Fair Value

3 Months Ended

Mar. 31, 2013

FAIR VALUE

3. FAIR VALUE

The fair value of current financial assets and liabilities, debt service reserves and other deposits approximate their reported carrying amounts. The estimated fair values of the Company's assets and liabilities have been determined using available market information. By virtue of these amounts being estimates and based on hypothetical transactions to sell assets or transfer liabilities, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. There were no changes in fair valuation techniques during the period and the Company continues to follow the valuation techniques described in Note 4.—FairValuein Item 8.—Financial Statements and Supplementary Dataofits 2012 Form 10-K.

Recurring Measurements

The following table sets forth, by level within the fair value hierarchy, the Company's financial assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012:

			March 31, 2013								December 31, 2012
			Level 1		Level 2		Level 3			Total	Level 1		Level 2		Level 3			Total
Assets			(in millions)
AVAILABLE-FOR-SALE:(1)
	Debt securities:
		Unsecured debentures	$	-	$	615	$	-	$	615	$	-	$	448	$	-	$	448
		Certificates of deposit		-		137		-		137		-		143		-		143
		Government debt securities		-		28		-		28		-		34		-		34
		Subtotal		-		780		-		780		-		625		-		625
	Equity securities:
		Mutual funds		-		57		-		57		-		56		-		56
		Subtotal		-		57		-		57		-		56		-		56
	Total available-for-sale			-		837		-		837		-		681		-		681
TRADING:
	Equity securities:
		Mutual funds		12		-		-		12		12		-		-		12
	Total trading			12		-		-		12		12		-		-		12
DERIVATIVES:
	Interest rate derivatives			-		2		-		2		-	$	2	$	-		2
	Cross currency derivatives			-		8		-		8		-		6		-		6
	Foreign currency derivatives			-		6		82		88		-		2		79		81
	Commodity derivatives			-		6		1		7		-		8		3		11
		Total derivatives		-		22		83		105		-		18		82		100
TOTAL ASSETS			$	12	$	859	$	83	$	954	$	12	$	699	$	82	$	793
Liabilities
DERIVATIVES:
	Interest rate derivatives		$	-	$	469	$	72	$	541	$	-	$	153	$	412	$	565
	Cross currency derivatives			-		3		-		3		-		6		-		6
	Foreign currency derivatives			-		7		11		18		-		7		7		14
	Commodity derivatives			-		24		69		93		-		13		59		72
		Total derivatives		-		503		152		655		-		179		478		657
TOTAL LIABILITIES			$	-	$	503	$	152	$	655	$	-	$	179	$	478	$	657

_______________________

• Amortized cost approximated fair value at March 31, 2013 and December 31, 2012. As of March 31, 2013, all available-for-sale debt securities had stated maturities within one year.

The following tables present a reconciliation of net derivative assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for thethreemonths ended March 31, 2013 and 2012 (presented net by type of derivative where any foreign currency impacts are presented as part of gains (losses) in earnings or other comprehensive income as appropriate)

						Three Months Ended March 31, 2013
						Interest		Foreign
						Rate		Currency		Commodity		Total
			(in millions)
Balance at January 1						$	(412)	$	73	$	(57)	$	(396)
	Total gains (losses) (realized and unrealized):
		Included in earnings					-		(1)		(10)		(11)
		Included in other comprehensive income					(17)		-		-		(17)
		Included in regulatory (assets) liabilities					-		-		(1)		(1)
	Settlements						23		(1)		-		22
	Transfers of (assets) liabilities out of Level 3						334		-		-		334
Balance at March 31						$	(72)	$	71	$	(68)	$	(69)
Total gains (losses) for the period included in earnings
	attributable to the change in unrealized gains (losses)
	relating to assets and liabilities held at the end of the
	period					$	-	$	(2)	$	(10)	$	(12)
				Three Months Ended March 31, 2012
				Interest		Cross		Foreign
				Rate		Currency		Currency		Commodity		Total
			(in millions)
Balance at January 1				$	(128)	$	(18)	$	51	$	(53)	$	(148)
	Total gains (losses) (realized and unrealized):
		Included in earnings			(1)		-		(2)		8		5
		Included in other comprehensive income			1		14		-		-		15
		Included in regulatory (assets) liabilities			-		-		-		-		-
	Settlements				6		4		(1)		(1)		8
	Transfers of assets (liabilities) into Level 3				(28)		-		-		-		(28)
	Transfers of (assets) liabilities out of Level 3				26		-		-		-		26
Balance at March 31				$	(124)	$	-	$	48	$	(46)	$	(122)
Total gains (losses) for the period included in earnings
	attributable to the change in unrealized gains (losses)
	relating to assets and liabilities held at the end of the
	period			$	-	$	-	$	(3)	$	9	$	6

