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J <br />T <br />specifications (if applicable) for such Major Replacements shall be prepared by the. Managing <br />Participant and submitted to the Operating Advisory Committee for review. Each Participant shall <br />pay its pro rata share of the cost of any such work based on the following. For Major Replacements <br />costing less than or equal to $500,000, the expense shall be treated as an O&M Expense and billed <br />according to the ordinary O&M Expense billing procedure. For purposes of Major Replacements <br />costing in excess of $500,00b, the expense shall be treated as a capital expense, with funding <br />temporarily supplied by the Managing Participant's short term borrowing to be reimbursed by the <br />Participants with interest within a 270-day repayment period that runs from the date of notice to <br />proceed to the contractor. Such Major Replacements must be paid by the Participants in the ratio <br />of their respective Demand, Pumping or Distribution Allocation Factors, as applicable. A Participant <br />may prepay its prorated share of a Major Replacement costing in excess of $500,000 without penalty. <br />A Participant shall never be required to pay for portions of replacements, additions or transmission <br />facilities that provide capacity or water solely to other Participants. <br />3.9 Operation in the Event of a Loss in Production or Pumping Capacity <br />If production of water from the Plant is lost or substantially reduced, any Participant may <br />request the Managing Participant Director to provide interim alternative water supply service. The <br />cost of such interim alternative water service shall be the total usage by the Participant (in thousands <br />of gallons) times the current budgeted O&M Expense (computed on the basis of thousand gallon <br />units). Provided, however, if the Participant takes water from the alternate source for a period of <br />A:\EWB 10975.RV 1 <br />L.D. File No. 80-99146-01 <br />22 <br />February 9, 2000 <br />