Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 01/01/2004, Docket: RP04- 68-000, Status: Effective

Second Revised Sheet No. 865 Second Revised Sheet No. 865 : Effective

Superseding: First Revised Sheet No. 865

RATE SCHEDULE SH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE 10 - INTERRUPTIONS OF SERVICE

10.1 Curtailment. If Transporter determines on any Day that for any reason

whatsoever, including reasons of Force Majeure, the capacity of its

system or any portion thereof is insufficient to satisfy the

requirements for transportation service as set forth in executed

transportation agreements, Transporter shall curtail or interrupt

receipts and deliveries. Subject to the balancing provisions of Article

16 - OPERATING TOLERANCES AND BALANCING herein, such curtailment shall

be limited to the portion of Transporter's System on which capacity is

reduced and shall be in accordance with the priorities set forth in

Section 13.3 of the General Terms and Conditions of this tariff.

10.2 Monthly Reservation Charge Credit. Except for an incident of Force

Majeure or curtailment pursuant to Section 10.1 and subject to the

balancing provisions in Article 16 hereof, and excluding any curtailment

of service at Secondary Receipt Points or Secondary Delivery Points, if

Transporter is unable on any Day to deliver to Shipper at all Delivery

Points nominated pursuant to Section 13.2, a Quantity of Gas Thermally

Equivalent to the Quantity of Gas tendered by Shipper for Transportation

at all Receipt Points up to Shipper's Transportation Maximum Daily

Quantity, then for such Day Shipper's Monthly Reservation Charge (if

any) shall be credited for such Quantities of Gas in the applicable

billing month by an amount equal to the following:

CR = ((AxB)x((E-D)/E)) where

CR = credit applied to shippers' Monthly Reservation Charge,

expressed in dollars

A = Shipper's Demand Maximum Daily Quantity

B = the daily demand rate or reservation rate component (if any)

of

Shipper's rate for service hereunder