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<br /> with LCRA's system-wide salary administration plan. However, <br /> CITY shall have the right to increase the proposed wage and <br /> salary rates and particularly when such changes are necessary <br /> to provide for an orderly transition of LCRA SYSTEM employees <br /> to the status of CITY employees. <br /> LCRA will operate and maintain the SYSTEM in accord- <br /> ance with the approved ANNUAL BUDGET. To the extent ANNUAL <br /> BUDGET modifications are required during the CONTRACT YEAR, and <br /> particularly in order to provide for the safe, reliable, <br /> economical and efficient operation and maintenance of the SYS- <br /> TEM by LCRA, CITY will not unreasonably withhold its approval <br /> of any ANNUAL BUDGET modifications proposed by LCRA. <br /> CITY shall have the right to evaluate the impact of <br /> ANNUAL BUDGET modifications for renewals and replacements and <br /> major capital additions on CITY's retail rates and/or financing <br /> capabilities and any adverse impact thereto may control CITY's <br /> approval except to the extent the proposed modification is <br /> required to correct an unsafe or potentially unsafe condition <br /> on the SYSTEM. <br /> 2.6 CITY will establish rates, fees and charges, <br /> including applicable terms and conditions of service <br /> (hereinafter "SCHEDULE OF RATES") and regulations of electric <br /> service (hereinafter "REGULATIONS"), for the various classes <br /> PRIVILEGED AND CONFIDENTIAL <br /> - Operating Agreement - Page 6- <br />