SEC Filings

10-Q
CLEARWAY ENERGY LLC filed this Form 10-Q on 11/06/2018
Entire Document
 
Document
                                                                              

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x
 
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
 
 
 
For the Quarterly Period Ended: September 30, 2018
 
 
 
o
 
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 333-203369
Clearway Energy LLC
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
 
32-0407370
(I.R.S. Employer
Identification No.)
 
 
 
300 Carnegie Center, Suite 300, Princeton, New Jersey
(Address of principal executive offices)
 
08540
(Zip Code)
(609) 608-1525
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (Note: The registrant is a voluntary filer and not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934. Although not subject to these filing requirements, the registrant has filed all reports that would have been required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months had the registrant been subject to such requirements.) Yes o      No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes x      No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated filer x
 
Smaller reporting company o
Emerging growth company o
 
 
 
 
(Do not check if a smaller reporting company)
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o       No x
As of October 31, 2018, there were 34,586,250 Class A units outstanding, 42,738,750 Class B units outstanding, 73,087,756 Class C units outstanding, and 42,738,750 Class D units outstanding. There is no public market for the registrant's outstanding units.
NOTE: WHEREAS CLEARWAY ENERGY LLC MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q, THIS FORM 10-Q IS BEING FILED WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).
 
 
 
 
 


                                                                              

TABLE OF CONTENTS
Index

2

                                                                              

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q of Clearway Energy LLC, together with its consolidated subsidiaries, or the Company, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words "believes," "projects," "anticipates," "plans," "expects," "intends," "estimates" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors, risks and uncertainties include the factors described under Item 1A — Risk Factors in Part I, of the Company's Annual Report on Form 10-K for the year ended December 31, 2017, as well as the following:
The Company's ability to maintain and grow its quarterly distributions;
Potential risks to the Company as a result of the consummation of the NRG Transaction;
The Company's ability to successfully identify, evaluate and consummate acquisitions from third parties;
The Company's ability to acquire assets from NRG under the NRG ROFO agreement and from GIP III Zephyr Acquisition Partners, L.P. and CEG under the CEG ROFO Agreement;
The Company's ability to raise additional capital due to its indebtedness, corporate structure, market conditions or otherwise;
Changes in law, including judicial decisions;
Hazards customary to the power production industry and power generation operations such as fuel and electricity price volatility, unusual weather conditions (including wind and solar conditions), catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to fuel supply costs or availability due to higher demand, shortages, transportation problems or other developments, environmental incidents, or electric transmission or gas pipeline system constraints and the possibility that the Company may not have adequate insurance to cover losses as a result of such hazards;
The Company's ability to operate its businesses efficiently, manage maintenance capital expenditures and costs effectively, and generate earnings and cash flows from its asset-based businesses in relation to its debt and other obligations;
The willingness and ability of counterparties to the Company's offtake agreements to fulfill their obligations under such agreements;
The Company's ability to enter into contracts to sell power and procure fuel on acceptable terms and prices as current offtake agreements expire;
Government regulation, including compliance with regulatory requirements and changes in market rules, rates, tariffs and environmental laws;
Operating and financial restrictions placed on the Company that are contained in the project-level debt facilities and other agreements of certain subsidiaries and project-level subsidiaries generally, in the Clearway Energy Operating LLC amended and restated revolving credit facility and in the indentures governing the Senior Notes;
Cyber terrorism and inadequate cybersecurity, or the occurrence of a catastrophic loss and the possibility that the Company may not have adequate insurance to cover losses resulting from such hazards or the inability of the Company's insurers to provide coverage;
The Company's ability to engage in successful acquisitions activity; and
The Company's ability to borrow additional funds and access capital markets, as well as the Company's substantial indebtedness and the possibility that the Company may incur additional indebtedness going forward.
Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause the Company's actual results to differ materially from those contemplated in any forward-looking statements included in this Quarterly Report on Form 10-Q should not be construed as exhaustive.



3

                                                                              

GLOSSARY OF TERMS
When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:
2017 Form 10-K
 
Clearway Energy LLC's (formerly NRG Yield LLC) Annual Report on Form 10-K for the year ended December 31, 2017
2019 Convertible Notes
 
$329 million aggregate principal amount of 3.50% convertible notes due 2019, issued by Clearway Energy, Inc.
2020 Convertible Notes
 
$288 million aggregate principal amount of 3.25% convertible notes due 2020, issued by Clearway Energy, Inc.
2024 Senior Notes
 
$500 million aggregate principal amount of 5.375% unsecured senior notes due 2024, issued by Clearway Energy Operating LLC
2025 Senior Notes
 
$600 million aggregate principal amount of 5.750% unsecured senior notes due 2025, issued by Clearway Energy Operating LLC
2026 Senior Notes
 
$350 million aggregate principal amount of 5.00% unsecured senior notes due 2026, issued by Clearway Energy Operating LLC
Adjusted EBITDA
 
Represents EBITDA adjusted for mark-to-market gains or losses, asset write offs and impairments; and factors which the Company does not consider indicative of future operating performance
ASC
 
The FASB Accounting Standards Codification, which the FASB established as the source of
authoritative GAAP
ASU
 
Accounting Standards Updates - updates to the ASC
ATM Program
 
At-The-Market Equity Offering Program
August 2017 Drop Down Assets
 
The remaining 25% interest in Wind TE Holdco
Bridge Credit Agreement
 
364-Day Bridge Credit Agreement entered into by Clearway Operating LLC, as borrower, and Clearway Energy LLC, as guarantor, on August 31, 2018
Buckthorn Solar Drop Down Asset
 
Buckthorn Renewables, LLC, which owns 100% of Buckthorn Solar Portfolio, LLC, which was acquired by Clearway Energy Operating LLC from NRG on March 30, 2018
CAFD
 
Cash Available for Distribution (CAFD) is Adjusted EBITDA plus cash distributions/return of investment from unconsolidated affiliates, cash receipts from notes receivable, cash distributions from noncontrolling interests, less cash distributions to noncontrolling interests, maintenance capital expenditures, pro-rata Adjusted EBITDA from unconsolidated affiliates, cash interest paid, income taxes paid, principal amortization of indebtedness, Walnut Creek investment payments, and changes in prepaid and accrued capacity payments
Carlsbad Project
 
A 527 MW natural gas fired project in Carlsbad, CA
CEG
 
Clearway Energy Group LLC (formerly Zephyr Renewables LLC)
CEG Master Services Agreements
 
Master Services Agreements between the Company, Clearway Energy LLC and Clearway Energy Operating LLC, and CEG
CEG ROFO Agreement
 
Right of First Offer Agreement, entered into as of August 31, 2018, by and between Clearway Energy Group LLC and Clearway Energy, Inc., and solely for purposes of Section 2.4, GIP III Zephyr Acquisition Partners, L.P.
Clearway Energy Group LLC
 
The holder of Clearway Energy, Inc.'s Class B and Class D common shares and Clearway Energy LLC's Class B and Class D units
Clearway Energy LLC
 
The holding company through which the projects are owned by Clearway Energy Group LLC, the holder of Class B and Class D units, and Clearway Energy, Inc., the holder of the Class A and Class C units
Clearway Energy Operating LLC
 
The holder of the project assets that are owned by Clearway Energy LLC
Company
 
Clearway Energy LLC, together with its consolidated subsidiaries
CVSR
 
California Valley Solar Ranch
CVSR Drop Down
 
The Company's acquisition from NRG of the remaining 51.05% interest of CVSR Holdco
CVSR Holdco
 
CVSR Holdco LLC, the indirect owner of CVSR
DGPV Holdco 1
 
DGPV Holdco 1 LLC
DGPV Holdco 2
 
DGPV Holdco 2 LLC
DGPV Holdco 3
 
DGPV Holdco 3 LLC

4

                                                                              

Distributed Solar

 
Solar power projects, typically less than 20 MW in size, that primarily sell power produced to customers for usage on site, or are interconnected to sell power into the local distribution grid
Drop Down Assets
 
Collectively, assets under common control acquired by the Company from NRG from January 1, 2014 through the period ended August 31, 2018
Economic Gross Margin
 
Energy and capacity revenue less cost of fuels
ECP
 
Energy Center Pittsburgh LLC, a subsidiary of the Company
EPC
 
Engineering, Procurement and Construction
Exchange Act
 
The Securities Exchange Act of 1934, as amended
FASB
 
Financial Accounting Standards Board
GAAP
 
Accounting principles generally accepted in the U.S.
GIP
 
Global Infrastructure Partners III, the purchaser of CEG through GIP III Zephyr Acquisition Partners, L.P.
HLBV
 
Hypothetical Liquidation at Book Value
IASB
 
International Accounting Standards Board
ISO
 
Independent System Operator, also referred to as RTO
KPPH
 
Kilo Pascals Per Hour
LIBOR
 
London Inter-Bank Offered Rate
March 2017 Drop Down Assets
 
(i) Agua Caliente Borrower 2 LLC, which owns a 16% interest (approximately 31% of NRG's 51% interest) in the Agua Caliente solar farm and (ii) NRG's 100% ownership in the Class A equity interests in the Utah Solar Portfolio (defined below), both acquired by the Company on March 27, 2017
MMBtu
 
Million British Thermal Units
MW
 
Megawatts
MWh
 
Saleable megawatt hours, net of internal/parasitic load megawatt-hours
MWt
 
Megawatts Thermal Equivalent
NERC
 
North American Electric Reliability Corporation
Net Exposure
 
Counterparty credit exposure to Clearway Energy, Inc. net of collateral
November 2015 Drop Down Assets
 
75% of the Class B interests of Wind TE Holdco, which owns a portfolio of 12 wind facilities totaling 814 net MW, which was acquired by Clearway Energy Operating LLC from NRG on November 3, 2015
November 2017 Drop Down Assets
 
38 MW portfolio of distributed and small utility-scale solar assets, primarily comprised of assets from NRG's Solar Power Partners (SPP) funds, in addition to other projects developed since the acquisition of SPP by NRG, which was acquired by Clearway Energy Operating LLC from NRG on November 1, 2017
NRG
 
NRG Energy, Inc.
NRG ROFO Agreement
 
Third Amended and Restated Right of First Offer Agreement, entered into as of August 31, 2018, by and between NRG Energy, Inc. and the Company
NRG Transaction
 
On August 31, 2018, NRG transferred its full ownership interest in the Company to Clearway Energy Group LLC and subsequently sold 100% of its interests in Clearway Energy Group LLC, which includes NRG's renewable energy development and operations platform to an affiliate of GIP. GIP, NRG and the Company also entered into a consent and indemnity agreement in connection with the purchase and sale agreement, which was signed on February 6, 2018
NRG TSA
 
Transition Services Agreement dated as of August 31, 2018 by and between NRG Energy, Inc. and the Company
OECD
 
The Organization for Economic Co-operation and Development
OCI/OCL
 
Other comprehensive income/loss
O&M
 
Operation and Maintenance
PPA
 
Power Purchase Agreement
RENOM
 
Clearway Renewable Operation & Maintenance LLC
ROFO
 
Right of First Offer
RPV Holdco
 
RPV Holdco 1 LLC
RTO
 
Regional Transmission Originator
SEC
 
U.S. Securities and Exchange Commission

5

                                                                              

Senior Notes
 
Collectively, the 2024 Senior Notes and the 2026 Senior Notes
SPP
 
Solar Power Partners
Tax Act
 
Tax Cuts and Jobs Act of 2017
Thermal Business
 
The Company's thermal business, which consists of thermal infrastructure assets that provide steam, hot water and/or chilled water, and in some instances electricity, to commercial businesses, universities, hospitals and governmental units
UPMC Thermal Project
 
The University of Pittsburgh Medical Center Thermal Project, a 73 MWt district energy system that allows ECP to provide steam, chilled water and 7.5 MW of emergency backup power service to UPMC
U.S.
 
United States of America
Utah Solar Portfolio
 
Collection consists of Four Brothers Solar, LLC, Granite Mountain Holdings, LLC, and Iron Springs Holdings, LLC, which are equity investments owned by Four Brothers Capital, LLC, Granite Mountain Capital, LLC, and Iron Springs Capital, LLC, respectively, and are part of the March 2017 Drop Down Assets acquisition that closed on March 27, 2017
Utility Scale Solar

 
Solar power projects, typically 20 MW or greater in size (on an alternating current, or AC, basis), that are interconnected into the transmission or distribution grid to sell power at a wholesale level
VaR
 
Value at Risk
VIE
 
Variable Interest Entity
Wind TE Holdco
 
Wind TE Holdco LLC, an 814 net MW portfolio of twelve wind projects


6

                                                                              

PART I - FINANCIAL INFORMATION
ITEM 1 — FINANCIAL STATEMENTS
CLEARWAY ENERGY LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three months ended September 30,
 
Nine months ended September 30,
(In millions)
2018
 
2017 (a)
 
2018
 
2017 (a)
Operating Revenues
 
 
 
 
 
 
 
Total operating revenues
$
292

 
$
269

 
$
824

 
$
778

Operating Costs and Expenses
 
 
 
 
 
 
 
Cost of operations
84

 
79

 
247

 
241

Depreciation and amortization
84

 
90

 
247

 
246

Impairment losses

 
12

 

 
12

General and administrative
6

 
4

 
17

 
14

Acquisition-related transaction and integration costs
17

 

 
19

 
2

Development costs
1

 

 
1

 

Total operating costs and expenses
192

 
185

 
531

 
515

Operating Income
100

 
84

 
293

 
263

Other Income (Expense)
 
 
 
 
 
 
 
Equity in earnings of unconsolidated affiliates
32

 
28

 
65

 
63

Other income, net
2

 
1

 
4

 
3

Loss on debt extinguishment

 

 

 
(2
)
Interest expense
(70
)
 
(71
)
 
(190
)
 
(229
)
Total other expense, net
(36
)
 
(42
)
 
(121
)
 
(165
)
Net Income
64

 
42

 
172

 
98

Less: Loss attributable to noncontrolling interests
(2
)
 
(23
)
 
(95
)
 
(56
)
Net Income Attributable to Clearway Energy LLC
$
66

 
$
65

 
$
267

 
$
154

 
(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

7

                                                                              

CLEARWAY ENERGY LLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three months ended September 30,
 
Nine months ended September 30,
(In millions)
2018
 
2017 (a)
 
2018
 
2017 (a)
Net Income
$
64

 
$
42

 
$
172

 
$
98

Other Comprehensive Gain
 
 
 
 
 
 
 
Unrealized gain on derivatives
7

 
7

 
34

 
7

Other comprehensive gain
7

 
7

 
34

 
7

Comprehensive Income
71

 
49

 
206

 
105

Less: Comprehensive loss attributable to noncontrolling interests
(2
)
 
(23
)
 
(95
)
 
(56
)
Comprehensive Income Attributable to Clearway Energy LLC
$
73

 
$
72

 
$
301

 
$
161


(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

8

                                                                              

CLEARWAY ENERGY LLC
CONSOLIDATED BALANCE SHEETS
(In millions)
September 30, 2018
 
December 31, 2017 (a)
ASSETS
(unaudited)
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
231

 
$
146

Restricted cash
157

 
168

Accounts receivable — trade
141

 
95

Accounts receivable — affiliate

 
1

Inventory
39

 
39

Notes receivable
3

 
13

Prepayments and other current assets
31

 
19

Total current assets
602

 
481

Property, plant and equipment, net
5,306

 
5,410

Other Assets
 
 
 
Equity investments in affiliates
1,182

 
1,178

Intangible assets, net
1,177

 
1,228

Derivative instruments
32

 
1

Other non-current assets
92

 
62

Total other assets
2,483

 
2,469

Total Assets
$
8,391

 
$
8,360

LIABILITIES AND MEMBERS' EQUITY
 
 
 
Current Liabilities
 
 
 
Current portion of long-term debt — external
$
309

 
$
339

Current portion of long-term debt — affiliate
559

 

Accounts payable — trade
90

 
46

Accounts payable — affiliate
22

 
49

Derivative instruments
5

 
18

Accrued expenses and other current liabilities
95

 
87

Total current liabilities
1,080

 
539

Other Liabilities
 
 
 
Long-term debt — external
4,888

 
5,049

Long-term debt — affiliate
44

 
618

Derivative instruments
9

 
31

Other non-current liabilities
97

 
94

Total non-current liabilities
5,038

 
5,792

Total Liabilities
6,118

 
6,331

Commitments and Contingencies
 
 
 
Members' Equity
 
 
 
Contributed capital
1,937

 
1,919

Retained earnings
177

 
16

Accumulated other comprehensive loss
(34
)
 
(68
)
Noncontrolling interest
193

 
162

Total Members' Equity
2,273

 
2,029

Total Liabilities and Members’ Equity
$
8,391

 
$
8,360

    
 
(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.


9

                                                                              

CLEARWAY ENERGY LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine months ended September 30,
 
2018
 
2017 (a)
 
(In millions)
Cash Flows from Operating Activities
 
 
 
Net income
$
172

 
$
98

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Equity in earnings of unconsolidated affiliates
(65
)
 
(63
)
Distributions from unconsolidated affiliates
58

 
52

Depreciation and amortization
247

 
246

Amortization of financing costs
10

 
7

Amortization of intangibles and out-of-market contracts
52

 
52

Adjustment for debt extinguishment

 
2

Impairment losses

 
12

Derivative interest income
(39
)
 
(5
)
(Gain) loss on disposal of asset components
(2
)
 
8

Changes in prepaid and accrued liabilities for tolling agreements
8

 
5

Changes in other working capital
(44
)
 
(40
)
Net Cash Provided by Operating Activities
397

 
374

Cash Flows from Investing Activities
 
 
 
Acquisition of businesses, net of cash acquired
(11
)
 

Payments for the Drop Down Assets
(126
)
 
(176
)
Capital expenditures
(62
)
 
(102
)
Cash receipts from notes receivable
10

 
11

Return of investment from unconsolidated affiliates
22

 
32

Investments in unconsolidated affiliates
(16
)
 
(48
)
Other
8

 

Net Cash Used in Investing Activities
(175
)
 
(283
)
Cash Flows from Financing Activities
 
 
 
Net contributions from noncontrolling interests
108

 
13

Net distributions and return of capital to NRG prior to the acquisition of Drop Down Assets

 
(26
)
Net proceeds from the issuance of Class C units
151

 
33

Payments of distributions, net of contributions
(189
)
 
(149
)
Payments of debt issuance costs
(5
)
 
(12
)
Proceeds from the revolving credit facility
35

 

Payments for the revolving credit facility
(90
)
 

Proceeds from the issuance of long-term debt — external
227

 
130

Payments for long-term debt — external
(369
)
 
(255
)
Payments for long-term debt — affiliate
(16
)
 

Net Cash Used in Financing Activities
(148
)
 
(266
)
Net Decrease in Cash, Cash Equivalents and Restricted Cash
74

 
(175
)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
314

 
497

Cash, Cash Equivalents and Restricted Cash at End of Period
$
388

 
$
322

 
(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

10

                                                                              

CLEARWAY ENERGY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1Nature of Business
Clearway Energy LLC (formerly NRG Yield LLC), together with its consolidated subsidiaries, or the Company, was formed by NRG as a Delaware limited liability company on March 5, 2013, to serve as the primary vehicle through which NRG owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. On August 31, 2018, NRG Energy, or NRG, transferred its full ownership interest in Clearway Energy, Inc. (formerly NRG Yield, Inc.) to Clearway Energy Group LLC, or CEG, the holder of NRG's renewable energy development and operations platform, and subsequently sold 100% of its interest in CEG to Global Infrastructure Partners III, or GIP, referred to hereinafter as the NRG Transaction. As a result of the NRG Transaction, GIP indirectly acquired a 45.2% economic interest in Clearway Energy LLC and a 55% voting interest in the Company. GIP is an independent fund manager that invests in infrastructure assets in energy and transport sectors. The Company is sponsored by GIP through GIP's portfolio company, Clearway Energy Group.
The Company’s environmentally-sound asset portfolio includes over 5,272 MW of wind, solar and natural gas-fired power generation facilities, as well as district energy systems. Nearly all of these assets sell substantially all of their output pursuant to long-term offtake agreements with creditworthy counterparties. The weighted average remaining contract duration of these offtake agreements was approximately 15 years as of September 30, 2018 based on CAFD. The Company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,392 net MWt and electric generation capacity of 133 net MW. These thermal infrastructure assets provide steam, hot and/or chilled water, and, in some instances, electricity to commercial businesses, universities, hospitals and governmental units in multiple locations, principally through long-term contracts or pursuant to rates regulated by state utility commissions.
The Company consolidates the results of Clearway Energy LLC through its controlling interest, with CEG's interest shown as noncontrolling interest in the financial statements. The holders of Clearway Energy, Inc.'s outstanding shares of Class A and Class C common stock are entitled to dividends as declared. CEG receives its distributions from Clearway Energy LLC through its ownership of Clearway Energy LLC Class B and Class D units.
On September 27, 2018, Clearway Energy, Inc. issued and sold 3,916,449 shares of Class C common stock for net proceeds, after underwriting discounts and expenses, of $75 million. Clearway Energy, Inc. utilized the proceeds of the offering to acquire 3,916,449 Class C units from Clearway Energy LLC and, as a result, Clearway Energy, Inc. currently owns 55.7% of the economic interests of Clearway Energy LLC, with CEG retaining 44.3% of the economic interests of Clearway Energy LLC.
.

11

                                                                              

The following table represents the structure of the Company as of September 30, 2018:
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12532706&doc=12
As of September 30, 2018, the Company's operating assets are comprised of the following projects:
Projects
 
Percentage Ownership
 
Net Capacity (MW)(a)
 
Offtake Counterparty
 
Expiration
Conventional
 
 
 
 
 
 
 
 
El Segundo
 
100
%
 
550

 
Southern California Edison
 
2023
GenConn Devon
 
50
%
 
95

 
Connecticut Light & Power
 
2040
GenConn Middletown
 
50
%
 
95

 
Connecticut Light & Power
 
2041
Marsh Landing
 
100
%
 
720

 
Pacific Gas and Electric
 
2023
Walnut Creek
 
100
%
 
485

 
Southern California Edison
 
2023
 
 
 
 
1,945

 
 
 
 
Utility Scale Solar
 
 
 
 
 
 
 
 
Agua Caliente
 
16
%
 
46

 
Pacific Gas and Electric
 
2039
Alpine
 
100
%
 
66

 
Pacific Gas and Electric
 
2033
Avenal
 
50
%
 
23

 
Pacific Gas and Electric
 
2031
Avra Valley
 
100
%
 
26

 
Tucson Electric Power
 
2032
Blythe
 
100
%
 
21

 
Southern California Edison
 
2029
Borrego
 
100
%
 
26

 
San Diego Gas and Electric
 
2038
Buckthorn Solar
 
100
%
 
154

 
City of Georgetown, TX
 
2043
CVSR
 
100
%
 
250

 
Pacific Gas and Electric
 
2038
Desert Sunlight 250
 
25
%
 
63

 
Southern California Edison
 
2034
Desert Sunlight 300
 
25
%
 
75

 
Pacific Gas and Electric
 
2039
Kansas South
 
100
%
 
20

 
Pacific Gas and Electric
 
2033
Roadrunner
 
100
%
 
20

 
El Paso Electric
 
2031

12

                                                                              

Projects
 
Percentage Ownership
 
Net Capacity (MW)(a)
 
Offtake Counterparty
 
Expiration
TA High Desert
 
100
%
 
20

 
Southern California Edison
 
2033
      Utah Solar Portfolio (b) (e)
 
50
%
 
265

 
PacifiCorp
 
2036
 
 
 
 
1,075

 
 
 
 
Distributed Solar
 
 
 
 
 
 
 
 
Apple I LLC Projects
 
100
%
 
9

 
Various
 
2032
AZ DG Solar Projects
 
100
%
 
5

 
Various
 
2025 - 2033
SPP Projects
 
100
%
 
25

 
Various
 
2026 - 2037
Other DG Projects
 
100
%
 
13

 
Various
 
2023 - 2039
 
 
 
 
52

 
 
 
 
Wind
 
 
 
 
 
 
 
 
Alta I
 
100
%
 
150

 
Southern California Edison
 
2035
Alta II
 
100
%
 
150

 
Southern California Edison
 
2035
Alta III
 
100
%
 
150

 
Southern California Edison
 
2035
Alta IV
 
100
%
 
102

 
Southern California Edison
 
2035
Alta V
 
100
%
 
168

 
Southern California Edison
 
2035
Alta X (b)
 
100
%
 
137

 
Southern California Edison
 
2038
Alta XI (b)
 
100
%
 
90

 
Southern California Edison
 
2038
Buffalo Bear
 
100
%
 
19

 
Western Farmers Electric Co-operative
 
2033
Crosswinds (b) (f)
 
99
%
 
21

 
Corn Belt Power Cooperative
 
2027
Elbow Creek (b) (f)
 
100
%
 
122

 
NRG Power Marketing LLC
 
2022
Elkhorn Ridge (b) (f)
 
66.7
%
 
54

 
Nebraska Public Power District
 
2029
Forward (b) (f)
 
100
%
 
29

 
Constellation NewEnergy, Inc.
 
2022
Goat Wind (b) (f)
 
100
%
 
150

 
Dow Pipeline Company
 
2025
Hardin (b) (f)
 
99
%
 
15

 
Interstate Power and Light Company
 
2027
Laredo Ridge
 
100
%
 
80

 
Nebraska Public Power District
 
2031
Lookout (b) (f)
 
100
%
 
38

 
Southern Maryland Electric Cooperative
 
2030
Odin (b) (f)
 
99.9
%
 
20

 
Missouri River Energy Services
 
2028
Pinnacle
 
100
%
 
55

 
Maryland Department of General Services and University System of Maryland
 
2031
San Juan Mesa (b) (f)
 
75
%
 
90

 
Southwestern Public Service Company
 
2025
Sleeping Bear (b) (f)
 
100
%
 
95

 
Public Service Company of Oklahoma
 
2032
South Trent
 
100
%
 
101

 
AEP Energy Partners
 
2029
Spanish Fork (b) (f)
 
100
%
 
19

 
PacifiCorp
 
2028
Spring Canyon II (b)
 
90.1
%
 
29

 
Platte River Power Authority
 
2039
Spring Canyon III (b)
 
90.1
%
 
25

 
Platte River Power Authority
 
2039
Taloga
 
100
%
 
130

 
Oklahoma Gas & Electric
 
2031
Wildorado (b) (f)
 
100
%
 
161

 
Southwestern Public Service Company
 
2027
 
 
 
 
2,200

 
 
 
 
Thermal
 
 
 
 
 
 
 
 
Energy Center Dover LLC
 
100
%
 
103

 
NRG Power Marketing LLC
 
2018
Thermal generation
 
100
%
 
30

 
Various
 
Various
 
 
 
 
133

 
 
 
 
Total net generation capacity(c)
 
 
 
5,405

 
 
 
 
 
 
 
 
 
 
 
 
 
Thermal equivalent MWt (d)
 
100
%
 
1,392

 
Various
 
Various
 
(a) Net capacity represents the maximum, or rated, generating capacity of the facility multiplied by the Company's percentage ownership in the facility as of September 30, 2018.
(b) Projects are part of tax equity arrangements.
(c) The Company's total generation capacity is net of 6 MWs for noncontrolling interest for Spring Canyon II and III. The Company's generation capacity including this noncontrolling interest was 5,411 MWs.
(d) For thermal energy, net capacity represents MWt for steam or chilled water and excludes 134 MWt available under the right-to-use provisions contained in agreements between two of the Company's thermal facilities and certain of its customers.
(e) Represents interests in Four Brothers Solar, LLC, Granite Mountain Holdings, LLC, and Iron Springs Holdings, LLC, all acquired as part of the March 2017 Drop Down Assets (ownership percentage is based upon cash to be distributed).
(f) Projects are part of Wind TE Holdco portfolio.

13

                                                                              

In addition to the facilities owned or leased in the table above, the Company has entered into partnerships to own or purchase solar power generation projects, as well as other ancillary related assets from a related party via intermediate funds.  The Company does not consolidate these partnerships and accounts for them as equity method investments. The Company's net interest in these projects is 268 MW based on cash to be distributed pursuant to the partnership agreements as of September 30, 2018. For further discussions, see Note 4, Investments Accounted for by the Equity Method and Variable Interest Entities of this Form 10-Q and Note 5, Investments Accounted for by the Equity Method and Variable Interest Entities to the consolidated financial statements included in the Company's 2017 Form 10-K.
Substantially all of the Company's generation assets are under long-term contractual arrangements for the output or capacity from these assets. The thermal assets are comprised of district energy systems and combined heat and power plants that produce steam, hot water and/or chilled water and, in some instances, electricity at a central plant. Certain district energy systems are subject to rate regulation by state public utility commissions (although they may negotiate certain rates) while the other district energy systems have rates determined by negotiated bilateral contracts.
Recast of the Historical Financial Statements
Prior to the NRG Transaction on August 31, 2018, the Company completed several acquisitions of Drop Down Assets from NRG, which were accounted for as transfer of entities under common control. The accounting guidance for transfers of entities under common control requires retrospective combination of the entities for all periods presented as if the combinations had been in effect from the beginning of the financial statement period or from the date the entities were under common control (if later than the beginning of the financial statement period). The transfers of entities under common control that took place in 2017 and 2018, and affected the historical results in reporting periods in this Form 10-Q as further described in Note 3, Business Acquisitions are: (i) the acquisition of 100% of NRG's interest in Buckthorn Renewables, LLC, or the Buckthorn Solar Drop Down Asset on March 30, 2018, and (ii) in 2017, the acquisition of the November 2017 November Drop Down Assets and August 2017 Drop Down Assets from NRG.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the SEC’s regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the consolidated financial statements included in the Company's 2017 Form 10-K. Interim results are not necessarily indicative of results for a full year.
The Company has elected not to push down the effects of the NRG Transaction to its consolidated financial statements and, accordingly, there was no change in basis of presentation related to the NRG transaction.
In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company's consolidated financial position as of September 30, 2018, and the results of operations, comprehensive income (loss) and cash flows for the nine months ended September 30, 2018 and 2017.
Transition Services Agreement
As a result of the NRG Transaction, the Company entered into a Transition Services Agreement with NRG, or the NRG TSA, pursuant to which NRG or certain of its affiliates began providing certain services to the Company following the consummation of the NRG Transaction, in exchange for the payment of a fee in respect of such services. The agreement is effective until the earlier of June 30, 2019 or the date that all services are terminated by the Company. The Company may extend the term on a month-by-month basis no later than March 31, 2020 for a fixed monthly fee provided for in the agreement. Expenses related to the NRG TSA are recorded in general and administrative expenses in the consolidated statements of operations.

Note 2Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could be different from these estimates.

14

                                                                              

Accumulated Depreciation, Accumulated Amortization
The following table presents the accumulated depreciation included in the property, plant and equipment, net, and accumulated amortization included in intangible assets, net, respectively, as of September 30, 2018 and December 31, 2017:
 
September 30, 2018
 
December 31, 2017
 
(In millions)
Property, Plant and Equipment Accumulated Depreciation
$
1,507

 
$
1,285

Intangible Assets Accumulated Amortization
289

 
237

Noncontrolling Interests
Noncontrolling interests represent the equity associated with CEG's interest in Repowering Partnership LLC, as described in Note 4, Investments Accounted for by the Equity Method and Variable Interest Entities, and third-party interests in the net assets under certain tax equity arrangements, which are consolidated by the Company, that have been entered into to finance the cost of wind facilities eligible for tax credits.
The following table reflects the changes in the Company's noncontrolling interest balance for the period from January 1, 2018 through September 30, 2018:
 
(In millions)
Balance as of December 31, 2017
$
162

Capital contributions from tax equity investors, net of distributions (a)
108

Comprehensive loss
(95
)
Contributions from CEG (b)
18

Balance as of September 30, 2018
$
193

 
(a) Activity primarily relates to net capital contributions from the TE investor into Buckthorn Holdings LLC in the amount of $99 million, as further described in Note 4, Investments Accounted for by the Equity Method and Variable Interest Entities.
(b) Contributions from CEG are primarily comprised of non-cash contribution of $17 million made by CEG in connection with the formation of Repowering Partnership LLC, as further described in Note 4, Investments Accounted for by the Equity Method and Variable Interest Entities.
Distributions
The following table lists the distributions paid on Clearway Energy LLC's Class A, B, C and D units during the nine months ended September 30, 2018:
 
Third Quarter 2018
 
Second Quarter 2018
 
First Quarter 2018
Distributions per Class A, B, C and D unit
$
0.320

 
$
0.309

 
$
0.298

On October 31, 2018, Clearway Energy LLC declared a distribution on its Class A, Class B, Class C and Class D units of $0.331 per unit payable on December 17, 2018 to unit holders of record as of December 3, 2018.

15

                                                                              

Changes in Capital Structure
At-the-Market Equity Offering Program, or the ATM Program
Clearway Energy, Inc. is party to an equity distribution agreement with Barclays Capital Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and RBC Capital Markets, LLC, as sales agents. Pursuant to the terms of the equity distribution agreement, Clearway Energy, Inc. may offer and sell shares of its Class C common stock par value $0.01 per share, from time to time through the sales agents up to an aggregate sales price of $150 million through an at-the-market equity offering program, or the ATM Program. Clearway Energy, Inc. may also sell shares of its Class C common stock to any of the sales agents, as principals for its own account, at a price agreed upon at the time of sale.
Clearway Energy, Inc. sold a total of 4,392,583 of Class C common stock for gross proceeds of $77 million during the period ended September 30, 2018. Clearway Energy, Inc. used the net proceeds to acquire 4,392,583 Class C units from the Company. As of September 30, 2018, approximately $38 million remains available for issuance under the ATM Program.
Revenue Recognition
Revenue from Contracts with Customers
On January 1, 2018, the Company adopted the guidance in ASC 606, Revenue from Contracts with Customers, or Topic 606, using the modified retrospective method applied to contracts which were not completed as of the adoption date, with no adjustment required to the financial statements upon adoption. Following the adoption of the new standard, the Company’s revenue recognition of its contracts with customers remains materially consistent with its historical practice. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company's policies with respect to its various revenue streams are detailed below. In general, the Company applies the invoicing practical expedient to recognize revenue for the revenue streams detailed below, except in circumstances where the invoiced amount does not represent the value transferred to the customer.
Thermal Revenues
Steam and chilled water revenue is recognized as the Company transfers the product to the customer, based on customer usage as determined by meter readings taken at month-end. Some locations read customer meters throughout the month, and recognize estimated revenue for the period between meter read date and month-end. For thermal contracts, the Company’s performance obligation to deliver steam and chilled water is satisfied over time and revenue is recognized based on the invoiced amount. The Thermal Business subsidiaries collect and remit state and local taxes associated with sales to their customers, as required by governmental authorities. These taxes are presented on a net basis in the income statement.
As contracts for steam and chilled water are long-term contracts, the Company has performance obligations under these contracts that have not yet been satisfied. These performance obligations have transaction prices that are both fixed and variable, and that vary based on the contract duration, customer type, inception date and other contract-specific factors. For the fixed price contracts, the Company cannot accurately estimate the amount of its unsatisfied performance obligations as it will vary based on customer usage, which will depend on factors such as weather and customer activity.
Power Purchase Agreements, or PPAs
The majority of the Company’s revenues are obtained through PPAs or other contractual agreements. Energy, capacity and where applicable, renewable attributes, from the majority of the Company’s renewable energy assets and certain conventional energy plants is sold through long-term PPAs and tolling agreements to a single counterparty, which is often a utility or commercial customer. The majority of these PPAs are accounted for as leases. ASC 840 requires the minimum lease payments received to be amortized over the term of the lease and contingent rentals are recorded when the achievement of the contingency becomes probable. Judgment is required by management in determining the economic life of each generating facility, in evaluating whether certain lease provisions constitute minimum payments or represent contingent rent and other factors in determining whether a contract contains a lease and whether the lease is an operating lease or capital lease.
Renewable Energy Credits, or RECs
As stated above, renewable energy credits, or RECs, are usually sold through long-term PPAs. Revenue from the sale of self-generated RECs is recognized when the related energy is generated and simultaneously delivered even in cases where there is a certification lag as it has been deemed to be perfunctory.
In a bundled contract to sell energy, capacity and/or self-generated RECs, all performance obligations are deemed to be delivered at the same time and hence, timing of recognition of revenue for all performance obligations is the same and occurs over time. In such cases, it is often unnecessary to allocate transaction price to multiple performance obligations.

