Fair Value

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

The fair value of current financial assets and liabilities, debt service reserves, and other deposits approximate their reported carrying amounts. The estimated fair values of the Company’s assets and liabilities have been determined using available market information. Because these amounts are estimates and based on hypothetical transactions to sell assets or transfer liabilities, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. For further information on our valuation techniques and policies, see Note 5—Fair Value in Item 8.—Financial Statements and Supplementary Data of our 2023 Form 10-K.

Recurring Measurements

The following table presents, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of the dates indicated (in millions). For the Company’s investments in marketable debt securities, the security classes presented were determined based on the nature and risk of the security and are consistent with how the Company manages, monitors, and measures its marketable securities:

	March 31, 2024								December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
DEBT SECURITIES:
Available-for-sale:
Certificates of deposit	$	—	$	338	$	—	$	338	$	—	$	360	$	—	$	360
Government debt securities	—		3		—		3		—		—		—		—
Total debt securities	—		341		—		341		—		360		—		360
EQUITY SECURITIES:
Mutual funds	49		—		—		49		46		—		—		46
Common stock	5		—		—		5		—		—		—		—
Total equity securities	54		—		—		54		46		—		—		46
DERIVATIVES:
Interest rate derivatives	—		268		—		268		—		182		2		184
Foreign currency derivatives	—		13		64		77		—		15		59		74
Commodity derivatives	—		253		—		253		—		127		1		128
Total derivatives — assets	—		534		64		598		—		324		62		386
TOTAL ASSETS	$	54	$	875	$	64	$	993	$	46	$	684	$	62	$	792
Liabilities
Contingent consideration	$	—	$	—	$	158	$	158	$	—	$	—	$	165	$	165
DERIVATIVES:
Interest rate derivatives	—		33		2		35		—		102		6		108
Cross-currency derivatives	—		54		—		54		—		63		—		63
Foreign currency derivatives	—		28		—		28		—		19		—		19
Commodity derivatives	—		191		79		270		—		145		111		256
Total derivatives — liabilities	—		306		81		387		—		329		117		446
TOTAL LIABILITIES	$	—	$	306	$	239	$	545	$	—	$	329	$	282	$	611

As of March 31, 2024, all available-for-sale debt securities had stated maturities within one year. There were no other-than-temporary impairments of marketable securities during the three months ended March 31, 2024. The level 3 contingent consideration relates mainly to the acquisition of Bellefield in June 2023. Credit-related impairments are recognized in earnings under ASC 326. Gains and losses on the sale of investments are determined using the specific-identification method. The following table presents gross proceeds from the sale of available-for-sale securities during the periods indicated (in millions):

	Three Months Ended March 31,
	2024		2023
Gross proceeds from sale of available-for-sale securities	$	119	$	369

The following tables present a reconciliation of assets and liabilities measured at fair value on a recurring basis

using significant unobservable inputs (Level 3) for the three months ended March 31, 2024 and 2023 (derivative balances are presented net), in millions. Transfers between Level 3 and Level 2 principally result from changes in the significance of unobservable inputs used to calculate the credit valuation adjustment.

	Derivative Assets and Liabilities
Three Months Ended March 31, 2024	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at January 1, 2024	$	(4)	$	59	$	(110)	$	(165)	$	(220)
Total realized and unrealized gains (losses):
Included in earnings	—		10		4		6		20
Included in other comprehensive income (loss) — derivative activity	8		4		28		—		40
Included in other comprehensive income (loss) — foreign currency translation activity	—		—		—		(1)		(1)
Acquisitions	—		—		—		(9)		(9)
Settlements	(1)		(9)		(1)		11		—
Transfers of assets, net out of Level 3	(5)		—		—		—		(5)
Balance at March 31, 2024	$	(2)	$	64	$	(79)	$	(158)	$	(175)
Total gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period	$	—	$	3	$	6	$	6	$	15
	Derivative Assets and Liabilities
Three Months Ended March 31, 2023	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at January 1, 2023	$	—	$	64	$	(47)	$	(25)	$	(8)
Total realized and unrealized gains (losses):
Included in earnings	—		(2)		—		(6)		(8)
Included in other comprehensive income (loss) — derivative activity	(1)		—		(17)		—		(18)
Included in regulatory (assets) liabilities	—		—		(5)		—		(5)
Transfers of liabilities, net into Level 3	(4)		—		—		—		(4)
Balance at March 31, 2023	$	(5)	$	62	$	(69)	$	(31)	$	(43)
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period	$	—	$	(1)	$	1	$	6	$	6

