Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 01/01/2004, Docket: RP04- 68-000, Status: Effective

First Revised Sheet No. 513 First Revised Sheet No. 513 : Effective

Superseding: Original Sheet No. 513

RATE SCHEDULE CH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE IV - TRANSPORTATION RATES AND CHARGES (Continued)

4.2 Fuel Use, Lost and Unaccounted for Gas.

4.2.1 Fuel Calculation. The charges in Sections 4.1.1, 4.1.2 and 4.1.4

of this Rate Schedule are exclusive of fuel use requirements and

lost and unaccounted for Gas, which shall be furnished in kind by

Shipper each Day, pursuant to Section 12 of the General Terms and

Conditions of this tariff. Transporter shall make every

reasonable effort to conserve and keep to a minimum the quantity

of Natural Gas used for compressor station fuel. In the event the

quantity of Natural Gas allocated under this Section 4.2.1 to

Shipper exceeds one percent (1%) on a volumetric basis of the

Natural Gas tendered by Shipper to Transporter in any Month,

Transporter agrees on request of Shipper to explain the fuel use

allocation and negotiate in good faith any objection or complaint

Shipper may have with respect to the fuel use allocation.

4.2.2 Loss Limitations. The total quantity of Gas in Dekatherms for

lost and unaccounted for Gas shall not exceed one percent (1%) of

the quantity of Gas in Dekatherms tendered by Shipper to

Transporter. Such percentage ceiling shall be subject to

adjustment for subsequent expansions of the Kern River System

after a showing by Transporter that an increase is justified and

upon the agreement of Shipper which shall not be unreasonably

withheld.