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<SEC-DOCUMENT>0001193125-06-205947.txt : 20061011
<SEC-HEADER>0001193125-06-205947.hdr.sgml : 20061011
<ACCEPTANCE-DATETIME>20061011090231
ACCESSION NUMBER:		0001193125-06-205947
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20061006
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20061011
DATE AS OF CHANGE:		20061011

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			UNITIL CORP
		CENTRAL INDEX KEY:			0000755001
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC & OTHER SERVICES COMBINED [4931]
		IRS NUMBER:				020381573
		STATE OF INCORPORATION:			NH
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-08858
		FILM NUMBER:		061139165

	BUSINESS ADDRESS:	
		STREET 1:		6 LIBERTY LANE WEST
		CITY:			HAMPTON
		STATE:			NH
		ZIP:			03842
		BUSINESS PHONE:		6037736504

	MAIL ADDRESS:	
		STREET 1:		6 LIBERTY LANE WEST
		CITY:			HAMPTON
		STATE:			NH
		ZIP:			03842
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>d8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML><HEAD>
<TITLE>Form 8-K</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

<HR SIZE="3" NOSHADE COLOR="#000000" ALIGN="left"> <P STYLE="margin-top:3px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"><B>UNITED STATES </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="3"><B>Washington, D.C. 20549 </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="17%" SIZE="1" NOSHADE COLOR="#000000"> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="5"><B>FORM 8-K </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="17%" SIZE="1" NOSHADE COLOR="#000000"> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="3"><B>CURRENT REPORT </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"><B>Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act 1934
</B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Date of Report (Date of earliest event reported): October&nbsp;6, 2006 </B></FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="17%" SIZE="1" NOSHADE COLOR="#000000"> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="6"><B>UNITIL CORPORATION
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B></B><B><I>(Exact name of registrant as specified in its charter)</I></B><B> </B></FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="17%" SIZE="1" NOSHADE COLOR="#000000"> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="34%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>New Hampshire</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>1-8858</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>02-0381573</B></FONT></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(State or other jurisdiction</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="1"><B>of incorporation)</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Commission File Number)</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(IRS Employer</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="1"><B>Identification No.)</B></FONT></P></TD></TR>
</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="50%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="48%"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>6 Liberty Lane West, Hampton, New Hampshire</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>03842-1720</B></FONT></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Address of principal executive offices)</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Zip Code)</B></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Registrant&#146;s telephone number, including area code: (603)&nbsp;772-0775 </B></FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>N/A </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Former name or former address,
if changed since last report) </B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="17%" SIZE="1" NOSHADE COLOR="#000000"> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </FONT></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>

<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </FONT></TD></TR></TABLE> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </FONT></TD></TR></TABLE> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </FONT></TD></TR></TABLE> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR SIZE="3" NOSHADE COLOR="#000000" ALIGN="left">

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Item&nbsp;8.01 Other Events </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">On October&nbsp;6, 2006, Unitil Corporation&#146;s (&#147;Unitil&#148; or &#147;Registrant&#148;) New Hampshire utility subsidiary, Unitil Energy Systems, Inc. (&#147;UES&#148;) received approval from the New Hampshire Public Utilities
Commission (&#147;NHPUC&#148;) of a Settlement Agreement resolving all issues in its electric distribution base rate case filed in November, 2005. A copy of Unitil&#146;s press release and the NHPUC&#146;s Order approving the Settlement Agreement
are attached as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Item&nbsp;9.01 Financial Statements and Exhibits </B></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(d) Exhibits: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="84%" BORDER="0" ALIGN="center">

<TR>
<TD></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="90%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Exhibit&nbsp;99.1</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">October&nbsp;10, 2006 press release regarding approval by the NHPUC of the Settlement Agreement.</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Exhibit&nbsp;99.2</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">NHPUC Order No. 24,677 &#150; Order on Settlement Agreement.</FONT></TD></TR>
</TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">SIGNATURES </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="43%" BORDER="0">

<TR>
<TD WIDTH="7%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="92%"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">UNITIL CORPORATION</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Mark H. Collin</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Mark H. Collin</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Senior Vice President, Chief Financial Officer and Treasurer</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Date: October&nbsp;11, 2006 </FONT></P>
</BODY></HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>dex991.htm
<DESCRIPTION>PRESS RELEASE
<TEXT>
<HTML><HEAD>
<TITLE>Press Release</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 99.1 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px">

<IMG SRC="g19184image001.jpg" ALT="LOGO"> </P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">For Immediate Release </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="6%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="93%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Contact:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">George Gantz</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Phone: 603-773-6569</FONT></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Fax: 603-773-6769</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B><I>Unitil Base Rate Settlement Approved in New Hampshire </I></B></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Hampton, NH (October 10, 2006):</B> Unitil Corporation (AMEX:UTL) announced that its New Hampshire electric distribution utility, Unitil Energy Systems, Inc.
