Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

We have operating leases for office buildings, facilities, vehicles and certain equipment. Our finance leases are primarily related to electric generation and certain buildings, vehicles and equipment. Certain of our lease agreements include rental payments adjusted periodically for inflation or are based on other periodic input measures. Our leases do not contain any material residual value guarantees or material restrictive covenants. Our leases have remaining lease terms of 1 year to 62 years, some of which may include options to extend the leases for up to 40 years, and some of which may include options to terminate. We consider extension or termination options in the lease term if it is reasonably certain we will exercise the option.

The components of lease cost for the years ended December 31, 2022, 2021 and 2020 were as follows:

For the Year Ended December 31,	2022		2021		2020
(Millions)
Lease cost
Finance lease cost
Amortization of right-of-use assets	$	12	$	8	$	17
Interest on lease liabilities	3		3		4
Total finance lease cost	15		11		21
Operating lease cost	20		14		16
Short-term lease cost	6		4		3
Variable lease cost	3		4		—
Total lease cost	$	44	$	33	$	40

Balance sheet and other information as of December 31, 2022 and 2021 was as follows:

As of December 31,	2022			2021
(Millions, except lease term and discount rate)
Operating Leases
Operating lease right-of-use assets	$	159		$	148
Operating lease liabilities, current	13			12
Operating lease liabilities, long-term	161			149
Total operating lease liabilities	$	174		$	161
Finance Leases
Other assets	$	143		$	156
Other current liabilities	7			4
Other non-current liabilities	80			91
Total finance lease liabilities	$	87		$	95
Weighted-average Remaining Lease Term (years)
Finance leases	6.4			7.3
Operating leases	16.9			20.5
Weighted-average Discount Rate
Finance leases	3.46		%	3.49		%
Operating leases	3.69		%	3.06		%

For the years ended December 31, 2022, 2021 and 2020 supplemental cash flow information related to leases was as follows:

For the Year Ended December 31,	2022		2021		2020
(Millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14	$	16	$	13
Operating cash flows from finance leases	$	1	$	3	$	3
Financing cash flows from finance leases	$	9	$	6	$	9
Right-of-use assets obtained in exchange for lease obligations:
Finance leases	$	(1)	$	—	$	46
Operating leases	$	25	$	10	$	94

As of December 31, 2022, maturities of lease liabilities were as follows:

	Finance Leases		Operating Leases
(Millions)
Year ending December 31,
2023	$	9	$	16
2024	30		14
2025	8		14
2026	9		14
2027	10		16
Thereafter	33		183
Total lease payments	99		257
Less: imputed interest	(12)		(83)
Total	$	87	174

Renewables has a sale-leaseback arrangement (as a seller-lessee) on a solar generation facility. The finance lease liability outstanding (including the current portion thereof) was $41 million and $45 million at December 31, 2022 and December 31, 2021, respectively. In 2013, Renewables sold the generation facility to a consortium of buyers (referred to as “Trusts”) and simultaneously entered into an agreement with the Trusts for the right to use the facility for up to 15 years with an early buyout option in year 10. During 2022, Renewables elected not to exercise the early buyout option and prospectively adjusted the accounting for the lease, which contains a buyout option at fair value at the end of the lease term. The gain on the sale of the generation facility was deferred and is being amortized to depreciation expense over the 25-year life of the facility.

Most of our leases do not provide an implicit rate in the lease; thus we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Leases

Leases

We have operating leases for office buildings, facilities, vehicles and certain equipment. Our finance leases are primarily related to electric generation and certain buildings, vehicles and equipment. Certain of our lease agreements include rental payments adjusted periodically for inflation or are based on other periodic input measures. Our leases do not contain any material residual value guarantees or material restrictive covenants. Our leases have remaining lease terms of 1 year to 62 years, some of which may include options to extend the leases for up to 40 years, and some of which may include options to terminate. We consider extension or termination options in the lease term if it is reasonably certain we will exercise the option.

The components of lease cost for the years ended December 31, 2022, 2021 and 2020 were as follows:

For the Year Ended December 31,	2022		2021		2020
(Millions)
Lease cost
Finance lease cost
Amortization of right-of-use assets	$	12	$	8	$	17
Interest on lease liabilities	3		3		4
Total finance lease cost	15		11		21
Operating lease cost	20		14		16
Short-term lease cost	6		4		3
Variable lease cost	3		4		—
Total lease cost	$	44	$	33	$	40

Balance sheet and other information as of December 31, 2022 and 2021 was as follows:

As of December 31,	2022			2021
(Millions, except lease term and discount rate)
Operating Leases
Operating lease right-of-use assets	$	159		$	148
Operating lease liabilities, current	13			12
Operating lease liabilities, long-term	161			149
Total operating lease liabilities	$	174		$	161
Finance Leases
Other assets	$	143		$	156
Other current liabilities	7			4
Other non-current liabilities	80			91
Total finance lease liabilities	$	87		$	95
Weighted-average Remaining Lease Term (years)
Finance leases	6.4			7.3
Operating leases	16.9			20.5
Weighted-average Discount Rate
Finance leases	3.46		%	3.49		%
Operating leases	3.69		%	3.06		%

For the years ended December 31, 2022, 2021 and 2020 supplemental cash flow information related to leases was as follows:

For the Year Ended December 31,	2022		2021		2020
(Millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14	$	16	$	13
Operating cash flows from finance leases	$	1	$	3	$	3
Financing cash flows from finance leases	$	9	$	6	$	9
Right-of-use assets obtained in exchange for lease obligations:
Finance leases	$	(1)	$	—	$	46
Operating leases	$	25	$	10	$	94

As of December 31, 2022, maturities of lease liabilities were as follows:

	Finance Leases		Operating Leases
(Millions)
Year ending December 31,
2023	$	9	$	16
2024	30		14
2025	8		14
2026	9		14
2027	10		16
Thereafter	33		183
Total lease payments	99		257
Less: imputed interest	(12)		(83)
Total	$	87	174

Renewables has a sale-leaseback arrangement (as a seller-lessee) on a solar generation facility. The finance lease liability outstanding (including the current portion thereof) was $41 million and $45 million at December 31, 2022 and December 31, 2021, respectively. In 2013, Renewables sold the generation facility to a consortium of buyers (referred to as “Trusts”) and simultaneously entered into an agreement with the Trusts for the right to use the facility for up to 15 years with an early buyout option in year 10. During 2022, Renewables elected not to exercise the early buyout option and prospectively adjusted the accounting for the lease, which contains a buyout option at fair value at the end of the lease term. The gain on the sale of the generation facility was deferred and is being amortized to depreciation expense over the 25-year life of the facility.

Most of our leases do not provide an implicit rate in the lease; thus we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.