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September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Current | Non-Current | Total | Current | Non-Current | Total | ||||||||||||||||||
Debt service | $ | 22 | $ | 7 | $ | 29 | $ | 11 | $ | 8 | $ | 19 | |||||||||||
Construction/major maintenance | 25 | 17 | 42 | 45 | 6 | 51 | |||||||||||||||||
Security/project/insurance | 145 | — | 145 | 114 | — | 114 | |||||||||||||||||
Other | 4 | 2 | 6 | 3 | 1 | 4 | |||||||||||||||||
Total | $ | 196 | $ | 26 | $ | 222 | $ | 173 | $ | 15 | $ | 188 |
September 30, 2017 | December 31, 2016 | Depreciable Lives | ||||||||||
Buildings, machinery and equipment | $ | 16,512 | $ | 16,468 | 3 | – | 46 | Years | ||||
Geothermal properties | 1,480 | 1,377 | 13 | – | 58 | Years | ||||||
Other | 235 | 259 | 3 | – | 46 | Years | ||||||
18,227 | 18,104 | |||||||||||
Less: Accumulated depreciation | 6,265 | 5,865 | ||||||||||
11,962 | 12,239 | |||||||||||
Land | 117 | 116 | ||||||||||
Construction in progress | 754 | 658 | ||||||||||
Property, plant and equipment, net | $ | 12,833 | $ | 13,013 |
West | Texas | East | Total | ||||||||||||
Goodwill at December 31, 2016 | $ | 68 | $ | 31 | $ | 88 | $ | 187 | |||||||
Acquisition of North American Power | — | — | 49 | 49 | |||||||||||
Purchase price allocation adjustments(1) | (2 | ) | 1 | 8 | 7 | ||||||||||
Goodwill at September 30, 2017 | $ | 66 | $ | 32 | $ | 145 | $ | 243 |
(1) | The purchase price allocation adjustment in the East segment represents adjustments of $17 million for North American Power and $(9) million for Calpine Solutions. |
As Previously Reported | Effect of Offsetting Adjustment | As Adjusted | ||||||||||
Consolidated Condensed Balance Sheet as of December 31, 2016 | ||||||||||||
Margin deposits and other prepaid expense | $ | 441 | $ | (77 | ) | $ | 364 | |||||
Derivative assets, current | $ | 1,725 | $ | (1,504 | ) | $ | 221 | |||||
Total current assets | $ | 4,432 | $ | (1,581 | ) | $ | 2,851 | |||||
Long-term derivative assets | $ | 543 | $ | (243 | ) | $ | 300 | |||||
Total assets | $ | 19,317 | $ | (1,824 | ) | $ | 17,493 | |||||
Derivative liabilities, current | $ | 1,630 | $ | (1,492 | ) | $ | 138 | |||||
Other current liabilities | $ | 528 | $ | (5 | ) | $ | 523 | |||||
Total current liabilities | $ | 3,702 | $ | (1,497 | ) | $ | 2,205 | |||||
Long-term derivative liabilities | $ | 476 | $ | (327 | ) | $ | 149 | |||||
Total liabilities | $ | 15,978 | $ | (1,824 | ) | $ | 14,154 | |||||
Consolidated Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2016 | ||||||||||||
Change in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||
Derivative instruments, net | $ | (71 | ) | $ | (83 | ) | $ | (154 | ) | |||
Other assets | $ | (75 | ) | $ | 76 | $ | 1 | |||||
Accounts payable and accrued expenses | $ | 46 | $ | 7 | $ | 53 | ||||||
Net cash provided by operating activities | $ | 667 | $ | — | $ | 667 |
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Ownership Interest as of September 30, 2017 | September 30, 2017 | December 31, 2016 | |||||||
Greenfield LP | 50% | $ | 92 | $ | 73 | ||||
Whitby | 50% | 4 | 16 | ||||||
Calpine Receivables | 100% | 10 | 10 | ||||||
Total investments in unconsolidated subsidiaries | $ | 106 | $ | 99 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Greenfield LP | $ | (5 | ) | $ | (3 | ) | $ | (11 | ) | $ | (8 | ) | |||
Whitby | (2 | ) | (3 | ) | (6 | ) | (8 | ) | |||||||
Total | $ | (7 | ) | $ | (6 | ) | $ | (17 | ) | $ | (16 | ) |
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September 30, 2017 | December 31, 2016 | ||||||
Senior Unsecured Notes | $ | 3,415 | $ | 3,412 | |||
First Lien Term Loans | 3,152 | 3,165 | |||||
First Lien Notes | 1,843 | 2,290 | |||||
Project financing, notes payable and other | 1,575 | 1,597 | |||||
CCFC Term Loans | 1,544 | 1,553 | |||||
Capital lease obligations | 121 | 162 | |||||
Subtotal | 11,650 | 12,179 | |||||
Less: Current maturities | 369 | 748 | |||||
Total long-term debt | $ | 11,281 | $ | 11,431 |
September 30, 2017 | December 31, 2016 | ||||||
2023 Senior Unsecured Notes | $ | 1,238 | $ | 1,237 | |||
2024 Senior Unsecured Notes | 643 | 643 | |||||
2025 Senior Unsecured Notes | 1,534 | 1,532 | |||||
Total Senior Unsecured Notes | $ | 3,415 | $ | 3,412 |
September 30, 2017 | December 31, 2016 | ||||||
2017 First Lien Term Loan(1) | $ | 149 | $ | 537 | |||
2019 First Lien Term Loan | 389 | — | |||||
2023 First Lien Term Loans | 1,067 | 1,071 | |||||
2024 First Lien Term Loan | 1,547 | 1,557 | |||||
Total First Lien Term Loans | $ | 3,152 | $ | 3,165 |
(1) | For the nine months ended September 30, 2017, we used cash on hand to repay $400 million of our outstanding 2017 First Lien Term Loan. We recorded approximately $1 million and $4 million in debt extinguishment costs for the three and nine months ended September 30, 2017, related to the partial repayment of our 2017 First Lien Term Loan. |
September 30, 2017 | December 31, 2016 | ||||||
2022 First Lien Notes | $ | 741 | $ | 739 | |||
2023 First Lien Notes(1) | — | 450 | |||||
2024 First Lien Notes | 485 | 485 | |||||
2026 First Lien Notes | 617 | 616 | |||||
Total First Lien Notes | $ | 1,843 | $ | 2,290 |
(1) | On March 6, 2017, we used cash on hand along with the proceeds from our 2019 First Lien Term Loan to redeem the remaining $453 million of our 2023 First Lien Notes, plus accrued and unpaid interest. During the first quarter of 2017, we recorded approximately $21 million in debt extinguishment costs related to the redemption of our 2023 First Lien Notes. |
September 30, 2017 | December 31, 2016 | ||||||
Corporate Revolving Facility(1) | $ | 474 | $ | 535 | |||
CDHI | 246 | 250 | |||||
Various project financing facilities | 230 | 206 | |||||
Total | $ | 950 | $ | 991 |
(1) | The Corporate Revolving Facility represents our primary revolving facility. |
September 30, 2017 | December 31, 2016 | ||||||||||||||
Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||
Senior Unsecured Notes | $ | 3,307 | $ | 3,415 | $ | 3,343 | $ | 3,412 | |||||||
First Lien Term Loans | 3,202 | 3,152 | 3,244 | 3,165 | |||||||||||
First Lien Notes | 1,905 | 1,843 | 2,349 | 2,290 | |||||||||||
Project financing, notes payable and other(1) | 1,516 | 1,484 | 1,543 | 1,506 | |||||||||||
CCFC Term Loans | 1,554 | 1,544 | 1,567 | 1,553 | |||||||||||
Total | $ | 11,484 | $ | 11,438 | $ | 12,046 | $ | 11,926 |
(1) | Excludes a lease that is accounted for as a failed sale-leaseback transaction under U.S. GAAP. |
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Assets and Liabilities with Recurring Fair Value Measures as of September 30, 2017 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents(1) | $ | 173 | $ | — | $ | — | $ | 173 | |||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 605 | — | — | 605 | |||||||||||
Commodity forward contracts(2) | — | 362 | 332 | 694 | |||||||||||
Interest rate hedging instruments | — | 20 | — | 20 | |||||||||||
Effect of netting and allocation of collateral(3)(4) | (605 | ) | (203 | ) | (21 | ) | (829 | ) | |||||||
Total assets | $ | 173 | $ | 179 | $ | 311 | $ | 663 | |||||||
Liabilities: | |||||||||||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 656 | — | — | 656 | |||||||||||
Commodity forward contracts(2) | — | 355 | 64 | 419 | |||||||||||
Interest rate hedging instruments | — | 52 | — | 52 | |||||||||||
Effect of netting and allocation of collateral(3)(4) | (656 | ) | (220 | ) | (35 | ) | (911 | ) | |||||||
Total liabilities | $ | — | $ | 187 | $ | 29 | $ | 216 |
Assets and Liabilities with Recurring Fair Value Measures as of December 31, 2016 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents(1) | $ | 153 | $ | — | $ | — | $ | 153 | |||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 1,542 | — | — | 1,542 | |||||||||||
Commodity forward contracts(2) | — | 231 | 466 | 697 | |||||||||||
Interest rate hedging instruments | — | 29 | — | 29 | |||||||||||
Effect of netting and allocation of collateral(3)(4) | (1,542 | ) | $ | (188 | ) | (17 | ) | (1,747 | ) | ||||||
Total assets | $ | 153 | $ | 72 | $ | 449 | $ | 674 | |||||||
Liabilities: | |||||||||||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 1,570 | — | — | 1,570 | |||||||||||
Commodity forward contracts(2) | — | 411 | 67 | 478 | |||||||||||
