Risk Management and Hedging Activities (Notes)

12 Months Ended

Dec. 31, 2020

PacifiCorp [Member]

Derivative [Line Items]

Risk Management and Hedging Activities [Text Block]

Risk Management and Hedging Activities PacifiCorp is exposed to the impact of market fluctuations in commodity prices and interest rates. PacifiCorp is principally exposed to electricity, natural gas, coal and fuel oil commodity price risk as it has an obligation to serve retail customer load in its service territories. PacifiCorp's load and generating facilities represent substantial underlying commodity positions. Exposures to commodity prices consist mainly of variations in the price of fuel required to generate electricity and wholesale electricity that is purchased and sold. Commodity prices are subject to wide price swings as supply and demand are impacted by, among many other unpredictable items, weather, market liquidity, generating facility availability, customer usage, storage, and transmission and transportation constraints. Interest rate risk exists on variable-rate debt and future debt issuances. PacifiCorp does not engage in a material amount of proprietary trading activities.

PacifiCorp has established a risk management process that is designed to identify, manage and report each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, PacifiCorp uses commodity derivative contracts, which may include forwards, options, swaps and other agreements, to effectively secure future supply or sell future production generally at fixed prices. PacifiCorp manages its interest rate risk by limiting its exposure to variable interest rates primarily through the issuance of fixed-rate long-term debt and by monitoring market changes in interest rates. Additionally, PacifiCorp may from time to time enter into interest rate derivative contracts, such as interest rate swaps or locks, to mitigate PacifiCorp's exposure to interest rate risk. No interest rate derivatives were in place during the periods presented. PacifiCorp does not hedge all of its commodity price and interest rate risks, thereby exposing the unhedged portion to changes in market prices.

There have been no significant changes in PacifiCorp's accounting policies related to derivatives. Refer to Notes 2 and 13 for additional information on derivative contracts.

The following table, which reflects master netting arrangements and excludes contracts that have been designated as normal under the normal purchases or normal sales exception afforded by GAAP, summarizes the fair value of PacifiCorp's derivative contracts, on a gross basis, and reconciles those amounts to the amounts presented on a net basis on the Consolidated Balance Sheets (in millions):

	Other				Other		Other
	Current		Other		Current		Long-term
	Assets		Assets		Liabilities		Liabilities		Total
As of December 31, 2020:
Not designated as hedging contracts(1):
Commodity assets	$	29	$	6	$	1	$	—	$	36
Commodity liabilities	(2)		—		(23)		(28)		(53)
Total	27		6		(22)		(28)		(17)
Total derivatives	27		6		(22)		(28)		(17)
Cash collateral receivable	—		—		15		9		24
Total derivatives - net basis	$	27	$	6	$	(7)	$	(19)	$	7
As of December 31, 2019:
Not designated as hedging contracts(1):
Commodity assets	$	15	$	2	$	4	$	—	$	21
Commodity liabilities	(3)		—		(31)		(50)		(84)
Total	12		2		(27)		(50)		(63)
Total derivatives	12		2		(27)		(50)		(63)
Cash collateral receivable	—		—		20		27		47
Total derivatives - net basis	$	12	$	2	$	(7)	$	(23)	$	(16)

(1)PacifiCorp's commodity derivatives are generally included in rates and as of December 31, 2020 and 2019, a regulatory asset of $17 million and $62 million, respectively, was recorded related to the net derivative liability of $17 million and $63 million, respectively.

The following table reconciles the beginning and ending balances of PacifiCorp's regulatory assets and summarizes the pre-tax gains and losses on commodity derivative contracts recognized in regulatory assets, as well as amounts reclassified to earnings for the years ended December 31 (in millions):

	2020		2019		2018
Beginning balance	$	62	$	96	$	101
Changes in fair value recognized in regulatory assets	(11)		(37)		12
Net gains (losses) reclassified to operating revenue	3		(34)		(68)
Net (losses) gains reclassified to energy costs	(37)		37		51
Ending balance	$	17	$	62	$	96

Derivative Contract Volumes

The following table summarizes the net notional amounts of outstanding commodity derivative contracts with fixed price terms that comprise the mark-to-market values as of December 31 (in millions):

	Unit of
	Measure	2020	2019
Electricity sales	Megawatt hours	(1)	(2)
Natural gas purchases	Decatherms	100	129

Credit Risk

PacifiCorp is exposed to counterparty credit risk associated with wholesale energy supply and marketing activities with other utilities, energy marketing companies, financial institutions and other market participants. Credit risk may be concentrated to the extent PacifiCorp's counterparties have similar economic, industry or other characteristics and due to direct or indirect relationships among the counterparties. Before entering into a transaction, PacifiCorp analyzes the financial condition of each significant wholesale counterparty, establishes limits on the amount of unsecured credit to be extended to each counterparty and evaluates the appropriateness of unsecured credit limits on an ongoing basis. To further mitigate wholesale counterparty credit risk, PacifiCorp enters into netting and collateral arrangements that may include margining and cross-product netting agreements and obtains third-party guarantees, letters of credit and cash deposits. If required, PacifiCorp exercises rights under these arrangements, including calling on the counterparty's credit support arrangement.

