HomeMy WebLinkAbout20140715Stipulation & Settlement.pdfAvista Corp.
1411 East Mission P.O. Box3727
Spokane. Washington 99220{1500
Telephone 509489-0500
TollFree 800-727-9170
FILED ELECTRONICALLY AND VIA OVERNIGHT MAIL
July 14,2014 -{r*
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Jean D. Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W . Washington Street
Boise,lD 83702
Re: Case Nos. AVU-E-14-05 and AVU-G-14-01
Stipulation and Settlement and Joint Motion
Enclosed for filing with the Commission in the above-referenced docket are the original
and seven copies of the Joint Motion for Approval of Stipulation and Settlement, and the
Stipulation and Settlement, dated July I1,2014.
Sincerely,
Da{d J. Meyer
Vice President, Chief Counsel for Regulatory
& Governmental Affairs
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have this 14th day of July, 2}14,served the Stipulation and
Settlement, and Joint Motion for Approval of Stipulation and Settlement, upon the
following parties, by mailing a copy thereof, properly addressed with postage prepaid
to:
Jean D Jewell, Secretary
ldaho Public Utilities Commission
Statehouse
Boise, lD 83720-5983
Jean. iewell@puc. idaho. qov
Donald Howell
Deputy Attorney General
ldaho Public Utilities Commission
472W. Washington
Boise, lD 83702-0659
kristine.sasser@puc. idaho.oov
donald. howell@puc. idaho.oov
Marv Lewallen
Clearwater Paper
601 W. Riverside Avenue
Suite 1100
Spokane, WA 99201
m a rv. lewa I len@clearwaterpaper. com
Ken Miller
Snake River Alliance
223 N.6th Street
Boise, lD 83702
km i I ler@sna kerive ral I ian ce. oro
Brad M. Purdy
Attorney at Law
2019 N 17th Street
Boise, lD 83720
bmpurdv@hotmail.com
Peter J. Richardson
Greg M. Adams
Richardson & O'Leary PLLC
515 N. 27th Street
PO Box 7218
Boise, lD 83702
peter@ richardsona ndolearv. com
g reo @ ri ch a rd sondo learv. co m
Dean J. Miller
McDevitt & Miller, LLP
420W. Bannock St.
PO Box 2564-83701
Boise, lD 83701-2564
ioe@mcdevitt-miller. com
Benjamin J. Otto
ldaho Conservation League
710 N.6th St.
Bosie, ldaho 83702
botto@idahoconservation. oro
Patrick Ehrbar
Manager, Rates & Tariffs
Rf C[:i1''* i]
David J' Mever' Esq'
?strt JuL rs AH r0, 09Vice President and Chief Counsel for
l:?,Y3&T"l#ernmentar
Affairs
uTrl!?#ilri*',i*,iu*,-r,l4l I E. Mission Avenue
P.O.Box3727
Spokane, Washington 99220
Phone: (509)495-4316, Fax: (509) 495-8851
Donald L. Howell, II
Deputy Attorney General
Idaho Public Utilities Commission Staff
P.O. Box 83720
Boise,lD 83720-0074
Phone: (208) 334-03l2,Fax: (208) 334-3762
Bar No. 3366
BEFORE THE IDAHO PUBLIC UTILITIES COMIVIISSION
IN THE MATTER OF THE APPLICATION ) CASE No. AVU-E-14-05
OF AVISTA CORPORATION TO INITIATE ) CASE No. AVU-G-14-01
DISCUSSIONS WITH INTERESTED )
PARTIES ON AN EXTENSION OF THE ) STIPULATION AND
EXISTING RATE PLAN. ) SETTLEMENT
This Stipulation is entered into by and among Avista Corporation, doing business as
Avista Utilities ("Avista" or "Company"), the Staff of the Idaho Public Utilities Commission
("Staff'), Clearwater Paper Corporation ("Clearwater"), the ldaho Forest Group, LLC
("Idaho Forest"), the Idaho Conservation League ("ICL"), the Community Action Partnership
Association of Idaho ("CAPAI"), ffid the Snake River Alliance. These entities are
collectively referred to as the "Parties", and represent all parties in the above-referenced
cases that participated in settlement discussions. The Parties understand this Stipulation is
subject to approval by the Idaho Public Utilities Commission ("IPUC" or the "Commission").
