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<br />(3) The rate for water usage after October 1, 1991, <br />shall be as determined by the cost of service <br />study as described in Section 7.2. <br />7.2 Every three (3) years, a detailed revenue <br />requirement shall be developed on an actual historical cost <br />test year basis allowing for reasonable and necessary <br />expenses of providing such water service and allowing for <br />known and measurable adjustments. Such adjustments shall <br />allow for year-end trending and the spreading of <br />non-recurring expenses over an appropriate benefit period. <br />CITY shall be allowed an adequate opportunity to .recover all <br />of its cost of service. The first test year shall be <br />October 1, 1989, through September 30, 1990, and the first <br />detailed cost-of-service study shall be performed by an <br />independent utility rate consultant engaged by CITY during <br />the first two (2) calendar quarters of 1991 based on audited <br />data for the immediate past six (6) months ended September <br />30, 1990. On a three (3) year cycle thereafter, a complete <br />detailed rate study will be performed with the same <br />methodology used in the previous rate study by an <br />independent utility rate consultant engaged by CITY, except <br />that the study shall be based on the entire test year rather <br />than the last six (6) months. In the interim period between <br />complete detailed rate studies, this contract water rate <br />shall be adjusted by CITY using the same methodology adopted <br /> <br />-7- <br />