If the modeling policy for gross ups is changed, what impact does this have on future recovery structures?

When the modeling policy for gross ups is changed, the recovery structures for future calculations will default to the newly set gross up percentage. This means that any adjustments or updates made to the gross up policy will automatically influence how recoveries are structured in subsequent periods. In essence, a new gross up percentage reflects the latest considerations of factors affecting expenses and is intended to ensure that cost recoveries are aligned with current policies and practices.

This approach allows entities to maintain consistency and adapt to fluctuations in operating expenses, market conditions, and other relevant factors that influence what is deemed an appropriate recovery amount. As a result, future recovery structures become more relevant and reflective of current conditions rather than being tied to outdated practices or historical data.

In contrast, any options suggesting that recovery structures will remain unchanged, revert to historical figures, or adopt averages from prior structures do not accurately represent how the adjustment of the modeling policy would logically operate. This highlights the significance of adaptive financial modeling and the importance of staying current with relevant operational policies.