The following table summarizes the significant unobservable inputs used for Level 3 derivative assets (liabilities) as of March 31, 2024 (in millions, except range amounts):

Type of Derivative	Fair Value		Unobservable Input	Amount or Range (Average)
Interest rate	$	(2)	Subsidiary credit spread	0.7% to 3.0% (2.1%)
Foreign currency:
Argentine peso	64		Argentine peso to U.S. dollar currency exchange rate after one year	1,339 to 1,657 (1,514)
Commodity:
CAISO Energy Swap	(79)		Forward energy prices per MWh after 2030	$11.58 to $121.53 ($62.03)
Total	$	(17)

For the Argentine peso foreign currency derivatives, increases in the estimate of the above exchange rate would increase the value of the derivative. For the CAISO Energy Swap, increases in the estimate above would decrease the value of the derivative.

Contingent consideration is primarily related to future milestone payments associated with acquisitions of renewables development projects. The estimated fair value of contingent consideration is determined using probability-weighted discounted cash flows based on internal forecasts, which are considered Level 3 inputs. Changes in Level 3 inputs, particularly changes in the probability of achieving development milestones, could result in material changes to the fair value of the contingent consideration and could materially impact the amount of expense or income recorded each reporting period. Contingent consideration is updated quarterly with any prospective changes in fair value recorded through earnings.

Nonrecurring Measurements

The Company measures fair value using the applicable fair value measurement guidance. Impairment expense, shown as pre-tax loss below, is measured by comparing the fair value at the evaluation date to the then-latest available carrying amount and is included in Asset impairment expense on the Condensed Consolidated Statements of Operations. The following table summarizes our major categories of asset groups measured at fair value on a nonrecurring basis and their level within the fair value hierarchy (in millions):

	Measurement Date	Carrying Amount (1)		Fair Value						Pre-tax Loss
Three Months Ended March 31, 2024				Level 1		Level 2		Level 3
Held-for-sale businesses: (2)
Mong Duong	3/31/2024	$	450	$	—	$	413	$	—	$	37
	Measurement Date	Carrying Amount (1)		Fair Value
Three Months Ended March 31, 2023				Level 1		Level 2		Level 3		Pre-tax Loss
Held-for-sale businesses: (2)
Jordan (3)	3/31/2023	$	179	$	—	$	170	$	—	$	14

_____________________________

(1)Represents the carrying values of the asset groups at the dates of measurement, before fair value adjustment.

(2)See Note 18—Held-for-Sale and Dispositions for further information.

(3)The pre-tax loss recognized was calculated using the $170 million fair value of the Jordan disposal group less costs to sell of $5 million.

Financial Instruments Not Measured at Fair Value in the Condensed Consolidated Balance Sheets

The following table presents (in millions) the carrying amount, fair value, and fair value hierarchy of the Company’s financial assets and liabilities that are not measured at fair value in the Condensed Consolidated Balance Sheets as of the periods indicated, but for which fair value is disclosed:

		March 31, 2024
		Carrying Amount		Fair Value
				Total		Level 1		Level 2		Level 3
Assets:	Accounts receivable — noncurrent (1)	$	91	$	148	$	—	$	—	$	148
Liabilities:	Non-recourse debt	23,924		23,695		—		22,165		1,530
	Recourse debt	5,295		4,995		—		4,995		—

		December 31, 2023
		Carrying Amount		Fair Value
				Total		Level 1		Level 2		Level 3
Assets:	Accounts receivable — noncurrent (1)	$	193	$	239	$	—	$	—	$	239
Liabilities:	Non-recourse debt	22,144		22,174		—		20,676		1,498
	Recourse debt	4,464		4,210		—		4,210		—

_____________________________

(1)These amounts primarily relate to the sale of the Redondo Beach land in the U.S. and the amounts impacted by the Stabilization Funds enacted by the Chilean government, and are included in Other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets.