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HomeMy WebLinkAbout20110803Rhead Di, Exhibits.pdfDea J. Miller (ISB No. 1968) Chas. F. McDevitt (ISB No. 835) McDEVITT"& MILLER LLP 420 West Banock Strt P.O. Box 2564-83701 Boise, il 83702 Tel: 208.343.7500 Fax: 208.336.6912 joe(ßmcdevitt-miller.com r:u:r.EI.j;\L-. ...l n:;-' zan !IUG -3 PM I: 52 Attorneys for Applicant BEFORE TH IDAHO PUBLIC UTILITIES COMMSSION IN THE MATTER OF TH APPLICATION OF UNITED WATER IDAHO INC. FOR AUTHORIY TO INCREASE ITS RATES Case No. UW-W-LL-02 AN CHAGES FOR WATER SERVICE IN TH STATE OF IDAHO BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION DIRCT TESTIMONY OF SCOTT RHEAD 10 11 12 13 14 15 16 17 18 19 20 21 22 23 1 2 3 4 5 6 7 8 9 Q. A. Q.Please state your name. A.Scott Rhead. Q.By whom are you employed and in what capacity? A.United Water Idao ("United Water" or "Company") as Director of Engineering. Q.What are your duties and responsibilties in your capacity as Director of Engineering? A.I manage all activities of the Engineering group. These responsibilties include strategic planng, capita budgeting, engineerig design, inormation technology, water quaity, and constrction management for capital improvements. Q.Please describe your professiona training and experience. A.I received a Bachelor of Science Degree in Civil Engineerig from Idaho State University in 1972. I was employed by Forsgren Consultig Engineering from 1975 to 1990 designg and managg a varety of water and waste water muncipal improvement projects. I joined United Water in 1990. Since then I have had diversified responsibilities in both Engineering and Production deparents. I am a registered professional engineer in Idaho, Oregon, Washington, Uta and New Mexico. I am also a certfied Idao Water Treatment Operator Level I and Distrbution Operator Level IV. What is the purse of your testimony? I will discuss these topics: · Pro forma adjustments in the test year to recognize investments in plant in service though November 30, 2011. · Explanation of the purchased water expense adjustment as it relates to drought protection, weather conditions, and salmon flow augmentation. Rhead, Di 1 United Water Idaho Inc. 10 11 1 2 3 4 5 6 7 8 9 · Instalation of auxilar power on property purchased adjacent the Columbia Raw Water Pumping Facilty. Q.Since the last proceeding has the Company continued to invest in utilty plant in service? A.Yes. The Company continues to provide new and replacement utility plant in all areas of the business including source of supply, water treatment, pumping, transmission and distribution mains, distrbution storage, customer service lines, customer meters, inormation technology, and general plant. Q.Are the plant in service additions used and useful in providing service to the Company's customers? A.Yes they are and so will be the assets projected from May 1 though November 30 12 which I will discuss below. 13 Pro Forma Additions and Retirements 14 15 16 17 18 19 20 21 22 23 Q. Q.Can you now discuss, in general terms, the capital additions planed to be placed in service from May 1,2011 though November 30,2011? A.Yes. The pro forma plant additions for ths time period are detaled two locations with associated exhbits. May 1 through June 30 are explained in testimony provided by Mr Dohert. July 1 through November 30 are detaled in the attched Exhbit No.3. Examples of these capita additions include customer servces, meters, pumping equipment, new and replacement mains, distrbution storage, control equipment, facility improvements, securty upgrades and investments in the