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

Second Revised Sheet No. 852 Second Revised Sheet No. 852 : Effective

Superseding: First Revised Sheet No. 852

RATE SCHEDULE SH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE 6 - RATES (Continued)

6.6 Determination of Alternate Rates. (Continued)

6.6.4 Time-Based Rates. Each Time-Based Rate (as defined in

Section 6.5.3) identified on Transporter's Rate List shall

be adjusted by Transporter to reflect its annualized

equivalent ("AE") as follows:

AE=(t1xr1)+(t2xr2)+...+(tnxrn)/(t1+t2+...+tn)

Where

AE = Annualized equivalent of the Time-Based Rate

t = The number of Days in a relevant time period during a

year (e.g., each season for a seasonal rate, each peak

period and off-peak period for peak/off-peak rates,

etc.)

r = The Time-Based Rate for a relevant time period during

a year

6.6.5 Weighted Average Alternate Rate.

(a) Shipper's Alternate Rate List. Within ten (10) Days

after receipt of Transporter's Rate List, Shipper

shall compile from items (ii) and (iii) of

Transporter's Rate List and provide to Transporter a

list ("Shipper's Alternate Rate List") of rates

excluding any ACA charges, and the maximum Quantities

of gas which Transporter is obligated to transport at

such rates, which Quantities, in the aggregate, are

equivalent to or greater than twice Shipper's DMDQ.

Shipper shall rank such rates in any fashion it

desires, numbering each rate successively in

descending order of preference.

(b) Computing a Weighted Average Alternate Rate. The

demand/reservation component (if any) and the

commodity/usage component (if any) of each rate on

Shipper's Alternate Rate List, beginning with the

first, shall separately be multiplied in succession by

the maximum