16

                                                                              

Sale of Emission Allowances
The Company records its bank of emission allowances as part of intangible assets. From time to time, management may authorize the transfer of emission allowances in excess of usage from the Company's emission bank to intangible assets held-for-sale for trading purposes. The Company records the sale of emission allowances on a net basis within operating revenue in the Company's consolidated statements of operations.
Disaggregated Revenues     
The following tables represent the Company’s disaggregation of revenue from contracts with customers for the three and nine months ended September 30, 2018, along with the reportable segment for each category:
 
Three months ended September 30, 2018
(In millions)
Conventional Generation
 
Renewables
 
Thermal
 
Total
Energy revenue(a)
$
2

 
$
167

 
$
50

 
$
219

Capacity revenue(a)
86

 

 
4

 
90

Contract amortization
(1
)
 
(15
)
 
(1
)
 
(17
)
Total operating revenue
87

 
152

 
53

 
292

Less: Lease revenue
(88
)
 
(158
)
 

 
(246
)
Less: Contract amortization
1

 
15

 
1

 
17

Total revenue from contracts with customers
$

 
$
9

 
$
54

 
$
63

 
(a) The following amounts of energy and capacity revenue relate to leases and are accounted for under ASC 840:
 
 
Conventional Generation
 
Renewables
 
Total
Energy Revenue
 
$
2

 
$
158

 
$
160

Capacity Revenue
 
86

 

 
86

 
 
88

 
158

 
246

 
Nine months ended September 30, 2018
(In millions)
Conventional Generation
 
Renewables
 
Thermal
 
Total
Energy revenue(b)
$
5

 
$
473

 
$
139

 
$
617

Capacity revenue(b)
250

 

 
9

 
259

Contract amortization
(4
)
 
(46
)
 
(2
)
 
(52
)
Total operating revenue
251

 
427

 
146

 
824

Less: Lease revenue
(255
)
 
(438
)
 
(1
)
 
(694
)
Less: Contract amortization
4

 
46

 
2

 
52

Total revenue from contracts with customers
$

 
$
35

 
$
147

 
$
182

 
(b) The following amounts of energy and capacity revenue relate to leases and are accounted for under ASC 840:
 
 
Conventional Generation
 
Renewables
 
Thermal
 
Total
Energy Revenue
 
$
5

 
$
438

 
$
1

 
$
444

Capacity Revenue
 
250

 

 

 
250

 
 
255

 
438

 
1

 
694

Contract Amortization
Assets and liabilities recognized from power sales agreements assumed through acquisitions related to the sale of electric capacity and energy in future periods for which the fair value has been determined to be significantly less (more) than market are amortized to revenue over the term of each underlying contract based on actual generation and/or contracted volumes or on a straight-line basis, where applicable.

17

                                                                              

Contract Balances
The following table reflects the contract assets and liabilities included on the Company’s balance sheet as of September 30, 2018:
(In millions)
 
September 30, 2018
Accounts receivable, net - Contracts with customers
 
$
35

Accounts receivable, net - Leases
 
106

Total accounts receivable, net
 
$
141

 
 
 
Reclassifications
Certain prior-year amounts have been reclassified for comparative purposes.
Recent Accounting Developments - Not Yet Adopted
ASU 2016-02 — In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), or Topic 842, with the objective to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and to improve financial reporting by expanding the related disclosures. The guidance in Topic 842 provides that a lessee that may have previously accounted for a lease as an operating lease under current GAAP should recognize the assets and liabilities that arise from a lease on the balance sheet. In addition, Topic 842 expands the required quantitative and qualitative disclosures with regards to lease arrangements. The Company will adopt the standard effective January 1, 2019 and expects to elect certain of the practical expedients permitted, including the expedient that permits the Company to retain its existing lease assessment and classification. The Company is currently working through an adoption plan and evaluating the anticipated impact on the Company's results of operations, cash flows and financial position. While the Company is currently evaluating the impact the new guidance will have on its financial position and results of operations, the Company expects to recognize lease liabilities and right of use assets. The extent of the increase to assets and liabilities associated with these amounts remains to be determined pending the Company’s review of its existing lease contracts and service contracts which may contain embedded leases. While this review is still in process, the Company believes the adoption of Topic 842 may be material to its financial statements. The Company is continuing to monitor potential changes to Topic 842 that have been proposed by the FASB and will assess any necessary changes to the implementation as the guidance is updated.
Note 3Business Acquisitions
2018 Acquisitions
UPMC Thermal Project Asset Acquisition On June 19, 2018, upon reaching substantial completion, the Company acquired from NRG the UPMC Thermal Project for cash consideration of $84 million, subject to working capital adjustments. The Company will pay an additional $5 million to NRG upon final completion of the project pursuant to the EPC agreement. The project adds 73 MWt of thermal equivalent capacity and 7.5 MW of emergency backup thermal capacity to the Company's portfolio. The transaction is reflected in the Company's Thermal segment. The acquisition was funded with the proceeds from the sale of the Series E Notes and Series F Notes, as further described in Note 7, Long-term Debt. The assets transferred to the Company relate to interests under common control by NRG and were recorded at book value in accordance with ASC 805-50, Business Combinations - Related Issues. The difference between the purchase price and book value of the assets was recorded as a distribution to NRG and decreased the balance of contributed capital. The acquisition was determined to be an asset acquisition and not a business combination, therefore no recast of the historical financial information was deemed necessary.
Central CA Fuel Cell 1, LLC On April 18, 2018, the Company acquired the Central CA Fuel Cell 1, LLC project in Tulare, California from FuelCell Energy Finance, Inc., for cash consideration of $11 million, subject to working capital adjustments. The project adds 2.8 MW of thermal capacity to the Company's portfolio, with a 20-year PPA contract with the City of Tulare. The transaction is reflected in the Company's Thermal segment.
Buckthorn Solar Drop Down Asset On March 30, 2018, the Company acquired 100% of NRG's interests in Buckthorn Renewables, LLC, which owned a 154 MW construction-stage utility-scale solar generation project located in Texas, or the Buckthorn Solar Drop Down Asset, for cash consideration of approximately $42 million, subject to working capital adjustments. The Company also assumed non-recourse debt of $183 million and non-controlling interest of $19 million (as of acquisition date) attributable to the Class A member, as further described below. The Company converted $132 million of non-recourse debt to a term loan and the remainder of the outstanding debt was paid down with the contribution from the Class A member in the amount of $80 million upon the project reaching substantial completion in May 2018. The purchase price for the Buckthorn Solar Drop Down Asset was funded with cash on hand and borrowings from the Company's revolving credit facility. The assets and liabilities

18

                                                                              

transferred to the Company related to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. The difference between the cash paid and historical value of the entities' equity was recorded as a distribution to NRG and decreased the balance of contributed capital. Since the transaction constituted a transfer of net assets under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination had been in effect since the inception of common control.
Buckthorn Solar Portfolio, LLC, a wholly owned subsidiary of Buckthorn Renewables, LLC, is the Class B member in a tax equity partnership, Buckthorn Holdings, LLC, the owner of the Buckthorn Solar Drop Down Asset. The Class A member is a tax equity investor, or TE investor, who receives 99% of allocations of taxable income and other items through the six month anniversary of the placed in service date, at which time the allocations change to 67% through the last calendar year before the flip point, and then back to 99% through the flip point (which occurs when the TE Investor obtains a specified return on its initial investment), at which time the allocations to the TE Investor change to 5% for all the periods thereafter. Before the flip point, the TE investor would receive a priority distribution of distributable cash, as defined, plus a percentage of remaining distributable cash after the priority distribution subject to a percentage cap.
The project sells power under a 25-year PPA to the City of Georgetown, Texas, which commenced in July 2018.
The following is a summary of net assets transferred in connection with the acquisition of the Buckthorn Solar Drop Down Asset as of March 31, 2018:
 
(In millions)
Assets:
 
Current assets
$
20

Property, plant and equipment
212

Non-current assets
3

Total assets
235

Liabilities:
 
Debt (Current and non-current) (a)
176

Other current and non-current liabilities
15

Total liabilities
191

Less: noncontrolling interest
19

Net assets acquired
$
25

 
(a) Net of $7 million of net debt issuance costs.
2017 Acquisitions
November 2017 Drop Down Assets On November 1, 2017, the Company acquired a 38 MW solar portfolio primarily comprised of assets from NRG's Solar Power Partners (SPP) funds and other projects developed by NRG, for cash consideration of $74 million, including working capital adjustments, plus assumed non-recourse debt of $26 million.
The purchase price for the November 2017 Drop Down Assets was funded with cash on hand. The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. The difference between the cash paid and historical value of the entities' equity was recorded as an adjustment to contributed capital. Since the transaction constituted a transfer of net assets under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control.

