XML 35 R22.htm IDEA: XBRL DOCUMENT
v3.20.2

Leases | 9 Months Ended
--- | ---
Sep. 30, 2020
Leases [Abstract] |
Leases | Leases Accounting for Leases The Company evaluates each arrangement at inception to determine if it contains a lease. All of the Company’s leases are operating leases as of September 30, 2020. Lessee The Company records its operating lease liabilities at the present value at lease commencement date of the lease payments over the lease term. Lease payments include fixed payment amounts, as well as variable rate payments based on an index initially measured at lease commencement date. Variable payments, including payments based on future performance and based on index changes, are recorded as the expense is incurred. The Company determines the relevant lease term by evaluating whether renewal and termination options are reasonably to certain to be exercised. The Company uses its incremental borrowing rate to calculate the present value of the lease payments, based on information available at the lease commencement date. The Company’s leases consist of land leases for numerous operating asset locations, real estate leases and equipment leases. The terms and conditions for these leases vary by the type of underlying asset. Lease expense was comprised of the following:
| Three months ended September 30, 2020 |  | Three months ended September 30, 2019 |  | Nine months ended September 30, 2020 |  | Nine months ended September 30, 2019
| (In millions)
Operating lease cost - Fixed | $ | 5 |  |  | $ | 2 |  |  | $ | 14 |  |  | $ | 6 |
Operating lease cost - Variable | 2 |  |  | 3 |  |  | 7 |  |  | 10 |
Total lease cost | $ | 7 |  |  | $ | 5 |  |  | $ | 21 |  |  | $ | 16 |
The Company lease liabilities as of September 30, 2020 and December 31, 2019 comprised of the following:
|  | September 30, 2020 |  | December 31, 2019
|  | (In millions, except term and rate)
ROU Assets - operating leases, net |  | $ | 256 |  | $ | 223
Short-term lease liability - operating leases (a) |  | 7 |  | 7
Long-term lease liability - operating leases |  | 260 |  | 227
Total lease liability |  | $ | 267 |  | $ | 234
Weighted average remaining lease term |  | 24 |  | 25
Weighted average discount rate |  | 4.3 | % |  | 4.4 | %
|  | Nine months ended September 30, 2020 |  | Nine months ended September 30, 2019
Cash paid for operating leases |  | $ | 13 |  |  | $ | 7
(a) Short-term lease liability balances are included within the accrued expenses and other current liabilities line item of the consolidated balance sheets as of September 30, 2020 and December 31, 2019. Maturities of operating lease liabilities as of September 30, 2020 are as follows:
(In millions) |  |
Remainder of 2020 |  | $ | 5 |
2021 |  | 18 |
2022 |  | 18 |
2023 |  | 18 |
2024 |  | 18 |
Thereafter |  | 332 |
Total lease payments |  | 409 |
Less imputed interest |  | (142) |
Total lease liability - operating leases |  | $ | 267 |
Oahu Solar Lease Agreements The Oahu Solar projects are party to various land lease agreements with a wholly owned subsidiary of CEG. The projects are leasing the land for a period of 35 years, with the ability to renew the lease for two additional five year periods. The Company has a lease liability of $20 million and $21 million as of September 30, 2020 and December 31, 2019, respectively, and a corresponding right-of-use asset of $18 million and $19 million related to leases as of September 30, 2020 and December 31, 2019, respectively. Lessor The majority of the Company’s revenue is obtained through PPAs or other contractual agreements that are accounted for as leases. These leases are comprised of both fixed payments and variable payments contingent upon volumes or performance metrics. The terms of the leases are further described in Item 2 — MD&A, Introduction, Environmental, Regulatory of this Form 10-Q. Many of the leases have renewal options at the end of the lease term. Termination may be allowed under specific circumstances in the lease arrangements, such as under an event of default. All but one of the Company’s leases are operating leases. The remaining lease met the criteria of a s ales-type lease and the impact of this sales-type lease to the consolidated financial statements was immaterial. Certain of these leases have both lease and non-lease components, and the Company allocates the transaction price to the components based on standalone selling prices. As disclosed in Note 2, Summary of Significant Accounting Policies, the following amounts of energy and capacity revenue are related to the Company’s operating leases:
|  | Three months ended September 30, 2020
(In millions) |  | Conventional Generation |  | Renewables |  | Thermal |  | Total
Energy revenue |  | $ | 3 |  |  | $ | 153 |  |  | $ | — |  |  | $ | 156 |
Capacity revenue |  | 119 |  |  | — |  |  | — |  |  | 119 |
Operating revenue |  | $ | 122 |  |  | $ | 153 |  |  | $ | — |  |  | $ | 275 |
|  | Nine months ended September 30, 2020
(In millions) |  | Conventional Generation |  | Renewables |  | Thermal |  | Total
Energy revenue |  | $ | 6 |  |  | $ | 449 |  |  | $ | 1 |  |  | $ | 456 |
Capacity revenue |  | 338 |  |  | — |  |  | — |  |  | 338 |
Operating revenue |  | $ | 344 |  |  | $ | 449 |  |  | $ | 1 |  |  | $ | 794 |
|  | Three months ended September 30, 2019
(In millions) |  | Conventional Generation |  | Renewables |  | Thermal |  | Total
Energy revenue |  | $ | 2 |  |  | $ | 160 |  |  | $ | 1 |  |  | $ | 163 |
Capacity revenue |  | 89 |  |  | — |  |  | — |  |  | 89 |
Operating revenue |  | $ | 91 |  |  | $ | 160 |  |  | $ | 1 |  |  | $ | 252 |
|  | Nine months ended September 30, 2019
(In millions) |  | Conventional Generation |  | Renewables |  | Thermal |  | Total
Energy revenue |  | $ | 4 |  |  | $ | 416 |  |  | $ | 2 |  |  | $ | 422 |
Capacity revenue |  | 253 |  |  | — |  |  | — |  |  | 253 |
Operating revenue |  | $ | 257 |  |  | $ | 416 |  |  | $ | 2 |  |  | $ | 675 |
Minimum future rent payments under the operating leases for the remaining periods as of September 30, 2020.
(In millions) |
Remainder of 2020 | $ | 117 |
2021 | 444 |
2022 | 450 |
2023 | 259 |
2024 | 106 |
Thereafter | 1,605 |
Total lease payments | $ | 2,981 |
Property, plant and equipment, net related to the Company’s operating leases were as follows:
(In millions) | September 30, 2020 |  | December 31, 2019
Property, plant and equipment | $ | 6,975 |  |  | $ | 6,942 |
Accumulated depreciation | (1,854) |  |  | (1,649) |
Net property, plant and equipment | $ | 5,121 |  |  | $ | 5,293 |
Leases | Leases Accounting for Leases The Company evaluates each arrangement at inception to determine if it contains a lease. All of the Company’s leases are operating leases as of September 30, 2020. Lessee The Company records its operating lease liabilities at the present value at lease commencement date of the lease payments over the lease term. Lease payments include fixed payment amounts, as well as variable rate payments based on an index initially measured at lease commencement date. Variable payments, including payments based on future performance and based on index changes, are recorded as the expense is incurred. The Company determines the relevant lease term by evaluating whether renewal and termination options are reasonably to certain to be exercised. The Company uses its incremental borrowing rate to calculate the present value of the lease payments, based on information available at the lease commencement date. The Company’s leases consist of land leases for numerous operating asset locations, real estate leases and equipment leases. The terms and conditions for these leases vary by the type of underlying asset. Lease expense was comprised of the following:
| Three months ended September 30, 2020 |  | Three months ended September 30, 2019 |  | Nine months ended September 30, 2020 |  | Nine months ended September 30, 2019
| (In millions)
Operating lease cost - Fixed | $ | 5 |  |  | $ | 2 |  |  | $ | 14 |  |  | $ | 6 |
Operating lease cost - Variable | 2 |  |  | 3 |  |  | 7 |  |  | 10 |
Total lease cost | $ | 7 |  |  | $ | 5 |  |  | $ | 21 |  |  | $ | 16 |
The Company lease liabilities as of September 30, 2020 and December 31, 2019 comprised of the following:
|  | September 30, 2020 |  | December 31, 2019
|  | (In millions, except term and rate)
ROU Assets - operating leases, net |  | $ | 256 |  | $ | 223
Short-term lease liability - operating leases (a) |  | 7 |  | 7
Long-term lease liability - operating leases |  | 260 |  | 227
Total lease liability |  | $ | 267 |  | $ | 234
Weighted average remaining lease term |  | 24 |  | 25
Weighted average discount rate |  | 4.3 | % |  | 4.4 | %
|  | Nine months ended September 30, 2020 |  | Nine months ended September 30, 2019
Cash paid for operating leases |  | $ | 13 |  |  | $ | 7
(a) Short-term lease liability balances are included within the accrued expenses and other current liabilities line item of the consolidated balance sheets as of September 30, 2020 and December 31, 2019. Maturities of operating lease liabilities as of September 30, 2020 are as follows:
(In millions) |  |
Remainder of 2020 |  | $ | 5 |
2021 |  | 18 |
2022 |  | 18 |
2023 |  | 18 |
2024 |  | 18 |
Thereafter |  | 332 |
Total lease payments |  | 409 |
Less imputed interest |  | (142) |
Total lease liability - operating leases |  | $ | 267 |
Oahu Solar Lease Agreements The Oahu Solar projects are party to various land lease agreements with a wholly owned subsidiary of CEG. The projects are leasing the land for a period of 35 years, with the ability to renew the lease for two additional five year periods. The Company has a lease liability of $20 million and $21 million as of September 30, 2020 and December 31, 2019, respectively, and a corresponding right-of-use asset of $18 million and $19 million related to leases as of September 30, 2020 and December 31, 2019, respectively. Lessor The majority of the Company’s revenue is obtained through PPAs or other contractual agreements that are accounted for as leases. These leases are comprised of both fixed payments and variable payments contingent upon volumes or performance metrics. The terms of the leases are further described in Item 2 — MD&A, Introduction, Environmental, Regulatory of this Form 10-Q. Many of the leases have renewal options at the end of the lease term. Termination may be allowed under specific circumstances in the lease arrangements, such as under an event of default. All but one of the Company’s leases are operating leases. The remaining lease met the criteria of a s ales-type lease and the impact of this sales-type lease to the consolidated financial statements was immaterial. Certain of these leases have both lease and non-lease components, and the Company allocates the transaction price to the components based on standalone selling prices. As disclosed in Note 2, Summary of Significant Accounting Policies, the following amounts of energy and capacity revenue are related to the Company’s operating leases:
|  | Three months ended September 30, 2020
(In millions) |  | Conventional Generation |  | Renewables |  | Thermal |  | Total
Energy revenue |  | $ | 3 |  |  | $ | 153 |  |  | $ | — |  |  | $ | 156 |
Capacity revenue |  | 119 |  |  | — |  |  | — |  |  | 119 |
Operating revenue |  | $ | 122 |  |  | $ | 153 |  |  | $ | — |  |  | $ | 275 |
|  | Nine months ended September 30, 2020
(In millions) |  | Conventional Generation |  | Renewables |  | Thermal |  | Total
Energy revenue |  | $ | 6 |  |  | $ | 449 |  |  | $ | 1 |  |  | $ | 456 |
Capacity revenue |  | 338 |  |  | — |  |  | — |  |  | 338 |
Operating revenue |  | $ | 344 |  |  | $ | 449 |  |  | $ | 1 |  |  | $ | 794 |
|  | Three months ended September 30, 2019
(In millions) |  | Conventional Generation |  | Renewables |  | Thermal |  | Total
Energy revenue |  | $ | 2 |  |  | $ | 160 |  |  | $ | 1 |  |  | $ | 163 |
Capacity revenue |  | 89 |  |  | — |  |  | — |  |  | 89 |
Operating revenue |  | $ | 91 |  |  | $ | 160 |  |  | $ | 1 |  |  | $ | 252 |
|  | Nine months ended September 30, 2019
(In millions) |  | Conventional Generation |  | Renewables |  | Thermal |  | Total
Energy revenue |  | $ | 4 |  |  | $ | 416 |  |  | $ | 2 |  |  | $ | 422 |
Capacity revenue |  | 253 |  |  | — |  |  | — |  |  | 253 |
Operating revenue |  | $ | 257 |  |  | $ | 416 |  |  | $ | 2 |  |  | $ | 675 |
Minimum future rent payments under the operating leases for the remaining periods as of September 30, 2020.
(In millions) |
Remainder of 2020 | $ | 117 |
2021 | 444 |
2022 | 450 |
2023 | 259 |
2024 | 106 |
Thereafter | 1,605 |
Total lease payments | $ | 2,981 |
Property, plant and equipment, net related to the Company’s operating leases were as follows:
(In millions) | September 30, 2020 |  | December 31, 2019
Property, plant and equipment | $ | 6,975 |  |  | $ | 6,942 |
Accumulated depreciation | (1,854) |  |  | (1,649) |
Net property, plant and equipment | $ | 5,121 |  |  | $ | 5,293 |

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for lessor's operating leases. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 10 -Section 55 -Paragraph 40 -Subparagraph Note 1 -URI http://asc.fasb.org/extlink&oid=82846649&loc=d3e38371-112697 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 10 -Section 55 -Paragraph 40 -Subparagraph Note 3 -URI http://asc.fasb.org/extlink&oid=82846649&loc=d3e38371-112697 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 30 -URI http://asc.fasb.org/subtopic&trid=77888252 + Details
Name: | us-gaap_OperatingLeasesOfLessorDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration