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Fair Value | 12 Months Ended
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Dec. 31, 2013
Fair Value Disclosures [Abstract] |
FAIR VALUE | FAIR VALUE The fair value of current financial assets and liabilities, debt service reserves and other deposits approximate their reported carrying amounts. The estimated fair values of the Company’s assets and liabilities have been determined using available market information. By virtue of these amounts being estimates and based on hypothetical transactions to sell assets or transfer liabilities, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Valuation Techniques The fair value measurement accounting guidance describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach, (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on current market expectations of the return on those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Company measures its investments and derivatives at fair value on a recurring basis. Additionally, in connection with annual or event-driven impairment evaluations, certain nonfinancial assets and liabilities are measured at fair value on a nonrecurring basis. These include long-lived tangible assets (i.e., property, plant and equipment), goodwill and intangible assets (e.g., sales concessions, land use rights and emissions allowances, etc.). In general, the Company determines the fair value of investments and derivatives using the market approach and the income approach, respectively. In the nonrecurring measurements of nonfinancial assets and liabilities, all three approaches are considered; however, the value estimated under the income approach is often the most representative of fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the determination of the fair value of the assets and liabilities and their placement within the fair value hierarchy levels. Investments The Company’s investments measured at fair value generally consist of marketable debt and equity securities. Equity securities are measured at fair value using quoted market prices. Debt securities primarily consist of unsecured debentures, certificates of deposit and government debt securities held by our Brazilian subsidiaries. Returns and pricing on these instruments are generally indexed to the CDI (Brazilian equivalent to London Inter-Bank Offered Rate, or LIBOR, a benchmark interest rate widely used by banks in the interbank lending market) or Selic (overnight borrowing rate) rates in Brazil. Fair value is determined from comparisons to market data obtained for similar assets and are considered Level 2 in the fair value hierarchy. For more detail regarding the fair value of investments see Note 5 — Investments in Marketable Securities. Derivatives Any Level 1 derivative instruments are exchange-traded commodity futures for which the pricing is observable in active markets, and as such, these are not expected to transfer to other levels. There have been no transfers between Level 1 and Level 2. For all derivatives, with the exception of any classified as Level 1, the income approach is used, which consists of forecasting future cash flows based on contractual notional amounts and applicable and available market data as of the valuation date. Among the most common market data inputs used in the income approach include volatilities, spot and forward benchmark interest rates (such as LIBOR and Euro Inter Bank Offered Rate (“EURIBOR”)), foreign exchange rates and commodity prices. Forward rates with the same tenor as the derivative instrument being valued are generally obtained from published sources, with these forward rates being assessed quarterly at a portfolio-level for reasonableness versus comparable published information provided from another source. When significant inputs are not observable, the Company uses relevant techniques to best estimate the inputs, such as regression analysis or prices for similarly traded instruments available in the market. For derivatives for which there is a standard industry valuation model, the Company uses a third-party treasury and risk management software product that uses a standard model and observable inputs to estimate the fair value. For these derivatives, the Company performs analytical procedures and makes comparisons to other third-party information in order to assess the reasonableness of the fair value. For derivatives for which there is not a standard industry valuation model (such as PPAs and fuel supply agreements that are derivatives or include embedded derivatives), the Company has created internal valuation models to estimate the fair value, using observable data to the extent available. At each quarter-end, the models for the commodity and foreign currency-based derivatives are generally prepared and reviewed by employees who globally manage the respective commodity and foreign currency risks and are analytically reviewed independent of those employees. Those cash flows are then discounted using the relevant spot benchmark interest rate (such as LIBOR or EURIBOR). The Company then makes a credit valuation adjustment (“CVA”) by further discounting the cash flows for nonperformance or credit risk based on the observable or estimated debt spread of the Company’s subsidiary or its counterparty and the tenor of the respective derivative instrument. The CVA for asset positions is based on the counterparty’s credit ratings and debt spreads. The CVA for liability positions is based on the Parent Company’s or the subsidiary’s current debt spread. In the absence of readily obtainable credit information, the Parent Company’s or the subsidiary’s estimated credit rating (based on applying a standard industry model to historical financial information and then