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<br />other ways, it will provide a written report to BAWSCA. The report will contain (1) a description <br />of proposed covenant(s) in the bond indenture; (2) an explanation of how savings are expected <br />to be achieved (e.g., increase in the SFPUC's credit rating over the then-current level; ability to <br />obtain credit enhancement, etc.); (3) the estimated all-in true interest cost savings; (4) a <br />comparison of the Wholesale Revenue Requirements using the Debt Service coverage <br />limitation in subsection A and under the proposed methodology; and (5) a comparison of the <br />respective monetary benefits expected to be received by both Retail and Wholesale Customers. <br />The SFPUC and BAWSCA agree to meet and confer in good faith about the proposed changes. <br /> <br />F. Any increase in Debt Service coverage proposed by the SFPUC shall be <br />commensurate with Proportional Water Use by Retail and Wholesale Customers. If the SFPUC <br />demonstrates that an increase in Debt Service coverage will result in equivalent percentage <br />reductions in total Wholesale and Retail Debt Service payments over the life of the proposed <br />new Indebtedness, based on Proportional Water Use, BAWSCA may agree to a modification of <br />the Wholesale Revenue Coverage requirement in subsection A. If BAWSCA .does not agree to <br />a proposed modification in coverage requirements in the covenants for new Indebtedness, <br />SFPUC may nevertheless proceed with the modification and the issuance of new Indebtedness. <br />Any Wholesale Customer, or BAWSCA, may challenge an increase in the Wholesale Revenue <br />Requirement resulting from the modification in' Debt Service coverage through arbitration as <br />provided in Section 8.01.A. If the arbitrator finds that the increase in Debt Service coverage <br />(1) did not and will not result in equivalent percentage reductions in total Wholesale and Retail <br />Debt Service payments over the life of the proposed new Indebtedness, based on Proportional <br />Water Use, or (2) was n.ot commensurate with Proportional Water Use, the arbitrator may order <br />the Wholesale Revenue Requirement to be recalculated both retrospectively and prospectively <br />to eliminate the differential impact to Wholesale or Retail Customers, subject to the limitation in <br />Section 8.01.C. <br /> <br />6.07 Working Capital Requirement <br />A. The SFPUC maintains working capital in the form of unappropriated reserves for <br />the purpose of bridging the gap between when the SFPUC incurs operating expenses required <br />to provide service and when it receives revenues from its Retail and Wholesale Customers. <br />The Wholesale Customers shall fund their share of working capital as part of the annual <br />Wholesale Revenue Requirement calculation. The amount of wholesale working capital for <br />which the Wholesale Customers will be responsible will be determined using the BO-day <br />standard formula approach. <br /> <br />-58- <br /> <br />1840795.8 <br />