*Pacific Gas Transmission Company*

*First Revised Volume No. 1-A*

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Effective Date: 06/01/2002, Docket: RP99-518-028, Status: Effective

**Fifth Revised Sheet No. 7B **Fifth Revised Sheet No. 7B : Effective

Superseding: Fourth Revised Sheet No. 7B

STATEMENT OF EFFECTIVE RATES AND CHARGES

FOR TRANSPORTATION OF NATURAL GAS

(Continued)

NEGOTIATED RATE AGREEMENTS UNDER RATE SCHEDULES FTS-1 AND LFS-1

Explanatory Footnotes for Negotiated Rates

under Rate Schedules FTS-1 and LFS-1

/7 The Reservation charge shall be equal to the rate set forth in GTN’s FERC

Gas Tariff identified as FTS-1 E-2 (WWP), or its successor, multiplied by the

appropriate Effective Period Percentage as shown in the following table.

Effective Period Percentage

11/1/01-10/31/02 75%

11/1/02-10/31/03 80%

11/1/03-10/31/04 85%

11/1/04-10/31/05 90%

11/1/05-10/31/06 95%

11/1/06-10/31/25 100%

The Daily Delivery Charge shall be equal to the 100% load factor equivalent

of the FTS-1 E-2 rate, or its successor, and shall be multiplied by the

positive difference between (a) volumes delivered and (b) the contract MDQ

times the appropriate Effective Period Percentage.

Daily Delivery Charge = [Dth Delivered - (MDQ * Effective Period %)] * 100%

Load Factor Equivalent FTS-1 E-2

/8 The Reservation Charge under this Agreement will equal the Daily Index

Price for Malin minus the Daily Index Price for Stanfield minus the Delivery

Charge minus ACA minus an allowance for fuel. The allowance for fuel shall

be determined daily as product of the Gas Daily Index Price for Kingsgate

and the applicable fuel and line loss percentage for the Kingsgate to Malin

Path. The Reservation Charge shall not be less than $0.00/Dth.