(&#147;UES&#148;), received approval from the New Hampshire Public Utilities Commission (the &#147;Commission&#148;) of a Settlement Agreement resolving all issues in its electric distribution base rate case filed in November 2005. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">&#147;We are very pleased with the results of our distribution base rate case and believe the settlement with all the parties represents a fair and reasonable resolution
of many issues raised during the course of the proceeding,&#148; said Robert G. Schoenberger, Unitil&#146;s Chairman and Chief Executive Officer. &#147;This decision will allow us to maintain the financial stability and resources necessary for the
delivery of safe, reliable and cost-efficient distribution service to our New Hampshire customers.&#148; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The key provisions of the Settlement Agreement
approved by the Commission include: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">an increase in electric base distribution rates of $2,266,966 annually, effective as of January 2006; </FONT></TD></TR></TABLE> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">a stipulated overall rate of return of 8.70%, including a return on equity of 9.67%, applied to a proforma rate base of $96,046,267; </FONT></TD></TR></TABLE> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">two additional future step increases in electric base distribution rates, related to utility plant additions in 2006, of approximately $400,000 and $130,000 annually, effective as
of November&nbsp;1, 2006 and May&nbsp;1, 2007, respectively; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">the recovery of over $300,000 annually of supply-related operating and administrative costs through default energy service rates; </FONT></TD></TR></TABLE> <P
STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">a reduction of approximately $600,000 in annual depreciation expense, primarily reflecting an increase in utility plant and equipment average service lives;
</FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">the resolution of a multi-year effort by UES to recover in rates the rapidly escalating costs of pension and other post-retirement benefit costs - the Settlement Agreement provides
for the recovery of the costs sought by UES in the rate case as a component of base distribution rates; </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">a comprehensive agreement on several rate design issues, including the allocation of the revenue increase to each customer class, the capping of the increase to low use residential
customers and the maintenance of a discounted initial 250 kWh block for residential customers, and agreement on customer, volumetric and demand charges for each rate class; </FONT></TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">a provision for a temporary rate surcharge to provide for recovery of rate case expense and recoupment of the authorized distribution rate increase from January through October
2006. </FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The increase in distribution base rates and other rate changes provided for in the Settlement Agreement will increase UES&#146;s base
revenue by approximately $3.1 million on an annualized basis. This represents an increase of about 10% over UES&#146;s present distribution base revenue. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">The effect of these rate changes on a customer&#146;s total electric bill, which include the base distribution changes as well as the supply-related operating and administrative costs changes, will vary by customer class and individual
usage. On average, the total electric bill for a residential customer will increase 2.4%. The average total bill increase for commercial and industrial customers will be 1.3%. The implementation of the changes in base rates on November&nbsp;1 is
expected to coincide with other scheduled rate changes, including proposed changes to default energy service rates now pending before the Commission. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Unitil Corporation is a public utility holding company with subsidiaries providing electric service in New Hampshire, electric and gas service in Massachusetts and energy services throughout the northeast. </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2"><U>Corporate Office</U> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">6 Liberty Lane
West </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Hampton, NH 03842-1720 </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Phone: 603-772-0775 </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Fax: 603-773-6605 </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Email: corp@unitil.com </FONT></P>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>dex992.htm
<DESCRIPTION>SETTLEMENT AGREEMENT
<TEXT>
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<TITLE>Settlement Agreement</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 99.2 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>DE 05-178 </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>UNITIL ENERGY SYSTEMS, INC. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Petition for Base Rate Increase </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Order On Settlement Agreement </B></FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B><U>ORDER</U> <U>NO</U>. <U>24,677</U> </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2"><B>October&nbsp;6, 2006 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>APPEARANCES:</B> Scott Mueller, Esq., LeBoeuf, Lamb, Greene&nbsp;&amp; MacRae, for Unitil Energy Systems, Inc.;
Kenneth E. Traum of the New Hampshire Office of Consumer Advocate, on behalf of New Hampshire ratepayers; and Edward N. Damon, Esq. for the Staff of the New Hampshire Public Utilities Commission. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px; text-indent:2%"><FONT FACE="Times New Roman" SIZE="2"><B>I. PROCEDURAL HISTORY</B> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On
November&nbsp;4, 2005, Unitil Energy Systems, Inc. (UES or the Company) filed with the New Hampshire Public Utilities Commission (Commission) a petition for authorization to 1) implement new permanent rates for electric distribution service
beginning December&nbsp;4, 2005; 2) replace UES&#146;s current tariff with its proposed revised tariff; 3) implement an annual Pension Adjustment Charge (PAC) for recovery of UES&#146;s pension and post-retirement benefits other than pension (PBOP)
costs; 4) implement a step adjustment for certain future rate base additions; and 5) implement temporary rates beginning December&nbsp;4, 2005 for distribution service at current rate levels, together with extensive supporting testimony and
materials. On November&nbsp;17, 2005, the Office of Consumer Advocate (OCA) notified the Commission of its participation in the docket on behalf of residential ratepayers consistent with RSA 363:28. In Order No.&nbsp;24,553 (December 2, 2005), the
Commission suspended the proposed tariff and scheduled a Prehearing Conference for December&nbsp;20, 2005. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Commission issued Order No.&nbsp;24,572 (December 30, 2005), approving a procedural schedule and
granting with limitations a request to intervene filed by Public Service Company of New Hampshire. Between February&nbsp;1, 2006 and July&nbsp;31, 2006, UES filed eight motions for protective order regarding certain of its discovery responses, one
of which was withdrawn by letter dated March&nbsp;10, 2006. On February&nbsp;3, 2006, the Commission issued Order No.&nbsp;24,585, approving temporary rates at current rate levels beginning on January&nbsp;1, 2006. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On June&nbsp;9, 2006, the Commission Staff (Staff) filed with the Commission the testimony of four Staff witnesses and OCA also filed testimony. On
July&nbsp;28, UES filed with the Commission rebuttal testimony of eleven witnesses. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On August&nbsp;16, 2006, Staff filed, on behalf of
itself, UES and OCA, a letter with the Commission requesting a delay in the procedural schedule to allow the filing of a settlement agreement by August&nbsp;23, 2006. On August&nbsp;18, 2006, the Commission issued a secretarial letter granting the
requested delay and scheduling the hearing on the settlement agreement (Settlement Agreement) to commence on August&nbsp;30, 2006. On August&nbsp;24, 2006, Staff filed the Settlement Agreement with the Commission and the hearing was held on
August&nbsp;30, 2006. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">During the course of the proceedings, the Commission received several consumer comments expressing opposition and/or
concern about the rate increase requested by UES. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On September&nbsp;15, 2006, UES filed information related to implementation of the
temporary rate case surcharge, proposing a surcharge of $0.00226 per kilowatt-hour (kWh). On October&nbsp;2, 2006, UES filed with the Commission its first step adjustment filing under the Settlement Agreement. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%"><FONT FACE="Times New Roman" SIZE="2"><B>II. SUMMARY OF SETTLEMENT AGREEMENT</B> </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Set forth below are the substantive provisions as stated in the Settlement Agreement: </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">ARTICLE II. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">REVENUE DEFICIENCY </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">2.1. The Parties and Staff agree that a permanent increase of $2,266,966 over current revenues will result in rates that are just and reasonable.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">2.1.1. Stipulated Cost of Capital: UES&#146;s revenue requirement is calculated with an overall rate of return of 8.70 percent, including a
return on common equity of 9.67 percent applied to UES&#146;s pro forma test year capital structure (Attachment A, Schedule 6). </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">2.1.2.
Stipulated Rate Base: The overall rate of return shall be applied to the pro forma rate base of $96,046,267, as calculated in Attachment A, Schedule RevReq-5 for the test year ending June&nbsp;30, 2005. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">2.1.3. Pension/PBOP: In its initial filing, the Company proposed to collect its pension and PBOP costs through an annually reconciling adjustment
mechanism. The Company hereby withdraws that request. Accordingly, the Parties and Staff agree to provide for the recovery of pension and PBOP expenses in permanent base distribution rates. As provided in the revenue requirement schedules included
as Attachment A to this settlement, the amount of $2,097,622 is included as pension and PBOP expense, the amount of $112,018 is included as test year PBOP amortization and the amount of $282,064 is included as additional amortization expense.
</FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">2.1.4. Depreciation: The Parties and Staff agree the UES revenue requirements calculation shall include a pro forma depreciation expense of
$5,525,236, which reflects an overall net salvage rate of negative 25.28 percent and an overall plant average service life of 33.87 years. UES agrees to adopt the depreciation accrual rates by plant account shown on Attachment A, Schedule RevReq
3-15, as of the end of the test year. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">2.1.4.1 In addition, these settlement depreciation accrual rates reflect (a)&nbsp;continuation of
UES&#146;s current practice of accounting for retirements by vintage year; (b)&nbsp;UES&#146;s commitment to account for net salvage by plant account rather than by Distribution and General Plant Segments by no later than December&nbsp;31, 2007; and
(c)&nbsp;UES&#146;s commitment to update its Depreciation Study within 5-8 years. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">2.1.5. Other Operations&nbsp;&amp; Maintenance Expenses:
In addition, the Parties and Staff agree that UES&#146;s revenue requirement calculation shall include a pro forma reduction of $282,064 to Other Operations and Maintenance expense. In the </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">event that UES files a new permanent base distribution rate request that results in rates that take
effect prior to January&nbsp;1, 2012, UES agrees to include this pro forma reduction to Other Operations and Maintenance expense of $282,064 in the calculation of UES&#146;s revenue requirements. </FONT></P> <P
STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">ARTICLE III. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">STEP ADJUSTMENT </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">3.1. Step Adiustment. The Parties and Staff agree that it is reasonable to authorize UES to implement a two-part step adjustment to base rates to recover
prudently incurred costs related to certain large non-revenue producing capital additions placed in service or, in the case of the Broken Ground Land Acquisition, for which the transaction will be completed, by January&nbsp;1, 2007. The Parties and
Staff agree that UES will be permitted to file for, and implement, an increase to its base distribution rates to reflect costs related to capital expenditures for the following four projects: (1)&nbsp;Penacook Substation 34.5 kV Line Terminal
(&#147;Penacook Substation&#148;); (2)&nbsp;3342 and 3353 Line Reconductoring Project (&#147;Line Reconductoring&#148;); (3)&nbsp;Hampton Relocation Project; and (4)&nbsp;Broken Ground (referred to in UES&#146;s initial filing as &#147;Hollis
Station&#148;) Land Acquisition. In its petition for a step increase, UES agrees to reflect the associated decrease in depreciation expense associated with plant retirements related to these four projects. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">3.2. Implementation of Step Adjustment Part 1. UES shall file by October&nbsp;2, 2006, a final calculation of the step adjustment revenue amount based on
actual costs for the Penacook Substation, Line Reconductoring and Hampton Relocation projects, along with all supporting data and information, for review by Staff and the OCA, and review and approval by the Commission for effect November&nbsp;1,
2006. The Parties and Staff further agree that UES shall propose equal percentage rate impacts for all customer classes as part of its proposed step adjustment. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT
FACE="Times New Roman" SIZE="2">3.3. Implementation of Step Adjustment Part 2. UES shall file by February&nbsp;1, 2007, a final calculation of the step adjustment revenue amount based on actual costs of the Broken Ground Land Acquisition, along with
all supporting data and information, for review by Staff and the OCA, and review and approval by the Commission for effect May&nbsp;1, 2007. The Parties and Staff further agree that UES shall propose equal percentage rate impacts for all customer
classes as part of its proposed step adjustment. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">ARTICLE IV. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">RATE DESIGN </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">4.1. The Parties and Staff agree that UES&#146;s rate design set forth in the Company&#146;s
initial filing as modified by this Article is appropriate and should be approved. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 4 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">4.1.1. Class Revenue Requirement: The Parties and Staff agree to cap the revenue increase to the
Residential and Outside Lighting rate classes at 125 percent of the overall average distribution increase, or 9.06 percent. The revenues for the Small Commercial and Industrial and Large Commercial and Industrial rate classes will increase by 6.52
percent and 3.17 percent, respectively. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">4.1.2. Residential Rate Design, Schedule D: The Parties and Staff agree that bill increases to low
use (up to 250 kWh per month) residential customers shall be capped at 140 percent of the overall average increase to the residential class, or 12.7 percent. The size of the initial block will be maintained at 250 kWh [per month] and the initial
block rate will be $0.005 per kWh lower than the tail block rate. The customer charge for the residential class shall be increased to $8.40. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman"
SIZE="2">4.1.3. G2 kWh Rate: The Company shall continue the G2 kWh rate schedule, with an increase in the customer charge to $8.40. Customers currently served under this schedule will have the option to switch to the G2 demand rate after UES&#146;s
Automated Metering Initiative is implemented. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">4.1.4. G1 Customer Charge: The Parties and Staff agree that for the G1 class there shall be
separate customer charges based upon the marginal costs to provide metering at primary and secondary voltages. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">4.1.5. All Other Rates: The
Parties and Staff agree the rate designs for all other rate classes shall be designed using the customer charge proposed by UES and adjusting the energy and demand charges in order to achieve the class&#146;s targeted revenue requirements in
accordance with section 4.1.1. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">ARTICLE V. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">EFFECTIVE DATE OF PERMANENT RATES </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">5.1. The Parties and Staff agree that the permanent rates take effect
for service rendered as of January&nbsp;1, 2006. </FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">ARTICLE VI. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">RECONCILIATION AND SURCHARGE </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">6.1. The Parties and Staff agree that, consistent with RSA 378:29, revenues
collected pursuant to UES&#146;s authorized temporary rates must be reconciled for the period in effect with the permanent rate level established by the Commission. The difference between the temporary rates which were set at present rate levels and
permanent rates shall be recovered via a surcharge over a twelve month period. The Parties and Staff also agree that this surcharge shall provide for the recovery of prudently incurred rate case expenses. UES shall file by September&nbsp;15, 2006, a
calculation for the surcharge to be collected in rates beginning November&nbsp;1, 2006. The calculation of the surcharge shall include final accounting of the approved rate case expenses and the amount of the difference </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">between temporary rates and permanent rates reflecting actual billing data (January through July 2006)
and estimated billing data (August through October 2006). The surcharge shall be subject to reconciliation. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">6.2. On or before
September&nbsp;1, 2007, UES shall file with the Commission, for its review and approval, a reconciliation of the surcharge. The reconciliation shall include the final calculation of the difference between temporary rates and permanent rates being
collected through the surcharge and a recommendation for treatment of any under- or over-recovered balances projected to remain at the end of the surcharge. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%"><FONT
FACE="Times New Roman" SIZE="2">6.3. In accordance with the Settlement Agreement in Docket DE 05-064, supply-related working capital and UES&#146;s internal administrative costs related to supply service have been removed from distribution rates and
will be recovered through Default Service rates. The Parties and the Staff agree that these costs for the period of temporary rates (January 1, 2006 through October&nbsp;31, 2006) shall be reconciled and recovered in Default Service rates effective
November&nbsp;1, 2006. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; margin-left:2%"><FONT FACE="Times New Roman" SIZE="2"><B>III. POSITIONS OF THE PARTIES AND STAFF</B> </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>A. UES</B> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES stated it was seeking a
