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Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended
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Jun. 30, 2020
Accounting Policies [Abstract] |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies We are one of the largest power generators in the U.S. We own and operate primarily natural gas-fired and geothermal power plants in North America and have a significant presence in major competitive wholesale and retail power markets in California, Texas, and the Northeast and mid-Atlantic regions of the U.S. We sell power, steam, capacity, renewable energy credits and ancillary services to our wholesale customers, which include utilities, independent electric system operators and industrial companies, retail power providers, municipalities, CCAs and other governmental entities and power marketers. Additionally, through our retail brands, we market retail energy and related products to commercial, industrial, governmental and residential customers. We continue to focus on providing products and services that are beneficial to our wholesale and retail customers. We purchase primarily natural gas and some fuel oil as fuel for our power plants and engage in related natural gas transportation and storage transactions. We also purchase power and related products for sale to our customers and purchase electric transmission rights to deliver power to our customers. Additionally, consistent with our Risk Management Policy, we enter into natural gas, power, environmental product, fuel oil and other physical and financial commodity contracts to hedge certain business risks and optimize our portfolio of power plants. Basis of Interim Presentation — The accompanying unaudited, interim Consolidated Condensed Financial Statements of Calpine Corporation, a Delaware corporation, and consolidated subsidiaries have been prepared pursuant to the rules and regulations of the SEC. In the opinion of management, the Consolidated Condensed Financial Statements include the normal, recurring adjustments necessary for a fair statement of the information required to be set forth therein. Certain information and note disclosures, normally included in financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, these financial statements should be read in conjunction with our audited Consolidated Financial Statements for the year ended December 31, 2019, included in our 2019 Form 10-K. The results for interim periods are not indicative of the results for the entire year primarily due to acquisitions and disposals of assets, seasonal fluctuations in our revenues and expenses, timing of major maintenance expense, variations resulting from the application of the method to calculate the provision for income tax for interim periods, volatility of commodity prices and mark-to-market gains and losses from commodity and interest rate derivative contracts. Use of Estimates in Preparation of Financial Statements — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures included in our Consolidated Condensed Financial Statements. Actual results could differ from those estimates. Cash and Cash Equivalents — We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. We have cash and cash equivalents held in non-corporate accounts relating to certain project finance facilities and lease agreements that require us to establish and maintain segregated cash accounts. These accounts have been pledged as security in favor of the lenders under such project finance facilities, and the use of certain cash balances on deposit in such accounts is limited, at least temporarily, to the operations of the respective projects. Restricted Cash — Certain of our debt agreements, lease agreements or other operating agreements require us to establish and maintain segregated cash accounts, the use of which is restricted, making these cash funds unavailable for general use. These amounts are held by depository banks in order to comply with the contractual provisions requiring reserves for payments such as for debt service, rent and major maintenance or with applicable regulatory requirements. Funds that can be used to satisfy obligations due during the next 12 months are classified as current restricted cash, with the remainder classified as non-current restricted cash. Restricted cash is generally invested in accounts earning market rates; therefore, the carrying value approximates fair value. Such cash is excluded from cash and cash equivalents on our Consolidated Condensed Balance Sheets. The table below represents the components of our restricted cash as of June 30, 2020 and December 31, 2019 (in millions):
| June 30, 2020 |  | December 31, 2019
| Current |  | Non-Current |  | Total |  | Current |  | Non-Current |  | Total
Debt service(1) | $ | 55 |  |  | $ | 8 |  |  | $ | 63 |  |  | $ | 58 |  |  | $ | 8 |  |  | $ | 66 |
Construction/major maintenance(2) | 35 |  |  | 7 |  |  | 42 |  |  | 28 |  |  | 6 |  |  | 34 |
Security/project/insurance(3) | 130 |  |  | — |  |  | 130 |  |  | 209 |  |  | 31 |  |  | 240 |
Other | 5 |  |  | 1 |  |  | 6 |  |  | 4 |  |  | 1 |  |  | 5 |
Total | $ | 225 |  |  | $ | 16 |  |  | $ | 241 |  |  | $ | 299 |  |  | $ | 46 |  |  | $ | 345 |
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(1) | At June 30, 2020, includes $52 million in restricted cash that will be transferred to cash and cash equivalents during the third quarter of 2020 as a result of PG&E’s emergence from bankruptcy.
(2) | At June 30, 2020, includes $2 million in restricted cash that will be transferred to cash and cash equivalents during the third quarter of 2020 as a result of PG&E’s emergence from bankruptcy.
(3) | At December 31, 2019, includes $119 million in restricted cash associated with margin deposits received from PG&E that were returned to PG&E and replaced with letters of credit during the second quarter of 2020. At June 30, 2020, includes $34 million in restricted cash that will be transferred to cash and cash equivalents during the third quarter of 2020 as a result of PG&E’s emergence from bankruptcy.
