Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 02/01/2006, Docket: RP06-160-000, Status: Effective

Third Revised Sheet No. 610 Third Revised Sheet No. 610 : Effective

Superseding: Second Revised Sheet No. 610

RATE SCHEDULE UP-1

Kern River Firm Transportation Services

(Continued)

ARTICLE III - TRANSPORTATION RATES AND CHARGES

3.1 Rate Definition. For the purposes of this Article III, the following

terms shall have the following meanings:

(a) The Transportation Rate means that rate levelized for fifteen

years expressed on an Dth basis determined by dividing

Transporter's cost of service for Transporter's System, which

includes all fixed and variable costs as allowed by the FERC

from time to time to determine the rates for jurisdictional

service, by a throughput equal to 95% of the FERC-certificated

daily design capacity of Transporter's System multiplied by 365.

The cost of service levelization methodology is more

particularly set forth in Transporter's application in FERC

Docket No. CP89-2048.

(b) The Monthly Reservation Rate means that rate expressed as a

monthly charge per Dth based on 95% of the FERC certificated

daily design capacity of Transporter's System.

which equals the Transportation Rate minus the daily reservation

rate.

3.2 Transportation Charges. For Transportation services provided by

Transporter to Shipper pursuant to the Firm Transportation Service

Agreement prior to the Commencement Date, Shipper shall pay

Transporter the Authorized Overrun Rate for each Dth of Gas actually

received by Transporter from Shipper, less fuel use and lost and

unaccounted for Gas. For transportation services provided by

Transporter to Shipper pursuant to the Firm Transportation Service

Agreement each Month from and after the Commencement Date, Shipper

shall pay Transporter either (1) an amount equal to the sum of the

amounts described in Sections 3.2.1, 3.2.2, 3.2.3 and 3.2.4 below, or

(2) the amount specified in Article 3.2.6.