base rate increase to account for significant investment in its utility plant and increased operating expenses since its last base rate filing, based on a 2001 test year. UES noted that it had failed to earn its authorized rate of return in both
2004 and 2005 despite efforts to mitigate the revenue shortfall through productivity and cost management efforts. UES stated that a significant part of its filing proposed several ratemaking mechanisms to address attrition.</FONT><FONT
FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>1</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES contends
that the Settlement Agreement provides a just and reasonable resolution of the issues in this proceeding. In UES&#146;s view, certain step adjustments for non-revenue producing rate base investment made after the test year, and the determination of
test year non-revenue </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="8%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>1</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In its pre-filed direct testimony, UES defined attrition generally as the &#147;failure of a utility to have a reasonable opportunity to earn its authorized rate of
return as the result of some fundamental or systematic set of underlying circumstances.&#148; Robert C. Yardley, Jr. testimony at 26, lines 22-24. UES then identified three kinds of attrition, rate base, expense, and capital cost attrition, claiming
that UES was suffering from the first two kinds and may experience capital cost attrition in the future. For purposes of its testimony, Staff accepted UES&#146; definition. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">producing rate base investment as of the end of the test year,</FONT><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>2</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> address attrition by
providing it &#147;with adequate revenues to give it a reasonable opportunity to earn its rate of return and [provide] for just and reasonable rates.&#148; Hearing Transcript (Tr.) of August&nbsp;30, 2006 at 14 lines 8-11. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES noted that the Settlement Agreement does not include the reconciling pension and post retirement benefits other than pension (PBOP) attrition
mechanism originally requested by the Company; instead, the Settlement Agreement follows the traditional practice of including test year pension and PBOP expense, together with known and measurable pro forma adjustments, in the revenue requirement.
According to UES, this will provide the Company with &#147;an adequate recovery of those costs in the context of this rate case.&#148; Tr. at 15 lines 4-6. UES cautioned that there have been recent federal legislative changes and proposals for
changing the Financial Accounting Standards Board rules and stated that the pension PBOP issue may recur. <I>See</I> Tr. at 15-17. In addition, UES pointed out that the Settlement Agreement excludes UES&#146;s original request for an inflation
adjustment for other operation and maintenance expenses. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES explained that the agreed-upon revenue increase of $2,266,966 is calculated
by multiplying the stipulated rate base of approximately $96 million by the overall cost of capital of 8.7 percent (including a return on equity of 9.67 percent) to arrive at UES&#146;s required income of approximately $8 million. This is compared
to the Company&#146;s adjusted net operating income to determine a revenue deficiency before taxes of approximately $1.4 million and taxes are then calculated to determine the revenue increase. UES stated that the estimate of the revenue requirement
based on all projects reflected in the step increase is $595,268. Tr. page 23, lines 2-4. UES also stated that its rate case expenses were estimated to be $851,000 and maintained that it had worked hard to keep its rate case costs low. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="8%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman"
SIZE="1" COLOR="#000000"><SUP>2</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The Settlement Agreement retains the traditional method of determining the test year rate base investment driven by customer growth based on test year averages.
</FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES stated that it performed two cost studies that aided in the determination of class revenue
requirements, an allocated cost of service study based on test year accounting costs allocable to each class which the Company had committed to file in its last base rate case, and a marginal cost study based on an estimate of the total cost of
providing an additional unit of service. The marginal cost of service study was used to indicate target class revenue requirements for all classes except the outdoor lighting class, for which the allocated cost of service study was used because of
the difficulty in quantifying marginal costs. UES stated that the target revenue requirement levels were then adjusted to reflect other rate design goals such as rate continuity. For example, under the Settlement Agreement, the residential and
outdoor lighting class distribution revenue increases were capped at 9.06 percent, while the distribution revenue increase for the small commercial and industrial (C&nbsp;&amp; I) class was 6.52 percent and the revenue increase for the large C &amp;
I class was 3.17 percent.</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>3</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES noted that the G-2 controlled off-peak water heating class, which has just one
customer, is being eliminated. The impact of the November&nbsp;1, 2006, step adjustment, on all classes is estimated to be approximately 1.5 percent on distribution revenue and the impact of the February&nbsp;1, 2007 step adjustment on all classes
is estimated to be approximately 0.4 percent. According to UES, including both step adjustments and proposed test year amounts to be recovered as default service charges as agreed to in Docket No. DE 05-164, and excluding the temporary rate case
surcharge, the impact of the distribution rate changes for UES&#146;s total revenue, taking into account the distribution and other rate components, is approximately 1.8 </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="8%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman"
SIZE="1" COLOR="#000000"><SUP>3</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">These figures are exclusive of the revenue increases resulting from the step adjustments, which will have equal percentage rate impacts for all customer classes, and
the recovery of test year amounts for certain administrative costs and working capital amounts included in default service rates. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 8 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">percent on all classes. <I>See</I> Ex. 13. Excluding both the step adjustments and the temporary rate case surcharge, the
Company&#146;s original filing estimated a 2.9 percent increase to total revenues from the rate changes for all rate classes, compared to 1.5 percent under the Settlement Agreement. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>B. OCA</B> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The OCA stated that on
balance the Settlement Agreement is just and reasonable and in the interests of residential ratepayers but it should not be considered as precedent. The OCA noted that the Settlement Agreement includes an overall revenue increase of approximately
$2.3 million with no deferrals, compared to the Company&#146;s initial request of approximately $4.2 million with a $2.5 million deferral. OCA noted that its pre-filed testimony supported an approximate $1.5 million increase with no deferrals.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">OCA&#146;s pre-filed testimony contended that all customer classes should receive the same percentage increase; however, the Settlement
Agreement provides that no class shall receive more than 125 percent of the average increase. OCA pointed out that under the Settlement Agreement the step adjustments and the temporary rate case surcharge will be assigned to all of the customer
classes on an equal basis. The Settlement Agreement retains a lower priced initial usage tier for the Residential class, which the OCA contends will help promote energy conservation. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">OCA explained that an issue had arisen regarding whether raw land may properly be included in rate base and was taken into account in the second of the
step adjustments. The OCA stated that UES was able to provide it with sufficient information showing that in a prior docket involving Public Service Company of New Hampshire,</FONT><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>4</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> which was decided after
the anti-Construction Work in Progress (CWIP) statute, RSA 378:30-a, went into effect, the Commission </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="8%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman"
SIZE="1" COLOR="#000000"><SUP>4</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Public Service Company of New Hampshire</I>, 69 NH PUC 67 (1984), Order No.&nbsp;16,885 in Docket No.&nbsp;82-333. </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 9 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">had allowed land held for future use to be included in rates under certain circumstances and that the Company&#146;s
