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Qverview of the ]~te Review Process <br /> <br />The Company submits the rate application to the SBTSA by November <br />30. Normally, the consultants review the rate application <br />package during December and January and prepare draft recommenda- <br />tions. These recommendations are reviewed with the SBTSA and the <br />Company during the first or second week of February. Based upon <br />this review, any necessary changes are made and the final report <br />and recommendations are prepared and submitted to the SBTSA by <br />February 28. If a rate adjustment has been requested and is <br />approved by the SBTiA, a recommendation would be made to the City <br />Councils with rates effective no later than October 1 of that <br />year (see Exhibit III). <br /> <br />The review process consists of the following ma3or tasks: <br /> <br /> o Direct and indirect expenses are reviewed for <br /> reasonableness. <br /> <br /> o Projections from prior years are compared to actual results <br /> and explanations are sought for significant variances. <br /> <br /> o Allocations are reviewed for reasonableness. <br /> <br /> o Pass-through costs are reviewed for reasonableness. <br /> <br /> o Allocations between franchised and non-franchised expenses <br /> are reviewed. <br /> <br /> o A reasonable profit is determined. <br /> <br /> o Cost-savings program proposals are reviewed. <br /> <br /> o The final revenue requirement is calculated. <br /> <br /> o The balancing account is adjusted for actual results from <br /> the preceding 2ear. <br /> <br /> o Operating statistics are reviewed to identify any favorable <br /> or unfavorable trends and relationship to revenue and <br /> expense trends. <br /> <br /> <br />