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

First Revised Sheet No. 710 First Revised Sheet No. 710 : Effective

Superseding: Original Sheet No. 710

RATE SCHEDULE MO-1

Kern River Firm Transportation Services

(Continued)

ARTICLE III - TRANSPORTATION RATES AND CHARGES

3.1 Rates.

3.1.1 Definitions. For the purposes of this Article III the following

terms shall have the following meanings:

(a) The Transportation Rate means that rate expressed on a Dth

basis determined by dividing Transporter's cost of service,

which includes all fixed and variable costs, levelized for

fifteen years by a throughput equal to 95% of the daily

design capacity of the Kern River System multiplied by 365.

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

monthly charge per Dth based on 95% of the daily design

capacity of Transporter's System.

(c) The Commodity Rate means that rate expressed on a per Dth

basis which equals the Transportation Rate minus the daily

reservation rate.

(d) The Construction Notification Date shall be the date prior

to commencement of construction at the time when Transporter

is prepared to commit to the construction of its project,

that Transporter provides Shipper a revised estimate of

capital costs for the Kern River System and the associated

rates.

(e) The Contractual Cost Estimate shall be the sum of (i) that

portion of the cost estimate provided to Shipper at

Construction Notification Date which estimates the cost of

the materials necessary for construction of the Kern River

System multiplied by 1.03, and (ii) all costs other than

materials costs actually incurred by Transporter for

construction of the Kern River System.