PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2022

Property, plant and equipment [abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

US$ MILLIONS	Gross carrying amount		Accumulated depreciation		Accumulated fair value adjustments		Total
Balance at January 1, 2021	$	4,197	$	(719)	$	1,633	$	5,111
Additions, net of disposals	367		10		—		377
Assets held by subsidiaries disposed during the period(1)	(599)		163		(217)		(653)
Non-cash additions	(1)		(3)		—		(4)
Depreciation expense	—		(128)		—		(128)
Fair value adjustments	—		—		134		134
Net foreign currency exchange differences	(29)		4		(9)		(34)
Balance at December 31, 2021	$	3,935	$	(673)	$	1,541	$	4,803
Additions, net of disposals	435		5		—		440
Non-cash additions	7		(4)		—		3
Depreciation expense	—		(110)		—		(110)
Fair value adjustments	—		—		100		100
Net foreign currency exchange differences	(430)		75		(163)		(518)
Balance at December 31, 2022	$	3,947	$	(707)	$	1,478	$	4,718

(1)See Note 4, Disposition of Businesses, for additional information.

Property, plant and equipment of our company is predominantly comprised of last mile utility connections at our U.K. regulated distribution operation which provides essential services and generate regulated cash flows. Tariffs are set on the basis of a regulated asset base, provides inflation protection, and are typically adjusted annually. Our U.K. operation has a diverse customer base throughout England, Scotland, and Wales, which underpins its cash flows.

Our company’s property, plant, and equipment is measured at fair value on a recurring basis with an effective date of revaluation for all asset classes of December 31, 2022 and 2021. Our company determined fair value under the income method. Assets under development were revalued where fair value could be reliably measured.

The following table summarizes the valuation techniques and significant inputs for our company’s property, plant and equipment assets.

Dec. 31, 2022				Dec. 31, 2021
Valuation Technique	Discount Rate	Terminal Value Multiple	Investment Horizon	Valuation Technique	Discount Rate	Terminal Value Multiple	Investment Horizon
Discounted cash flow model	7%	18x	10 yrs	Discounted cash flow model	7%	20x	10 yrs

An increase in the discount rate would lead to a decrease in the fair value of property, plant and equipment. Conversely, an increase to the terminal value multiple would increase the fair value of property, plant and equipment. Our company has classified all property, plant and equipment under level 3 of the fair value hierarchy.

At December 31, 2022, our company carried out an assessment of the fair value of its property, plant and equipment, resulting in a gain from revaluation of $100 million (2021: $134 million) which was recognized in revaluation surplus in the Consolidated Statements of Comprehensive Income. Our valuation of property, plant and equipment is underpinned by stable cash flows as we earn a regulated return on an asset base for making the infrastructure available to users with minimal volume and price risk. Key drivers behind the revaluation gain recorded include growth in underlying cash flows at our U.K. regulated distribution business associated with new connections added during the year and increased tariffs.

Had the assets been carried under the cost model, the carrying amount of property, plant and equipment would have been $3,449 million as at December 31, 2022 (2021: $3,464 million).