Accounts Receivable — Accounts receivable represents amounts due from customers. Accounts receivable are recorded at invoiced amounts, net of reserves and allowances, and do not bear interest as the balances are short term in nature. On January 1, 2020, we adopted the provisions of Accounting Standards Update 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). We use a variety of information to determine our allowance for expected credit losses based on multiple factors including the length of time receivables are past due, current and future economic trends and conditions affecting our customer base, significant one-time events, historical write-off experience and forward-looking information such as internally developed forecasts. See below for further information related to our adoption of ASU 2016-13. Property, Plant and Equipment, Net — At June 30, 2020 and December 31, 2019, the components of property, plant and equipment are stated at cost less accumulated depreciation as follows (in millions):
| June 30, 2020 |  | December 31, 2019 |  | Depreciable Lives
Buildings, machinery and equipment | $ | 16,488 |  |  | $ | 16,510 |  |  | 1.5 | – | 50 | Years
Geothermal properties | 1,595 |  |  | 1,553 |  |  | 13 | – | 58 | Years
Other | 282 |  |  | 291 |  |  | 3 | – | 50 | Years
| 18,365 |  |  | 18,354 |  |  |  |  |  |
Less: Accumulated depreciation | 6,907 |  |  | 6,851 |  |  |  |  |  |
| 11,458 |  |  | 11,503 |  |  |  |  |  |
Land | 128 |  |  | 128 |  |  |  |  |  |
Construction in progress | 351 |  |  | 332 |  |  |  |  |  |
Property, plant and equipment, net | $ | 11,937 |  |  | $ | 11,963 |  |  |  |  |  |
Capitalized Interest — The total amount of interest capitalized was $3 million and $1 million during the three months ended June 30, 2020 and 2019, respectively, and $5 million and $8 million during the six months ended June 30, 2020 and 2019, respectively. Goodwill — We assess the carrying amount of our goodwill annually for impairment during the third quarter and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We have not recorded any impairment losses or changes in the carrying amount of our goodwill during the three and six months ended June 30, 2020 and 2019. Leases Lessee — Supplemental balance sheet information related to our operating and finance leases is as follows as of June 30, 2020 and December 31, 2019 (in millions):
|  | Location on Consolidated Condensed Balance Sheet |  | June 30, 2020 |  | December 31, 2019
Right-of-use assets – operating leases |  | Other assets |  | $ | 165 |  |  | $ | 171 |
Right-of-use assets – finance leases |  | Property, plant and equipment, net |  | $ | 102 |  |  | $ | 107 |
Operating lease obligation, current |  | Other current liabilities |  | $ | 15 |  |  | $ | 12 |
Operating lease obligation, long-term |  | Other long-term liabilities |  | $ | 164 |  |  | $ | 170 |
Finance lease obligation, current |  | Debt, current portion |  | $ | 10 |  |  | $ | 10 |
Finance lease obligation, long-term |  | Debt, net of current portion |  | $ | 58 |  |  | $ | 63 |
Lessor — We apply lease accounting to PPAs that meet the definition of a lease and determine lease classification treatment at commencement of the agreement. Revenue recognized related to fixed lease payments on our operating leases was $57 million and $70 million during the three months ended June 30, 2020 and 2019, respectively, and $105 million and $139 million during the six months ended June 30, 2020 and 2019, respectively. New Accounting Standards and Disclosure Requirements Financial Instruments–Credit Losses — In June 2016, the FASB issued ASU 2016-13. The standard provides a new model for recognizing credit losses on financial assets carried at amortized cost using an estimate of expected credit losses, instead of the "incurred loss" methodology previously required for recognizing credit losses that delayed recognition until it was probable that a loss was incurred. The estimate of expected credit losses is to be based on consideration of past events, current conditions and reasonable and supportable forecasts of future conditions. The scope of the standard is limited to our trade account receivable balances and the standard is effective for fiscal years beginning after December 15, 2019. We adopted ASU 2016-13 on January 1, 2020 with no cumulative effect adjustment recognized upon adoption. The adoption of ASU 2016-13 did not have a material effect on our financial condition, results of operations or cash flows. Fair Value Measurements — In August 2018, the FASB issued Accounting Standards Update 2018-13, “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The standard removes, modifies and adds disclosures about fair value measurements and is effective for fiscal years beginning after December 15, 2019. We adopted Accounting Standards Update 2018-13 on January 1, 2020, which did not have a material effect on our financial condition, results of operations or cash flows. Income Taxes — In December 2019, the FASB issued Accounting Standards Update 2019-12, “Simplifying the Accounting for Income Taxes.” The standard is intended to simplify the accounting for income taxes by removing certain exceptions and improve consistent application by clarifying guidance related to the accounting for income taxes. The standard is effective for fiscal years beginning after December 15, 2020 with early adoption permitted including in interim periods. We adopted Accounting Standards Update 2019-12 on January 1, 2020, which did not have a material effect on our financial condition, results of operations or cash flows.

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- Definition The entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). Accounting policies describe all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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