Kern River Gas Transmission Company

Second Revised Volume No. 1

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

Second Revised Sheet No. 613 Second Revised Sheet No. 613 : Effective

Superseding: First Revised Sheet No. 613

RATE SCHEDULE UP-1

Kern River Firm Transportation Services

(Continued)

ARTICLE III - TRANSPORTATION RATES AND CHARGES (Continued)

3.3 Fuel Use, Lost and Unaccounted for Gas.

3.3.1 Fuel Calculation. The Transportation rates set out in Exhibit "C"

to the Transportation Service Agreement are exclusive of fuel use

requirements and lost and unaccounted for Gas, which shall be

furnished in kind by Shipper each Month, pursuant to Section 12 of

the General Terms and Conditions of this tariff.

3.3.2 Fuel and Loss Limitations. Notwithstanding anything to the

contrary herein, the total quantity of Gas in Dekatherms for fuel

use and lost and unaccounted for Gas each Month shall not exceed

two and one half percent (2.5%) of the quantity of Gas in

Dekatherms tendered by Shipper to Transporter on a monthly basis.

Such percentage ceiling shall be subject to adjustment upon mutual

agreement by the parties to reflect subsequent expansion of

Transporter's System.

3.4 Discounted Recourse Rates.

(a) Transporter reserves the right to discount at any time the

Recourse Rates for any individual Shipper under any service

agreement without discounting any other Recourse Rates for that or

any other Shipper; provided, however, that such discounted

Recourse Rates will not be less than any applicable Minimum Rates

set forth on Sheet No. 5 of Transporter's effective tariff, or any

superseding tariff. Such discounted Recourse Rates may apply to

specific volumes of Gas (such as volumes above or below a certain

level or all volumes if volumes exceed a certain level), volumes

of Gas transported during specific time periods, and volumes of

Gas transported from specific receipt points and/or to specific

delivery points, or within other defined geographical areas. If

Transporter discounts any Recourse Rates to any Shipper,

Transporter will file with the FERC any required reports

reflecting such adjusted rates.