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September 30, 2014 | December 31, 2013 | ||||||||||||||||||||||
Current | Non-Current | Total | Current | Non-Current | Total | ||||||||||||||||||
Debt service | $ | 22 | $ | 25 | $ | 47 | $ | 11 | $ | 41 | $ | 52 | |||||||||||
Rent reserve | 4 | — | 4 | 3 | — | 3 | |||||||||||||||||
Construction/major maintenance | 69 | 12 | 81 | 35 | 20 | 55 | |||||||||||||||||
Security/project/insurance | 149 | 3 | 152 | 151 | 6 | 157 | |||||||||||||||||
Other | — | 2 | 2 | 3 | 2 | 5 | |||||||||||||||||
Total | $ | 244 | $ | 42 | $ | 286 | $ | 203 | $ | 69 | $ | 272 |
September 30, 2014 | December 31, 2013 | Depreciable Lives | |||||||
Buildings, machinery and equipment | $ | 15,528 | $ | 15,838 | 3 – 47 Years | ||||
Geothermal properties | 1,295 | 1,265 | 13 – 59 Years | ||||||
Other | 171 | 164 | 3 – 47 Years | ||||||
16,994 | 17,267 | ||||||||
Less: Accumulated depreciation | 4,840 | 4,897 | |||||||
12,154 | 12,370 | ||||||||
Land | 109 | 103 | |||||||
Construction in progress | 402 | 522 | |||||||
Property, plant and equipment, net | $ | 12,665 | $ | 12,995 |
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Plant Name | Plant Capacity | Location | ||||
Oneta Energy Center | 1,134 | MW | Coweta, OK | |||
Carville Energy Center(1) | 501 | MW | St. Gabriel, LA | |||
Decatur Energy Center | 795 | MW | Decatur, AL | |||
Hog Bayou Energy Center | 237 | MW | Mobile, AL | |||
Santa Rosa Energy Center | 225 | MW | Pace, FL | |||
Columbia Energy Center(1) | 606 | MW | Calhoun County, SC | |||
Total | 3,498 | MW |
(1) | Indicates combined-cycle cogeneration power plant. |
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Ownership Interest as of September 30, 2014 | September 30, 2014 | December 31, 2013 | |||||||
Greenfield LP | 50% | $ | 78 | $ | 76 | ||||
Whitby | 50% | 14 | 17 | ||||||
Total investments in power plants | $ | 92 | $ | 93 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Greenfield LP | $ | (2 | ) | $ | (5 | ) | $ | (7 | ) | $ | (14 | ) | |||
Whitby | (3 | ) | (4 | ) | (11 | ) | (11 | ) | |||||||
Total | $ | (5 | ) | $ | (9 | ) | $ | (18 | ) | $ | (25 | ) |
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September 30, 2014 | December 31, 2013 | ||||||
First Lien Notes | $ | 2,195 | $ | 4,989 | |||
Senior Unsecured Notes | 2,800 | — | |||||
First Lien Term Loans | 2,806 | 2,828 | |||||
Project financing, notes payable and other | 1,861 | 1,901 | |||||
CCFC Term Loans | 1,600 | 1,191 | |||||
Capital lease obligations | 192 | 203 | |||||
Subtotal | 11,454 | 11,112 | |||||
Less: Current maturities | 194 | 204 | |||||
Total long-term debt | $ | 11,260 | $ | 10,908 |
September 30, 2014 | December 31, 2013 | ||||||
2019 First Lien Notes(1) | $ | — | $ | 320 | |||
2020 First Lien Notes(1) | — | 875 | |||||
2021 First Lien Notes(1) | — | 1,600 | |||||
2022 First Lien Notes | 745 | 744 | |||||
2023 First Lien Notes | 960 | 960 | |||||
2024 First Lien Notes | 490 | 490 | |||||
Total First Lien Notes | $ | 2,195 | $ | 4,989 |
(1) | The 2019 First Lien Notes, 2020 First Lien Notes and 2021 First Lien Notes were repaid during the third quarter of 2014 with the proceeds from the issuance of our Senior Unsecured Notes, together with cash on hand, which are described in further detail below. |
September 30, 2014 | December 31, 2013 | ||||||
2023 Senior Unsecured Notes | $ | 1,250 | $ | — | |||
2025 Senior Unsecured Notes | 1,550 | — | |||||
Total Senior Unsecured Notes | $ | 2,800 | $ | — |
• | general unsecured obligations of Calpine; |
• | rank equally in right of payment with all of Calpine’s existing and future senior indebtedness; |
• | effectively subordinated to Calpine’s secured indebtedness to the extent of the value of the collateral securing such indebtedness; |
• | structurally subordinated to any existing and future indebtedness and other liabilities of Calpine’s subsidiaries; and |
• | senior in right of payment to any of Calpine’s subordinated indebtedness. |
September 30, 2014 | December 31, 2013 | ||||||
2018 First Lien Term Loans | $ | 1,601 | $ | 1,614 | |||
2019 First Lien Term Loan | 818 | 824 | |||||
2020 First Lien Term Loan | 387 | 390 | |||||
Total First Lien Term Loans | $ | 2,806 | $ | 2,828 |
September 30, 2014 | December 31, 2013 | ||||||
Corporate Revolving Facility(1) | $ | 206 | $ | 242 | |||
CDHI(2) | 199 | 218 | |||||
Various project financing facilities | 241 | 170 | |||||
Total | $ | 646 | $ | 630 |
(1) | The Corporate Revolving Facility represents our primary revolving facility. On July 30, 2014, we amended our Corporate Revolving Facility to increase the capacity by an additional $500 million to $1.5 billion. |
(2) | During the first quarter of 2014, we amended our CDHI letter of credit facility to lower our fees and extend the maturity to January 2, 2018. |
September 30, 2014 | December 31, 2013 | ||||||||||||||
Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||
First Lien Notes | $ | 2,348 | $ | 2,195 | $ | 5,317 | $ | 4,989 | |||||||
Senior Unsecured Notes | 2,695 | 2,800 | — | — | |||||||||||
First Lien Term Loans | 2,778 | 2,806 | 2,845 | 2,828 | |||||||||||
Project financing, notes payable and other(1) | 1,784 | 1,739 | 1,772 | 1,766 | |||||||||||
CCFC Term Loans | 1,594 | 1,600 | 1,179 | 1,191 | |||||||||||
Total | $ | 11,199 | $ | 11,140 | $ | 11,113 | $ | 10,774 |
(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, 2014 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents(1) | $ | 1,753 | $ | — | $ | — | $ | 1,753 | |||||||
Margin deposits | 177 | — | — | 177 | |||||||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 649 | — | — | 649 | |||||||||||
Commodity forward contracts(2) | — | 132 | 58 | 190 | |||||||||||
Interest rate swaps | — | 5 | — | 5 | |||||||||||
Total assets | $ | 2,579 | $ | 137 | $ | 58 | $ | 2,774 | |||||||
Liabilities: | |||||||||||||||
Margin deposits posted with us by our counterparties | $ | 67 | $ | — | $ | — | $ | 67 | |||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 575 | — | — | 575 | |||||||||||
Commodity forward contracts(2) | — | 94 | 47 | 141 | |||||||||||
Interest rate swaps | — | 113 | — | 113 | |||||||||||
Total liabilities | $ | 642 | $ | 207 | $ | 47 | $ | 896 |
Assets and Liabilities with Recurring Fair Value Measures as of December 31, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents(1) | $ | 1,134 | $ | — | $ | — | $ | 1,134 | |||||||
Margin deposits | 261 | — | — | 261 | |||||||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 434 | — | — | 434 | |||||||||||
Commodity forward contracts(2) | — | 75 | 32 | 107 | |||||||||||
Interest rate swaps | — | 9 | — | 9 | |||||||||||
Total assets | $ | 1,829 | $ | 84 | $ | 32 | $ | 1,945 | |||||||
Liabilities: | |||||||||||||||
