METROPOLITAN WATER DISTRICT OF SO. CALIF ET AL

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In the first Fiscal Year and Fiscal Year n+1 of production of Allowable Yield, each amortization for the calculation of ACCost shall be prorated by the number of days needed to achieve exactly n years of amortization following the first day of production of Allowable Yield. C. For variable -interest rate financing, annual payments shall be computed based on the actual payments made in the applicable Fiscal Year according to OCWD's financing documents. Any principal payments toward the Project capital cost before the Project operation will be treated as cash. OCWD shall provide Metropolitan with the accumulated paid principal pursuant to Section 5.1. d. For fixed -interest rate financing with a non -uniform annual payment schedule, an economically -equivalent uniform annual payment schedule shall be calculated based on an "Internal Rate of Return" analysis to establish the annualized capital cost. e. Project capital costs not covered by a financing arrangement described above and all grants and contributions as defined in Section 5.3 shall be amortized over 25 years at an interest rate equal to the lesser of: • Metropolitan's most recent weighted cost of long-term debt on June 30 in the year the capital expenditure occurred; or • the Fiscal Year average of the 25-bond Revenue Bond Index (RBI) as published in the Bond Buyer, or such other index that may replace the RBI, over the most recent Fiscal Year prior to the date the replacement cost was incurred. All grants or contributions shall be amortized as negative capital cost values beginning in the year that money was received. f. After the first Fiscal Year of operation, only refinancing changes which lower the Annualized Capital Component shall be included in the Annualized Capital Component calculation of each subsequent Fiscal Year. g. If the Project capital cost is part of a broad financing arrangement, annual payments shall be calculated by prorating the annual payments of the broad financing using the ratio of the Project capital cost to the initial principal of the broad financing arrangement. 4. The Annualized Capital Component (ACCom) in dollars per acre-foot for purposes of determining the Project Unit Cost each Fiscal Year shall be calculated using the following formula: ACCom = ACCost / Allowable Yield 5. When Recycled Water is delivered to OCSD plants, the Annualized Capital Component shall be adjusted as follows: Agreement 22156 -17-