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<br />7.3 Every three (3) years, a detailed reven~e requirement <br />shall be developed on an actual historical cost test year basis <br />allowing for reasonable and necessary expenses of providing such <br />water service and allowing for known and measurable adjustments. <br />Such adjustments should allow for year-end trending and the <br />spreading of non-recurring expenses over an appropriate benefit <br />period. CITY shall be allowed an adequate opportunity to recover <br />all of its cost of service. The first test year shall be October <br />1, 1989, through September 30, 1990, and the first detailed <br />cost-of-service study shall be performed by an independent <br />utility rate consultant during the first two (2) calendar <br />quarters of 1991, based on audited data for the immediate past <br />fiscal year ended September 30, 1990. On a three (3) year cycle <br />thereafter, a complete detailed rate study will be performed with <br />the same methodology used in the previous rate study by an <br />independent utility rate consultant. In the interim period <br />between complete detailed rate studies, this contract water rate <br />shall be adjusted by CITY using the same methodology adopted at <br />the time of the last complete detailed rate study, utilizing the <br />actual operating data for the twelve month period ending <br />September 30th of the prior year, adjusted for known and <br />measurable changes in cost data which may have occurred since the <br />last audited statement. <br /> <br />-6- <br />