Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 09/04/2009, Docket: RP09-860-000, Status: Effective

First Revised Sheet No. 499B First Revised Sheet No. 499B

Superseding: Original Sheet No. 499B

. .

NEGOTIATED RATE AGREEMENTS (Continued)

FOOTNOTES: (Continued)

---------

11/ Shipper will pay Transporter a discounted rate of $0.1000 per Dth for

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

to Shipper's DMDQ. Shipper will pay Transporter a Commodity/Usage Rate of

$0.0150 per Dth for all capacity scheduled by Shipper or any replacement

Shipper using the transportation path(s) identified on Exhibit "A", plus all

Applicable Surcharges, as defined in footnote 13.

12/ 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 Firm Incremental Rate

Service related to the 2003 Expansion, 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.

During the first twelve (12) months of this Agreement, in no event shall

Shipper pay less than the Minimum Annual Charge, defined as follows:

Minimum Annual Charge = DMDQ x Currently Effective Maximum Recourse

Rate under Rate Schedule KRF-1 for firm incremental rate service for

the 2003 Expansion Project x 365.

13/ The term of the agreement is for a period beginning September 1, 2008,

up to and including August 31, 2009, and month to month thereafter.