Stipulation and Settlement - AW-E-14-05 & AVU-G-14-01 Page I
I. INTRODUCTION
A. The terms and conditions of this Stipulation are set forth herein. The Parties agree
that this Stipulation represents a fair,just and reasonable compromise of all the issues raised
in the proceeding and that this Stipulation and its acceptance by the Commission represents a
reasonable resolution of the issues. The Parties, therefore, recommend that the Commission,
in accordance with Ftule 274, approve the Stipulation and all of its terms and conditions
without material change or condition.
B. On March 24, 2014, in compliance with the minimum sixty-day notice
requirement of Rule 122 of the IPUC Rules of Procedure "Notice of Intent to File a General
Rate Case," Avista Corporation provided notice to the Idaho Public Utilities Commission
that the Company intended to file a combined electric and natural gas general rate case on or
after June 2,2014.
C. In Case Nos. AW-E-12-08 and AVU-G-12-07, the Commission previously
approved a settlement that provided for a rate plan that set base rates for a period extending
through January 1,2015.
D. Between May 22 and May 27, 2014, Avista had informal discussions,
individually, with Commission Staff, Clearwater, Idaho Forest Group, CAPAI, [CL, and the
Snake River Alliance, representing all intervenors and interested parties in the Company's
last general rate case (Case Nos. AVU-E-12-08 and AVU-G-12-07).
E. As a part of those informal discussions, Avista explained a proposal to extend
the existing rate plan approved by the Commission in the Company's last general rate case,
and avoid the need for Avista to immediately file a general rate case that would otherwise
take effect on or after the expiration of the existing rate plan on January 1,2015. All of the
Stipulation and Settlement -AVU-E-14-05 & AVU-G-14-01 Page2
parties expressed a willingness to engage in settlement discussions for the purpose of
exploring an extension of the existing rate plan.
F. On May 30,2014, Avista filed a request with the Commission for approval to
initiate settlement discussions with the Parties. On June 11,2014, the Commission issued
Order No. 33051 and formally notified the public and interested parties of Avista's intent to
engage in settlement discussions, pursuant to Rule 273. The Order set a settlement
conference for June 25, 2014, so the Parties could discuss the Company's desire to avoid
filing a general rate case in2014, and extend the existing rate plan for an additional period of
time.
G. On June 25, 2014, the Parties (signatories to this Stipulation) met for the
purpose of exploring a settlement that would extend the existing base rates for an additional
year. The Parties were able to reach agreement among themselves on terms and conditions
such that Avista would not seek to implement a change in base rates prior to 2016. In
addition, under the Stipulation, the increases in rates that would otherwise occur on January
1,2015, resulting from the expiration of the BPA Credit (l.3yo), and the PGA Deferral Credit
(1.7%), will not occur, but will be replaced with other credits or rebates to customers.
II. BACKGROUND
The current and existine Idaho Rate Plan from Case Nos. AYII-E-12-08 and
AYU-G-12-07 contains the followinq elements:
Rate Freeze - The current Avista Rate Plan in Idaho provides for no new electric
or natural gas general rate increases to become effective prior to January 1. 2015.
BPA Credit - Avista's electric customers are currently receiving a rebate of $3.865
million (1.3% on Schedule 97), related to the prior settlement with the Bonneville
Power Administration ("BPA"), for the 15-month period October 1,2013 through
A.
B.
Stipulation and Settlement - AVU-E-14-05 & AVU-G-14-01 Page 3
December 31,2014. Retail electric rates would increase l.3Yo effective January l,
2015 with the expiration of this rebate.
C. PGA Deferral Credit - Avista's natural gas customers are currently receiving a
rebate of $1.55 million (1.7o/o on Schedule 197), related to a Purchased Gas Cost
Adjustment ("PGA") deferral credit balance, for the l5-month period October l,
2013 through December 31,2014. Retail natural gas rates would increase 1.7%o
effective January 1,2015 with the expiration of this rebate.
D. 2013 Earnings Test - In the Company's last general rate case, the Company agreed
to an after-the-fact eamings test, where it would refund to customers one-half of
any earnings in excess of the 9.8%o return on equity ("ROE"), on a consolidated
basis for electric and natural gas, for each of the years 2013 and2014. For the 2013
earnings test, Avista deferred a benefit of $3.914 million for electric customers, and
$444,000 for natural gas customers.
