Kern River Gas Transmission Company

Second Revised Volume No. 1

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

Original Sheet No. 736 Original Sheet No. 736 : Effective

RATE SCHEDULE MO-1

Kern River Firm Transportation Services

(Continued)

ARTICLE VIII - INVOICING AND PAYMENT (Continued)

8.3 Interest on Unpaid Amounts. (Continued)

Such interest shall accrue on unpaid amounts, including any unpaid

interest compounded quarterly, beginning on the payment due date of

Transporter's invoice to Shipper, and shall terminate when such an

invoice is paid.

8.4 Interest on Overcollections by Transporter. Should Transporter

overcollect by payment of any bill by Shipper, interest shall accrue on

the amount of the overcollection at a rate of interest equal to the then

effective rate computed in the manner set forth in Section 154.501(d)(1)

of the FERC's regulations under the Natural Gas Act. If such rate

becomes unavailable, the rate shall be computed on the basis of the

lesser of two percent (2%) above the prime rate from time to time

charged by Chase Manhattan, N.A. (or the succeeding bank of Chase

Manhattan, N.A.), or the maximum applicable nonusurious rate of interest

in the State of Texas. Such interest shall accrue on the amount of the

overcollection, plus any unpaid interest compounded quarterly, beginning

on the date Transporter receives the overcollected funds, and shall

terminate on the date Transporter repays such funds to Shipper.

8.5 Remedies for Failure to Pay. If Shipper's failure to pay continues for

30 Days after payment is due, Transporter may discontinue transportation

service; provided, however, that Transporter shall provide Shipper with

a minimum of 15 Days notice before service is discontinued and shall

report such discontinuance of service to the FERC. Transporter shall

not be entitled to suspend further delivery of Gas if Shipper in good

faith shall dispute the amount of any such bill or part thereof and

shall pay to Transporter such amounts as it concedes to be correct.

8.6 Late Billing. If presentation of a bill by Transporter is delayed after

the due date, then the time for payment shall be extended

correspondingly unless Shipper is responsible for such delay.