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Revenue | 12 Months Ended
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Dec. 31, 2018
Disclosure of revenue from contracts with customers [Abstract] |
Revenue | Revenue A. Disaggregation of Revenue The majority of the Corporation's revenues are derived from the sale of physical power, capacity and green attributes, leasing of power facilities, and from energy marketing and trading activities, which the Corporation disaggregates into the following groups for the purpose of determining how economic factors affect the recognition of revenue.
Year ended Dec. 31, 2018 | Canadian Coal |  | US Coal |  | Canadian Gas |  | Australian Gas |  | Wind and Solar |  | Hydro |  | Energy Marketing |  | Corporate |  | Total |
Revenues from contracts with customers | 517 |  | 9 |  | 224 |  | 91 |  | 206 |  | 132 |  | — |  | — |  | 1,179 |
Revenue from leases(1) | 68 |  | — |  | — |  | 68 |  | 27 |  | 7 |  | — |  | — |  | 170 |
Revenue from derivatives | (1 | ) | 115 |  | 4 |  | — |  | (20 | ) | — |  | 67 |  | — |  | 165 |
Government incentives | — |  | — |  | — |  | — |  | 16 |  | — |  | — |  | — |  | 16 |
Revenue from other(2) | 328 |  | 318 |  | 4 |  | 6 |  | 53 |  | 17 |  | — |  | (7 | ) | 719 |
Total revenue | 912 |  | 442 |  | 232 |  | 165 |  | 282 |  | 156 |  | 67 |  | (7 | ) | 2,249 |
Revenues from contracts with customers |  |  |  |  |  |  |  |
Timing of revenue recognition |  |  |  |  |  |  |  |  |
At a point in time | 38 |  | 9 |  | — |  | — |  | 18 |  | — |  | — |  | — |  | 65 |
Over time | 479 |  | — |  | 224 |  | 91 |  | 188 |  | 132 |  | — |  | — |  | 1,114 |
Total revenue from contracts with customers | 517 |  | 9 |  | 224 |  | 91 |  | 206 |  | 132 |  | — |  | — |  | 1,179 |
(1) Total rental income, including contingent rent related to certain PPAs and other long-term contracts that meet the criteria of operating leases. 2017 - $247 million, 2016 - $221 million. (2) Includes merchant revenue and other miscellaneous. B. Contract Balances The Corporation has recognized the following revenue-related contract assets and liabilities:
Contract liabilities
Dec. 31, 2017 | 62 |
IFRS 15 transition adjustment | 17 |
Amounts transferred to revenue included in opening balance | (10 | )
Consideration received | 13 |
Increases due to interest accrued and expensed during the period | 6 |
Amounts transferred to payables | (1 | )
Dec. 31, 2018 | 87 |
Contract liabilities are primarily comprised of consideration received from the Corporation’s Keephills Unit 3 joint operation partner for which the Corporation has a future obligation to transfer goods and services to the partner under the contract. Consideration received is dependent upon the Corporation’s mine capital replacement plan and revenue is recognized as the Corporation satisfies its performance obligations under the contract of being available to deliver coal and the delivery of coal. C. Remaining Performance Obligations As required by the new revenue standard, the Corporation is required to disclose the aggregate amount of the transaction price allocated to remaining performance obligation (contract revenues that have not yet been recognized) for contracts in place at the end of the reporting period. The following disclosures exclude revenues related to contracts that qualify for the following practical expedients:
▪ | The Corporation recognizes revenue from the contract in an amount that is equal to the amount invoiced where the amount invoiced represents the value to the customer of the service performed to date. Certain of the Corporation’s contracts at some of its wind, hydro, gas and solar facilities, and within its commercial and industrial business, qualify for this practical expedient. For these contracts, the Corporation is not required to disclose information about the remaining unsatisfied performance obligations.
▪ | Contracts with an original expected duration of less than 12 months.
Additionally, in many of the Corporation’s contracts, elements of the transaction price are considered constrained, such as for variable revenues dependent upon future production volumes that are driven by customer or market demand or market prices that are subject to factors outside the Corporation’s influence. Future revenues that are related to constrained variable consideration are not included in the disclosure of remaining performance obligations until the constraints are resolved. Further, adjustments to revenue to recognize a significant financing component in a contract are not included in the amounts disclosed for remaining performance obligations. As a result, the amounts of future revenues disclosed below represent only a portion of future revenues that are expected to be realized by the Corporation from its contractual portfolio. Canadian Coal At Dec. 31, 2018, the Corporation has PPAs with the Balancing Pool for capacity and electricity from two of its coal plants, as dispatched, with contract end dates of Dec. 31, 2020. All generation produced is delivered to the customer. Certain sources of revenue under one PPA contract are accounted for as a lease, and are excluded from these disclosures. Pricing is comprised of multiple components, of both fixed and variable nature, consisting of a capacity payment based on a return of capital, availability payments (from or to the customer) based on the 30-day rolling average pool price and actual availability of the plant as compared to targeted availability specified in the PPAs, recovery of regulatory pass-through costs, and payments for delivery of energy based on the variable cost of producing the energy. Energy-related payments are variable depending on output from the plant, which is dependent upon market demand and the operational ability of the plant. Revenues are generally recognized over time, on a monthly basis. Future revenues that are based upon variable consideration are considered to be fully constrained and are excluded from these disclosures. The Corporation also has several contracts for sale of byproducts of coal combustion from certain of its coal plants. The contracts range in duration from one to three years. Generally, revenues vary based on market prices that are subject to factors outside of the Corporation’s control, and the quantities delivered and sold, which are ultimately dependent upon customer demand. These variable revenues are considered to be fully constrained, and will be recognized at a point in time as the performance obligation, the delivery of byproducts, is satisfied. Accordingly, these revenues are excluded from these disclosures. The Corporation has a contract at its Alberta coal mine that requires it to be available to deliver coal as required, and to provide byproduct disposal services for the plant. The duration of the contract is largely dependent upon the Corporation’s coal-to-gas transition plans and decisions. Pricing terms are based on actual costs incurred to provide the coal, and will vary over the life of the contract. Revenue will be recognized on the basis of the costs incurred and based on volumes of coal delivered, which are variable and depend upon market demand for electricity, which is subject to factors outside of the Corporation’s control. Accordingly, revenues related to remaining performance obligations associated with this component of the contract are excluded from these disclosures as they are variable and considered to be fully constrained. The customer also funds a portion of the required mine capital as part of the transaction price, which the Corporation has determined constitutes a significant financing component. Revenues are dependent upon the Corporation’s mine capital replacement plan and the recoveries, along with the significant financing component, and are amortized into revenue as the Corporation satisfies its performance obligations of being available to deliver coal and the delivery of coal. The significant financing component of these revenues is excluded from these disclosures. Estimated future revenues related to the remaining performance obligations for these contracts as of Dec. 31, 2018, are approximately $330 million, of which the Corporation expects to recognize approximately $245 million in total over the next two fiscal years and on average, between approximately $7 million to $10 million annually thereafter for the duration of the contracts. US Coal The Corporation’s long-term contract for the sale of electricity produced at its US Coal plant is considered a derivative and is designated as an all-in-one hedge. Accordingly, while revenues for electricity delivered to the customer are recognized pursuant to the contractual terms, the revenues are not accounted for under IFRS 15 and the contract has been excluded from any required IFRS 15 disclosures. The Corporation also has a contract for the sale of byproducts of coal combustion from its US Coal plant. Generally, revenues vary based on market prices that are subject to factors outside of the Corporation’s control, and the quantities delivered and sold, which are ultimately dependent upon customer demand. These variable revenues are considered to be fully constrained, and will be recognized at a point in time as the performance obligation, the delivery of byproducts, is satisfied. Accordingly, these revenues are excluded from these disclosures. Canadian Gas At Dec. 31, 2018, the Corporation has contracts with customers to deliver energy services from one of its gas plants in Ontario. The contracts all consist of a single performance obligation requiring the Corporation to stand ready to deliver electricity and steam. The following is a summary of the key terms: The energy supply agreements require specified amounts of steam to be delivered to each customer, and have pricing terms that include fixed and variable charges for electricity, capacity and steam, as well as a true-up based on contractual minimum volumes of steam. The steam reconciliation is based on an estimate of the customer’s steam volume taken and the contractual minimum volume, and various factors including the annual average market price of electricity and the average locally posted and index prices of natural gas, as well as transportation. For steam volumes not taken by the customer, a revenue-sharing mechanism provides for sharing of revenues earned by the Corporation using that steam to generate and sell electricity. Capacity and electricity pricing vary from contract to contract and are subject to annual indexation at varying rates. Electricity and steam delivered is ultimately dependent upon customer requirements, which is outside