Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 11/01/2003, Docket: RP04- 4-000, Status: Effective

Third Revised Sheet No. 614 Third Revised Sheet No. 614 : Effective

Superseding: Second Revised Sheet No. 614

RATE SCHEDULE UP-1

Kern River Firm Transportation Services

(Continued)

3.5 Rate Filings. Transporter's rates, charges, classifications and

services as set forth in the Transportation Service Agreement and this

Rate Schedule are subject to regulation by the FERC under the Natural

Gas Act. Transporter shall have the right to file from time to time

with the FERC under Section 4 of the Natural Gas Act and to place into

effect such changes in the Rate Schedule, Transportation Service

Agreement, and other applicable terms of Transporter's Tariff as

Transporter may find necessary from time to time to assure Transporter

just and reasonable rates and charges and terms and conditions of

service and Shipper shall have the right to oppose such changes.

Shipper shall have the rights available to it under Section 5 of the

Natural Gas Act to assure Shipper just and reasonable rates and charges

and terms and conditions. Waivers of these statutory rights, if any,

shall be as provided in the Transportation Service Agreement between

Transporter and Shipper.

3.6 System Expansion.

3.6.1 DMDQ Reduction Rights. If the FERC-certificated daily design

capacity of Transporter's System is less than 775 MMCFD, then

within 30 days of written notice from Transporter of a decision by

Transporter to expand the capacity of Transporter's System,

Shipper shall have an option to reduce its DMDQ, effective on the