Company's new customer inormation system. Are there also some retirements and fixed asset system adjustments on Exhbit 3? Rhead, Di 2 United Water Idaho Inc. 10 11 1 2 3 4 5 6 7 8 9 A.Yes. These retiements include the legacy cusomer inormation system, customer servces, meters, pumping equipment, new and replacement mains, distrbution storage, control equipment, information technology equipment, facilty improvements, offce futue/equipment, engineering master plan, securty upgrades and general plant. Q.Wil these plant additions be in service by the end of the pro forma period? A.Yes. These items are underway and planed for completion by the end of the pro forma period at November 30,2011. Q.Wil the plant additions shown on Exhbit No.3 be used and usefu in providing service to the Company's customers? A.Yes they will. 12 Purchased Water Expense 13 14 15 16 17 18 19 20 21 22 23 Q.Please discuss the basis for United Water's purchased water expense in the pro forma amount of $ 142,672 as shown on Exhbit 11 accompanying the testimony of Witness Healy. A.The anua cost for surace water hinges on multiple factors. The primar factor in establishig the anua cost is balancing the use of short term rental pool water when available versus longer term storage contracts between the Bureau of Reclamation (BOR) and the Company. This in tu is directly related to the snow pack or moistue conditions for any given year. Anual purchased water has raged from approximately $186,000 to $130,000 durng the period from 2004-2010. The Company balances its surace water portfolio by renting or leasing water at a lower cost when available and preservg the more reliable storage space for drought Rhead, Di 3 United Water Idaho Inc. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 1 2 3 4 5 6 7 8 9 Q. protection when renta water is unavailable or becomes extremely costly due to limited availabilty. In ths way the Company minimizes curent year costs while guding against futue shortges or high prices. It should be noted that the BOR contrct payments for 2,100 acre feet must be made even if the water is not used in any given year. These contracts are shown in Exhibit No.4 identified by a double asterisk (**). Q.Are the lease/contract costs generally known and measureable related to purchase water expense? A.Yes, these agreements have been executed and are assigned under the colum heading called "Contract Status" on Exhibit No.4. Q.Can you clarfy why purchased water expense proposed in the proforma period exceeds the test year expense by approximately $ 13,000? A.The primar reason for this expense increase is drought protection to assure enough storage water and senior natual flow to operate the surace water treatment plants in the event of low snow pack and associated storage water carover. The Company's natual flow water rights are very junor in priority and transition to storage water release occurs according the control of the Boise River Water Master. In drought years ths transition happens early in the season and more storage release is necessar to operate until the next sprig when the process stas again. We have been in a relatively wet snow pack cycle but ths can all change if we experience two dr years in a row as has happened in the past. This additional $13,000 expense is associated with leases that provide additional storage and senior natual flow from the existing owners of these water rights. Can you explain in detal the breakdown of ths additional expense? Rhead, Di 4 United Water Idao Inc. 10 11 1 2 3 4 5 6 7 8 9 A.Yes. There are thee known and measurable