Leases Leases (Notes)

6 Months Ended

Jun. 30, 2019

Lessee, Lease, Description [Line Items]

Leases

Adoption

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, which creates FASB Accounting Standards Codification ("ASC") Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize on the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. Following the issuance of ASU No. 2016-02, the FASB issued several ASUs that clarified the implementation guidance for ASU No. 2016-02 but did not change the core principle of the guidance. The Company adopted this guidance for all applicable contracts in-effect as of January 1, 2019 under a modified retrospective method and the adoption did not have a cumulative effect impact at the date of initial adoption.

The Company has elected to utilize various practical expedients available to adopt ASU No. 2016-02, including (1) the package of three not requiring a reassessment of (i) whether any expired or existing contracts are or contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases; (2) using hindsight in determining the lease term; and (3) not requiring a reassessment of whether existing or expired land easements that were not previously accounted for as leases under ASC Topic 840 are or contain a lease under ASC Topic 842.

Leases

Lessee

The Company has non-cancelable operating leases primarily for office space, office equipment, generating facilities, land and rail cars and finance leases consisting primarily of transmission assets, generating facilities and vehicles. These leases generally require the Company to pay for insurance, taxes and maintenance applicable to the leased property. Given the capital intensive nature of the utility industry, it is common for a portion of lease costs to be capitalized when used during construction or maintenance of assets, in which the associated costs will be capitalized with the corresponding asset and depreciated over the remaining life of that asset. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices. The Company does not include options in its lease calculations unless there is a triggering event indicating the Company is reasonably certain to exercise the option. The Company’s accounting policy is to not recognize lease obligations and corresponding right-of-use assets for leases with contract terms of one year or less and not separate lease components from non-lease components and instead account for each separate lease component and the non-lease components associated with a lease as a single lease component. Leases will be evaluated for impairment in line with ASC 360, "Property, Plant and Equipment" when a triggering event has occurred that might affect the value and use of the assets being leased.

The Company's leases of generating facilities generally are for the long-term purchase of electric energy, also known as power purchase agreements ("PPA"). PPAs are generally signed before or during the early stages of project construction and can yield a lease that has not yet commenced. These agreements are primarily for renewable energy and the payments are considered variable lease payments as they are based on the amount of output.

The Company's operating and finance right-of-use assets are recorded in other assets and the operating and finance lease liabilities are recorded in current and long-term other liabilities accordingly. The right-of-use assets and lease liabilities for finance leases as of December 31, 2018 have been reclassified from property, plant and equipment, net and current portion of long-term and subsidiary debt, respectively, to conform to the current period presentation. The following table summarizes the Company's leases recorded on the Consolidated Balance Sheet (in millions):



	As of
	June 30,
	2019
Right-of-use assets:
Operating leases	$	553
Finance leases	509
Total right-of-use assets	$	1,062

Lease liabilities:
Operating leases	$	597
Finance leases	523
Total lease liabilities	$	1,120

The following table summarizes the Company's lease costs (in millions):



	Three-Month Period		Six-Month Period
	Ended June 30,		Ending June 30,
	2019		2019

Variable	$	153	$	296
Operating	41		82
Finance:
Amortization	4		8
Interest	10		21
Short-term	1		3
Total lease costs	$	209	$	410

Weighted-average remaining lease term (years):
Operating leases			8.0
Finance leases			29.1

Weighted-average discount rate:
Operating leases			5.2		%
Finance leases			8.7		%

The following table summarizes the Company's supplemental cash flow information relating to leases (in millions):



	Six-Month Period
	Ended June 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(70	)
Operating cash flows from finance leases	(22		)
Financing cash flows from finance leases	(9		)
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	49
Finance leases	6

The Company has the following remaining lease commitments as of (in millions):



	June 30, 2019									December 31, 2018⁽¹⁾
	Operating			Finance			Total			Operating		Capital		Total
2019	$	77		$	39		$	116		$	147	$	69	$	216
2020	139			69			208			128		68		196
2021	117			75			192			110		73		183
2022	93			68			161			87		67		154
2023	66			57			123			61		56		117
Thereafter	236			776			1,012			159		772		931
Total undiscounted lease payments	728			1,084			1,812			$	692	$	1,105	$	1,797
Less - amounts representing interest	(131		)	(561		)	(692		)
Lease liabilities	$	597		$	523		$	1,120

(1) Amounts included for comparability and accounted for in accordance with ASC 840, "Leases".

