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SEC Filings
10-Q
TERRAFORM POWER, INC. filed this Form 10-Q on 08/14/2018
Entire Document
 


 
 
Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationships
 
Gain (Loss) Included in the Assessment of Effectiveness Recognized in OCI, net of taxes1
 
Gain (Loss) Excluded from the Assessment of Effectiveness Recognized in OCI Using an Amortization Approach2
 
Location of Amount Reclassified from AOCI into Income
 
(Gain) Loss Included in the Assessment of Effectiveness Reclassified from AOCI into Income3
 
(Gain) Loss Excluded from the Assessment of Effectiveness that is Amortized through Earnings2
(In thousands)
 
2018
 
2017
 
2018
 
2017
 
 
2018
 
2017
 
2018
 
2017
Interest rate swaps
 
$
10,520

 
$
(3,252
)
 

 
$

 
Interest expense, net
 
$
973

 
$
2,644

 
$

 
$
491

Commodity contracts
 
(7,479
)
 
13,874

 
735

 

 
Operating revenues, net
 
(2,042
)
 
(3,265
)
 
(679
)
 
3,083

Total
 
$
3,041

 
$
10,622

 
$
735

 
$

 
 
 
$
(1,069
)
 
$
(621
)
 
$
(679
)
 
$
3,574

————
(1)
Net of tax benefit of zero and $0.5 million attributed to interest rate swaps during the six months ended June 30, 2018 and 2017, respectively. Net of tax expense of zero and $2.1 million attributed to commodity contracts during the six months ended June 30, 2018 and 2017, respectively.
(2)
As a result of the adoption of ASU No. 2017-12 effective January 1, 2018 (see Note 2. Summary of Significant Accounting Policies), certain gains and losses were excluded from the assessment of effectiveness that are being amortized through earnings for the six months ended June 30, 2018. No such amounts existed for the six months ended June 30, 2017 prior to the adoption of ASU No. 2017-12.
(3)
Net of tax benefit of zero and $1.7 million attributed to interest rate swaps during the six months ended June 30, 2018 and 2017, respectively. Net of tax expense of zero and $2.1 million attributed to commodity contracts during the six months ended June 30, 2018 and 2017, respectively.

As discussed in Note 2. Summary of Significant Accounting Policies, the Company adopted ASU No. 2017-12 as of January 1, 2018 and recognized a cumulative-effect adjustment of $4.2 million, net of tax of $1.6 million, representing a decrease in beginning accumulated deficit and AOCI, which is reflected within cumulative-effect adjustment in the unaudited condensed consolidated statement of stockholders’ equity for the six months ended June 30, 2018.

As of June 30, 2018 and December 31, 2017, the Company had posted letters of credit in the amount of $15.0 million, as collateral related to certain commodity contracts. Certain derivative contracts contain provisions providing the counterparties a lien on specific assets as collateral. There was no cash collateral received or pledged as of June 30, 2018 and December 31, 2017 related to the Company’s derivative transactions.

Derivatives Designated as Hedging Instruments

Interest Rate Swaps

The Company has interest rate swap agreements to hedge variable rate non-recourse debt. These interest rate swaps were designated as hedging instruments and qualify for hedge accounting. Under the interest rate swap agreements, the renewable energy facilities pay a fixed rate and the counterparties to the agreements pay a variable interest rate. The amounts deferred in AOCI and reclassified into earnings during the three and six months ended June 30, 2018 and 2017 related to these interest rate swaps are provided in the tables above. The gain expected to be reclassified into earnings over the next twelve months is approximately $0.4 million. The maximum term of outstanding interest rate swaps designated as hedging instruments is 16 years.



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