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 THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 - 66 - ● Pacific Northwest Refund Case—In a proceeding before FERC, various buyers of energy, including the City, sought refunds from various sellers on energy sales in the Pacific Northwest between December 1999 and June 2001. The case was tried at FERC between August and October of 2013. In March 2014, the FERC administrative law judge issued an Initial Decision denying all refunds. In May 2014, the City filed a brief objecting to the Initial Decision, and the parties are now awaiting a final decision from FERC. Prior to the FERC trial, the City settled refund claims with twelve entities, with a combined total settlement amount of $4.6 million. In February 2015, after hearing argument in a related case, the Ninth Circuit sua sponte reactivated certain City Light appeals previously stayed at the Ninth Circuit that were primarily related to City Light’s appeal of the FERC’s determination that the Mobile-Sierra presumption applied to the contracts at issue and whether FERC had improperly excluded certain evidence that City Light had presented in order to overcome the Mobile-Sierra presumption. After a truncated briefing schedule, oral arguments were heard in June 2015. On December 17, 2015, the Ninth Circuit issued its opinion finding that the Mobile-Serra presumption does apply to the issues in this case. The Ninth Circuit also determined that it did not have jurisdiction over the evidentiary issues. On December 31, 2015, FERC issued its decision largely confirming the Initial Decision issued by the administrative law judge on March 28, 2014. City Light filed its notice of appeal to the Ninth Circuit on February 22, 2016.  State Farm, et al. v. City, Puget Sound Energy(PSE) and Inghams - This case stems from a gas explosion in September 2011 in the Pinehurst neighborhood in Seattle. Discovery thus far indicates the Ingham home exploded after an undiscovered gas leak caused a gas buildup in the crawl space of their home. The Inghams were inside their home at the time, and Mrs. Ingham suffered severe burns. After cross-claims and joinders of additional parties, this case involves the claims of six insurance companies seeking over $1.0 million in property damages involving eight different properties and the personal injury claims of the Inghams and their next-door neighbors. The plaintiffs’ theory against the Department is that the gas leak was caused by arcing electricity from a fallen Department power line blocks away from the Inghams’ home. Puget Sound Energy is a co-defendant and was sanctioned by the State UTC regarding this incident. The City settled with State Farm during 2015 for $795,000. Shortly thereafter, the claim by American Family Insurance was settled for $26,000 for a total settlement in this matter of $821,000.   Taylor, et al. v. City – Four plaintiffs allege that certain Department managers retaliated and discriminated against them on the basis of age, race, gender, and sexual orientation. The Department managers deny all allegations of discrimination, harassment, and retaliation. An adverse result in litigation could result in awards of back pay, compensatory damages, and attorneys’ fees. Trial is currently scheduled for June 20, 2016, in King County Superior Court. The Department’s ultimate liability is indeterminate. Sharma v City – The Department terminated the plaintiff for poor job performance. Plaintiff alleges that the termination was discriminatory on account of his national origin. Because the plaintiff alleges violation of anti-discrimination laws, an adverse result in the litigation could create an obligation to pay the plaintiff’s attorneys’ fees. Trial is currently scheduled for October 31, 2016, in King County Superior Court. The Department’s ultimate liability is indeterminate. Gamble v. City – The plaintiff is a long-time Department employee who alleges that she has been denied promotions on the basis of her gender, age, disability, and use of Family Medical Leave. The plaintiff also alleges that she has suffered from working in a work environment that was hostile due to the same characteristics. An adverse result in litigation could result in awards of back pay, compensatory 66