19

                                                                              

The following tables present a summary of the Company's historical information combining the financial information for the Buckthorn Solar Drop Down Asset and November 2017 Drop Down Assets transferred in connection with the acquisition:
 
Three months ended September 30, 2017
 
As Previously Reported (a)
 
Buckthorn Solar Drop Down Asset
 
November 2017 Drop Down Assets
 
As Currently Reported
(In millions)
 
 
 
 
 
 
 
Total operating revenues
$
265

 
$

 
$
4

 
$
269

Operating income (loss)
95

 

 
(11
)
 
84

Net income (loss)
52

 
1

 
(11
)
 
42

Less: Loss attributable to noncontrolling interests
(23
)
 

 

 
(23
)
Net income (loss) attributable to Clearway Energy LLC
75

 
1

 
(11
)
 
65

 
Nine months ended September 30, 2017
 
As Previously Reported (a)
 
Buckthorn Solar Drop Down Asset
 
November 2017 Drop Down Assets
 
As Currently Reported
(In millions)
 
 
 
 
 
 
 
Total operating revenues
$
767

 
$

 
$
11

 
$
778

Operating income
271

 

 
(8
)
 
263

Net income (loss)
110

 
(2
)
 
(10
)
 
98

Less: Loss attributable to noncontrolling interests
(56
)
 

 

 
(56
)
Net income (loss) attributable to Clearway Energy LLC
166

 
(2
)
 
(10
)
 
154

 
(a) As previously reported in the Company's Form 10-Q for the quarter ended September 30, 2017.
August 2017 Drop Down Assets On August 1, 2017, the Company acquired the remaining 25% interest in Wind TE Holdco, a portfolio of 12 wind projects, from NRG for total cash consideration of $44 million, including working capital adjustments. The purchase agreement also included potential additional payments to NRG dependent upon actual energy prices for merchant periods beginning in 2027, which were estimated and accrued as contingent consideration in the amount of $8 million.
The Company originally acquired 75% of Wind TE Holdco on November 3, 2015, or November 2015 Drop Down Assets, which were consolidated with 25% of the net assets recorded as noncontrolling interest. The assets and liabilities transferred to the Company related to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50, Business Combination - Related Issues. The difference between the cash paid of $44 million, net of the contingent consideration of $8 million, and the historical value of the remaining 25% of $87 million as of July 31, 2017, was recorded as an adjustment to NRG's contributed capital. Since the transaction constituted a transfer of entities under common control, the accounting guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect from the beginning of the financial statement period or from the date the entities were under common control (if later than the beginning of the financial statement period).
March 2017 Drop Down Assets On March 27, 2017, the Company acquired the following interests from NRG: (i) Agua Caliente Borrower 2 LLC, which owns a 16% interest (approximately 31% of NRG's 51% interest) in the Agua Caliente solar farm, one of the ROFO Assets, representing ownership of approximately 46 net MW of capacity and (ii) NRG's interests in the Utah Solar Portfolio. Agua Caliente is located in Yuma County, AZ and sells power subject to a 25-year PPA with Pacific Gas and Electric, with 22 years remaining on that contract. The seven utility-scale solar farms in the Utah Solar Portfolio are owned by the following entities: Four Brothers Capital, LLC, Iron Springs Capital, LLC, and Granite Mountain Capital, LLC. These utility-scale solar farms achieved commercial operations in 2016, sell power subject to 20-year PPAs with PacifiCorp, a subsidiary of Berkshire Hathaway and are part of a tax equity structure with Dominion Solar Projects III, Inc., or Dominion, through which the Company is entitled to receive 50% of cash to be distributed, as further described below. The Company paid cash consideration of $128 million, which includes $3 million of final net working capital adjustment received by the Company from NRG. The acquisition of the March 2017 Drop Down Assets was funded with cash on hand. The Company recorded the acquired interests as equity method investments. The Company also assumed non-recourse debt of $41 million and $287 million on Agua Caliente Borrower 2 LLC and the Utah Solar Portfolio, respectively, as well as its pro-rata share of non-recourse project-level debt of Agua Caliente Solar LLC, as further described in Note 4, Investments Accounted for by the Equity Method and Variable Interest Entities.

20

                                                                              

The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50, Business Combination - Related Issues. The difference between the cash paid and the historical value of the entities' equity of $8 million was recorded as an adjustment to contributed capital. Since the transaction constituted a transfer of entities under common control, the accounting guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect from the beginning of the financial statement period or from the date the entities were under common control (if later than the beginning of the financial statement period).

Note 4Investments Accounted for by the Equity Method and Variable Interest Entities
Entities that are Consolidated
The Company has a controlling financial interest in certain entities which have been identified as VIEs under ASC 810, Consolidations, or ASC 810. These arrangements are primarily related to tax equity arrangements entered into with third parties in order to monetize certain tax credits associated with wind facilities, as further described in Note 5, Investments Accounted for by the Equity Method and Variable Interest Entities, to the consolidated financial statements included in the Company's 2017 Form 10-K.
Buckthorn Renewables, LLC As described in Note 3, Business Acquisitions, on March 30, 2018, the Company acquired 100% of NRG’s interest in a 154 MW construction-stage utility-scale solar generation project, Buckthorn Renewables, LLC, which owns 100% interest in Buckthorn Solar Portfolio, LLC, which in turn owns 100% of the Class B membership interests in Buckthorn Holdings, LLC . Buckthorn Holdings, LLC is a tax equity fund, which is a variable interest entity that is consolidated by Buckthorn Solar Portfolio, LLC. The Company is the primary beneficiary, through its position as managing member, and indirectly consolidates Buckthorn Holdings, LLC through Buckthorn Solar Portfolio, LLC. The Class A member is a tax equity investor who made its initial contribution of $19 million on March 30, 2018, which is reflected as noncontrolling interest on the Company’s consolidated balance sheet. The project achieved substantial completion in May 2018, at which time the remaining tax equity contributions of $80 million were funded. The Company utilizes the HLBV method to determine the net income or loss allocated to the tax equity investor noncontrolling interest. The Company recorded $55 million of loss attributable to noncontrolling interest in Buckthorn Renewables, LLC during the period ended September 30, 2018.
Repowering Partnership LLC On August 30, 2018, Wind TE Holdco, an indirect subsidiary of the Company, entered into a partnership with Clearway Renew LLC, an indirect subsidiary of CEG, in order to facilitate the repowering of the Elbow Creek and Wildorado facilities. Wind TE Holdco contributed its interests in the two facilities and Clearway Renew LLC contributed a turbine supply agreement, including title to certain components that qualify for production tax credits. Clearway Renew LLC paid a $17 million deposit and had a payable for an additional $17 million due to the service provider, which will be funded by an additional contribution from Clearway Renew LLC. Wind TE Holdco is the managing member of Repowering Partnership LLC and consolidates the entity, which is a VIE. Clearway Renew LLC is entitled to allocations of 21% of income, which is reflected in Wind TE Holdco’s noncontrolling interests.
Summarized financial information for the Company's consolidated VIEs consisted of the following as of September 30, 2018:
(In millions)
Wind TE Holdco
 
Alta Wind TE Holdco
 
Spring Canyon
 
Buckthorn Renewables, LLC
Other current and non-current assets
$
192

 
$
32

 
$
1

 
$
21

Property, plant and equipment
354

 
417

 
92

 
225

Intangible assets
2

 
253

 

 

Total assets
548

 
702

 
93

 
246

Current and non-current liabilities
205

 
14

 
5

 
136

Total liabilities
205

 
14

 
5

 
136

Noncontrolling interest
32

 
67

 
50

 
44

Net assets less noncontrolling interests
$
311

 
$
621

 
$
38

 
$
66


21

                                                                              

Entities that are not Consolidated
The Company has interests in entities that are considered VIEs under ASC 810, but for which it is not considered the primary beneficiary.  The Company accounts for its interests in these entities under the equity method of accounting, as further described in Note 5, Investments Accounted for by the Equity Method and Variable Interest Entities, to the consolidated financial statements included in the Company's 2017 Form 10-K.
The Company's maximum exposure to loss as of September 30, 2018, is limited to its equity investment in the unconsolidated entities, as further summarized in the table below:
(In millions)
Maximum exposure to loss
Four Brothers Solar, LLC
$
204

GenConn Energy LLC
98

DGPV Holdco 3 LLC
85

DGPV Holdco 1 LLC
78

Granite Mountain Holdings, LLC
74

DGPV Holdco 2 LLC
63

Iron Springs Holdings, LLC
52

RPV Holdco 1 LLC
42

DGPV Holdco 1 LLC The Company invested $4 million of cash during the nine months ended September 30, 2018 into DGPV Holdco 1 LLC and recorded $1 million due to CEG in accounts payable — affiliate as of September 30, 2018 to be funded as the project milestones are completed. The Company owns approximately 52 MW of distributed solar capacity, based on cash to be distributed, with a weighted average remaining contract life of approximately 17 years as of September 30, 2018.
DGPV Holdco 3 LLC The Company invested $12 million of cash during the nine months ended September 30, 2018 into DGPV Holdco 3 LLC and recorded $10 million due to CEG in accounts payable — affiliate as of September 30, 2018 to be funded in tranches as the project milestones are completed. The Company owns approximately 59 MW of distributed solar capacity, based on cash to be distributed, with a weighted average remaining contract life of approximately 21 years as of September 30, 2018.
Utah Solar Portfolio As described in Note 3, Business Acquisitions, on March 27, 2017, as part of the March 2017 Drop Down Assets acquisition, the Company acquired from NRG 100% of the Class A equity interests in the Utah Solar Portfolio, comprised of Four Brothers Solar, LLC, Granite Mountain Holdings, LLC, and Iron Springs Holdings, LLC. The Class B interests of the Utah Solar Portfolio are owned by a tax equity investor, who receives 99% of allocations of taxable income and other items until the flip point, which occurs when the tax equity investor obtains a specified return on its initial investment, at which time the allocations to the tax equity investor change to 50%. The Company generally receives 50% of distributable cash throughout the term of the tax-equity arrangements. The three entities comprising the Utah Solar Portfolio are VIEs. As the Company is not the primary beneficiary, the Company uses the equity method of accounting to account for its interests in the Utah Solar Portfolio. The Company utilizes the HLBV method to determine its share of the income or losses in the investees.

Note 5Fair Value of Financial Instruments
Fair Value Accounting under ASC 820
ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.
Level 2—inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
Level 3—unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.
In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement.

