Kern River Gas Transmission Company

Second Revised Volume No. 1

Effective Date: 05/01/2002, Docket: RP01-190-002, Status: Effective

First Revised Sheet No. 828 First Revised Sheet No. 828 : Superseded

Superseding: Original Sheet No. 828

RATE SCHEDULE SH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE 5 - CAPACITY RELEASE PROGRAM (Continued)

5.6 Determination of Successful Bidder. (Continued)

applied methodology, for any reason, cannot be effectively applied

to permit Transporter to determine the successful Bidder, then

Transporter will use a lottery to choose between bids of equal

value.

(i) Highest Rate methodology: the highest rate bid that meets

the minimum terms and conditions of the release

(ii) Net Revenue methodology: R x N x V = Net Revenue

where: R = the reservation charge and reservation surcharge

N = term of the agreement, in Days

V = Quantity, stated in Dth

(iii) Present Value methodology:

1 - (1 + i)-n

R X _____________ x V = Present Value

where: R = the reservation charge(s) and reservation

surcharge(s)

n = term of agreement, in Days

i = the annual rate of interest prescribed by FERC

as computed in accordance with the formula

set forth in 18 C.F.R. Section 154.501(d)

V = Quantity stated in Dth

(b) If a Release Request includes a Prearranged Bidder, then the

Release shall be awarded to the Prearranged Bidder if its bid has

a value which is equal to or higher than the highest value of each

of the bids submitted by all other Bidders, or if it matches any

bid having a higher value within the time period provided by

Section 5.8 of this Rate Schedule.