changes to the level of purchased water expense included in the test year. Fir the Company has increased the volume of water leased under the agreement with Boise Valley Irgation Distrct (BVID) from 1,000 acre feet to 1,500 acre feet. The increase in leased volume with BVID results in a corresponding increase of 500 acre feet in the Basin 63 Renta Pool volume. Third, we have been notified by Boise City Canal Company that its charge per unt will increase from $95 per unt to $98 per unt in 2012. These changes are reflected in Exhibit No.4 which produce the total purchased water expense of $142,672. Q.Do you believe $142,672, as depicted on Exhbit No.4 is a reasonable allowance for purchased water expense for rate makng puroses? A.Yes. Based on my experience in acquirig surface water to meet potential demand, I 12 believe it is. 13 Installation of Auxiliar Power at the Columbia Raw Water Pumping Facility 14 15 16 17 18 19 20 21 22 23 Q. Q.Can you explain the Company's decision to instal auxilar electrc power at the Columbia Raw Water Pumping facilty and termnate the Schedule 46: Uniform Alternate Distrbution Service Agreement with Idaho Power Company? A.Yes. The Columbia pumping facilty is located on the Boise River near Highway 21 and is jointly owned and operated with Micron Technology and the J.R. Simplot Company and it is the sole source of raw water for the Columbia Water Treatment Plant (CWTP). The Company's investment in the facilty has been previously approved by the Commission. Do you believe it is prudent to have back-up or redundant electrc power at the pumping facility? Rhead, Di 5 United Water Idaho Inc. 10 11 12 13 14 15 16 17 18 19 20 21 22 1 2 3 4 5 6 7 8 9 A. A.Yes. Because the Columbia Water Treatment Plant can provide approximately 6,000,000 gpd to the Company's system, it is importt that the source of water be available paricularly during the sumer peak production season, under all foreseeable conditions. Previously, back up electrc power was provided under a Schedule 46, Alternate Distrbution Service Agreement with Idaho Power Company with an associated anual expense of $75,716, that amount is now reduced to $21,160 resulting in an anual savings of $54,556. Q.Can you explain the costs associated with termination of the Idaho Power Company Alternate Distrbution Agreement with Idaho Power Company.? A.Yes. The Agreement is in the process of being terminated. The termination letter was sent on July 27,2011. This results in an anua expense savigs of approximately $54,556. In conjunction with termination, a payment of approximately $74,272 to Idaho Power is required to compensate Idaho Power for non-salvable equipment. As explained in the testimony of Ms. Car, the Company is requesting a two-year amortization of that payment. Q.Has the Company taen steps to improve redundant electric power for the pumping facility? Yes. The Company has installed a 800 kW diesel electric power generation unt on land adjacent to the pumping facilty. In the event of a power outage, automated switching equipment will immediately sta the diesel generation, insurng that water is provided to the CWTP on an un-interrpted basis. The diesel generating unt was placed in servce in Febru of2011. Rhead, Di 6 United Water Idao Inc. