Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 07/01/2000, Docket: RP00-288-000, Status: Effective

Original Sheet No. 883 Original Sheet No. 883 : Effective

RATE SCHEDULE SH-1

Kern River Firm Transportation Services

(Continued)

ARTICLE 16 - OPERATING TOLERANCES AND BALANCING

16.1 Receipt and Delivery Tolerances. It is recognized that receipts from

Shipper and deliveries by Transporter may vary above or below the

quantities scheduled on any Day. Such variations shall be kept to the

minimum permitted by operating conditions and shall be balanced as soon

as practicable but in no event shall exceed an allowable daily variation

of ten (10) percent of the scheduled quantities, and provided further

that the cumulative net variations during any month above or below the

quantities scheduled shall not exceed five (5) percent of the sum of the

scheduled quantities for each Day of such month.

16.2 Uniform Receipts and Deliveries. Transporter and Shipper shall

undertake to maintain receipts and deliveries on a uniform daily basis

to the maximum extent practicable, subject to the provisions of this

Rate Schedule.

16.3 Imbalance Correction. Transporter and Shipper agree to correct any

cumulative imbalances in receipts and deliveries as soon as practicable,

and shall seek to eliminate any imbalances within sixty (60) Days of the

date Transporter notifies Shipper in writing that such imbalances have

occurred. If such imbalances are not corrected within such sixty (60)

Day period, Transporter shall have the right upon twenty-four (24) hours

prior written notice to Shipper to suspend or reduce service to Shipper

to correct such imbalances which threaten the operation or integrity of

its system, including maintenance thereof and service to others.

16.3.1 Post Term Imbalance Correction. In the event that, at the end

of the Primary Term or any Extended Term of the Firm

Transportation Service Agreement as provided in Article 3

hereof, there are cumulative imbalances in receipt and

deliveries, Transporter and Shipper have an obligation, which

shall survive the termination of the Firm Transportation

Service Agreement, to correct such cumulative imbalances in

receipts and deliveries as soon as practicable after the end of

the term of the Firm Transportation Service Agreement.

16.3.2 Thermally Equivalent Basis. All calculations of balances and

imbalances and corrections under this Section shall be made on

a Thermally Equivalent Basis.