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. 540 First Revised Sheet No. 540 : Effective

Superseding: Original Sheet No. 540

RATE SCHEDULE CH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE XII - TITLE AND POSSESSION OF GAS

12.1 Possession of Gas and Responsibility. Title to the Gas delivered by

Shipper to Transporter shall be retained by Shipper during

Transportation hereunder. As between Transporter and Shipper, Shipper

shall be deemed to be in control and possession of the Gas until it has

been received by Transporter for Transportation at Receipt Point(s).

Transporter shall thereupon be deemed to be in control and possession of

the Gas until the Thermally Equivalent Quantities (less any requisite

fuel and loss reimbursement) shall have been delivered to Shipper at the

Delivery Point(s), after which Shipper shall be deemed to be in control

and possession. Shipper shall have no responsibility with respect to

any Gas after it has been received by Transporter at the Receipt

Point(s) on account of anything which may be done, happen or arise with

respect to said Gas, until the Thermally Equivalent Quantities (less any

requisite fuel and loss reimbursement) are delivered to Shipper at the

Delivery Point(s). Transporter shall have no responsibility with

respect to said Gas prior to its receipt by Transporter at the Receipt

Point(s), after its delivery to Shipper at the Delivery Point(s) or on

account of anything which may be done, happen or arise with respect to

said Gas prior to such receipt or after such delivery.