Lessee, Operating Leases [Text Block]

Leases

Adoption

Leases

Lessee



	As of
	June 30,
	2019
Right-of-use assets:
Operating leases	$	553
Finance leases	509
Total right-of-use assets	$	1,062

Lease liabilities:
Operating leases	$	597
Finance leases	523
Total lease liabilities	$	1,120

The following table summarizes the Company's lease costs (in millions):



	Three-Month Period		Six-Month Period
	Ended June 30,		Ending June 30,
	2019		2019

Variable	$	153	$	296
Operating	41		82
Finance:
Amortization	4		8
Interest	10		21
Short-term	1		3
Total lease costs	$	209	$	410

Weighted-average remaining lease term (years):
Operating leases			8.0
Finance leases			29.1

Weighted-average discount rate:
Operating leases			5.2		%
Finance leases			8.7		%

The following table summarizes the Company's supplemental cash flow information relating to leases (in millions):



	Six-Month Period
	Ended June 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(70	)
Operating cash flows from finance leases	(22		)
Financing cash flows from finance leases	(9		)
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	49
Finance leases	6

The Company has the following remaining lease commitments as of (in millions):



	June 30, 2019									December 31, 2018⁽¹⁾
	Operating			Finance			Total			Operating		Capital		Total
2019	$	77		$	39		$	116		$	147	$	69	$	216
2020	139			69			208			128		68		196
2021	117			75			192			110		73		183
2022	93			68			161			87		67		154
2023	66			57			123			61		56		117
Thereafter	236			776			1,012			159		772		931
Total undiscounted lease payments	728			1,084			1,812			$	692	$	1,105	$	1,797
Less - amounts representing interest	(131		)	(561		)	(692		)
Lease liabilities	$	597		$	523		$	1,120

(1) Amounts included for comparability and accounted for in accordance with ASC 840, "Leases".

PacifiCorp [Member]

Lessee, Lease, Description [Line Items]

Lessee, Finance Leases [Text Block]

Leases

Adoption

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, which creates FASB Accounting Standards Codification ("ASC") Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize on the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. Following the issuance of ASU No. 2016-02, the FASB issued several ASUs that clarified the implementation guidance for ASU No. 2016-02 but did not change the core principle of the guidance. PacifiCorp adopted this guidance for all applicable contracts in effect as of January 1, 2019 under a modified retrospective method and the adoption did not have a cumulative effect impact at the date of initial adoption.

PacifiCorp has elected to utilize various practical expedients available to adopt ASU No. 2016-02, including (1) the package of three not requiring a reassessment of (i) whether any expired or existing contracts are or contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases; (2) using hindsight in determining the lease term; and (3) not requiring a reassessment of whether existing or expired land easements that were not previously accounted for as leases under ASC Topic 840 are or contain a lease under ASC Topic 842.

Leases

Lessee

PacifiCorp has non-cancelable operating leases primarily for land, office space, office equipment, and generating facilities and finance leases consisting primarily of office buildings, natural gas pipeline facilities, and generating facilities. These leases generally require PacifiCorp to pay for insurance, taxes and maintenance applicable to the leased property. Given the capital intensive nature of the utility industry, it is common for a portion of lease costs to be capitalized when used during construction or maintenance of assets, in which the associated costs will be capitalized with the corresponding asset and depreciated over the remaining life of that asset. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices. PacifiCorp does not include options in its lease calculations unless there is a triggering event indicating PacifiCorp is reasonably certain to exercise the option. PacifiCorp's accounting policy is to not recognize lease obligations and corresponding right-of-use assets for leases with contract terms of one year or less and not separate lease components from non-lease components and instead account for each separate lease component and the non-lease components associated with a lease as a single lease component. Leases will be evaluated for impairment in line with ASC 360, "Property, Plant and Equipment" when a triggering event has occurred that might affect the value and use of the assets being leased.

PacifiCorp's leases of generating facilities generally are for the long-term purchase of electric energy, also known as power purchase agreements ("PPA"). PPAs are generally signed before or during the early stages of project construction and can yield a lease that has not yet commenced. These agreements are primarily for renewable energy and the payments are considered variable lease payments as they are based on the amount of output.

PacifiCorp's operating and finance right-of-use assets are recorded in other assets and the operating and finance lease liabilities are recorded in current and long-term other liabilities accordingly. The right-of-use assets and lease liabilities for finance leases as of December 31, 2018 have been reclassified from property, plant and equipment, net and current portion of long-term and long-term debt, respectively, to conform to the current period presentation. The following table summarizes PacifiCorp's leases recorded on the Consolidated Balance Sheet (in millions):



	As of
	June 30,
	2019
Right-of-use assets:
Operating leases	$	14
Finance leases	20
Total right-of-use assets	$	34

Lease liabilities:
Operating leases	$	14
Finance leases	20
Total lease liabilities	$	34

The following table summarizes PacifiCorp's lease costs (in millions):



	Three-Month Period		Six-Month Period
	Ended June 30,		Ended June 30,
	2019		2019

Variable	$	16	$	26
Operating	1		1
Finance:
Amortization	—		1
Interest	1		1
Short-term	1		1
Total lease costs	$	19	$	30

Weighted-average remaining lease term (years):
Operating leases			13.6
Finance leases			9.5

Weighted-average discount rate:
Operating leases			3.7		%
Finance leases			10.6		%

Cash payments associated with operating and finance lease liabilities approximated lease cost for the three- and six-month periods ended June 30, 2019 and 2018, respectively.

PacifiCorp has the following remaining lease commitments as of (in millions):



	June 30, 2019									December 31, 2018⁽¹⁾
	Operating			Finance			Total			Operating		Capital		Total
2019	$	2		$	2		$	4		$	3	$	4	$	7
2020	2			3			5			3		4		7
2021	2			7			9			3		7		10
2022	2			3			5			2		3		5
2023	2			2			4			2		2		4
Thereafter	8			16			24			7		16		23
Total undiscounted lease payments	18			33			51			$	20	$	36	$	56
Less - amounts representing interest	(4		)	(13		)	(17		)
Lease liabilities	$	14		$	20		$	34

(1) Amounts included for comparability and accounted for in accordance with ASC 840, "Leases".

Lessee, Operating Leases [Text Block]

Leases

Adoption

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, which creates FASB Accounting Standards Codification ("ASC") Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize on the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. Following the issuance of ASU No. 2016-02, the FASB issued several ASUs that clarified the implementation guidance for ASU No. 2016-02 but did not change the core principle of the guidance. PacifiCorp adopted this guidance for all applicable contracts in effect as of January 1, 2019 under a modified retrospective method and the adoption did not have a cumulative effect impact at the date of initial adoption.

Leases

Lessee



	As of
	June 30,
	2019
Right-of-use assets:
Operating leases	$	14
Finance leases	20
Total right-of-use assets	$	34

Lease liabilities:
Operating leases	$	14
Finance leases	20
Total lease liabilities	$	34

The following table summarizes PacifiCorp's lease costs (in millions):



	Three-Month Period		Six-Month Period
	Ended June 30,		Ended June 30,
	2019		2019

Variable	$	16	$	26
Operating	1		1
Finance:
Amortization	—		1
Interest	1		1
Short-term	1		1
Total lease costs	$	19	$	30

Weighted-average remaining lease term (years):
Operating leases			13.6
Finance leases			9.5

Weighted-average discount rate:
Operating leases			3.7		%
Finance leases			10.6		%

Cash payments associated with operating and finance lease liabilities approximated lease cost for the three- and six-month periods ended June 30, 2019 and 2018, respectively.

PacifiCorp has the following remaining lease commitments as of (in millions):



	June 30, 2019									December 31, 2018⁽¹⁾
	Operating			Finance			Total			Operating		Capital		Total
2019	$	2		$	2		$	4		$	3	$	4	$	7
2020	2			3			5			3		4		7
2021	2			7			9			3		7		10
2022	2			3			5			2		3		5
2023	2			2			4			2		2		4
Thereafter	8			16			24			7		16		23
Total undiscounted lease payments	18			33			51			$	20	$	36	$	56
Less - amounts representing interest	(4		)	(13		)	(17		)
Lease liabilities	$	14		$	20		$	34

(1) Amounts included for comparability and accounted for in accordance with ASC 840, "Leases".

Nevada Power Company [Member]

Lessee, Lease, Description [Line Items]

Lessee, Finance Leases [Text Block]

Leases

Adoption

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, which creates FASB Accounting Standards Codification ("ASC") Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize on the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. Following the issuance of ASU No. 2016-02, the FASB issued several ASUs that clarified the implementation guidance for ASU No. 2016-02 but did not change the core principle of the guidance. Nevada Power adopted this guidance for all applicable contracts in-effect as of January 1, 2019 under a modified retrospective method and the adoption did not have a cumulative-effect impact to the opening balance of retained earnings at the date of initial adoption.

