Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 07/01/2000, Docket: RP00-288-000, Status: Effective

Original Sheet No. 711 Original Sheet No. 711 : Effective

RATE SCHEDULE MO-1

Kern River Firm Transportation Services

(Continued)

ARTICLE III - TRANSPORTATION RATES AND CHARGES (Continued)

3.1 Rates. (Continued)

(f) The Projected Transportation Rate, Projected Monthly

Reservation Rate, and Projected Commodity Rate means those

rates calculated as set forth in (a), (b), and (c) above,

based on Transporter's actual fixed and variable costs as

allowed by the FERC from time to time to determine rates for

jurisdictional service, except that the capital cost of

constructing the initial Kern River System shall be based

upon the Contractual Cost Estimate. To the extent any such

costs are subsequently disallowed by a lawful, FERC order,

resulting in refunds to the shippers on Transporter's

system, Shipper shall be entitled to a refund of its rates

to reflect such lawful disallowance.

(g) The Maximum Transportation Rate, Maximum Monthly Reservation

Rate, and Maximum Commodity Rate means those rates

calculated as set forth in (a), (b) and (c) above, based on

Transporter's actual capital cost of constructing the Kern

River System and all other fixed and variable costs as

allowed by the FERC from time to time to determine the rates

for jurisdictional service. To the extent any such costs

are subsequently disallowed by a lawful, FERC order,

resulting in refunds to the shippers on Transporter's

system, Shipper shall be entitled to a refund of its rates

to reflect such lawful disallowance.

(h) FERC Annual Charge Adjustment Surcharge means the surcharge

assessed and required by the FERC on Transportation of

Natural Gas under Section 3401 of the Omnibus Reconciliation

Act of 1986, 42 U.S.C.A. 7178 (Supp. 1987), adjusted to

Transporter's pressure base and heating value.