Margin deposits posted with us by our counterparties | $ | 5 | $ | — | $ | — | $ | 5 | |||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 495 | — | — | 495 | |||||||||||
Commodity forward contracts(2) | — | 52 | 18 | 70 | |||||||||||
Interest rate swaps | — | 129 | — | 129 | |||||||||||
Total liabilities | $ | 500 | $ | 181 | $ | 18 | $ | 699 |
(1) | As of September 30, 2014 and December 31, 2013, we had cash equivalents of $1,493 million and $889 million included in cash and cash equivalents and $260 million and $245 million included in restricted cash, respectively. |
(2) | Includes OTC swaps and options. |
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||
September 30, 2014 | ||||||||||
Fair Value, Net Asset | Significant Unobservable | |||||||||
(Liability) | Valuation Technique | Input | Range | |||||||
(in millions) | ||||||||||
Power Contracts | $ | (3 | ) | Discounted cash flow | Market price (per MWh) | $15.35 — $191.50/MWh | ||||
Natural Gas Contracts | $ | 10 | Discounted cash flow | Market price (per MMBtu) | $1.98 — $22.52/MMBtu | |||||
Power Congestion Products | $ | 3 | Discounted cash flow | Market price (per MWh) | $(19.56) — $35.30/MWh | |||||
December 31, 2013 | ||||||||||
Fair Value, Net Asset | Significant Unobservable | |||||||||
(Liability) | Valuation Technique | Input | Range | |||||||
(in millions) | ||||||||||
Power Contracts | $ | 7 | Discounted cash flow | Market price (per MWh) | $28.92 — $53.15/MWh | |||||
Power Congestion Products | $ | 7 | Discounted cash flow | Market price (per MWh) | $(8.79) — $11.53/MWh |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Balance, beginning of period | $ | (9 | ) | $ | 13 | $ | 14 | $ | 16 | ||||||
Realized and mark-to-market gains (losses): | |||||||||||||||
Included in net income: | |||||||||||||||
Included in operating revenues(1) | 7 | 7 | (1 | ) | 8 | ||||||||||
Included in fuel and purchased energy expense(2) | 5 | 1 | 9 | — | |||||||||||
Purchases, issuances and settlements: | |||||||||||||||
Purchases | — | — | 1 | — | |||||||||||
Issuances | — | — | — | — | |||||||||||
Settlements | 9 | (5 | ) | (7 | ) | (8 | ) | ||||||||
Transfers in and/or out of level 3(3): | |||||||||||||||
Transfers into level 3(4) | — | — | — | — | |||||||||||
Transfers out of level 3(5) | (1 | ) | — | (5 | ) | — | |||||||||
Balance, end of period | $ | 11 | $ | 16 | $ | 11 | $ | 16 | |||||||
Change in unrealized gains relating to instruments still held at end of period | $ | 12 | $ | 8 | $ | 8 | $ | 8 |
(1) | For power contracts and other power-related products, included on our Consolidated Condensed Statements of Operations. |
(2) | For natural gas 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, 2014 and 2013. |
(4) | There were no transfers out of level 2 into level 3 for each of the three and nine months ended September 30, 2014 and 2013. |
(5) | We had $1 million and $5 million in gains transferred out of level 3 into level 2 for the three and nine months ended September 30, 2014, respectively, primarily due to changes in market liquidity in various power markets. There were no transfers out of level 3 into level 2 for each of the three and nine months ended September 30, 2013. |
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Derivative Instruments | Notional Amounts | |||||||
September 30, 2014 | December 31, 2013 | |||||||
Power (MWh) | (57 | ) | (29 | ) | ||||
Natural gas (MMBtu) | 230 | 448 | ||||||
Environmental credits (Tonnes) | 2 | — | ||||||
Interest rate swaps | $ | 1,500 | $ | 1,527 |
September 30, 2014 | |||||||||||
Commodity Instruments | Interest Rate Swaps | Total Derivative Instruments | |||||||||
Balance Sheet Presentation | |||||||||||
Current derivative assets | $ | 549 | $ | — | $ | 549 | |||||
Long-term derivative assets | 290 | 5 | 295 | ||||||||
Total derivative assets | $ | 839 | $ | 5 | $ | 844 | |||||
Current derivative liabilities | $ | 489 | $ | 45 | $ | 534 | |||||
Long-term derivative liabilities | 227 | 68 | 295 | ||||||||
Total derivative liabilities | $ | 716 | $ | 113 | $ | 829 | |||||
Net derivative asset (liabilities) | $ | 123 | $ | (108 | ) | $ | 15 |
December 31, 2013 | |||||||||||
Commodity Instruments | Interest Rate Swaps | Total Derivative Instruments | |||||||||
Balance Sheet Presentation | |||||||||||
Current derivative assets | $ | 445 | $ | — | $ | 445 | |||||
Long-term derivative assets | 96 | 9 | 105 | ||||||||
Total derivative assets | $ | 541 | $ | 9 | $ | 550 | |||||
Current derivative liabilities | $ | 404 | $ | 47 | $ | 451 | |||||
Long-term derivative liabilities | 161 | 82 | 243 | ||||||||
Total derivative liabilities | $ | 565 | $ | 129 | $ | 694 | |||||
Net derivative asset (liabilities) | $ | (24 | ) | $ | (120 | ) | $ | (144 | ) |
September 30, 2014 | December 31, 2013 | ||||||||||||||
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 swaps | $ | 5 | $ | 108 | $ | 9 | $ | 115 | |||||||
Total derivatives designated as cash flow hedging instruments | $ | 5 | $ | 108 | $ | 9 | $ | 115 | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity instruments | $ | 839 | $ | 716 | $ | 541 | $ | 565 | |||||||
Interest rate swaps | — | 5 | — | 14 | |||||||||||
Total derivatives not designated as hedging instruments | $ | 839 | $ | 721 | $ | 541 | $ | 579 | |||||||
Total derivatives | $ | 844 | $ | 829 | $ | 550 | $ | 694 |
September 30, 2014 | ||||||||||||||||
Gross Amounts Not Offset on the Consolidated Condensed Balance Sheets | ||||||||||||||||
Gross Amounts Presented on our Consolidated Condensed Balance Sheets | Derivative Asset (Liability) not Offset on the Consolidated Condensed Balance Sheets | Margin/Cash (Received) Posted (1) | Net Amount | |||||||||||||
Derivative assets: | ||||||||||||||||
Commodity exchange traded futures and swaps contracts | $ | 649 | $ | (575 | ) | $ | (74 | ) | $ | — | ||||||
Commodity forward contracts | 190 | (121 | ) | (2 | ) | 67 | ||||||||||
Interest rate swaps | 5 | — | — | 5 | ||||||||||||
Total derivative assets | $ | 844 | $ | (696 | ) | $ | (76 | ) | $ | 72 | ||||||
Derivative (liabilities): | ||||||||||||||||
Commodity exchange traded futures and swaps contracts | $ | (575 | ) | $ | 575 | $ | — | $ | — | |||||||
Commodity forward contracts | (141 | ) | 121 | 8 | (12 | ) | ||||||||||
Interest rate swaps | (113 | ) | — | — | (113 | ) | ||||||||||
Total derivative (liabilities) | $ | (829 | ) | $ | 696 | $ | 8 | $ | (125 | ) | ||||||
Net derivative assets (liabilities) | $ | 15 | $ | — | $ | (68 | ) | $ | (53 | ) |
December 31, 2013 | ||||||||||||||||
Gross Amounts Not Offset on the Consolidated Condensed Balance Sheets | ||||||||||||||||
Gross Amounts Presented on our Consolidated Condensed Balance Sheets | Derivative Asset (Liability) not Offset on the Consolidated Condensed Balance Sheets | Margin/Cash (Received) Posted (1) | Net Amount | |||||||||||||
