Seattle City Light 2016 ANNUAL REPORT | Audited Financial Statements 7 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 - 7 - Bond reserve account deposits increased by $25.8 million to $73.7 million from operating cash, bond proceeds, and interest earnings. Funding from operating cash of $20.0 million continued accumulation of the reserve account ahead of the existing surety bond 2029 expiration. The Rate Stabilization Account (RSA) decreased by a net $23.4 million to $91.0 million as funds of $24.7 million were transferred to operating cash during the year because net wholesale revenues were less than budgeted. Interest earnings in the amount of $1.3 were transferred to the RSA. Other restricted assets declined by $0.6 million to $11.7 million. Current Assets 2016 Compared to 2015 Current assets decreased by $53.1 million to $286.5 million at year end. Operating cash decreased by $79.6 million to $72.9 million at the end of 2016. Increased inflows to cash derived from a 4.9% system average rate increase effective in January, Bonneville Power Administration (Bonneville) 0.9% pass-through rate adjustment effective in October 2015, transfers from the RSA, and reimbursement from the Construction account for capital expenditures. These were offset by payments for higher debt service, capital construction projects, and ongoing operations. Accounts receivable, net, increased by $15.6 million to $97.8 million. A total of $17.8 million net increase in receivables were for retail electric due to rate increases noted above of $5.4 million, reclassification of customer overpayments to a liability at implementation of the new billing system of $4.8 million, large service connections in progress of $3.0 million, billings to other City departments of $1.6 million, wholesale power receivables of $2.0 million, and other. These were offset by a net increase of $2.2 million in the allowance for bad debt for retail electric and sundry billings. Unbilled revenues increased by $6.1 million to $76.6 million because of the rate increases and higher customer loads due to colder weather during the 4th quarter compared to same comparable period of 2015. Other current assets increased by $4.8 million to $39.2 million. Materials and supplies inventory was higher by $3.1 million due to the purchase of an additional spare transformer for generating facilities and materials for two major projects in progress. The balance increase consisted mainly of inventory loading costs that will be allocated in the following year. 2015 Compared to 2014 Current assets increased by $40.8 million to $339.6 million at the end of 2015. Operating cash increased by $24.2 million to $152.5 million at the end of the year. Increased inflows to cash derived from a 4.2% system average rate increase effective in January, Bonneville Power Administration (Bonneville) 0.9% pass-through rate adjustment effective in October, transfers from the RSA, and reimbursement from the Construction account for capital expenditures. Cash inflows were offset by payments for higher debt service, capital construction projects, and ongoing operations. Accounts receivable, net, increased by $7.6 million to $82.2 million. A total of $12.6 million net increase in receivables were for retail electric due to rate increases, large service connections in progress, a grant from the Model Toxics Control Act, damage billings, and other. These were offset by a net decrease in short-term wholesale power sales of $5.0 million because of lower surplus sales compared to December 2014.