Brookfield Renewable Energy Partners L.P.
ANNUAL REPORT
2014
TABLE OF CONTENTS
Letter To Shareholders
Generation and Financial Review for The Year Ended December 31, 2014
Generation and Financial Review for The Year Ended December 31, 2013
Analysis Of Consolidated Financial Statements and Other Information
Audited Consolidated Financial Statements as at and for The Year Ended
December 31 2014
1
12
19
24
59
OUR OPERATIONS
In 2014, we operated our facilities through regional operating centers in the United States,
Canada, Brazil and Europe which are designed to maintain and enhance the value of our assets, while
cultivating positive relations with local stakeholders. We own and manage 204 hydroelectric generating
stations, 28 wind facilities, and two natural gas-fired plants. Overall, the assets we own or manage have
6,707 MW of generating capacity and annual generation of 23,742 GWh based on long-term averages.
The table below outlines our portfolio as at December 31, 2014:
River
Systems
Facilities
Generating Capacity(1)
(MW)
Units
LTA(1)(2)
(GWh)
Storage
(GWh)
Hydroelectric
United States(3)
Canada(3)
Brazil(4)
Wind
United States
Canada
Europe
Other
30
19
23
72
-
-
-
-
-
136
421
3,191
11,464
3,582
33
35
73
75
1,361
5,184
1,261
670
3,614
N/A
204
569
5,222
20,262
4,843
8
3
17
28
2
724
220
171
538
406
326
1,394
1,197
837
1,115
1,270
3,428
6
215
52
-
-
-
-
-
72
234
1,690
6,707
23,742
4,843
(1)
(2)
(3)
(4)
Includes 100% of capacity and generation from equity-accounted investments.
Long-term average (“LTA”) is calculated on an annualized basis from the beginning of the year, regardless of the acquisition
or commercial operation date.
Hydroelectric LTA is the expected average level of generation, as obtained from the results of a simulation based on historical
inflow data performed over a period of typically 30 years.
Brazilian hydroelectric assets benefit from a market framework which levelizes generation risk across producers.
The following table presents the annualized long-term average generation of our portfolio as at December
31, 2014 on a quarterly basis:
GENERATION (GWh)(1)(2)
Q1
Q2
Q3
Q4
Total
Hydroelectric
United States(3)
Canada(3)
Brazil(4)
Wind
United States
Canada
Europe
Other
Total
(1)
(2)
(3)
(4)
3,193
1,241
929
5,363
311
324
256
891
10
3,276
1,492
898
5,666
468
292
183
943
6
2,199
1,233
887
4,319
341
238
163
742
32
2,796
1,218
900
11,464
5,184
3,614
4,914
20,262
274
343
235
852
4
1,394
1,197
837
3,428
52
6,264
6,615
5,093
5,770
23,742
Includes 100% of generation from equity-accounted investments.
LTA is calculated on an annualized basis from the beginning of the year, regardless of the acquisition or commercial
operation date.
Hydroelectric LTA is the expected average level of generation, as obtained from the results of a simulation based on historical
inflow data performed over a period of typically 30 years.
Brazilian hydroelectric assets benefit from a market framework which levelizes generation risk across producers.
Statement Regarding Forward-Looking Statements and Use of Non-IFRS Measures
This Annual Report contains forward-looking information within the meaning of U.S. and Canadian securities laws. We may make
such statements in this Annual Report, in other filings with the U.S. Securities and Exchange Commission (“SEC”) or in other
communications with Canadian regulators - see “Cautionary Statement Regarding Forward-Looking Statements”. We make use of
non-IFRS measures in this Annual Report - see “Cautionary Statement Regarding Use Of Non-IFRS Measures”. This Annual
Report, our Form 20-F and additional information filed with the SEC and with securities regulators in Canada are available on our
website at www.brookfieldrenewable.com, on the SEC’s website at www.sec.gov or on SEDAR’s website at www.sedar.com.
LETTER TO SHAREHOLDERS
Over the past 15 years, we are proud to have grown Brookfield Renewable into one of the largest and
most experienced pure-play renewable power businesses in the world. More than 1,300 talented
professionals are committed to managing and optimizing the value of our portfolio on a daily basis. It is as
a result of their efforts that we had another successful year across our operations – ensuring the reliability
and performance of our asset base; delivering projects on scope, schedule and budget; embodying our
core principles around health, safety and the environment; and meeting the daily challenges of operating
a global business with $20 billion of assets and more than 230 facilities on three continents.
Our strategy is to leverage our integrated operating platform to provide stable, high quality cash flows for
our shareholders and create outsized returns over the long-term. Our approach to value creation is
primarily focused on the following: 1) marketing our power to capture rising prices and take advantage of
cycles; 2) advancing our high quality development pipeline and building assets at premium returns; and 3)
growing margins and reducing operating risk through strong internal expertise in hydro and wind. This
expertise gives us confidence that we can continue to grow cash flows and raise distributions
consistently.
Our achievements in 2014 reflect this strategy and we believe we will be able to continue to increase
distributions within our stated range. We remain focused on delivering total shareholder returns of 12-
15% over time, and as the track record below illustrates, this is consistent with our performance over the
last 15 years.
Total Return
BEP.UN (TSX)
BEP (NYSE)
1 Year
3 Years
5 Years
15 Years (inception)
35%
24%
15%
19%
16%
-
-
-
Building a strong operating organization
We generated $1.2 billion in Adjusted EBITDA and $560 million in Funds From Operations in 2014, in line
with our annual plans but below the prior year, which had benefitted from both strong generation and
higher-priced contracts. Newly added assets, strong pricing in some markets and cost reduction efforts in
North America and Brazil helped to mitigate less favourable hydrology in our U.S. fleet and the
suspension of operations at our natural gas facility in Ontario. We continued to generate meaningful cash
flow to fund our operations, growth initiatives and development activities. We continue to invest in our
assets to maintain high reliability, and are well positioned to benefit from our recent acquisitions and
newly commissioned facilities in 2015.
As we have grown meaningfully in recent years, we have been working actively to strengthen the
organization and to ensure that we have the systems, structure and culture in place to achieve our
objectives. By establishing the business around three continental platforms – in North America, South
America and Europe – we benefit from strong local leadership and clear accountability for operations, as
well as the identification, execution and integration of new assets in their respective regions.
In addition, succession planning has also been a key area of focus within the organization over the last
year. Our succession and continuity plans are well advanced in every key area of the organization,
including operations, finance, legal and business development. Two especially notable changes for
Brookfield Renewable are the appointments of Sachin Shah as President and Chief Operating Officer and
Nicholas (Nick) Goodman as Chief Financial Officer.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 1
Advancing our development pipeline
We delivered approximately $400 million of development projects on plan during 2014, and continued to
advance our development pipeline with the objective of bringing 500 megawatts to 750 megawatts of
greenfield projects into operation over the next five years.
Early in the year, we brought online a 45 megawatt hydro project in British Columbia. More recently, the
88 megawatt Knockacummer and 37 megawatt Killhills wind projects in Ireland were substantially
completed and are generating revenue under long-term contracts. Our 12 megawatt Glentane 2 project
remains on track to achieve commercial operation in the second quarter of 2015. In Brazil, construction of
the 25 megawatt Serra dos Cavalinhos I hydro project is proceeding to plan.
In addition to acquiring operating assets and portfolios, we are strategically expanding our development
pipeline with renewable projects acquired from other developers. We recently entered into an agreement
to acquire two advanced hydro development projects totaling 47 megawatts located on the Verde River in
the state of Mato Grosso do Sul, Brazil. These projects have all the permits necessary to begin
construction, which we anticipate will take place in 2015. Together with two other projects in our pipeline,
we have the potential to start construction on a total of 90 megawatts of new hydro capacity in Brazil in
2015.
Growth initiatives
We, along with our institutional partners, invested or committed more than $3 billion of capital in new
acquisitions in 2014. These included more than 800 megawatts of transformational acquisitions in Ireland
and Brazil. The purchase of a wind portfolio in Ireland in June 2014 was our first acquisition in Europe
and provides us with a strong foundation to build a scalable renewable energy business on the continent.
More recently, we entered into an agreement to acquire a 488 megawatt diversified portfolio in Brazil
which significantly expands our operating capacity in the country. The transaction is expected to close in
the first half of 2015 and will add two new technologies to our Latin American portfolio – wind and
biomass – with additional opportunities for future expansion.
In North America, we continued to pursue our growth strategy based on high-quality assets which also
provide an option on rising electricity prices. During the year, we acquired more than 500 megawatts of
hydroelectric capacity in the United States including the 417 megawatt Safe Harbor facility, the second-
largest privately held hydroelectric generating station in the country. These assets are situated in
northeastern markets where power prices are poised to increase from gradually improving economic
fundamentals, the significant retirement of coal facilities, and strong renewable portfolio standards.
Today, approximately 50% of our portfolio is situated in the United States, where we see considerable
opportunity for continued growth.
A strong outlook
In North America, current energy prices remain well below sustainable long-term levels, while in Brazil,
years of under-investment have contributed to very tight power market conditions and the growing
realization that new supply is required to meet current and future needs. The investment opportunity in
Europe remains compelling as exemplified by the recent increase to EU long-term objectives targeting a
40% CO2 reduction and 27% of renewables content by 2030. We are actively pursuing growth
opportunities in a number of markets in western Europe which could provide meaningful expansion and
diversification to our newest platform.
We raised $3.5 billion in capital during 2014 to fund growth, refinance existing maturities and optimize our
capital structure. Our liquidity at year-end stood at $1.0 billion and our ability to maintain strong
capitalization and funding platforms continues to play an integral role in our success.
We are well positioned to create meaningful shareholder value in the coming years and believe that our
scale will allow us to allocate capital across our key markets opportunistically. Our integrated operations
will allow us to surface value in multiple technologies by efficiently integrating new assets, building our
development pipeline, growing our cash flow margins and continuously enhancing the operating
characteristics of the portfolio. The core business is highly stable with long-life, predominantly contracted
assets, while a prudent portion of our revenues are positioned to benefit from rising prices over time and
the potential to add meaningful accretion on a per share basis.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 2
We have a long and successful track record of executing our strategy and this has allowed us to steadily
grow our distributions. In light of our 2014 achievements and strong cash flow profile, we are announcing
an increase in our annualized distribution to $1.66 per unit, representing a 7% increase over 2014 and
consistent with our distribution growth target of 5-9% per year.
On a final note, I would like to express my sincere appreciation to our employees, directors, shareholders
and business partners for your contributions to our success. We are looking forward to the opportunities
that 2015 will bring and thank you for your continued support.
Sincerely,
Richard Legault
Chief Executive Officer
February 6, 2015
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 3
OUR COMPETITIVE STRENGTHS
Brookfield Renewable Energy Partners L.P. ("Brookfield Renewable") is the owner and operator
of a diversified portfolio of high quality assets that produce electricity from renewable resources.
Our business model is to utilize our global reach to identify and acquire high quality renewable
power generating assets at favorable valuations, finance them on a long-term, low-risk basis, and
enhance the cash flows and values of these assets using our experienced operating teams to earn
reliable, attractive, long-term total returns for the benefit of our shareholders.
One of the largest, listed pure-play renewable platforms. We own one of the world’s largest,
publicly-traded, pure-play renewable power portfolios with approximately $20 billion in assets, 6,707 MW
of installed capacity, and long-term average generation from operating assets of 23,742 GWh. Our
portfolio includes 204 hydroelectric generating stations on 72 river systems and 28 wind facilities,
diversified across 13 power markets in the United States, Canada, Brazil and Europe.
Generation by Technology
Generation by Market
Focus on attractive hydroelectric asset class. Our assets are predominantly hydroelectric and
represent one of the longest life, lowest-cost and most environmentally-preferred forms of power
generation. Our North American assets have the ability to store water in reservoirs approximating 29% of
their annualized long-term average generation. Our assets in Brazil benefit from a framework in that
country that levelizes generation risk across hydroelectric producers. The ability to store water in
reservoirs in North America and to benefit from levelized generation in Brazil provides partial protection
against short-term changes in water supply. As a result of our scale and the quality of our assets, we are
competitively positioned compared to other listed renewable power platforms, providing significant
scarcity value to investors.
Well positioned for global growth mandate. We have strong organic growth potential with an
approximate 2,000 MW development pipeline spread across all of our operating jurisdictions, combined
with the ability to capture operating efficiencies and the value of rising power prices for the market-based
portion of our portfolio. Our organic growth is complemented by our strong acquisition ability. Over the
last ten years, we have acquired or commissioned approximately 80 hydroelectric assets totaling
approximately 2,600 MW and 28 wind assets totaling 1,270 MW. For the year ended December 31, 2014,
we acquired or commissioned hydroelectric assets and wind assets that have an installed capacity of 547
MW and 326 MW, respectively. Our ability to develop and acquire assets is strengthened by our
established operating and project development teams, strategic relationship with Brookfield Asset
Management, and our strong liquidity and capitalization profile. We have, in the past, and may continue in
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 4
the future to pursue the acquisition or development of assets through arrangements with institutional
investors in Brookfield Asset Management sponsored or co-sponsored partnerships.
Attractive distribution profile. We pursue a strategy which we expect will provide for highly
stable, predictable cash flows sourced from predominantly long-life hydroelectric assets ensuring an
attractive distribution yield. We target a distribution payout ratio in the range of approximately 60% to 70%
of Funds From Operations and, in the third quarter of 2014, announced an increase in our long-term
distribution growth rate target to a range of 5% to 9% annually.
Stable, high quality cash flows with attractive long-term value for limited partnership
unitholders. We intend to maintain a highly stable, predictable cash flow profile sourced from a
diversified portfolio of low operating cost, long-life hydroelectric and wind assets that sell electricity under
long-term, fixed price contracts with creditworthy counterparties. Approximately 85% of our 2015
generation output is sold pursuant to power purchase agreements to public power authorities, load-
serving utilities, industrial users or to affiliates of Brookfield Asset Management. The power purchase
agreements for our assets have a weighted-average remaining duration of 18 years, providing long-term
cash flow stability.
Strong financial profile. With approximately $20 billion of assets and a conservative leverage
profile, our consolidated debt-to-capitalization is 40%. Our liquidity position remains strong with
approximately $1.0 billion of cash and available portions of credit facilities. Approximately 78% of our
borrowings are non-recourse to Brookfield Renewable. Corporate borrowings and subsidiary borrowings
have weighted-average terms of approximately seven and ten years, respectively.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 5
Management’s Discussion and Analysis
For the year ended December 31, 2014
HIGHLIGHTS FOR 2014
Operating Results
Total generation from the portfolio was 22,548 GWh compared to the long-term average of 23,296 GWh
and to 22,222 GWh from the prior year. Revenues were $1,704 million, compared to $1,706 million in the
prior year. Net income was $203 million, compared to $215 million in the prior year.
Existing Facilities
• The U.S. and Canadian hydroelectric portfolios, collectively, produced generation 129 GWh
above the long-term average but 696 GWh lower than the prior year in which hydrology
conditions were particularly strong. The return to more normal hydrology levels in North America
is an important component of the year-over-year variance. We successfully managed our assets,
with no material unplanned outages, through a very cold winter and a late spring melt with several
high flow events
• The Brazilian hydroelectric portfolio generated 8% lower than assured levels with the impact of
the drought-like conditions partially reduced by participation in the balancing pool. Optionality in
the portfolio allowed us to benefit from the strong power pricing environment. We secured three to
five year contracts for 567 GWh at prices ranging from R$190 – R$270 per MWh, significantly
above existing contracts expiring in the near term
• The wind portfolio maintained high availability throughout the year, but experienced lower wind
conditions. Generation was 345 GWh and 35 GWh below the long-term average and lower than
the prior year, respectively
Asset Growth
• Generation of 1,712 GWh from the hydroelectric and wind facilities acquired or commissioned
during the year resulted in revenues of $112 million, including the contribution from two
substantially completed development projects in Ireland
• Full year’s contribution from hydroelectric and wind facilities acquired during 2013 resulted in
incremental generation of 248 GWh and revenues of $39 million
• Benefited from the merchant profile on some of our recently acquired assets to capture high
energy and capacity pricing
Adjusted EBITDA was $1,216 million compared to $1,208 million from the prior year. Funds From
Operations was $560 million compared to $594 million from the prior year.
Growth and Development
A total of 828 MW of renewable generation was acquired and 45 MW was commissioned in 2014. An
additional 125 MW of wind development projects were substantially completed and 37 MW of
construction commenced on two other development projects.
Business Combinations
The following acquisitions were completed with our institutional partners:
• 417 MW hydroelectric facility in Pennsylvania expected to generate 1,129 GWh annually
• 326 MW Irish wind portfolio expected to generate 837 GWh annually
• 70 MW hydroelectric portfolio in Maine expected to generate 372 GWh annually
• Remaining 50% interest in a 30 MW hydroelectric facility in California expected to generate 80
GWh annually
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 6
Brookfield Renewable retains a 40% interest in the Pennsylvania, Irish, and Maine facilities, and a 22%
interest in the California facility.
Entered into an agreement to acquire a 488 MW portfolio in Brazil comprising hydroelectric, wind, and
biomass generating capacity. The portfolio is expected to generate 2,100 GWh annually. The transaction
is expected to close in the first half of 2015, subject to regulatory approvals and closing conditions. We
also entered into an agreement to acquire two advanced hydroelectric development projects totaling 47
MW in Brazil which, once fully commissioned, are expected to generate 280 GWh annually. In February
2015, this transaction was completed. Brookfield Renewable will retain an approximate 40% interest.
Development Projects
The following development projects were commissioned, substantially completed or commenced:
• Commissioned a 45 MW hydroelectric facility in British Columbia which is expected to generate
138 GWh annually.
• Substantially completed construction on two Irish wind facilities totaling 125 MW. The facilities
generated 125 GWh in 2014 and received payments under power purchase agreements. These
facilities, which are expected to generate 349 GWh annually, were fully commissioned in Q1
2015.
• Commenced construction on a 12 MW Irish wind facility expected to generate 33 GWh annually.
The facility is expected to be fully commissioned in mid-2015.
• Commenced construction on a 25 MW Brazilian hydroelectric facility expected to generate 119
GWh annually. The facility is expected to be fully commissioned in 2017.
Liquidity and Capital Resources
Our liquidity remains strong at $1.0 billion. We successfully raised $3.5 billion in debt and equity during
the year to fund growth and refinance existing maturities to enhance our capital structure and access to
liquidity:
• Completed a bought deal limited partnership unit (“LP Unit”) offering of 10.25 million LP Units at a
price of C$31.70 per LP Unit for gross proceeds of C$325 million ($297 million)
•
In connection with the Irish wind portfolio, we secured a €160 million ($210 million) term loan for
153 MW of our facilities with an initial fixed rate of 2.9%, and secured a €188 million ($227
million) construction and term loan for 137 MW of our development projects. An initial amount of
€168 million ($203 million) was drawn on the loan at a rate of 2.82%. The rates on these loans
include the related interest rate swaps, and mature in December 2026 and December 2027,
respectively
• Refinanced the $279 million bridge loan associated with a 360 MW hydroelectric portfolio in New
England at LIBOR plus 2.25% and maturing in July 2017
• Secured a $560 million term loan associated with the acquisition of the 417 MW hydroelectric
facility in Pennsylvania, at an initial interest rate of LIBOR plus 1.75% and maturing in June 2018
•
Issued a $140 million bond associated with the acquisition of the 70 MW hydroelectric portfolio in
Maine, at a 5.5% interest rate and maturing in February 2024
• Secured an 18-month extension on the $250 million term loan associated with a hydroelectric
portfolio in Tennessee and North Carolina, at a fixed interest rate of 3.20%, including the related
interest rate swaps, and maturing in May 2016
• Raised C$150 ($136 million) million through up-financing the indebtedness associated with a 349
MW hydroelectric portfolio in Ontario with a bond issuance, in two tranches with interest rates of
3.8% and 5.0%, and maturing in June 2023
• Refinanced the $125 million debt facility associated with a 167 MW hydroelectric portfolio in New
England, at a fixed rate of 4.59% and maturing in January 2022
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 7
• Extended the maturity for $1,280 million in corporate revolving credit facilities to June 2019,
reduced the margin by five basis points, and added an option to borrow in Euro (€) and British
Pound Sterling (£)
In February 2014, we increased LP Unitholder distributions to $1.55 per LP Unit on an annualized basis,
an increase of ten cents per LP Unit. In December 2014, we announced our intention to commence a
normal course issuer bid, which will permit us to repurchase up to 7.1 million of our issued and
outstanding LP Units.
In February 2015, we announced an increase in LP Unitholder distributions to $1.66 per LP Unit on an
annualized basis, an increase of 11 cents per LP Unit, to take effect with the first quarter distribution
payable in March 2015.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 8
HISTORICAL OPERATIONAL AND FINANCIAL INFORMATION
(MILLIONS, EXCEPT AS NOTED)
Operational information:(2)
Capacity (MW)
Long-term average generation (GWh)(3)
Actual generation (GWh)(3)
Average revenue ($ per MWh)
Selected financial information:
Revenues
Adjusted EBITDA(4)
Funds From Operations(4)
Adjusted Funds From Operations(4)
Net income (loss)
Distributions per LP Unit(5)
(MILLIONS, EXCEPT AS NOTED)
Balance sheet data:
Property, plant and equipment, at fair value
Equity-accounted investments
Total assets
For the years ended December 31
2011(1)
2013
2012
2014
2010(1)
6,707
23,296
22,548
77
5,849
21,836
22,222
77
5,304
18,202
15,942
82
4,536
16,297
15,877
74
4,309
15,887
14,480
72
$ 1,704 $ 1,706 $ 1,309
852
1,208
1,216
1,169 $ 1,045
751
804
560
502
203
1.55
594
538
215
1.45
347
295
(95)
1.38
332
284
(451)
0.34
As at December 31
269
221
294
-
2014
2013
2012
2011(1)
2010(1)
$ 18,566 $ 15,741 $ 15,702 $ 14,002 $ 12,260
269
13,882
344
16,943
290
16,999
273
19,849
405
15,713
Long-term debt and credit facilities
Deferred income tax liabilities
Total liabilities
7,678
2,637
10,968
6,623
2,265
9,463
6,119
2,349
9,135
5,519
2,367
8,529
4,994
2,424
8,709
Preferred equity
Participating non-controlling interests -
in operating subsidiaries
General partnership interest in a holding
subsidiary held by Brookfield
Participating non-controlling interests - in a
holding subsidiary - Redeemable
/Exchangeable units held by Brookfield
Limited partners' equity
Total equity
Debt to total capitalization(6)
728
796
500
2,062
1,303
1,028
59
54
63
241
629
64
252
206
34
2,865
3,167
8,881
40%
2,657
2,726
7,536
41%
3,070
3,147
7,808
38%
3,089
3,161
7,184
37%
1,643
1,683
5,173
40%
(1)
(2)
(3)
(4)
(5)
(6)
For periods prior to November 28, 2011, the date of completion of a strategic combination of the renewable power generating
assets of Brookfield Renewable Power Inc. and Brookfield Renewable Power Fund, the financial information for Brookfield
Renewable represents the combined financial information for the Brookfield Renewable Power Division, a division of
Brookfield Asset Management.
Includes 100% of capacity and generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date.
Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”, “Financial Review by Segments for
the Year Ended 2014”.
Represents distributions per unit to holders of Redeemable/Exchangeable partnership units, LP Units and GP interest.
Total capitalization is calculated as total debt plus deferred income tax liabilities, net of deferred income tax assets, and
equity.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 9
This Management’s Discussion and Analysis for the year ended December 31, 2014 is provided
as of February 27, 2015. Unless the context indicates or requires otherwise, the terms “Brookfield
Renewable”, “we”, “us”, and “our” mean Brookfield Renewable Energy Partners L.P. and its controlled
entities.
Brookfield Renewable’s financial statements are prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”), which require estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of the financial statements and the amounts
of revenue and expense during the reporting periods.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
Unless otherwise indicated, all dollar amounts are expressed in United States (“U.S.”) dollars.
The ultimate partner of Brookfield Renewable is Brookfield Asset Management Inc. (“Brookfield
Asset Management”). Brookfield Asset Management and its subsidiaries, other than Brookfield
Renewable, are also individually and collectively referred to as Brookfield in this Management’s
Discussion and Analysis.
Voting Agreements with Affiliates
Brookfield Renewable has entered into voting agreements with Brookfield, whereby Brookfield
Renewable gained control of the entities that own certain United States, Brazil and Europe renewable
power generating operations. The voting agreements provide Brookfield Renewable the authority to direct
the election of the Boards of Directors of the relevant entities, among other things, and therefore provide
Brookfield Renewable with control. Accordingly, Brookfield Renewable consolidates the accounts of these
entities.
The voting agreements do not represent business combinations in accordance with IFRS 3
Business Combinations (“IFRS 3”), as all combining businesses are ultimately controlled by Brookfield
Asset Management both before and after the transactions were completed. Brookfield Renewable
accounts for these transactions involving entities under common control in a manner similar to a pooling
of interest, which requires the presentation of pre-voting agreement financial information as if the
transactions had always been in place. Refer to Note 2(o)(ii) – Critical judgments in applying accounting
policies - Common control transactions in our audited consolidated financial statements for our policy on
accounting for transactions under common control.
PRESENTATION TO PUBLIC STAKEHOLDERS
Brookfield Renewable’s consolidated equity interests include the non-voting limited partnership
units ("LP Units") held by public unitholders, Redeemable/Exchangeable partnership units in Brookfield
Renewable Energy L.P. (“BRELP”), a holding subsidiary of Brookfield Renewable, held by Brookfield
(“Redeemable/Exchangeable partnership units”), and a general partnership interest in BRELP held by
Brookfield (“GP interest”). The LP Units and the Redeemable/Exchangeable partnership units have the
same economic attributes in all respects, except that the Redeemable/Exchangeable partnership units
provide Brookfield the right to request that their units be redeemed for cash consideration. In the event
that Brookfield exercises this right, Brookfield Renewable has the right, at its sole discretion, to satisfy the
redemption request with LP Units, rather than cash, on a one-for-one basis. Brookfield, as holder of
Redeemable/Exchangeable partnership units, participates in earnings and distributions on a per unit
basis equivalent to the per unit participation of the LP Units. As Brookfield Renewable, at its sole
discretion, has the right to settle the obligation with LP Units, the Redeemable/Exchangeable partnership
units are classified under equity, and not as a liability.
Given
the exchange
referenced above, we are presenting LP Units,
Redeemable/Exchangeable partnership units, and the GP interest as separate components of
consolidated equity. This presentation does not impact the total income (loss), per unit or share
information, or total consolidated equity.
feature
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 10
As at the date of this report, Brookfield owns an approximate 62% LP Unit interest, on a fully-
exchanged basis, and all general partnership interests in Brookfield Renewable, representing a 0.01%
interest, while the remaining approximately 38% is held by the public.
PERFORMANCE MEASUREMENT
We present our key financial metrics based on total results prior to distributions made to LP
Unitholders, the Redeemable/Exchangeable Unitholders and holders of the GP interest. In addition, our
operations are segmented by geography and asset type (i.e. hydroelectric and wind), as that is how
Brookfield Renewable’s President and Chief Executive Officer and Chief Financial Officer (collectively, the
chief operating decision maker, or “CODM”) review our results, manage operations and allocate
resources. Accordingly, we report our results in accordance with these segments. Refer to Note 24 –
Segmented information in our audited consolidated financial statements for further details.
One of our primary business objectives is to generate reliable and growing cash flows while
minimizing risk for the benefit of all stakeholders. We monitor our performance in this regard through four
key metrics — i) Net Income (loss), ii) Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (“Adjusted EBITDA”), iii) Funds From Operations, and iv) Adjusted Funds From Operations.
It is important to highlight that Adjusted EBITDA, Funds From Operations, and Adjusted Funds
From Operations do not have any standardized meaning prescribed by IFRS and therefore are unlikely to
be comparable to similar measures presented by other companies. We provide additional information on
how we determine Adjusted EBITDA, Funds From Operations, and Adjusted Funds From Operations, and
we provide reconciliations to net income (loss) and cash flows from operating activities. See “Financial
Review by Segments for the Year Ended December 31, 2014” and “Financial Review by Segments for
the Year Ended December 31, 2013”.
Net Income (Loss)
Net income (loss) is calculated in accordance with IFRS.
Adjusted EBITDA
Adjusted EBITDA means revenues less direct costs (including energy marketing costs), plus our
share of cash earnings from equity-accounted investments and other income, before interest, income
taxes, depreciation, management service costs and the cash portion of non-controlling interests.
Funds From Operations
Funds From Operations is defined as Adjusted EBITDA less interest, current income taxes and
management service costs, which is then adjusted for the cash portion of non-controlling interests. For
the year ended December 31, 2014, Funds From Operations include the earnings received from the wind
portfolio we acquired in Ireland, reflecting our economic interest from January 1, 2014 to June 30, 2014.
Our payout ratio is defined as distributions to Redeemable/Exchangeable partnership units, LP
Units and the GP interest, including general partnership incentive distributions, divided by Funds From
Operations.
Adjusted Funds From Operations
Adjusted Funds From Operations is defined as Funds From Operations less Brookfield
Renewable’s share of adjusted sustaining capital expenditures (based on long-term sustaining capital
expenditure plans).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 11
GENERATION AND FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2014
The following table reflects the actual and long-term average generation for the year ended
December 31:
Actual Generation(1)
2013
2014
LTA Generation(1)
Actual vs. LTA
Prior Year
2014
2013
2014
2013
Variance of Results
Actual vs.
GENERATION (GWh)
Hydroelectric generation
United States
10,293
10,082
10,785
Canada
Brazil
Wind energy
United States
Canada
Europe(2)
9,681
5,062
3,656
5,570
3,371
5,494
3,656
5,132
3,614
19,234
19,232
19,531
18,399
1,170
1,042
891
1,145
1,075
-
1,394
1,197
826
1,341
1,197
-
3,103
2,220
3,417
2,538
(492)
438
(243)
(297)
(224)
(155)
65
(314)
401
432
-
833
(196)
(122)
-
(318)
211
76
(285)
2
25
(33)
891
883
Other
Total(3)
326
(1) For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
23,296
22,548
22,222
21,836
(129)
(137)
(748)
(559)
211
348
770
899
386
commercial operation date.
(2) We completed the acquisition of the wind portfolio in Ireland on June 30, 2014. Pursuant to the terms of the purchase and sale
agreement, Brookfield Renewable acquired an economic interest in the wind portfolio from January 1, 2014. Accordingly,
generation from January 1, 2014 to June 30, 2014 was recorded in the second quarter of 2014.
Includes 100% of generation from equity-accounted investments.
(3)
We compare actual generation levels against the long-term average to highlight the impact of one
of the important factors that affect the variability of our business results. In the short-term, we recognize
that hydrology and wind conditions will vary from one period to the next; over time however, we expect
our facilities will continue to produce in line with their long-term averages, which have proven to be
reliable indicators of performance.
Our risk of a generation shortfall in Brazil continues to be minimized by participation in a
hydrological balancing pool administered by the government of Brazil. This program mitigates hydrology
risk by assuring that all participants receive, at any particular point in time, a balanced amount of
electricity, irrespective of the actual volume of energy generated. The program reallocates energy,
transferring surplus energy from those who generated an excess to those who generate less than their
assured energy, up to the total generation within the pool. Periodically, low precipitation across the entire
country’s system could result in a temporary reduction of generation available for sale. The last three
quarters of 2014 was such a period. During these periods, we expect that a higher proportion of thermal
generation would be needed to balance supply and demand in the country potentially leading to higher
overall spot market prices. In anticipation of lower hydrology, we maintained a lower level of contracted
generation, allowing us to capture the strong power prices.
Generation levels during the year ended December 31, 2014 totaled 22,548 GWh, compared to
the long-term average of 23,296 GWh, and an increase of 326 GWh as compared to the prior year.
The hydroelectric portfolio generated 19,234 GWh, below the long-term average of 19,531 GWh
and consistent with the prior year. Generation from existing facilities was 18,192 GWh, compared to
19,232 GWh for the prior year. The decrease in generation was primarily attributable to inflows at our
Tennessee and North Carolina facilities returning to more normal levels compared to the prior year, when
generation was above the long-term average. The impact on financial results was partly offset by the non-
controlling interests. Inflows were strong and generation levels were above long-term average across the
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 12
majority of the Canadian portfolio, consistent with the prior year. As at December 31, 2014, reservoir
levels in Canada and the United States were above average. In Brazil, our participation in the
hydrological balancing pool mitigated the impact of drought-like conditions and resulted in generation
being only 8% lower than assured levels. The recent growth in our portfolio resulted in incremental
generation of 821 GWh, and a full year’s contribution from facilities acquired in 2013 resulted in
incremental generation of 221 GWh.
The wind portfolio generated 3,103 GWh, below the long-term average of 3,417 GWh and an
increase of 883 GWh compared to the prior year. The increase is attributable to the recent growth in our
portfolio, which resulted in incremental generation of 891 GWh, and a full year’s contribution from facilities
acquired in 2013 which resulted in incremental generation of 27 GWh.
Our 110 MW natural gas-fired plant in Ontario had been operating on an uncontracted basis since
April 2014. Since then, the facility has had nominal generation as a result of low power prices relative to
gas market prices. The operations at this facility have temporarily been suspended but remain available
to be restarted should economic conditions allow.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 13
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net income for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Revenues
Other income
Share of cash earnings from equity-accounted investments
Direct operating costs
Adjusted EBITDA(1)
Fixed earnings adjustment(2)
Interest expense – borrowings
Management service costs
Current income taxes
Less: cash portion of non-controlling interests
Preferred equity
Participating non-controlling interests - in operating subsidiaries
Funds From Operations(1)
Less: adjusted sustaining capital expenditures(3)
Adjusted Funds From Operations(1)
Add: cash portion of non-controlling interests
Add: adjusted sustaining capital expenditures
Less: fixed earnings adjustment
Other items:
Depreciation
Unrealized financial instruments gain
Share of non-cash loss from equity-accounted investments
Deferred income tax recovery
Other
Net income
2014
1,704 $
10
26
(524)
1,216
11
(415)
(51)
(18)
(38)
(145)
560
(58)
502
183
58
(11)
(548)
10
(23)
29
3
203 $
2013
1,706
11
21
(530)
1,208
-
(410)
(41)
(19)
(37)
(107)
594
(56)
538
144
56
-
(535)
37
(12)
18
(31)
215
$
$
Basic and diluted earnings per LP Unit(4)
0.52
(1) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures” and “Financial Review by Segments
0.42 $
$
for the Year Ended December 31, 2014”.
(2) The fixed earnings adjustment relates to Brookfield Renewable’s investment in the acquisition of the wind portfolio in Ireland.
Pursuant to the terms of the purchase and sale agreement, Brookfield Renewable acquired an economic interest in the wind
portfolio from January 1, 2014. The transaction closed on June 30, 2014, and accordingly under IFRS, the $11 million net Funds
From Operations contribution was recorded as part of the purchase price.
(3) Based on long-term sustaining capital expenditure plans.
(4) Average LP Units outstanding during the period totaled 138.8 million (2013: 132.9 million).
Net income is one important measure of profitability, in particular because it has a standardized
meaning under IFRS. The presentation of net income on an IFRS basis for our business will often lead to
the recognition of a loss or a year-over-year decrease in income even though the underlying cash flow
generated by the assets is supported by strong margins and stable, long-term contracts. The primary
reason for this is that we recognize a significantly higher level of depreciation for our assets than we are
required to reinvest in the business as sustaining capital expenditures.
As a result, we also measure our financial results based on Adjusted EBITDA, Funds From
Operations, and Adjusted Funds From Operations to provide readers with an assessment of the operating
cash flow generated by our assets and the residual cash flow retained to fund distributions and growth
initiatives.
totaled $1,704 million which represented a year-over-year decrease of $2
million. Strong merchant pricing and annual escalations in our power purchase agreements partially
Revenues
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 14
offset lower year-over-year generation from existing U.S. hydroelectric facilities and a contractual
decrease in contract price at our Louisiana facility, the net negative impact of which was $46 million.
While total generation from our Canada hydroelectric portfolio was consistent with prior year,
stronger performance from facilities with higher relative contract prices contributed an incremental $9
million to our financial results.
In Brazil, revenues declined $14 million year-over-year as the impact of lower generation was
partially offset by our ability to capture strong merchant power pricing by keeping a portion of our output
uncontracted.
While contributions from our existing wind portfolio were consistent with prior year, revenue from
our natural gas-fired plant in Ontario decreased $40 million reflecting limited operations throughout 2014.
The recent growth in our hydroelectric and wind portfolios and a full year’s contribution from
facilities acquired or commissioned in 2013 resulted in incremental revenues of $151 million.
The average total revenue per MWh of $77 is consistent with the prior year.
Direct operating costs totaling $524 million represent a year-over-year decrease of $6 million
attributable to the savings achieved from the cost efficiencies at our operations and the reduction in
power purchased in the open market for our co-generation facilities. The recent growth in our portfolio
and a full year’s costs from facilities acquired or commissioned in 2013 resulted in an incremental $46
million.
Pursuant to the terms of the purchase and sale agreement, our acquisition of the Irish wind
portfolio provided us with the economic benefit as of January 1, 2014, despite the transaction closing on
June 30, 2014. Accordingly, we have included $11 million in Funds From Operations for the first six
months of the year.
Interest expense totaling $415 million represents a year-over-year increase of $5 million.
Incremental interest costs related to financing the growth in our portfolio were $31 million, and $5 million
was related to up-financing activities. Repayment of certain subsidiary borrowings and corporate credit
facilities resulted in a $17 million decrease in borrowing costs.
Management service costs totaling $51 million represent a year-over-year increase of $10 million
primarily attributable to the increase in the market value of our LP Units and the issuance of 10.25 million
LP Units in the second quarter of 2014.
The cash portion of non-controlling interests totaling $183 million represents a year-over-year
increase of $39 million. An increase of $60 million related to the growth in our portfolio and the partial sale
of hydroelectric facilities in New England to institutional investors in the third quarter of 2013, was partly
offset by the overall decrease in performance from certain existing assets in our U.S. hydroelectric
portfolio.
Funds From Operations totaling $560 million incorporates growth of $26 million and the net
impact of the appreciation of the U.S. dollar of $24 million.
Net income was $203 million for the year ended December 31, 2014 (2013: Net income $215
million) resulting in a net income per LP Unit of $0.42 (2013: $0.52).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 15
SEGMENTED DISCLOSURES
Segmented information is prepared on the same basis that Brookfield Renewable’s CODM
manages the business, evaluates financial results, and makes key operating decisions. See Note 24 -
Segmented information in our audited consolidated financial statements.
HYDROELECTRIC
The following table reflects the results of our hydroelectric operations for the year ended
December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(1)
(2)
United States
Canada
2014
10,785
10,293
719
520
283
$
$
$
$
5,132
5,570
394
328
256
$
$
2013
United States
Canada
9,681
10,082
$
$
677
494
274
$
$
5,062
5,494
399
330
266
$
$
Brazil
3,614
3,371
265
198
149
Brazil
3,656
3,656
301
221
169
$
$
$
$
Total
19,531
19,234
1,378
1,046
688
Total
18,399
19,232
1,377
1,045
709
Includes 100% of generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date.
Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”, and “Financial Review By
Segments For the Year Ended December 31, 2014”.
(3)
United States
Generation from the portfolio was 10,293 GWh for the year ended December 31, 2014, below the
long-term average of 10,785 GWh and above prior year generation of 10,082 GWh. Generation from
existing facilities decreased 704 GWh. Inflows returned to more normal levels at our facilities in
Tennessee, North Carolina and the eastern United States as compared to the prior year, which had
benefited from strong hydrological conditions and above long-term average generation. However, the
impact on results from this variance was reduced by the non-controlling interest in the Tennessee and
North Carolina facilities. Partly offsetting these decreases were the strong inflows at our New England
facilities. During the year we benefited from the merchant profile on our recently acquired facilities in New
England and Pennsylvania, and captured strong energy pricing. The recent growth in our portfolio and a
full period’s contribution from facilities acquired in 2013 resulted in incremental generation of 915 GWh.
Revenues totaling $719 million represent a year-over-year increase of $42 million. Revenues
were reduced by $54 million due to the decrease in generation from existing facilities, and a contractual
decrease in the price at our Louisiana facility. Favorable market prices at the uncontracted facilities in our
portfolio and the price escalators inherent in the power purchase agreements for certain of our facilities
contributed $8 million. The recent growth in our portfolio and a full period’s contribution from facilities
acquired in 2013 resulted in incremental revenues of $88 million.
Funds From Operations totaling $283 million incorporates growth of $6 million. The increase in
revenues from existing facilities and improved performance from our equity-accounted investments was
partly offset by the cash portion of non-controlling interests.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 16
Canada
Generation from the portfolio was 5,570 GWh for the year ended December 31, 2014, above the
long-term average of 5,132 GWh and slightly above the prior year generation of 5,494 GWh. We
experienced strong hydrological conditions, particularly at our facilities in Ontario. The facility in British
Columbia commissioned during the second quarter provided incremental generation of 68 GWh.
Revenues totaling $394 million represent a year-over-year decrease of $5 million. Stronger
performance from existing facilities with higher relative contract prices contributed an additional $9 million,
and the recently commissioned facility in British Columbia and a full period’s contribution from facilities
acquired in 2013 resulted in incremental revenues of $12 million.
Funds From Operations totaling $256 million represent a year-over-year decrease of $10 million.
The decrease in revenues and higher borrowing costs associated with up-financing initiatives were partly
offset by the cost efficiencies at our operations. The appreciation of the U.S. dollar impacted revenues by
$26 million, but also affected costs and other expenses resulting in a net decrease in Funds From
Operations of $17 million.
Brazil
Generation from the portfolio was 3,371 GWh for the year ended December 31, 2014 below prior
year generation of 3,656 GWh and the long-term average of 3,614 GWh. The decrease is primarily
attributable to the drought-like conditions experienced in the year; however, the impact was mitigated by
our participation in the hydrological balancing pool. The optionality maintained in the portfolio allowed us
to benefit from the strong power pricing environment and help offset the effects of the lower generation.
During the year we secured 3 – 5 year contracts for 567 GWh at prices ranging from R$190 – R$270 per
MWh, significantly above existing contracts expiring in the near term. A full period’s contribution from a
facility commissioned in 2013 provided an incremental 59 GWh of generation.
Revenues totaling $265 million represent a year-over-year decrease of $36 million. Strong power
pricing was offset by the effects of the lower volumes.
Funds From Operations totaling $149 million represent a year-over-year decrease of $20 million.
The appreciation of the U.S. dollar impacted revenues by $25 million, but also affected costs and other
expenses resulting in a net decrease in Funds From Operations of $14 million.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 17
WIND
The following table reflects the results of our wind operations for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
2014
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(1)
(2)
United States
Canada
Europe
1,394
1,170
129
90
17
$
$
$
$
1,197
1,042
123
108
70
$
$
2013
826
891
45
29
18
United States
Canada
Europe
1,341
1,145
125
85
21
$
$
1,197
1,075
133
113
69
$
$
$
$
N/A
N/A
N/A
N/A
N/A
$
$
$
$
Total
3,417
3,103
297
227
105
Total
2,538
2,220
258
198
90
Includes 100% of generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date.
Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”, and “Financial Review By
Segments For the Year Ended December 31, 2014”.
(3)
United States
Generation from the portfolio was 1,170 GWh for the year ended December 31, 2014, below the
long-term average of 1,394 GWh due to lower wind conditions across the portfolio, and consistent with
prior year generation of 1,145 GWh. A full period’s contribution from the facilities acquired in 2013
resulted in incremental generation of 27 GWh.
Revenues totaling $129 million represent a year-over-year increase of $4 million primarily
attributable to the full period’s contribution from the facilities acquired in 2013.
Funds From Operations totaling $17 million represent a year-over-year decrease of $4 million,
primarily attributable to the increase in non-controlling interests.
Canada
Generation from our Canadian wind portfolio was 1,042 GWh, below the long-term average of
1,197 GWh and prior year generation of 1,075 GWh, all attributable to lower wind conditions. Generation
at one of our facilities was curtailed, reducing generation by 29 GWh, for which we received
compensation at the power purchase agreement price.
Revenues totaling $123 million represent a year-over-year decrease of $10 million, primarily
attributable to the appreciation of the U.S. dollar.
Funds From Operations totaling $70 million was consistent year-over-year. The decrease in
revenues was offset by cost efficiencies at our operations.
Europe
Generation from our wind portfolio in Ireland was 891 GWh for the year ended December 31,
2014. We substantially completed construction on two Irish wind facilities totaling 125 MW. The facilities
generated 125 GWh in 2014 and received payments under power purchase agreements. These facilities,
which are expected to generate 349 GWh annually, were fully commissioned in Q1 2015.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 18
Revenues totaled $45 million for the year ended December 31, 2014 and included a $12 million
contribution from the two development projects.
Funds From Operations totaling $18 million includes an $11 million fixed earnings adjustment
amount for the period from January 1, 2014 to June 30, 2014.
GENERATION AND FINANCIAL REVIEW FOR THE YEAR ENDED DECEMBER 31, 2013
The following table reflects the actual and long-term generation for the year ended December 31:
GENERATION (GWh)
Hydroelectric generation
United States
Canada
Brazil(2)
Actual Generation(1)
2012
2013
LTA Generation(1)
Actual vs. LTA
2013
2012
2013
2012
Actual vs.
Prior Year
Variance of Results
10,082
5,494
3,656
19,232
5,913
3,953
3,470
13,336
9,681
5,062
3,656
18,399
7,205
4,972
3,470
15,647
401
432
-
833
(1,292)
(1,019)
-
(2,311)
4,169
1,541
186
5,896
Wind energy
United States
Canada
1,145
1,075
2,220
770
22,222
526
1,341
(15)
1,197
511
2,538
(127)
899
6,280
21,836
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date.
In Brazil, assured generation levels are used as a proxy for long-term average.
Includes 100% of generation from equity-accounted investments.
619
1,090
1,709
897
15,942
837
1,197
2,034
521
18,202
(218)
(107)
(325)
376
(2,260)
(196)
(122)
(318)
(129)
386
Other
Total generation(3)
(1)
(2)
(3)
Generation levels during the year ended December 31, 2013 totaled 22,222 GWh, an increase of
6,280 GWh as compared to the same period of the prior year. The increase is attributable to favorable
hydrology and wind conditions when compared to the prior year, the contribution of assets acquired or
commissioned during the year in both our hydroelectric and wind portfolios, and a full year of generation
from wind facilities acquired or commissioned in 2012.
Generation from the hydroelectric portfolio totaled 19,232 GWh, and above the long-term average
of 18,399 GWh and an increase of 5,896 GWh as compared to the prior year. Generation from existing
hydroelectric assets was 15,934 GWh compared to 13,336 GWh in the prior year, as generation returned
to more normal levels relative to the dry conditions in the prior year. In addition, recent acquisitions and
assets reaching commercial operations increased generation by 3,298 GWh.
Generation from the wind portfolio totaled 2,220 GWh, below the long-term average of 2,538
GWh and an increase of 511 GWh as compared to the prior year. The increase from prior year was
primarily due to additional generation of 321 GWh from facilities acquired in California, and more
favorable wind conditions as compared to the prior year. The prior year results do not reflect a full year of
operations for assets acquired or commissioned.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 19
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net income (loss) for the year ended December 31:
(MILLIONS, EXCEPT AS NOTED)
Revenues
Other income
Share of cash earnings from equity-accounted investments
Direct operating costs
Adjusted EBITDA(1)
Interest expense – borrowings
Management service costs
Current income taxes
Less: cash portion of non-controlling interests
Preferred equity
Participating non-controlling interests - in operating subsidiaries
Funds From Operations(1)
Less: adjusted sustaining capital expenditures(2)
Adjusted Funds From Operations(1)
Add: cash portion of non-controlling interests
Add: adjusted sustaining capital expenditures
Other items:
Depreciation(3)
Unrealized financial instrument gain (loss)
Share of non-cash loss from equity-accounted investments
Deferred income tax recovery
Other
Net income (loss)
2013
2012
$ 1,706 $ 1,309
16
13
(486)
852
(411)
(36)
(14)
11
21
(530)
1,208
(410)
(41)
(19)
(37)
(107)
594
(56)
538
144
56
(535)
37
(12)
18
(31)
215 $
$
(16)
(28)
347
(52)
295
44
52
(483)
(23)
(18)
54
(16)
(95)
Basic and diluted earnings (loss) per LP Unit(4)
(1)
(0.26)
Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures” and “Financial Review by
Segments for the Year Ended December 31, 2013”.
Based on long-term sustaining capital expenditure plans.
See Note 2(f) - Change in accounting estimates in our audited consolidated financial statements concerning changes in
estimates related to depreciation expense.
Average LP Units outstanding during the period totaled 132.9 million (2012: 132.9 million).
0.52 $
(2)
(3)
(4)
$
Revenues totaled $1,706 million for the year ended December 31, 2013, representing a year-
over-year increase of $397 million. Approximately $209 million of the increase was attributable to the
return to long-term average generation levels at existing hydroelectric facilities, while contributions from
facilities acquired or commissioned during the year, and full year of contribution from assets acquired in
2012 amount to approximately $218 million. The increase in revenues was partially offset by the
appreciation of the U.S. dollar as compared to the Brazilian real and the Canadian dollar.
Direct operating costs totaled $530 million for the year ended December 31, 2013, representing a
year-over-year increase of $44 million. Of this amount, $62 million was attributable to recently acquired
facilities, and the balance from lower costs with the appreciation of the U.S. dollar relative to the Brazilian
real.
Interest expense totaled $410 million for the year ended December 31, 2013, which was
consistent year-over-year. Lower borrowing costs attributable to the savings provided by the repayment
and refinancing activities, and to changes in foreign exchange rates in the year, were offset by borrowing
costs associated with the financing related to the growth in our portfolio. With the growth in the portfolio of
renewable energy assets, we increased long-term debt by $504 million. We also repaid higher cost
borrowings and refinanced certain subsidiary borrowings. Our weighted average annualized interest rate
on subsidiary borrowings decreased from 6.4% in 2012 to 6.0% in 2013.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 20
Management service costs reflect a base fee of $20 million annually plus 1.25% of the growth in
total capitalization value. Management services costs totaled $41 million for the year ended December
31, 2013, which was $5 million higher than the same period in the prior year. The increase is primarily
attributable to an increase in the average fair market value of the LP Units, and the issuance of preferred
equity, on an accretive basis.
The cash portion of non-controlling interests for the year ended December 31, 2013 was $144
million as compared to $44 million in the prior year. An increase in operating results from existing facilities
and contributions from recently acquired facilities amounted to $79 million. The completion of two
separate issuances of Class A Preference Shares during the year increased distributions to preferred
shareholders by $21 million.
Funds From Operations totaled $594 million for the year ended December 31, 2013, an increase
of $247 million year-over-year.
Depreciation expense for the year ended December 31, 2013 increased by $72 million due to
recently acquired assets, which was partly offset by a $15 million decrease in depreciation due to the
impact of changes made in the prior year to the estimated service lives of certain assets.
Net income was $215 million for the year ended December 31, 2013 (2012: Net loss $95 million).
SEGMENTED DISCLOSURES
HYDROELECTRIC
The following table reflects the results of our hydroelectric operations for the year ended
December 31:
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(1)
(2)
United States
9,681
10,082
677
494
274
$
$
United States
7,205
5,913
438
294
148
$
$
$
$
$
$
2013
Canada
5,062
5,494
399
330
266
$
$
2012
Canada
4,972
3,953
272
213
148
$
$
Brazil
3,656
3,656
301
221
169
Brazil
3,470
3,470
340
236
151
$
$
$
$
Total
18,399
19,232
1,377
1,045
709
Total
15,647
13,336
1,050
743
447
Includes 100% generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date.
Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures” and “Financial Review by
Segments for the Year ended December 31, 2013”.
(3)
United States
Generation from the portfolio was 10,082 GWh for the year ended December 31, 2013 compared
to the long-term average of 9,681 GWh and prior year generation of 5,913 GWh. The increase from prior
year was driven by an additional 3,093 GWh from the recently acquired assets in Tennessee, North
Carolina and Maine, and an increase in generation from existing assets. In the prior year, dry conditions
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 21
in New York State and in the mid-western United States resulted in generation levels below long-term
average.
Revenues totaled $677 million for the year ended December 31, 2013 representing a year-over-
year increase of $239 million. Of this amount, $147 million was attributable to generation from recently
acquired facilities, while $92 million was attributable to higher generation levels at existing facilities.
Funds From Operations totaled $274 million for the year ended December 31, 2013, an increase
of $126 million resulting primarily from the increase in revenues from higher generation and the
contribution from recently acquired assets. The increase was partially offset by higher direct operating
costs and interest expense associated with the new facilities, and an increase in the cash portion of non-
controlling interests.
Canada
Generation from the portfolio was 5,494 GWh for the year ended December 31, 2013 compared
to the long-term average of 5,062 GWh and to prior year generation of 3,953 GWh. Generation returned
to long-term average, with strong inflows at our eastern Canadian assets.
Revenues totaled $399 million for the year ended December 31, 2013, representing an increase
of $127 million, which was primarily attributable to the increase in generation levels.
Funds From Operations totaled $266 million for the year ended December 31, 2013, representing
an increase of $118 million.
Brazil
Generation from the portfolio was 3,656 GWh for the year ended December 31, 2013 compared
to the prior year generation of 3,470 GWh. The increase in generation is primarily attributable to a facility
commissioned during the year, and a full year’s contribution from one facility acquired and one facility
commissioned in the second half of 2012.
Revenues totaled $301 million for the year ended December 31, 2013, representing a year-over-
year decrease of $39 million. Revenues declined with the appreciation of the U.S. dollar compared to the
Brazilian real by $36 million. In addition, revenues were higher by $12 million due to generation from
facilities integrated within the last year and lower by $15 million due to lower allocated energy volumes.
Funds From Operations totaled $169 million for the year ended December 31, 2013 representing
a year-over-year increase of $18 million. Funds From Operations benefited from the repayment of higher-
yielding subsidiary borrowings in the prior year and resulted in a $37 million decrease in interest expense.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 22
WIND
The following table reflects the results of our wind operations for the year ended December 31:
(MILLIONS, EXCEPT FOR AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(MILLIONS, EXCEPT FOR AS NOTED)
Generation (GWh) – LTA(1)(2)
Generation (GWh) – actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
(1)
(2)
2013
United States
Canada
1,341
1,145
125
85
21
$
$
1,197
1,075
133
113
69
2012
$
$
United States
Canada
837
619
58
31
2
$
$
1,197
1,090
131
113
69
$
$
Total
2,538
2,220
258
198
90
Total
2,034
1,709
189
144
71
$
$
$
$
Includes 100% generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
commercial operation date.
(3) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures” and “Financial Review by Segments
for the Year ended December 31, 2013”.
United States
Generation from the portfolio was 1,145 GWh for the year ended December 31, 2013, and lower
than the long-term average of 1,341 GWh and higher than the prior year generation of 619 GWh. The
increase in generation from prior year is attributable to 321 GWh from facilities acquired in California
during the year, a full year of generation from four facilities acquired or commissioned in 2012, and
stronger wind conditions at existing facilities.
Revenues totaled $125 million for the year ended December 31, 2013, representing a year-over-
year increase of $67 million. Of this amount, $34 million was attributable to generation from the assets
acquired in California during the year. In addition, revenues benefited from a full year of contribution from
assets acquired or commissioned in 2012, and from stronger wind conditions.
Funds From Operations totaled $21 million for the year ended December 31, 2013 compared to
$2 million in the prior year.
Canada
Generation from the portfolio was 1,075 GWh for the year ended December 31, 2013,
substantially unchanged from the prior year, and below the long-term average of 1,197 GWh due to wind
conditions.
Revenues and Funds From Operations totaled $133 million and $69 million, respectively, for the
year ended December 31, 2013.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 23
ANALYSIS OF CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION
PROPERTY, PLANT AND EQUIPMENT
In accordance with IFRS, Brookfield Renewable has elected to revalue its property, plant and
equipment at a minimum on an annual basis, as at December 31st of each year. Substantially all of
Brookfield Renewable’s property, plant and equipment, are carried at fair value as opposed to historical
cost, using a 20-year discounted cash flow model. This model incorporates future cash flows from long-
term power purchase agreements that are in place where it is determined that the power purchase
agreements are linked specifically to the related power generating assets. The model also includes
estimates of future electricity prices, anticipated long-term average generation, estimated operating and
capital expenditures, and assumptions about future inflation rates and discount rates by geographical
location. For power generating assets acquired through business combinations during the year,
Brookfield Renewable initially measures the assets at fair value consistent with the policy described in
Note 2(l) – Business combinations in our audited consolidated financial statements. Accordingly, in the
year of acquisition, power generating assets are not revalued at year-end unless there is an indication
that assets are impaired.
Property, plant and equipment, at fair value totaled $18.6 billion as at December 31, 2014 as
compared to $15.7 billion as at December 31, 2013. During the year ended December 31, 2014, the
acquisition of 502 MW of hydroelectric facilities and a 326 MW wind portfolio totaling $2.4 billion were not
revalued at year-end. The development and construction of power generating assets totaled $214 million.
