Seattle City Light 2016 ANNUAL REPORT | Audited Financial Statements 13 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 - 13 - Transactions within Transfers from/(to) rate stabilization account are affected in part by actual net wholesale power revenues compared to budget. In 2016, actual net wholesale power revenues were lower than budget by $5.5 million and this amount was transferred from the rate stabilization unearned revenue account. This was offset by the RSA rate surcharge revenues of $4.4 million and interest earnings of $1.2 million for a net ($0.1) million transferred to the rate stabilization unearned revenue account. In 2015, actual net wholesale power revenues were lower than budget and $23.4 million net was transferred to operating revenues. The net effect to the Transfers from/(to) RSA between years was a decrease of $23.5 million. Other operating revenues declined for damage billings of $1.9 million, salvage sales of $1.6 million, and new retail billing system interest charges of $0.6 million, and were offset by other net increases of $1.0 million. *Operating revenues adjusted by $4.1 million for prior years one-time true-up downward adjustment to unbilled revenue, a noncash item recorded in 2014. Net Short-term wholesale power revenues were $47.8 million, an increase of $13.4 million or 39.0% from net Short- term wholesale power revenues of $34.4 million in 2015. On an annual basis, the Department expects to be a net seller in the wholesale energy market. Water conditions in the Northwest improved in 2016 resulting in more power generated than in 2015 which was used to meet the Department’s load leading to lower short-term power purchased in the spot market. Average wholesale power prices were again lower in 2016 because of the low natural gas prices. Other net power-related revenues, including valuation of energy exchange revenues were lower by a net $2.9 million due to lower average wholesale power prices. 2,918.0 2,914.6 2,987.7 6,262.4 6,242.9 6,352.9 - 2,000.0 4,000.0 6,000.0 8,000.0 10,000.0 2016 2015 2014 MWh Retail MWh Residential Non-residential 9,180.4 9,157.5 9,340.6 $285.7 $264.7 $259.9 $502.3 $471.9 $460.9 $- $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 2016 2015 2014 (in millions) Retail Revenue Residential Non-residential $788.0 $736.6 $720.8 *