timetable for using the land for operating purposes had been moved up considerably from the Company&#146;s original timetable, to as early as three years from now. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">The OCA pointed out that the Settlement Agreement does not, consistent with its (and Staff&#146;s) pre-filed testimony, include in the revenue requirement an amount to compensate the Company for income taxes on energy
efficiency incentive payments nor does it include an amount for certain tree trimming costs which are the subject of a dispute between the Company and Verizon. On the other hand, the OCA stated that the Settlement Agreement provides for the full
amount of the Company&#146;s projected pro forma postage increase. In addition, although the OCA had argued for an equal sharing of rate case expenses by shareholders and ratepayers in its pre-filed testimony, the Settlement Agreement allows full
recovery of prudently-incurred rate case expenses subject to Commission audit and approval. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>C. Staff</B> </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Staff stated that the result of the Settlement Agreement is just and reasonable and serves the public interest and should therefore be approved. Staff
stated that it did not agree with the Company&#146;s views on the need for or appropriateness of many of the requested attrition mechanisms. Consistent with the Commission&#146;s recognition of step adjustment mechanisms in other dockets, Staff did
agree with the concept of a step adjustment for certain specified capital projects. Staff also agreed that the Company was not earning its authorized rate of return. Staff concluded that the Settlement Agreement represents a fair resolution of the
issues raised in the case. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 10 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Staff also stated that the 9.67 percent return on equity specified in the Settlement Agreement is a fair
compromise of the initial positions of the parties, is in line with recent Commission decisions, and in its view, is consistent with current market conditions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">Staff noted that in its pre-filed testimony it proposed maintaining the traditional methodology of recovering pension and PBOP costs in base rates and did not propose a method for recovering the regulatory asset
established by UES following a prior docket</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><SUP>5</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> in which it had unsuccessfully sought authorization to defer certain prior cash contributions to the pension plan. Staff pointed out that under the Settlement
Agreement UES will collect its test year pension and PBOP costs in base rates and approximately $282,000 will be included in the revenue requirement as additional amortization expense, which will allow UES to avoid a potential write-off of the
regulatory asset. At the same time, Staff explained that the additional amortization expense will not represent any additional expense to ratepayers because there will be a corresponding reduction to other operation and maintenance expenses.
According to Staff, the result is reasonable and consistent with the Commission&#146;s prior order. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Staff stated that the parties and
Staff were able to reach agreement on the two main issues of net salvage accrual rates and amortization of the depreciation reserve imbalance. Staff noted that the depreciation expense included in the revenue requirement pursuant to the Settlement
Agreement represents a compromise of the original Company and Staff positions and that it represents a decrease in annual expense from the amount that was recorded in the test year. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Staff testified that the Company&#146;s pre-filed rebuttal testimony included much more detail about the status, plan and timetable of the project
included in the second step adjustment, the Broken Ground/Hollis Station land acquisition, and referenced the prior Commission order discussed by the OCA. Based on this information, Staff was willing to accept that the land acquisition was
appropriate for inclusion in the step adjustment. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="8%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman"
SIZE="1" COLOR="#000000"><SUP>5</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>See Unitil Energy Systems, Inc.</I>, Docket No. DE 04-231, Order No.&nbsp;24,449 (2005). </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 11 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Staff stated that the calculations in the Company&#146;s marginal cost of service study were generally
reasonable and that the results of the study were used to guide the proposals for class target revenues in the Settlement Agreement. More particularly, Staff stated that although the proposed target revenues do not directly match the results of the
study, the differences between the class target revenues are reasonably reflective of the differences between class marginal costs. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Staff
noted that the Settlement Agreement provides for significantly increased customer charges compared to the demand and energy charges. In Staff&#146;s view, the increases are reasonable because the marginal cost study showed that the existing customer
charges for all rate classes are substantially below cost. Staff stated that the increases in the customer and demand charges are appropriately offset with reductions in energy charges. Regarding C&amp;I customers served under the G-2 kWh rate that
have low levels of consumption, Staff explained that the Settlement Agreement caps the increase at a level substantially below that which could be supported by cost of service considerations alone. Staff explained that these and other G-2 kWh
customers will also have the option under the Settlement Agreement to stay on this rate schedule instead of being transferred to a demand-based rate following the installation of appropriate metering, as proposed by the UES. G-2 kWh customers that
opt to switch to the demand-based rate will face a second significant rate increase. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 12 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%"><FONT FACE="Times New Roman" SIZE="2"><B>IV. OUTSTANDING MOTIONS</B> </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>A. February&nbsp;1, 2006 Motion for Protective Order, re: Staff Data Requests 1-9 and 1-10</B> </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES filed a Motion for Protective Order under RSA 91-A:5, IV requesting confidential treatment of responses to Staff data requests 1-9 and 1-10. The data
requests for which confidential treatment is requested sought information concerning a cost/benefit study with respect to UES&#146;s investment in the Automated Metering Investment (AMI) program, including a description of alternatives explored by
UES regarding advanced metering technology, details regarding UES&#146;s capital expenditures in the AMI program, and vendor contract negotiations. UES claimed that the information provided in responses to the data requests include pricing
information, discounts, and enhancements that contain confidential and competitively sensitive commercial information, and information regarding confidential negotiations with vendors that, if disclosed, could compromise UES&#146;s bargaining
position and hinder its ability to achieve the lowest reasonable price to the detriment of UES and its customers. UES relied on RSA 91-A:5, IV, which expressly exempts from public disclosure any records pertaining to confidential, commercial or
financial information. UES argued that the commercial and financial interests of itself and its vendors with respect to the information requested in the data requests significantly outweigh the public interest of disclosure. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>B. February&nbsp;1, 2006 Motion for Protective Order, re: Staff Data Request 1-96</B> </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES requested confidential treatment of response to Staff data request 1-96, which sought a complete working model of the accounting cost of service in
electronic format. UES stated that the material requested was provided by Management Applications Consulting, Inc. (MAC) as part of UES&#146;s supporting testimony. UES claimed that the software contained in the compact disc is the sole and
exclusive property of MAC and consists of confidential trade </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 13 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">secrets. UES maintained that MAC represented to UES that the public disclosure of its software could cause harm to MAC by
giving competitors the opportunity to use methodologies and processes developed by MAC for their own financial gain. UES asserted that it had a long-standing working relationship with MAC and has made a commitment to MAC to make every effort to