The revaluation of property, plant and equipment resulted in an increase in fair value of $1.7 billion.
Property, plant and equipment were impacted by foreign currency changes related to the appreciation of
the U.S. dollar in the amount of $910 million. We also recognized depreciation expense of $548 million
which is significantly higher than what we are required to reinvest in the business as sustaining capital
expenditures.
Fair value of property, plant and equipment can vary with discount and terminal capitalization
rates. Excluding power generating assets acquired during the year ended December 31, 2014, the
following table summarizes the impact of a change in discount rates and terminal capitalization rates on
the fair value of property, plant and equipment as at December 31:
(BILLIONS)
50 bps increase in discount rates
50 bps decrease in discount rates
50 bps increase in terminal capitalization rate(1)
50 bps decrease in terminal capitalization rate(1)
( 1 )
0.4
The terminal capitalization rate applies only to hydroelectric assets in the United States and Canada.
$
$
2014
(1.3)
1.5
(0.3)
2013
(1.1)
1.3
(0.3)
0.3
Terminal values are included in the valuation of hydroelectric assets in the United States and
Canada. For the hydroelectric assets in Brazil, cash flows have been included based on the duration of
the authorization or useful life of a concession asset without consideration of potential renewal value. The
weighted-average remaining duration at December 31, 2014, was 15 years (2013: 16 years).
Consequently, there is no terminal value attributed to the hydroelectric assets in Brazil. If an additional 20
years of cash flows were included, the fair value of property, plant and equipment would increase by
approximately $1 billion. See Note 11 - Property, plant and equipment, at fair value in our audited
consolidated financial statements.
A 5% change in the estimates of future electricity prices would increase or decrease the fair value
of property, plant and equipment by approximately $500 million.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from
renewable sources to meet future demand growth by the year 2020. A one year change would increase
or decrease the fair value of property, plant and equipment by approximately $225 million.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 24
LIQUIDITY AND CAPITAL RESOURCES
A key element of our financing strategy is to raise the majority of our debt in the form of asset-
specific, non-recourse borrowings at our subsidiaries on an investment grade basis. As at December 31,
2014, long-term indebtedness increased from December 31, 2013 as a result of the portfolio growth. The
debt to capitalization ratio decreased marginally from December 31, 2013 and was 40% as at December
31, 2014.
Capitalization
The following table summarizes the capitalization using book values as at December 31:
(MILLIONS, EXCEPT AS NOTED)
Credit facilities(1)
Corporate borrowings(1)
Subsidiary borrowings(2)
Long-term indebtedness
Deferred income tax liabilities, net of deferred income tax assets
Equity
Total capitalization
$
2014
401
$
1,286
5,991
7,678
2,495
8,881
$
19,054
$
40%
2013
311
1,406
4,906
6,623
2,148
7,536
16,307
41%
Debt to total capitalization
(1)
(2)
Issued by a subsidiary of Brookfield Renewable and guaranteed by Brookfield Renewable. The amounts are unsecured.
Issued by subsidiaries of Brookfield Renewable and secured against their respective assets. The amounts are not
guaranteed.
•
•
•
•
•
•
•
•
During the year ended December 31, 2014 we completed the following financings:
In January 2014, the $279 million bridge loan associated with a 360 MW hydroelectric portfolio
located in New England was refinanced to July 2017 at LIBOR plus 2.25%.
In February 2014, as part of the acquisition of the 70 MW hydroelectric portfolio in New England,
$140 million of financing was obtained through a bond issuance with a 5.5% interest rate
maturing in February 2024.
In March 2014, we up-financed indebtedness associated with a 349 MW Ontario hydroelectric
portfolio through the issuance of C$90 million of senior and C$60 million of subordinate bonds
with interest rates of 3.8% and 5.0%, respectively, maturing in June 2023.
In June 2014, we refinanced a $125 million debt facility associated with a 167 MW hydroelectric
portfolio in New England through the issuance of 8-year notes maturing in January 2022 at a
fixed rate of 4.59%.
In June 2014, as part of the acquisition of the 326 MW Irish wind portfolio, we assumed a €169
million ($232 million) loan with a fixed interest rate of 4.6%, including the related interest rate
swaps, maturing in December 2026.
In August 2014, we extended the maturity for $1,280 million in corporate credit facilities to June
2019 and reduced the applicable margin from 1.25% to 1.20%. The credit facilities now also
provide us with an option to borrow in Euro (€) and British Pound Sterling (£).
In August 2014, we secured a €160 million ($210 million) term loan for 153 MW of our wind
facilities in Ireland with an initial fixed rate of 2.9%, including the related interest rate swaps,
maturing in December 2026.
In October 2014, we secured a $560 million term loan associated with a 417 MW hydroelectric
facility in Pennsylvania. A portion of the proceeds was used to prepay the high-yielding $65
million bond initially assumed in connection with the acquisition of the facility. The debt bears
interest at LIBOR plus 1.75%, with the margin increasing 25 basis points annually, and matures in
June 2018.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 25
•
•
In November 2014, we secured an 18-month extension on a $250 million term loan associated
with a hydroelectric portfolio in Tennessee and North Carolina with a fixed interest rate of 3.20%,
including the related interest rate swaps, and maturing in May 2016.
In December 2014, we secured a €188 million ($227 million) construction and term loan for 137
MW of our development projects in Ireland. An amount of €168 million ($203 million) was initially
drawn on the loan at a rate of 2.82%, including the related interest rate swaps, maturing in
December 2027.
On June 10, 2014, we completed a bought deal LP Unit offering of 10.25 million LP Units at a
price of C$31.70 per LP Unit for gross proceeds of C$325 million ($297 million). The net proceeds were
used to repay outstanding indebtedness and for general corporate purposes.
Available liquidity
We operate with sufficient liquidity to enable us to fund growth initiatives, capital expenditures,
distributions, withstand sudden adverse changes in economic circumstances or short-term fluctuations in
generation, and to finance the business on an investment grade basis. Principal sources of liquidity are
cash flows from operations and access to public and private capital markets.
The following table summarizes the available liquidity as at December 31:
(MILLIONS)
Cash and cash equivalents
Credit facilities
Authorized credit facilities
Draws on credit facilities(1)
Issued letters of credit
Available portion of credit facilities
Available liquidity
(1)
$
2014
150 $
1,480
(401)
(227)
852
$
1,002 $
2013
203
1,480
(311)
(212)
957
1,160
Amounts are unsecured and revolving. Interest rate is at the LIBOR plus 1.20% (December 31, 2013: 1.25%).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 26
Long-term debt and credit facilities
The following table summarizes our principal repayment obligations and maturities as at December 31,
2014:
(MILLIONS)
Principal repayments
Subsidiary borrowings(1)
United States
Canada
Brazil
Europe
Corporate borrowings and
credit facilities(1)
Equity-accounted investments
Interest payable(2)
Subsidiary borrowings
United States
Canada
Brazil
Europe
Corporate borrowings and
credit facilities
Equity-accounted investments
2015
2016
2017
2018
2019 Thereafter
Total
$ 147 $ 347 $ 784 $ 777 $
67 $ 1,346 $ 3,468
53
23
33
135
22
36
49
21
40
54
20
41
52
19
44
1,455
1,798
84
400
189
594
256
540
894
892
182
3,285
6,049
-
30
258
-
-
125
172
-
401
-
861
1,692
-
155
286
798
1,019
1,064
583
4,146
7,896
182
101
13
21
177
173
125
99
11
19
92
10
19
89
8
19
97
85
7
17
626
556
22
75
1,380
1,022
71
170
317
306
294
241
206
1,279
2,643
75
5
75
5
397
386
59
2
355
59
-
300
47
-
189
-
504
12
253
1,468
3,159
(1)
(2)
$ 683 $ 1,184 $ 1,374 $ 1,364 $ 836 $ 5,614 $ 11,055
Subsidiary borrowings and corporate borrowings and credit facilities include $8 million and $71 million of unamortized
premiums and deferred financing fees, respectively.
Represents aggregate interest payable expected to be paid over the entire term of the obligations, if held to maturity. Variable
rate interest payments have been calculated based on estimated interest rates.
We remain focused on refinancing near term facilities on acceptable terms and maintaining a
manageable maturity ladder. We do not anticipate material issues in addressing our borrowings through
2019 on acceptable terms and will do so opportunistically based on the prevailing interest rate
environment.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 27
The overall maturity profile and average interest rates associated with our borrowings and credit
facilities as at December 31 are as follows:
Corporate borrowings
Subsidiary borrowings
Credit facilities
Average term (years) Average interest rate (%)
2014
6.7
10.4
4.5
2013
7.7
11.8
3.8
2014
5.3
5.3
1.4
2013
5.3
6.0
1.4
Our Series 3 corporate medium-term notes advanced one year toward their maturity in 2016.
During the year ended December 31, 2014, we continued to capitalize on the low interest rate
environment and reduced our borrowing costs on subsidiary borrowings from 6.0% to 5.3%. The average
term and interest rate of our subsidiary borrowings decreased during the year primarily due to securing
the $560 million term loan on the 417 MW facility in Pennsylvania. Also during the year, we extended the
maturity date for $1,280 million of our credit facilities to June 30, 2019.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 28
CONTRACT PROFILE
We have a largely predictable profile driven by both long-term power purchase agreements with a
weighted-average remaining duration of 18 years combined with a well-diversified portfolio that reduces
variability in our generation volumes. We operate the business on a largely contracted basis to ensure a
high degree of predictability in Funds From Operations. We do however maintain a long-term view that
electricity prices and the demand for electricity from renewable sources will rise due to a growing level of
acceptance around climate change and the legislated requirements in some areas to diversify away from
fossil fuel based generation.
The following table sets out contracts over the next five years for generation output assuming
long-term average:
FOR THE YEAR ENDED DECEMBER 31
2015
2016
2017
2018
2019
Generation (GWh)
Contracted(1)
Hydroelectric
United States(2)
Canada
Brazil
Wind energy
United States
Canada
Europe
Uncontracted
Total long-term average
Long-term average on a proportionate basis(3)
Contracted generation - as at December 31, 2014
8,847
5,185
2,888
9,053
5,185
2,689
7,018
5,185
1,961
7,018
5,185
1,736
7,018
5,175
1,736
16,920
16,927
14,164
13,939
13,929
1,292
1,197
1,130
3,619
1,292
1,197
1,146
3,635
1,292
1,197
1,146
3,635
1,292
1,197
1,146
3,635
1,292
1,197
1,146
3,635
20,539
20,562
17,799
17,574
17,564
3,548
24,087
18,668
3,515
6,269
24,077
24,068
18,650
18,642
6,494
24,068
18,641
6,504
24,068
18,641
% of total generation
% of total generation on a proportionate basis(3)
85%
91%
85%
90%
74%
83%
73%
82%
73%
82%
85
82
Price per MWh - total generation
$
81 $
80 $
83 $
84 $
Price per MWh - total generation on a
79
79
80
81
proportionate basis
(1)
Assets under construction are included when long-term average and pricing details are available and the commercial
operation date is established in a definitive construction contract.
Includes generation of 1,812 GWh for 2015 and 2,035 GWh for 2016 secured under financial contracts.
Long-term average on a proportionate basis includes wholly-owned assets, and our share of partially-owned assets and
equity-accounted investments.
(2)
(3)
The majority of the long-term power purchase agreements are with investment-rated or
creditworthy counterparties. The composition of our contracted generation under power purchase
agreements for 2015 is comprised of: Brookfield (45%), public power authorities (23%), industrial users
(29%) and distribution companies (3%).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 29
SUMMARY CONSOLIDATED BALANCE SHEETS
The following table provides a summary of the key line items on the consolidated balance sheets
as at December 31:
(MILLIONS)
Property, plant and equipment, at fair value
Equity-accounted investments
Total assets
Long-term debt and credit facilities
Deferred income tax liabilities
Total liabilities
Preferred equity
Participating non-controlling interests - in operating subsidiaries
General partnership interest in a holding subsidiary held by Brookfield
Participating non-controlling interests - in a holding subsidiary -
Redeemable/Exchangeable units held by Brookfield
Limited partners' equity
Total liabilities and equity
CONTRACTUAL OBLIGATIONS
Development and construction
2014
$
18,566
$
273
19,849
7,678
2,637
10,968
728
2,062
59
2,865
3,167
19,849
2013
15,741
290
16,999
6,623
2,265
9,463
796
1,303
54
2,657
2,726
16,999
The remaining development project costs on the 25 MW hydroelectric project in Brazil and three
wind facilities in Ireland totaling 137 MW of capacity, are expected to be $164 million. As at December 31,
2014, restricted cash in the amount of $56 million was held and reserved for the purpose of funding the
remaining costs. The projects in Ireland are expected to be fully operational by the end of 2015 and the
hydroelectric facility in Brazil during 2017.
Commitments and contingencies
In November 2014, we entered into an agreement to acquire a 488 MW portfolio in Brazil
comprising hydroelectric, wind, and biomass generating capacity. The portfolio is expected to generate
approximately 2,100 GWh annually. The transaction represents a total enterprise value of $R2.4 billion
($935 million). The transaction is expected to close in the first half of 2015, subject to regulatory
approvals and closing conditions. Also in November 2014, we signed an agreement to acquire two
advanced hydroelectric development projects in Brazil totaling 47 MW which, once fully commissioned,
are expected to generate 280 GWh annually. We completed this acquisition in February 2015; refer to
“Subsequent Events”. These acquisitions are being pursued with our institutional partners, and Brookfield
Renewable will retain an approximate 40% interest.
At the balance sheet date, we had commitments for future minimum lease payments under non-
cancellable leases which fall due as follows:
(MILLIONS)
Operating leases
Capital leases
Total
2015
21 $
-
2016
22 $
-
2017
19 $
-
2018
18 $
2019 Thereafter
17 $
151 $
-
1
43
Total
248
44
21 $
22 $
19 $
18 $
18 $
194 $
292
$
$
Brookfield Renewable, on behalf of its subsidiaries, and subsidiaries themselves have provided
letters of credit, which include, but are not limited to, guarantees for debt service reserves, capital
reserves, construction completion and performance. See “Liquidity and Capital Resources” for further
details.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 30
Brookfield Renewable along with institutional investors have provided letters of credit, which
include, but are not limited to, guarantees for debt service reserves, capital reserves, construction
completion and performance as it relates to interests in the Brookfield Americas Infrastructure Fund and
the Brookfield Infrastructure Fund II. As at December 31, 2014, letters of credit issued by Brookfield
Renewable along with institutional investors were $125 million (2013: $93 million).
Guarantees
In the normal course of operations, we execute agreements that provide for indemnification and
guarantees to third parties in transactions such as acquisitions, construction projects, capital projects, and
purchases of assets. We have also agreed to indemnify our directors and certain of our officers and
employees. The nature of the indemnifications prevents us from making a reasonable estimate of the
maximum potential amount that could be required to pay third parties, as many of the agreements do not
specify a maximum amount and the amounts are dependent upon the outcome of future contingent
events, the nature and likelihood of which cannot be determined at this time. Historically, we have made
no significant payments under indemnification agreements.
OFF-BALANCE SHEET ARRANGEMENTS
Brookfield Renewable has no off-balance sheet financing arrangements.
RELATED PARTY TRANSACTIONS
Brookfield Renewable’s related party transactions are in the normal course of business, and are
recorded at the exchange amount. Brookfield Renewable’s related party transactions are primarily with
Brookfield.
Brookfield Renewable sells electricity
long-term power purchase
agreements to provide contracted cash flow and reduce Brookfield Renewable’s exposure to electricity
prices in deregulated power markets. Brookfield Renewable also benefits from a wind levelization
agreement with Brookfield which reduces the exposure to the fluctuation of wind generation at certain
facilities and thus improves the stability of its cash flow.
to Brookfield
through
In addition to these agreements, Brookfield Renewable and Brookfield have executed other
agreements that are described in Note 9 - Related Party Transactions in our audited consolidated
financial statements.
Brookfield Renewable has also entered into a number of voting agreements with Brookfield
whereby Brookfield, as managing member of entities related to Brookfield Americas Infrastructure Fund
and Brookfield Infrastructure Fund II, in which Brookfield Renewable holds investments in power
generating operations with institutional partners, agreed to provide to Brookfield Renewable the authority
to direct the election of the Boards of Directors of such entities.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 31
The following table reflects the related party agreements and transactions on the consolidated
statements of income (loss), for the year ended December 31:
(MILLIONS)
Revenues
Power purchase and revenue agreements
Wind levelization agreement
Direct operating costs
Energy purchases
Energy marketing fee
Insurance services
Management service costs
2014
2013
2012
$
$
$
$
$
433 $
456 $
6
6
439 $
462 $
(9) $
(36) $
(21)
(29)
(59) $
(51) $
(20)
(26)
(82) $
(41) $
376
2
378
(40)
(18)
(18)
(76)
(36)
Revenues from power purchase and revenue agreements for the year ended December 31, 2014
were lower as compared to the prior year. This decrease is primarily due to the reduction in the level of
price support and reflects the strong pricing environment which we benefited from in the first quarter of
2014. Energy purchases for the year ended December 31, 2014 were lower as compared to the prior year
as a result of the reduction in power purchased for our co-generation facilities.
The following table reflects the impact of the related party agreements and transactions on the
consolidated balance sheets as at December 31:
Related party
2014
2013
(MILLIONS)
Current assets
Due from related parties
Amounts due from
Current liabilities
Due to related parties
Amount due to
Brookfield
Equity accounted investments and other
Brookfield
$
$
$
54 $
9
63 $
36
12
48
56 $
48
21
2
62
-
$
79 $
110
Accrued distributions payable on LP
Units and Redeemable/Exchangeable
partnership units
Amount due to
Brookfield
Equity accounted investments and other
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 32
CONSOLIDATED STATEMENTS OF CASH FLOWS
The following table summarizes the key items on the consolidated statements of cash flows, for
the year ended December 31:
(MILLIONS)
Cash flow provided by (used in):
Operating activities
Financing activities
Investing activities
Foreign exchange loss on cash
2014
2013
2012
$
700 $
735 $
1,299
(2,037)
(15)
(263)
(397)
(9)
413
335
(828)
(8)
(88)
(Decrease) increase in cash and cash equivalents
$
(53) $
66 $
Cash and cash equivalents as at December 31, 2014 totaled $150 million, representing a
decrease of $53 million since December 31, 2013.
Operating Activities
Cash flows provided by operating activities totaling $700 million for the year ended December 31,
2014 represent a year-over-year decrease of $35 million primarily attributable to the decrease in Funds
From Operations. Cash flows provided by operating activities totaled $735 million for year ended
December 31, 2013, resulting in a year-over-year increase of $322 million. The increases were primarily
attributable to Funds From Operations.
Net change in working capital
The net change in working capital balances shown in the consolidated statements of cash flows
for the year ended December 31 is comprised of the following:
(MILLIONS)
Trade receivables and other current assets
Accounts payable and accrued liabilities
Other assets and liabilities
Financing Activities
2014
20
$
(54)
14
(20)
$
2013
47
(42)
(4)
1
$
$
Cash flows provided by financing activities totaled $1,299 million for the year ended December
31, 2014. Long-term debt – borrowings were $2,118 million and increased due to the growth in our
portfolio, up-financing indebtedness associated with a 349 MW Ontario hydroelectric portfolio, a $560
million financing associated with a 417 MW hydroelectric facility in Pennsylvania, and financings totaling
€328 million ($413 million) associated with the wind facilities and development projects in Ireland. Long-
term debt – repayments related to subsidiary borrowings and credit facilities were $1,046 million. The
issuance of 10,250,000 LP Units at a price of C$31.70 per LP Unit resulted in net proceeds of $285
million. The capital provided by participating non-controlling interests – in operating subsidiaries relates to
the growth in our portfolio, and amounted to $610 million.
For the year ended December 31, 2014, distributions paid to LP Unitholders were $480 million
(2013: $378 million). With the change in timing of our quarterly distributions taking effect in the first
quarter of 2014 resulting in a distribution on January 31, 2014 and on March 31, 2014, the amounts paid
in the first quarter of 2014 included distributions declared in both the fourth quarter of 2013 and the first
quarter of 2014. Distributions paid in the first quarter of 2013 included only those declared in the
preceding quarter. Further, we increased our distributions to $1.55 per LP Unit, an increase of 10 cents
per LP Unit which took effect in the first quarter of 2014. The distributions paid to preferred shareholders
and participating non-controlling interests - in operating subsidiaries were $188 million (2013: $157
million). See “Dividends and Distributions” for further details.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 33
Cash flows used in financing activities totaled $263 million for the year ended December 31,
2013. Repayments related to subsidiary borrowings and credit facilities were approximately $1.7 billion.
Long-term debt increased by $1.4 billion due to the growth in our portfolio and re-financings at two
Ontario wind facilities. Capital was provided from the issuances of C$175 million each of the Series 5 and
Series 6 Class A Preference Shares. The capital provided by participating non-controlling interests – in
operating subsidiaries includes the co-investment by a private fund sponsored by Brookfield Asset
Management.
For the year ended December 31, 2013 distributions paid to LP Unitholders were $378 million
(2012: $362 million). The distributions paid to preferred shareholders and participating non-controlling
interests - in operating subsidiaries were $157 million (2012: $38 million). See “Dividends and
Distributions” for further details.
Investing Activities
Cash flows used in investing activities for the year ended December 31, 2014 totaled $2,037
million. Our investments were with respect to the acquisition of a hydroelectric facility in Pennsylvania, a
wind portfolio in Ireland, a hydroelectric portfolio in Maine, and the remaining 50% interest previously held
by our partner in hydroelectric facility in California. When combined, these investments totaled $1,838
million. In addition, our continued investment in the construction of power generating assets was $78
million and sustainable capital expenditures totaled $108 million.
Cash flows used in investing activities for the year ended December 31, 2013 totaled $397
million. Our investments were with respect to the acquisition of hydroelectric facilities in Maine, the
remaining 50% interest previously held by our partner in a facility located in British Columbia, and a wind
portfolio in California that when combined totaled $241 million. In addition, our investment in the
construction of power generating assets was $147 million and sustainable capital expenditures totaled
$79 million.
NON-CONTROLLING INTERESTS
Preferred equity
In January 2013 and May 2013, we completed issuances which included 7,000,000 each of
Series 5 and Series 6 Class A Preference Shares with fixed, annual, cumulative dividends yielding 5% at
a price of C$25.00 per Class A Preference Share for gross proceeds of C$350 million ($348 million).
Total transaction costs associated with the issuances were C$11 million ($11 million). The net proceeds
were used to repay outstanding indebtedness and for general corporate purposes. As at December 31,
2014, no preference shares have been redeemed.
General partnership interest in a holding subsidiary held by Brookfield
Brookfield, as the owner of the 1% GP interest in BRELP, is entitled to regular distributions plus
an incentive distribution based on the amount by which quarterly LP Unit distributions exceed specified
target levels. To the extent that LP Unit distributions exceed $0.375 per LP Unit per quarter, the incentive
is 15% of distributions above this threshold. To the extent that quarterly distributions exceed $0.4225 per
LP Unit, the incentive distribution is equal to 25% of distributions above this threshold. Accordingly,
incentive distributions of $2 million were made during the year ended December 31, 2014.
