Seattle City Light 2016 ANNUAL REPORT | Audited Financial Statements 28 THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 - 28 - of December 31, 2016 and 2015, Assets held for future use included the following electrical plant assets: land for future substations, ducts and vaults, transmission lines, and plans for additional hydraulic generating capacity totaling $59.5 million and $60.8 million, respectively. Materials and Supplies—Materials and supplies are generally used for construction, operation and maintenance work, not for resale. They are valued utilizing the average cost method and charged to construction or expense when used. Revenue Recognition—Service rates are authorized by City ordinances. Billings are made to customers on a monthly or bimonthly basis. Revenues for energy delivered to customers between the last billing date and the end of the year are estimated and reflected in the accompanying financial statements as unbilled revenue within Retail power revenues. The Department’s customer base accounted for electric energy sales at December 31, 2016 and 2015, as follows: 2016 2015 Residential 36.3 % 35.9 % Nonresidential 63.7 % 64.1 % Total 100.0 % 100.0 % Revenues earned in the process of delivering energy to customers, wholesale energy transactions, and related activities are considered operating revenues in the determination of change in net position. Investment income, nonexchange transactions, and other revenues are considered Nonoperating revenues. Expense Recognition—Expenses incurred in the process of delivering energy to customers, wholesale energy transactions, and related activities are considered operating expenses in the determination of net income. Debt interest expense, debt related amortization, and certain other expenses are considered Nonoperating expenses. Administrative and General Overhead Costs Applied—Certain administrative and general overhead costs are allocated to construction work-in-progress, major data processing systems development, programmatic conservation, relicensing mitigation projects, and billable operations and maintenance activities based on rates established by cost studies. Pension and benefit costs are allocated to capital and operations and maintenance activities based on a percentage of labor dollars. The administrative and general overhead costs applied totaled $51.4 million and $52.1 million in 2016 and 2015, respectively. Pension and benefit costs were $59.9 million and $58.7 million in 2016 and 2015, respectively. Administrative and general expenses, net of total applied overhead, were $105.0 million and $92.1 million in 2016 and 2015, respectively. Interest Charged to Construction—Interest is charged for funds used during construction of plant assets and to non-billable construction work-in-progress. Interest charged represents the estimated costs of financing construction projects and is computed using the Department’s weighted-average interest rate for all bonds outstanding, the majority of which are tax exempt, and is revised when new bonds are issued and at the end of the year. Interest charged to construction totaled $10.2 million and $8.9 million in 2016 and 2015, respectively, and is reflected as a reduction of Interest expense in the statements of revenues, expenses, and changes in net position.