Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 05/01/2002, Docket: RP01-190-002, Status: Effective

First Revised Sheet No. 514 First Revised Sheet No. 514 : Effective

Superseding: Original Sheet No. 514

RATE SCHEDULE CH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE V - OPERATING PROCEDURES

5.1 Scheduling and Dispatching.

5.1.1 Scheduling, nomination and dispatch of Shipper's gas Quantities

for transportation hereunder shall be governed by Sections 10.1,

13.1 and 15.11(g) of the General Terms and Conditions of this

Tariff.

5.1.2 Limitation Upon Transporter's Daily Transportation Obligation.

Subject to the provisions of this Rate Schedule as to scheduling

and balancing, Transporter shall not be obligated to deliver to

Shipper on any Day a greater quantity of Gas, on a Thermally

Equivalent basis, up to Shipper's TMDQ, than it has received from

Shipper on such Day, reduced by any requisite fuel and loss

reimbursement.

5.2 Balancing of Gas.

5.2.1 Daily Deliveries. Transporter and Shipper, subject to operating

conditions affecting Shipper and Transporter and the available

capacity of their respective facilities, shall endeavor to deliver

and receive from each other on each Day, beginning with the

Commencement Date, the Quantity of Gas received by Transporter

from Shipper; provided, however, the Quantity delivered to Shipper

shall be less any fuel use and lost and unaccounted for Gas as

provided in Section 4.2. It is recognized that receipt by

Transporter from Shipper and deliveries by Transporter to Shipper

may vary above or below the quantities scheduled on any Day.

Subject to available capacity in Transporter's system, Transporter

and Shipper shall eliminate all imbalances at least once every 60

Days by adjusting delivery and receipt quantities (imbalance

adjustments) unless otherwise mutually agreed. Upon notice to

Shipper, Transporter shall have the right to take actions of

whatever nature may be required, including reduction of service to

Shipper to correct imbalances which threaten the operation or

integrity of its system, including maintenance of service to other

shippers.