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. 812 Second Revised Sheet No. 812 : Effective

Superseding: Sub First Revised Sheet No. 812

RATE SCHEDULE SH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE 3 - TERM

3.1 Primary and Extended Terms. The Primary Term of service shall be as

provided in the Firm Transportation Service Agreement between

Transporter and Shipper. Shipper shall have the option to extend the

term of the Firm Transportation Service Agreement for one or more

extended periods of at least twelve months each (such periods referred

to individually as "an Extended Term"); provided, however, that to

exercise its option for the first Extended Term, Shipper shall provide

notice to Transporter at least twelve months prior to the end of the

Primary Term, and for each succeeding Extended Term shall provide notice

to Transporter at least twelve months before the end of the immediately

preceding Extended Term. All of the terms and provisions of the Firm

Transportation Service Agreement shall apply throughout any or all

Extended Terms, except the provisions of Article 6 - Rates. Within the

first 180 Days following the date Shipper gives Transporter written

notice of Shipper's exercise of its option for an Extended Term,

Transporter and Shipper shall make every reasonable effort to mutually

agree on the rates to be applied during such Extended Term, and unless

Transporter and Shipper have reached agreement on rates before the one

hundred eightieth (180th) Day following Shipper's notice to Transporter,

the Firm Transportation Service Agreement shall terminate effective at

the end of the Primary Term or the then effective Extended Term, if any.

If a 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.

3.2 Right of First Refusal.

a) At the end of the Primary and/or Extended Term as determined

above, Shipper may exercise a right of first refusal to continue

such 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