Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 07/01/2009, Docket: RP09-616-000, Status: Effective

Third Revised Sheet No. 633 Third Revised Sheet No. 633

Superseding: Second Revised Sheet No. 633

RATE SCHEDULE UP-1

Kern River Firm Transportation Services

(Continued)

ARTICLE VII - TERM OF AGREEMENT (Continued)

7.3 Right of First Refusal. (Continued)

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.

(b) If Shipper chooses to exercise the foregoing right of first refusal,

Shipper shall give written notice to that effect to Transporter at

least one hundred twenty (120) days prior to the termination date of

its Transportation Service Agreement. Transporter shall post such

notice on its EBB for a minimum period of sixty (60) days and shall

receive any competing offers for such transportation service only

during such period.

(c) If Shipper chooses to exercise the foregoing right of first refusal,

but wishes to retain only a portion of its capacity, Shipper's MDQ,

aggregate Maximum Receipt Volume entitlements and aggregate Maximum

Delivery Volume entitlements all must be retained by the same

percentage.

7.4 Extension to Correct Imbalance. The term of the Transportation Service

Agreement shall continue for a period of time reasonably sufficient to allow

the parties to correct any cumulative imbalances in receipts and deliveries

pursuant to Section 4.2.2 herein. Provided however, that Shipper shall not be

subject to a Daily Reservation/Demand Rate during such period of time.