Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 02/25/2001, Docket: RP00-505-002, Status: Effective

Sub First Revised Sheet No. 532 Sub First Revised Sheet No. 532 : Effective

Superseding: Original Sheet No. 532

RATE SCHEDULE CH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE VIII - TERM OF AGREEMENT (Continued)

8.2 Continuation of Term. (Continued)

during the extended period, provided, however, that if

Transporter's rates for transportation service are not at that

time regulated by the FERC or any successor agency thereto, the

provisions 8.2 (b) below shall apply.

(b) If, at the time of Transporter's notice of its desire to establish

new Transportation Rates and Charges for the extended period,

Transporter's rates for transportation service are not regulated

by the FERC or any successor agency thereto, then Shipper and

Transporter shall, within 30 days of Shipper's receipt of such

notice, commence negotiations to establish such new Transportation

Rates and Charges. If Shipper and Transporter have not agreed on

new Transportation Rates and Charges for the extended period

within 120 days following Shipper's notice of its election to

extend, then the determination of such Transportation Rates and

Charges shall be submitted to arbitration. The arbitration shall

be conducted by a panel of three disinterested and competent

persons. Two of the arbitrators shall be mutually chosen by

Shipper and Transporter and the two so chosen shall select the

third arbitrator. The arbitrators' determination shall be

conclusive and binding on both parties. The parties shall

establish the arbitration panel and present their evidence to it

in a sufficiently timely manner to permit the panel to make its

determination no more than 30 days prior to the commencement of

the extended period.

(c) If a Shipper elects to extend the primary term of its service

agreement for only a portion of its firm contract rights,

Shipper's MDQ, aggregate Maximum Receipt Volume entitlements and

aggregate Maximum Delivery Volume entitlements for the extended

term must be retained by the same percentage.