Derivative assets: | ||||||||||||||||
Commodity exchange traded futures and swaps contracts | $ | 434 | $ | (420 | ) | $ | (14 | ) | $ | — | ||||||
Commodity forward contracts | 107 | (60 | ) | — | 47 | |||||||||||
Interest rate swaps | 9 | — | — | 9 | ||||||||||||
Total derivative assets | $ | 550 | $ | (480 | ) | $ | (14 | ) | $ | 56 | ||||||
Derivative (liabilities): | ||||||||||||||||
Commodity exchange traded futures and swaps contracts | $ | (495 | ) | $ | 420 | $ | 75 | $ | — | |||||||
Commodity forward contracts | (70 | ) | 60 | 1 | (9 | ) | ||||||||||
Interest rate swaps | (129 | ) | — | — | (129 | ) | ||||||||||
Total derivative (liabilities) | $ | (694 | ) | $ | 480 | $ | 76 | $ | (138 | ) | ||||||
Net derivative assets (liabilities) | $ | (144 | ) | $ | — | $ | 62 | $ | (82 | ) |
(1) | Negative balances represent margin deposits posted with us by our counterparties related to our derivative activities that are subject to a master netting arrangement. Positive balances reflect margin deposits and natural gas and power prepayments posted by us with our counterparties related to our derivative activities that are subject to a master netting arrangement. See Note 7 for a further discussion of our collateral. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Realized gain (loss)(1) | |||||||||||||||
Commodity derivative instruments | $ | 59 | $ | 27 | $ | 38 | $ | 60 | |||||||
Total realized gain (loss) | $ | 59 | $ | 27 | $ | 38 | $ | 60 | |||||||
Mark-to-market gain (loss)(2) | |||||||||||||||
Commodity derivative instruments | $ | 11 | $ | 43 | $ | 79 | $ | 15 | |||||||
Interest rate swaps | 7 | (5 | ) | 9 | (1 | ) | |||||||||
Total mark-to-market gain (loss) | $ | 18 | $ | 38 | $ | 88 | $ | 14 | |||||||
Total activity, net | $ | 77 | $ | 65 | $ | 126 | $ | 74 |
(1) | Does not include the realized value associated with derivative instruments that settle through physical delivery. |
(2) | In addition to changes in market value on derivatives not designated as hedges, changes in mark-to-market gain (loss) also includes de-designation of interest rate swap cash flow hedges and related reclassification from AOCI into earnings, hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Realized and mark-to-market gain (loss) | |||||||||||||||
Derivatives contracts included in operating revenues | $ | 53 | $ | 18 | $ | (26 | ) | $ | (41 | ) | |||||
Derivatives contracts included in fuel and purchased energy expense | 17 | 52 | 143 | 116 | |||||||||||
Interest rate swaps included in interest expense | 7 | (5 | ) | 9 | (1 | ) | |||||||||
Total activity, net | $ | 77 | $ | 65 | $ | 126 | $ | 74 |
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) | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | Affected Line Item on the Consolidated Condensed Statements of Operations | |||||||||||||
Interest rate swaps(1)(2) | $ | 11 | $ | 12 | $ | (8 | ) | (4) | $ | (19 | ) | Interest expense |
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) | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | Affected Line Item on the Consolidated Condensed Statements of Operations | |||||||||||||
Interest rate swaps(1)(2) | $ | 2 | $ | 73 | $ | (34 | ) | (4) | $ | (38 | ) | Interest expense |
(1) | We did not record any gain (loss) on hedge ineffectiveness related to our interest rate swaps designated as cash flow hedges during each of the three and nine months ended September 30, 2014 and 2013. |
(2) | We recorded an income tax expense of nil and $7 million for the three months ended September 30, 2014 and 2013, respectively, and income tax expense of nil and $4 million for the nine months ended September 30, 2014 and 2013, respectively, 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 $145 million and $148 million at September 30, 2014 and December 31, 2013, respectively. Cumulative cash flow hedge losses attributable to the noncontrolling interest, net of tax, remaining in AOCI were $12 million and $11 million at September 30, 2014 and December 31, 2013, respectively. |
(4) | Includes a loss of nil and $7 million for the three months ended September 30, 2014 and 2013, respectively, and a loss of $10 million and $7 million for the nine months ended September 30, 2014 and 2013, respectively, that was reclassified from AOCI to interest expense, where the hedged transactions are no longer expected to occur. |
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September 30, 2014 | December 31, 2013 | ||||||
Margin deposits(1) | $ | 177 | $ | 261 | |||
Natural gas and power prepayments | 24 | 28 | |||||
Total margin deposits and natural gas and power prepayments with our counterparties(2) | $ | 201 | $ | 289 | |||
Letters of credit issued | $ | 444 | $ | 488 | |||
First priority liens under power and natural gas agreements | 12 | 31 | |||||
First priority liens under interest rate swap agreements | 115 | 132 | |||||
Total letters of credit and first priority liens with our counterparties | $ | 571 | $ | 651 | |||
Margin deposits posted with us by our counterparties(1)(3) | $ | 67 | $ | 5 | |||
Letters of credit posted with us by our counterparties | 140 | 2 | |||||
Total margin deposits and letters of credit posted with us by our counterparties | $ | 207 | $ | 7 |
(1) | Balances are subject to master netting arrangements and presented on a gross basis on our Consolidated Condensed Balance Sheets. We do not offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting arrangement for financial statement presentation, and we do not offset amounts recognized for the right to reclaim, or the obligation to return, cash collateral with corresponding derivative instrument fair values. See Note 6 for further discussion of our derivative instruments subject to master netting arrangements. |
(2) | At September 30, 2014 and December 31, 2013, $190 million and $272 million, respectively, were included in margin deposits and other prepaid expense and $11 million and $17 million, respectively, were included in other assets on our Consolidated Condensed Balance Sheets. |
(3) | Included in other current liabilities on our Consolidated Condensed Balance Sheets. |
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Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Income tax expense | $ | 9 | $ | 110 | $ | 5 | $ | 12 | |||||||
Effective tax rate | 1 | % | 26 | % | 1 | % | 10 | % |
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Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Term (in years) | Aggregate Intrinsic Value (in millions) | |||||||||
Outstanding — December 31, 2013 | 14,114,289 | $ | 18.25 | 3.1 | $ | 36 | ||||||
Granted | — | $ | — | |||||||||
Exercised | 2,869,586 | $ | 16.18 | |||||||||
Forfeited | 46,117 | $ | 16.05 | |||||||||
Expired | 2,500 | $ | 17.79 | |||||||||
