Seattle City Light 2016 ANNUAL REPORT | Audited Financial Statements 70 THE CITY OF SEATTLE—CITY LIGHT DEPARTMENT NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 - 70 - Fair Value of Exchange Energy—Exchange energy receivable and the related regulatory gains at December 31, 2016 and 2015, were valued using Kiodex Forward Curves, and Dow Jones U.S. Daily Electricity Price Indices for settled deliveries. An income valuation technique that uses interest rate forecasts from HIS Global Insight is used to discount for present value based on the interest rate for U.S. Government Treasury constant maturities, bond-equivalent yields by the future month of the transactions (see Note 2 Fair Value Measurement and Note 16 Deferred Inflows of Resources). Estimated Future Payments Under Purchased Power, Transmission and Related Contracts—The Department’s estimated payments for purchased power and transmission, Renewable Energy Credits (RECs) and other contracts for the period from 2017 through 2065, undiscounted, are as follows: Years Ending Estimated December 31 Payments (a) ($ in millions) 2017 288.8 $ 2018 283.5 2019 291.6 2020 308.6 2021(b) 292.2 2022-2026(c) 1,395.7 2027-2031(d) 497.2 Thereafter (through 2065) 160.0 Total 3,517.6 $ (a) 2017 to 2019 includes estimated REP recoveries from Bonneville. (b) British Columbia - High Ross direct cost payments end in 2020. (c) Bonneville transmission contract expires July 31, 2025. (d) Bonneville Block and Slice contract expires September 30, 2028. 19. COMMITMENTS AND CONTINGENCIES Operating Leases—While the Department owns several buildings including those at the Skagit and Boundary hydroelectric projects, service centers, and the System Control Center, the Department leases some administrative office space from the City. Such lease payments to the City are made through a central cost allocation process, similar to all other payments for tenancy of City property. These payments are not included in the operating leases table below. The Department also leases certain office equipment and smaller facilities for various purposes through long-term operating lease agreements. Expenses for all operating leases totaled $1.7 million in 2016 and $1.6 million in 2015.