Collateral and Contingent Features

In accordance with industry practice, certain wholesale agreements, including derivative contracts, contain credit support provisions that in part base certain collateral requirements on credit ratings for senior unsecured debt as reported by one or more of the recognized credit rating agencies. These agreements may either specifically provide bilateral rights to demand cash or other security if credit exposures on a net basis exceed specified rating-dependent threshold levels ("credit-risk-related contingent features") or provide the right for counterparties to demand "adequate assurance" if there is a material adverse change in PacifiCorp's creditworthiness. These rights can vary by contract and by counterparty. As of December 31, 2020, PacifiCorp's credit ratings for its senior secured debt and its issuer credit ratings for senior unsecured debt from the recognized credit rating agencies were investment grade.

The aggregate fair value of PacifiCorp's derivative contracts in liability positions with specific credit-risk-related contingent features totaled $51 million and $80 million as of December 31, 2020 and 2019, respectively, for which PacifiCorp had posted collateral of $24 million and $47 million, respectively, in the form of cash deposits. If all credit-risk-related contingent features for derivative contracts in liability positions had been triggered as of December 31, 2020 and 2019, PacifiCorp would have been required to post $25 million and $27 million, respectively, of additional collateral. PacifiCorp's collateral requirements could fluctuate considerably due to market price volatility, changes in credit ratings, changes in legislation or regulation or other factors.

Eastern Energy Gas Holdings, LLC [Member]

Derivative [Line Items]

Risk Management and Hedging Activities [Text Block]

Risk Management and Hedging ActivitiesEastern Energy Gas is exposed to the impact of market fluctuations in commodity prices, interest rates, and foreign currency exchange rates. Eastern Energy Gas is principally exposed to natural gas market fluctuations primarily through fuel retained and used during the operation of the pipeline system as well as lost and unaccounted for gas, to interest rate risk on its outstanding variable-rate short- and long-term debt and future debt issuances, and to foreign currency exchange risk associated with Euro denominated debt. Eastern Energy Gas has established a risk management process that is designed to identify, assess, manage, mitigate, monitor and report, each of the various types of risk involved in its business. To mitigate a portion of its commodity price risk, Eastern Energy Gas uses over-the-counter commodity derivative contracts, which may include forwards, options, swaps and other agreements, to effectively secure future supply or sell future production generally at fixed prices. Eastern Energy Gas also uses over-the-counter interest rate swaps to hedge its exposure to variable interest rates on long-term debt as well as over-the-counter foreign currency swaps to hedge its exposure to principal and interest payments denominated in Euros. Eastern Energy Gas does not hedge all of its commodity price and interest rate risks, thereby exposing the unhedged portion to changes in market prices.

Subsequent to the GT&S Transaction, Eastern Energy Gas has elected to offset derivative contracts where master netting arrangements allow. There have been no other significant changes in Eastern Energy Gas' accounting policies related to derivatives. Refer to Notes 2 and 15 for additional information on derivative contracts.

The following table, which reflects master netting arrangements and excludes contracts that have been designated as normal under the normal purchases or normal sales exception afforded by GAAP, summarizes the fair value of Eastern Energy Gas' derivative contracts, on a gross basis, and reconciles those amounts to the amounts presented on a net basis on the Consolidated Balance Sheets (in millions):

	Other				Other		Other
	Current		Other		Current		Long-term
	Assets		Assets		Liabilities		Liabilities		Total
As of December 31, 2020:
Designated as hedging contracts:
Interest rate contracts	$	—	$	—	$	(6)	$	—	$	(6)
Foreign currency contracts	—		20		(2)		—		18
Not designated as hedging contracts:
Commodity contracts	—		—		(1)		—		(1)
Total	—		20		(9)		—		11
Total derivatives	—		20		(9)		—		11
Cash collateral receivable	—		—		—		—		—
Total - net basis	$	—	$	20	$	(9)	$	—	$	11
As of December 31, 2019:
Designated as hedging contracts:
Interest rate contracts	$	—	$	—	$	(30)	$	(53)	$	(83)
Foreign currency contracts	—		8		(3)		—		5
Total	—		8		(33)		(53)		(78)
Total derivatives	—		8		(33)		(53)		(78)
Cash collateral receivable	—		—		—		—		—
Total - net basis	$	—	$	8	$	(33)	$	(53)	$	(78)

AOCI

The following table presents selected information related to losses on cash flow hedges included in AOCI in Eastern Energy Gas' Consolidated Balance Sheet as of December 31, 2020 (in millions):

	AOCI After-Tax		Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax		Maximum Term
Interest rate	$	(45)	$	(5)	288 months
Foreign currency	(6)		(2)		66 months
Total	$	(51)	$	(7)

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest payments) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates and foreign currency exchange rates.

