Seattle City Light 2016 ANNUAL REPORT | Audited Financial Statements 66 THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 - 66 - purposes and maintaining regulatory accounts to spread the accounting impact of these accounting adjustments, in Resolution No. 30942 adopted January 16, 2007 (see Note 18 Long-Term Purchased Power, Exchanges, and Transmission). Deferred inflows of resources at December 31, 2016 and 2015 consisted of the following: ($ in millions) 2016 2015 Deferred inflows of resources: Unearned revenue—rate stabilization account 66.1 $ 66.0 $ Changes in Net Pension Liability - changes in employer proportion and differences between contributions and proportionate share of pension expense 0.8 - Bonneville energy conservation agreement 25.7 17.7 Bonneville Slice true-up credit 0.4 5.6 Exchange energy: regulatory gain 1.2 0.6 Total 94.2 $ 89.9 $ 17. SHORT-TERM ENERGY CONTRACTS AND DERIVATIVE INSTRUMENTS The Department engages in an ongoing process of resource optimization, which involves the economic selection from available energy resources to serve the Department’s load obligations and using these resources to capture available economic value. The Department makes frequent projections of electric loads at various points in time based on, among other things, estimates of factors such as customer usage and weather, as well as historical data and contract terms. The Department also makes recurring projections of resource availability at these points in time based on variables such as estimates of stream flows, availability of generating units, historic and forward market information, contract terms, and experience. On the basis of these projections, the Department purchases and sells wholesale electric capacity and energy to match expected resources to expected electric load requirements, and to realize earnings from surplus energy resources. These transactions can be up to 24 months forward. Under these forward contracts, the Department commits to purchase or sell a specified amount of energy at a specified time, or during a specified time in the future. Except for limited intraday and interday trading to take advantage of owned hydro storage, the Department does not take market positions in anticipation of generating revenue. Energy transactions in response to forecasted seasonal resource and demand variations require approval by the Department’s Risk Oversight Council. It is the Department’s policy to apply the normal purchase and normal sales exception of Statement No. 53 of the GASB, Accounting and Financial Reporting for Derivative Instruments, as appropriate. Certain forward purchase and sale of electricity contracts meet the definition of a derivative instrument, but are intended to result in the purchase or sale of electricity delivered and used in the normal course of operations. Accordingly, the Department considers these forward contracts as normal purchases and normal sales under GASB Statement No. 53. These transactions are not required to be recorded at fair value in the financial statements.