of the Corporation’s control, These variable revenues under the contracts are considered to be fully constrained. Accordingly, these revenues are excluded from these disclosures. The Corporation expects to recognize revenue as it delivers electricity and steam until the completion of the contract in late 2022. At the same gas plant, the Corporation has a contract with the local power authority with fixed capacity charges that are adjusted for seasonal fluctuations, steam demand from the plant’s other customers, and for deemed net revenue related to production of electricity into the market. As a result, revenues recognized in the future will vary as they are dependent upon factors outside of the Corporation’s control and are considered to be fully constrained. Accordingly, these revenues are excluded from these disclosures. The Corporation expects to recognize such revenue as it stands ready to deliver electricity until the completion of the contract term on Dec. 31, 2025. At Dec. 31, 2018, the Corporation has contracts with customers to deliver steam, hot water and chilled water from one of its other gas plants in Ontario, extending through 2023. Prices under these contracts are at fixed base amounts per gigajoule and are subject to escalation annually for both gas prices and inflation. The contracts include minimum annual take-or-pay volumes. Estimated future revenues related to the remaining performance obligations for these contracts as of Dec. 31, 2018, are approximately $25 million in total, of which the Corporation expects to be on average, between approximately $4 million to $6 million annually thereafter for the duration of the contracts. The practical expedient allowing the recognition of revenue from the contract in an amount that is equal to the amount invoiced is applied to some of the Corporation’s other gas facilities’ contracts in Ontario; accordingly, disclosures related to remaining performance obligations are not provided for these contracts. Australian Gas At Dec. 31, 2018, the Corporation has PPAs with customers to deliver electricity from its gas plants located in Australia. One contract is considered to be a lease and is excluded from these disclosures. The PPAs generally call for all available generation to be provided to customers. Pricing terms include fixed and variable price components for delivered electricity and fixed capacity payments. Prices may be subject to true-up adjustments for deviations from expected heat rates and are subject to various escalators to reflect inflation. Electricity delivered is ultimately dependent upon customer requirements, which is outside of the Corporation’s control. These variable revenues for electricity delivered are considered to be fully constrained, and will be recognized at a point in time as the performance obligation, the delivery of electricity, is satisfied. Accordingly, these revenues are excluded from these disclosures. The contracts have durations that range from 2021 to 2042. Estimated future revenues related to the remaining performance obligations for these contracts as of Dec. 31, 2018, are approximately $2,280 million, of which the Corporation expects to recognize approximately $230 million in total over the next three fiscal years and on average, between approximately $80 million to $110 million annually thereafter for the duration of the contracts. Wind and Solar At Dec. 31, 2018, the Corporation had long-term contracts with customers to deliver electricity and the associated renewable energy credits from two wind farms located in Alberta and Minnesota, for which the invoice practical expedient is not applied. The PPAs generally require all available generation to be provided to customers at fixed prices, with certain pricing subject to annual escalations for inflation. The Corporation expects to recognize such amounts as revenue as it delivers electricity over the remaining terms of the contracts, until 2024 and 2034. Electricity delivered is ultimately dependent upon the wind resource, which is outside of the Corporation’s control. Amounts delivered, and therefore revenue recognized, in the future will vary. These variable revenues for electricity delivered are considered to be fully constrained, and will be recognized at a point in time as the performance obligation, the delivery of electricity, is satisfied. Accordingly, these revenues are excluded from these disclosures. The Corporation also has contracts to sell renewable energy certificates generated at merchant wind facilities and expects to recognize revenues as it delivers the renewable energy certificates to the purchaser over the remaining terms of the contracts, from 2019 through 2024. Estimated future revenues related to the remaining performance obligations for these contracts as of Dec. 31, 2018, are approximately $9 million, of which the Corporation expects to recognize between approximately $1 million to $2 million annually through to contract expiry. The practical expedient allowing the recognition of revenue from the contract in an amount that is equal to the amount invoiced is applied to wind energy contracts in Ontario, New Brunswick, Quebec and Wyoming, and for all solar contracts; accordingly, disclosures related to remaining performance obligations are not provided for these contracts. Hydro At Dec. 31, 2018, the Corporation has a PPA with the Balancing Pool to provide the capacity of 12 hydro plants throughout the province of Alberta. The capacity payment is fixed on an annual basis. As part of the PPA, the Corporation also has a financial obligation to the Balancing Pool determined on the basis of notional quantities of electricity delivered and the pool price for the period. The Corporation expects to recognize revenue as it makes capacity available to the customer until completion of the contract term at Dec. 31, 2020. The Corporation also has contracts for blackstart services at specific hydro plants and a contract with the Government of Alberta to manage water on the Bow River for flood and drought mitigation purposes, which all conclude within 2020. Estimated future revenues related to the remaining performance obligations for these contracts as of Dec. 31, 2018, are approximately $130 million, which the Corporation expects to recognize over the next two fiscal years. The practical expedient allowing the recognition of revenue from the contract in an amount that is equal to the amount invoiced is applied to all hydro energy contracts in Ontario, British Columbia and Washington; accordingly, disclosures related to remaining performance obligations are not provided for these contracts.

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