Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 10/01/2002, Docket: RP02-482-000, Status: Effective

Second Revised Sheet No. 813 Second Revised Sheet No. 813 : Effective

Superseding: Sub First Sheet No. 813

RATE SCHEDULE SH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE 3 - TERM (Continued)

3.2 Right of First Refusal. (Continued)

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

Rate that meets or exceeds the lowest rate Transporter is willing

to accept for such service, the existing Shipper may retain its

capacity by matching the bid on either a Negotiated Rate basis or

a Recourse Rate basis as provided in Section 23.2(c) of the

General Terms and Conditions; provided, however, that nothing

herein shall obligate Transporter to render service to Shipper or

to any competing prospective shipper if such persons do not agree

to pay Transporter's applicable maximum transportation rates. To

exercise its right of first refusal, Shipper must agree to all

other terms and conditions of service to which the competing

prospective shipper is prepared to agree, or to such other terms

and conditions which are acceptable to Transporter.

(b) If Shipper chooses to exercise the foregoing right of first

refusal, Shipper shall give written notice to that effect to

Transporter at least one hundred twenty (120) days prior to the

termination date of its Firm Transportation Service Agreement.

Transporter shall post such notice on its Designated Site for a

minimum period of sixty (60) days and shall receive any competing

offers for such transportation service only during such period.

(c) If Shipper chooses to exercise the foregoing right of first

refusal, but wishes to retain only a portion of its capacity,

Shipper's MDQ, aggregate Maximum Receipt Volume entitlements and

aggregate Maximum Delivery Volume entitlements all must be

retained by the same percentage.

3.3 Pregranted Authorization. Reduction, cessation, termination, re-

initiation, or resumption of service to Shipper, as provided for and

permitted by the Firm Transportation Service Agreement, and any

amendments thereto, shall be permitted without necessity for any further

authorization or approval under the Natural Gas Act or any other statute

or regulation by the Federal Energy Regulatory Commission.