						Amount or Range
Type of Derivative			Fair Value	Unobservable Input		(Weighted Average)
		(in millions)
Interest rate		$	(72)	Subsidiaries' credit spreads		2.15% - 9.03% (4.35%)
Foreign currency:
	Embedded derivative - Argentine Peso		70	Argentine Peso to U.S. Dollar
					currency exchange rate after 3 years	14.4 - 21.2 (17.7)
Commodity:
	Embedded derivative - Aluminum		(65)	Market price of power for
					customer in Cameroon (per KWh)	$0.06 - $0.14 ($0.12)
Other			(2)
Total		$	(69)

Nonrecurring Measurements

For purposes of impairment evaluation, the Company measured the fair value of long-lived assets and equity method investments under the fair value measurement accounting guidance. Impairment expense is measured by comparing the fair value of asset groups at the evaluation date totheir carrying amount. The following table summarizes major categories of assets and liabilities measured at fair value on a nonrecurring basis during the period and their level within the fair value hierarchy:

			Three Months Ended March 31, 2013
			Carrying		Fair Value						Gross
			Amount		Level 1		Level 2		Level 3		Loss
Assets			(in millions)
	Long-lived assets held and used:(1)
		Beaver Valley	$	61	$	-	$	-	$	15	$	46
	Long-lived assets held for sale:(1)
		Wind turbines		25		-		-		25		-
	Discontinued operations and held for sale businesses:(2)
		Ukraine utilities		143		-		109		-		38
	Goodwill
			Three Months Ended March 31, 2012
			Carrying		Fair Value						Gross
			Amount		Level 1		Level 2		Level 3		Loss
Assets			(in millions)
	Long-lived assets held and used:(1)
		Kelanitissa		22		-		-		17		5
	Equity method investments(3)			204		-		155		-		49

_______________________

(1) See Note 13―Asset Impairment Expensefor further information.

(2) See Note 15―Discontinued Operations and Held For Sale Businessesfor further information. Also, the gross loss equals the carrying amount of the disposal group less its fair value less costs to sell.

(3) See Note 14―Other Non-Operating Expense for further information.

The following table summarizes the significant unobservable inputs used in the Level 3 measurement of long-lived assets during the three months ended March 31, 2013:

		Fair Value		Valuation Technique	Unobservable Input		Range (Weighted Average)
		(in millions)					($ in millions)
Long-lived assets held and used:
	Beaver Valley	$	15	Discounted
				cash flow	Annual revenue growth		3% to 45% (19%)
					Annual pretax operating margin		-42% to 41% (25%)
					Weighted average cost of capital		7%
Long-lived assets held for sale:
	Wind turbines		25	Market
				Approach	Indicative offer prices	$	$12 to $38 (25)
Total		$	40

Financial Instrumentsnot Measured at Fair Value in the Condensed Consolidated Balance Sheets

The following table sets forth the carrying amount and fair value of the Company's financial assets and liabilities that are not measured at fair value in the condensed consolidated balance sheets as of March 31, 2013and December 31, 2012, but for which fair value is disclosed. In addition, the fair value level hierarchy of such assets and liabilities is presented as of March 31, 2013:

		Carrying		Fair Value
March 31, 2013		Amount			Total	Level 1		Level 2		Level 3
		(in millions)
Assets
	Accounts receivable - noncurrent(1)	$	295	$	167	$	-	$	-	$	167
Liabilities
	Non-recourse debt		15,923		16,416		-		14,212		2,204
	Recourse debt		5,961		6,724		-		6,724		-
December 31, 2012
Assets
	Accounts receivable - noncurrent(1)	$	304	$	188	$	-	$	-	$	188
Liabilities
	Non-recourse debt		15,383		16,110		-		13,811		2,299
	Recourse debt		5,962		6,628		-		6,628		-

(1) These accounts receivable principally relate to amounts due from the independent system operator in Argentina and are included in “Noncurrent assets― Other” in the accompanying condensed consolidated balance sheets. The fair value of these accounts receivable excludesvalue added tax of $53 million and $55 million at March 31, 2013 and December 31, 2012,respectively.