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<br /> Zgq <br /> a. Project estimated future water sales volumes and revenues under <br /> existing rate levels based on projected number of customers and <br /> water usage per customer taking into consideration historical <br /> growth trends and patterns in customer usage characteristics and <br /> studies by others of future growth trends. <br /> b. Estimate future water system revenues under existing ra~es based <br /> upon the number of customers and sales volume projected in <br /> - Task C.1 above. <br /> c. Develop annual revenue requirements of the water utility based <br /> upon historical and projected future needs and taking into account <br /> expected operational changes and inflation. Revenue <br /> requirements examined will include at least the following: <br /> .. (1) operation and maintenance expense; <br /> (2) capital outlay for equipment and improvements; <br /> (3) debt service on existing and any proposed bond issues; <br /> (4) other cash obligations. <br /> d. Develop alternative cash flow statements for the water utility, <br /> showing application of revenue under existing rate levels to meet <br /> the projected annual revenue requirements. <br /> e. On the basis of the estimated cash flow statements, develop <br /> schedules of revenue level adjustments to meet projected revenue <br /> requirements for sound utility financial operations. <br /> f. Meet with representatives of the utility to discuss the revenue <br /> requirements portion of the study, review the alternative cash flow <br /> statements and select one financial plan for cost allocation and <br /> rate design. <br /> g. Finalize revenue requirements for the selected alternative, taking <br /> into consideration policy direction and comments by Owner <br /> representatives. <br /> 4. Cost of Service Allocations <br /> For a future test year, the revenue requirements, or cost of service to be <br /> met from rates, will be allocated to customer classes for the utility. This <br /> process will include the following elements: <br /> A-7 <br />