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Segment Reporting
 9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
The Company defines its operating segments to reflect the manner in which the Company's chief operating decision maker, the chief executive officer, evaluates performance and allocates resources in managing the business. The Company evaluates its operations in two reportable segments: (i) the operating business segment, which is comprised of the portfolio of renewable energy power projects and (ii) the development investment, which consists of the Company's investment in Pattern Development. The operating business segment is engaged in the sale of energy from the power projects. The development investment segment develops and sells renewable energy projects and consists solely of the Company's proportional share of its investment in Pattern Development. Corporate, other and eliminations includes operating companies that provide services to the Company's renewable energy power projects, various Pattern Energy Group LP subsidiaries, and Pattern Development and its equity losses in Pattern Development, and is presented to reconcile to the consolidated financial statements.
The chief operating decision maker evaluates segment performance based on segment Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). The Company defines Adjusted EBITDA as net income (loss) before net interest expense, income taxes, and depreciation, amortization and accretion, including its proportionate share of net income (loss) before interest expense, income taxes, and depreciation, amortization and accretion of unconsolidated investments. Adjusted EBITDA also excludes the effect of certain mark-to-market adjustments, gain or loss related to acquisitions, divestitures, or refinancing transactions, adjustments from unconsolidated investments, and infrequent items not related to normal or ongoing operations. In
calculating Adjusted EBITDA, the Company excludes mark-to-market adjustments to the value of the Company's derivatives because the Company believes that it is useful for investors to understand, as a supplement to net income (loss) and other traditional measures of operating results, the results of the Company's operations without regard to periodic, and sometimes material, fluctuations in the market value of such assets or liabilities.
Segment information for the three and nine months ended September 30, 2019 and 2018, respectively, is presented in the table below (in millions):
For the Three Months Ended September 30, 2019
 
 
Operating Business
 
Development Investment (1)
 
Corporate, Other and Eliminations
 
Reconciling Amounts (2)
 
Consolidated
Total revenue
 
$
116

 
$
2

 
$
3

 
$
(2
)
 
$
119

Depreciation, amortization and accretion
 
$
76

 
$
1

 
$
—

 
$
(1
)
 
$
76

Operating income (loss)
 
$
(18
)
 
$
(10
)
 
$
(14
)
 
$
10

 
$
(32
)
Earnings (loss) in unconsolidated investments (3)
 
$
2

 
$
—

 
$
(12
)
 
$
—

 
$
(10
)
Interest expense
 
$
14

 
$
1

 
$
13

 
$
(1
)
 
$
27

Income tax provision
 
$
1

 
$
—

 
$
—

 
$
—

 
$
1

Net income (loss)
 
$
(31
)
 
$
(11
)
 
$
(40
)
 
$
11

 
$
(71
)
Adjusted EBITDA
 
$
86


$
(10
)

$
(21
)

$
10

 

 
 
 
 


 
 
 
 
 
 
Capital expenditures
 
$
(95
)
 
$
(54
)
 
$
(1
)
 
$
54

 
$
(96
)
 
 
 
 


 
 
 
 
 
 
As of September 30, 2019
 
 
 


 
 
 
 
 
 
Property, plant and equipment, net
 
$
3,853

 
$
86

 
$
64

 
$
(86
)
 
$
3,917

Unconsolidated investments
 
$
296

 
$
10

 
$
(15
)
 
$
(10
)
 
$
281

Total assets
 
$
8,892

 
$
205

 
$
(3,496
)
 
$
(205
)
 
$
5,396

For the Nine Months Ended September 30, 2019
 
 
Operating Business
 
Development Investment (1)
 
Corporate, Other and Eliminations
 
Reconciling Amounts (2)
 
Consolidated
Total revenue
 
$
387

 
$
15

 
$
7

 
$
(15
)
 
$
394

Depreciation, amortization and accretion
 
$
234

 
$
1

 
$
2

 
$
(1
)
 
$
236

Impairment expense
 
$
—

 
$
2

 
$
—

 
$
(2
)
 
$
—

Operating income (loss)
 
$
1

 
$
(30
)
 
$
(40
)
 
$
30

 
$
(39
)
Earnings (loss) in unconsolidated investments (3)
 
$
15

 
$
—

 
$
(31
)
 
$
—

 
$
(16
)
Interest expense
 
$
41

 
$
1

 
$
37

 
$
(1
)
 
$
78

Income tax provision
 
$
5

 
$
—

 
$
4

 
$
—

 
$
9

Net income (loss)
 
$
(34
)
 
$
(30
)
 
$
(113
)
 
$
30

 
$
(147
)
Adjusted EBITDA
 
$
311


$
(29
)

$
(46
)

$
29

 

 
 
 
 


 
 
 
 
 
 
Capital expenditures
 
$
(155
)
 
$
(56
)
 
$
(4
)
 
$
56

 
$
(159
)

For the Three Months Ended September 30, 2018
 
 
Operating Business
 
Development Investment (1)
 
