Talen Energy Corp
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
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12. Fair Value
- Fair Value
Recurring Fair Value Measurements
Financial assets and liabilities reported at fair value on a recurring basis primarily include energy commodity derivatives, interest rate derivatives, and investments held within the NDT.
The classifications of recurring fair value measurements within the fair value hierarchy were:
| Successor | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2024 | December 31, 2023 | |||||||||
| Level 1 | Level 2 | NAV | Netting (a) | Total | Level 1 | Level 2 | NAV | Netting (a) | Total | |
| Assets | ||||||||||
| Cash equivalents | $— | $— | $8 | $— | $8 | $— | $— | $9 | $— | $9 |
| Equity securities (b) | 755 | — | 377 | — | 1,132 | 629 | — | 384 | — | 1,013 |
| U.S. Government debt securities | 328 | — | — | — | 328 | 337 | — | — | — | 337 |
| Municipal debt securities | — | 88 | — | — | 88 | — | 86 | — | — | 86 |
| Corporate debt securities | — | 177 | — | — | 177 | — | 156 | — | — | 156 |
| Receivables (payables), net (c) | — | — | — | — | 4 | — | — | — | — | (26) |
| NDT funds | 1,083 | 265 | 385 | — | 1,737 | 966 | 242 | 393 | — | 1,575 |
| Commodity derivatives | 108 | 103 | — | (139) | 72 | 98 | 196 | — | (200) | 94 |
| Interest rate derivatives | — | — | — | — | — | — | 1 | — | — | 1 |
| Total assets | $1,191 | $368 | $385 | $(139) | $1,809 | $1,064 | $439 | $393 | $(200) | $1,670 |
| Liabilities | ||||||||||
| Commodity derivatives | $131 | $38 | $— | $(162) | $7 | $155 | $139 | $— | $(257) | $37 |
| Interest rate derivatives | — | 3 | — | — | 3 | — | 6 | — | — | 6 |
| Total liabilities | $131 | $41 | $— | $(162) | $10 | $155 | $145 | $— | $(257) | $43 |
(a)Amounts represent netting pursuant to master netting arrangements and cash collateral held or placed with the same counterparty.
(b)Includes commingled equity and fixed income funds and real estate investment trusts.
(c)Represents: (i) interest and dividends earned but not received; and (ii) net sold or purchased investments, but not settled.
There were no recurring fair value measurements classified as Level 3 as of September 30, 2024 (Successor) and December 31, 2023 (Successor).
Nonrecurring Fair Value Measurements
There were no nonrecurring fair value measurements related to impairments of long-lived assets during the nine months ended September 30, 2024 (Successor) and for the period from May 18 through September 30, 2023 (Successor). See Note 8 for information on the nonrecurring fair value measurement of Brandon Shores during the period from January 1 through May 17, 2023 (Predecessor).
Reported Fair Value
The carrying value of certain financial assets and liabilities on the Consolidated Balance Sheets, including “Cash and cash equivalents,” “Restricted cash and cash equivalents,” “Accounts receivable, net,” and “Accounts payable and other accrued liabilities” approximate fair value.
The fair value measurements of indebtedness are classified as Level 2 within the fair value hierarchy. The fair value of fixed rate debt was estimated primarily by utilizing an income approach whereby the future cash flows of the obligations are discounted at the estimated current cost of funding rates, which incorporates the credit risk associated with the obligations. The carrying value of variable rate indebtedness approximates fair value.
The carrying value and fair value of indebtedness presented on the Consolidated Balance Sheets were:
| Successor | ||||
|---|---|---|---|---|
| September 30, 2024 | December 31, 2023 | |||
| Carrying Value | Fair Value | Carrying Value | Fair Value | |
| Long-term debt (a) | $2,625 | $2,769 | $2,820 | $2,934 |
| Other short-term indebtedness (b) | — | — | 6 | 6 |
(a)Aggregate value of “Long-term debt” and “Long-term debt, due within one year” presented on the Consolidated Balance Sheets.
(b)Presented as “Other current liabilities” on the Consolidated Balance Sheets.
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