3. Disposition of Operating Reserve Account.

DWR shall separately notify CPUC in writing each time the Operating Reserve Account Requirement is reduced pursuant to the Bond Indenture. Whenever such reduction in the Operating Reserve Account Requirement occurs, any excess amounts in the Operating Reserve Account ("Excess Amounts") will be used at such time to satisfy any deficiencies existing at such time in the payment of Items 1-8 under "Power Charge Revenues" in Section III of the Summary of Material Terms (including repayment in full of the General Fund of the State). Unless otherwise agreed by both the CPUC and DWR, each acting in their own discretion, any Excess Amounts remaining after application to the uses described in the preceding sentence, shall be used, at the direction of CPUC, after consultation with DWR, to (i) adjust DWR Charges or (ii) with the agreement of DWR, reduce debt outstanding under the proposed Bond Indenture, in all instances, upon consideration of the interests of the retail customers of the Electrical Corporations, DWR and, if applicable, ESP retail customers.