Outstanding — September 30, 2014 | 11,196,086 | $ | 18.79 | 2.3 | $ | 40 | ||||||
Exercisable — September 30, 2014 | 10,423,567 | $ | 19.05 | 1.9 | $ | 35 | ||||||
Vested and expected to vest – September 30, 2014 | 11,175,937 | $ | 18.80 | 2.3 | $ | 40 |
2013 | ||||
Expected term (in years)(1) | 6.5 | |||
Risk-free interest rate(2) | 1.4 | % | ||
Expected volatility(3) | 25.6 | % | ||
Dividend yield(4) | — | |||
Weighted average grant-date fair value (per option) | $ | 5.31 |
(1) | Expected term calculated using the simplified method prescribed by the SEC due to the lack of sufficient historical exercise data on the grant date to provide a reasonable basis to estimate the expected term. |
(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, 2013 | 4,431,841 | $ | 16.45 | |||
Granted | 1,845,049 | $ | 19.26 | |||
Forfeited | 360,956 | $ | 17.66 | |||
Vested | 1,530,075 | $ | 15.25 | |||
Nonvested — September 30, 2014 | 4,385,859 | $ | 17.95 |
Number of Performance Share Units | Weighted Average Grant-Date Fair Value | |||||
Nonvested — December 31, 2013 | 449,798 | $ | 21.25 | |||
Granted | 461,393 | $ | 22.56 | |||
Forfeited | 15,894 | $ | 21.84 | |||
Vested(1) | 15,312 | $ | 21.25 | |||
Nonvested — September 30, 2014 | 879,985 | $ | 21.93 |
(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 Plan 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. |
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Three Months Ended September 30, 2014 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 714 | $ | 985 | $ | 488 | $ | — | $ | 2,187 | |||||||||
Intersegment revenues | 1 | 4 | 2 | (7 | ) | — | |||||||||||||
Total operating revenues | $ | 715 | $ | 989 | $ | 490 | $ | (7 | ) | $ | 2,187 | ||||||||
Commodity Margin(1) | $ | 361 | $ | 346 | $ | 237 | $ | — | $ | 944 | |||||||||
Add: Mark-to-market commodity activity, net and other(2) | 41 | (64 | ) | 4 | (6 | ) | (25 | ) | |||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 91 | 77 | 55 | (8 | ) | 215 | |||||||||||||
Depreciation and amortization expense | 65 | 51 | 38 | (1 | ) | 153 | |||||||||||||
Sales, general and other administrative expense | 11 | 18 | 8 | — | 37 | ||||||||||||||
Other operating expenses | 12 | 1 | 6 | 4 | 23 | ||||||||||||||
Impairment losses | — | — | 123 | — | 123 | ||||||||||||||
(Gain) on sale of assets, net | — | — | (753 | ) | — | (753 | ) | ||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (5 | ) | — | (5 | ) | ||||||||||||
Income from operations | 223 | 135 | 769 | (1 | ) | 1,126 | |||||||||||||
Interest expense, net of interest income | 154 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 344 | ||||||||||||||||||
Income before income taxes | $ | 628 |
Three Months Ended September 30, 2013 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 620 | $ | 842 | $ | 588 | $ | — | $ | 2,050 | |||||||||
Intersegment revenues | 1 | (6 | ) | 43 | (38 | ) | — | ||||||||||||
Total operating revenues | $ | 621 | $ | 836 | $ | 631 | $ | (38 | ) | $ | 2,050 | ||||||||
Commodity Margin(1) | $ | 337 | $ | 328 | $ | 320 | $ | — | $ | 985 | |||||||||
Add: Mark-to-market commodity activity, net and other(2) | 16 | (5 | ) | 3 | (8 | ) | 6 | ||||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 84 | 56 | 67 | (7 | ) | 200 | |||||||||||||
Depreciation and amortization expense | 58 | 41 | 51 | — | 150 | ||||||||||||||
Sales, general and other administrative expense | 9 | 13 | 10 | 1 | 33 | ||||||||||||||
Other operating expenses | 12 | 2 | 9 | (3 | ) | 20 | |||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (9 | ) | — | (9 | ) | ||||||||||||
Income from operations | 190 | 211 | 195 | 1 | 597 | ||||||||||||||
Interest expense, net of interest income | 174 | ||||||||||||||||||
Other (income) expense, net | 7 | ||||||||||||||||||
Income before income taxes | $ | 416 |
Nine Months Ended September 30, 2014 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 1,692 | $ | 2,592 | $ | 1,807 | $ | — | $ | 6,091 | |||||||||
Intersegment revenues | 4 | 19 | 46 | (69 | ) | — | |||||||||||||
Total operating revenues | $ | 1,696 | $ | 2,611 | $ | 1,853 | $ | (69 | ) | $ | 6,091 | ||||||||
Commodity Margin(3) | $ | 791 | $ | 644 | $ | 786 | $ | — | $ | 2,221 | |||||||||
Add: Mark-to-market commodity activity, net and other(4) | 91 | 74 | (31 | ) | (23 | ) | 111 | ||||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 291 | 250 | 237 | (24 | ) | 754 | |||||||||||||
Depreciation and amortization expense | 183 | 141 | 129 | — | 453 | ||||||||||||||
Sales, general and other administrative expense | 28 | 48 | 32 | — | 108 | ||||||||||||||
Other operating expenses | 39 | 4 | 22 | 1 | 66 | ||||||||||||||
Impairment losses | — | — | 123 | — | 123 | ||||||||||||||
(Gain) on sale of assets, net | — | — | (753 | ) | — | (753 | ) | ||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (18 | ) | — | (18 | ) | ||||||||||||
Income from operations | 341 | 275 | 983 | — | 1,599 | ||||||||||||||
Interest expense, net of interest income | 486 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 361 | ||||||||||||||||||
Income before income taxes | $ | 752 |
Nine Months Ended September 30, 2013 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 1,482 | $ | 1,820 | $ | 1,561 | $ | — | $ | 4,863 | |||||||||
Intersegment revenues | 2 | (24 | ) | 101 | (79 | ) | — | ||||||||||||
Total operating revenues | $ | 1,484 | $ | 1,796 | $ | 1,662 | $ | (79 | ) | $ | 4,863 | ||||||||
Commodity Margin(3) | $ | 737 | $ | 537 | $ | 705 | $ | — | $ | 1,979 | |||||||||
Add: Mark-to-market commodity activity, net and other(4) | (2 | ) | 18 | 12 | (24 | ) | 4 | ||||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 271 | 214 | 221 | (22 | ) | 684 | |||||||||||||
Depreciation and amortization expense | 164 | 125 | 153 | (1 | ) | 441 | |||||||||||||
Sales, general and other administrative expense | 24 | 43 | 34 | 1 | 102 | ||||||||||||||
Other operating expenses | 33 | 4 | 25 | (4 | ) | 58 | |||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (25 | ) | — | (25 | ) | ||||||||||||
Income from operations | 243 | 169 | 309 | 2 | 723 | ||||||||||||||
Interest expense, net of interest income | 517 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 83 | ||||||||||||||||||
Income before income taxes | $ | 123 |
(1) | Commodity Margin related to the six power plants sold in our East segment on July 3, 2014, was not significant for the three months ended September 30, 2014. Commodity Margin related to these plants was $65 million for the three months ended September 30, 2013. |
(2) | Includes $49 million and $44 million of lease levelization and $4 million and $4 million of amortization expense for the three months ended September 30, 2014 and 2013, respectively. |