Interest rate hedging instruments | — | 58 | — | 58 | |||||||||||
Effect of netting and allocation of collateral(3)(4) | (1,570 | ) | $ | (215 | ) | (34 | ) | (1,819 | ) | ||||||
Total liabilities | $ | — | $ | 254 | $ | 33 | $ | 287 |
(1) | At September 30, 2017 and December 31, 2016, we had cash equivalents of $32 million and $26 million included in cash and cash equivalents and $141 million and $127 million included in restricted cash, respectively. |
(2) | Includes OTC swaps and options and retail contracts. |
(3) | During the third quarter of 2017, we elected to offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting arrangement for financial statement presentation; therefore, amounts recognized for the right to reclaim, or the obligation to return, cash collateral are presented net with the corresponding derivative instrument fair values. See Note 1 for a further description of the change in accounting principle associated with our election to offset fair value amounts associated with our derivative instruments. See Note 6 for further discussion of our derivative instruments subject to master netting arrangements. |
(4) | Cash collateral posted with (received from) counterparties allocated to level 1, level 2 and level 3 derivative instruments totaled $51 million, $17 million and $14 million, respectively, at September 30, 2017. Cash collateral posted with (received from) counterparties allocated to level 1, level 2 and level 3 derivative instruments totaled $28 million, $27 million and $17 million, respectively, at December 31, 2016. |
Quantitative Information about Level 3 Fair Value Measurements | |||||||||||||||
September 30, 2017 | |||||||||||||||
Fair Value, Net Asset | Significant Unobservable | ||||||||||||||
(Liability) | Valuation Technique | Input | Range | ||||||||||||
(in millions) | |||||||||||||||
Power Contracts | $ | 234 | Discounted cash flow | Market price (per MWh) | $ | 6.55 | — | $89.83 | /MWh | ||||||
Power Congestion Products | $ | 10 | Discounted cash flow | Market price (per MWh) | $ | (13.13 | ) | — | $6.85 | /MWh | |||||
Natural Gas Contracts | $ | 38 | Discounted cash flow | Market price (per MMBtu) | $ | 0.97 | — | $9.35 | /MMBtu | ||||||
December 31, 2016 | |||||||||||||||
Fair Value, Net Asset | Significant Unobservable | ||||||||||||||
(Liability) | Valuation Technique | Input | Range | ||||||||||||
(in millions) | |||||||||||||||
Power Contracts | $ | 376 | Discounted cash flow | Market price (per MWh) | $ | 9.60 | — | $86.34 | /MWh | ||||||
Power Congestion Products | $ | 12 | Discounted cash flow | Market price (per MWh) | $ | (7.52 | ) | — | $13.62 | /MWh | |||||
Natural Gas Contracts | $ | 18 | Discounted cash flow | Market price (per MMBtu) | $ | 1.95 | — | $5.66 | /MMBtu |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Balance, beginning of period | $ | 303 | $ | (61 | ) | $ | 416 | $ | (46 | ) | ||||||
Realized and mark-to-market gains (losses): | ||||||||||||||||
Included in net loss: | ||||||||||||||||
Included in operating revenues(1) | 26 | 30 | 125 | 9 | ||||||||||||
Included in fuel and purchased energy expense(2) | (12 | ) | (31 | ) | (1 | ) | (24 | ) | ||||||||
Change in collateral | 4 | (2 | ) | (4 | ) | — | ||||||||||
Purchases and settlements: | ||||||||||||||||
Purchases | 1 | 1 | 2 | 4 | ||||||||||||
Settlements | (40 | ) | 15 | (129 | ) | (4 | ) | |||||||||
Transfers in and/or out of level 3(3): | ||||||||||||||||
Transfers into level 3(4) | 3 | 1 | (5 | ) | — | |||||||||||
Transfers out of level 3(5) | (3 | ) | 75 | (122 | ) | 89 | ||||||||||
Balance, end of period | $ | 282 | $ | 28 | $ | 282 | $ | 28 | ||||||||
Change in unrealized gains (losses) relating to instruments still held at end of period | $ | 14 | $ | (1 | ) | $ | 124 | $ | (15 | ) |
(1) | For power contracts and other power-related products, included on our Consolidated Condensed Statements of Operations. |
(2) | For natural gas and power contracts, swaps and options, included on our Consolidated Condensed Statements of Operations. |
(3) | We transfer amounts among levels of the fair value hierarchy as of the end of each period. There were no transfers into or out of level 1 for each of the three and nine months ended September 30, 2017 and 2016. |
(4) | There were $3 million and $1 million in gains transferred out of level 2 into level 3 for the three months ended September 30, 2017 and 2016, and $(5) million and nil in losses transferred out of level 2 into level 3 for the nine months ended September 30, 2017 and 2016, respectively, due to changes in market liquidity in various power markets. |
(5) | We had $3 million in gains and $(75) million in losses transferred out of level 3 into level 2 for the three months ended September 30, 2017 and 2016, respectively, and $122 million in gains and $(89) million in losses transferred out of level 3 into level 2 for the nine months ended September 30, 2017 and 2016, respectively, due to changes in market liquidity in various power markets. |
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Derivative Instruments | Notional Amounts | |||||||
September 30, 2017 | December 31, 2016 | |||||||
Power (MWh) | (98 | ) | (86 | ) | ||||
Natural gas (MMBtu) | 398 | 613 | ||||||
Environmental credits (Tonnes) | 19 | 16 | ||||||
Interest rate hedging instruments | $ | 4,600 | (1) | $ | 3,721 |
(1) | We entered into interest rate hedging instruments during the first quarter of 2017 to hedge approximately $1.0 billion of variable rate debt for 2018 through 2020 and approximately $500 million of variable rate debt for 2021 through 2022. We also extended the tenor of certain interest rate hedging instruments, which effectively places a ceiling on LIBOR on $2.5 billion of variable rate corporate debt through 2020 and $1.25 billion of variable rate corporate debt in 2021. |
September 30, 2017 | ||||||||||||
Gross Amounts of Assets and (Liabilities) | Gross Amounts Offset on the Consolidated Condensed Balance Sheets | Net Amount Presented on the Consolidated Condensed Balance Sheet(1) | ||||||||||
Derivative assets: | ||||||||||||
Commodity exchange traded futures and swaps contracts | $ | 472 | $ | (472 | ) | $ | — | |||||
Commodity forward contracts | 338 | (133 | ) | 205 | ||||||||
Interest rate hedging instruments | 2 | (1 | ) | 1 | ||||||||
Total current derivative assets(2) | $ | 812 | $ | (606 | ) | $ | 206 | |||||
Commodity exchange traded futures and swaps contracts | 133 | (133 | ) | — | ||||||||
Commodity forward contracts | 356 | (82 | ) | 274 | ||||||||
Interest rate hedging instruments | 18 | (8 | ) | 10 | ||||||||
Total long-term derivative assets(2) | $ | 507 | $ | (223 | ) | $ | 284 | |||||
Total derivative assets | $ | 1,319 | $ | (829 | ) | $ | 490 | |||||
Derivative (liabilities): | ||||||||||||
Commodity exchange traded futures and swaps contracts | $ | (496 | ) | $ | 496 | $ | — | |||||
Commodity forward contracts | (236 | ) | 148 | (88 | ) | |||||||
Interest rate hedging instruments | (26 | ) | 1 | (25 | ) | |||||||
Total current derivative (liabilities)(2) | $ | (758 | ) | $ | 645 | $ | (113 | ) | ||||
Commodity exchange traded futures and swaps contracts | (160 | ) | 160 | — | ||||||||
Commodity forward contracts | (183 | ) | 98 | (85 | ) | |||||||
Interest rate hedging instruments | (26 | ) | 8 | (18 | ) | |||||||
Total long-term derivative (liabilities)(2) | $ | (369 | ) | $ | 266 | $ | (103 | ) | ||||
Total derivative liabilities | $ | (1,127 | ) | $ | 911 | $ | (216 | ) | ||||
Net derivative assets (liabilities) | $ | 192 | $ | 82 | $ | 274 |
December 31, 2016 | ||||||||||||
Gross Amounts of Assets and (Liabilities) | Gross Amounts Offset on the Consolidated Condensed Balance Sheets | Net Amount Presented on the Consolidated Condensed Balance Sheet(1) | ||||||||||
Derivative assets: | ||||||||||||
Commodity exchange traded futures and swaps contracts | $ | 1,344 | $ | (1,344 | ) | $ | — | |||||
Commodity forward contracts | 380 | (160 | ) | 220 | ||||||||
Interest rate hedging instruments | 1 | — | 1 | |||||||||
Total current derivative assets(3) | $ | 1,725 | $ | (1,504 | ) | $ | 221 | |||||
Commodity exchange traded futures and swaps contracts | 198 | (198 | ) | — | ||||||||
Commodity forward contracts | 317 | (45 | ) | 272 | ||||||||
Interest rate hedging instruments | 28 | — | 28 | |||||||||
