Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90Seattle City Light 2015 Annual Report 13 - 13 - THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 and 2014 REVENUES 2015 Compared to 2014 Total operating revenues were $882.9 million, a decrease of $3.5 million or (0.4%) from 2014. Retail power revenues at $736.6 million increased $15.8 million, Wholesale power revenues at $61.2 million decreased $35.6 million, Other power revenues at $36.8 million decreased $14.0 million, Transfers from/(to) RSA at $23.4 million increased $27.8 million, and Other operating revenues at $24.9 million increased $2.5 million. Retail power revenues were higher due to the 4.2% across-the-board rate increase effective January 1, 2015 and the 0.9% Bonneville pass-through rate adjustment effective in October 2015 despite lower consumption from warmer weather during most of 2015. Actual net wholesale power revenues were lower than budget and as a consequence, $23.4 million net was transferred to operating revenues. In 2014, $4.4 million net was transferred to the RSA unearned revenue account as a result of actual net wholesale energy revenues being higher than budget. The net effect of Transfers from/(to) RSA between years was an increase of $27.8 million. Net wholesale energy revenues were $34.4 million, a substantial decrease of $47.5 million or (58.0%) from net wholesale energy revenues of $81.9 million in 2014. On an annual basis, the Department expects to be a net seller in the wholesale energy market. During 2015, earlier snow melt in the mountains, lower than normal spring precipitation, and above average temperatures since May contributed to the lower wholesale energy sales. The resulting less power generated along with lower average wholesale prices also influenced the unfavorable surplus energy revenues. Wholesale power prices remained historically low throughout most of 2015, mainly driven by depressed natural gas prices. Additionally, compared to the average of the last five years, 2015 hydro generation was around 88% and prices were around 80%. Other power related revenues were lower by a net $8.1 million from 2014, also affected by lower average wholesale power prices along with lower volume available, and thereby causing lower valuation of net power exchange revenues. 2014 Compared to 2013 Total operating revenues were $886.4 million, an increase of $44.2 million or 5.3% from 2013. Retail power revenues at $720.8 million increased $23.1 million, Wholesale power revenues at $96.8 million increased $33.8 million, Other power revenues at $50.8 million increased $10.4 million, Transfers from/(to) RSA at ($4.4) million decreased $22.7 million, and Other operating revenues at $22.4 million decreased $0.4 million. Retail power revenues were higher as a result of the 5.6% across-the-board rate increase effective January 1, 2014 and the 1.2% Bonneville pass-through rate adjustment effective in October 2013. Actual net wholesale power revenues were higher than budgeted and therefore, $4.4 million net was transferred to the RSA unearned revenue account. In 2013, $18.3 million net was transferred-in from the RSA unearned revenue account to supplement lower net wholesale energy revenues than budget. The net effect of transactions in the Transfers from/(to) RSA between years was a reduction of $22.7 million in operating revenues. Net wholesale energy revenues were $81.9 million, an increase of $38.7 million or 89.6% from net wholesale energy revenues of $43.2 million in 2013. During 2014, higher surplus energy that was available for sale due to a strong water year along with higher average wholesale power prices contributed to the improved net wholesale energy revenues. Other power revenues were higher by a net $6.8 million from 2013 generally on the basis of higher valuation of net power exchange revenues and the higher average wholesale power prices.