(3) | Our East segment includes Commodity Margin of $81 million and $122 million for the nine months ended September 30, 2014 and 2013, respectively, related to the six power plants in our East segment that were sold in July 2014. |
(4) | Includes $(7) million and $17 million of lease levelization and $11 million and $11 million of amortization expense for the nine months ended September 30, 2014 and 2013, respectively. |
|
|
September 30, 2014 | December 31, 2013 | ||||||||||||||||||||||
Current | Non-Current | Total | Current | Non-Current | Total | ||||||||||||||||||
Debt service | $ | 22 | $ | 25 | $ | 47 | $ | 11 | $ | 41 | $ | 52 | |||||||||||
Rent reserve | 4 | — | 4 | 3 | — | 3 | |||||||||||||||||
Construction/major maintenance | 69 | 12 | 81 | 35 | 20 | 55 | |||||||||||||||||
Security/project/insurance | 149 | 3 | 152 | 151 | 6 | 157 | |||||||||||||||||
Other | — | 2 | 2 | 3 | 2 | 5 | |||||||||||||||||
Total | $ | 244 | $ | 42 | $ | 286 | $ | 203 | $ | 69 | $ | 272 |
September 30, 2014 | December 31, 2013 | Depreciable Lives | |||||||
Buildings, machinery and equipment | $ | 15,528 | $ | 15,838 | 3 – 47 Years | ||||
Geothermal properties | 1,295 | 1,265 | 13 – 59 Years | ||||||
Other | 171 | 164 | 3 – 47 Years | ||||||
16,994 | 17,267 | ||||||||
Less: Accumulated depreciation | 4,840 | 4,897 | |||||||
12,154 | 12,370 | ||||||||
Land | 109 | 103 | |||||||
Construction in progress | 402 | 522 | |||||||
Property, plant and equipment, net | $ | 12,665 | $ | 12,995 |
|
Plant Name | Plant Capacity | Location | ||||
Oneta Energy Center | 1,134 | MW | Coweta, OK | |||
Carville Energy Center(1) | 501 | MW | St. Gabriel, LA | |||
Decatur Energy Center | 795 | MW | Decatur, AL | |||
Hog Bayou Energy Center | 237 | MW | Mobile, AL | |||
Santa Rosa Energy Center | 225 | MW | Pace, FL | |||
Columbia Energy Center(1) | 606 | MW | Calhoun County, SC | |||
Total | 3,498 | MW |
(1) | Indicates combined-cycle cogeneration power plant. |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Greenfield LP | $ | (2 | ) | $ | (5 | ) | $ | (7 | ) | $ | (14 | ) | |||
Whitby | (3 | ) | (4 | ) | (11 | ) | (11 | ) | |||||||
Total | $ | (5 | ) | $ | (9 | ) | $ | (18 | ) | $ | (25 | ) |
Ownership Interest as of September 30, 2014 | September 30, 2014 | December 31, 2013 | |||||||
Greenfield LP | 50% | $ | 78 | $ | 76 | ||||
Whitby | 50% | 14 | 17 | ||||||
Total investments in power plants | $ | 92 | $ | 93 |
|
September 30, 2014 | December 31, 2013 | ||||||
First Lien Notes | $ | 2,195 | $ | 4,989 | |||
Senior Unsecured Notes | 2,800 | — | |||||
First Lien Term Loans | 2,806 | 2,828 | |||||
Project financing, notes payable and other | 1,861 | 1,901 | |||||
CCFC Term Loans | 1,600 | 1,191 | |||||
Capital lease obligations | 192 | 203 | |||||
Subtotal | 11,454 | 11,112 | |||||
Less: Current maturities | 194 | 204 | |||||
Total long-term debt | $ | 11,260 | $ | 10,908 |
September 30, 2014 | December 31, 2013 | ||||||
2019 First Lien Notes(1) | $ | — | $ | 320 | |||
2020 First Lien Notes(1) | — | 875 | |||||
2021 First Lien Notes(1) | — | 1,600 | |||||
2022 First Lien Notes | 745 | 744 | |||||
2023 First Lien Notes | 960 | 960 | |||||
2024 First Lien Notes | 490 | 490 | |||||
Total First Lien Notes | $ | 2,195 | $ | 4,989 |
(1) | The 2019 First Lien Notes, 2020 First Lien Notes and 2021 First Lien Notes were repaid during the third quarter of 2014 with the proceeds from the issuance of our Senior Unsecured Notes, together with cash on hand, which are described in further detail below. |
September 30, 2014 | December 31, 2013 | ||||||
2023 Senior Unsecured Notes | $ | 1,250 | $ | — | |||
2025 Senior Unsecured Notes | 1,550 | — | |||||
Total Senior Unsecured Notes | $ | 2,800 | $ | — |
September 30, 2014 | December 31, 2013 | ||||||
2018 First Lien Term Loans | $ | 1,601 | $ | 1,614 | |||
2019 First Lien Term Loan | 818 | 824 | |||||
2020 First Lien Term Loan | 387 | 390 | |||||
Total First Lien Term Loans | $ | 2,806 | $ | 2,828 |
September 30, 2014 | December 31, 2013 | ||||||
Corporate Revolving Facility(1) | $ | 206 | $ | 242 | |||
CDHI(2) | 199 | 218 | |||||
Various project financing facilities | 241 | 170 | |||||
Total | $ | 646 | $ | 630 |
(1) | The Corporate Revolving Facility represents our primary revolving facility. On July 30, 2014, we amended our Corporate Revolving Facility to increase the capacity by an additional $500 million to $1.5 billion. |
(2) | During the first quarter of 2014, we amended our CDHI letter of credit facility to lower our fees and extend the maturity to January 2, 2018. |
September 30, 2014 | December 31, 2013 | ||||||||||||||
Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||
First Lien Notes | $ | 2,348 | $ | 2,195 | $ | 5,317 | $ | 4,989 | |||||||
Senior Unsecured Notes | 2,695 | 2,800 | — | — | |||||||||||
First Lien Term Loans | 2,778 | 2,806 | 2,845 | 2,828 | |||||||||||
Project financing, notes payable and other(1) | 1,784 | 1,739 | 1,772 | 1,766 | |||||||||||
CCFC Term Loans | 1,594 | 1,600 | 1,179 | 1,191 | |||||||||||
Total | $ | 11,199 | $ | 11,140 | $ | 11,113 | $ | 10,774 |
(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, 2014 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents(1) | $ | 1,753 | $ | — | $ | — | $ | 1,753 | |||||||
Margin deposits | 177 | — | — | 177 | |||||||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 649 | — | — | 649 | |||||||||||
Commodity forward contracts(2) | — | 132 | 58 | 190 | |||||||||||
Interest rate swaps | — | 5 | — | 5 | |||||||||||
Total assets | $ | 2,579 | $ | 137 | $ | 58 | $ | 2,774 | |||||||
Liabilities: | |||||||||||||||
Margin deposits posted with us by our counterparties | $ | 67 | $ | — | $ | — | $ | 67 | |||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 575 | — | — | 575 | |||||||||||
Commodity forward contracts(2) | — | 94 | 47 | 141 | |||||||||||
Interest rate swaps | — | 113 | — | 113 | |||||||||||
Total liabilities | $ | 642 | $ | 207 | $ | 47 | $ | 896 |
Assets and Liabilities with Recurring Fair Value Measures as of December 31, 2013 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents(1) | $ | 1,134 | $ | — | $ | — | $ | 1,134 | |||||||
Margin deposits | 261 | — | — | 261 | |||||||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 434 | — | — | 434 | |||||||||||
Commodity forward contracts(2) | — | 75 | 32 | 107 | |||||||||||
Interest rate swaps | — | 9 | — | 9 | |||||||||||
Total assets | $ | 1,829 | $ | 84 | $ | 32 | $ | 1,945 | |||||||
Liabilities: | |||||||||||||||
Margin deposits posted with us by our counterparties | $ | 5 | $ | — | $ | — | $ | 5 | |||||||
Commodity instruments: | |||||||||||||||
Commodity exchange traded futures and swaps contracts | 495 | — | — | 495 | |||||||||||
Commodity forward contracts(2) | — | 52 | 18 | 70 | |||||||||||
Interest rate swaps | — | 129 | — | 129 | |||||||||||
Total liabilities | $ | 500 | $ | 181 | $ | 18 | $ | 699 |
(1) | As of September 30, 2014 and December 31, 2013, we had cash equivalents of $1,493 million and $889 million included in cash and cash equivalents and $260 million and $245 million included in restricted cash, respectively. |
(2) | Includes OTC swaps and options. |
Quantitative Information about Level 3 Fair Value Measurements | ||||||||||
September 30, 2014 | ||||||||||
Fair Value, Net Asset | Significant Unobservable | |||||||||
(Liability) | Valuation Technique | Input | Range | |||||||
(in millions) | ||||||||||
Power Contracts | $ | (3 | ) | Discounted cash flow | Market price (per MWh) | $15.35 — $191.50/MWh | ||||
Natural Gas Contracts | $ | 10 | Discounted cash flow | Market price (per MMBtu) | $1.98 — $22.52/MMBtu | |||||
Power Congestion Products | $ | 3 | Discounted cash flow | Market price (per MWh) | $(19.56) — $35.30/MWh | |||||
December 31, 2013 | ||||||||||
Fair Value, Net Asset | Significant Unobservable | |||||||||
(Liability) | Valuation Technique | Input | Range | |||||||
(in millions) | ||||||||||
Power Contracts | $ | 7 | Discounted cash flow | Market price (per MWh) | $28.92 — $53.15/MWh | |||||
Power Congestion Products | $ | 7 | Discounted cash flow | Market price (per MWh) | $(8.79) — $11.53/MWh |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Balance, beginning of period | $ | (9 | ) | $ | 13 | $ | 14 | $ | 16 | ||||||
Realized and mark-to-market gains (losses): | |||||||||||||||
Included in net income: | |||||||||||||||
Included in operating revenues(1) | 7 | 7 | (1 | ) | 8 | ||||||||||
Included in fuel and purchased energy expense(2) | 5 | 1 | 9 | — | |||||||||||
Purchases, issuances and settlements: | |||||||||||||||
Purchases | — | — | 1 | — | |||||||||||
Issuances | — | — | — | — | |||||||||||
Settlements | 9 | (5 | ) | (7 | ) | (8 | ) | ||||||||
Transfers in and/or out of level 3(3): | |||||||||||||||
Transfers into level 3(4) | — | — | — | — | |||||||||||
Transfers out of level 3(5) | (1 | ) | — | (5 | ) | — | |||||||||
Balance, end of period | $ | 11 | $ | 16 | $ | 11 | $ | 16 | |||||||
Change in unrealized gains relating to instruments still held at end of period | $ | 12 | $ | 8 | $ | 8 | $ | 8 |
(1) | For power contracts and other power-related products, included on our Consolidated Condensed Statements of Operations. |
(2) | For natural gas 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, 2014 and 2013. |
(4) | There were no transfers out of level 2 into level 3 for each of the three and nine months ended September 30, 2014 and 2013. |
(5) | We had $1 million and $5 million in gains transferred out of level 3 into level 2 for the three and nine months ended September 30, 2014, respectively, primarily due to changes in market liquidity in various power markets. There were no transfers out of level 3 into level 2 for each of the three and nine months ended September 30, 2013. |
|
Derivative Instruments | Notional Amounts | |||||||
September 30, 2014 | December 31, 2013 | |||||||
Power (MWh) | (57 | ) | (29 | ) | ||||
Natural gas (MMBtu) | 230 | 448 | ||||||
Environmental credits (Tonnes) | 2 | — | ||||||
Interest rate swaps | $ | 1,500 | $ | 1,527 |
September 30, 2014 | |||||||||||
Commodity Instruments | Interest Rate Swaps | Total Derivative Instruments | |||||||||
Balance Sheet Presentation | |||||||||||
Current derivative assets | $ | 549 | $ | — | $ | 549 | |||||
Long-term derivative assets | 290 | 5 | 295 | ||||||||
Total derivative assets | $ | 839 | $ | 5 | $ | 844 | |||||
Current derivative liabilities | $ | 489 | $ | 45 | $ | 534 | |||||
Long-term derivative liabilities | 227 | 68 | 295 | ||||||||
Total derivative liabilities | $ | 716 | $ | 113 | $ | 829 | |||||
Net derivative asset (liabilities) | $ | 123 | $ | (108 | ) | $ | 15 |
December 31, 2013 | |||||||||||
Commodity Instruments | Interest Rate Swaps | Total Derivative Instruments | |||||||||
Balance Sheet Presentation | |||||||||||
Current derivative assets | $ | 445 | $ | — | $ | 445 | |||||
Long-term derivative assets | 96 | 9 | 105 | ||||||||
Total derivative assets | $ | 541 | $ | 9 | $ | 550 | |||||
Current derivative liabilities | $ | 404 | $ | 47 | $ | 451 | |||||
Long-term derivative liabilities | 161 | 82 | 243 | ||||||||
Total derivative liabilities | $ | 565 | $ | 129 | $ | 694 | |||||
Net derivative asset (liabilities) | $ | (24 | ) | $ | (120 | ) | $ | (144 | ) |
September 30, 2014 | December 31, 2013 | ||||||||||||||
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 swaps | $ | 5 | $ | 108 | $ | 9 | $ | 115 | |||||||
Total derivatives designated as cash flow hedging instruments | $ | 5 | $ | 108 | $ | 9 | $ | 115 | |||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Commodity instruments | $ | 839 | $ | 716 | $ | 541 | $ | 565 | |||||||
Interest rate swaps | — | 5 | — | 14 | |||||||||||
Total derivatives not designated as hedging instruments | $ | 839 | $ | 721 | $ | 541 | $ | 579 | |||||||
Total derivatives | $ | 844 | $ | 829 | $ | 550 | $ | 694 |
September 30, 2014 | ||||||||||||||||
Gross Amounts Not Offset on the Consolidated Condensed Balance Sheets | ||||||||||||||||
Gross Amounts Presented on our Consolidated Condensed Balance Sheets | Derivative Asset (Liability) not Offset on the Consolidated Condensed Balance Sheets | Margin/Cash (Received) Posted (1) | Net Amount | |||||||||||||
Derivative assets: | ||||||||||||||||
Commodity exchange traded futures and swaps contracts | $ | 649 | $ | (575 | ) | $ | (74 | ) | $ | — | ||||||
Commodity forward contracts | 190 | (121 | ) | (2 | ) | 67 | ||||||||||
Interest rate swaps | 5 | — | — | 5 | ||||||||||||
Total derivative assets | $ | 844 | $ | (696 | ) | $ | (76 | ) | $ | 72 | ||||||
Derivative (liabilities): | ||||||||||||||||
Commodity exchange traded futures and swaps contracts | $ | (575 | ) | $ | 575 | $ | — | $ | — | |||||||
Commodity forward contracts | (141 | ) | 121 | 8 | (12 | ) | ||||||||||
Interest rate swaps | (113 | ) | — | — | (113 | ) | ||||||||||
Total derivative (liabilities) | $ | (829 | ) | $ | 696 | $ | 8 | $ | (125 | ) | ||||||
Net derivative assets (liabilities) | $ | 15 | $ | — | $ | (68 | ) | $ | (53 | ) |
December 31, 2013 | ||||||||||||||||
Gross Amounts Not Offset on the Consolidated Condensed Balance Sheets | ||||||||||||||||
Gross Amounts Presented on our Consolidated Condensed Balance Sheets | Derivative Asset (Liability) not Offset on the Consolidated Condensed Balance Sheets | Margin/Cash (Received) Posted (1) | Net Amount | |||||||||||||
Derivative assets: | ||||||||||||||||
Commodity exchange traded futures and swaps contracts | $ | 434 | $ | (420 | ) | $ | (14 | ) | $ | — | ||||||
Commodity forward contracts | 107 | (60 | ) | — | 47 | |||||||||||
Interest rate swaps | 9 | — | — | 9 | ||||||||||||
Total derivative assets | $ | 550 | $ | (480 | ) | $ | (14 | ) | $ | 56 | ||||||
