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Agreement Between Metropolitan Water District of Southern California City of Santa Ana, and Municipal Water District of Orange County for In -Lieu Treated Deliveries to MWDOC-Metropolitan Cyclic Account dollar. For example, if the November 2019 CPI-U was 269.005 and the November 2018 CPI-U was 259.064, then the increase for January 1, 2020 would be 3.84% or up to $234 per acre-foot. Section 6. Determination of Cost -offset Credit Term. Metropolitan, at its sole discretion, will determine the Cost -offset Credit Term. Metropolitan will make such determination based on an estimate of costs incurred by the City as a result of taking In -Lieu Treated Deliveries of additional treated water at Metropolitan's request that the City would not otherwise have taken, minus the costs that the City would have incurred if it produced an equivalent amount of water from the Orange County Groundwater Basin. The City will submit its avoided cost estimates to Metropolitan, which Metropolitan will review in addition to historical production cost estimates. Metropolitan will determine the cost -offset credit term and specify the amount in each purchase agreement. The City may, at any time prior to reconciliation and certification described in Section 8, request a redetermination of the Cost -Offset Credit Term, by submitting documentation that its groundwater production costs have changed. Metropolitan may, in its sole discretion, change the Cost -Offset Credit Term upon review of any such additional documentation and confirmation of changes in costs. Section 7. Billing Procedures. Metropolitan will bill the City the Treatment Surcharge in effect at the time the City certifies the In -Lieu Treated Deliveries, in the same manner as Metropolitan bills the City for all other water sales. Metropolitan will pay the City the Cost -Offset Credit Term for In -Lieu Treated Deliveries by applying a credit to the City's meter invoiced amounts, which credit is subject to the certification and reconciliation process described in Section 8. Section 8. Certification and Reconciliation of In -Lieu Treated Deliveries. The City shall submit monthly certifications of In -Lieu Treated Deliveries pursuant to this Agreement consistent with Metropolitan's Administrative Code, sections 4506 to 4507. Such certifications will be made pursuant to the Certification Procedures For In -Lieu Treated Deliveries for Cyclic Agreement Between Metropolitan Water District of Southern California, City of Santa Ana, and Municipal Water District of Orange County, attached hereto and incorporated herein as Attachment 1. On a monthly basis Metropolitan will review these certifications for conformance with the operating plans submitted pursuant to the Certification Procedures For In -Lieu Treated Deliveries for Cyclic Agreement Between Metropolitan Water District of Southern California, City of Santa Ana, and Municipal Water District of Orange County. Metropolitan will process certifications of these deliveries made pursuant to this Agreement in accordance with the agreed -upon operating plan in order to ensure In -Lieu Treated Deliveries were made in addition to normal Full -Service deliveries and as a result of actions to reduce groundwater pumping. #11706v4 2 5 E -6