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DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended
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Dec. 31, 2024
Disclosure of detailed information about financial instruments [abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The company’s activities expose it to a variety of financial risks, including market risk (i.e. currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The company selectively uses derivative financial instruments principally to manage these risks. The aggregate notional amount of the company’s derivative positions as at December 31, 2024 and 2023 is as follows:
AS AT DEC. 31 (MILLIONS) | Note |  | 2024 |  | 2023
Foreign exchange | (a) |  | $ | 63,064 |  |  | $ | 58,175 |
Interest rates | (b) |  | 97,961 |  |  | 124,265 |
Equity derivatives | (c) |  | 1,936 |  |  | 2,017 |
Commodity instruments | (d) |  |  |  |
Energy (GWh) |  |  | 173,523 |  |  | 98,345 |
Natural gas (MMBtu – 000’s) |  |  | 110,828 |  |  | 144,104 |
a) Foreign Exchange The company held the following foreign exchange contracts with notional amounts as at December 31, 2024 and 2023:
| Notional Amount (U.S. Dollars) |  | Average Exchange Rate
(MILLIONS) | 2024 |  | 2023 |  | 2024 |  | 2023
Foreign exchange contracts |  |  |  |  |  |  |
Canadian dollars | $ | 7,878 |  |  | $ | 7,360 |  |  | 0.74 |  |  | 0.76 |
British pounds | 8,334 |  |  | 7,608 |  |  | 1.15 |  |  | 1.07 |
European Union euros | 15,497 |  |  | 14,814 |  |  | 1.01 |  |  | 1.09 |
Australian dollars | 5,228 |  |  | 3,417 |  |  | 0.66 |  |  | 0.69 |
Indian rupee 1 | 7,280 |  |  | 5,233 |  |  | 88.12 |  |  | 85.57 |
Korean won 1 | 1,002 |  |  | 1,091 |  |  | 1,380 |  |  | 1,303 |
Chinese yuan 1 | 3,604 |  |  | 3,083 |  |  | 6.97 |  |  | 6.86 |
Japanese yen 1 | 142 |  |  | 77 |  |  | 137.64 |  |  | 138.41 |
Colombian pesos 1 | 2,463 |  |  | 2,652 |  |  | 4,541 |  |  | 4,629 |
Brazilian reais | 1,981 |  |  | 3,969 |  |  | 0.19 |  |  | 0.18 |
Other currencies | 763 |  |  | 1,532 |  |  | Various |  | Various
Cross currency interest rate swaps |  |  |  |  |  |  |
Canadian dollars | 5,661 |  |  | 6,457 |  |  | 0.80 |  |  | 0.80 |
Australian dollars | 346 |  |  | 502 |  |  | 0.66 |  |  | 0.68 |
Chinese yuan 1 | 825 |  |  | — |  |  | 7.17 |  |  | — |
Foreign exchange options |  |  |  |  |  |  |
Indian rupee 1 | 2,060 |  |  | 379 |  |  | 82.87 |  |  | 74.20 |
1.Average rate is quoted using USD as base currency. Included in net income are unrealized net gains on foreign currency derivative contracts amounting to $236 million (2023 – gains of $47 million) and included in the cumulative translation adjustment account in other comprehensive income are gains in respect of foreign currency contracts entered into for hedging purposes amounting to $2.8 billion (2023 – losses of $1.6 billion). b) Interest Rates As at December 31, 2024, the company held interest rate swap and forward starting swap contracts having an aggregate notional amount of $70.5 billion (2023 – $76.1 billion), interest rate swaptions with an aggregate notional amount of $nil (2023 – $292 million) and interest rate cap contracts with an aggregate notional amount of $27.5 billion (2023 – $47.9 billion). c) Equity Derivatives As at December 31, 2024, the company held equity derivatives with a notional amount of $1.9 billion (2023 – $2.0 billion) which include approximately $1.9 billion (2023 – $2.0 billion) notional amount that hedges long-term compensation arrangements. The balance represents common equity positions established in connection with the company’s investment activities as well as general equity market hedges. The fair value of these instruments was reflected in the company’s consolidated financial statements at year end. d) Commodity Instruments The company has entered into energy derivative contracts primarily to hedge the sale of generated power. The company endeavors to link forward electricity sale derivatives to specific periods in which it expects to generate electricity for sale. All energy derivative contracts are recorded at an amount equal to fair value and are reflected in the company’s consolidated financial statements. The company has financial contracts outstanding on 110,828,000 MMBtu’s (2023 – 144,104,000 MMBtu’s) of natural gas as part of its electricity sale price risk mitigation strategy. Other Information Regarding Derivative Financial Instruments The following table classifies derivatives elected for hedge accounting during the years ended December 31, 2024 and 2023 as either cash flow hedges or net investment hedges. Changes in the fair value of the effective portion of the hedge are recorded in either other comprehensive income or net income, depending on the hedge classification, whereas changes in the fair value of the ineffective portion of the hedge are recorded in net income:
| 2024 |  | 2023
FOR THE YEARS ENDED DEC. 31 (MILLIONS) | Notional |  | Effective Portion |  | Ineffective Portion |  | Notional |  | Effective Portion |  | Ineffective Portion
Cash flow hedges 1 | $ | 71,646 |  |  | $ | (17) |  |  | $ | 7 |  |  | $ | 84,119 |  |  | $ | (754) |  |  | $ | (12) |
Net investment hedges | 47,408 |  |  | 2,814 |  |  | — |  |  | 45,979 |  |  | (1,200) |  |  | — |
| $ | 119,054 |  |  | $ | 2,797 |  |  | $ | 7 |  |  | $ | 130,098 |  |  | $ | (1,954) |  |  | $ | (12) |
1.Notional amount does not include 131,526 GWh and 69,082 MMBtu – 000’s – of commodity derivatives as at December 31, 2024 (2023 – 28,952 GWh, 49,386 MMBtu – 000’s). The following table presents the change in fair values of the company’s derivative positions during the years ended December 31, 2024 and 2023, for derivatives that are fair valued through profit or loss, and derivatives that qualify for hedge accounting:
(MILLIONS) | Unrealized Gains During 2024 |  | Unrealized Losses During 2024 |  | Net Change During 2024 |  | Net Change During 2023
Foreign exchange derivatives | $ | 271 |  |  | $ | (35) |  |  | $ | 236 |  |  | $ | 47 |
Interest rate derivatives | 222 |  |  | (461) |  |  | (239) |  |  | (10) |
Equity derivatives | 500 |  |  | — |  |  | 500 |  |  | (32) |
Commodity derivatives | 248 |  |  | (126) |  |  | 122 |  |  | 98 |
| $ | 1,241 |  |  | $ | (622) |  |  | $ | 619 |  |  | $ | 103 |
The following table presents the notional amounts underlying the company’s derivative instruments by term to maturity as at December 31, 2024 and 2023, for derivatives that are classified as fair value through profit or loss, and derivatives that qualify for hedge accounting:
| 2024 |  | 2023
AS AT DEC. 31 (MILLIONS) | <1 Year |  | 1 to 5 Years |  | >5 Years |  | Total Notional Amount |  | Total Notional Amount
Fair value through profit or loss |  |  |  |  |  |  |  |  |
Foreign exchange derivatives | $ | 2,576 |  |  | $ | 4,489 |  |  | $ | 2,594 |  |  | $ | 9,659 |  |  | $ | 6,133 |
Interest rate derivatives | 15,044 |  |  | 15,264 |  |  | 1,393 |  |  | 31,701 |  |  | 45,100 |
Equity derivatives | 1,704 |  |  | 198 |  |  | 34 |  |  | 1,936 |  |  | 2,017 |
Commodity instruments |  |  |  |  |  |  |  |  |
Energy (GWh) | 3,507 |  |  | 24,011 |  |  | 14,479 |  |  | 41,997 |  |  | 69,394 |
Natural gas (MMBtu – 000’s) | 41,276 |  |  | 470 |  |  | — |  |  | 41,746 |  |  | 94,718 |
Elected for hedge accounting |  |  |  |  |  |  |  |  |
Foreign exchange derivatives | $ | 15,741 |  |  | $ | 35,776 |  |  | $ | 1,888 |  |  | $ | 53,405 |  |  | $ | 52,041 |
Interest rate derivatives | 23,888 |  |  | 33,208 |  |  | 9,164 |  |  | 66,260 |  |  | 79,165 |
Commodity instruments |  |  |  |  |  |  |  |  |
Energy (GWh) | 14,553 |  |  | 42,697 |  |  | 74,276 |  |  | 131,526 |  |  | 28,951 |
Natural gas (MMBtu – 000’s) | 41,921 |  |  | 27,161 |  |  | — |  |  | 69,082 |  |  | 49,386 |

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- Definition The disclosure of derivative financial instruments. [Refer: Derivatives [member]] + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Name IAS -Number 1 -IssueDate 2023-01-01 -Paragraph 10 -Subparagraph e -URI https://taxonomy.ifrs.org/xifrs-link?type=IAS&num=1&code=ifrs-tx-2023-en-r&anchor=para_10_e&doctype=Standard -URIDate 2023-03-23 + Details
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