protect the confidentiality of its proprietary information during this proceeding. UES reasoned that RSA 91-A:5, IV expressly exempts from public disclosure any records pertaining to confidential, commercial or financial information. UES argued that
the commercial and financial interests of itself and its vendor with respect to the information requested in Staff data request 1-96 significantly outweigh the public interest of disclosure. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>C. February&nbsp;1, 2006 Motion for Protective Order, re: Staff Data Requests 1-113 and 1-131</B> </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES requested confidential treatment of responses to Staff data requests 1-113 and 1-131. Data request 1-113 sought detailed descriptions of UES&#146;s
distribution system, including the location of particular points on the system, the identities and locations of substations, and a description of the extent to which the distribution system is integrated or interconnected. Data request 1-131
requested background information regarding the drivers of investment in distribution system capacity. UES stated that the information requested should be kept confidential for security reasons and to protect the public safety and the reliability of
the distribution system. UES claimed that both the narrative portion and tables provided in response to data requests 1-113 and 1-131 divulge the location of key components of UES&#146;s distribution system. UES asserted that the information should
be kept confidential because it provides specific details concerning UES&#146;s energy infrastructure and discloses detailed information as to how the distribution system is designed and configured, revealing key components and their locations. UES
stated that the responses also disclose critical information regarding the current </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 14 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">configuration of UES&#146;s distribution system, as well as planning information as to how the system may be configured
in the near future. UES reasoned that RSA 91-A:5, IV expressly exempts from public disclosure any records pertaining to confidential, commercial or financial information. UES argued that the State&#146;s and public&#146;s interests in protecting the
safety and reliability of the transmission and distribution systems significantly outweigh the public interest of disclosure. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>D.
February&nbsp;14, 2006 Motion for Protective Order</B> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES requested confidential treatment of responses to OCA data request 46 which
sought information regarding UES&#146;s plans to build a substation on the Hollis substation land. UES stated in its motion that the information requested should be kept confidential because it provides specific details concerning UES&#146;s
negotiations for the purchase of the substation, which negotiations were on-going and not yet final at the time of the request for confidential treatment. UES claimed that disclosure of UES&#146;s plans to purchase the substation could have a
negative impact on its negotiating position and ultimately prevent UES from securing the most favorable purchase price for the property. UES reasoned that RSA 91-A:5, IV expressly exempts from public disclosure any records pertaining to
confidential, commercial or financial information. UES argued that its commercial and financial interests with respect to the information requested in OCA data request 46 significantly outweigh the public interest of disclosure. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>E. March&nbsp;7, 2006 Motion for Protective Order</B> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">UES requested confidential treatment of responses to Staff data requests 2-3 and 2-4, which sought detailed information regarding UES&#146;s commercial and industrial customers, including the name, location, and
billing history for each such customer. UES stated that the information requested should be kept confidential to protect the competitive positions of its </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 15 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">customers in the marketplace, and should not be disclosed without the consent of each respective customer. UES reasoned
that RSA 91-A:5, IV expressly exempts from public disclosure any records pertaining to confidential, commercial or financial information. UES also relied on the Commission&#146;s Competitive Electric Power Supplier Rules, N.H. Code Admin. Rules Puc
2004.08, which require that customer-specific information be preserved by electric suppliers. UES argued that the potential harm to its commercial and industrial customers significantly outweigh the public interest of full disclosure. </FONT></P> <P
STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>F. March&nbsp;8, 2006 Motion for Protective Order </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">UES requested confidential treatment of its response to Staff data request 2-86, which sought information pertaining to UES&#146;s sales, revenues, and expense forecasts. UES stated that the information requested
should be kept confidential because it contains detailed information about the projected future performance of the company that if released may affect financial markets by influencing potential investors who would not otherwise have access to the
information and could be detrimental to the company. UES reasoned that RSA 91-A:5, IV expressly exempts from public disclosure any records pertaining to confidential, commercial or financial information. UES argued that keeping confidential the
information contained in its response to Staff data request 2-86 significantly outweighs the public interest of disclosure. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>G.
July&nbsp;31, 2006 Motion for Protective Order </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">UES requested confidential treatment of portions of the rebuttal testimony of its
witness, Justin C. Eisfeller, which contained information regarding the purchase of the Hollis substation land. UES stated that certain pages and schedules should be kept confidential because they contain specific details concerning UES&#146;s
negotiations, which were on-going, for the purchase of the substation. In addition, UES claimed that the information for which confidential treatment is </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 16 - </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">requested contains details regarding the location of particular points on the system, the identities and locations of
substations, and a description of the extent to which the distribution system is integrated or interconnected. UES maintained that the information should be kept confidential for security reasons and to protect the public safety and reliability of
the distribution system. According to UES, the information divulges the location of key components of UES&#146;s distribution system and the information should be kept confidential because it provides specific details concerning UES&#146;s energy
infrastructure and discloses detailed information as to how the distribution system is designed and configured, revealing key components and their locations. UES reasoned that RSA 91-A:5, IV expressly exempts from public disclosure any records
pertaining to confidential, commercial or financial information. UES argued that the State&#146;s and the public&#146;s interests in protecting the safety and reliability of the transmission and distribution systems significantly outweigh the public
interest of disclosure. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; margin-left:2%"><FONT FACE="Times New Roman" SIZE="2"><B>V. COMMISSION ANALYSIS </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2"><B>A. Merits</B> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">N.H. Code Admin. Rules Puc 203.22 (b)&nbsp;provides that the Commission shall approve
disposition of any contested case by settlement &#147;if it determines that the result is just and reasonable and serves the public interest.&#148; <I>See also</I> RSA 541-A:31, V(a). In general, the Commission encourages parties to attempt to reach
a settlement of issues through negotiation and compromise &#147;as it is an opportunity for creative problem-solving, allows the parties to reach a result more in line with their expectations, and is often a more expedient alternative to
litigation.&#148; <I>Concord Electric Company</I>, 87 NH PUC 694, 708, Order No.&nbsp;24,072 (2002), quoting from <I>Concord Electric Company,</I> 87 NH PUC 595, 605, Order No.&nbsp;24,046 (2002), and orders cited therein. However, even where all
parties enter into a settlement agreement, the Commission cannot approve it &#147;without independently determining that the result comports with applicable standards.&#148; <I>Id</I>. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 17 - </FONT></P>


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<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">According to UES&#146;s pre-filed direct testimony, the earnings results of UES during the period since
the Company&#146;s last base rate case in 2002 have been mixed. The Company stated that it was able to earn its authorized rate of return in 2003 through extraordinary efforts but fell short in 2004 and in the test year ended June&nbsp;30, 2005.
