Seattle City Light 2016 ANNUAL REPORT | Audited Financial Statements 6 THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2016 and 2015 - 6 - assets were partially offset by a $58.9 million increase in Accumulated depreciation and amortization to $1,671.8 million. The $101.4 million increase in distribution plant is primarily due to $45.0 million for underground system, $17.9 million for transformers, $15.9 million for stations, $11.4 million for poles, $5.5 million for overhead system, and $5.4 million for streetlights. In hydroelectric production, an increase of $40.4 million was due to continued improvements for generation units at the Boundary project. Other components of utility plant include Construction work-in-progress $319.8 million which increased $67.4 million, Nonoperating property $11.8 million which increased $1.3 million, Assets held for future use $60.8 million which decreased $11.0 million, and Land and land rights $72.7 million, which increased $2.2 million. The $67.5 million increase in Construction work-in-progress is primarily due to increases in the following projects: $16.5 million for the new customer billing system, $16.0 million for Seattle Seawall, $15.7 million for Denny Substation, and $8.1 million for replacement of the energy management system. The decrease in Assets held for future use is primarily due to distribution assets being placed in service. Restricted Assets 2016 Compared to 2015 Restricted assets consisting of restricted cash decreased by $43.1 million to $222.0 million. Construction funds decreased by $60.3 million to $28.4 million, and represent the balance of unspent proceeds from the 2016A Clean Renewable Energy Bonds issued in January. All proceeds from bonds issued prior to 2016 and from additional bonds issued during 2016, were fully spent and used for funding a significant portion of the ongoing capital improvement program. Bond reserve account deposits increased by $13.3 million to $87.0 million from bond proceeds and interest earnings. Additional funding from operating cash of $10.0 million continued accumulation of the reserve account ahead of the existing surety bond 2029 expiration. The Rate Stabilization Account (RSA) increased by a net $0.1 million to $91.1 million. A surcharge on electric rates of 1.5% remains in effect implemented in August 2016 until the RSA is funded to $100.0 million. Additions from the rate surcharge of $4.4 million and interest earnings of $1.2 million were offset by transfer of funds to operating cash of $5.5 million because actual net wholesale revenues were less than budgeted. See Note 4 Rate Stabilization Account of the accompanying financial statements. Other restricted assets increased by $3.8 million to $15.5 million primarily for sundry prepayments and escrow deposits. 2015 Compared to 2014 Restricted assets consisting of restricted cash decreased by $33.3 million to $265.1 million. Construction funds decreased by $35.1 million to $88.7 million, and represent the balance of unspent proceeds from the variable rate 2015B bonds issued in July. Proceeds from the 2014 bonds and from the 2015A bonds issued in May 2015 were fully spent during the year funding a significant portion of the ongoing capital improvement program.