Derivative (liabilities): | ||||||||||||||||
Commodity exchange traded futures and swaps contracts | $ | (495 | ) | $ | 420 | $ | 75 | $ | — | |||||||
Commodity forward contracts | (70 | ) | 60 | 1 | (9 | ) | ||||||||||
Interest rate swaps | (129 | ) | — | — | (129 | ) | ||||||||||
Total derivative (liabilities) | $ | (694 | ) | $ | 480 | $ | 76 | $ | (138 | ) | ||||||
Net derivative assets (liabilities) | $ | (144 | ) | $ | — | $ | 62 | $ | (82 | ) |
(1) | Negative balances represent margin deposits posted with us by our counterparties related to our derivative activities that are subject to a master netting arrangement. Positive balances reflect margin deposits and natural gas and power prepayments posted by us with our counterparties related to our derivative activities that are subject to a master netting arrangement. See Note 7 for a further discussion of our collateral. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Realized gain (loss)(1) | |||||||||||||||
Commodity derivative instruments | $ | 59 | $ | 27 | $ | 38 | $ | 60 | |||||||
Total realized gain (loss) | $ | 59 | $ | 27 | $ | 38 | $ | 60 | |||||||
Mark-to-market gain (loss)(2) | |||||||||||||||
Commodity derivative instruments | $ | 11 | $ | 43 | $ | 79 | $ | 15 | |||||||
Interest rate swaps | 7 | (5 | ) | 9 | (1 | ) | |||||||||
Total mark-to-market gain (loss) | $ | 18 | $ | 38 | $ | 88 | $ | 14 | |||||||
Total activity, net | $ | 77 | $ | 65 | $ | 126 | $ | 74 |
(1) | Does not include the realized value associated with derivative instruments that settle through physical delivery. |
(2) | In addition to changes in market value on derivatives not designated as hedges, changes in mark-to-market gain (loss) also includes de-designation of interest rate swap cash flow hedges and related reclassification from AOCI into earnings, hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Realized and mark-to-market gain (loss) | |||||||||||||||
Derivatives contracts included in operating revenues | $ | 53 | $ | 18 | $ | (26 | ) | $ | (41 | ) | |||||
Derivatives contracts included in fuel and purchased energy expense | 17 | 52 | 143 | 116 | |||||||||||
Interest rate swaps included in interest expense | 7 | (5 | ) | 9 | (1 | ) | |||||||||
Total activity, net | $ | 77 | $ | 65 | $ | 126 | $ | 74 |
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) | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | Affected Line Item on the Consolidated Condensed Statements of Operations | |||||||||||||
Interest rate swaps(1)(2) | $ | 11 | $ | 12 | $ | (8 | ) | (4) | $ | (19 | ) | Interest expense |
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) | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | Affected Line Item on the Consolidated Condensed Statements of Operations | |||||||||||||
Interest rate swaps(1)(2) | $ | 2 | $ | 73 | $ | (34 | ) | (4) | $ | (38 | ) | Interest expense |
(1) | We did not record any gain (loss) on hedge ineffectiveness related to our interest rate swaps designated as cash flow hedges during each of the three and nine months ended September 30, 2014 and 2013. |
(2) | We recorded an income tax expense of nil and $7 million for the three months ended September 30, 2014 and 2013, respectively, and income tax expense of nil and $4 million for the nine months ended September 30, 2014 and 2013, respectively, 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 $145 million and $148 million at September 30, 2014 and December 31, 2013, respectively. Cumulative cash flow hedge losses attributable to the noncontrolling interest, net of tax, remaining in AOCI were $12 million and $11 million at September 30, 2014 and December 31, 2013, respectively. |
(4) | Includes a loss of nil and $7 million for the three months ended September 30, 2014 and 2013, respectively, and a loss of $10 million and $7 million for the nine months ended September 30, 2014 and 2013, respectively, that was reclassified from AOCI to interest expense, where the hedged transactions are no longer expected to occur. |
|
September 30, 2014 | December 31, 2013 | ||||||
Margin deposits(1) | $ | 177 | $ | 261 | |||
Natural gas and power prepayments | 24 | 28 | |||||
Total margin deposits and natural gas and power prepayments with our counterparties(2) | $ | 201 | $ | 289 | |||
Letters of credit issued | $ | 444 | $ | 488 | |||
First priority liens under power and natural gas agreements | 12 | 31 | |||||
First priority liens under interest rate swap agreements | 115 | 132 | |||||
Total letters of credit and first priority liens with our counterparties | $ | 571 | $ | 651 | |||
Margin deposits posted with us by our counterparties(1)(3) | $ | 67 | $ | 5 | |||
Letters of credit posted with us by our counterparties | 140 | 2 | |||||
Total margin deposits and letters of credit posted with us by our counterparties | $ | 207 | $ | 7 |
(1) | Balances are subject to master netting arrangements and presented on a gross basis on our Consolidated Condensed Balance Sheets. We do not offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting arrangement for financial statement presentation, and we do not offset amounts recognized for the right to reclaim, or the obligation to return, cash collateral with corresponding derivative instrument fair values. See Note 6 for further discussion of our derivative instruments subject to master netting arrangements. |
(2) | At September 30, 2014 and December 31, 2013, $190 million and $272 million, respectively, were included in margin deposits and other prepaid expense and $11 million and $17 million, respectively, were included in other assets on our Consolidated Condensed Balance Sheets. |
(3) | Included in other current liabilities on our Consolidated Condensed Balance Sheets. |
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Income tax expense | $ | 9 | $ | 110 | $ | 5 | $ | 12 | |||||||
Effective tax rate | 1 | % | 26 | % | 1 | % | 10 | % |
|
Number of Performance Share Units | Weighted Average Grant-Date Fair Value | |||||
Nonvested — December 31, 2013 | 449,798 | $ | 21.25 | |||
Granted | 461,393 | $ | 22.56 | |||
Forfeited | 15,894 | $ | 21.84 | |||
Vested(1) | 15,312 | $ | 21.25 | |||
Nonvested — September 30, 2014 | 879,985 | $ | 21.93 |
(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 Plan 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. |
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Term (in years) | Aggregate Intrinsic Value (in millions) | |||||||||
Outstanding — December 31, 2013 | 14,114,289 | $ | 18.25 | 3.1 | $ | 36 | ||||||
Granted | — | $ | — | |||||||||
Exercised | 2,869,586 | $ | 16.18 | |||||||||
Forfeited | 46,117 | $ | 16.05 | |||||||||
Expired | 2,500 | $ | 17.79 | |||||||||
Outstanding — September 30, 2014 | 11,196,086 | $ | 18.79 | 2.3 | $ | 40 | ||||||