considering other relevant information) and spreads of comparably rated entities or the respective country’s debt spreads are used as a proxy. All derivative instruments are analyzed individually and are subject to unique risk exposures. The Company’s methodology to fair value its derivatives is to start with any observable inputs; however, in certain instances the published forward rates or prices may not extend through the remaining term of the contract and management must make assumptions to extrapolate the curve, which necessitates the use of unobservable inputs, such as proxy commodity prices or historical settlements to forecast forward prices. In addition, in certain instances, there may not be market or market-corroborated data readily available, requiring the use of unobservable inputs. Similarly, in certain instances, the spread that reflects the credit or nonperformance risk is unobservable. The fair value hierarchy of an asset or a liability is based on the level of significance of the input assumptions. An input assumption is considered significant if it affects the fair value by at least 10%. Assets and liabilities are classified as Level 3 when the use of unobservable inputs is significant. When the use of unobservable inputs is insignificant, assets and liabilities are classified as Level 2. Transfers between Level 3 and Level 2 are determined as of the end of the reporting period and result from changes in significance of unobservable inputs used to calculate the CVA. Changes in the above significant unobservable inputs that lead to a significant and unusual impact to current period earnings are disclosed to the Financial Audit Committee. For interest rate derivatives, increases (decreases) in the estimates of the Company's own credit spreads would decrease (increase) the value of the derivatives in a liability position. For foreign currency derivatives, increases (decreases) in the estimate of the above exchange rate would increase (decrease) the value of the derivative. For commodity and other derivatives in the above table, increases (decreases) in the estimated inflation would increase (decrease) the value of those embedded derivatives, while increases (decreases) in the estimated market price for power would increase (decrease) the value of that embedded derivative. Debt Recourse and non-recourse debt are carried at amortized cost. The fair value of recourse debt is estimated based on quoted market prices. The fair value of non-recourse debt is estimated differently based upon the type of loan. In general, the carrying amount of variable rate debt is a close approximation of its fair value. For fixed rate loans, the fair value is estimated using quoted market prices or discounted cash flow analyses. In the discounted cash flow analysis, the discount rate is based on the credit rating of the individual debt instruments, if available, or the credit rating of the subsidiary. If the subsidiary’s credit rating is not available, a synthetic credit rating is determined using certain key metrics, including cash flow ratios and interest coverage, as well as other industry specific factors. For subsidiaries located outside the U.S., in the event that the country rating is lower than the credit rating previously determined, the country rating is used for purposes of the discounted cash flow analysis. The fair value of recourse and non-recourse debt excludes accrued interest at the valuation date. The fair value was determined using available market information as of December 31, 2013. The Company is not aware of any factors that would significantly affect the fair value amounts subsequent to December 31, 2013. Nonfinancial Assets and Liabilities For nonrecurring measurements derived using the income approach, fair value is determined using valuation models based on the principles of discounted cash flows (“DCF”). The income approach is most often used in the impairment evaluation of long-lived tangible assets, goodwill and intangible assets. The Company uses its internally developed DCF valuation models as the primary means to determine nonrecurring fair value measurements though other valuation approaches prescribed under the fair value measurement accounting guidance are also considered. Depending on the complexity of a valuation, an independent valuation firm may be engaged to assist management in the valuation process. A few examples of input assumptions to such valuations include macroeconomic factors such as growth rates, industry demand, inflation, exchange rates and power and commodity prices. Whenever possible, the Company attempts to obtain market observable data to develop input assumptions. Where the use of market observable data is limited or not available for certain input assumptions, the Company develops its own estimates using a variety of techniques such as regression analysis and extrapolations. For nonrecurring measurements derived using the market approach, recent market transactions involving the sale of identical or similar assets are considered. The use of this approach is limited because it is often difficult to identify sale transactions of identical or similar assets. This approach is used in impairment evaluations of certain intangible assets. Otherwise, it is used to corroborate the fair value determined under the income approach. For nonrecurring measurements derived using the cost approach, fair value is typically based upon a replacement cost approach. Under this approach, the depreciated replacement cost of assets is derived by first estimating the current replacement cost of assets and then applying the remaining useful life percentages to such costs. Further adjustments for economic and functional obsolescence are made to the depreciated replacement cost. This approach involves a considerable amount of judgment, which is why its use is limited to the measurement of long-lived tangible assets. Like the market approach, this approach is also used to corroborate the fair value determined under the income approach. Fair Value Considerations In determining fair value, the Company considers the source of observable market data inputs, liquidity of the instrument, the credit risk of the counterparty and the risk of the Company’s or its counterparty’s nonperformance. The conditions and criteria used to assess these factors are: Sources of market assumptions The Company derives most of its market assumptions from market efficient data sources (e.g., Bloomberg and Reuters). To determine fair value, where market data is not readily available, management uses comparable market sources and empirical evidence to develop its own estimates of market assumptions. Market liquidity The Company evaluates market liquidity based on whether the financial or physical instrument, or the underlying asset, is traded in an active or inactive market. An active market exists if the prices are fully transparent to market participants, can be measured by market bid and ask quotes, the market has a relatively large proportion of trading volume as compared to the Company’s current trading volume and the market has a significant number of market participants that will allow the market to rapidly absorb the quantity of assets traded without significantly affecting the market price. Another factor the Company considers when determining whether a market is active or inactive is the presence of government or regulatory controls over pricing that could make it difficult to establish a market based price when entering into a transaction. Nonperformance risk Nonperformance risk refers to the risk that an obligation will not be fulfilled and affects the value at which a liability is transferred or an asset is sold. Nonperformance risk includes, but may not be limited to, the Company or its counterparty’s credit and settlement risk. Nonperformance risk adjustments are dependent on credit spreads, letters of credit, collateral, other arrangements available and the nature of master netting arrangements. The Company and its subsidiaries are parties to various interest rate swaps and options; foreign currency options and forwards; and derivatives and embedded derivatives, which subject the Company to nonperformance risk. The financial and physical instruments held at the subsidiary level are generally non-recourse to the Parent Company. Nonperformance risk on the investments held by the Company is incorporated in the fair value derived from quoted market data to mark the investments to fair value. Recurring Measurements The following table sets forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2013 and 2012:
|  | December 31, 2013 |  | December 31, 2012
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | (in millions)
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
AVAILABLE-FOR-SALE:(1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unsecured debentures |  | $ | — |  |  | $ | 435 |  |  | $ | — |  |  | $ | 435 |  |  | $ | — |  |  | $ | 448 |  |  | $ | — |  |  | $ | 448 |
Certificates of deposit |  | — |  |  | 151 |  |  | — |  |  | 151 |  |  | — |  |  | 143 |  |  | — |  |  | 143 |
Government debt securities |  | — |  |  | 25 |  |  | — |  |  | 25 |  |  | — |  |  | 34 |  |  | — |  |  | 34 |
Subtotal |  | — |  |  | 611 |  |  | — |  |  | 611 |  |  | — |  |  | 625 |  |  | — |  |  | 625 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  | — |  |  | 44 |  |  | — |  |  | 44 |  |  | — |  |  | 56 |  |  | — |  |  | 56 |
Subtotal |  | — |  |  | 44 |  |  | — |  |  | 44 |  |  | — |  |  | 56 |  |  | — |  |  | 56 |
Total available-for-sale |  | — |  |  | 655 |  |  | — |  |  | 655 |  |  | — |  |  | 681 |  |  | — |  |  | 681 |
TRADING: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  | 13 |  |  | — |  |  | — |  |  | 13 |  |  | 12 |  |  | — |  |  | — |  |  | 12 |
Total trading |  | 13 |  |  | — |  |  | — |  |  | 13 |  |  | 12 |  |  | — |  |  | — |  |  | 12 |
DERIVATIVES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives |  | — |  |  | 98 |  |  | — |  |  | 98 |  |  | — |  |  | 2 |  |  | — |  |  | 2 |
Cross currency derivatives |  | — |  |  | 5 |  |  | — |  |  | 5 |  |  | — |  |  | 6 |  |  | — |  |  | 6 |
Foreign currency derivatives |  | — |  |  | 15 |  |  | 98 |  |  | 113 |  |  | — |  |  | 2 |  |  | 79 |  |  | 81 |
Commodity derivatives |  | — |  |  | 18 |  |  | 6 |  |  | 24 |  |  | — |  |  | 8 |  |  | 3 |  |  | 11 |
Total derivatives |  | — |  |  | 136 |  |  | 104 |  |  | 240 |  |  | — |  |  | 18 |  |  | 82 |  |  | 100 |
TOTAL ASSETS |  | $ | 13 |  |  | $ | 791 |  |  | $ | 104 |  |  | $ | 908 |  |  | $ | 12 |  |  | $ | 699 |  |  | $ | 82 |  |  | $ | 793 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
DERIVATIVES: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate derivatives |  | $ | — |  |  | $ | 221 |  |  | $ | 101 |  |  | $ | 322 |  |  | $ | — |  |  | $ | 153 |  |  | $ | 412 |  |  | $ | 565 |
Cross currency derivatives |  | — |  |  | 11 |  |  | — |  |  | 11 |  |  | — |  |  | 6 |  |  | — |  |  | 6 |
Foreign currency derivatives |  | — |  |  | 16 |  |  | 5 |  |  | 21 |  |  | — |  |  | 7 |  |  | 7 |  |  | 14 |
Commodity derivatives |  | — |  |  | 15 |  |  | 2 |  |  | 17 |  |  | — |  |  | 13 |  |  | 4 |  |  | 17 |
Total derivatives |  | — |  |  | 263 |  |  | 108 |  |  | 371 |  |  | — |  |  | 179 |  |  | 423 |  |  | 602 |
TOTAL LIABILITIES |  | $ | — |  |  | $ | 263 |  |  | $ | 108 |  |  | $ | 371 |  |  | $ | — |  |  | $ | 179 |  |  | $ | 423 |  |  | $ | 602 |
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(1) | Amortized cost approximated fair value at December 31, 2013 and 2012.