Nevada Power has elected to utilize various practical expedients available to adopt ASU No. 2016-02, including (1) the package of three not requiring a reassessment of (i) whether any expired or existing contracts are or contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases; (2) using hindsight in determining the lease term; and (3) not requiring a reassessment of whether existing or expired land easements that were not previously accounted for as leases under ASC Topic 840 are or contain a lease under ASC Topic 842.

Leases

Lessee

Nevada Power has non-cancelable operating leases primarily for land, generating facilities, vehicles and office equipment and finance leases consisting primarily of transmission assets, generating facilities, office space and vehicles. These leases generally require Nevada Power to pay for insurance, taxes and maintenance applicable to the leased property. Given the capital intensive nature of the utility industry, it is common for a portion of lease costs to be capitalized when used during construction or maintenance of assets, in which the associated costs will be capitalized with the corresponding asset and depreciated over the remaining life of that asset. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices. Nevada Power does not include options in its lease calculations unless there is a triggering event indicating Nevada Power is reasonably certain to exercise the option. Nevada Power's accounting policy is to not recognize lease obligations and corresponding right-of-use assets for leases with contract terms of one year or less and not separate lease components from non-lease components and instead account for each separate lease component and the non-lease components associated with a lease as a single lease component. Leases will be evaluated for impairment in line with ASC Topic 360, "Property, Plant and Equipment" when a triggering event has occurred that might affect the value and use of the assets being leased.

Nevada Power's leases of generating facilities generally are for the long-term purchase of electric energy, also known as power purchase agreements ("PPA"). PPAs are generally signed before or during the early stages of project construction and can yield a lease that has not yet commenced. These agreements are primarily for renewable energy and the payments are considered variable lease payments as they are based on the amount of output

Nevada Power's operating right-of-use assets are recorded in other assets and the operating lease liabilities are recorded in current and long-term other liabilities accordingly. The right-of-use assets and lease liabilities for finance leases as of December 31, 2018 have been reclassified from property, plant and equipment, net and current portion of long-term and long-term debt, respectively, to conform to the current period presentation. The following table summarizes Nevada Power's leases recorded on the Consolidated Balance Sheet (in millions):



	As of
	June 30,
	2019
Right-of-use assets:
Operating leases	$	14
Finance leases	449
Total right-of-use assets	$	463

Lease liabilities:
Operating leases	$	18
Finance leases	462
Total lease liabilities	$	480

The following table summarizes Nevada Power's lease costs (in millions):



	Three-Month Period		Six-Month Period
	Ended June 30,		Ended June 30,
	2019		2019

Variable	$	112	$	220
Operating	—		1
Finance:
Amortization	3		6
Interest	10		20
Total lease costs	$	125	$	247

Weighted-average remaining lease term (years):
Operating leases			7.7
Finance leases			30.8

Weighted-average discount rate:
Operating leases			4.4		%
Finance leases			8.6		%

The following table summarizes Nevada Power's supplemental cash flow information relating to leases (in millions):



	Six-Month Period
	Ended June 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(1	)
Operating cash flows from finance leases	(20		)
Financing cash flows from finance leases	(7		)
Right-of-use assets obtained in exchange for lease liabilities:
Finance leases	$	4

Nevada Power has the following remaining lease commitments as of (in millions):



	June 30, 2019									December 31, 2018⁽¹⁾
	Operating			Finance			Total			Operating		Capital		Total
2019	$	1		$	34		$	35		$	3	$	59	$	62
2020	3			59			62			3		59		62
2021	3			63			66			3		61		64
2022	2			61			63			3		60		63
2023	2			50			52			2		50		52
Thereafter	10			712			722			10		709		719
Total undiscounted lease payments	21			979			1,000			$	24	$	998	$	1,022
Less - amounts representing interest	(3		)	(517		)	(520		)
Lease liabilities	$	18		$	462		$	480

(1) Amounts included for comparability and accounted for in accordance with ASC Topic 840, "Leases".

Lessee, Operating Leases [Text Block]

Leases

Adoption

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, which creates FASB Accounting Standards Codification ("ASC") Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize on the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. Following the issuance of ASU No. 2016-02, the FASB issued several ASUs that clarified the implementation guidance for ASU No. 2016-02 but did not change the core principle of the guidance. Nevada Power adopted this guidance for all applicable contracts in-effect as of January 1, 2019 under a modified retrospective method and the adoption did not have a cumulative-effect impact to the opening balance of retained earnings at the date of initial adoption.

Leases

Lessee



	As of
	June 30,
	2019
Right-of-use assets:
Operating leases	$	14
Finance leases	449
Total right-of-use assets	$	463

Lease liabilities:
Operating leases	$	18
Finance leases	462
Total lease liabilities	$	480

The following table summarizes Nevada Power's lease costs (in millions):



	Three-Month Period		Six-Month Period
	Ended June 30,		Ended June 30,
	2019		2019

Variable	$	112	$	220
Operating	—		1
Finance:
Amortization	3		6
Interest	10		20
Total lease costs	$	125	$	247

Weighted-average remaining lease term (years):
Operating leases			7.7
Finance leases			30.8

Weighted-average discount rate:
Operating leases			4.4		%
Finance leases			8.6		%

The following table summarizes Nevada Power's supplemental cash flow information relating to leases (in millions):



	Six-Month Period
	Ended June 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(1	)
Operating cash flows from finance leases	(20		)
Financing cash flows from finance leases	(7		)
Right-of-use assets obtained in exchange for lease liabilities:
Finance leases	$	4

Nevada Power has the following remaining lease commitments as of (in millions):



	June 30, 2019									December 31, 2018⁽¹⁾
	Operating			Finance			Total			Operating		Capital		Total
2019	$	1		$	34		$	35		$	3	$	59	$	62
2020	3			59			62			3		59		62
2021	3			63			66			3		61		64
2022	2			61			63			3		60		63
2023	2			50			52			2		50		52
Thereafter	10			712			722			10		709		719
Total undiscounted lease payments	21			979			1,000			$	24	$	998	$	1,022
Less - amounts representing interest	(3		)	(517		)	(520		)
Lease liabilities	$	18		$	462		$	480

(1) Amounts included for comparability and accounted for in accordance with ASC Topic 840, "Leases".

Sierra Pacific Power Company [Member]

Lessee, Lease, Description [Line Items]

Lessee, Finance Leases [Text Block]

Leases

Adoption

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, which creates FASB Accounting Standards Codification ("ASC") Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize on the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. Following the issuance of ASU No. 2016-02, the FASB issued several ASUs that clarified the implementation guidance for ASU No. 2016-02 but did not change the core principle of the guidance. Sierra Pacific adopted this guidance for all applicable contracts in-effect as of January 1, 2019 under a modified retrospective method and the adoption did not have a cumulative-effect impact at the date of initial adoption.

Sierra Pacific has elected to utilize various practical expedients available to adopt ASU No. 2016-02, including (1) the package of three not requiring a reassessment of (i) whether any expired or existing contracts are or contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases; (2) using hindsight in determining the lease term; and (3) not requiring a reassessment of whether existing or expired land easements that were not previously accounted for as leases under ASC Topic 840 are or contain a lease under ASC Topic 842.

Leases

Lessee

Sierra Pacific has non-cancelable operating leases primarily for transmission and delivery assets, generating facilities, vehicles and office equipment and finance leases consisting primarily of transmission assets, generating facilities and vehicles. These leases generally require Sierra Pacific to pay for insurance, taxes and maintenance applicable to the leased property. Given the capital intensive nature of the utility industry, it is common for a portion of lease costs to be capitalized when used during construction or maintenance of assets, in which the associated costs will be capitalized with the corresponding asset and depreciated over the remaining life of that asset. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices. Sierra Pacific does not include options in its lease calculations unless there is a triggering event indicating Sierra Pacific is reasonably certain to exercise the option. Sierra Pacific's accounting policy is to not recognize lease obligations and corresponding right-of-use assets for leases with contract terms of one year or less and not separate lease components from non-lease components and instead account for each separate lease component and the non-lease components associated with a lease as a single lease component. Leases will be evaluated for impairment in line with ASC Topic 360, "Property, Plant and Equipment" when a triggering event has occurred that might affect the value and use of the assets being leased.

Sierra Pacific's leases of generating facilities generally are for the long-term purchase of electric energy, also known as power purchase agreements ("PPA"). PPAs are generally signed before or during the early stages of project construction and can yield a lease that has not yet commenced. These agreements are primarily for renewable energy and the payments are considered variable lease payments as they are based on the amount of output.

