Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Letter of Credit Facilities - Two of NEP’s projects have letter of credit (LOC) facilities under which the LOC lenders may issue standby letters of credit not to exceed approximately $65 million in the aggregate. These LOC facilities have maturity dates of June 2022 and July 2022. At September 30, 2019, approximately $51 million of LOCs was outstanding primarily related to debt service reserves and as security for certain of the projects' agreements, including a PPA.

Development, Engineering and Construction Commitments - At September 30, 2019, a NEP subsidiary had several engineering, procurement and construction contracts related to the repowering of certain wind facilities. Those contracts have varying payment terms and some include performance obligations that allow the NEP subsidiary to receive liquidated damages if the contractor does not perform. As of September 30, 2019, the NEP subsidiary has purchased approximately $16 million under these contracts, which costs have been capitalized in property, plant and equipment - net on the condensed consolidated balance sheet. As of September 30, 2019, the NEP subsidiary has remaining commitments under these contracts of approximately $123 million.

PG&E Bankruptcy - During the nine months ended September 30, 2019, approximately $25 million of net income attributable to NEP relates to PPAs that the Genesis, Desert Sunlight and Shafter solar projects have with PG&E. On January 29, 2019, PG&E filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Genesis and Shafter solar projects are financed with various forms of indebtedness. PG&E’s Chapter 11 filing, or related events, have caused events of default under the financings for the Genesis and Shafter projects which, among other things, has blocked the distribution of cash generated by those projects.

In April 2019, a waiver of the PG&E-related event of default was obtained related to the Shafter solar project indebtedness which, subject to certain conditions, waived the lenders’ ability to accelerate the repayment of borrowings thereunder and therefore the debt outstanding related to Shafter was reclassified to long-term debt. At September 30, 2019, the debt outstanding under the Genesis and Shafter financings totaled approximately $389 million, of which $363 million relating to Genesis had scheduled final maturity dates in 2038 and was classified as current debt on the condensed consolidated balance sheets.

In response to the events of default caused by PG&E's bankruptcy under the Genesis financings, during the nine months ended September 30, 2019, an indirect subsidiary of NEP (the offeror) purchased approximately $236 million of outstanding principal of Genesis HoldCo 5.600% senior secured notes due 2038 (Genesis HoldCo notes). Genesis HoldCo is the indirect owner of the Genesis solar project. After the purchases and debt service payments totaling approximately $17 million during the nine months ended September 30, 2019, there is no outstanding principal for the Genesis HoldCo notes at September 30, 2019.

In September 2019, the offeror also initiated a cash tender offer to purchase any and all of the outstanding 3.875% Series A Trust Certificates due 2038 (Series A certificates) and 5.125% Series B Trust Certificates due 2038 (Series B certificates) issued in connection with the initial development and construction of the Genesis solar project (the Genesis OpCo debt). Genesis OpCo is the direct owner of the Genesis solar project. The offeror accepted for purchase approximately $10 million in aggregate principal amount of the Series A certificates at a purchase price of $1,100 per $1,000 principal amount, and approximately $9 million in aggregate principal amount of the Series B certificates at a purchase price of $1,000 per $1,000 principal amount, which was settled in October 2019. In addition, the offeror purchased approximately $39 million in aggregate principal amount of the Series B certificates from two holders in September 2019 under the same pricing terms as the tender offer. NEP expects to acquire the remaining $344 million in outstanding Genesis OpCo debt prior to December 31, 2019.

In addition, while PG&E or other stakeholders in the bankruptcy proceeding could seek to reject some or all of the PPAs, PG&E and an ad hoc group, including PG&E secured bondholders and the Official Committee of Tort Claimants, have each proposed plans of reorganization, which have contemplated that PG&E would assume all of the PPAs.

Based on the estimated future cash flows related to the Genesis, Shafter and Desert Sunlight solar projects, no impairment adjustment was recorded at September 30, 2019. NEP will continue to monitor its investments in these projects. At September 30, 2019, cumulative cash distributions of approximately $79 million from these projects were not distributed as a result of the events of default under the financings that arose due to PG&E’s bankruptcy filing.