E. Natural Gas Energy Efficiency Funding Balance - Avista currently has a
Schedule 191 Natural Gas Energy Efficiency funding balance due customers of
$653,000 (the current Schedule 191 tariff rate is zero and no energy efficiency
projects are ongoing).
III. TERMS OF THE STIPULATION AND SETTLEMENT
A. Avista would not file an electric or natural gas general rate case in20l4, and would
not file for new electric or natural gas base rates to be effective prior to January l,
20t6.1
B. The BPA Credit and the PGA Deferral Credit would be replaced using other
deferral balances such that customers would not experience rate increases effective
January 1,2015.
l. The $653,000 Schedule 191 Natural Gas Energy Efficiency funding balance
and the $444,000 2013 natural gas earnings test deferral would be used to
replace the l.7Yo PGA Deferral Credit ($1,179,000) on natural gas Schedule
I 97 from January I , 2015 to December 3l , 2015, which would result in no rate
increase for customers January l, 2015. The language on Schedule 197 would
be revised to describe the new rebate.2. $3.201 million of the $3.914 million 2013 electric earnings test deferral would
be used to replace the l.3Yo BPA credit on electric Schedule 97 from January
1,2015 to December 31, 2015, which would result in no rate increase for
I Accordingly, the Parties agree that Avista will not file another electric or natural gas general rate case before
May 31, 2015, and while it may request an effective date earlier than January 1,2016, final approved new rates
will not go into effect prior to January l, 2016. This does not apply to tariff filings authorized by or
contemplated by the terms of the Power Cost Adjustment (PCA), or the Purchased Gas Cost Adjustment tariff
(PGA), or other miscellaneous filings.
Stipulation and Settlement - AVU-E-14-05 & AVU-G-14-01 Page 4
customers January 1,2015. The language on Schedule 97 would be revisedto
describe the new rebate.
The remaining $713,000 of the 2013 earnings test deferral would be credited to
customers through the Power Cost Adjustment ("PCA") over a one-year period
beginning October l, 2014.
Any differences between the estimated 2015 electric and natural gas credits,
and the actual amounts rebated to customers through December 31,2015 on
Schedules 97 and 197, would be added to, or subhacted from, the PCA and
PGA deferral balances, respectively.
C. Project Compass2 - Eighty-percent (80%) of the revenue requirement associated
with Project Compass during 2015, beginning the month the Project goes into
service, would be deferred for recovery in a future proceeding. The 80olo figure was
arrived at through negotiation for calendar year 2015 only, and is unrelated to any
assessment or determination of the prudence of the Project. The deferral is due, in
part, to the uncertainty of the timing of the in-service date for the project. In its
next general rate case, Avista will address the prudence of Project Compass, and
request full recovery of the cost of the project on a going-forward basis.'
D. CS2/Colstrip O&M Amortization - The three-year amortization of the 2013
Coyote Springs 2/Colstrip O&M deferral balance of $1.253 million ($418,000 per
year) would begin January 1,2016, instead of January 1,2015.4
2 Pro;ect Compass involves the replacement of Avista's legacy Customer Information System, which is
composed of three highly-connected applications, which include:
o Customer Service System - this application supports the traditional utility business functions of meter
reading, customer billing, payment processing, credit, collections, field requests and customer service
orders;o Work Management System - this application is used to create orders for service and emergency calls
and for construction jobs for customers and Company operations; ando Electric & Gas Meter Apolication - this application hosts the data for the Company's in-service
electric and gas meters.
Together, these three applications have been connected over time with many other applications and systems
required to conduct all aspects ofAvista's customer service, and natural gas and electric business operations.