Total long-term derivative assets(3) | $ | 543 | $ | (243 | ) | $ | 300 | |||||
Total derivative assets | $ | 2,268 | $ | (1,747 | ) | $ | 521 | |||||
Derivative (liabilities): | ||||||||||||
Commodity exchange traded futures and swaps contracts | $ | (1,327 | ) | $ | 1,327 | $ | — | |||||
Commodity forward contracts | (275 | ) | 165 | (110 | ) | |||||||
Interest rate hedging instruments | (28 | ) | — | (28 | ) | |||||||
Total current derivative (liabilities)(3) | $ | (1,630 | ) | $ | 1,492 | $ | (138 | ) | ||||
Commodity exchange traded futures and swaps contracts | (243 | ) | 243 | — | ||||||||
Commodity forward contracts | (203 | ) | 84 | (119 | ) | |||||||
Interest rate hedging instruments | (30 | ) | — | (30 | ) | |||||||
Total long-term derivative (liabilities)(3) | $ | (476 | ) | $ | 327 | $ | (149 | ) | ||||
Total derivative liabilities | $ | (2,106 | ) | $ | 1,819 | $ | (287 | ) | ||||
Net derivative assets (liabilities) | $ | 162 | $ | 72 | $ | 234 |
(1) | At September 30, 2017 and December 31, 2016, we had $115 million and $262 million of collateral under master netting arrangements that were not offset against our derivative instruments on the Consolidated Condensed Balance Sheets. |
(2) | At September 30, 2017, current and long-term derivative assets are shown net of collateral of $(4) million and $(8) million, respectively, and current and long-term derivative liabilities are shown net of collateral of $43 million and $51 million, respectively. |
(3) | At December 31, 2016, current and long-term derivative assets are shown net of collateral of $(29) million and $(3) million, respectively, and current and long-term derivative liabilities are shown net of collateral of $19 million and $85 million, respectively. |
September 30, 2017 | December 31, 2016 | ||||||||||||||
Fair Value of Derivative Assets | Fair Value of Derivative Liabilities | Fair Value of Derivative Assets | Fair Value of Derivative Liabilities | ||||||||||||
Derivatives designated as cash flow hedging instruments: | |||||||||||||||
Interest rate hedging instruments | $ | 11 | $ | 43 | $ | 29 | $ | 58 | |||||||
Total derivatives designated as cash flow hedging instruments | $ | 11 | $ | 43 | $ | 29 | $ | 58 | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity instruments | $ | 479 | $ | 173 | $ | 492 | $ | 229 | |||||||
Total derivatives not designated as hedging instruments | $ | 479 | $ | 173 | $ | 492 | $ | 229 | |||||||
Total derivatives | $ | 490 | $ | 216 | $ | 521 | $ | 287 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Realized gain (loss)(1)(2) | |||||||||||||||
Commodity derivative instruments | $ | (53 | ) | $ | 32 | $ | 20 | $ | 213 | ||||||
Total realized gain (loss) | $ | (53 | ) | $ | 32 | $ | 20 | $ | 213 | ||||||
Mark-to-market gain (loss)(3) | |||||||||||||||
Commodity derivative instruments | $ | 66 | $ | 109 | $ | 39 | $ | (22 | ) | ||||||
Interest rate hedging instruments | — | — | 1 | 1 | |||||||||||
Total mark-to-market gain (loss) | $ | 66 | $ | 109 | $ | 40 | $ | (21 | ) | ||||||
Total activity, net | $ | 13 | $ | 141 | $ | 60 | $ | 192 |
(1) | Does not include the realized value associated with derivative instruments that settle through physical delivery. |
(2) | Includes amortization of acquisition date fair value of financial derivative activity related to the acquisition of Champion Energy, Calpine Solutions and North American Power. |
(3) | In addition to changes in market value on derivatives not designated as hedges, changes in mark-to-market gain (loss) also includes hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Realized and mark-to-market gain (loss)(1) | |||||||||||||||
Derivatives contracts included in operating revenues(2)(3) | $ | 60 | $ | 308 | $ | 252 | $ | 240 | |||||||
Derivatives contracts included in fuel and purchased energy expense(2)(3) | (47 | ) | (167 | ) | (193 | ) | (49 | ) | |||||||
Interest rate hedging instruments included in interest expense(4) | — | — | 1 | 1 | |||||||||||
Total activity, net | $ | 13 | $ | 141 | $ | 60 | $ | 192 |
(1) | In addition to changes in market value on derivatives not designated as hedges, changes in mark-to-market gain (loss) also includes adjustments to reflect changes in credit default risk exposure. |
(2) | Does not include the realized value associated with derivative instruments that settle through physical delivery. |
(3) | Includes amortization of acquisition date fair value of financial derivative activity related to the acquisition of Champion Energy, Calpine Solutions and North American Power. |
(4) | In addition to changes in market value on interest rate hedging instruments not designated as hedges, changes in mark-to-market gain (loss) also includes hedge ineffectiveness. |
Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||
Gain (Loss) Recognized in OCI (Effective Portion) | Gain (Loss) Reclassified from AOCI into Income (Effective Portion)(3) | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | Affected Line Item on the Consolidated Condensed Statements of Operations | |||||||||||||
Interest rate hedging instruments(1)(2) | $ | 7 | $ | 18 | $ | (10 | ) | $ | (11 | ) | Interest expense | ||||||
Interest rate hedging instruments(1)(2) | 1 | — | (1 | ) | — | Depreciation expense | |||||||||||
Total | $ | 8 | $ | 18 | $ | (11 | ) | $ | (11 | ) |
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
Gain (Loss) Recognized in OCI (Effective Portion) | Gain (Loss) Reclassified from AOCI into Income (Effective Portion)(3) | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | Affected Line Item on the Consolidated Condensed Statements of Operations | |||||||||||||
Interest rate hedging instruments(1)(2) | $ | (12 | ) | $ | — | $ | (32 | ) | $ | (33 | ) | Interest expense | |||||
Interest rate hedging instruments(1)(2) | 5 | — | (5 | ) | — | Depreciation expense | |||||||||||
Total | $ | (7 | ) | $ | — | $ | (37 | ) | $ | (33 | ) |
(1) | We did not record any material gain (loss) on hedge ineffectiveness related to our interest rate hedging instruments designated as cash flow hedges during the three and nine months ended September 30, 2017 and 2016. |
(2) | We recorded an income tax expense of $1 million and $3 million for each of the three and nine months ended September 30, 2017 and nil for each of the three and nine months ended September 30, 2016, in AOCI related to our cash flow hedging activities. |
(3) | Cumulative cash flow hedge losses attributable to Calpine, net of tax, remaining in AOCI were $101 million and $90 million at September 30, 2017 and December 31, 2016, respectively. Cumulative cash flow hedge losses attributable to the noncontrolling interest, net of tax, remaining in AOCI were $7 million and $8 million at September 30, 2017 and December 31, 2016, respectively. |
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September 30, 2017 | December 31, 2016 | ||||||
Margin deposits(1) | $ | 216 | $ | 350 | |||
Natural gas and power prepayments | 27 | 25 | |||||
Total margin deposits and natural gas and power prepayments with our counterparties(2) | $ | 243 | $ | 375 | |||
Letters of credit issued | $ | 731 | $ | 798 | |||
First priority liens under power and natural gas agreements | 193 | 206 | |||||
First priority liens under interest rate hedging instruments | 41 | 55 | |||||
Total letters of credit and first priority liens with our counterparties | $ | 965 | $ | 1,059 | |||
Margin deposits posted with us by our counterparties(1)(3) | $ | 19 | $ | 16 | |||
Letters of credit posted with us by our counterparties | 33 | 43 | |||||
Total margin deposits and letters of credit posted with us by our counterparties | $ | 52 | $ | 59 |
(1) | During the third quarter of 2017, we elected to offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting arrangement for financial statement presentation; therefore, amounts recognized for the right to reclaim, or the obligation to return, cash collateral are presented net with the corresponding derivative instrument fair values. See Note 1 for a further description of the change in accounting principle associated with our election to offset fair value amounts associated with our derivative instruments. See Note 6 for further discussion of our derivative instruments subject to master netting arrangements. |
