XML 22 R11.htm IDEA: XBRL DOCUMENT
v3.23.3

Derivative Instruments and Hedging Activity | 9 Months Ended
--- | ---
Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activity | Derivative Instruments and Hedging Activity NEP uses derivative instruments (primarily interest rate swaps) to manage the interest rate cash flow risk associated with outstanding and expected future debt issuances and borrowings and to manage the physical and financial risks inherent in the sale of electricity. NEP records all derivative instruments that are required to be marked to market as either assets or liabilities on its condensed consolidated balance sheets and measures them at fair value each reporting period. NEP does not utilize hedge accounting for its derivative instruments. All changes in the interest rate contract derivatives' fair value are recognized in interest expense and the equity method investees' related activity is recognized in equity in earnings of equity method investees in NEP's condensed consolidated statements of income. At September 30, 2023 and December 31, 2022, the net notional amounts of the interest rate contracts were approximately $2.2 billion and $7.8 billion, respectively. All changes in commodity contract derivatives' fair value are recognized in operating revenues in NEP's condensed consolidated statements of income. At September 30, 2023 and December 31, 2022, NEP had derivative commodity contracts for power with net notional volumes of approximately 6.0 million and 5.7 million MW hours, respectively. Cash flows from the interest rate and commodity contracts are reported in cash flows from operating activities in NEP's condensed consolidated statements of cash flows. In October 2023, NEP entered into forward starting interest rate swap agreements with a notional amount of $1.85 billion to manage interest rate risk associated with forecasted debt issuances. Fair Value Measurement of Derivative Instruments – The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. NEP uses several different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or comparable assets and liabilities for those assets and liabilities that are measured at fair value on a recurring basis. Certain financial instruments may be valued using multiple inputs including discount rates, counterparty credit ratings and credit enhancements. NEP’s assessment of the significance of any particular input to the fair value measurement requires judgment and may affect the placement of those assets and liabilities within the fair value hierarchy levels. Non-performance risk, including the consideration of a credit valuation adjustment, is also considered in the determination of fair value for all assets and liabilities measured at fair value. Transfers between fair value hierarchy levels occur at the beginning of the period in which the transfer occurred. NEP estimates the fair value of its derivative instruments using an income approach based on a discounted cash flows valuation technique utilizing the net amount of estimated future cash inflows and outflows related to the agreements. The primary inputs used in the fair value measurements include the contractual terms of the derivative agreements, current interest rates and credit profiles. The significant inputs for the resulting fair value measurement of interest rate contracts are market-observable inputs and the measurements are reported as Level 2 in the fair value hierarchy. The tables below present NEP's gross derivative positions, based on the total fair value of each derivative instrument, at September 30, 2023 and December 31, 2022, as required by disclosure rules, as well as the location of the net derivative positions, based on the expected timing of future payments, on NEP's condensed consolidated balance sheets.
|  | September 30, 2023
|  | Level 1 |  | Level 2 |  | Level 3 |  | Netting(a) |  | Total
|  | (millions)
Assets: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | 309 |  |  | $ | — |  |  | $ | (12) |  |  | $ | 297 |
Commodity contracts |  | $ | — |  |  | $ | — |  |  | $ | 7 |  |  | $ | (2) |  |  | 5 |
Total derivative assets |  |  |  |  |  |  |  |  |  | $ | 302 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | 15 |  |  | $ | — |  |  | $ | (12) |  |  | $ | 3 |
Commodity contracts |  | $ | — |  |  | $ | — |  |  | $ | 11 |  |  | $ | (2) |  |  | 9 |
Total derivative liabilities |  |  |  |  |  |  |  |  |  | $ | 12 |
Net fair value by balance sheet line item: |  |  |  |  |  |  |  |  |  |
Current derivative assets |  |  |  |  |  |  |  |  |  | $ | 82 |
Noncurrent derivative assets |  |  |  |  |  |  |  |  |  | 220 |
Total derivative assets |  |  |  |  |  |  |  |  |  | $ | 302 |
Current other liabilities |  |  |  |  |  |  |  |  |  | $ | 9 |
Noncurrent other liabilities |  |  |  |  |  |  |  |  |  | 3 |
Total derivative liabilities |  |  |  |  |  |  |  |  |  | $ | 12 |
|  | December 31, 2022
|  | Level 1 |  | Level 2 |  | Level 3 |  | Netting(a) |  | Total
|  | (millions)
Assets: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | 459 |  |  | $ | — |  |  | $ | (26) |  |  | $ | 433 |
Commodity contracts |  | $ | — |  |  | $ | — |  |  | $ | 3 |  |  | $ | (2) |  |  | 1 |
Total derivative assets |  |  |  |  |  |  |  |  |  | $ | 434 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | 37 |  |  | $ | — |  |  | $ | (26) |  |  | $ | 11 |
Commodity contracts |  | $ | — |  |  | $ | — |  |  | $ | 5 |  |  | $ | (2) |  |  | 3 |
Total derivative liabilities |  |  |  |  |  |  |  |  |  | $ | 14 |
Net fair value by balance sheet line item: |  |  |  |  |  |  |  |  |  |
Current derivative assets |  |  |  |  |  |  |  |  |  | $ | 65 |
Noncurrent derivative assets |  |  |  |  |  |  |  |  |  | 369 |
Total derivative assets |  |  |  |  |  |  |  |  |  | $ | 434 |
Current other liabilities |  |  |  |  |  |  |  |  |  | $ | 12 |
Noncurrent other liabilities |  |  |  |  |  |  |  |  |  | 2 |
Total derivative liabilities |  |  |  |  |  |  |  |  |  | $ | 14 |
____________________ (a) Includes the effect of the contractual ability to settle contracts under master netting arrangements. Financial Statement Impact of Derivative Instruments – Gains (losses) related to NEP's derivatives are recorded in NEP's condensed consolidated financial statements as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (millions)
Interest rate contracts – interest expense | $ | 97 |  |  | $ | 201 |  |  | $ | (1) |  |  | $ | 978 |
Commodity contracts – operating revenues | $ | 5 |  |  | $ | 1 |  |  | $ | (4) |  |  | $ | 1 |
Credit-Risk-Related Contingent Features – Certain of NEP's derivative instruments contain credit-related cross-default and material adverse change triggers, none of which contain requirements to maintain certain credit ratings or financial ratios. At September 30, 2023 and December 31, 2022, the aggregate fair value of NEP's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately $15 million and $37 million, respectively.

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

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration