Related Party Transactions

9 Months Ended

Sep. 30, 2019

Management Fees

The Company provides management services and receives a fee for such services under agreements with its joint venture investees, Belle River, North Kent, South Kent, Grand, and Armow, in addition to various Pattern Energy Group LP subsidiaries and equity method investments. In connection with the Japan Acquisition, the Company receives management services related to the acquired projects and incurs a fee for such services under agreements with a subsidiary of Pattern Development.

Management Services Agreement and Shared Management

The Company has entered into a MSA with the Pattern Development Companies, which provides for the Company and the Pattern Development Companies to benefit, primarily on a cost-reimbursement basis, from the parties’ respective management and other professional, technical and administrative personnel, all of whom report to the Company’s executive officers. Costs and expenses incurred at the Pattern Development Companies or their respective subsidiaries on the Company's behalf will be allocated to the Company. Conversely, costs and expenses incurred at the Company or its respective subsidiaries on the behalf of a Pattern Development Company will be allocated to the respective Pattern Development Company.

Pursuant to the MSA, certain of the Company’s executive officers, including its Chief Executive Officer (shared PEG executives), also serve as executive officers of the Pattern Development Companies and devote their time to both the Company and the Pattern Development Companies as is prudent in carrying out their executive responsibilities and fiduciary duties. The shared PEG executives have responsibilities for both the Company and the respective Pattern Development Companies and, as a result, these individuals do not devote all of their time to the Company’s business. Under the terms of the MSA, each of the respective Pattern Development Companies is required to reimburse the Company for an allocation of the compensation paid to such shared PEG executives reflecting the percentage of time spent providing services to such Pattern Development Company. The MSA costs incurred by the Company are included in related party general and administrative on the consolidated statements of operations.

Related Party Transactions

The table below presents amounts due from and to related parties as included in the consolidated balance sheets for the following periods (in millions):



	September 30, 2019		December 31, 2018
Other current assets	$	11	$	7
Total due from related parties	$	11	$	7

Other current liabilities	13		9
Contingent liabilities, current	122		25
Contingent liabilities	—		105
Total due to related parties	$	135	$	139

The table below presents revenue, reimbursement and (expenses) recognized for management services and under the MSA, as included in the statements of operations for the following periods (in millions):



		Three months ended September 30,						Nine months ended September 30,
Related Party Agreement	Financial Statement Line Item	2019			2018			2019			2018
Management fees	Other revenue	$	3		$	2		$	8		$	7
Management fees	Project expense	$	—		$	—		$	1		$	1
MSA reimbursement	General and administrative	$	2		$	3		$	7		$	7
MSA costs	Related party general and administrative	$	(4	)	$	(4	)	$	(12	)	$	(12	)

Purchase and Sales Agreements

During the nine months ended September 30, 2019 and 2018, the Company consummated the following acquisitions with Pattern Energy Group LP, which are further detailed in Note 5, Acquisitions and Note 8, Unconsolidated Investments (in millions):



Acquisitions from Pattern Development Companies	Date of Acquisition	Cash consideration net of acquired cash		Debt Assumed		Contingent Consideration
Japan projects	March 7, 2018	$	158	$	181	$	106
MSM	August 10, 2018	$	31	$	196	$	—
Belle River	August 2, 2019	$	18	$	—	$	—
North Kent	August 2, 2019	$	26	$	—	$	—

Investment in Pattern Development

During 2019, the Company funded $7 million into Pattern Development. As of September 30, 2019, the Company has funded $190 million in aggregate and holds an approximately 29% ownership interest in Pattern Development.

ERP Purchase from Pattern Energy Group LP

On March 26, 2019, the Company entered into an Intellectual Property Rights Purchase and Transfer Agreement with Pattern Energy Group LP, pursuant to which the Company acquired certain intellectual property assets which comprise the enterprise resource planning system and associated integrated platforms developed by Pattern Energy Group LP, on a third-party software platform for a purchase price of $13 million. In addition, the Company intends to bill both Pattern Energy Group LP and Pattern Development for their usage under the MSA.