Seattle City Light 2016 ANNUAL REPORT | Audited Financial Statements 46 THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 - 46 - for the 2015B Bonds. Proceeds from the 2015 Bonds were used to finance certain capital improvement and conservation programs and to make a deposit to the Reserve Fund. The debt service on the 2015A Bonds requires a cash flow over the life of the bonds of $286.0 million, including $114.1 million in interest, and the debt service on the 2015B Bonds requires a cash flow over the life of the bonds of $177.4 million including $77.4 million in estimated interest. The Department has certain bonds outstanding that provide a refundable tax credit, or federal subsidy, paid to state or local governmental issuers by the U.S. Treasury. The amount of the federal subsidy is equal to the lesser of the amount of interest payable based on the coupon interest rate or a percentage of the amount of interest payable based on the tax credit rate on the sale date with respect to those bonds. This federal subsidy ultimately results in a net decrease to debt service, although debt service payments are paid gross. The federal subsidies are recorded as nonoperating revenues on the statements of revenues, expenses, and changes in net position. Federal Sequestration. The sequestration provisions of the Budget Control Act of 2011 went into effect on March 1, 2013. The only direct impact of sequestration on the Department for 2016 was a 6.8% reduction through the end of the federal fiscal year ending September 30, 2016 at which time the automatic reductions were adjusted to 6.9% in the amount the Department expects to receive from the federal government in connection with its Municipal Light and Power Revenue Bonds, 2010A (Taxable Build America Bonds—Direct Payment); Municipal Light and Power Revenue Bonds; 2010C (Taxable Recovery Zone Economic Development Bonds—Direct Payment); Municipal Light and Power Improvement Revenue Bonds, 2011B (Taxable New Clean Renewable Energy Bonds—Direct Payment); Municipal Light and Power Improvement Revenue Bonds, 2012C (Taxable New Clean Renewable Energy Bonds—Direct Payment); and Municipal Light and Power Revenue Bonds, 2016A (Taxable New Clean Renewable Energy Bonds—Direct Payment). Because of this reduction, the Department will receive approximately $0.4 million less in interest subsidies than originally anticipated for 2016. The Department has sufficient revenues to pay the interest without these subsidies. The effect for the accrual of federal subsidies as of December 31, 2016 was inconsequential. The effect during 2017 is estimated to be lower federal subsidies by approximately $0.4 million. The effect thereafter for federal subsidies is indeterminable. Sequestration was originally in effect through federal fiscal year (FFY) 2021 and has subsequently been extended through FFY 2024.