22

                                                                              

For cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accounts payable — affiliates, accrued expenses and other liabilities, the carrying amounts approximate fair value because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.
The estimated carrying amounts and fair values of the Company’s recorded financial instruments not carried at fair market value are as follows:
 
As of September 30, 2018
 
As of December 31, 2017
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
(In millions)
 
Assets:
 
 
 
 
 
 
 
Notes receivable
$
3

 
$
3

 
$
13

 
$
13

Liabilities:
 
 
 
 
 
 
 
Long-term debt — affiliate, including current portion
603

 
603

 
618

 
618

Long-term debt — external, including current portion (a)
$
5,253

 
$
5,218

 
$
5,450

 
$
5,466

 
(a) Excludes deferred financing costs, which are recorded as a reduction to long-term debt on the Company's consolidated balance sheets.
The fair value of the Company's publicly-traded long-term debt is based on quoted market prices and is classified as Level 2 within the fair value hierarchy. The fair value of non-publicly traded long-term debt and certain notes receivable of the Company are based on expected future cash flows discounted at market interest rates, or current interest rates for similar instruments with equivalent credit quality and are classified as Level 3 within the fair value hierarchy. The following table presents the level within the fair value hierarchy for long-term debt, including current portion as of September 30, 2018 and December 31, 2017:
 
As of September 30, 2018
 
As of December 31, 2017
 
Level 2
 
Level 3
 
Level 2
 
Level 3
 
(In millions)
Long-term debt, including current portion
$
834

 
$
4,987

 
$
870

 
$
5,214

Recurring Fair Value Measurements
The Company records its derivative assets and liabilities at fair value on its consolidated balance sheet. The following table presents assets and liabilities measured and recorded at fair value on the Company's consolidated balance sheets on a recurring basis and their level within the fair value hierarchy:
 
As of September 30, 2018
 
As of December 31, 2017
 
Fair Value (a)
 
Fair Value (a)
(In millions)
Level 2
 
Level 2
Derivative assets:
 
 
 
Commodity contracts
$

 
$
1

Interest rate contracts
35

 
1

Total assets
35

 
2

Derivative liabilities:
 
 
 
Commodity contracts
1

 
1

Interest rate contracts
13

 
48

Total liabilities
$
14

 
$
49

 
(a) There were no derivative assets or liabilities classified as Level 1 or Level 3 as of September 30, 2018 and December 31, 2017.
Derivative Fair Value Measurements
The Company's contracts are non-exchange-traded and valued using prices provided by external sources. For the Company’s energy markets, management receives quotes from multiple sources. To the extent that multiple quotes are received, the prices reflect the average of the bid-ask mid-point prices obtained from all sources believed to provide the most liquid market for the commodity.

23

                                                                              

The fair value of each contract is discounted using a risk free interest rate. In addition, a credit reserve is applied to reflect credit risk, which is, for interest rate swaps, calculated based on credit default swaps using the bilateral method. For commodities, to the extent that the net exposure under a specific master agreement is an asset, the Company uses the counterparty’s default swap rate. If the net exposure under a specific master agreement is a liability, the Company uses a proxy of its own default swap rate. For interest rate swaps and commodities, the credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the liabilities or that a market participant would be willing to pay for the assets. As of September 30, 2018, the credit reserve was $1 million in interest expense. It is possible that future market prices could vary from those used in recording assets and liabilities and such variations could be material.
Concentration of Credit Risk
In addition to the credit risk discussion in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in the Company's 2017 Form 10-K, the following is a discussion of the concentration of credit risk for the Company's financial instruments. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. The Company monitors and manages credit risk through credit policies that include: (i) an established credit approval process; (ii) monitoring of counterparties' credit limits; (iii) the use of credit mitigation measures such as margin, collateral, prepayment arrangements, or volumetric limits; (iv) the use of payment netting agreements; and (v) the use of master netting agreements that allow for the netting of positive and negative exposures of various contracts associated with a single counterparty. Risks surrounding counterparty performance and credit could ultimately impact the amount and timing of expected cash flows. The Company seeks to mitigate counterparty risk by having a diversified portfolio of counterparties.
Counterparty credit exposure includes credit risk exposure under certain long-term agreements, including solar and other PPAs. As external sources or observable market quotes are not available to estimate such exposure, the Company estimates the exposure related to these contracts based on various techniques including, but not limited to, internal models based on a fundamental analysis of the market and extrapolation of observable market data with similar characteristics. Based on these valuation techniques, as of September 30, 2018, credit risk exposure to these counterparties attributable to the Company's ownership interests was approximately $2.5 billion for the next five years. The majority of these power contracts are with utilities with strong credit quality and public utility commission or other regulatory support. However, such regulated utility counterparties can be impacted by changes in government regulations, which the Company is unable to predict.
Note 6Accounting for Derivative Instruments and Hedging Activities
This footnote should be read in conjunction with the complete description under Note 7, Accounting for Derivative Instruments and Hedging Activities, to the consolidated financial statements included in the Company's 2017 Form 10-K.
Energy-Related Commodities
As of September 30, 2018, the Company had energy-related derivative instruments extending through 2020. At September 30, 2018, these contracts were not designated as cash flow or fair value hedges.
Interest Rate Swaps
As of September 30, 2018, the Company had interest rate derivative instruments on non-recourse debt extending through 2041, a portion of which are designated as cash flow hedges.
Volumetric Underlying Derivative Transactions
The following table summarizes the net notional volume buy of the Company's open derivative transactions broken out by type:
 
 
 
Total Volume
 
 
 
September 30, 2018
 
December 31, 2017
Commodity
Units
 
(In millions)
Natural Gas
MMBtu
 
2

 
2

Interest
Dollars
 
$
1,909

 
$
2,050


24

                                                                              

Fair Value of Derivative Instruments
The following table summarizes the fair value within the derivative instrument valuation on the balance sheet:
 
Fair Value
 
Derivative Assets (a)
 
Derivative Liabilities
 
September 30, 2018
 
December 31, 2017
 
September 30, 2018
 
December 31, 2017
 
(In millions)
Derivatives Designated as Cash Flow Hedges:
 
 
 
 
 
 
 
Interest rate contracts current
$
2

 
$

 
$
1

 
$
4

Interest rate contracts long-term
11

 
1

 
4

 
9

Total Derivatives Designated as Cash Flow Hedges
13

 
1

 
5

 
13

Derivatives Not Designated as Cash Flow Hedges:
 
 
 
 
 
 
 
Interest rate contracts current
1

 

 
3

 
13

Interest rate contracts long-term
21

 

 
5

 
22

Commodity contracts current

 
1

 
1

 
1

Total Derivatives Not Designated as Cash Flow Hedges
22

 
1

 
9

 
36

Total Derivatives
$
35

 
$
2

 
$
14

 
$
49

 
(a) Derivative Assets balances classified as current are included within the prepayments and other current assets line item of the consolidated balance sheets as of September 30, 2018 and December 31, 2017.

The Company has elected to present derivative assets and liabilities on the balance sheet on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. As of September 30, 2018 and December 31, 2017, there was no outstanding collateral paid or received. The following tables summarize the offsetting of derivatives by the counterparty master agreement level as of September 30, 2018 and December 31, 2017:
As of September 30, 2018
Gross Amounts of Recognized Assets/Liabilities
 
Derivative Instruments
 
Net Amount
Commodity contracts(a):
(In millions)
Derivative liabilities
$
(1
)
 
$

 
$
(1
)
Total commodity contracts
(1
)
 

 
(1
)
Interest rate contracts:
 
 
 
 
 
Derivative assets
35

 
(2
)
 
33

Derivative liabilities
(13
)
 
2

 
(11
)
Total interest rate contracts
22

 

 
22

Total derivative instruments
$
21

 
$

 
$
21

 
(a) There were no commodity contracts classified as derivative assets as of September 30, 2018.
As of December 31, 2017
Gross Amounts of Recognized Assets/Liabilities
 
Derivative Instruments
 
Net Amount
Commodity contracts:
(In millions)
Derivative assets
$
1

 
$

 
$
1

Derivative liabilities
(1
)
 

 
(1
)
Total commodity contracts

 

 

Interest rate contracts:
 
 
 
 
 
Derivative assets
1

 
(1
)
 

Derivative liabilities
(48
)
 
1

 
(47
)
Total interest rate contracts
(47
)
 

 
(47
)
Total derivative instruments
$
(47
)
 
$

 
$
(47
)

25

                                                                              

Accumulated Other Comprehensive Loss
The following table summarizes the effects on the Company’s accumulated OCL balance attributable to interest rate swaps designated as cash flow hedge derivatives:
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
 
(In millions)
Accumulated OCL beginning balance  
$
(42
)
 
$
(86
)
 
$
(69
)
 
$
(86
)
Reclassified from accumulated OCL to income due to realization of previously deferred amounts
5

 
5

 
13

 
13

Mark-to-market of cash flow hedge accounting contracts
2

 
2

 
21

 
(6
)
Accumulated OCL ending balance
(35
)
 
(79
)
 
(35
)
 
(79
)
Accumulated OCL attributable to noncontrolling interests
(1
)
 
(1
)
 
(1
)
 
(1
)
Accumulated OCL attributable to Clearway Energy LLC
$
(34
)
 
$
(78
)
 
$
(34
)
 
$
(78
)
Losses expected to be realized from OCL during the next 12 months
$
(9
)
 
 
 
$
(9
)
 
 
The Company's regression analysis for Marsh Landing, Walnut Creek and Avra Valley interest rate swaps, while positively correlated, no longer contain matching terms for cash flow hedge accounting. As a result, the Company voluntarily de-designated the Marsh Landing, Walnut Creek and Avra Valley cash flow hedges as of April 28, 2017, and will prospectively mark these derivatives to market through the income statement.
Impact of Derivative Instruments on the Statements of Operations
The Company has interest rate derivative instruments that are not designated as cash flow hedges. The effect of interest rate hedges is recorded to interest expense. For the three months ended September 30, 2018 and 2017, the impact to the consolidated statements of operations was a gain of $9 million and a gain of $7 million, respectively. For the nine months ended September 30, 2018 and 2017, the impact to the consolidated statements of operations was a gain of $40 million and a loss of $2 million, respectively.
A portion of the Company’s derivative commodity contracts relates to its Thermal Business for the purchase of fuel commodities based on the forecasted usage of the thermal district energy centers. Realized gains and losses on these contracts are reflected in the fuel costs that are permitted to be billed to customers through the related customer contracts or tariffs and, accordingly, no gains or losses are reflected in the consolidated statements of operations for these contracts.
See Note 5, Fair Value of Financial Instruments, for a discussion regarding concentration of credit risk.


