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(1) A cost of service report and operating statement for City or such other service
area appropriate for establishing local rates;
(2) Copies of statistical and operating reports filed with other regulatory agencies
such as the Federal Communications Commission, Federal Power Commission or
the Texas Railroad Commission.
(3) A copy of annual and interim reports prepared for release to stockholders; and
(4) Such other reports or special information as may reasonably be required by City
for supervision of Utility and for the regulation of local rates and service.
B. Change in Rates. In connection with consideration of a change in basic rates, Utility
shall furnish to City such information as is reasonably required for City to evaluate and
determine the rate base, operating income and expenses, and a fair rate of return, the
burden of proof being with Utility. In addition, Utility may file, and shall file if requested
by City, schedules of present and proposed rates, analysis of customer bills or such other
information necessary for the verification of revenue effect of proposed rates, schedules of
rates in other jurisdictions, and such other. information City may reasonably request for a
full and fair consideration of a change in rates or service. If appropriate for a fair deter-
mination of local rates, City may -consider a service area beyond its city limits and may re-
quire information thereof from Utility.
C. Test Year. Any future requests by Utility for rate increases shall use as their "Test
Year', t e Fiscal year of Utility and shall be based upon financial information pertaining
to such fiscal year.
D. Certification. City hereby requires that information furnished by Utility to City be
supped under o by an appropriate official of Utility as to correctness, authenticity and
adherence to accepted practices or recognized standards. In regard to a request by Utility
for a change in rates, City hereby requires that such material filed in connection therewith
that relates to Utility's set of books be certified by a Certified Public Accountant. For
communications utilities, such certification shall also verify adherence to standard
and current separations practices recognized by City.
E. Standards. City may associate and contract with other cities to adopt standard
financia reporting forms, uniform standards of service, conditions of service, deposit
requirements, etc. City may require Utility to use or follow such standards developed
in an association of cities or may require Utility to sue or follow such other standards
or requirements as may be reasonably appropriate.
SECTION V.
EXPENSES
A. All reasonable and necessary expenses of operating Utility shall be allowed in
the determination of net operating revenue. Expenses included in annual reports or
other reports to City shall be actual expenses recorded on Utility's books. When filing
for a rate increase, Utility shall show actual revenue and expenses recorded on books
and adjustments necessary in order to properly present net operating revenue for the
period under review. Depreciation expense shall be based upon original cost and not
upon other measures of value of assets.
B. City may exclude charitable contributions, advertising expense, and other expenses
not reasonably related to Utility's operations. City may also question other expenses
and if Utility fails to prove that these expenses are reasonable and necessary, then such
expenses can be disallowed for rate making purposes.
SECTION VI.
RATE OF RETURN
Utility shall be entitled to a fair return upon the fair value rate base. The rate of return
shall be based on Utility's actual cost of debt capital, a reasonable cost of equity capital,
and shall be sufficient to attract capital at reasonable cost in the market place and to
maintain the financial integrity of Utility.