25-AGREEMENT BETWEEN THE CITY OF PARIS AND DAISY FARMS

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(d) Rate Methodology. The Volume Rates subsequeiit to the Initial Rate for Treated Water shall be calculated annually in a Cost of Service Study in accordance with the methodology described in the Wcrter and WastelVuter Cost of Service Study, City of Paris, Texas, June 2010, prepared and submitted by J. Stowe & Co., attached hereto as Exhibit C("2010 CnS.S"), and in accordance with Section 5.3(d). The Parties agree that the rate methodology described and used in the 2010 COSS shall be used in future Cost of Service Studies until the Parties agree to a different rate metiiodology and that Daisy Farms shall be a separate Treated Water customer class in future Cost of Service Studies. The principles of the rate nlethodology to be used until the Parties agree otherwise are as follows: 1. The "Cash Basis" methodology for rate setting; 2. The "Base - Extra Capacity" cost allocation methodology, as sanctioned by the American Water Works Association; The Cost of Service Study shall be based on historical Costs of the System and Treated Water consumption and production data for the Test Year, adjusted for known and measurable changes; 4. The Cost of Service Study and Volume Rate shall be based on historical water consumption and demands for the Test Year for the Delivery Point(s), adjusted for known and measurable changes, and adjusted for water loss on the Paris Treated Water System associated with the distribution and transmission pipes having a diameter of 8" and greater. 5. The lesset• of Daisy Farms' actual peaking ratio, consisting of Daisy Farms' Maximum Day Usage divided by Daisy Farms' average daily Treated Water usage determined through Meter readings during the corresponding Test Year, or an assumed peaking ratio of 1.10 to 1, shall be used to determine the Volume Rate for the subsequent Rate Year_ 6. The Costs of the System allocated to Daisy rarms shall not include any of Paris' costs that have otherwise been directly assigned to Daisy Farms through a charge described in this Agreement in addition to the Volume Charge. 5.3 Billing and Payment. (a) Volume Charge. Each month during the term of this Agreement, Paris shall read the Meter(s) mcasuring Treated Water being provided to Daisy Farms. The number of gallons of Treated Water measured by the Meter(s) shall be multiplied by the Volume Rate to determine the Volume Charge. Paris shall prepare and deliver to Daisy Farms a statement showing the Volume Charge for all Treated Water delivered to Daisy Farms. Payment shall be made by thc l Oth day after receipt of the stateinent. (b) Peaking Ratio Surcharge. Commencing with the Secondary Rate Ternz (Year 6), Daisy Farms shall he subject to a peaking ratio limitation, with such peaking limitation being a 1.10 to 1 ratio of Daisy Farms' Maximum Day Usage during each Fiscal Year divided by Daisy Farms' average daily Treated Water usage determined through Meter readings during the corresponding Fiscal Year. The Volume Rate for each Cost of Service Study shall be determined using the lesser of Daisy Farms' actual peaking ratio, consisting of Daisy Farms' Maximum Day Usage divided by Daisy Farms' average daily Treated Water usage determined through Meter readings during the corresponding Test Year, or an assumed Page 10 of 23 207