In July 2020, Eastern Energy Gas recorded a loss of $141 million ($105 million after-tax) in interest expense in the Consolidated Statement of Operations, for cash flow hedges of debt-related items that are probable of not occurring as a result of the GT&S Transaction. The derivatives related to these hedges were settled in October 2020 for a cash payment of $165 million.

Gains and Losses on Derivative Contracts

The following tables present the gains and losses on Eastern Energy Gas' derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Consolidated Statements of Operations for the years ended December 31 (in millions):

Derivatives in cash flow hedging relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)(1)		Amount of Gain (Loss) Reclassified from AOCI to Income
2020
Derivative type and location of gains (losses):
Interest rate(2)	$	(104)	$	(157)
Foreign currency(3)	12		25
Total	$	(92)	$	(132)
2019
Derivative type and location of gains (losses):
Commodity:
Net income from discontinued operations			$	4
Total commodity	$	1	$	4
Interest rate(2)	(68)		(5)
Foreign currency(3)	(18)		(6)
Total	$	(85)	$	(7)
2018
Derivative type and location of gains (losses):
Commodity:
Net income from discontinued operations			$	(8)
Total commodity	$	1	$	(8)
Interest rate(2)	(16)		(5)
Foreign currency(3)	(6)		(13)
Total	$	(21)	$	(26)

(1)Amounts deferred into AOCI have no associated effect in Eastern Energy Gas' Consolidated Statements of Operations.

(2)Amounts recorded in Eastern Energy Gas' Consolidated Statements of Operations are classified in interest expense.

(3)Amounts recorded in Eastern Energy Gas' Consolidated Statements of Operations are classified in other, net.

	Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives not designated as hedging instruments	2020		2019		2018
Derivative type and location of gains (losses):
Interest rate(1)	$	5	$	—	$	—
Commodity:
Operating revenue	(1)		—		(11)
Total	$	4	$	—	$	(11)

(1)Amounts recorded in Eastern Energy Gas' Consolidated Statements of Operations are classified in interest expense.

Derivative Contract Volumes

The following table summarizes the net notional amounts of outstanding commodity derivative contracts with fixed price terms that comprise the mark-to-market values as of December 31 (in millions):

	Unit of
	Measure	2020	2019
Interest rate	U.S. $	500	1,300
Foreign currency	Euro €	250	250
Natural gas	Dth	5	—

Credit Risk

Eastern Energy Gas is exposed to counterparty credit risk associated with wholesale energy supply and marketing activities with other utilities, energy marketing companies, financial institutions and other market participants. Credit risk may be concentrated to the extent Eastern Energy Gas' counterparties have similar economic, industry or other characteristics and due to direct or indirect relationships among the counterparties. Before entering into a transaction, Eastern Energy Gas analyzes the financial condition of each significant wholesale counterparty, establishes limits on the amount of unsecured credit to be extended to each counterparty and evaluates the appropriateness of unsecured credit limits on an ongoing basis. To further mitigate wholesale counterparty credit risk, Eastern Energy Gas enters into netting and collateral arrangements that may include margining and cross-product netting agreements and obtains third-party guarantees, letters of credit and cash deposits. If required, Eastern Energy Gas exercises rights under these arrangements, including calling on the counterparty's credit support arrangement.

Upon the Cove Point LNG export/liquefaction facility commencing commercial operations in April 2018, the majority of Cove Point's revenue and earnings are from annual reservation payments under certain terminalling, storage and transportation contracts with ST Cove Point, LLC, a joint venture of Sumitomo Corporation and Tokyo Gas Co., LTD., and GAIL Global (USA) LNG, LLC (the "Export Customers"). If such agreements were terminated and Cove Point was unable to replace such agreements on comparable terms, there could be a material impact on results of operations, financial condition and/or cash flows.

The Export Customers comprised approximately 34% of Eastern Energy Gas' operating revenues for both of the years ended December 31, 2020 and 2019, with Eastern Energy Gas' largest customer representing approximately 17% of such amounts.

For the year ended December 31, 2020, EGTS provided service to 289 customers with approximately 98% of its storage and transportation revenue being provided through firm services. The ten largest customers provided approximately 37% of the total storage and transportation revenue and the thirty largest provided approximately 69% of the total storage and transportation revenue.