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. . specifications (if applicable) for such Major Replacements shall be prepared by the. Managing Participant and submitted to the Operating Advisory Committee for review. Each Participant shall pay its pro rata share of the cost of any such work based on the following. For Major Replacements costing less than or equal to $500,000, the expense shall be treated as an O&M Expense and billed according to the ordinary O&M Expense billing procedure. For purposes of Major Replacements costing in excess of $500,000, the expense shall be treated as a capital expense, with funding temporarily supplied by the Managing Participant's short term borrowing to be reimbursed by the Participants with interest within a 270-day repayment period that runs from the date of notice to proceed to the contractor. Such Major Replacements must be paid by the Participants in the ratio of their respective Demand, Pumping or Distribution Allocation Factors, as applicable. A Participant may prepay its prorated share of a Major Replacement costing in excess of $500,000 without penalty. A Participant shall never be required to pay for portions of replacements, additions or transmission facilities that provide capacity or water solely to other Participants. 3.9 Operation in the Event ofa Loss in Production or Pumping Capacit;y If production of water from the Plant is lost or substantially reduced, any Participant may request the Managing Participant Director to provide interim alternative water supply service. The cost of such interim alternative water service shall be the total usage by the Participant (in thousands of gallons) times the current budgeted O&M Expense (computed on the basis of thousand gallon units). Provided, however, if the Participant takes water from the alternate source for a period of A:\EWBI097S.RVI L.D. File No. 80..99146-01 February 9. 2000 22