Common use of Service Facilities Clause in Contracts

Service Facilities. 3.01 Expansion / Improvement of Service Facilities --------------------------------------------- (a) The Parties recognize that normal operations of the Service Facilities require some ongoing level of capital improvement and expenditures. Also capital improvements and expenditures may be required to meet local, state or Federal regulations. To the degree that these expenditures are required to maintain and operate the Service Facilities to the benefit of all the Service users, the funding for such capital improvements shall be the responsibility of the Service Provider. The Service Receiver will be obligated to participate in these capital improvements and expenditures but will have the option of funding its share of the capital expenditures, in which case the charges associated with the capital improvement and expenditures will not be included in Capital Carrying Charges and the Service Provider will not charge the Service Receiver for depreciation. If the Service Receiver elects to fund its share of the capital improvement and expenditure, its share will be based upon its percentage usage or consumption during the past twelve (12) months. If, however, the Service Receiver elects not to fund its share of the capital expenditure, it will be charged start-up costs and on-going depreciation and Capital Carrying Charges based upon its Budgeted Service Quantity Percentage in future years. (b) To the extent that capital improvements and expenditures are known, they will be included in the annual capital budget by the Service Provider and reviewed at budget time with the Service Receiver. Individual projects included in the capital budget with costs totaling less than Two Hundred Thousand Dollars ($200,000) will be performed at the sole discretion of the Service Provider, provided that the sum total of all such projects for an individual Service does not exceed Six Hundred Thousand Dollars ($600,000) in any one calendar year. For a project totaling less than Two Hundred Thousand Dollars ($200,000) but not included in the annual capital budget, the Service Provider, after reviewing the project with the Service Receiver, may proceed at its sole discretion with implementation of the project provided that the aggregate sum of all projects applicable to that particular Service does not exceed Six Hundred Thousand Dollars ($600,000) for that calendar year. (c) For capital improvements and expenditures in excess of Two Hundred Thousand Dollars ($200,000) for any single project or the aggregate sum of such projects exceeding Six Hundred Thousand Dollars ($600,000) for a particular Service during a Contract Year, the Service Provider will review such capital improvements and expenditures with and receive the approval of the Service Receiver. (d) To the extent that capital investment for the improvement or expansion of the Service Facilities are made to meet a specific need of either the Service Provider or the Service Receiver then the Party whose needs are being met will be responsible for funding such capital improvements and expenditures and all operating costs associated with such capital investments. (e) If the Service Provider identifies a capital expenditure it considers will provide sufficient cost savings to justify the expenditure, then the Service Receiver will be asked to fund the expenditure in proportion to the Service Receiver's consumption of such Service during the previous twelve (12) month period. If the Service Receiver decides not to participate in the cost saving project and the Service Provider proceeds with the project, then no Capital Carrying Charges for such cost savings project will accrue to the Service Receiver, and only the Service Provider shall receive the benefit of any cost savings achieved from the project. The Service Charge for the Service to the Service Receiver, if it decides not to participate in the project, shall be computed to reflect the costs that the Service Provider would have incurred in providing the Service had the cost saving project not been done. (f) The Service Receiver also shall have the right to identify cost savings projects and if the Service Provider elects not to participate in such projects, the Service Receiver can direct that the Service Provider implement the projects with funding by the Service Receiver and all cost benefits accruing exclusively to the Service Receiver.