Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 08/01/2004, Docket: RP04-339-000, Status: Effective

Third Revised Sheet No. 509 Third Revised Sheet No. 509 : Effective

Superseding: Second Revised Sheet No. 509

RATE SCHEDULE CH-1

Kern River Firm Transportation Services (continued)

ARTICLE IV - TRANSPORTATION RATES AND CHARGES

4.1 Charges. Shipper shall pay Transporter each month for service rendered

hereunder either (1) an amount equal to the sum of Sections 4.1.1,

4.1.2, 4.1.3 and 4.1.4 below, or (2) the amount specified in Article

4.1.8.

4.1.1 Reservation Charge. An amount obtained by multiplying (i) the

Shipper's DMDQ as stated in Section 2.1 herein by (ii) the

applicable Daily Reservation/Demand Rate shown on Sheet No. 5,

and multiplying the result by (iii) the number of days in the

Month.

4.1.2 Transportation Charge. An amount obtained by multiplying (i)

the Quantity of Gas in Dth received by Transporter from

Shipper for Transportation during the month, exclusive of

Quantities for fuel use and lost and unaccounted for Gas as

provided in Section 4.2 herein, by (ii) the Transportation

Rate stated on Sheet No. 5.

4.1.3 ACA Surcharge. An amount obtained by multiplying (i) the

Quantity of Gas received by Transporter from Shipper for

Transportation during the month, exclusive of Quantities for

fuel use and lost and unaccounted for Gas, by (ii) the FERC

Annual Charge Adjustment ("ACA") Surcharge as set forth on

Sheet No. 5.