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 1 2 3 4 5 6 7 8 9 Q A. Q.Do you believe it is more prudent for the Company to own the redundant source of electrc power rather th rely on contractu redundacy? A.Yes. Havig direct control of stadby power and associated pumping capacity is much more reliable th relying of trsmission circuits and automatic transfer switches from Idaho Power. Q.Was it necessar for the Company to acquire the real estate upon which the generating facilty is located? A.Yes. The original parcel of propert on which the pumping facility is located was not large enough to accommodate the addition of the generating facilities. The only adjacent property upon which a generating facilty could be placed was owned by Mr. Maron Smith (MS). Over a period of five years I engaged Mr. Smith in discussion about possible purchase of his propert and agreement was finally reached in July of 2009. Q.Were there any unusua featues of the negotiations with Mr. Smith? A.Yes there were. The Smith propert abuts a road way that rus along the New York CanaL. The roadway provides the only access to the pumping facilty and to Mr. Smith's home. Ownership and access rights of ths road to the pumping station were previously in doubt. Can you explain more regarding ths roadway and access ownership question? Yes. The United States Bureau of Reclamation (BOR) obtained the New York Canal Right of Way (ROW) pursuat to a conveyance from the New York Canal Co. Ltd. in 1906. That conveyance was vague in its description of the property conveyed. The BOR believed that ths conveyance created an exclusive perpetual easement to build Rhead, Di 7 United Water Idao Inc. 10 11 12 13 14 15 16 17 1 2 3 4 5 6 7 8 9 and maintain the canal for a distace of twenty five feet (25') from the toe of the canal ban. Maron Smith believed conveyances from his predecessors' created ownership underneath the roadway and to the center line of the New York Canal. Additionally, the BOR had not stopped or impeded this access along the roadway for over one hundred year. Mr. Smith contended his ownership interest included the right to use the roadway so long as such use did not uneasonably interfere with the BOR access rights. In the Company's view, the best course of action was to secure all of Mr. Smith's rights, including his claim of access rights, thereby creating the strongest possible position in the event there was ever a challenge by BOR. Q.Was Mr. Smith willing to sell anytng less than the ful parcel? A.No. Mr. Smith was unwillng to sell anytng less than the ful parcel of propert. Ths became very apparent to me durng my long discussions with Mr. Smith. Thus, in order to reduce doubt about access to the pumping and generating facilities and to meet Mr. Smith's non-negotiable condition, it was necessar for the Company to purchase the entire acreage owned by Mr. Smith. Q. Does ths conclude your testimony? A.Yes. Rhead, Di 8 United Water Idaho Inc. Dean J. Miler (ISB 1968) McDEVITT & MILER LLP 420 West Bannock Street P.O. Box 2564-83701 Boise, ID 83702 Tel: 208.343.7500 Fax: 208.336.6912 joe($mcdevitt-miler .com REr.FI\iFn- '''' .. ~~.;j. ;"." 2011 AUG -3 PM f: 52 Attorneys for Applicant BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF UNITED WATER IDAHO INC. FOR AUTHORITY TO INCREASE ITS RATES AND CHAGES FOR WATER SERVICE IN THE STATE OF IDAHO Case No. UWI-W-I1-02 BEFORE THE IDAHO PUBLIC UTILITIES COMMSSION EXHIBIT TO ACCOMPANY THE DIRCT TESTIMONY OF SCOTT RHEAD Un i t e d W a t e r I d a h o Pr o F o r m a P e r i o d P l a n t A d d i t i o n s a n d R e t i r e m e n t s Ju l y 1 , 2 0 1 1 t o N o v e m b e r 3 0 , 2 0 1 1 In Fo r e c a s t Se r v i c e Fo r e c a s t Fo r e c a s t Co s t o f Fo r e c a s t Pr o j e c t I D Pr o j e c t T i t l e Da t e Ad d i t i o n s Re t i r e m e n t s Re m o v a l Sa l v a g e So u r c e o f S u p p l y Cl l A O O l Wa t e r R i g h t s Fe b - 1 1 65 , 1 0 0 Cl l A S 0 1 Re d r i l l F o x t a i l W e l l - 3 3 8 . 