(2) | At September 30, 2017 and December 31, 2016, $85 million and $78 million, respectively, were included in current and long-term derivative assets and liabilities, $149 million and $288 million, respectively, were included in margin deposits and other prepaid expense and $9 million and $9 million, respectively, were included in other assets on our Consolidated Condensed Balance Sheets. |
(3) | At September 30, 2017 and December 31, 2016, $3 million and $6 million, respectively, were included in current and long-term derivative assets and liabilities and $16 million and $10 million, respectively, were included in other current liabilities on our Consolidated Condensed Balance Sheets. |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income tax expense (benefit) | $ | (2 | ) | $ | (4 | ) | $ | — | $ | 17 | |||||
Effective tax rate | (1 | )% | (1 | )% | — | % | 20 | % |
|
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Term (in years) | Aggregate Intrinsic Value (in millions) | |||||||||
Outstanding — December 31, 2016 | 2,697,136 | $ | 13.59 | 3.0 | $ | 2 | ||||||
Granted | 1,476,480 | $ | 11.70 | |||||||||
Exercised | 4,000 | $ | 9.49 | |||||||||
Forfeited | 15,721 | $ | 11.69 | |||||||||
Expired | 32,100 | $ | 17.70 | |||||||||
Outstanding — September 30, 2017 | 4,121,795 | $ | 12.89 | 4.8 | $ | 10 | ||||||
Exercisable — September 30, 2017 | 2,661,036 | $ | 13.54 | 2.3 | $ | 5 | ||||||
Vested and expected to vest – September 30, 2017 | 3,949,676 | $ | 12.94 | 4.6 | $ | 9 |
2017 | ||||
Expected term (in years)(1) | 7.3 - 10.0 | |||
Risk-free interest rate(2) | 2.25 | % | ||
Expected volatility(3) | 33 - 40 | % | ||
Dividend yield(4) | — | |||
Weighted average grant-date fair value (per option) | $ | 5.38 |
(1) | Expected term calculated using historical exercise data. |
(2) | Zero Coupon U.S. Treasury rate or equivalent based on expected term. |
(3) | Volatility calculated using the implied volatility of our exchange traded stock options. |
(4) | We have never paid cash dividends on our common stock and we do not anticipate any cash dividend payments on our common stock in the near future. |
Number of Restricted Stock Awards | Weighted Average Grant-Date Fair Value | |||||
Nonvested — December 31, 2016 | 4,869,648 | $ | 15.83 | |||
Granted | 3,606,816 | $ | 11.76 | |||
Forfeited | 546,585 | $ | 13.90 | |||
Vested | 1,674,738 | $ | 17.07 | |||
Nonvested — September 30, 2017 | 6,255,141 | (1) | $ | 13.31 |
(1) | Includes 63,075 shares of restricted stock and restricted stock units outstanding under the Director Plans and 6,192,066 shares of restricted stock and restricted stock units outstanding under the Equity Plans. |
Number of Performance Share Units | Weighted Average Grant-Date Fair Value | |||||
Nonvested — December 31, 2016 | 890,587 | $ | 17.90 | |||
Granted | 478,984 | $ | 10.73 | |||
Forfeited | 54,638 | $ | 18.38 | |||
Vested(1) | 30,312 | $ | 17.21 | |||
Nonvested — September 30, 2017 | 1,284,621 | $ | 15.22 |
(1) | In accordance with the applicable performance share unit agreements, performance share units granted to employees who meet the retirement eligibility requirements stipulated in the Equity Plans are fully vested upon the later of the date on which the employee becomes eligible to retire or one-year anniversary of the grant date. |
|
|
Three Months Ended September 30, 2017 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 553 | $ | 1,127 | $ | 906 | $ | — | $ | 2,586 | |||||||||
Intersegment revenues | 2 | 4 | 2 | (8 | ) | — | |||||||||||||
Total operating revenues | $ | 555 | $ | 1,131 | $ | 908 | $ | (8 | ) | $ | 2,586 | ||||||||
Commodity Margin | $ | 327 | $ | 201 | $ | 336 | $ | — | $ | 864 | |||||||||
Add: Mark-to-market commodity activity, net and other(1) | (40 | ) | 88 | (39 | ) | (8 | ) | 1 | |||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 83 | 77 | 75 | (7 | ) | 228 | |||||||||||||
Depreciation and amortization expense | 63 | 61 | 55 | — | 179 | ||||||||||||||
Sales, general and other administrative expense | 10 | 16 | 10 | 1 | 37 | ||||||||||||||
Other operating expenses | 13 | 6 | 6 | (2 | ) | 23 | |||||||||||||
Impairment losses | — | 12 | — | — | 12 | ||||||||||||||
(Income) from unconsolidated subsidiaries | — | — | (7 | ) | — | (7 | ) | ||||||||||||
Income from operations | 118 | 117 | 158 | — | 393 | ||||||||||||||
Interest expense | 156 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 8 | ||||||||||||||||||
Income before income taxes | $ | 229 |
Three Months Ended September 30, 2016 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 524 | $ | 1,067 | $ | 764 | $ | — | $ | 2,355 | |||||||||
Intersegment revenues | 1 | 3 | 2 | (6 | ) | — | |||||||||||||
Total operating revenues | $ | 525 | $ | 1,070 | $ | 766 | $ | (6 | ) | $ | 2,355 | ||||||||
Commodity Margin | $ | 298 | $ | 198 | $ | 324 | $ | — | $ | 820 | |||||||||
Add: Mark-to-market commodity activity, net and other(1) | 11 | 110 | (51 | ) | (7 | ) | 63 | ||||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 79 | 65 | 78 | (7 | ) | 215 | |||||||||||||
Depreciation and amortization expense | 56 | 53 | 52 | — | 161 | ||||||||||||||
Sales, general and other administrative expense | 9 | 13 | 12 | (1 | ) | 33 | |||||||||||||
Other operating expenses | 8 | 2 | 7 | 1 | 18 | ||||||||||||||
(Income) from unconsolidated subsidiaries | — | — | (6 | ) | — | (6 | ) | ||||||||||||
Income from operations | 157 | 175 | 130 | — | 462 | ||||||||||||||
Interest expense | 158 | ||||||||||||||||||
Other (income) expense, net | 7 | ||||||||||||||||||
Income before income taxes | $ | 297 |
Nine Months Ended September 30, 2017 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 1,666 | $ | 2,723 | $ | 2,562 | $ | — | $ | 6,951 | |||||||||
Intersegment revenues | 4 | 12 | 6 | (22 | ) | — | |||||||||||||
Total operating revenues | $ | 1,670 | $ | 2,735 | $ | 2,568 | $ | (22 | ) | $ | 6,951 | ||||||||
Commodity Margin | $ | 792 | $ | 516 | $ | 761 | $ | — | $ | 2,069 | |||||||||
Add: Mark-to-market commodity activity, net and other(2) | (1 | ) | 28 | (65 | ) | (22 | ) | (60 | ) | ||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 291 | 282 | 260 | (21 | ) | 812 | |||||||||||||
Depreciation and amortization expense | 189 | 187 | 166 | — | 542 | ||||||||||||||
Sales, general and other administrative expense | 31 | 54 | 31 | 1 | 117 | ||||||||||||||
Other operating expenses | 30 | 12 | 23 | (2 | ) | 63 | |||||||||||||
Impairment losses | 28 | 13 | — | — | 41 | ||||||||||||||
(Gain) on sale of assets, net | — | — | (27 | ) | — | (27 | ) | ||||||||||||
(Income) from unconsolidated subsidiaries | — | — | (17 | ) | — | (17 | ) | ||||||||||||
Income (loss) from operations | 222 | (4 | ) | 260 | — | 478 | |||||||||||||
Interest expense | 469 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 42 | ||||||||||||||||||
Loss before income taxes | $ | (33 | ) |
Nine Months Ended September 30, 2016 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 1,159 | $ | 2,129 | $ | 1,846 | $ | — | $ | 5,134 | |||||||||
Intersegment revenues | 4 | 10 | 9 | (23 | ) | — | |||||||||||||
Total operating revenues | $ | 1,163 | $ | 2,139 | $ | 1,855 | $ | (23 | ) | $ | 5,134 | ||||||||
Commodity Margin | $ | 749 | $ | 511 | $ | 797 | $ | — | $ | 2,057 | |||||||||
Add: Mark-to-market commodity activity, net and other(2) | (5 | ) | 7 | (44 | ) | (21 | ) | (63 | ) | ||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 268 | 236 | 258 | (21 | ) | 741 | |||||||||||||
Depreciation and amortization expense | 168 | 159 | 163 | — | 490 | ||||||||||||||
Sales, general and other administrative expense | 27 | 43 | 36 | — | 106 | ||||||||||||||
Other operating expenses | 23 | 6 | 27 | (1 | ) | 55 | |||||||||||||
Impairment losses | 13 | — | — | — | 13 | ||||||||||||||
(Income) from unconsolidated subsidiaries | — | — | (16 | ) | — | (16 | ) | ||||||||||||
Income from operations | 245 | 74 | 285 | 1 | 605 | ||||||||||||||
Interest expense | 472 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 33 | ||||||||||||||||||
Income before income taxes | $ | 100 |
(1) | Includes $33 million and $40 million of lease levelization and $39 million and $25 million of amortization expense for the three months ended September 30, 2017 and 2016, respectively. |