Exercisable — September 30, 2014 | 10,423,567 | $ | 19.05 | 1.9 | $ | 35 | ||||||
Vested and expected to vest – September 30, 2014 | 11,175,937 | $ | 18.80 | 2.3 | $ | 40 |
2013 | ||||
Expected term (in years)(1) | 6.5 | |||
Risk-free interest rate(2) | 1.4 | % | ||
Expected volatility(3) | 25.6 | % | ||
Dividend yield(4) | — | |||
Weighted average grant-date fair value (per option) | $ | 5.31 |
(1) | Expected term calculated using the simplified method prescribed by the SEC due to the lack of sufficient historical exercise data on the grant date to provide a reasonable basis to estimate the expected term. |
(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, 2013 | 4,431,841 | $ | 16.45 | |||
Granted | 1,845,049 | $ | 19.26 | |||
Forfeited | 360,956 | $ | 17.66 | |||
Vested | 1,530,075 | $ | 15.25 | |||
Nonvested — September 30, 2014 | 4,385,859 | $ | 17.95 |
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Three Months Ended September 30, 2014 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 714 | $ | 985 | $ | 488 | $ | — | $ | 2,187 | |||||||||
Intersegment revenues | 1 | 4 | 2 | (7 | ) | — | |||||||||||||
Total operating revenues | $ | 715 | $ | 989 | $ | 490 | $ | (7 | ) | $ | 2,187 | ||||||||
Commodity Margin(1) | $ | 361 | $ | 346 | $ | 237 | $ | — | $ | 944 | |||||||||
Add: Mark-to-market commodity activity, net and other(2) | 41 | (64 | ) | 4 | (6 | ) | (25 | ) | |||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 91 | 77 | 55 | (8 | ) | 215 | |||||||||||||
Depreciation and amortization expense | 65 | 51 | 38 | (1 | ) | 153 | |||||||||||||
Sales, general and other administrative expense | 11 | 18 | 8 | — | 37 | ||||||||||||||
Other operating expenses | 12 | 1 | 6 | 4 | 23 | ||||||||||||||
Impairment losses | — | — | 123 | — | 123 | ||||||||||||||
(Gain) on sale of assets, net | — | — | (753 | ) | — | (753 | ) | ||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (5 | ) | — | (5 | ) | ||||||||||||
Income from operations | 223 | 135 | 769 | (1 | ) | 1,126 | |||||||||||||
Interest expense, net of interest income | 154 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 344 | ||||||||||||||||||
Income before income taxes | $ | 628 |
Three Months Ended September 30, 2013 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 620 | $ | 842 | $ | 588 | $ | — | $ | 2,050 | |||||||||
Intersegment revenues | 1 | (6 | ) | 43 | (38 | ) | — | ||||||||||||
Total operating revenues | $ | 621 | $ | 836 | $ | 631 | $ | (38 | ) | $ | 2,050 | ||||||||
Commodity Margin(1) | $ | 337 | $ | 328 | $ | 320 | $ | — | $ | 985 | |||||||||
Add: Mark-to-market commodity activity, net and other(2) | 16 | (5 | ) | 3 | (8 | ) | 6 | ||||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 84 | 56 | 67 | (7 | ) | 200 | |||||||||||||
Depreciation and amortization expense | 58 | 41 | 51 | — | 150 | ||||||||||||||
Sales, general and other administrative expense | 9 | 13 | 10 | 1 | 33 | ||||||||||||||
Other operating expenses | 12 | 2 | 9 | (3 | ) | 20 | |||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (9 | ) | — | (9 | ) | ||||||||||||
Income from operations | 190 | 211 | 195 | 1 | 597 | ||||||||||||||
Interest expense, net of interest income | 174 | ||||||||||||||||||
Other (income) expense, net | 7 | ||||||||||||||||||
Income before income taxes | $ | 416 |
Nine Months Ended September 30, 2014 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 1,692 | $ | 2,592 | $ | 1,807 | $ | — | $ | 6,091 | |||||||||
Intersegment revenues | 4 | 19 | 46 | (69 | ) | — | |||||||||||||
Total operating revenues | $ | 1,696 | $ | 2,611 | $ | 1,853 | $ | (69 | ) | $ | 6,091 | ||||||||
Commodity Margin(3) | $ | 791 | $ | 644 | $ | 786 | $ | — | $ | 2,221 | |||||||||
Add: Mark-to-market commodity activity, net and other(4) | 91 | 74 | (31 | ) | (23 | ) | 111 | ||||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 291 | 250 | 237 | (24 | ) | 754 | |||||||||||||
Depreciation and amortization expense | 183 | 141 | 129 | — | 453 | ||||||||||||||
Sales, general and other administrative expense | 28 | 48 | 32 | — | 108 | ||||||||||||||
Other operating expenses | 39 | 4 | 22 | 1 | 66 | ||||||||||||||
Impairment losses | — | — | 123 | — | 123 | ||||||||||||||
(Gain) on sale of assets, net | — | — | (753 | ) | — | (753 | ) | ||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (18 | ) | — | (18 | ) | ||||||||||||
Income from operations | 341 | 275 | 983 | — | 1,599 | ||||||||||||||
Interest expense, net of interest income | 486 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 361 | ||||||||||||||||||
Income before income taxes | $ | 752 |
Nine Months Ended September 30, 2013 | |||||||||||||||||||
West | Texas | East | Consolidation and Elimination | Total | |||||||||||||||
Revenues from external customers | $ | 1,482 | $ | 1,820 | $ | 1,561 | $ | — | $ | 4,863 | |||||||||
Intersegment revenues | 2 | (24 | ) | 101 | (79 | ) | — | ||||||||||||
Total operating revenues | $ | 1,484 | $ | 1,796 | $ | 1,662 | $ | (79 | ) | $ | 4,863 | ||||||||
Commodity Margin(3) | $ | 737 | $ | 537 | $ | 705 | $ | — | $ | 1,979 | |||||||||
Add: Mark-to-market commodity activity, net and other(4) | (2 | ) | 18 | 12 | (24 | ) | 4 | ||||||||||||
Less: | |||||||||||||||||||
Plant operating expense | 271 | 214 | 221 | (22 | ) | 684 | |||||||||||||
Depreciation and amortization expense | 164 | 125 | 153 | (1 | ) | 441 | |||||||||||||
Sales, general and other administrative expense | 24 | 43 | 34 | 1 | 102 | ||||||||||||||
Other operating expenses | 33 | 4 | 25 | (4 | ) | 58 | |||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (25 | ) | — | (25 | ) | ||||||||||||
Income from operations | 243 | 169 | 309 | 2 | 723 | ||||||||||||||
Interest expense, net of interest income | 517 | ||||||||||||||||||
Debt extinguishment costs and other (income) expense, net | 83 | ||||||||||||||||||
Income before income taxes | $ | 123 |
(1) | Commodity Margin related to the six power plants sold in our East segment on July 3, 2014, was not significant for the three months ended September 30, 2014. Commodity Margin related to these plants was $65 million for the three months ended September 30, 2013. |
(2) | Includes $49 million and $44 million of lease levelization and $4 million and $4 million of amortization expense for the three months ended September 30, 2014 and 2013, respectively. |
(3) | Our East segment includes Commodity Margin of $81 million and $122 million for the nine months ended September 30, 2014 and 2013, respectively, related to the six power plants in our East segment that were sold in July 2014. |
(4) | Includes $(7) million and $17 million of lease levelization and $11 million and $11 million of amortization expense for the nine months ended September 30, 2014 and 2013, respectively. |
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