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Leases
 12 Months Ended
Dec. 31, 2024
Leases [Abstract]  
Leases Leases
Accounting for Leases
The Company evaluates each arrangement at inception to determine if it contains a lease. Substantially all of the Company’s leases are operating leases.
Lessee
The Company records its operating lease liabilities at the present value of the lease payments over the lease term at lease commencement date. 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 when the expense is probable. The Company determines the relevant lease term by evaluating whether renewal and termination options are reasonably 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. Certain of these leases have both lease and non-lease components and the Company has elected to apply the practical expedient to not separate these components.
Lease expense was comprised of the following:
Year Ended December 31,
(In millions)202420232022
Operating lease cost - Fixed $31 $40 $36 
Operating lease cost - Variable12 11 11 
Total lease cost$43 $51 $47 
Operating lease information was as follows:
Year Ended December 31,
(In millions)202420232022
Cash paid for operating leases$34 $30 $28 

(In millions, except term and rate)December 31, 2024December 31, 2023
Right-of-use assets - operating leases, net
$547 $597 
Short-term lease liability - operating leases (a)
$10 $7 
Long-term lease liability - operating leases
569 627 
Total lease liabilities $579 $634 
Weighted average remaining lease term (in years)2628
Weighted average discount rate4.5 %4.2 %
(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 December 31, 2024 and 2023.
Minimum future rental payments of operating lease liabilities as of December 31, 2024 are as follows:
(In millions)
2025$34 
202634 
202735 
202835 
202935 
Thereafter 771 
Total lease payments 944 
Less imputed interest(365)
Total lease liability - operating leases$579 
The Company is party to various land lease agreements with wholly-owned subsidiaries of CEG that are accounted for as operating leases. The following table summarizes the land lease agreements:
(In millions)Right-of-use assets, netLong-term lease liabilitiesLease expiration
As of December 31, 2024
Daggett 2$22 $23 June 30, 2058
Daggett 330 34 December 18, 2062
Mililani I18 21 March 31, 2057
Oahu Solar (a)
17 19 August 1, 2057
Rosamond Central (a)
11 12 March 31, 2056
As of December 31, 2023
Daggett 2$22 $23 June 30, 2058
Daggett 331 33 December 18, 2062
Mililani I19 20 March 31, 2057
Oahu Solar (a)
17 20 August 1, 2057
Rosamond Central (a)
11 12 March 31, 2056
(a) The Company has the ability to extend each of these leases for two additional five-year periods.
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. 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 active leases are operating leases. This sales-type lease is further described below. Certain of these operating leases have both lease and non-lease components, and the Company allocates the transaction price to the components based on standalone selling prices.
The following amounts of energy, capacity and other revenues are related to the Company’s operating leases:
Flexible GenerationRenewablesTotal
December 31, 2024(In millions)
Energy revenue$3 $817 $820 
Capacity revenue110 43 153 
Operating revenues$113 $860 $973 
Flexible GenerationRenewablesTotal
December 31, 2023(In millions)
Energy revenue$4 $760 $764 
Capacity revenue249 20 269 
Other revenues (a)
21 — 21 
Operating revenues$274 $780 $1,054 
(a) On May 31, 2023, the Marsh Landing Black Start addition reached commercial operations and the Company will receive an annual fixed fee over a five-year term under the related agreement. The agreement was determined to be a sales-type lease resulting in the Company recording a lease receivable of $21 million included in total operating revenues, offset by net investment costs of $13 million included in cost of operations, resulting in a net pre-tax profit of $8 million. The lease receivable is included in other current and non-current assets on the Company’s consolidated balance sheet.
Flexible GenerationRenewables ThermalTotal
December 31, 2022(In millions)
Energy revenue$6 $809 $1 $816 
Capacity revenue435 — — 435 
Operating revenues$441 $809 $1 $1,251 
Minimum future rent payments the Company expects to receive for the remaining periods related to various facility operating leases as of December 31, 2024 were as follows:
(In millions)
2025$168 
2026170 
2027171 
2028172 
2029173 
Thereafter1,700 
Total lease payments$2,554 
Property, plant and equipment, net related to the Company’s operating leases were as follows:
(In millions)December 31, 2024December 31, 2023
Property, plant and equipment$6,284 $5,720 
Accumulated depreciation(2,276)(1,991)
Net property, plant and equipment$4,008 $3,729 
Leases Leases
Accounting for Leases
The Company evaluates each arrangement at inception to determine if it contains a lease. Substantially all of the Company’s leases are operating leases.
Lessee
The Company records its operating lease liabilities at the present value of the lease payments over the lease term at lease commencement date. 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 when the expense is probable. The Company determines the relevant lease term by evaluating whether renewal and termination options are reasonably 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. Certain of these leases have both lease and non-lease components and the Company has elected to apply the practical expedient to not separate these components.
Lease expense was comprised of the following:
Year Ended December 31,
(In millions)202420232022
Operating lease cost - Fixed $31 $40 $36 
Operating lease cost - Variable12 11 11 
Total lease cost$43 $51 $47 
Operating lease information was as follows:
Year Ended December 31,
(In millions)202420232022
Cash paid for operating leases$34 $30 $28 

(In millions, except term and rate)December 31, 2024December 31, 2023
Right-of-use assets - operating leases, net
$547 $597 
Short-term lease liability - operating leases (a)
$10 $7 
Long-term lease liability - operating leases
569 627 
Total lease liabilities $579 $634 
Weighted average remaining lease term (in years)2628
Weighted average discount rate4.5 %4.2 %
(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 December 31, 2024 and 2023.
Minimum future rental payments of operating lease liabilities as of December 31, 2024 are as follows:
(In millions)
2025$34 
202634 
202735 
202835 
202935 
Thereafter 771 
Total lease payments 944 
Less imputed interest(365)
Total lease liability - operating leases$579 
The Company is party to various land lease agreements with wholly-owned subsidiaries of CEG that are accounted for as operating leases. The following table summarizes the land lease agreements:
(In millions)Right-of-use assets, netLong-term lease liabilitiesLease expiration
As of December 31, 2024
Daggett 2$22 $23 June 30, 2058
Daggett 330 34 December 18, 2062
Mililani I18 21 March 31, 2057
Oahu Solar (a)
17 19 August 1, 2057
Rosamond Central (a)
11 12 March 31, 2056
As of December 31, 2023
Daggett 2$22 $23 June 30, 2058
Daggett 331 33 December 18, 2062
Mililani I19 20 March 31, 2057
Oahu Solar (a)
17 20 August 1, 2057
Rosamond Central (a)
11 12 March 31, 2056
(a) The Company has the ability to extend each of these leases for two additional five-year periods.
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. 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 active leases are operating leases. This sales-type lease is further described below. Certain of these operating leases have both lease and non-lease components, and the Company allocates the transaction price to the components based on standalone selling prices.
The following amounts of energy, capacity and other revenues are related to the Company’s operating leases:
Flexible GenerationRenewablesTotal
December 31, 2024(In millions)
Energy revenue$3 $817 $820 
Capacity revenue110 43 153 
Operating revenues$113 $860 $973 
Flexible GenerationRenewablesTotal
December 31, 2023(In millions)
Energy revenue$4 $760 $764 
Capacity revenue249 20 269 
Other revenues (a)
21 — 21 
Operating revenues$274 $780 $1,054 
(a) On May 31, 2023, the Marsh Landing Black Start addition reached commercial operations and the Company will receive an annual fixed fee over a five-year term under the related agreement. The agreement was determined to be a sales-type lease resulting in the Company recording a lease receivable of $21 million included in total operating revenues, offset by net investment costs of $13 million included in cost of operations, resulting in a net pre-tax profit of $8 million. The lease receivable is included in other current and non-current assets on the Company’s consolidated balance sheet.
Flexible GenerationRenewables ThermalTotal
December 31, 2022(In millions)
Energy revenue$6 $809 $1 $816 
Capacity revenue435 — — 435 
Operating revenues$441 $809 $1 $1,251 
Minimum future rent payments the Company expects to receive for the remaining periods related to various facility operating leases as of December 31, 2024 were as follows:
(In millions)
2025$168 
2026170 
2027171 
2028172 
2029173 
Thereafter1,700 
Total lease payments$2,554 
Property, plant and equipment, net related to the Company’s operating leases were as follows:
(In millions)December 31, 2024December 31, 2023
Property, plant and equipment$6,284 $5,720 
Accumulated depreciation(2,276)(1,991)
Net property, plant and equipment$4,008 $3,729