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<br />A. All In Lieu Water delivered to the Participating Pumpers shall be (1) temporary <br />and interruptible in nature and (2) at the sole discretion of the SFPUC basE?d on the total volume <br />of water available to the Regional Water System. <br /> <br />B. All In Lieu Water delivered to the Participating Pumpers shall be considered a <br />delivery of water to storage and shall not be construed to affect or increase the Individual <br />Supply Guarantees of these wholesale customers or to otherwise entitle them to any claim of <br />water in excess of their Individual Supply Guarantees or their Interim Supply Allocations. <br />Furthermore, Environmental Enhancement Surcharges authorized under Section 4.04 will not <br />be applied by the SFPUC to any quantity of In Lieu Water that is delivered to the Participating <br />Pumpers, but will instead be based solely on Participating Pumper water deliveries in excess of <br />their respective Interim Supply Allocation~. <br /> <br />C. Any operation and maintenance expenses incurred by the Participating Pumpers <br />and the SFPUC that are related to the operation of Regional Program wells and related assets <br />shall be included as Regional pumping expenses under Section 5.05.B and included as part of <br />the Wholesale Revenue Requirement. For rate setting purposes, estimated Regional Program <br />operation and maintenance expenses shall be used as set forth in Section 6.01. Operation and <br />maintenance expenses associated with the Participating Pumpers' existing wells that do not <br />provide Regional benefits shall not be included in the Wholesale Revenue Requirement. On a <br />case-by-case basis, the SFPUC may include Participating Pumper existing well operation and <br />maintenance expenses in the Wholesale Revenue Requirement provided that such expenses <br />(1) are solely attributable to Regional Program operations and (2) are not caused by the <br />Participating Pumper's failure to operate and maintain its existing wells in a reasonable and <br />prudent manner consistent with water utility industry standards. <br /> <br />D. The SFPUC will audit operation and maintenance expenses submitted by the <br />Participating Pumpers for reimbursement to confirm that such costs were incurred as a result of <br />operating Regional Program wells and related assets. Costs associated with the use of <br />Program facilities for Direct Retail or Direct Wholesale purposes, or that do not otherwise <br />provide Regional benefits, shall not be included in the Wholesale Revenue Requirement. The <br />SFPUC is responsible for resolving disputes with the Participating Pumpers concerning expense <br />allocations. Program expense documentation, including documentation of negotiation and <br />settlement of disputed costs, will be available for review during the Compliance Audit described <br /> <br />-25- <br /> <br />1840795.8 <br />