Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 08/01/2004, Docket: RP04-339-000, Status: Effective

First Revised Sheet No. 843 First Revised Sheet No. 843 : Effective

Superseding: Original Sheet No. 843

RATE SCHEDULE SH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE 6 - RATES

The provisions of Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6 and 6.7 of this

Article 6 shall apply only to the extent that they are agreed to by both

Transporter and Shipper and included in the Transportation Service Agreement

executed by Transporter and Shipper.

6.1 Shipper's Rate. For transportation service as described in

Section 2.1 rendered by Transporter on behalf of Shipper pursuant

to this Rate Schedule, Shipper shall pay each month a rate

("Shipper's Rate"), which shall be, at Shipper's option (and

subject to the conditions provided herein), Shipper's Negotiated

Rate pursuant to Section 6.2 below, a Negotiated Rate pursuant to

Section 23 of the General Terms and Conditions, including ACA

surcharges as well as fuel reimbursement pursuant to Section 12 of

the General Terms and Conditions, or the Alternate Rate pursuant

to Section 6.6 below. Shipper's Rate shall always be subject to

any refunds that may be ordered by FERC and that may be applicable

to Shipper's Rate. Shipper's Rate shall include the Annual Charge

Adjustment (ACA), pursuant to this Rate Schedule and the Firm

Transportation Service Agreement. Notwithstanding the foregoing,

however, if Shipper's Rate is based upon an Alternate Rate or an

Available Rate Schedule to which the ACA is applicable but as to

which Transporter has waived its rights to reimbursement, then the

ACA charges shall be waived hereunder in proportion to the degree

to which Shipper's Rate is based on such Alternate Rate or

Available Rate Schedule.

6.2 Shipper's Negotiated Rate

6.2.1 Initial Shipper's Negotiated Rate. Effective as of the In-Service

Date, the initial Shipper's Negotiated Rate shall be a two-part

rate, comprised of a Monthly Reservation Rate and a Commodity

Rate, which may be established by Shipper and Transporter prior to

the Construction Commitment Date, and which, if so established,

shall not exceed the maximum demand or reservation rate and

associated commodity or usage rate, respectively, under any of

Transporter's two-part rate schedules for Firm Service which is,

by its terms, generally available to