Kern River Gas Transmission Company

Second Revised Volume No. 1

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

Second Revised Sheet No. 871 Second Revised Sheet No. 871 : Effective

Superseding: First Revised Sheet No. 871

RATE SCHEDULE SH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE 12 - FUEL GAS, UNACCOUNTED-FOR GAS, TESTING AND LINE PACK

12.1 Fuel Gas. Each Day, Shipper shall reimburse Transporter in-kind for

compressor fuel used pursuant to Section 12 of the General Terms and

Conditions of this tariff.

12.2 Lost or Unaccounted-for Gas. Each month, Shipper shall reimburse

Transporter in-kind for lost or unaccounted-for gas pursuant to Section

12 of the General Terms and Conditions of this tariff.

12.3 Maximum Fuel Reimbursement Factor. For each month, the fuel

reimbursement factor applicable to Shipper's receipt point nominations

as described in Section 12 of the General Terms and Conditions of this

tariff shall not exceed the percentage shown below:

Transporter's System

Certificated Capacity Maximum Fuel

(Dth per Day) Reimbursement Factor

_________________________ ____________________

0 - 700,000 0.0230

701,000 - 750,000 0.0240

751,000 - 800,000 0.0250

801,000 - 850,000 0.0263

851,000 - 900,000 0.0300

901,000 - 950,000 0.0330

951,000 - 1,000,000 0.0343

1,001,000 - 1,050,000 0.0391

1,051,000 - 1,100,000 0.0441

1,101,000 - 1,150,000 0.0553

1,151,000 - 1,200,000 0.0688

Prior to any expansion of Transporter's System which would result in a

certificated capacity in excess of 1,200,000 Mcf per Day, Shipper and

Transporter shall attempt in good faith to mutually agree on a maximum

fuel reimbursement factor. Neither party, however, shall be obligated

to so agree. If no such agreement is reached, then the fuel and lost

and unaccounted-for gas provisions contained in Section 12 of the

General Terms and Conditions of Transporter's FERC Gas Tariff shall

apply.