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<br />because other suburban users did not utilize their full allocation or there otherwise was <br />sufficient water in the Hetch Hetchy system. However, there can be no assurance that the <br />Enterprise will be able to continue to receive water deliveries in excess of its allocation under the <br />Master Water Sales Contract. Further, in the event that San Francisco declares a system <br />shortage, the Enterprise's water deliveries would be reduced based on its allocation under the <br />Master Water Sales Contract, and not on the San Francisco's actual prior water deliveries to the <br />Enterprise. Accordingly, a 10% water shortage in the Hetch Hetchy System would currently <br />reduce water deliveries to the Enterprise by 17.5%. See "RISK FACTORS - Risks Relating to <br />Water Supply." <br /> <br />Historical Wholesale Water Cost <br /> <br />The table below sets forth the history of wholesale water cost increases under the <br />Master Water Sales Contract since Fiscal Year 1998-99 and projected wholesale water cost <br />increases through Fiscal Year 2009-10. See Table 9 and Table 10 for historical and projected <br />water rate increases for the Enterprise. <br /> <br />Table 3 <br />Historical and Projected Wholesale Water Cost Increases <br /> <br />Fiscal Year <br />1998- 99 <br />1999-00 <br />2000-01 <br />2001-02 <br />2002-03 <br />2003-04 <br />2004-05 <br />2005-06 <br />2006-07 <br />2007 -08 <br />2008-09 <br />2009-1 0 <br /> <br />Wholesale <br />Water <br />Rate Increases <br />( 13.0)% <br />35.0 <br />4.4 <br />2.8 <br />0.0 <br />25.7 <br />2.7 <br />0.0 <br />13.3 <br />10.9 <br />10.6 <br />8.9 <br /> <br />Cost Per <br />Acre Foot <br />$261 <br />357 <br />375 <br />383 <br />383 <br />479 <br />492 <br />492 <br />558 <br />619 <br />684 <br />745 <br /> <br />Source: <br /> <br />City of Redwood City. <br /> <br />The Master Water Sales Contract contains a rate setting formula that allocates the cost of <br />operating the Hetch Hetchy system among San Francisco and the suburban water purchasers <br />based on their respective water deliveries. This formula, together with the actual amount of <br />water deliveries to the City. determines the amount that the City pays under the Master Water <br />Sales Contract. Accordingly, the City anticipates that its cost of acquiring water from San <br />Francisco will increase in the future as San Francisco continues to implement its capital <br />improvement plan for the Hetch Water System and the resulting costs of operating the Hetch <br />Hetchy system continue to increase. See "RISK FACTORS - Wholesale Water Costs." <br /> <br />21 <br />