Sierra Pacific's operating and finance right-of-use assets are recorded in other assets and the operating and finance lease liabilities are recorded in current and long-term other liabilities accordingly. The right-of-use assets and lease liabilities for finance leases as of December 31, 2018 have been reclassified from property, plant and equipment, net and current portion of long-term and long-term debt, respectively, to conform to the current period presentation. The following table summarizes Sierra Pacific's leases recorded on the Balance Sheet (in millions):



	As of
	June 30,
	2019
Right-of-use assets:
Operating leases	$	19
Finance leases	39
Total right-of-use assets	$	58

Lease liabilities:
Operating leases	$	19
Finance leases	40
Total lease liabilities	$	59

The following table summarizes Sierra Pacific's lease costs (in millions):



	Three-Month Period		Six-Month Period
	Ended June 30,		Ended June 30,
	2019		2019

Variable	$	15	$	30
Operating	1		1
Finance:
Amortization	—		1
Interest	—		1
Total lease costs	$	16	$	33

Weighted-average remaining lease term (years):
Operating leases			26.0
Finance leases			23.0

Weighted-average discount rate:
Operating leases			4.9		%
Finance leases			7.0		%

The following table summarizes Sierra Pacific's supplemental cash flow information relating to leases (in millions):



	Six-Month Period
	Ended June 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(1	)
Operating cash flows from finance leases	(1		)
Financing cash flows from finance leases	(1		)
Right-of-use assets obtained in exchange for lease liabilities:
Finance leases	$	2

Sierra Pacific has the following remaining lease commitments as of (in millions):



	June 30, 2019									December 31, 2018⁽¹⁾
	Operating			Finance			Total			Operating		Capital		Total
2019	$	2		$	3		$	5		$	2	$	6	$	8
2020	2			5			7			2		4		6
2021	2			5			7			2		5		7
2022	1			5			6			1		4		5
2023	1			5			6			1		4		5
Thereafter	27			48			75			28		47		75
Total undiscounted lease payments	35			71			106			$	36	$	70	$	106
Less - amounts representing interest	(16		)	(31		)	(47		)
Lease liabilities	$	19		$	40		$	59

(1) Amounts included for comparability and accounted for in accordance with ASC Topic 840, "Leases".

Lessee, Operating Leases [Text Block]

Leases

Adoption

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, which creates FASB Accounting Standards Codification ("ASC") Topic 842, "Leases" and supersedes Topic 840 "Leases." This guidance increases transparency and comparability among entities by recording lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. A lessee should recognize on the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous guidance. Following the issuance of ASU No. 2016-02, the FASB issued several ASUs that clarified the implementation guidance for ASU No. 2016-02 but did not change the core principle of the guidance. Sierra Pacific adopted this guidance for all applicable contracts in-effect as of January 1, 2019 under a modified retrospective method and the adoption did not have a cumulative-effect impact at the date of initial adoption.

Leases

Lessee



	As of
	June 30,
	2019
Right-of-use assets:
Operating leases	$	19
Finance leases	39
Total right-of-use assets	$	58

Lease liabilities:
Operating leases	$	19
Finance leases	40
Total lease liabilities	$	59

The following table summarizes Sierra Pacific's lease costs (in millions):



	Three-Month Period		Six-Month Period
	Ended June 30,		Ended June 30,
	2019		2019

Variable	$	15	$	30
Operating	1		1
Finance:
Amortization	—		1
Interest	—		1
Total lease costs	$	16	$	33

Weighted-average remaining lease term (years):
Operating leases			26.0
Finance leases			23.0

Weighted-average discount rate:
Operating leases			4.9		%
Finance leases			7.0		%

The following table summarizes Sierra Pacific's supplemental cash flow information relating to leases (in millions):



	Six-Month Period
	Ended June 30,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(1	)
Operating cash flows from finance leases	(1		)
Financing cash flows from finance leases	(1		)
Right-of-use assets obtained in exchange for lease liabilities:
Finance leases	$	2

Sierra Pacific has the following remaining lease commitments as of (in millions):



	June 30, 2019									December 31, 2018⁽¹⁾
	Operating			Finance			Total			Operating		Capital		Total
2019	$	2		$	3		$	5		$	2	$	6	$	8
2020	2			5			7			2		4		6
2021	2			5			7			2		5		7
2022	1			5			6			1		4		5
2023	1			5			6			1		4		5
Thereafter	27			48			75			28		47		75
Total undiscounted lease payments	35			71			106			$	36	$	70	$	106
Less - amounts representing interest	(16		)	(31		)	(47		)
Lease liabilities	$	19		$	40		$	59

(1) Amounts included for comparability and accounted for in accordance with ASC Topic 840, "Leases".