The following tables present a reconciliation of net derivative assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2013 and 2012 (presented net by type of derivative where any foreign currency impacts are presented as part of gains (losses) in earnings or other comprehensive income as appropriate). Transfers between Level 3 and Level 2 are determined as of the end of the reporting period and principally result from changes in the significance of unobservable inputs used to calculate the credit valuation adjustment.
|  | Year Ended December 31, 2013
|  | Interest Rate |  | Foreign Currency |  | Commodity |  | Total
|  | (in millions)
Balance at January 1 |  | $ | (412 | ) |  | $ | 72 |  |  | $ | (1 | ) |  | $ | (341 | )
Total gains (losses) (realized and unrealized): |  |  |  |  |  |  |  |
Included in earnings |  | 13 |  |  | 53 |  |  | 4 |  |  | 70 |
Included in other comprehensive income - derivative activity |  | 93 |  |  | — |  |  | — |  |  | 93 |
Included in other comprehensive income - foreign currency translation activity |  | (4 | ) |  | (23 | ) |  | — |  |  | (27 | )
Included in regulatory (assets) liabilities |  | — |  |  | — |  |  | 2 |  |  | 2 |
Settlements |  | 100 |  |  | (5 | ) |  | (1 | ) |  | 94 |
Transfers of (assets) liabilities out of Level 3 |  | 109 |  |  | (4 | ) |  |  |  | 105 |
Balance at December 31 |  | $ | (101 | ) |  | $ | 93 |  |  | $ | 4 |  |  | $ | (4 | )
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period |  | $ | 10 |  |  | $ | 53 |  |  | $ | 1 |  |  | $ | 64 |
|  | Year Ended December 31, 2012
|  | Interest Rate |  | Cross Currency |  | Foreign Currency |  | Commodity |  | Total
|  | (in millions)
Balance at January 1 |  | $ | (128 | ) |  | $ | (18 | ) |  | $ | 50 |  |  | $ | 2 |  |  | $ | (94 | )
Total gains (losses) (realized and unrealized): |  |  |  |  |  |  |  |  |  |
Included in earnings |  | (2 | ) |  | — |  |  | 32 |  |  | (5 | ) |  | 25 |
Included in other comprehensive income - derivative activity |  | (28 | ) |  | 3 |  |  | — |  |  | — |  |  | (25 | )
Included in other comprehensive income - foreign currency translation activity |  | (1 | ) |  | — |  |  | (7 | ) |  | — |  |  | (8 | )
Included in regulatory (assets) liabilities |  | — |  |  | — |  |  | — |  |  | 9 |  |  | 9 |
Settlements |  | 26 |  |  | 15 |  |  | (3 | ) |  | (7 | ) |  | 31 |
Transfers of assets (liabilities) into Level 3 |  | (285 | ) |  | — |  |  | — |  |  | — |  |  | (285 | )
Transfers of (assets) liabilities out of Level 3 |  | 6 |  |  | — |  |  | — |  |  | — |  |  | 6 |
Balance at December 31 |  | $ | (412 | ) |  | $ | — |  |  | $ | 72 |  |  | $ | (1 | ) |  | $ | (341 | )
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period |  | $ | (1 | ) |  | $ | — |  |  | $ | 28 |  |  | $ | (3 | ) |  | $ | 24 |
The following table summarizes the significant unobservable inputs used for the Level 3 derivative assets (liabilities) as of December 31, 2013:
Type of Derivative |  | Fair Value |  | Unobservable Input |  | Amount or Range (Weighted Average)
|  | (in millions) |  |  |  |
Interest rate |  | $ | (101 | ) |  | Subsidiaries’ credit spreads |  | 4.44%-5.87% (4.69%) |
Foreign currency: |  |  |  |  |  |