5 No v - 1 1 53 0 , 0 0 1 57 , 7 5 3 13 , 8 0 0 Su b t o t a l s $5 9 5 , 1 0 1 $5 7 , 7 5 3 $1 3 , 8 0 0 $0 Tr e a t m e n t Cl l B O O l Co v e r M a p l e H i l T r e a t m e n t Ju n - 1 1 69 , 8 1 3 4, 9 0 0 87 5 Cl l B O O 3 Co l u m b i a P r e - T r e a t m e n t Oe t - 1 1 10 , 0 0 0 Cl l B 5 0 l Ch l o r i n e R e s i d u a l A n a l y z e r s Ju l - l 1 6, 3 4 9 5, 0 7 1 50 , 0 0 0 Cl l B 5 0 4 Fa c i l t y C o o l i n g ( C W T P 2 0 1 1 ) Oe t - l 1 20 , 1 0 0 12 , 0 0 0 40 0 Cl l B 5 0 6 Re p l C W T P U P S Ju n - l l 4, 7 0 0 25 , 0 0 0 Cl l B 6 0 0 Re p l a c e T r e a t m e n t E q u i p m e n t Va r i o u s 36 , 8 0 6 14 , 2 0 0 1, 0 0 0 Cl l B 7 0 0 Re p l a c e C h l o r i n a t i o n E q u i p m e n t Ju l - l l 89 , 5 0 0 70 , 0 6 2 3, 1 5 0 Su b t o t a l s $2 3 7 , 2 6 8 $1 3 1 , 2 3 3 $5 5 , 4 2 5 $0 Pu m p i n g P l a n t Cl O C 5 0 4 SC A D A R e p l a c e m e n t No v - l 0 30 , 6 0 0 Cl l C O O l Go w e n C o n t r o l V a l v e Oe t - l l 11 1 , 6 0 0 Cl l C O O 3 Op t o P r o c e s s o r U p g r a d e s Ju n - l l 10 , 4 0 5 7, 0 0 0 20 0 CL L C O O 4 VF D F i l t e r i n g Au g - l l 10 7 , 2 0 0 Cl l C O O 5 Ar c F l a s h U p g r a d e s . 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R h e a d Ex h i b i t 3 Pa g e - l o f 3 Un i t e d W a t e r I d a h o Pr o F o r m a P e r i o d P l a n t A d d i t i o n s a n d R e t i r e m e n t s Ju l y 1 , 2 0 1 1 t o N o v e m b e r 3 0 , 2 0 1 1 In Fo r e c a s t Se r v i c e Fo r e c a s t Fo r e c a s t Co s t o f Fo r e c a s t Pr o j e c t I D Pr o j e c t T i t l e Da t e Ad d i t i o n s Re t i r e m e n t s Re m o v a l Sa l v a g e Cl l D 5 0 2 Re p l a c e S h o r t M a i n s & V a l v e s Fe b - 1 1 34 , 0 7 6 20 , 0 0 0 CI O D I O I Hi l l R o a d 2 4 - i n c h M a i n P h a s e I I Oc t - 1 0 1, 3 5 6 , 7 3 3 13 , 2 0 0 1, 0 0 0 0 CI O D 6 2 5 Up g r a d e P R V S t a t i o n s Ja n - 1 1 4, 2 0 0 Cl l D l O O Ne w M a i n s Oc t - 1 1 10 7 , 0 0 0 Cl l D l O l Ci t y I n t e r t i e s Ju l - 1 1 22 , 8 0 0 Cl l D 1 0 2 Re a l i g n B a r b e r S L B o u n d a r y Se p - 1 1 19 8 , 7 0 0 47 , 5 0 0 2, 5 0 0 Cl l D 3 0 0 De v e l o p e r E x t e n s i o n s Va r i o u s 53 2 , 0 4 9 CL 1 D 6 0 0 Re p l a c e m e n t M a i n s Ju l - 1 1 11 5 , 0 0 0 7, 1 7 0 70 0 CL 1 D 6 0 1 Un i v e r s i t y D r i v e 1 6 - i n c h AU Q - 1 1 16 6 , 0 0 0 2, 5 4 0 1, 0 0 0 Cl l D 6 0 2 Ow y h e e P R V & M a i n R e p l a c e m e n t s No v - 1 1 22 0 , 0 0 0 7, 7 0 0 3, 0 0 0 CL 1 D 6 2 5 Up g r a d e P R V S t a t i o n s No v - 1 1 10 7 , 0 0 0 5, 6 4 4 2, 5 0 0 CL 1 D 6 5 0 Sm a l l G I P M a i n R e p l P r o j e c t Va r i o u s 90 6 , 7 3 7 27 , 0 0 0 4, 8 8 0 Cl l D 7 0 0 Ag e n c y R e l a t e d R e p l M a i n s Ju n - 1 1 10 8 , 3 0 0 14 , 9 0 0 Su b t o t a l s $3 , 8 9 1 , 4 9 5 $1 4 5 , 6 5 4 $1 5 , 5 8 0 $0 St o r a g e Cl l E O O l Cir c u l a t i o n S y s t e m a t G o w e n S t a n d p i p e Oc t - 1 1 44 , 0 0 0 Cl l E 5 0 1 Re p l a c e B o u l d e r R e s e r v o i r Ju n - 1 1 42 2 , 5 9 9 5, 0 0 0 Su b t o t a l s $4 6 6 , 5 9 9 $0 $0 $5 , 0 0 0 Se r v i c e s CI I F O O I Ne w D o m e s t i c S e r v i c e s Fe b - 1 1 10 2 , 3 0 3 Cl l F O O 3 Ne w F i r e S e r v i c e s Fe b - 1 1 58 , 8 3 5 Cl l F O O 5 Ne w I s o l a t e d D o m e s t i c S e r v i c e s Fe b - 1 1 14 4 , 4 2 4 Cl l F 5 0 1 Re p l a c e m e n t D o m e s t i c S e r v i c e s Fe b - 1 1 32 5 , 0 6 1 68 , 5 0 0 25 , 6 3 4 Cl l F 5 0 5 Re p l l s o l a t e d S e r v i c e s Fe b - 1 1 32 8 , 5 9 3 Su b t o t a l s $9 5 9 , 2 1 6 $6 8 , 5 0 0 $2 5 , 6 3 4 $0 Me t e r s Cl l G O O l Ne w C u s t o m e r M e t e r s Fe b - 1 1 38 , 2 7 3 Cl l G 5 0 1 Re p l a c e m e n t C u s t o m e r M e t e r s Fe b - 1 1 81 , 2 5 5 10 , 0 0 0 16 3 1, 2 0 0 Su b t o t a l s $1 1 9 , 5 2 8 $1 0 , 0 0 0 $1 6 3 $1 , 2 0 0 In f o r m a t i o n T e c h n o l o g y ( I T ) Ca s e N o . 