6. Capital leases:

In 1985, we sold and subsequently leased back from four purchasers their 60% undivided ownership interest in Scherer Unit No. 2. The gain from the sale is being amortized over the terms of the leases. Three of the leases have lease terms through December 31, 2027, and one lease extends through June 30, 2031. The assumed interest rate at inception of the lease in 1985 was 11.05%.

The minimum lease payments under the capital leases together with the present value of the net minimum lease payments as of December 31, 2016 are as follows:


Year Ending December 31,		(dollars in thousands)

2017	$	22,424
2018		14,949
2019		14,949
2020		14,949
2021		14,949
2022-2031		100,380

Total minimum lease payments		182,600
Less: Amount representing interest		(84,069	)

Present value of net minimum lease payments		98,531
Less: Current portion		(6,435	)

Long-term balance	$	92,096

The Scherer No. 2 lease is reported as a capital lease. For rate-making purposes, however, we include the actual lease payments in our cost of service. The difference between lease payments and the aggregate of the amortization on the capital lease asset and the interest on the capital lease obligation is recognized as a regulatory asset. Capital lease amortization is recorded in depreciation and amortization expense.