Embedded derivative — Argentine Peso |  | 98 |  |  | Argentine Peso to U.S. Dollar currency exchange rate after 1 year |  | 9.94 - 21.11 (16.35) |
Embedded derivative — Euro |  | (4 | ) |  | Subsidiaries’ credit spreads |  | 4.44 | %
Other |  | (1 | ) |  |  |  |
Commodity: |  |  |  |  |  |
Other |  | 4 |  |  |  |  |
Total |  | $ | (4 | ) |  |  |  |
Nonrecurring Measurements When evaluating impairment of goodwill, long-lived assets, discontinued operations and held-for-sale businesses, and equity method investments, the Company measures fair value using the applicable fair value measurement guidance. Impairment expense is measured by comparing the fair value at the evaluation date to their then-latest available carrying amount. The following table summarizes major categories of assets and liabilities measured at fair value on a nonrecurring basis during the period and their level within the fair value hierarchy:
|  | Year Ended December 31, 2013
|  | Carrying Amount |  | Fair Value |  | Gross Loss
|  | Level 1 |  | Level 2 |  | Level 3 |
|  | (in millions)
Assets |  |  |  |  |  |  |  |  |  |
Long-lived assets held and used:(1) |  |  |  |  |  |  |  |  |  |
Itabo (San Lorenzo) |  | 23 |  |  | — |  |  | — |  |  | 7 |  |  | 16 |
Beaver Valley |  | 61 |  |  | — |  |  | — |  |  | 15 |  |  | 46 |
DP&L (Conesville) |  | 26 |  |  | — |  |  | — |  |  | — |  |  | 26 |
Long-lived assets held for sale:(1) |  |  |  |  |  |  |  |  |  |
U.S. wind turbines |  | 25 |  |  | — |  |  | 25 |  |  | — |  |  | — |
Discontinued operations and held-for-sale businesses:(2) |  |  |  |  |  |  |  |  |  |
Cameroon |  | 414 |  |  | — |  |  | 356 |  |  | — |  |  | 63 |
Saurashtra |  | 19 |  |  | — |  |  | 7 |  |  | — |  |  | 12 |
Ukraine utilities |  | 164 |  |  | — |  |  | 124 |  |  | — |  |  | 44 |
Poland wind projects |  | 79 |  |  | — |  |  | 14 |  |  | — |  |  | 65 |
U.S. wind projects |  | 77 |  |  | — |  |  | 30 |  |  | — |  |  | 47 |
Equity method investments (3) |  | 240 |  |  | — |  |  | — |  |  | 111 |  |  | 129 |
Goodwill |  |  |  |  |  |  |  |  |  |
DP&L |  | 623 |  |  | — |  |  | — |  |  | 316 |  |  | 307 |
Ebute |  | 58 |  |  | — |  |  | — |  |  | — |  |  | 58 |
MountainView |  | 7 |  |  | — |  |  | — |  |  | — |  |  | 7 |
|  | Year Ended December 31, 2012
|  | Carrying Amount |  | Fair Value |  | Gross Loss
|  | Level 1 |  | Level 2 |  | Level 3 |
|  | (in millions)
Assets |  |  |  |  |  |  |  |  |  |
Long-lived assets held and used:(1) |  |  |  |  |  |  |  |  |  |
Kelanitissa |  | $ | 29 |  |  | $ | — |  |  | $ | — |  |  | $ | 10 |  |  | $ | 19 |
U.S. wind projects |  | 21 |  |  | — |  |  | — |  |  | — |  |  | 21 |
Long-lived assets held for sale:(1) |  |  |  |  |  |  |  |  |  |
U.S. wind turbines |  | 45 |  |  | — |  |  | — |  |  | 25 |  |  | 20 |
St. Patrick |  | 33 |  |  | — |  |  | 22 |  |  | — |  |  | 11 |
Discontinued operations and held-for-sale businesses:(2) |  |  |  |  |  |  |  |  |  |
Tisza II |  | 105 |  |  | — |  |  | 14 |  |  | — |  |  | 91 |
Equity method investments (3) |  | 205 |  |  | — |  |  | 155 |  |  | — |  |  | 50 |
Goodwill |  |  |  |  |  |  |  |  |  |
DP&L |  | 2,440 |  |  | — |  |  | — |  |  | 623 |  |  | 1,817 |
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(1) | See Note 21 — Asset Impairment Expense for further information.
