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2.
average net fixed assets of China Light and the new Company shall be unrestricted to shareholders. "Average net fixed assets" for any year means the average of the opening balance for that year of the investments in property, plant and equipment (including incomplete construction) less depreciation charged on the basis of the Inland Revenue Schedule and of the year end closing balance, similarly calculated, as shown by the
China Light records of China Light and of the new Company.
and the new Company will agree on a basis for the division between them of the unrestricted shareholder return.
If the gross tariff revenues of China Light in any year shall exceed the sum for both companies of
a) operating costs
b)
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taxes, including profits tax,
c)
the unrestricted return to shareholders described in 1 above, and
d)
the charge referred to in paragraph 3 below,
LA MINUMAN MI
3*
4.
such excess shall be added to a Special Investment Reserve. Commencing in the third vear after implementation an annual charge the amount of which is equal to 8 per cent per annum of the average of the opening and closing balances of the Special Investment Reserve for each year will accrue. amount will be credited to a Rate Reduction Reserve, will be liquidated by reductions in charges to consumers. Ordinarily, reductions will be applied by means of a discount
If not so treated, or rebate in the immediately following year.
This
which
the amounts shall be carried in the Pate Reduction Account (which may be a memorandum account) the balance in which may not exceed the charge for the year in question and the preceding three years.
;
The balance in the Special Investment Reserve (SIR) shall be reduced by rate reduction to the consumer whenever revenues would otherwise be at a level such that after meeting all obligations, earning the permitted amount, and providing for new facilities, surplus cash would accumulate in the enterprise. Illustrative examples of the operation of the Control Scheme in periods of both ascending and descending SIR balances follow as an addendum to this Appendix.