RES 81036 - Laserfiche WebLink

EXHIBIT B The annual return on equity (ROE) is defined as the difference between franchise revenue and allowable franchise expenses. Franchise expenses shall include corporate taxes calculated at prevailing California and Federal tax rates, and shall include expenses and reserves established in accordance with the initial plan put forth in Section 2. of Resolution No. 81-36. The ROE shall be determined annually covering a twelve ~?'month fiscal year ending each March 31. The minimum and maximum ROE limitations shall be calculated by dividing the average annual return on equity for the period April 1, 1980 through March 31, 1983 by the average annual equity base for the same three year period. When the resulting perenrage is greater than the maximum ROE limitation, the excess revenues over and above the maximum limitations shall be held in a reserve to defray future rate increases. When the result- ing percentage is less than the minimum ROE limitation the de- ficiency in revenues shall be recoverable from future timely rate increases. The equity base shall be the total of amounts as of the last day of the preceding fiscal year and shall include all stock- holder advances to the companies capital or common stock re- tained earnings and net worth of Pleasanton Garbage Service and M & M Land Company but excluding Tri-Valley Pumping Service. The equity base shall be reduced by the adjusted value of any unamoritized covenant or franchise costs deferred as of the last day of each fiscal year. The adjusted value of these deferred costs shall be equal to the book value minus 52.5% representing the composite tax effect of Federal and California tax rates.