(2) | See Note 23 — Discontinued Operations and Held-For-Sale Businesses for further information. Also, the gross loss equals the carrying amount of the disposal group less its fair value less costs to sell.
(3) | See Note 9 — Other Non-Operating Expense for further information.
The following table summarizes the significant unobservable inputs used in the Level 3 measurement of long-lived assets during the year ended December 31, 2013:
|  | Fair Value |  | Valuation Technique |  | Unobservable Input |  | Range (Weighted Average)
|  | (in millions) |  |  |  |  |  | ($ in millions)
Long-lived assets held and used: |  |  |  |  |  |  |  |
Beaver Valley |  | $ | 15 |  |  | Discounted cash flow |  | Annual revenue growth |  | 3% to 45% (19%) |
|  |  |  |  |  | Annual pretax operating margin |  | -42% to 41% (25%) |
|  |  |  |  |  | Weighted-average cost of capital |  | 7 | %
DPL (Conesville) |  | — |  |  | Discounted cash flow |  | Annual revenue growth |  | -31% to 18% (0%) |
|  |  |  |  |  | Annual pretax operating margin |  | -9% to 18% (10%) |
|  |  |  |  |  | Weighted-average cost of capital |  | 8 | %
Itabo (San Lorenzo) |  | 7 |  |  | Market approach |  | Broker quote |  | 7 |
Equity method investment: |  |  |  |  |  |
Elsta |  | 111 |  |  | Discounted cash flow |  | Annual revenue growth |  | -66% to 24% (0%) |
|  |  |  |  |  | Annual pretax operating margin |  | 15% to 68% (40%) |
|  |  |  |  |  | Cost of equity |  | 7.8% to 9.8% (8.4%) |
Total |  | $ | 133 |  |  |  |  |  |  |
Financial Instruments not Measured at Fair Value in the Condensed Consolidated Balance Sheets The following table sets forth the carrying amount, fair value and fair value hierarchy of the Company’s financial assets and liabilities that are not measured at fair value in the condensed consolidated balance sheets as of December 31, 2013 and 2012, but for which fair value is disclosed.
|  | Carrying Amount |  | Fair Value
|  | Total |  | Level 1 |  | Level 2 |  | Level 3
|  | (in millions)
December 31, 2013 |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |
Accounts receivable — noncurrent(1) |  | $ | 260 |  |  | $ | 194 |  |  | $ | — |  |  | $ | — |  |  | $ | 194 |
Liabilities |  |  |  |  |  |  |  |  |  |
Non-recourse debt |  | 15,380 |  |  | 15,620 |  |  | — |  |  | 13,397 |  |  | 2,223 |
Recourse debt |  | 5,669 |  |  | 6,164 |  |  | — |  |  | 6,164 |  |  | — |
December 31, 2012 |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |
Accounts receivable — noncurrent(1) |  | $ | 304 |  |  | $ | 188 |  |  | $ | — |  |  | $ | — |  |  | $ | 188 |
Liabilities |  |  |  |  |  |  |  |  |  |
Non-recourse debt |  | 14,759 |  |  | 15,481 |  |  | — |  |  | 13,266 |  |  | 2,215 |
Recourse debt |  | 5,962 |  |  | 6,628 |  |  | — |  |  | 6,628 |  |  | — |
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(1) | These accounts receivable principally relate to amounts due from CAMMESA, the administrator of the wholesale electricity market in Argentina, and are included in “Noncurrent assets — Other” in the accompanying consolidated balance sheets. The fair value of these accounts receivable excludes value-added tax of $46 million and $55 million at December 31, 2013 and 2012, respectively.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
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