'Eighty-percent of the estimated 2015 electric revenue requirement is $2.663 million (Idaho share), plus $0.637
million for natural gas (Idaho share), for an estimated total of $3.3 million. There would be no carrying charge
on the deferral.
a Per Order No. 32371 (Case No. AVU-E-Il-01), the Company was allowed to defer changes in O&M costs
related to its Coyote Springs 2 (CS2) natural gas-fired generating plant located near Boardman, Oregon, and its
fifteen (15) percent ownership share ofthe Colstrip 3 & 4 coal-fired generating plants located in southeastern
Montana in order to address the large variability in year-to-year O&M costs, beginning in 201 1. The Company
compaf,es actual, non-fueI, O&M expenses for the Coyote Springs 2 and Colstrip 3 & 4 plants with the amount
ofexpenses authorized for recovery in base rates in the applicable deferral year, and defers the difference from
that cunently authorized. The deferral occurs annually, with no carrying charge, with deferred costs being
amortized over a three-year period, beginning in January ofthe year following the period costs are deferred. In
Case No. AVU-E-12-08, the beginning of the amortization of the 2013 deferral was delayed from 2014 to 2015.
This Stipulation delays the beginning of the amortization of the 2013 deferral for one year from 2015 to 2016,
consistent with the one-year extension of the rate plan. The amortization of any deferral from 2014 will begin
in 2015.
aJ.
4.
Stipulation and Settlement - AVU-E-14-05 & AVU-G-14-01 Page 5
Earnings Test - Any earnings test deferral for 2014 would be set aside to support
the one-year extension of the Rate Plan as explained below:
l. An ROE deadband would be established for 2015 between the authorized ROE
of 9.8Yo and9.5Yo.
2. During the calendar year 2015, if Avista earns less than a 9.5% ROE, on an
actual consolidated basis for electric and natural gas, any eamings test deferral
balance from 2014 would be used to move Avista's earnings up to, or up
toward, the9.5%o ROE on an actual consolidated basis.3. Any 2014 earnings test deferral balance that is not needed to achieve a 9.5o/o
ROE for 2015, e.g., Avista earns more than 9.5%o ROE during 2015, would
continue to be held as a deferral for future credit to customers.4. During the 2015 calendar year, if Avista earns more than a 9.8% ROE, on an
actual consolidated basis for electric and natural gas, Avista would defer, for
future rebate to customers, 50Yo of any earnings above the 9.8o/o.
Included as Attachment A to this Stipulation is a schematic of the components of
the Rate Extension Plan.
F. Meet and Confer Regarding Low-Income Issues:
On or before October l, 2014, Avista will meet with Commission Staff and other
interested Parties to this case to review the following issues:
l. Cost-effectiveness and appropriate funding of natural gas and electric demand-
side management ("DSM") programs for low-income customers: Prior to the
meeting, Avista will provide the Parties with the 2013 DSM Impact Evaluation
prepared by its consultant, Cadmus, as well as current information pertaining to the
cost-effectiveness of its low-income programs in Idaho. ln addition, Avista will
provide its analysis of when and under what conditions natural gas DSM programs
will become cost-effective and program funding resumes.
2. Electric and natural gas usage by low-income customers in Avista's Idaho
service territory and potential rate-design implications for such customers: Prior to
the meeting, Avista will provide usage data for its Idaho residential customers for
20ll-2013. Avista will consult with the Parties to identify their specific data
requirements.
3. No later than December 1,2014, the Parties will determine if a formal filing with
the Commission is warranted based upon review of low-income DSM program
cost-effectiveness and low-income usage.
Stipulation and Settlement - AVU-E-14-05 & AVU-G-14-01 Page 6
IV. OTHER GENERAL PROYISIONS
A. The Parties agree that this Stipulation represents a compromise of the
positions of the Parties in this case. As provided in Rule 272, other than any comments filed
in support of the approval of this Stipulation, and except to the extent necessary for a Party to
explain before the Commission its own statements and positions with respect to the
Stipulation, all statements made and positions taken in negotiations relating to this
Stipulation shall be confidential and will not be admissible in evidence in this or any other
proceeding.
B. The Parties submit this Stipulation to the Commission and recommend
approval in its entirety pursuant to Rule 274. Parties shall support this Stipulation before the
Commission, and no Party shall appeal a Commission Order approving the Stipulation or an
issue resolved by the Stipulation. If this Stipulation is challenged by any person not a party
to the Stipulation, the Parties to this Stipulation reserve the right to file testimony, cross-
examine witnesses and put on such case as they deem appropriate to respond fully to the
issues presented, including the right to raise issues that are incorporated in the settlement
terms embodied in this Stipulation. Notwithstanding this reservation of rights, the Parties to
this Stipulation agree that they will continue to support the Commission's adoption of the
terms of this Stipulation.
C. If the Commission rejects any part or all of this Stipulation or imposes any
additional material conditions on approval of this Stipulation, each Party reserves the right,
upon written notice to the Commission and the other Parties to this proceeding, within 14
days of the date of such action by the Commission, to withdraw from this Stipulation. In
such case, no Party shall be bound or prejudiced by the terms of this Stipulation, and each
Stipulation and Settlement - AVU-E-14-05 & AW-G-14-01 Page 7
Party shall be entitled to seek reconsideration of the Commission's order, file testimony as it
chooses, cross-examine witnesses, and do all other things necessary to put on such case as it
deems appropriate.
D. The Parties agree that this Stipulation is in the public interest and that all of its
terms and conditions are fair, just and reasonable.
E. No Party shall be bound, benefited or prejudiced by any position asserted in
the negotiation of this Stipulation, except to the extent expressly stated herein, nor shall this
Stipulation be construed as a waiver of the rights of any Party unless such rights are
expressly waived herein. Execution of this Stipulation shall not be deemed to constitute an
acknowledgment by any Party of the validity or invalidity of any particular method, theory or
principle of regulation or cost recovery. No Party shall be deemed to have agreed that any
method, theory or principle of regulation or cost recovery employed in arriving at this
Stipulation is appropriate for resolving any issues in any other proceeding in the future. No
findings of fact or conclusions of law other than those stated herein shall be deemed to be
implicit in this Stipulation.
F. The obligations of the Parties under this Stipulation are subject to the
Commission's approval of this Stipulation in accordance with its terms and conditions and
upon such approval being upheld on appeal, if any, by a court of competent jurisdiction.
G. This Stipulation may be executed in counterparts and each signed counterpart
shall constitute an original document.
Stipulation and Settlement -AVU-E-14-05 & AVU-G-14-01 Page 8
+11
DATED this !fiay of July 2014.
Avista Corporation,r,e//-
oafid J. Meyer
Attorney for Avista Corporation
Idaho Public Utilities Commission Staff
By:
Donald L. Howell,II
Deputy Attorney General
ldaho Forest Group
By:
Clearwater Paper Corporation
Peter Richardson
Attorney for Clearwater Paper
ldaho Conservation League
By:
Benjamin J. Otto
Attorney for ICL
By:
Community Action Partnership Association
Of ldaho (CAPAD
By:
Brad Purdy
Attorney for CAPAI
Dean J. Miller
Attorney for Idaho Forest Group LLC
Snake River Alliance
By:
Ken Miller
Clean Energy Program Director
Stipulation and Settlement - AVU-E-I4-0s & AVU-G-14-01 Page 9
Idrho
DATED fitu
-
day of July 2014.
AvistaCoreodon
By:
Dryid J. Mcpr
Aemsy for Avish CorpqU,on
Clcarrvatcr Papcr Coryoration
By:
PctrrRiefiadsqt
Atfincy for Clcarrrystcr Papor
Conscrycionkaguc
Idaho Fottst Gnoup
By:
Dcan J. Millcr
Attomcyforldaho Forrst Gmoup LI,C
Snalrc RivcrAlliancc
By:
KcnMillcr
Clcan Encrgy Prognm Dircotor
By:
Bcnjunin J. Otb
Attomcyfor ICL
Commrnity Astion Partrcmhip Astociation
Of ldaho (CAPAD
By:
Brad Purdy
Attorncy foTCAPAI
DcprfyAttotrcy Gcncral
Stipulation and Setlsmcnt -AW-E 14-05 & AW-G-14-01 Pagc 9
w
DATEDthis P dayofJuly2014.
Avista Corp,oration Idatro Public Utilitica Commission Staff
By:By:
David J. Meyet
Attomey for Avista Corporation
Donald L. Howell, II
Deputy AtlomeyGeneral
Idaho Forost Cnoup
By:
Idaho
Attorney for Clearwater Paper
Conservation lrague
Dean J. Miller
Auorneyforldaho Forcst Group LLC
Snakc RiverAlliance
By:
Ken Miller
Clean Encrgr Program Director
By:
Beqiamin J. Otto
Auomey for ICL
Community Action ParErcrship Association
Of Idatro (CAPAD
By:
Brad Purdy
Attomey for CAPAI
Papcr Qorporation
Stipulation and Satlemcnt -AVU-E 14-05 & AW-G-14{I Page 9
DATED this _ day of July 2014.
