Kern River Gas Transmission Company

Second Revised Volume No. 1

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

Second Revised Sheet No. 512 Second Revised Sheet No. 512 : Effective

Superseding: First Revised Sheet No. 512

RATE SCHEDULE CH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE IV - TRANSPORTATION RATES AND CHARGES (Continued)

4.1 Charges. (Continued)

will be adequate to recover the sum of Transporter's actual

principal and interest on debt. The unit amount of the

reduction of the Reservation Rate shall be calculated by

summing the components of such credit and dividing the total

by 30.416 and rounding to the nearest one-hundredth cent

($.0001).

To obtain the adjustment to the Reservation Charge, the

resulting unit amount shall be multiplied by each Dth of Gas

less than 100% of the amount tendered that Day by Shipper

(up to Shipper's TMDQ) which Transporter failed to deliver.

Such adjustment to the Reservation Charge shall continue

until the day that the Transporter is able again to deliver

a Thermally equivalent Quantity equal to Shipper's TMDQ.

However, in no event will Transporter be obligated to adjust

Reservation Charges below the total Reservation Charges

payable by Shipper during the month.

attributable to continued non-performance for each such day

shall equal zero.

Nothing in this Section 4.1.7 shall relieve Transporter or

Shipper from its obligations due and owing under the

Transportation Service Agreement before the onset of the

inability to make deliveries. Further, no adjustment to the

Reservation Charge shall be made for any interruption or

curtailment of service at any Secondary Receipt Point or

Secondary Delivery Point.

4.1.8 Negotiated Rates. Notwithstanding the foregoing provisions of

this Article 4, Transporter and Shipper may mutually agree to

Negotiated Rates for service hereunder as provided in Section 23

of the General Terms and Conditions. ACA surcharges pursuant to

Article 4.1.3 of this rate schedule and fuel reimbursement

pursuant to Section 12 of the General Terms and Conditions will

be applied to Shippers paying Negotiated Rates in the same

manner as they are applied to Shippers paying Recourse Rates.