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

As of December 31, 2017 and 2016, notional amounts for derivative instruments consisted of the following:
 
 
Notional Amount as of December 31,
(In thousands)
 
2017
 
2016
Derivatives designated as hedges:
 
 
 
 
Interest rate swaps (USD)
 
395,986

 
433,874

Interest rate swaps (CAD)
 
156,367

 
84,713

Commodity contracts (MWhs)
 
15,579

 
16,988

Derivatives not designated as hedges:
 
 
 
 
Interest rate swaps (USD)
 
13,520

 
14,681

Interest rate swaps (GBP)
 

 
222,018

Foreign currency contracts (CAD)
 
9,875

 
25,075

Commodity contracts (MWhs)
 
987

 
1,407


The Company has elected to present net derivative assets and liabilities on the balance sheet as a right to setoff exists. For interest rate swaps, the Company either nets derivative assets and liabilities on a trade-by-trade basis or nets them in accordance with a master netting arrangement if such an arrangement exists with the counterparties. Foreign currency contracts are netted by currency in accordance with a master netting arrangement. The Company has a master netting arrangement for its commodity contracts for which no amounts were netted as of December 31, 2017 or 2016 as each of the commodity contracts were in a gain position.

Gains and losses on derivatives not designated as hedges for the years ended December 31, 2017, 2016 and 2015 consisted of the following:
 
 
Location of Loss (Gain) in the Statements of Operations
 
Year Ended December 31,
(In thousands)
2017
 
2016
 
2015
Interest rate swaps
 
Interest expense, net
 
$
3,161

 
$
26,280

 
$
345

Foreign currency contracts
 
(Gain) loss on foreign currency exchange, net
 
966

 
(1,325
)
 
(3,600
)
Commodity contracts
 
Operating revenues, net
 
(5,117
)
 
(10,890
)
 
(10,178
)
    
During the second quarter of 2016, the Company discontinued hedge accounting for interest rate swaps that were previously designated as cash flow hedges of the forecasted interest payments pertaining to variable rate project debt in the U.K. Portfolio. Hedge accounting was prospectively discontinued for interest payments occurring before the anticipated sale date of June 2017, and for periods beyond that, the losses of $16.9 million accumulated in other comprehensive income were fully reclassified into interest expense, net during the second quarter of 2016. Subsequent to the discontinuation of hedge accounting, the Company recognized additional net unrealized losses of $7.3 million pertaining to these interest rate swaps during the year ended December 31, 2016 that are also reported in interest expense, net in the consolidated statement of operations.

As discussed in Note 4. Assets Held for Sale, the Company consummated the sale of the U.K. Portfolio on May 11, 2017. As part of the sale agreement, Vortex Solar UK Limited assumed the debt and the associated interest rate swaps. As of the date of the sale, the remaining loss amount accumulated in other comprehensive income of $0.4 million was reclassified into interest expense, net, and the fair value of the interest rate swap liability of $23.4 million is reflected within gain on sale of renewable energy facilities in the consolidated statement of operations for the year ended December 31, 2017. The interest expense amount reflected in the table above for the year ended December 31, 2017 primarily pertains to these interest rate swaps.



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