Avista Corporation
By:
DavidJ. Moyer
Attomey for Avista Corporation
Clearwater Paper Corporation
By:
PeterRichardson
Attomey for Clearwater Paper
Idaho Conservation League
By:
Benjamin J. Otto
AttomeyforICL
Idaho Public Utilities Commission Staff
By:
Dooald L. Howell, II
Deputy Attorney Creneral
Snake
By:
Community Action Partrcrship Association
Of Idaho (CAPAI)
By
Brad Purdy
Attorney for CAPAI
Attorney for Idaho Forest Group LIf
River Alliance
Ken Miller
Clean Energy Program Director
Stipulation and Settlement - AW-E-14-05 & AW-G-14-0.1 Page 9
DArED *, U{rofJuly 2014.
Avista Corporation
By
DavidJ. Meyer
Attomey for Avista Corporation
Clearwater Paper Corporation
By
Peter Ricbardson
Attomey for Clearwater Paper
ldaho Conscrrration League
Benjamin J. Otto
Attorney for ICL
Community Action Partnership Association
Ofldaho (CAPAD
By
Brad Pudy
Attorney for CAPAI
Idaho Public Utilities Commission Saff
By:
Donald L. Howell, II
Deputy Attorney General
Idaho Forest Group
By:
DeanJ. Miller
Attorney forldaho Forest Group LLC
Snake RivcrAlliance
By:
Ken Miller
Clean Energy Program Director
Stipulation and Settleme,nt - AW-E-14-05 & AVU-G-14-01 Page 9
Avi$
DATED this
-
day of July 2014.
Corporation Idaho Public utilities Commission Stalf
By;
flong[!_!- Howell. ll
Depuf Attorrcy General
Idaho Forest Gnoup
By:
DcanJ.Mllcr
Atbmey fur ldaho ForestCroup LLC
..' .t'
Snake River Alliance '. ' '
BY /3L*-V-24'z-z'*)
tren Mtlter..
Cleur Enerry PRotidm Dir€ctor
Page 9
By;
David J. Meyer
Atomcy for Avista Corporation
Clearwater Paper Corporation
By:
Peter Ridrardson
Attorney for Clcanratcr Papu
l&ho Conservation League
E-'-
Benjamin J. Otto
Aftorney for ICL
Community Astion PafinerBhip Association
Of ldaho (CAPAI)
Bvi
Brad Prrrdy
Aftorney for CAPAI
Stipulation and Sefilement -AVLr-E-l+05 & AVII-G-1441
DATED this day of July 2014.
Avista Corporation
By:
David J. Meyer
Attorney for Avista Corporation
C learwater Paper Corporation
By:
Peter Richardson
Attorney for Clearwater Paper
Idatro Public Utilities Commission Staff
By:
Donald L. Howell, I[
Depury Attorney General
Idaho Forest Group
By:
Idaho Conservation League Snake River Alliance
By:By:
Benjamin J. Otto
Attorney for ICL
Commrurity Action Partnemhip Association
Of Idaho (CAPAD ,-..-.._.
Dean J. Miller
Attorney for Idatro Forest Group LLC
Ken Miller
Clean Energy Program Director
Stipulation and Settlement - AW-E-I+05 & AW-G-14-01 Page 9
Case Nos. AW-E-1+05 and AVII-G-I4-01
Schematic of Rate Plan Extension Components
Natural Gas DSM Balance
s0.6s3M Replace PGA Defenal Credit
S1.l79M (1.7o/o)
2013 Gas Eamings Test Deferral
Balance
s0.444M
2013 Electric Eamings Test
Deferral Balance
$3.914M
Replace BPA Credit
$3.20rM (13%)
Credit to Customers Through
PCA Beginning l0 I I 120 14
Project Compass
Defer for Later Recovery
80% of Actu al 20 I 5 Revenue
Requirement (Est. $3.3M)
2015 Rate Plan Extension
(Eamings Test)
CS2/Colstrip O&M
Begin $0.418M Annual Amort.
l/112016 instead of l/l/2015
Use 2014 Eamings Test
Deferral Balance to Support
Attachment A Page I of1