Seattle City Light 2016 ANNUAL REPORT | Audited Financial Statements 45 THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 - 45 - The Department had the following activity in long-term debt during 2016 and 2015: ($ in millions) Balance at Balance at Current 1/1/16 Additions Reductions 12/31/16 Portion 2016 Prior Lien Bonds - fixed rate 1,970.8 $ 309.6 $ (262.3) $ 2,018.1 $ 111.2 $ Prior Lien Bonds - variable rate 100.0 - - 100.0 - 2,070.8 $ 309.6 $ (262.3) $ 2,118.1 $ 111.2 $ ($ in millions) Balance at Balance at Current 1/1/15 Additions Reductions 12/31/15 Portion 2015 Prior Lien Bonds - fixed rate 1,903.8 $ 171.9 $ (104.9) $ 1,970.8 $ 105.9 $ Prior Lien Bonds - variable rate - 100.0 - 100.0 - 1,903.8 $ 271.9 $ (104.9) $ 2,070.8 $ 105.9 $ Prior Lien Bonds—In January 2016 the Department issued $31.9 million of taxable Municipal Light and Power (ML&P) Clean Renewable Energy Bonds (2016A Bonds) and $116.9 million of tax exempt Municipal Light and Power (ML&P) Refunding Revenue Bonds (2016B Bonds). In September 2016, the Department issued $160.8 million of tax exempt Municipal Light and Power (ML&P) Improvement and Refunding Revenue Bonds (2016C Bonds). The 2016A Bonds had a fixed coupon interest rate of 4.05% and mature serially from January 1, 2036 to January 1, 2041. The 2016B Bonds had coupon interest rates ranging from 4.00% to 5.00% and mature serially from October 1, 2016 through April 1, 2029. The 2016C Bonds had interest rates ranging from 4.00% to 5.00% and mature serially from October 1, 2017 through October 1, 2037 with term bonds maturing annually from October 1, 2038 to October 1, 2046. The arbitrage yield was 1.01% for the 2016A Bonds, 1.88% for the 2016B Bonds, and 2.29% for the 2016C Bonds. Arbitrage yield, when used in computing the present worth of all payments of principal and interest on the Bonds in the manner prescribed by the Internal Revenue Code, produces an amount equal to the issue price of the Bonds. Proceeds from the 2016A Bonds are being used to finance certain capital improvement and conservation programs. Proceeds from the 2016B Bonds were used to refund $122.8 million of the 2008 Bonds. Proceeds from the 2016C Bonds were used to finance certain capital improvement and conservation programs and to refund $32.0 million of the 2010B Bonds. The debt service on the 2016A Bonds requires a cash flow over the life of the bonds of $60.9 million, including $29.0 million in interest, and the debt service on the 2016B Bonds requires a cash flow over the life of the bonds of $166.8 million including $50.0 million in interest. The difference between the cash flows required to service the old and new debt and to complete the refunding for the 2016A&B Bonds and the 2016C Bonds totaled $22.1 million and $1.8 million, and the aggregate economic gain on refunding totaled $19.4 million and $2.0 million at present value, respectively. The debt service of the 2016C Bonds requires a cash flow over the life of the bonds of $268.8 million, including $108.0 million in interest. The accounting loss on refunding for the 2016B Bonds was $16.1 million and was $3.0 million for the 2016C Bonds. In July 2015, the Department issued $171.9 million of tax exempt Municipal Light and Power (ML&P) Revenue Bonds (2015A Bonds), and $100.0 million of tax exempt variable rate Municipal Light and Power (ML&P) Revenue Bonds (2015B Bonds). The 2015A Bonds had coupon interest rates ranging from 4.00% to 5.00% and mature serially from May 1, 2016 to May 1, 2040 with term Bonds maturing May 1, 2045. The 2015B Bonds had coupon interest rates ranging from .69% to .71% during 2015 with term bonds maturing annually from May 1, 2026 to May 1, 2045. The 2015B Bonds bear interest at the adjusted Securities Industry and Financial Markets Association (SIFMA) interest rate which is the SIFMA Index plus the Index floating rate spread. The arbitrage yield was 3.52% for the 2015A Bonds and 3.47%