Corporate, Other and Eliminations
 
Reconciling Amounts (2)
 
Consolidated
Total revenue
 
$
116


$
4


$
2


$
(4
)

$
118

Depreciation, amortization and accretion
 
$
52


$
—


$
4


$
—


$
56

Impairment expense
 
$
—


$
—


$
3


$
—


$
3

Operating income (loss)
 
$
17


$
(1
)

$
(13
)

$
1


$
4

Earnings (loss) in unconsolidated investments (3)
 
$
1


$
—


$
(5
)

$
—


$
(4
)
Interest expense
 
$
15


$
—


$
13


$
—


$
28

Income tax provision
 
$
3


$
1


$
—


$
(1
)

$
3

Net income (loss)
 
$
(1
)

$
(2
)

$
(30
)

$
2


$
(31
)
Adjusted EBITDA
 
$
86


$
(1
)

$
(6
)

$
1


 
 
 












Capital expenditures
 
$
(40
)

$
(24
)

$
(3
)

$
24


$
(43
)
 
 









As of September 30, 2018
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net
 
$
4,044


$
2


$
66


$
(2
)

$
4,110

Unconsolidated investments
 
$
346


$
8


$
26


$
(8
)

$
372

Total assets
 
$
8,992


$
151


$
(3,620
)

$
(151
)

$
5,372

For the Nine Months Ended September 30, 2018
 
 
Operating Business
 
Development Investment (1)
 
Corporate, Other and Eliminations
 
Reconciling Amounts (2)
 
Consolidated
Total revenue
 
$
363


$
4


$
7


$
(4
)

$
370

Depreciation, amortization and accretion
 
$
163


$
—


$
3


$
—


$
166

Impairment expense
 
$
—


$
—


$
7


$
—


$
7

Operating income (loss)
 
$
62


$
(13
)

$
(32
)

$
13


$
30

Earnings (loss) in unconsolidated investments (3)
 
$
30


$
—


$
(17
)

$
—


$
13

Interest expense
 
$
46


$
—


$
35


$
—


$
81

Income tax provision
 
$
6


$
1


$
8


$
(1
)

$
14

Net income (loss)
 
$
40


$
(14
)

$
(86
)

$
14


$
(46
)
Adjusted EBITDA
 
$
294


$
(13
)

$
(2
)

$
13


 
 
 












Capital expenditures
 
$
(124
)

$
(31
)

$
(5
)

$
31


$
(129
)
(1) 
Amounts represent the Company's proportionate share in Pattern Development. The Company's proportionate share of revenue in Pattern Development for each of the three and nine months ended September 30, 2019 includes amounts from the sale of a development project to a third-party and electricity sales.
(2) 
The Company accounts for its investment in Pattern Development under the equity method. Therefore, the reconciling amounts are presented to eliminate Pattern Development and to reconcile to the consolidated totals.
(3) 
Included in Corporate, Other and Eliminations is a $11 million loss and a $30 million loss for the three and nine months ended September 30, 2019, respectively, related to the Company's portion of the loss of Pattern Development and the elimination of intra entity profits of approximately $1 million. Included in Corporate, Other and Eliminations is a $2 million loss and a $14 million loss for the three and nine months ended September 30, 2018, respectively, related to the Company's portion of the loss of Pattern Development and the elimination of intra entity profits of approximately $3 million.
Reconciliation of segment Adjusted EBITDA to the Company's consolidated net loss is presented as follows (in millions):
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2019
 
2018
 
2019
 
2018
Operating Business Adjusted EBITDA
 
$
86


$
86


$
311


$
294

Development Investment Adjusted EBITDA
 
(10
)

(1
)

(29
)

(13
)
Corporate, Other and Eliminations Adjusted EBITDA
 
(21
)

(6
)

(46
)

(2
)
Reconciling Amounts Adjusted EBITDA
 
10


1


29


13

Less, proportionate share from unconsolidated investments
 











Interest expense, net of interest income
 
(9
)

(9
)

(21
)

(28
)
Income tax provision
 
—


(1
)

—


(1
)
Depreciation, amortization and accretion
 
(8
)

(8
)

(21
)

(26
)
Gain (loss) on derivatives
 
(1
)

4


(13
)

7

Unrealized gain (loss) on derivatives
 
2


1


(8
)

1

Impairment expense
 
—


(3
)

—


(7
)
Adjustments for unconsolidated investments
 
5


—


8


—

Other
 
(13
)

(1
)

(15
)

(2
)
Interest expense, net of interest income
 
(26
)

(28
)

(76
)

(80
)
Depreciation, amortization and accretion
 
(85
)

(63
)

(257
)

(188
)
Net loss before income tax
 
(70
)

(28
)

(138
)

(32
)
Income tax provision
 
(1
)

(3
)

(9
)

(14
)
Net loss
 
$
(71
)

$
(31
)

$
(147
)

$
(46
)