Revenue

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

The Company sells electricity and RECs under the terms of PSAs or at market prices. The Company generally accounts for PSAs as either derivative instruments pursuant to ASC 815 or contracts with customers pursuant to ASC 606. As a result of the adoption of ASC 842 on January 1, 2019, the Company does not expect future PSAs entered into to meet the definition of a lease. Furthermore, to the extent that PSAs meet the definition of derivatives but qualify for the "normal purchase normal sale" (NPNS) scope exception, as defined in ASC 815, the Company elects NPNS scope exception, as PSAs are generally settled by physical delivery. As such, the Company primarily accounts for its PSAs in accordance with ASC 606.

Prior to January 1, 2019, a majority of the Company's revenues were accounted for under legacy lease guidance, ASC 840. On January 1, 2019, the Company adopted the new accounting standard ASC 842 and reassessed all of its PSAs. As a result of the adoption, all PSAs previously accounted for under ASC 840 are accounted for under ASC 606. As the Company elected the modified retrospective method, the comparative period has not been restated and continues to be presented in accordance with ASC 840.

Revenue Recognition

Revenues from contracts with customers are recognized when control of promised goods and services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table presents the Company's total revenue recognized and, for contracts with customers, disaggregated by revenue sources (in millions).



	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Revenue from contracts with customers
Electricity sales
Electricity sales under PSA⁽¹⁾	$	101	$	17	$	347	$	55
Electricity sales to market	12		5		19		12
Stand-alone REC sales	2		1		5		6
Electricity sales from contracts with customers	115		23		371		73
Other revenue
Related party management service fees	3		2		8		7
Other revenue from contracts with customers	3		2		8		7
Total revenue from contracts with customers	118		25		379		80
Other electricity sales ⁽²⁾	—		93		2		281
Other revenue	1		—		13		9
Total revenue	$	119	$	118	$	394	$	370


⁽¹⁾	Includes contracts accounted for under ASC 606 beginning January 1, 2019 as a result of the adoption of ASC 842.


⁽²⁾	Includes revenue from PSAs accounted for as leases under ASC 840 for prior period and an energy hedge contract accounted for as a derivative under ASC 815.

Electricity Sales from Contracts with Customers

The Company generates revenues primarily by delivering electricity and, where applicable, the associated self-generated RECs to customers under PSAs and market participants. The revenues are primarily determined by the price under the PSAs or market price multiplied by the amount of electricity that the Company delivers.

The Company transfers control of the electricity over time and the customer simultaneously receives and consumes the benefits provided by the Company's performance as it performs. Accordingly, the Company has concluded that the sale of electricity over the term of the agreement represents a series of distinct goods that are substantially the same and that have the same pattern of transfer to the customer. Each distinct transfer of electricity in MWh that the Company promises to transfer to the customer meets the criteria to be a performance obligation satisfied over time. The electricity sales are recognized based on an output measure, as each MWh is delivered to the customers. In bundled PSAs, revenue from the sale of self-generated RECs is recognized when the related electricity is generated and simultaneously delivered even in cases where there is a certification lag as the certification has been deemed to be perfunctory. Since the timing of recognition of revenue for electricity and the associated self-generated RECs is the same and occurs over time, it is unnecessary to allocate transaction price to the two performance obligations. The Company generally recognizes revenue based on the amount metered and invoiced on the basis of the contract prices multiplied by MWh delivered. The Company does not determine the total transaction price at contract inception, allocate the transaction price to performance obligations, or disclose the value of the variable portion of the remaining performance obligations for contracts for which it recognizes revenue as invoiced.

The Company also generates a small fraction of its revenue by delivering RECs on a stand-alone basis. Each promise to deliver stand-alone RECs is a distinct performance obligation that is satisfied at a point in time as none of the criteria are met to account for such promise as performance obligation satisfied over time. The revenue related to the stand-alone RECs is recognized at the point in time at which control of the energy credits is transferred to customers.

Related Party Management Service Fees

Related party revenue management service fees represent revenue recognized from the services provided by the Company, under Management, Operations and Maintenance Agreements (MOMAs) and Project Administration Agreements (PAAs) with certain wind farms that are consolidated subsidiaries of Pattern Development Companies or entities the Company accounts for as equity investments. Under these agreements, the Company provides services to the various wind farms, typically for a fixed annual fee payable in monthly installments, which escalates with the consumer price index (CPI) on an annual basis. The services by the Company to the wind farm under the agreement each month represent a single performance obligation, which is delivered to the project over time and is invoiced at a fixed price per month and will be recognized over time as invoiced to the respective wind farm.

Remaining performance obligations represent the fixed monthly installments for which services have not been performed. The transaction price is determined on the basis of the stated contract price.

Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2019, revenue expected to be recognized from remaining performance obligations associated with fixed considerations for PSAs, stand-alone RECs and related party management service fees are as follows (in millions):



	Amount
2019 (remainder)	$	18
2020	72
2021	72
2022	69
2023	67
Thereafter	285
Total	$	583

Contract Balances

The Company did not record any contract assets as none of its right to payment was subject to something other than passage of time. The Company also generally did not record any contract liabilities as it generally recognizes revenue only at the amount to which it has the right to invoice for the electricity and RECs delivered; therefore, there are no advanced payments or billings in excess of electricity or RECs delivered. However, for one PSA, the Company has a contract liability related to amounts received in advance from the PSA customer for access to the switchyard required in the delivery of electricity. The Company recognized less than $1 million and $1 million as revenue during the three and nine months ended September 30, 2019, respectively.