Note 13. Segment Information

Our segment reporting structure uses our management reporting structure as its foundation to reflect how AVANGRID manages the business internally and is organized by type of business. We report our financial performance based on the following two reportable segments:

•

Networks: including all the energy transmission and distribution activities, and any other regulated activity originating in New York and Maine, and regulated electric distribution, electric transmission and gas distribution activities originating in Connecticut and Massachusetts. The Networks reportable segment includes eight rate regulated operating segments. These operating segments generally offer the same services distributed in similar fashions, have the same types of customers, have similar long-term economic characteristics and are subject to similar regulatory requirements, allowing these operations to be aggregated into one reportable segment.

•	Renewables: activities relating to renewable energy, mainly wind energy generation and trading related with such activities.

Based on the quantitative assessment and due to the disposition of gas trading and storage businesses (see Note 20 – Assets Held For Sale for further discussion) Gas segment no longer meets the reportable segment criteria effective in the first quarter of 2018. As a result, the prior period segment information has been restated to conform to the 2018 presentation.

Products and services are sold between reportable segments and affiliate companies at cost. The chief operating decision maker evaluates segment performance based on segment adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) defined as net income adding back net income attributable to other non-controlling interests, income tax expense, depreciation and amortization and interest expense net of capitalization, and then subtracting other income and (expense) and earnings from equity method investments per segment. Segment income, expense, and assets presented in the accompanying tables include all intercompany transactions that are eliminated in the condensed consolidated financial statements.

Segment information as of and for the three months ended March 31, 2018, consisted of:

Three Months Ended March 31, 2018	Networks		Renewables			Other (a)			AVANGRID Consolidated
(Millions)
Revenue - external	$	1,549	$	283		$	33		$	1,865
Revenue - intersegment		3		1			(4	)		—
Loss from assets held for sale		—		—			5			5
Depreciation and amortization		118		85			—			203
Operating income (loss)		344		44			15			403
Adjusted EBITDA		462		129			20			611
Earnings (losses) from equity method investments		2		—			—			2
Interest expense, net of capitalization		60		8			6			74
Income tax expense (benefit)		64		(8	)		16			72
Capital expenditures		282		116			1			399
As of March 31, 2018
Property, plant and equipment		13,996		8,754			7			22,757
Equity method investments		144		204			—			348
Total assets	$	21,481	$	11,427		$	(1,425	)	$	31,483

(a)	Includes Corporate, Gas and intersegment eliminations.

Included in revenue-external for the three months ended March 31, 2018, are: $955 million from regulated electric operations, $600 million from regulated gas operations and $(6) million amounts from other operations of Networks; $283 million from renewable energy generation of Renewables.

Segment information for the three months ended March 31, 2017, consisted of:

Three Months Ended March 31, 2017	Networks			Renewables			Other (a)			AVANGRID Consolidated
(Millions)
Revenue - external	$	1,460		$	285		$	13		$	1,758
Revenue - intersegment		(1	)		2			(1	)		—
Depreciation and amortization		113			78			6			197
Operating income (loss)		365			56			6			427
Adjusted EBITDA		478			133			13			624
Earnings (losses) from equity method investments		4			(2	)		—			2
Interest expense, net of capitalization		63			7			1			71
Income tax expense (benefit)		116			(21	)		8			103
Capital expenditures		267			257			1			525
As of December 31, 2017
Property, plant and equipment		13,876			8,786			7			22,669
Equity method investments		147			205			—			352
Total assets	$	21,411		$	11,308		$	(1,048	)	$	31,671

(a)	Includes Corporate, Gas and intersegment eliminations.

Included in revenue-external for the three months ended March 31, 2017, are: $921 million from regulated electric operations, $537 million from regulated gas operations and $2 million amounts from other operations of Networks; $285 million from renewable energy generation of Renewables.

Reconciliation of consolidated Adjusted EBITDA to the AVANGRID consolidated Net Income for the three months ended March 31, 2018 and 2017, respectively, is as follows:

	Three Months Ended
	March 31,
	2018			2017
(Millions)
Consolidated Adjusted EBITDA	$	611		$	624
Less:
Loss from assets held for sale		5			—
Depreciation and amortization		203			197
Interest expense, net of capitalization		74			71
Income tax expense		72			103
Add:
Other expense		(21	)		(16	)
Earnings from equity method investments		2			2
Consolidated Net Income	$	238		$	239