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<br />year. Instead, the SFPUC may prorate a positive ending balance over a period of up to three <br />successive years in order to avoid fluctuating decreases and increases in wholesale rates. <br /> <br />a. If a positive balance is maintained for three successive years and <br />represents 10 percent or more of the Wholesale Revenue Requirement for the most recent <br />fiscal year, the SFPUC shall consult with BAWSCA as to the Wholesale Customers' preferred <br />application of the balance. The Wholesale Customers shall, through BAWSCA, direct that the <br />positive balance be applied to one or more of the following purposes: (a) transfer to the <br />Wholesale Revenue Coverage Reserve, (b) amortization of any remaining negative balance <br />from the ending balancing account under the 1984 Agreement, (c) prepayment of the existing <br />asset balance under Section 5.03, (d) water conservation or water supply projects administered <br />by or through BAWSCA, (e) immediate reduction of wholesale rates, or (f) continued retention <br />for future rate stabilization purposes. In the absence of a direction from BAWSCA, the SFPUC <br />shall continue to retain the balance for rate stabilization in subsequent years. <br /> <br />b. If the amount in the balancing account is owed to the SFPUC (a <br />negative balance), the SFPUC shall not be obligated to apply all or any part of the negative <br />balance in establishing wholesale rates for the immediately ensuring year. Instead, the SFPUC <br />may prorate the negative balance in whole or in part over multiple years in order to avoid <br />fluctuating increases and decreases in wholesale rates. <br /> <br />6.06 Wholesale Revenue CoveraQe Reserve <br />A. The SFPUC may include in wholesale rates for any fiscal year an additional <br />dollar amount ("Wholesale Revenue Coverage"), which for any fiscal year shall equal the <br />following: <br /> <br />1. The lesser of (i) 25% of the Wholesale Customers' share of Net Annual <br />Debt Service for that fiscal year determined as described in Section 5.04.A, or (ii) the amount <br />necessary to meet the Wholesale Customers' proportionate share of Debt Service coverage <br />required by then-current Indebtedness for that fiscal year, minus <br /> <br />2. A credit for (i) the actual amounts previously deposited in the "Wholesale <br />Revenue Coverage Reserve" (as defined in subsection B below), (ii) accrued interest on the <br />amounts on deposit in the Wholesale Revenue Coverage Reserve, and (iii) an amount equal to <br />any additional interest that would have accrued on the actual amounts previously deposited in <br /> <br />-56- <br /> <br />1840795.8 <br />