Seattle City Light 2016 ANNUAL REPORT | Audited Financial Statements 12 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 - 12 - RESULTS OF OPERATIONS Condensed Statements of Revenues, Expenses, and Changes in Net Position ($ in millions) 2016 2015 2014 Operating revenues 903.2 $ 882.9 $ 886.4 $ Nonoperating revenues 14.6 16.7 18.5 Total revenues 917.8 899.6 904.9 Operating expenses 795.8 772.0 734.1 Nonoperating expenses 75.1 76.5 77.9 Total expenses 870.9 848.5 812.0 Income before capital contributions and grants 46.9 51.1 92.9 Capital contributions 37.9 39.0 27.7 Capital grants 0.5 0.4 0.7 Total capital contributions and grants 38.4 39.4 28.4 Change in net position 85.3 $ 90.5 $ 121.3 $ Year Ended December 31 SUMMARY 2016 Compared to 2015 Change in net position for 2016 was $85.3 million, a decrease of $5.2 million or 5.7% from 2015 change in net position of $90.5 million. Higher retail electric sales attributable to rate increases, including for the 1.5% rate surcharge, and higher net Short-term wholesale power revenues were offset by lower transfers from/(to) RSA. Further offsets were for higher non-power operations and maintenance expenses due to retro pay and COLA labor costs, and for the increase in pension expense. 2015 Compared to 2014 Change in net position for 2015 was $90.5 million, a decrease of $30.8 million or 25.4% from 2014 change in net position of $121.3 million due in large part to lower net Short-term wholesale power revenues compared to 2014. Higher retail electric sales, transfers from/(to) RSA, and capital contributions were offset by lower power related revenues, net, and higher distribution, administrative and general, taxes, and depreciation, in addition to the lower net Short-term wholesale power revenues. REVENUES 2016 Compared to 2015 Total operating revenues were $903.2 million, an increase of $20.3 million or 2.3% from 2015. Retail power revenues at $788.0 million increased $51.4 million, Short-term wholesale power revenues at $62.9 million increased $1.7 million, Other power-related revenues at $32.6 million decreased $4.2 million, Transfers from/(to) RSA at ($.01) million decreased $23.5 million, and Other operating revenues at $19.8 million decreased $5.1 million. Retail power revenues were higher due to the 4.9% across-the-board rate increase effective January 1, 2016, the 0.9% Bonneville pass-through rate adjustment effective in October 2015, and the RSA rate surcharge, effective August 1, 2016 even with lower consumption from another year with overall warmer weather.