discounted rate of $0.3601 per Dth for

scheduled quantities at receipt and delivery points shown on Exhibit "A," up

to Shipper's Maximum Daily Quantity.

3/ For all scheduled quantities at receipt and/or delivery points not listed

in Exhibit "A," including quantities in excess of Shipper's DMDQ, Shipper will

pay Transporter an Alternate Rate that is calculated as follows:

Alternate Rate = (Net Daily Spread - Index Spread Adjustment) +

Applicable Surcharges.

Where: Net Daily Spread = ("SoCalGas" price* - "Kern River, Opal Plant

price*) - fuel**

Index Spread Adjustment = the lesser of $0.65 or (Net Daily Spread x

15%)

Applicable Surcharges = ACA or future surcharges that Kern River does

not have the ability to discount.

*Price is shown in Platts' Gas Daily, "Daily Price Survey, Flow Date Midpoint,"

for the day of scheduled transportation.

**Fuel is the product of (i) fuel and lost and unaccounted-for gas

reimbursement factor under Rate Schedule KRF-1 for rolled-in rate service and

(ii) price at "Kern River, Opal Plant."

In no event will the Alternate Rate, less applicable surcharges, be less than

the highest Daily Reservation/Demand Rate under Rate Schedule KRF-1 for Rolled-

in Rate Service, as such rates may change from time to time in accordance with

the Natural Gas Act.

4/ The term of the agreement is for a period beginning December 1, 2002 up

to and including December 31, 2002, and month to month thereafter.

5/ For scheduled transportation at receipt and delivery points shown on

Exhibit "A," up to Shipper's Maximum Daily Quantity at those points, Shipper

will pay Transporter a Total Backhaul Rate of $0.17 per Dth.

6/ The term of the agreement is for a period beginning December 1, 2002 up

to and including November 30, 2003 and year to year thereafter.