Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90Seattle City Light 2015 Annual Report 41 THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 - 41 - are paid gross. The federal subsidies are recorded as nonoperating revenues on the statements of revenues, expenses, and changes in net position. Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, certain automatic reductions were effective March 1, 2013 for qualified bonds including the Department’s 2012C series Bonds, 2011B series Bonds, 2010A series Bonds, and 2010C series Bonds. Federal subsidies for these bonds were reduced by 7.3% through the end of the federal fiscal year (September 30, 2015) at which time the automatic reductions were adjusted to 6.8%. The effect for the accrual of federal subsidies as of December 31, 2015 was inconsequential. The effect during 2016 is estimated to be lower federal subsidies by approximately $0.4 million. The effect thereafter for federal subsidies is indeterminable. Debt service requirements for prior lien bonds, excluding federal subsidies for the 2012, 2011 and 2010 bonds are shown in the table below. Future debt service requirements on the variable 2015B Bonds are based on actual interest rates in effect as of December 31, 2015. Years Ending December 31 ($ in millions) Fixed Rate Bonds Variable Rate Bonds Total Principal Interest Principal Interest Redemptions Requirements Redemptions Requirements 2016 105.9 $ 96.2 $ - $ 0.7 $ 202.8 $ 2017 109.1 88.4 - 0.7 198.2 2018 109.6 83.2 - 0.7 193.5 2019 106.2 77.9 - 0.7 184.8 2020 105.6 72.5 - 0.7 178.8 2021 – 2025 523.0 282.9 - 3.5 809.4 2026 – 2030 325.8 169.8 18.0 3.1 516.7 2031 – 2035 241.9 106.6 22.0 2.4 372.9 2036 – 2040 232.5 50.5 27.0 1.6 311.6 2041 – 2045 111.2 10.2 33.0 0.6 155.0 Total 1,970.8 $ 1,038.2 $ 100.0 $ 14.7 $ 3,123.7 $ The Department is required by Ordinance No. 124633 (the bond ordinance) to fund reserves for the 2015 Bonds and other parity bonds in the Municipal light and power bond reserve fund (Reserve Fund) for the purpose of securing the payment of principal and interest on all parity bonds outstanding. The Reserve Fund is an account within the books of the Department. The Department has covenanted and agreed that it will pay into the Reserve Fund, out of parity bond proceeds or out of gross revenues, within five years from the date of issuance of the parity bonds, such sums as will, together with money presently in the Reserve Fund, provide for the Reserve Fund Requirement. The bond legislation provides that, in calculating the Reserve Fund Requirement, the direct payments the Department expects to receive from the U.S. Treasury with respect to any federal subsidy bonds may be deducted from annual debt service.