Procedures for Reviewing Financial Plans,
and for Tariff Adjustments
Annex I
A.
Financing Reviews.
1.
In order to establish agreement concerning the levels of projected tariffs, and the degree of future participation by consumers in the financing of capital expenditure, a Financing Review will be conducted jointly by the Government and the Companies
a)
b)
c)
whenever financing plans for major additions to the Companies' system have been finalised;
before the period covered by the previous Financing Review expires; and/or
when required in accordance with B2.c) below.
2.
For each Financing Review, the Companies will make available their revenue and capital budgets, as well as financial models covering the preceding, the current and at least four subsequent years.
3.
In each Financing Review, the following components of the overall plan shall be examined:
a) the pattern of demand and sales of electricity,
together with the appropriate revenues;
b)
c)
d)
e)
f)
g)
all operating and capital expenditures, estimated in accordance with the most probable escalation values available, as well as appropriate tax items;
the amount of new capital, if any, to be raised as equity;
the amount of export credit in respect of generation (or other) equipment or other long term loans; also, the corresponding repayment figures covering both principal and interest;
the amount of retained earnings to be reinvested by the Companies;
annual tariff increments, to be so calculated that they are evenly or fairly evenly spread over the whole period referred to in 2. above, and that over the same time span the Companies together will have a positive, but not excessive, cash and bank balance (see B2.a)ii) below);
for each year considered, the estimated excess of the Scheme of Control net revenue over the Permitted Return, arising from the assumptions in a) to c) above and following from the calculation in f) above, will represent the "budgeted Development Fund transfer". Such budgeted Development Fund transfers together with all other available funds shall at all times be sufficient to meet the Companies' full financial commitments.