(2) | Includes $(13) million and $(2) million of lease levelization and $143 million and $79 million of amortization expense for the nine months ended September 30, 2017 and 2016, respectively. |
|
|
As Previously Reported | Effect of Offsetting Adjustment | As Adjusted | ||||||||||
Consolidated Condensed Balance Sheet as of December 31, 2016 | ||||||||||||
Margin deposits and other prepaid expense | $ | 441 | $ | (77 | ) | $ | 364 | |||||
Derivative assets, current | $ | 1,725 | $ | (1,504 | ) | $ | 221 | |||||
Total current assets | $ | 4,432 | $ | (1,581 | ) | $ | 2,851 | |||||
Long-term derivative assets | $ | 543 | $ | (243 | ) | $ | 300 | |||||
Total assets | $ | 19,317 | $ | (1,824 | ) | $ | 17,493 | |||||
Derivative liabilities, current | $ | 1,630 | $ | (1,492 | ) | $ | 138 | |||||
Other current liabilities | $ | 528 | $ | (5 | ) | $ | 523 | |||||
Total current liabilities | $ | 3,702 | $ | (1,497 | ) | $ | 2,205 | |||||
Long-term derivative liabilities | $ | 476 | $ | (327 | ) | $ | 149 | |||||
Total liabilities | $ | 15,978 | $ | (1,824 | ) | $ | 14,154 | |||||
Consolidated Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2016 | ||||||||||||
Change in operating assets and liabilities, net of effects of acquisitions: | ||||||||||||
Derivative instruments, net | $ | (71 | ) | $ | (83 | ) | $ | (154 | ) | |||
Other assets | $ | (75 | ) | $ | 76 | $ | 1 | |||||
Accounts payable and accrued expenses | $ | 46 | $ | 7 | $ | 53 | ||||||
Net cash provided by operating activities | $ | 667 | $ | — | $ | 667 |
September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
Current | Non-Current | Total | Current | Non-Current | Total | ||||||||||||||||||
Debt service | $ | 22 | $ | 7 | $ | 29 | $ | 11 | $ | 8 | $ | 19 | |||||||||||
Construction/major maintenance | 25 | 17 | 42 | 45 | 6 | 51 | |||||||||||||||||
Security/project/insurance | 145 | — | 145 | 114 | — | 114 | |||||||||||||||||
Other | 4 | 2 | 6 | 3 | 1 | 4 | |||||||||||||||||
Total | $ | 196 | $ | 26 | $ | 222 | $ | 173 | $ | 15 | $ | 188 |
September 30, 2017 | December 31, 2016 | Depreciable Lives | ||||||||||
Buildings, machinery and equipment | $ | 16,512 | $ | 16,468 | 3 | – | 46 | Years | ||||
Geothermal properties | 1,480 | 1,377 | 13 | – | 58 | Years | ||||||
Other | 235 | 259 | 3 | – | 46 | Years | ||||||
18,227 | 18,104 | |||||||||||
Less: Accumulated depreciation | 6,265 | 5,865 | ||||||||||
11,962 | 12,239 | |||||||||||
Land | 117 | 116 | ||||||||||
Construction in progress | 754 | 658 | ||||||||||
Property, plant and equipment, net | $ | 12,833 | $ | 13,013 |
West | Texas | East | Total | ||||||||||||
Goodwill at December 31, 2016 | $ | 68 | $ | 31 | $ | 88 | $ | 187 | |||||||
Acquisition of North American Power | — | — | 49 | 49 | |||||||||||
Purchase price allocation adjustments(1) | (2 | ) | 1 | 8 | 7 | ||||||||||
Goodwill at September 30, 2017 | $ | 66 | $ | 32 | $ | 145 | $ | 243 |
(1) | The purchase price allocation adjustment in the East segment represents adjustments of $17 million for North American Power and $(9) million for Calpine Solutions. |
|
Ownership Interest as of September 30, 2017 | September 30, 2017 | December 31, 2016 | |||||||
Greenfield LP | 50% | $ | 92 | $ | 73 | ||||
Whitby | 50% | 4 | 16 | ||||||
Calpine Receivables | 100% | 10 | 10 | ||||||
Total investments in unconsolidated subsidiaries | $ | 106 | $ | 99 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Greenfield LP | $ | (5 | ) | $ | (3 | ) | $ | (11 | ) | $ | (8 | ) | |||
Whitby | (2 | ) | (3 | ) | (6 | ) | (8 | ) | |||||||
Total | $ | (7 | ) | $ | (6 | ) | $ | (17 | ) | $ | (16 | ) |
|
September 30, 2017 | December 31, 2016 | ||||||
Senior Unsecured Notes | $ | 3,415 | $ | 3,412 | |||
First Lien Term Loans | 3,152 | 3,165 | |||||
First Lien Notes | 1,843 | 2,290 | |||||
Project financing, notes payable and other | 1,575 | 1,597 | |||||
CCFC Term Loans | 1,544 | 1,553 | |||||
Capital lease obligations | 121 | 162 | |||||
Subtotal | 11,650 | 12,179 | |||||
Less: Current maturities | 369 | 748 | |||||
Total long-term debt | $ | 11,281 | $ | 11,431 |
September 30, 2017 | December 31, 2016 | ||||||
2023 Senior Unsecured Notes | $ | 1,238 | $ | 1,237 | |||
2024 Senior Unsecured Notes | 643 | 643 | |||||
2025 Senior Unsecured Notes | 1,534 | 1,532 | |||||
Total Senior Unsecured Notes | $ | 3,415 | $ | 3,412 |
September 30, 2017 | December 31, 2016 | ||||||
2017 First Lien Term Loan(1) | $ | 149 | $ | 537 | |||
2019 First Lien Term Loan | 389 | — | |||||
2023 First Lien Term Loans | 1,067 | 1,071 | |||||
2024 First Lien Term Loan | 1,547 | 1,557 | |||||
Total First Lien Term Loans | $ | 3,152 | $ | 3,165 |
(1) | For the nine months ended September 30, 2017, we used cash on hand to repay $400 million of our outstanding 2017 First Lien Term Loan. We recorded approximately $1 million and $4 million in debt extinguishment costs for the three and nine months ended September 30, 2017, related to the partial repayment of our 2017 First Lien Term Loan. |
September 30, 2017 | December 31, 2016 | ||||||
2022 First Lien Notes | $ | 741 | $ | 739 | |||
2023 First Lien Notes(1) | — | 450 | |||||
2024 First Lien Notes | 485 | 485 | |||||
2026 First Lien Notes | 617 | 616 | |||||
Total First Lien Notes | $ | 1,843 | $ | 2,290 |
(1) | On March 6, 2017, we used cash on hand along with the proceeds from our 2019 First Lien Term Loan to redeem the remaining $453 million of our 2023 First Lien Notes, plus accrued and unpaid interest. During the first quarter of 2017, we recorded approximately $21 million in debt extinguishment costs related to the redemption of our 2023 First Lien Notes. |
September 30, 2017 | December 31, 2016 | ||||||
Corporate Revolving Facility(1) | $ | 474 | $ | 535 | |||
CDHI | 246 | 250 | |||||
Various project financing facilities | 230 | 206 | |||||
Total | $ | 950 | $ | 991 |
(1) | The Corporate Revolving Facility represents our primary revolving facility. |
September 30, 2017 | December 31, 2016 | ||||||||||||||
Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||
Senior Unsecured Notes | $ | 3,307 | $ | 3,415 | $ | 3,343 | $ | 3,412 | |||||||
First Lien Term Loans | 3,202 | 3,152 | 3,244 | 3,165 | |||||||||||
First Lien Notes | 1,905 | 1,843 | 2,349 | 2,290 | |||||||||||
Project financing, notes payable and other(1) | 1,516 | 1,484 | 1,543 | 1,506 | |||||||||||
CCFC Term Loans | 1,554 | 1,544 | 1,567 | 1,553 | |||||||||||
Total | $ | 11,484 | $ | 11,438 | $ | 12,046 | $ | 11,926 |
(1) | Excludes a lease that is accounted for as a failed sale-leaseback transaction under U.S. GAAP. |
|
Assets and Liabilities with Recurring Fair Value Measures as of September 30, 2017 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents(1) | $ | 173 | $ | — | $ | — | $ | 173 | |||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 605 | — | — | 605 | |||||||||||
Commodity forward contracts(2) | — | 362 | 332 | 694 | |||||||||||
Interest rate hedging instruments | — | 20 | — | 20 | |||||||||||
Effect of netting and allocation of collateral(3)(4) | (605 | ) | (203 | ) | (21 | ) | (829 | ) | |||||||
Total assets | $ | 173 | $ | 179 | $ | 311 | $ | 663 | |||||||
Liabilities: | |||||||||||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 656 | — | — | 656 | |||||||||||
Commodity forward contracts(2) | — | 355 | 64 | 419 | |||||||||||
Interest rate hedging instruments | — | 52 | — | 52 | |||||||||||
Effect of netting and allocation of collateral(3)(4) | (656 | ) | (220 | ) | (35 | ) | (911 | ) | |||||||
Total liabilities | $ | — | $ | 187 | $ | 29 | $ | 216 |
Assets and Liabilities with Recurring Fair Value Measures as of December 31, 2016 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents(1) | $ | 153 | $ | — | $ | — | $ | 153 | |||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 1,542 | — | — | 1,542 | |||||||||||
Commodity forward contracts(2) | — | 231 | 466 | 697 | |||||||||||
Interest rate hedging instruments | — | 29 | — | 29 | |||||||||||
Effect of netting and allocation of collateral(3)(4) | (1,542 | ) | $ | (188 | ) | (17 | ) | (1,747 | ) | ||||||
Total assets | $ | 153 | $ | 72 | $ | 449 | $ | 674 | |||||||
Liabilities: | |||||||||||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 1,570 | — | — | 1,570 | |||||||||||
Commodity forward contracts(2) | — | 411 | 67 | 478 | |||||||||||
Interest rate hedging instruments | — | 58 | — | 58 | |||||||||||
Effect of netting and allocation of collateral(3)(4) | (1,570 | ) | $ | (215 | ) | (34 | ) | (1,819 | ) | ||||||
Total liabilities | $ | — | $ | 254 | $ | 33 | $ | 287 |
(1) | At September 30, 2017 and December 31, 2016, we had cash equivalents of $32 million and $26 million included in cash and cash equivalents and $141 million and $127 million included in restricted cash, respectively. |
(2) | Includes OTC swaps and options and retail contracts. |
(3) | During the third quarter of 2017, we elected to offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting arrangement for financial statement presentation; therefore, amounts recognized for the right to reclaim, or the obligation to return, cash collateral are presented net with the corresponding derivative instrument fair values. See Note 1 for a further description of the change in accounting principle associated with our election to offset fair value amounts associated with our derivative instruments. See Note 6 for further discussion of our derivative instruments subject to master netting arrangements. |
(4) | Cash collateral posted with (received from) counterparties allocated to level 1, level 2 and level 3 derivative instruments totaled $51 million, $17 million and $14 million, respectively, at September 30, 2017. Cash collateral posted with (received from) counterparties allocated to level 1, level 2 and level 3 derivative instruments totaled $28 million, $27 million and $17 million, respectively, at December 31, 2016. |
Quantitative Information about Level 3 Fair Value Measurements | |||||||||||||||
September 30, 2017 | |||||||||||||||
Fair Value, Net Asset | Significant Unobservable | ||||||||||||||
(Liability) | Valuation Technique | Input | Range | ||||||||||||
(in millions) | |||||||||||||||
Power Contracts | $ | 234 | Discounted cash flow | Market price (per MWh) | $ | 6.55 | — | $89.83 | /MWh | ||||||
Power Congestion Products | $ | 10 | Discounted cash flow | Market price (per MWh) | $ | (13.13 | ) | — | $6.85 | /MWh | |||||
Natural Gas Contracts | $ | 38 | Discounted cash flow | Market price (per MMBtu) | $ | 0.97 | — | $9.35 | /MMBtu | ||||||
December 31, 2016 | |||||||||||||||
Fair Value, Net Asset | Significant Unobservable | ||||||||||||||
(Liability) | Valuation Technique | Input | Range | ||||||||||||
(in millions) | |||||||||||||||
Power Contracts | $ | 376 | Discounted cash flow | Market price (per MWh) | $ | 9.60 | — | $86.34 | /MWh | ||||||
Power Congestion Products | $ | 12 | Discounted cash flow | Market price (per MWh) | $ | (7.52 | ) | — | $13.62 | /MWh | |||||
Natural Gas Contracts | $ | 18 | Discounted cash flow | Market price (per MMBtu) | $ | 1.95 | — | $5.66 | /MMBtu |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Balance, beginning of period | $ | 303 | $ | (61 | ) | $ | 416 | $ | (46 | ) | ||||||
Realized and mark-to-market gains (losses): | ||||||||||||||||
Included in net loss: | ||||||||||||||||
Included in operating revenues(1) | 26 | 30 | 125 | 9 | ||||||||||||
Included in fuel and purchased energy expense(2) | (12 | ) | (31 | ) | (1 | ) | (24 | ) | ||||||||
Change in collateral | 4 | (2 | ) | (4 | ) | — | ||||||||||
Purchases and settlements: | ||||||||||||||||
Purchases | 1 | 1 | 2 | 4 | ||||||||||||
Settlements | (40 | ) | 15 | (129 | ) | (4 | ) | |||||||||
Transfers in and/or out of level 3(3): | ||||||||||||||||
Transfers into level 3(4) | 3 | 1 | (5 | ) | — | |||||||||||
Transfers out of level 3(5) | (3 | ) | 75 | (122 | ) | 89 | ||||||||||
Balance, end of period | $ | 282 | $ | 28 | $ | 282 | $ | 28 | ||||||||
Change in unrealized gains (losses) relating to instruments still held at end of period | $ | 14 | $ | (1 | ) | $ | 124 | $ | (15 | ) |
(1) | For power contracts and other power-related products, included on our Consolidated Condensed Statements of Operations. |
(2) | For natural gas and power contracts, swaps and options, included on our Consolidated Condensed Statements of Operations. |
(3) | We transfer amounts among levels of the fair value hierarchy as of the end of each period. There were no transfers into or out of level 1 for each of the three and nine months ended September 30, 2017 and 2016. |
(4) | There were $3 million and $1 million in gains transferred out of level 2 into level 3 for the three months ended September 30, 2017 and 2016, and $(5) million and nil in losses transferred out of level 2 into level 3 for the nine months ended September 30, 2017 and 2016, respectively, due to changes in market liquidity in various power markets. |
(5) | We had $3 million in gains and $(75) million in losses transferred out of level 3 into level 2 for the three months ended September 30, 2017 and 2016, respectively, and $122 million in gains and $(89) million in losses transferred out of level 3 into level 2 for the nine months ended September 30, 2017 and 2016, respectively, due to changes in market liquidity in various power markets. |
|
Derivative Instruments | Notional Amounts | |||||||
September 30, 2017 | December 31, 2016 | |||||||
Power (MWh) | (98 | ) | (86 | ) | ||||
Natural gas (MMBtu) | 398 | 613 | ||||||
Environmental credits (Tonnes) | 19 | 16 | ||||||
Interest rate hedging instruments | $ | 4,600 | (1) | $ | 3,721 |
(1) | We entered into interest rate hedging instruments during the first quarter of 2017 to hedge approximately $1.0 billion of variable rate debt for 2018 through 2020 and approximately $500 million of variable rate debt for 2021 through 2022. We also extended the tenor of certain interest rate hedging instruments, which effectively places a ceiling on LIBOR on $2.5 billion of variable rate corporate debt through 2020 and $1.25 billion of variable rate corporate debt in 2021. |
September 30, 2017 | ||||||||||||
Gross Amounts of Assets and (Liabilities) | Gross Amounts Offset on the Consolidated Condensed Balance Sheets | Net Amount Presented on the Consolidated Condensed Balance Sheet(1) | ||||||||||
Derivative assets: | ||||||||||||
Commodity exchange traded futures and swaps contracts | $ | 472 | $ | (472 | ) | $ | — | |||||
Commodity forward contracts | 338 | (133 | ) | 205 | ||||||||
Interest rate hedging instruments | 2 | (1 | ) | 1 | ||||||||
Total current derivative assets(2) | $ | 812 | $ | (606 | ) | $ | 206 | |||||
Commodity exchange traded futures and swaps contracts | 133 | (133 | ) | — | ||||||||
Commodity forward contracts | 356 | (82 | ) | 274 | ||||||||
Interest rate hedging instruments | 18 | (8 | ) | 10 | ||||||||
Total long-term derivative assets(2) | $ | 507 | $ | (223 | ) | $ | 284 | |||||
Total derivative assets | $ | 1,319 | $ | (829 | ) | $ | 490 | |||||
Derivative (liabilities): | ||||||||||||
Commodity exchange traded futures and swaps contracts | $ | (496 | ) | $ | 496 | $ | — | |||||
Commodity forward contracts | (236 | ) | 148 | (88 | ) | |||||||
Interest rate hedging instruments | (26 | ) | 1 | (25 | ) | |||||||
Total current derivative (liabilities)(2) | $ | (758 | ) | $ | 645 | $ | (113 | ) | ||||
Commodity exchange traded futures and swaps contracts | (160 | ) | 160 | — | ||||||||
Commodity forward contracts | (183 | ) | 98 | (85 | ) | |||||||
Interest rate hedging instruments | (26 | ) | 8 | (18 | ) | |||||||
Total long-term derivative (liabilities)(2) | $ | (369 | ) | $ | 266 | $ | (103 | ) | ||||
Total derivative liabilities | $ | (1,127 | ) | $ | 911 | $ | (216 | ) | ||||
Net derivative assets (liabilities) | $ | 192 | $ | 82 | $ | 274 |
December 31, 2016 | ||||||||||||
Gross Amounts of Assets and (Liabilities) | Gross Amounts Offset on the Consolidated Condensed Balance Sheets | Net Amount Presented on the Consolidated Condensed Balance Sheet(1) | ||||||||||
Derivative assets: | ||||||||||||
Commodity exchange traded futures and swaps contracts | $ | 1,344 | $ | (1,344 | ) | $ | — | |||||
Commodity forward contracts | 380 | (160 | ) | 220 | ||||||||
Interest rate hedging instruments | 1 | — | 1 | |||||||||
Total current derivative assets(3) | $ | 1,725 | $ | (1,504 | ) | $ | 221 | |||||
Commodity exchange traded futures and swaps contracts | 198 | (198 | ) | — | ||||||||
Commodity forward contracts | 317 | (45 | ) | 272 | ||||||||
Interest rate hedging instruments | 28 | — | 28 | |||||||||
Total long-term derivative assets(3) | $ | 543 | $ | (243 | ) | $ | 300 | |||||
Total derivative assets | $ | 2,268 | $ | (1,747 | ) | $ | 521 | |||||
Derivative (liabilities): | ||||||||||||
Commodity exchange traded futures and swaps contracts | $ | (1,327 | ) | $ | 1,327 | $ | — | |||||
Commodity forward contracts | (275 | ) | 165 | (110 | ) | |||||||
Interest rate hedging instruments | (28 | ) | — | (28 | ) | |||||||
Total current derivative (liabilities)(3) | $ | (1,630 | ) | $ | 1,492 | $ | (138 | ) | ||||
Commodity exchange traded futures and swaps contracts | (243 | ) | 243 | — | ||||||||
Commodity forward contracts | (203 | ) | 84 | (119 | ) | |||||||
Interest rate hedging instruments | (30 | ) | — | (30 | ) | |||||||
Total long-term derivative (liabilities)(3) | $ | (476 | ) | $ | 327 | $ | (149 | ) | ||||
Total derivative liabilities | $ | (2,106 | ) | $ | 1,819 | $ | (287 | ) | ||||
Net derivative assets (liabilities) | $ | 162 | $ | 72 | $ | 234 |
(1) | At September 30, 2017 and December 31, 2016, we had $115 million and $262 million of collateral under master netting arrangements that were not offset against our derivative instruments on the Consolidated Condensed Balance Sheets. |
(2) | At September 30, 2017, current and long-term derivative assets are shown net of collateral of $(4) million and $(8) million, respectively, and current and long-term derivative liabilities are shown net of collateral of $43 million and $51 million, respectively. |
(3) | At December 31, 2016, current and long-term derivative assets are shown net of collateral of $(29) million and $(3) million, respectively, and current and long-term derivative liabilities are shown net of collateral of $19 million and $85 million, respectively. |
September 30, 2017 | December 31, 2016 | ||||||||||||||
Fair Value of Derivative Assets | Fair Value of Derivative Liabilities | Fair Value of Derivative Assets | Fair Value of Derivative Liabilities | ||||||||||||
Derivatives designated as cash flow hedging instruments: | |||||||||||||||
Interest rate hedging instruments | $ | 11 | $ | 43 | $ | 29 | $ | 58 | |||||||
Total derivatives designated as cash flow hedging instruments | $ | 11 | $ | 43 | $ | 29 | $ | 58 | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity instruments | $ | 479 | $ | 173 | $ | 492 | $ | 229 | |||||||
Total derivatives not designated as hedging instruments | $ | 479 | $ | 173 | $ | 492 | $ | 229 | |||||||
Total derivatives | $ | 490 | $ | 216 | $ | 521 | $ | 287 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Realized gain (loss)(1)(2) | |||||||||||||||
Commodity derivative instruments | $ | (53 | ) | $ | 32 | $ | 20 | $ | 213 | ||||||
Total realized gain (loss) | $ | (53 | ) | $ | 32 | $ | 20 | $ | 213 | ||||||
Mark-to-market gain (loss)(3) | |||||||||||||||
Commodity derivative instruments | $ | 66 | $ | 109 | $ | 39 | $ | (22 | ) | ||||||
Interest rate hedging instruments | — | — | 1 | 1 | |||||||||||
Total mark-to-market gain (loss) | $ | 66 | $ | 109 | $ | 40 | $ | (21 | ) | ||||||
Total activity, net | $ | 13 | $ | 141 | $ | 60 | $ | 192 |
(1) | Does not include the realized value associated with derivative instruments that settle through physical delivery. |
(2) | Includes amortization of acquisition date fair value of financial derivative activity related to the acquisition of Champion Energy, Calpine Solutions and North American Power. |
(3) | In addition to changes in market value on derivatives not designated as hedges, changes in mark-to-market gain (loss) also includes hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Realized and mark-to-market gain (loss)(1) | |||||||||||||||
Derivatives contracts included in operating revenues(2)(3) | $ | 60 | $ | 308 | $ | 252 | $ | 240 | |||||||
Derivatives contracts included in fuel and purchased energy expense(2)(3) | (47 | ) | (167 | ) | (193 | ) | (49 | ) | |||||||
Interest rate hedging instruments included in interest expense(4) | — | — | 1 | 1 | |||||||||||
Total activity, net | $ | 13 | $ | 141 | $ | 60 | $ | 192 |
(1) | In addition to changes in market value on derivatives not designated as hedges, changes in mark-to-market gain (loss) also includes adjustments to reflect changes in credit default risk exposure. |
(2) | Does not include the realized value associated with derivative instruments that settle through physical delivery. |
(3) | Includes amortization of acquisition date fair value of financial derivative activity related to the acquisition of Champion Energy, Calpine Solutions and North American Power. |
(4) | In addition to changes in market value on interest rate hedging instruments not designated as hedges, changes in mark-to-market gain (loss) also includes hedge ineffectiveness. |
Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||
Gain (Loss) Recognized in OCI (Effective Portion) | Gain (Loss) Reclassified from AOCI into Income (Effective Portion)(3) | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | Affected Line Item on the Consolidated Condensed Statements of Operations | |||||||||||||
Interest rate hedging instruments(1)(2) | $ | 7 | $ | 18 | $ | (10 | ) | $ | (11 | ) | Interest expense | ||||||
Interest rate hedging instruments(1)(2) | 1 | — | (1 | ) | — | Depreciation expense | |||||||||||
Total | $ | 8 | $ | 18 | $ | (11 | ) | $ | (11 | ) |
Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
Gain (Loss) Recognized in OCI (Effective Portion) | Gain (Loss) Reclassified from AOCI into Income (Effective Portion)(3) | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | Affected Line Item on the Consolidated Condensed Statements of Operations | |||||||||||||
Interest rate hedging instruments(1)(2) | $ | (12 | ) | $ | — | $ | (32 | ) | $ | (33 | ) | Interest expense | |||||
Interest rate hedging instruments(1)(2) | 5 | — | (5 | ) | — | Depreciation expense | |||||||||||
Total | $ | (7 | ) | $ | — | $ | (37 | ) | $ | (33 | ) |
(1) | We did not record any material gain (loss) on hedge ineffectiveness related to our interest rate hedging instruments designated as cash flow hedges during the three and nine months ended September 30, 2017 and 2016. |
(2) | We recorded an income tax expense of $1 million and $3 million for each of the three and nine months ended September 30, 2017 and nil for each of the three and nine months ended September 30, 2016, in AOCI related to our cash flow hedging activities. |
(3) | Cumulative cash flow hedge losses attributable to Calpine, net of tax, remaining in AOCI were $101 million and $90 million at September 30, 2017 and December 31, 2016, respectively. Cumulative cash flow hedge losses attributable to the noncontrolling interest, net of tax, remaining in AOCI were $7 million and $8 million at September 30, 2017 and December 31, 2016, respectively. |
|
September 30, 2017 | December 31, 2016 | ||||||
Margin deposits(1) | $ | 216 | $ | 350 | |||
Natural gas and power prepayments | 27 | 25 | |||||
Total margin deposits and natural gas and power prepayments with our counterparties(2) | $ | 243 | $ | 375 | |||
Letters of credit issued | $ | 731 | $ | 798 | |||
First priority liens under power and natural gas agreements | 193 | 206 | |||||
First priority liens under interest rate hedging instruments | 41 | 55 | |||||
Total letters of credit and first priority liens with our counterparties | $ | 965 | $ | 1,059 | |||
Margin deposits posted with us by our counterparties(1)(3) | $ | 19 | $ | 16 | |||
Letters of credit posted with us by our counterparties | 33 | 43 | |||||
Total margin deposits and letters of credit posted with us by our counterparties | $ | 52 | $ | 59 |
(1) | During the third quarter of 2017, we elected to offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting arrangement for financial statement presentation; therefore, amounts recognized for the right to reclaim, or the obligation to return, cash collateral are presented net with the corresponding derivative instrument fair values. See Note 1 for a further description of the change in accounting principle associated with our election to offset fair value amounts associated with our derivative instruments. See Note 6 for further discussion of our derivative instruments subject to master netting arrangements. |
(2) | At September 30, 2017 and December 31, 2016, $85 million and $78 million, respectively, were included in current and long-term derivative assets and liabilities, $149 million and $288 million, respectively, were included in margin deposits and other prepaid expense and $9 million and $9 million, respectively, were included in other assets on our Consolidated Condensed Balance Sheets. |
(3) | At September 30, 2017 and December 31, 2016, $3 million and $6 million, respectively, were included in current and long-term derivative assets and liabilities and $16 million and $10 million, respectively, were included in other current liabilities on our Consolidated Condensed Balance Sheets. |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Income tax expense (benefit) | $ | (2 | ) | $ | (4 | ) | $ | — | $ | 17 | |||||
Effective tax rate | (1 | )% | (1 | )% | — | % | 20 | % |
|
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Term (in years) | Aggregate Intrinsic Value (in millions) | |||||||||
Outstanding — December 31, 2016 | 2,697,136 | $ | 13.59 | 3.0 | $ | 2 | ||||||
Granted | 1,476,480 | $ | 11.70 | |||||||||
Exercised | 4,000 | $ | 9.49 | |||||||||
Forfeited | 15,721 | $ | 11.69 | |||||||||
Expired | 32,100 | $ | 17.70 | |||||||||
Outstanding — September 30, 2017 | 4,121,795 | $ | 12.89 | 4.8 | $ | 10 | ||||||
Exercisable — September 30, 2017 | 2,661,036 | $ | 13.54 | 2.3 | $ | 5 | ||||||
Vested and expected to vest – September 30, 2017 | 3,949,676 | $ | 12.94 | 4.6 | $ | 9 |
2017 | ||||
Expected term (in years)(1) | 7.3 - 10.0 | |||
Risk-free interest rate(2) | 2.25 | % | ||
Expected volatility(3) | 33 - 40 | % | ||
Dividend yield(4) | — | |||
Weighted average grant-date fair value (per option) | $ | 5.38 |
(1) | Expected term calculated using historical exercise data. |
(2) | Zero Coupon U.S. Treasury rate or equivalent based on expected term. |
(3) | Volatility calculated using the implied volatility of our exchange traded stock options. |
(4) | We have never paid cash dividends on our common stock and we do not anticipate any cash dividend payments on our common stock in the near future. |
Number of Restricted Stock Awards | Weighted Average Grant-Date Fair Value | |||||
Nonvested — December 31, 2016 | 4,869,648 | $ | 15.83 | |||
Granted | 3,606,816 | $ | 11.76 | |||
Forfeited | 546,585 | $ | 13.90 | |||
Vested | 1,674,738 | $ | 17.07 | |||
Nonvested — September 30, 2017 | 6,255,141 | (1) | $ | 13.31 |
(1) | Includes 63,075 shares of restricted stock and restricted stock units outstanding under the Director Plans and 6,192,066 shares of restricted stock and restricted stock units outstanding under the Equity Plans |
Number of Performance Share Units | Weighted Average Grant-Date Fair Value | |||||
Nonvested — December 31, 2016 | 890,587 | $ | 17.90 | |||
Granted | 478,984 | $ | 10.73 | |||
Forfeited | 54,638 | $ | 18.38 | |||
Vested(1) | 30,312 | $ | 17.21 | |||
Nonvested — September 30, 2017 | 1,284,621 | $ | 15.22 |
(1) | In accordance with the applicable performance share unit agreements, performance share units granted to employees who meet the retirement eligibility requirements stipulated in the Equity Plans are fully vested upon the later of the date on which the employee becomes eligible to retire or one-year anniversary of the grant date. |
|
Three Months Ended September 30, 2017 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 553 | $ | 1,127 | $ | 906 | $ | — | $ | 2,586 | |||||||||
Intersegment revenues | 2 | 4 | 2 | (8 | ) | — | |||||||||||||
Total operating revenues | $ | 555 | $ | 1,131 | $ | 908 | $ | (8 | ) | $ | 2,586 | ||||||||
Commodity Margin | $ | 327 | $ | 201 | $ | 336 | $ | — | $ | 864 | |||||||||
Add: Mark-to-market commodity activity, net and other(1) | (40 | ) | 88 | (39 | ) | (8 | ) | 1 | |||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 83 | 77 | 75 | (7 | ) | 228 | |||||||||||||
Depreciation and amortization expense | 63 | 61 | 55 | — | 179 | ||||||||||||||
Sales, general and other administrative expense | 10 | 16 | 10 | 1 | 37 | ||||||||||||||
Other operating expenses | 13 | 6 | 6 | (2 | ) | 23 | |||||||||||||
Impairment losses | — | 12 | — | — | 12 | ||||||||||||||
(Income) from unconsolidated subsidiaries | — | — | (7 | ) | — | (7 | ) | ||||||||||||
Income from operations | 118 | 117 | 158 | — | 393 | ||||||||||||||
Interest expense | 156 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 8 | ||||||||||||||||||
Income before income taxes | $ | 229 |
Three Months Ended September 30, 2016 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 524 | $ | 1,067 | $ | 764 | $ | — | $ | 2,355 | |||||||||
Intersegment revenues | 1 | 3 | 2 | (6 | ) | — | |||||||||||||
Total operating revenues | $ | 525 | $ | 1,070 | $ | 766 | $ | (6 | ) | $ | 2,355 | ||||||||
Commodity Margin | $ | 298 | $ | 198 | $ | 324 | $ | — | $ | 820 | |||||||||
Add: Mark-to-market commodity activity, net and other(1) | 11 | 110 | (51 | ) | (7 | ) | 63 | ||||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 79 | 65 | 78 | (7 | ) | 215 | |||||||||||||
Depreciation and amortization expense | 56 | 53 | 52 | — | 161 | ||||||||||||||
Sales, general and other administrative expense | 9 | 13 | 12 | (1 | ) | 33 | |||||||||||||
Other operating expenses | 8 | 2 | 7 | 1 | 18 | ||||||||||||||
(Income) from unconsolidated subsidiaries | — | — | (6 | ) | — | (6 | ) | ||||||||||||
Income from operations | 157 | 175 | 130 | — | 462 | ||||||||||||||
Interest expense | 158 | ||||||||||||||||||
Other (income) expense, net | 7 | ||||||||||||||||||
Income before income taxes | $ | 297 |
Nine Months Ended September 30, 2017 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 1,666 | $ | 2,723 | $ | 2,562 | $ | — | $ | 6,951 | |||||||||
Intersegment revenues | 4 | 12 | 6 | (22 | ) | — | |||||||||||||
Total operating revenues | $ | 1,670 | $ | 2,735 | $ | 2,568 | $ | (22 | ) | $ | 6,951 | ||||||||
Commodity Margin | $ | 792 | $ | 516 | $ | 761 | $ | — | $ | 2,069 | |||||||||
Add: Mark-to-market commodity activity, net and other(2) | (1 | ) | 28 | (65 | ) | (22 | ) | (60 | ) | ||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 291 | 282 | 260 | (21 | ) | 812 | |||||||||||||
Depreciation and amortization expense | 189 | 187 | 166 | — | 542 | ||||||||||||||
Sales, general and other administrative expense | 31 | 54 | 31 | 1 | 117 | ||||||||||||||
Other operating expenses | 30 | 12 | 23 | (2 | ) | 63 | |||||||||||||
Impairment losses | 28 | 13 | — | — | 41 | ||||||||||||||
(Gain) on sale of assets, net | — | — | (27 | ) | — | (27 | ) | ||||||||||||
(Income) from unconsolidated subsidiaries | — | — | (17 | ) | — | (17 | ) | ||||||||||||
Income (loss) from operations | 222 | (4 | ) | 260 | — | 478 | |||||||||||||
Interest expense | 469 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 42 | ||||||||||||||||||
Loss before income taxes | $ | (33 | ) |
Nine Months Ended September 30, 2016 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 1,159 | $ | 2,129 | $ | 1,846 | $ | — | $ | 5,134 | |||||||||
Intersegment revenues | 4 | 10 | 9 | (23 | ) | — | |||||||||||||
Total operating revenues | $ | 1,163 | $ | 2,139 | $ | 1,855 | $ | (23 | ) | $ | 5,134 | ||||||||
Commodity Margin | $ | 749 | $ | 511 | $ | 797 | $ | — | $ | 2,057 | |||||||||
Add: Mark-to-market commodity activity, net and other(2) | (5 | ) | 7 | (44 | ) | (21 | ) | (63 | ) | ||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 268 | 236 | 258 | (21 | ) | 741 | |||||||||||||
Depreciation and amortization expense | 168 | 159 | 163 | — | 490 | ||||||||||||||
Sales, general and other administrative expense | 27 | 43 | 36 | — | 106 | ||||||||||||||
Other operating expenses | 23 | 6 | 27 | (1 | ) | 55 | |||||||||||||
Impairment losses | 13 | — | — | — | 13 | ||||||||||||||
(Income) from unconsolidated subsidiaries | — | — | (16 | ) | — | (16 | ) | ||||||||||||
Income from operations | 245 | 74 | 285 | 1 | 605 | ||||||||||||||
Interest expense | 472 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 33 | ||||||||||||||||||
Income before income taxes | $ | 100 |
(1) | Includes $33 million and $40 million of lease levelization and $39 million and $25 million of amortization expense for the three months ended September 30, 2017 and 2016, respectively. |
(2) | Includes $(13) million and $(2) million of lease levelization and $143 million and $79 million of amortization expense for the nine months ended September 30, 2017 and 2016, respectively. |
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