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819 negotiation, the office of Public Utility Council, the Public Utility Commission Staff, Large Industrial Customers, Small Industrial Customers, and Low Income Customers, all who have been a part of the past hearings have signed this settlement. It meets public policy goals, mainly it provides for fair treatment of customers, provides for the recovery of investment prudently made to provide service to the public, provides for reasonable transition period, and it provides for the continued service reliability of electric service. Mr. Sparks said the short term settlement in late 1996, TU began meeting with the PUC Staff and others in an attempt to reach a settlement concerning a level of its rates. In the spring, the Company agreed to refund eighty million dollars to customers in August 1997, and freeze rates through December 31, 1997. Mr. Sparks said the key points to this settlement are, while TU Electric could show itself entitled to a rate increase at this time if certain investments that are not recognized in the rate were included. TU Electric is offering rate reduction that will save our customers two hundred sixty three million dollars over the two year period (1998 & 1999). Mr. Sparks said residential customers will see a base rate fall 4% in 1998, and another 1.4% decrease in 1999. Small and mid -size business will get a base rate reduction of 2% decrease beginning in 1998. Large industrial customers will receive a 1% base rate reduction beginning in 1998. TU Electric's earning will be limited, anything earned in excess of a ceiling would be applied to reducing the investment in the power plants, they would also reduces their investment in power plants by redirecting the depreciation that otherwise would contribute to transmission and distribution properties to power plants during the two year period. Mr. Sparks said it is a fair deal to all concerned, and they expect final approval by the PUC quicker. Mr. Sparks said the roll that they are asking the City Council to play is to approve the tariff that implements these rate reductions. The further elements of the settlement will be passed upon by the PUC, but TU election asked that the City Council approve the three tariffs effective as of January 1, 1998, one for each class of customers receiving a rate reduction under the settlement. TU Electric is a member of this community, they understand that the customers depend on them to provide reliable service at a reasonable rate. Mr. Sparks said over the years they have lived up to this expectation as the settlement continues the tradition of meeting