26

                                                                              

Note 7Long-term Debt
This footnote should be read in conjunction with the complete description under Note 10, Long-term Debt, to the consolidated financial statements included in the Company's 2017 Form 10-K. Long-term debt consisted of the following:
 
 
September 30, 2018
 
December 31, 2017
 
September 30, 2018, interest rate % (a)
 
Letters of Credit Outstanding at September 30, 2018
 
 
(In millions, except rates)
Long-term debt - affiliate, due 2019
 
$
322

 
$
337

 
3.580
 
$

Long-term debt - affiliate, due 2020
 
281

 
281

 
3.325
 

2024 Senior Notes
 
500

 
500

 
5.375
 

2026 Senior Notes
 
350

 
350

 
5.000
 

Clearway Energy LLC and Clearway Energy Operating LLC Revolving Credit Facility, due 2023 (b)
 

 
55

 
L+1.50
 
70

Project-level debt:
 
 
 
 
 
 
 
 
Agua Caliente Borrower 2, due 2038
 
39

 
41

 
5.430
 
17

Alpine, due 2022
 
129

 
135

 
L+1.750
 
16

Alta Wind I - V lease financing arrangements, due 2034 and 2035
 
901

 
926

 
5.696 - 7.015
 
103

Buckthorn Solar, due 2025
 
132

 
169

 
L+1.750
 
26

CVSR, due 2037
 
720

 
746

 
2.339 - 3.775
 

CVSR Holdco Notes, due 2037
 
188

 
194

 
4.680
 
13

El Segundo Energy Center, due 2023
 
352

 
400

 
L+1.75 - L+2.375
 
138

Energy Center Minneapolis Series C Notes, due 2025
 

 
83

 
5.950
 

Energy Center Minneapolis Series D Notes, due 2031
 
125

 
125

 
3.550
 

Energy Center Minneapolis Series E, F, G, H Notes
 
203

 

 
various
 

Laredo Ridge, due 2028
 
91

 
95

 
L+1.875
 
10

Marsh Landing, due 2023
 
280

 
318

 
L+2.125
 
38

Tapestry, due 2021
 
154

 
162

 
L+1.625
 
20

Utah Solar Portfolio, due 2022
 
273

 
278

 
various
 
13

Viento, due 2023
 
154

 
163

 
L+3.00
 
26

Walnut Creek, due 2023
 
235

 
267

 
L+1.625
 
82

Other
 
427

 
443

 
various
 
36

Subtotal project-level debt:
 
4,403

 
4,545

 
 
 
 
Total debt
 
5,856

 
6,068

 
 
 
 
  Less current maturities (c)
 
(868
)
 
(339
)
 
 
 
 
Less net debt issuance costs
 
(56
)
 
(62
)
 
 
 
 
Total long-term debt
 
$
4,932

 
$
5,667

 
 
 
 
 
 
(a) As of September 30, 2018, L+ equals 3 month LIBOR plus x%, except for Viento, due 2023 where L+ equals 6 month LIBOR plus 3.00% and Utah Solar Portfolio, where L+ equals 1 month LIBOR plus x%.
(b) Applicable rate is determined by the borrower leverage ratio, as defined in the credit agreement.
(c) Current maturities reflect the results of the 2019 Convertible Notes and 2020 Convertible Notes tender offer, as further described below.
The financing arrangements listed above contain certain covenants, including financial covenants that the Company is required to be in compliance with during the term of the respective arrangement. As of September 30, 2018, the Company was in compliance with all of the required covenants.
The discussion below describes material changes to or additions of long-term debt for the nine months ended September 30, 2018.

27

                                                                              

Clearway Energy LLC and Clearway Energy Operating LLC Revolving Credit Facility
As of September 30, 2018, there were no outstanding borrowings under the revolving credit facility and the Company had $70 million of letters of credit outstanding. On October 9, 2018, the Company terminated certain letters of credit relating to certain project PPAs in exchange for a one-time payment, which reduced the outstanding letters of credit under the revolving credit facility to $45 million as of October 31, 2018.
On April 30, 2018, the Company closed on the refinancing of the revolving credit facility, which extended the maturity of the facility to April 28, 2023, and decreased the Company's overall cost of borrowing from L+2.50% to L+1.75%. The applicable rate is determined by the borrower leverage ratio, as defined in the credit agreement, and was L+1.50% as of September 30, 2018. The facility will continue to be used for general corporate purposes including financing of future acquisitions and posting letters of credit.
Bridge Credit Agreement
On August 31, 2018, the Company entered into a senior unsecured 364-day bridge credit agreement, or the Bridge Credit Agreement, which provides total borrowings of up to a maximum amount of $1.5 billion at a rate per annum equal to LIBOR or a base rate plus an applicable margin equal to 3.00% in the case of LIBOR loans and 2.00% in the case of base rate loans, in each case subject to an additional 0.25% on the 90th day following the effective date of the Bridge Credit Agreement, 0.25% on the 180th day following such effective date and 0.50% on each 90th day thereafter while any loans remain outstanding. The obligation of the lenders to fund loans under the Bridge Credit Agreement will expire on the date that is 110 days after the effective date of the Bridge Credit Agreement. Loans under the Bridge Credit Agreement will mature 364 days after the effective date of the agreement, provided that Clearway Energy Operating LLC may elect in its sole discretion to extend the maturity as provided for in the Bridge Credit Agreement. Borrowings under the Bridge Credit Agreement are guaranteed by Clearway Energy LLC and certain subsidiaries of Clearway Energy Operating LLC. As of September 30, 2018, there were no borrowings under the Bridge Credit Agreement.
In October 2018, the Company reduced the lenders' commitments under the bridge agreement from $1.5 billion to $867.5 million following the offering of the 2025 Senior Notes and the convertible notes tender offer results, each described below. On October 31, 2018, the Company terminated the Bridge Credit Agreement.
2025 Senior Notes
On October 1, 2018, Clearway Energy Operating LLC issued $600 million of senior unsecured notes, or the 2025 Senior Notes. The 2025 Senior Notes bear interest at 5.750% and mature on October 15, 2025. Interest on the 2025 Senior Notes is payable semi-annually on April 15 and October 15 of each year, and interest payments will commence on April 15, 2019. The 2025 Senior Notes are unsecured obligations of Clearway Energy Operating LLC and are guaranteed by Clearway Energy LLC and by certain of Clearway Energy Operating LLC's wholly owned current and future subsidiaries.
2019 Convertible Notes Open Market Repurchases
In August 2018, Clearway Energy, Inc. repurchased an aggregate principal amount of $16 million of the 2019 Convertible Notes in open market transactions. The repurchases were funded through a partial repayment of the intercompany note between Clearway Energy Operating LLC and Clearway Energy, Inc., which was reduced by $16 million.
2019 Convertible Notes and 2020 Convertible Notes Tender Offer
On September 10, 2018, pursuant to the 2019 Convertible Notes and the 2020 Convertible Notes indentures, Clearway Energy, Inc. delivered to the holders of the 2019 Convertible Notes and the 2020 Convertible Notes a fundamental change notice and offer to repurchase any and all of the 2019 Convertible Notes and 2020 Convertible Notes for cash at a price equal to 100% of the principal amount of the Convertible Notes plus any accrued and unpaid interest. The tender offer expired on October 9, 2018. An aggregate principal amount of $109 million of the 2019 Convertible Notes and $243 million of the 2020 Convertible Notes were tendered on or prior to the expiration date and accepted by the Company for purchase. After the expiration of the tender offer, $216 million aggregate principal amount of the long-term debt - affiliate due 2019 remains outstanding and $44 million aggregate principal amount of the long-term debt - affiliate due 2020 remains outstanding.

28

                                                                              

Project - level Debt
Energy Center Minneapolis Series E, F, G, H Notes
On June 19, 2018, Energy Center Minneapolis LLC, a subsidiary of the Company, entered into an amended and restated Thermal note purchase and private shelf agreement under which it authorized the issuance of the Series E Notes, Series F Notes, Series G Notes, and Series H Notes, as further described in the table below:
(in millions)
 
Amount
 
Interest Rate
Energy Center Minneapolis Series E Notes, due 2033
 
$
70

 
4.80
%
Energy Center Minneapolis Series F Notes, due 2033
 
10

 
4.60
%
Energy Center Minneapolis Series G Notes, due 2035
 
83

 
5.90
%
Energy Center Minneapolis Series H Notes, due 2037
 
40

 
4.83
%
Total proceeds
 
$
203