Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90Seattle City Light 2015 Annual Report THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 - 30 - RSA Balance Action Less than or equal to $90.0 million but greater than $80.0 million Automatic 1.5% surcharge Less than or equal to $80.0 million but greater than $70.0 million Automatic 3.0% surcharge Less than or equal to $70.0 million but greater than $50.0 million Automatic 4.5% surcharge Less than or equal to $50.0 million City Council must initiate rate review within 45 days and determine actions to replenish RSA to $100.0 million within 12 months In February 2014 the Seattle City Council adopted Ordinance No. 124426 (retroactive to December 2013), directing specific cash transfers to the RSA with the intention of reducing the likelihood of future rate surcharges. Ordinance No. 123260 originally required a rate review whenever the RSA balance exceeded $125.0 million, along with the implementation of measures to reduce the RSA balance to $125.0 million within a period of 12 months or less. Subsequently, the Seattle City Council adopted Ordinance No. 124108 in February 2013 (retroactive to January 1, 2013) which extended the timing of this required rate review and associated action to an effective date of January 1, 2014. In 2015, actual net wholesale revenue was $24.7 million less than budgeted due to an unusually warm and dry winter which yielded lower-than-normal hydro generation volumes, coupled with low wholesale energy market prices. Hence, net transfers of $24.7 million were made to the operating cash account during the year. Interest income of $1.3 million was earned on the RSA. The RSA ending balance was $91.0 million at December 31, 2015, and no surcharges were in effect during 2015. In 2014, actual surplus power sales revenues were greater than budgeted and funds of $3.4 million were transferred to the RSA from operating cash. Interest income of $1.0 million was earned on the RSA. Total net increase to the RSA was $4.4 million. The RSA balance was $114.4 million at December 31, 2014, and no surcharges were in effect during 2014. The RSA at December 31, 2015, and 2014, consisted of cash from the following sources: ($ in millions) 2015 2014 Rate Stabilization Account Beginning balance 114.4 $ 110.0 $ RSA interest income 1.3 1.0 Operating revenue (24.7) 3.4 Ending balance 91.0 $ 114.4 $ RSA transactions are recorded in accordance with GASB Statement No. 62 Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. 30