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The large percentage increase for industrials proposed by the Company and recommended pursuant to the Settlement Agreement is attributable to historic under-allocation of fixed costs and an application of an allocation methodology that all parties agree would have a reasonable expectation of adoption by the Railroad Commission if this case were to be reviewed on appeal. The allocation is consistent with the allocation methodology approved by the Commission in a Dallas distribution case at the end of last year. Despite the large percentage increase in industrial rates, TXU cannot charge those rates until existing contracts with industrial customers expire. Ifa given industrial customer has competitive fuel options, that customer may remain a customer of TXU under a lower negotiated contract rate, regardless of the tariffs approved in this case. Cities' consultants approved the proposed service charges, and these charges will result in $16,040 in additional system revenues. One final important note is that TXU's filing included all costs of natural gas in base rates. Cities' consultants recommended approving for base rate inclusion only the portion of gas costs authorized by the Railroad Commission in TXU's last city gate rate proceeding. The Settlement removes all gas costs from base rates. That should be of benefit to Cities in the future in explaining to citizens that the Cities have no regulatory authority over the cost of the commodity (the price of which has become extremely volatile during the last year), but rather only over the costs of the delivery of the commodity from the city gate to the end user. Percentage ~'hanges Resulting From Settlement % Change In RS % Change in Total % Change In % Change in Total Margin RS Commercial Margin Commercial (gas costs excluded) (gas costs included) (gas costs excluded) (gas costs included) Athens 41.32 12.22 61.02 9.5 Bells 14.89 -0.41 50.70 2.9 Clarksville -8.12 -5.76 24.50 0.88 Corsicana 19.78 3.81 -17.01 -6.13 Crandall 61.78 13.45 36.82 6.17 Denison 15.47 5.65 5.77 2.42 Ennis -1.30 1.61 -5.08 1.24 Farmersville 4.16 0.42 9.51 0.85 Gainesville 48.24 11.16 -10.49 -3.14 Greenville 22.43 4.56 22.29 4.12 Howe 182.43 21.18 85.32 9.10 Kaufman 10.45 0.60 13.41 3.04 Malakoff 104.89 17.07 97.47 9.52 Maypearl -4.01 -0.82 -7.94 - 1.44 Midlothian -3.77 -0.66 -6.82 0.76