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<br />CONTRACT YEAR and particularly in order to maintain safe, <br />reliable, economical and efficient operation of the SYSTEM by <br /> <br />LCRA, CITY will not unreasonably withhold its approval of any <br />annual OPERATING BUDGET or CAPITAL BUDGET modifications <br /> <br />proposed by LCRA. <br /> <br />CITY shall have the right to evaluate the impact of any <br />annual CAPITAL BUDGET modifications for renewals and <br /> <br />replacements and major capital additions on CITY's retail rates <br /> <br />and/or financing capabilities and any adverse impact thereto <br />may control CITY's approval except to the extent the proposed <br /> <br />modification is required to correct an unsafe or potentially <br /> <br />unsafe condition on the SYSTEM. <br /> <br />2.6 <br /> <br />CITY will establish rates, fees and charges, <br /> <br />including applicable terms and conditions of service <br /> <br />(hereinafter "SCHEDULE OF RATES") and regulations of electric <br />service (hereinafter "RULES AND REGULATIONS"), for the various <br /> <br />classes of CUSTOMERS served from the SYSTEM. <br /> <br />"CUSTOMER" for <br /> <br />purposes of this Agreement, shall mean all retail consumers of <br /> <br />electric power and energy directly connected to the SYSTEM at <br />the time of the purchase or which may be directly connected in <br /> <br />the future to the SYSTEM after purchase of the SYSTEM by CITY <br /> <br />from LCRA. <br /> <br />From time to time thereafter, CITY may adopt, by <br /> <br />-7- <br />