Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 12/20/2002, Docket: RP03- 82-000, Status: Effective

Second Revised Sheet No. 533 Second Revised Sheet No. 533 : Effective

Superseding: Sub First Revised Sheet No. 533

RATE SCHEDULE CH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE VIII - TERM OF AGREEMENT (Continued)

8.3 Right of First Refusal.

(a) At the end of the term determined in accordance with Sections 8.1

and 8.2 above, Shipper may exercise a right of first refusal to

continue service, provided that Shipper is receiving service (1)

at the maximum rate for a term of twelve consecutive months or

longer (or for more than one year for service which is not

available for twelve consecutive months); or (2) at any rate for a

term of one year or longer when such service is provided under a

service agreement executed prior to March 27, 2000.

To exercise such right of first refusal, Shipper must agree to

match the rate or rates, up to the maximum rate or rates then

applicable, and the agreement term which a competing prospective

Shipper is willing to irrevocably agree to with Transporter, for

all or any portion of the transportation rights then held by

Shipper. If the highest bid submitted by a competing prospective

Shipper is a Negotiated Rate that meets or exceeds the lowest rate

Transporter is willing to accept for such service, the existing

Shipper may retain its capacity by matching the bid on either a

Negotiated Rate basis or a Recourse Rate basis as provided in

Section 23.2(c) of the General Terms and Conditions; provided,

however, that nothing herein shall obligate Transporter to render

service to Shipper or to any competing prospective Shipper if such

persons do not agree to pay Transporter's maximum rates then

applicable. To exercise its rights of first refusal, Shipper must

agree to all other terms and conditions of service to which the

competing prospective Shipper is prepared to agree, or to such

other terms and conditions as may be acceptable to Transporter.