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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 03/07/2018
Entire Document
 

The following table presents the gross carrying amount, accumulated amortization and net book value of intangibles as of December 31, 2016:
(In thousands, except weighted average amortization period)
 
Weighted Average Amortization Period
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Book Value
Favorable rate revenue contracts
 
16 years
 
$
714,758

 
$
(57,634
)
 
$
657,124

In-place value of market rate revenue contracts
 
20 years
 
518,003

 
(47,284
)
 
470,719

Favorable rate land leases
 
18 years
 
15,800

 
(1,531
)
 
14,269

Total intangible assets, net
 
 
 
$
1,248,561

 
$
(106,449
)
 
$
1,142,112

 
 
 
 
 
 
 
 
 
Unfavorable rate revenue contracts
 
7 years
 
$
35,086

 
$
(10,541
)
 
$
24,545

Unfavorable rate O&M contracts
 
3 years
 
5,000

 
(1,302
)
 
3,698

Unfavorable rate land lease
 
16 years
 
1,000

 
(107
)
 
893

Total intangible liabilities, net
 
 
 
$
41,086

 
$
(11,950
)
 
$
29,136

    
The Company has intangible assets related to revenue contracts, representing long-term PPAs and REC agreements, and favorable rate land leases that were obtained through acquisitions. The revenue contract intangible assets are comprised of favorable rate PPAs and REC agreements and the in-place value of market rate PPAs. The Company also has intangible liabilities related to unfavorable rate PPAs and REC agreements, unfavorable rate O&M contracts and an unfavorable rate land lease, which are classified within other long-term liabilities in the consolidated balance sheets. These intangible assets and liabilities are amortized on a straight-line basis over the remaining lives of the agreements, which range from 1 to 27 years as of December 31, 2017.

Amortization expense related to favorable rate revenue contracts is reflected in the consolidated statements of operations as a reduction of operating revenues, net. Amortization related to unfavorable rate revenue contracts is reflected in the consolidated statements of operations as an increase to operating revenues, net. During the years ended December 31, 2017, 2016 and 2015, net amortization expense related to favorable and unfavorable rate revenue contracts resulted in a reduction of operating revenues, net of $39.6 million, $40.2 million and $5.3 million, respectively.

Amortization expense related to the in-place value of market rate revenue contracts is reflected in the consolidated statements of operations within depreciation, accretion and amortization expense. During the years ended December 31, 2017, 2016 and 2015, amortization expense related to the in-place value of market rate revenue contracts was $25.5 million, $25.2 million and $18.4 million, respectively.

Amortization expense related to favorable rate land leases is reflected in the consolidated statements of operations within cost of operations. Amortization related to the unfavorable rate land lease and unfavorable rate O&M contracts is reflected in the consolidated statements of operations as a reduction of cost of operations. During the years ended December 31, 2017, 2016 and 2015, net amortization related to favorable and unfavorable rate land leases and unfavorable rate O&M contracts resulted in a $0.5 million and $0.6 million reduction of cost of operations and $0.7 million increase to cost of operations, respectively.



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