TNAG-0638-FCO40-786-Supplies-of-electricity-for-Hong-Kong-1977 — Page 133

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Tariff Adjustments.

C.

1.

2.

3.

4.

At each Auditing review a "Development Fund element" will be computed for each of the four quarters of the current year in such a way that, taken together, these four Development Fund elements will be equivalent to the budgeted Development Fund transfer for that year which corresponds to the updated current tariff rate determined according to the provisions of B2 or B3 above. The Development Fund elements will thereafter be treated as invariable for the purpose of the tariff adjustment calculations.

As soon as possible after the end of each quarter, a calculation will be made to establish the "combined return" for the "base year", i.e. for the twelve months ending with the quarter in question. Such combined return will be obtained by deducting from revenue all operating costs including depreciation, all tax items, and the Development Fund elements determined in accordance with 1. above. Similarly, the Permitted Return will be computed for the base year.

If, for the base year, the combined return is different from the Permitted Return, a tariff adjustment will be calculated such that, had it applied during the base year, the combined return would have equalled the Permitted Return; this adjustment will, from the first day of the second month following the base year, be applied equally to each kWh sold.

The aggregate of all quarterly adjustments determined in accordance with 3. above will be known as "cost of service adjustment", and will appear in each electricity bill together with the tariff rate(s), fuel clause and, where applicable, rate reduction rebates.

5.

From time to time China Light may, after consulting the Government, consolidate the "cost of service adjustment" in the tariff rates, after which the aggregation of the adjustments referred to in 4. above will commence anew.

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