Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 12/20/2002, Docket: RP03- 82-000, Status: Effective

Second Revised Sheet No. 733 Second Revised Sheet No. 733 : Effective

Superseding: Sub First Revised Sheet No. 733

RATE SCHEDULE MO-1

Kern River Firm Transportation Services

(Continued)

ARTICLE VII - TERM OF AGREEMENT

7.1 Effective Date and Term. The term of service shall be as provided for

in the Transportation Service Agreement between Transporter and Shipper.

7.2 Continuation of Term. Shipper shall have the continuing option to

extend the term of the Transportation Service Agreement for one or more

additional twelve-month periods by providing at least twelve months

written notice prior to the commencement of each such additional period;

provided, however, that no such extended term shall be effective unless

Transporter and Shipper mutually agree, at least six months prior to the

commencement of each such extended term, on the rates or rate mechanism

to be in effect during such extended term. Transporter and Shipper

shall make every reasonable effort to reach agreement on such rates. If

Shipper agrees to pay Transporter's then existing maximum rate for Firm

Service, then such extended term shall be effective in accordance with

Shipper's notice.

If Shipper elects to extend the primary term of its service agreement

for only a portion of its firm contract rights, Shipper's MDQ, aggregate

Maximum Receipt Volume entitlements and aggregate Maximum Delivery

Volume entitlements for the extended term must be retained by the same

percentage.

7.3 Right of First Refusal

(a) At the end of the term determined in accordance with Sections 7.1

and 7.2 above, Shipper may exercise a right of first refusal to

continue service, provided that Shipper is receiving service (1)

at the maximum rate for a term of twelve consecutive months or

longer (or for more than one year for service which is not

available for twelve consecutive months); or (2) at any rate for a

term of one year or longer when such service is provided under a

service agreement executed prior to March 27, 2000.

To exercise such right of first refusal, Shipper must agree to

match the rate or rates, up to the maximum rate or rates then

applicable, and the agreement term which a competing prospective

shipper is willing to irrevocably agree to with Transporter, for

all or any portion of the transportation rights then held by

Shipper. If the highest bid submitted by a competing prospective

Shipper is a Negotiated