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T h e C a n a l B o a r d s e t s t h e a n n u a l a s s e s s m e n t s e a c h BO I S E V A L L E Y I R R I G A T I O N D I S T R I C T I B V I D ! NIA 43 !t 1 0 . 0 0 !t 5 5 . 0 0 OW N S H A R E S 21 1 5 1 2 0 1 2 fa l l a n d s e n d s a s s e s s m e n t s t o s h a r e h l d e r s t h e f o l l o n g s p r i n g . Sh a r e s a s s o c i a t e d w i t h l a n d a d j a c e n t t o C W P S . I r r g a t i o n D i s t r c t s e t s t h e an n u a l a s s e s s m e n t s e a c h f a l l a n d s e n d s a s s e s s m e n t s t o l a n d o w n e r s t h e NE W Y O R K I R R I G A T I O N D I S T R I C T NI A 50 !t 1 0 . 0 0 !t 5 0 0 . 0 0 OW N SH A R E S 21 1 5 1 2 0 1 2 fo l l o w i n g s p r i n g . CO N T R A C T S T O R A G E .. B U R E A U o f R E C L A M A T I O N C O N T R A C T i n A N D E R S O N 13 2 0 5 6 3 8 10 0 0 $2 5 . 7 7 $2 5 7 7 0 . 0 0 SI G N E D 11 1 5 1 2 0 1 2 Co n t r a c t w i t h B O R i n p l a c e e n d e s t a b l i s h e s t e r m s . .. B U R E A U o f R E C L A A T I O N C O N T R A C T i n L U C K Y P E A K !t 1 5 . 1 6 Co n t r a c t w i t h B O R i n p l a c e a n d e s t a b l i s h e s t e r m s . 05 9 0 1 0 1 4 6 8 11 0 0 $1 6 6 7 4 . 0 0 SI G N E D 11 1 5 1 2 0 1 2 .. B U R E A U o f R E C L A M A T I O N C O N T R A C T i n L U C K Y P E A K "2 . 4 5 B. O . R . e s t i m a t e s 0 & M e a c h y e a r a n d u p d a t e s c o s t s 05 9 0 1 0 1 4 6 8 11 0 0 $2 6 9 5 . 0 0 SI G N E D 11 1 5 1 2 0 1 2 St a t e w a t e r b a n k f e e i s s e t b y I D W R B o a r d a n d a l l o w a n n u a l t r a n s f e r AN N U A L be t w e e n w a t e r r i g h t h o l d e r s . P a y m e n t i s r e q u i r e d a t t i m e o f a p p l i c a t i o n ST A T E W A T E R B A N K NI A 35 0 $1 . 4 0 $4 9 0 . 0 0 AP P L I C A T I O N 51 1 5 1 2 0 1 2 fo r t h e t r a n s f e r . F i s k W e l l - O r e g o n T r a i l A S R Vo l u m e r e n t e d v a r i e s w i t h s n o w p a c k a n d a b i l i t y t o g e t c o m i t m e n t s f r o m AN N U A L ot h e r s p a c e h o l d e r s . E x p e c t t o r e n t 2 5 0 a f i n J a n . P a y m e n t r e q u i r e d a t BA S I N 6 3 R E N T A L P O O L Re x B a r r i e 25 0 0 $1 4 . 0 0 $3 5 0 0 . 0 0 AP P L I C A T I O N 11 1 5 1 2 0 1 2 tim e o f a p p l i c a t i o n . IN C E N T I V E P A Y M E N T S T O B A S I N 6 3 S P A C E H O L D E R S FA R M E R S C O - O P . 3 Y e a r L e a s e NI A 10 0 0 $4 . 3 8 $4 3 8 0 . 0 0 SI G N E D 51 1 5 1 2 0 1 2 Co n t r a c t w i t h C a n a l C o i n n l a c e a n d e s t a b l i s h e s t e r m s . BO I S E V A L L E Y I R R I G A T I O N D I S T R I C T - 1 0 Y e a r L e a s e NI A 15 0 0 $7 . 0 0 $1 0 5 0 . 0 0 SI G N E D 51 1 5 1 2 0 1 2 Co n t r a c t w i t h C a n a l C o i n n l a c e a n d e s t a b l i s h e s t e r m s . GA R D E N C I T Y P U B L I C W O R K S NI A NI A NI A $1 7 5 8 . 0 0 NI A An n u a l 3 U W I D C u s t o m e r s o n J o o l i n S t o e t t h e i r w a t e r o f f G C s v s t e m Un i t e d W a t e r I d a h o . P u r c h a s e d W a t e r E x h i b i t 4 ( 7 1 2 5 1 1 1 1 $1 4 2 , 6 7 2 . 0 0 Ca . e N o . U W I . W . " . 0 2 S. R h e a d Ex h i b h N o . 4 Pa g e . ' o f '