Although Staff&#146;s pre-filed testimony took issue with the Company&#146;s testimony regarding the precise level of the return authorized in the last base rate case, Staff agreed that an increase in UES&#146;s revenue requirement is justified
based on test year figures. Staff&#146;s pre-filed testimony indicated a revenue deficiency of $1,137,966, or a 3.5 percent increase in test year operating revenues with no deferrals. OCA&#146;s pre-filed testimony argued for a decrease in the
Company&#146;s revenue requirement but also supported the pension/PBOP reconciling mechanism under certain conditions, resulting in a suggested net revenue increase of approximately $1.5 million with no deferrals. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The revenue requirement increase included in the Settlement Agreement is approximately $2.3 million, with no deferrals, as compared to the Company&#146;s
initial request of approximately $4.2 million with $2.5 million in deferrals. In percentage terms, the Settlement Agreement provides for an overall revenue increase of approximately 1.5 percent, which is a 7.2 percent increase in distribution
revenues, not including the temporary rate case surcharge or step increases. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The approximate percentage impacts on total revenues
allocated to the various customer classes range from a 0.8 percent increase for the large C &amp; I class to a 2.4 percent increase for residential customers and a 5.6 percent increase for the outdoor lighting class. The impacts on distribution
revenues range from a 6.7 percent increase for the large C &amp; I class to an increase of </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 18 - </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">11.6 percent increase for the residential class.</FONT><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>6</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> The class revenue
increases and rate design changes reflected in the Settlement Agreement were guided by the results of UES&#146; marginal cost study moderated by considerations of rate continuity and stability. As Staff stated, although the results of the cost
studies are not directly reflected in the class target revenues, the differences between the class target revenues are reasonably reflective of the differences between class marginal costs. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Within each rate class, the proposed changes to individual rates and rate components have been supported by the settling parties and Staff as reasonable.
We are persuaded on the basis of the record that the shifting of revenue recovery away from volumetric (energy) charges and toward demand and customer charges (as compared to the existing rate structure) is cost justified. We note that the
Settlement Agreement continues the practice of pricing service to residential customers using a two-block rate structure, with the first 250 kWh per month being priced below the tail block rate. The difference between the initial and tail blocks,
$0.005 per kWh, is less than under existing rates but it should continue to provide some relief to low use customers. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">As reflected in the
pre-filed testimony, the existence and extent of attrition, and the appropriate remedies for it, were contested issues. In deciding whether to approve the Settlement Agreement, we are not called on to make findings on these issues since the focus of
our review is on whether the result of the Settlement Agreement is just and reasonable and serves the public interest.</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>7</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="8%"
SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>6</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The G-2 controlled off-peak water heating class, consisting of only one customer, would experience a revenue decrease of approximately 30 percent but that class is
eliminated pursuant to the Settlement Agreement. </FONT></TD></TR></TABLE>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman"
SIZE="1" COLOR="#000000"><SUP>7</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Although the New Hampshire Supreme Court has not approved a particular definition of attrition, it has observed that the use of an historic test year to fix rates
&#147;necessarily imposes on the[C]ommission the obligation to fix a rate of return which will meet the constitutional standards [under the <I>Bluefield Water Works</I> and related cases] not only at the time its order is made <I>but for a
reasonable period of time thereafter</I> [emphasis added].&#148; <I>New England Telephone and Telegraph Co. v. State</I>, 113 N.H. 92, 96 (1973); <I>see also Public Service Company of New Hampshire v. State</I>, 102 N.H. 150, 163 (1959); <I>Appeal
of Cheshire Bridge Corporation</I>, 126 N.H. 425 (1985); <I>Appeal of Manchester Gas Company</I>, 129 N.H. 800 (1987). The Court noted that RSA 387:7 recognizes this principle in providing that the Commission shall determine and fix a just and
reasonable rate &#147;thereafter to be observed&#148; by the utility. <I>Id</I>. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 19 - </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">With regard to certain particulars of the Settlement Agreement, we note that the agreed-upon return on
equity, 9.67 percent, is in line with recent Commission decisions. <I>See </I><U>ReVerizon New Hampshire</U>, 80 NH PUC 17 (2004)&nbsp;(setting a return on equity of 9.82%); <U>Re Public Service Company of New Hampshire,</U> PUR Slip Copy 2005 WL
3691934 (N.H.P.U.C.), Order No.&nbsp;24,552 (setting a return on equity of 9.62% for PSNH&#146;s generation business); <U>Re Granite State Telephone</U>, PUR Slip Copy 2006 WL 1488403 (N.H.P.U.C.), Order No.&nbsp;24,621 (approving a stipulated
return on equity of 9.30%). In addition, we note that the Settlement Agreement provides for the recovery of pension and PBOP expense using test year accrual figures rather than the reconciling mechanism originally requested by UES. Further, the
Settlement Agreement does not include an inflation adjustment for other operation and maintenance expenses. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Certain step adjustments for
rate base investment made after the end of the test year are permitted and the Commission has allowed similar adjustments in other recent cases<B>. </B><I>See</I>, <U>Re Northern Utilities, Inc</U>. 87 NH PUC 723, 730-31 (2002); and Re <U>Aquarion
Water Company of New Hampshire</U>, Order No.&nbsp;24,648, DW 05-119 (July 18, 2006). Although the Commission does not customarily use end of test year figures for determining the amount of rate base investment, choosing instead to use test year
average figures, the feature of the Settlement Agreement providing for end of test year figures for certain, large, non-revenue producing rate base investments may be characterized as a form of a step adjustment within the test year. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">We have independently considered whether, as agreed by the parties and Staff, land held for future use should be included in rate base. All assets in a
utility&#146;s rate base must be used and useful. The Commission considers whether plant held for future use should be placed in rate </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 20 - </FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">base on a &#147;case-by-case, parcel-by-parcel approach, requiring a utility to &#145;demonstrate a definite plan for
actual use within a reasonable time.&#146;&#148; <U>Re Public Service Company of New Hampshire</U>, 69 NH PUC 67, 74 (1984)&nbsp;<I>quoting </I><U>In Re Public Service Co. of New Hampshire</U>, 65 NH PUC 251, 269-71 (1980). UES testified that the
Broken Ground land acquisition is a necessary &#147;first step in developing a new transmission interconnection and associated substation for the Capital Area &#133; in order to design for site-specific access and the necessary transmission and
distribution equipment.&#148; <I>See</I> Ex. 10, p. 466, lines 9-10 and 14-15. UES also testified that &#147;[s]tudies undertaken this year have accelerated the need for the Broken Ground substation by 3 years, indicating a need for additional
capacity sometime between 2009 and 2015.&#148; <I>Id </I>at p. 467, lines 3-5. We find that the Broken Ground land acquisition described in the Settlement Agreement may be included in rate base as part of a step adjustment, subject to review of
final costs, in as much as UES has demonstrated a definite plan for the use of the land within a reasonable time. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The depreciation expense
included in the proposed revenue requirement reflects an overall net salvage rate of negative 25.28 percent and an overall plant average service life of 33.87 years.</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>8</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> Staff&#146;s pre-filed testimony confirmed that the average
service lives contained in the new depreciation study are slightly longer than those reflected in UES&#146;s existing depreciation accrual rates and stated they were reasonable. Staff recommended an overall net salvage percentage of negative 23.98
percent compared to the existing net salvage percentage of negative 20.89 percent. We find the depreciation accrual rates by plant account included in the Settlement Agreement derived from these overall net salvage rates and plant average service
lives to be appropriate. We also note that the Settlement Agreement commits UES to account for net salvage by plant account rather than by distribution and general plant segments by no later than December&nbsp;31, 2007, update its depreciation study
within 5-8 years, and continue its current practice of accounting for retirements by vintage year. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="8%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman"
SIZE="1" COLOR="#000000"><SUP>8</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Annual depreciation expense increases with greater, i.e., more negative, net salvage while longer plant average service lives decrease annual depreciation expense.
</FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 21 - </FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The record establishes the need for an increase in UES&#146; revenue requirement and supports the amount
of the increase and the target revenues allocated to the customer classes. We conclude that the increase in the revenue requirement and the class revenue impacts are appropriate and reasonable and we find that the Settlement Agreement produces
distribution rates that are just and reasonable. For these reasons, we will approve the Settlement Agreement. Of course, our decision is based on the record before us and does not create a precedent for future cases. We expect to rule on the
requested temporary surcharge and the first step adjustment in a supplemental order to be issued in the near future. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>B. Outstanding
Motions<FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>9</SUP></FONT><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"> </FONT></B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The New Hampshire Right-to-Know Law provides each citizen with the right to inspect all public records
in the possession of the Commission. <I>See</I> RSA 91-A:4, I. The statute contains an exemption, invoked here, for &#147;confidential, commercial or financial information.&#148; RSA 91-A:5, IV. In most cases, a balancing test weighing the interests
for and against confidential treatment is used to determine whether confidential treatment should be granted. <I>See e.g., </I><U>Union Leader Corporation v. New Hampshire Housing Finance Authority,</U> 142 N.H. 540 (1997). Applying the relevant
balancing of the privacy interest involved and the public&#146;s interest in disclosure, the New Hampshire Supreme Court has held that names and addresses of residential customers are entitled to confidential treatment under RSA 91-A:5, IV. <I>See
</I><U>Lamy v. New Hampshire Public Utilities Commission</U>, 152 N.H. 106, 113 (2005). However, names and addresses of business customers are not entitled to confidential treatment. <I>Id</I>. In addition to </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><HR WIDTH="8%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT><FONT FACE="Times New Roman"
SIZE="1" COLOR="#000000"><SUP>9</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In its motions for protective orders, UES cites as its legal authority RSA 91-A and NH Admin. Rules Puc 204.07. Puc 204.07 was subsequently repealed; the
Commission&#146;s current rule on motions for confidential treatment is Puc 203.08, effective June&nbsp;10, 2006. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 22 - </FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">RSA 91-A:5, IV, subsection VI of the statute provides that &#147;[r]ecords pertaining to matters relating to the
preparation for and the carrying out of all emergency functions, including training to carry out such functions, developed by local or state safety officials that are directly intended to thwart a deliberate act that is intended to result in
widespread or severe damage to property or widespread injury or loss of life&#148; are also exempt from disclousre. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">We note that no
parties have objected to the seven motions for protection. With the exception of UES&#146;s March&nbsp;6, 2006 motion regarding its commercial and industrial customers, the information for which confidential, protective treatment is sought is
similar to information for which the Commission has granted protective treatment in the past. We are persuaded on the basis of the record that the interests of UES and ultimately its ratepayers in non-disclosure outweigh the public&#146;s interest
in obtaining access to the information, described in the seven motions, except for UES&#146;s March&nbsp;7, 2006 motion to the extent it seeks confidential treatment for the names and addresses of UES&#146;s business customers. <I>See</I>, Lamy<U>
v. New Hampshire Public Utilities Commission</U>, 152 N.H. 106, 113 (2005). Accordingly we will grant the motions for protective treatment except for the names and addresses of UES&#146;s business customers disclosed in UES&#146;s responses to Staff
data requests 2-3 and 2-4 addressed in UES&#146;s March&nbsp;7, 2006 motion. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Consistent with past practice, the protective treatment
provisions of this Order will be subject to the ongoing rights of the Commission, on its own motion or on the motion of Staff, any party, or any other member of the public to reconsider in light of RSA 91-A, should circumstances so warrant.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 23 - </FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>Based upon the foregoing, it is hereby</B> </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>ORDERED</B>, that the Settlement Agreement is approved; and it is </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2"><B>FURTHER ORDERED</B>, that the motions for protection are granted in part and denied in part, as set forth herein; and it is </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2"><B>FURTHER ORDERED</B>, that UES shall file a compliance tariff with the Commission on or before October&nbsp;20, 2006, in accordance with N.H. Admin. Rules Puc 1603.02(b). </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">By order of the Public Utilities Commission of New Hampshire this sixth day of October, 2006. </FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD WIDTH="34%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="29%"></TD>
<TD VALIGN="bottom" WIDTH="2%"></TD>
<TD WIDTH="33%"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">/s/ Thomas B. Getz</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">/s/ Graham J. Morrison</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">/s/ Clifton C. Below</FONT></P></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">Thomas B. Getz</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">Graham J. Morrison</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">Clifton C. Below</FONT></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">Chairman</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">Commissioner</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">Commissioner</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Attested by: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="43%" BORDER="0">

<TR>
<TD WIDTH="100%"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Debra A. Howland</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Debra A. Howland</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Executive Director&nbsp;&amp; Secretary</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">- 24 - </FONT></P>

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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