Participating non-controlling interests - in a holding subsidiary - Redeemable/Exchangeable units
held by Brookfield
BRELP has issued Redeemable/Exchangeable partnership units to Brookfield, which may at the
request of the holder, require BRELP to redeem these units for cash consideration. The right is subject to
Brookfield Renewable’s right of first refusal which entitles it, at its sole discretion, to elect to acquire all of
the units presented to BRELP that are tendered for redemption in exchange for LP Units. If Brookfield
Renewable elects not to exchange the Redeemable/Exchangeable partnership units for LP Units, the
Redeemable/Exchangeable partnership units are required to be redeemed for cash. As Brookfield
Renewable, at its sole discretion, has the right to settle the obligation with LP Units, the
Redeemable/Exchangeable partnership units are classified as equity, and not as a liability.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 34
LIMITED PARTNERS’ EQUITY
On June 10, 2014, Brookfield Renewable completed a bought deal LP Unit offering which
included 10,250,000 LP Units at a price of C$31.70 per LP Unit for gross proceeds of C$325 million ($297
million). Brookfield Renewable incurred C$13 million ($12 million) in transaction costs associated with the
offering.
Brookfield Asset Management owns, directly and indirectly, 169,685,609 LP Units and
Redeemable/Exchangeable partnership units, representing approximately 62% of Brookfield Renewable
on a fully-exchanged basis.
SHARES AND UNITS OUTSTANDING
The shares and units outstanding as at December 31 are presented in the following table:
Class A Preference Shares
Series 1
Series 3
Series 5
Series 6
GP interest
2014
2013
10,000,000
10,000,000
10,000,000
10,000,000
7,000,000
7,000,000
7,000,000
7,000,000
34,000,000
34,000,000
2,651,506
2,651,506
Redeemable/Exchangeable partnership units
129,658,623
129,658,623
LP Units
Balance, beginning of year
Issuance of LP Units
Distribution reinvestment plan
Balance, end of year
Total LP Units on a fully-exchanged basis(1)
LP Units held by
Brookfield
External LP Unitholders
132,984,913
132,901,916
10,250,000
121,941
-
82,997
143,356,854
132,984,913
273,015,477
262,643,536
40,026,986
40,026,986
103,329,868
92,957,927
(1)
132,984,913
The fully-exchanged amounts assume the exchange of Redeemable/ Exchangeable partnership units for LP Units at the
beginning of the year.
143,356,854
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 35
DIVIDENDS AND DISTRIBUTIONS
The composition of the dividends and distributions for the year ended December 31 are
presented in the following table:
Declared
Paid
2014
2013
2012
2014
2013
2012
$
12 $
10
8
8
13 $
11
8
5
13 $
3
-
-
12 $
11
8
8
13 $
12
6
4
$
38 $
37 $
16 $
39 $
35 $
13
-
-
-
13
$
149 $
122 $
24 $
149 $
122 $
24
$
$
4 $
2
6 $
4 $
-
4 $
4 $
-
4 $
4 $
2
6 $
4 $
-
4 $
4
-
4
(MILLIONS, EXCEPT AS NOTED)
Class A Preference Shares
Series 1
Series 3
Series 5
Series 6
Participating non-controlling interests - in
operating subsidiaries
General partnership interest in a holding
subsidiary held by Brookfield
Incentive distribution
Participating non-controlling interests - in
a holding subsidiary - Redeemable/
Exchangeable units held by Brookfield
$
201 $
188 $
179 $
231 $
185 $
177
Limited partners' equity
Brookfield
External LP Unitholders
62
154
58
135
66
117
71
172
56
133
$
216 $
193 $
183 $
243 $
189 $
73
108
181
In January 2012, LP Unitholder distributions were increased to $1.38 per LP Unit on an
annualized basis, an increase of three cents per LP Unit, which took effect with the distribution payable in
April 2012.
In January 2013, LP Unitholder distributions were increased to $1.45 per LP Unit on an
annualized basis, an increase of seven cents per LP Unit, which took effect with the distribution payable
in April 2013.
In February 2014, LP Unitholder distributions were increased to $1.55 per unit on an annualized
basis, an increase of ten cents per LP Unit, which took effect with the distribution payable in March 2014.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 36
CRITICAL ESTIMATES AND CRITICAL JUDGMENTS
POLICIES
IN APPLYING ACCOUNTING
The consolidated annual financial statements are prepared in accordance with IFRS, which
require the use of estimates and judgments in reporting assets, liabilities, revenues, expenses and
contingencies. In the judgment of management, none of the estimates outlined in Note 2 – Significant
accounting policies in our audited consolidated financial statements are considered critical accounting
estimates as defined in NI 51-102 with the exception of the estimates related to the valuation of property,
plant and equipment and the related deferred income tax liabilities. These assumptions include estimates
of future electricity prices, discount rates, expected long-term average generation, inflation rates, terminal
year and operating and capital costs, the amount, the timing and the income tax rates of future income
tax provisions. Estimates also include determination of accruals, purchase price allocations, useful lives,
asset valuations, asset impairment testing, deferred tax liabilities, decommissioning retirement obligations
and those relevant to the defined benefit pension and non-pension benefit plans. Estimates are based on
historical experience, current trends and various other assumptions that are believed to be reasonable
under the circumstances.
In making estimates, management relies on external information and observable conditions
where possible, supplemented by internal analysis, as required. These estimates have been applied in a
manner consistent with that in the prior year and there are no known trends, commitments, events or
uncertainties that we believe will materially affect the methodology or assumptions utilized in this report.
These estimates are impacted by, among other things, future power prices, movements in interest rates,
foreign exchange and other factors, some of which are highly uncertain, as described in the “Risk
Factors” section. The interrelated nature of these factors prevents us from quantifying the overall impact
of these movements on Brookfield Renewable’s financial statements in a meaningful way. These sources
of estimation uncertainty relate in varying degrees to substantially all asset and liability account balances.
Actual results could differ from those estimates.
CRITICAL ESTIMATES
Brookfield Renewable makes estimates and assumptions that affect the carrying value of assets
and liabilities, disclosure of contingent assets and liabilities and the reported amount of income and other
comprehensive income (“OCI”) for the year. Actual results could differ from these estimates. The
estimates and assumptions that are critical to the determination of the amounts reported in the
consolidated financial statements relate to the following:
(i)
Property, plant and equipment
The fair value of Brookfield Renewable’s property, plant and equipment is calculated using
estimates and assumptions about future electricity prices from renewable sources, anticipated long-term
average generation, estimated operating and capital expenditures, future inflation rates and discount
rates, as described in Note 11 - Property, plant and equipment, at fair value in our audited consolidated
financial statements. Judgment is involved in determining the appropriate estimates and assumptions in
the valuation of Brookfield Renewable’s property, plant and equipment. See Note 2(o)(iii) - Critical
judgments in applying accounting policies – Property, plant and equipment in our audited consolidated
financial statements for further details.
Estimates of useful lives and residual values are used in determining depreciation. To ensure the
accuracy of useful lives and residual values, these estimates are reviewed on an annual basis.
(ii)
Financial instruments
Brookfield Renewable makes estimates and assumptions that affect the carrying value of its
financial instruments, including estimates and assumptions about future electricity prices, long-term
average generation, capacity prices, discount rates and the timing of energy delivery. Non-financial
instruments are valued using estimates of future electricity prices which are estimated by considering
broker quotes for the years in which there is a liquid market and for the subsequent years Brookfield
Renewable’s best estimate of electricity prices that would allow new entrants into the market. The fair
value of interest rate swaps is the estimated amount that another party would receive or pay to terminate
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 37
the swap agreements at the reporting date, taking into account current market interest rates. This
valuation technique approximates the net present value of future cash flows. See Note 8 - Risk
Management and Financial Instruments in our audited consolidated financial statements for more details.
(iii) Deferred income taxes
The consolidated financial statements include estimates and assumptions for determining the
future tax rates applicable to subsidiaries and identifying the temporary differences that relate to each
subsidiary. Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply during the year when the assets are realized or the liabilities settled, using the tax rates and laws
enacted or substantively enacted at the consolidated balance sheet dates. Operating plans and forecasts
are used to estimate when the temporary difference will reverse.
CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES
The following are the critical judgments that have been made in applying the accounting policies
used in the consolidated financial statements and that have the most significant effect on the amounts in
the consolidated financial statements:
(i)
Preparation of consolidated financial statements
These consolidated financial statements present the financial position, results of operations and
cash flows of Brookfield Renewable. Judgment is required in determining what assets, liabilities and
transactions are recognized in the consolidated financial statements as pertaining to Brookfield
Renewable’s operations.
(ii) Common control transactions
Common control business combinations specifically fall outside of scope of IFRS 3 and as such
management has used its judgment to determine an appropriate policy to account for these transactions.
Consideration was given to other relevant accounting guidance within the framework of principles in IFRS
and that reflects the economic reality of the transactions, in accordance with IAS 8, Accounting Policies,
Changes in Accounting Estimates and Errors (“IAS 8”). As a result, the consolidated financial statements
account for assets and liabilities acquired at the previous carrying value on the predecessor’s financial
statements. Differences between the consideration given and the assets and liabilities received are
recorded directly to equity.
(iii)
Property, plant and equipment
The accounting policy relating to Brookfield Renewable’s property, plant and equipment is
described in Note 2 (f) - Property plant and equipment and revaluation method in our audited
consolidated financial statements. In applying this policy, judgment is used in determining whether certain
costs are additions to the carrying amount of the property, plant and equipment as opposed to repairs and
maintenance. If an asset has been developed, judgment is required to identify the point at which the asset
is capable of being used as intended and to identify the directly attributable costs to be included in the
carrying value of the development asset. The useful lives of property, plant and equipment are
determined by independent engineers periodically with an annual review by management.
Annually, Brookfield Renewable determines the fair value of its property, plant and equipment
using a methodology that it has judged to be reasonable. The methodology is generally a 20 year
discounted cash flow model. Twenty years is the period considered reasonable as Brookfield Renewable
has 20 year capital plans and it believes a reasonable third party would be indifferent between extending
the cash flows further in the model versus using a discounted terminal value.
The valuation model incorporates future cash flows from long-term power purchase agreements
that are in place where it is determined that the power purchase agreements are linked specifically to the
related power generating assets. With respect to estimated future generation that does not incorporate
long-term power purchase agreement pricing, the cash flow model uses estimates of future electricity
prices using broker quotes from independent sources for the years in which there is a liquid market. The
valuation of power generating assets not linked to long-term power purchase agreements also requires
the development of a long-term estimate of future electricity prices. In this regard the valuation model
uses a discount to the all-in cost of construction with a reasonable return, to secure energy from new
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 38
renewable on-shore wind development resources as the benchmark that will establish the market price
for electricity for renewable resources.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from
renewable sources to meet future demand growth by the year 2020. This year is viewed as the point
when generators in North America must build additional capacity to maintain system reliability and
provide an adequate level of reserve generation with the retirement of older coal fired plants and with the
Environmental Protection Agency emission compliance deadlines. Brookfield Renewable has estimated a
discount to these new-build wind prices to determine renewable electricity prices for hydroelectric
facilities. In Brazil, the estimate of future electricity prices is based on a similar approach as applied in
North America using a forecast of the all-in cost of hydroelectric and wind development.
Discount rates are determined each year by considering the current interest rates, average
market cost of capital as well as the price risk and the geographical location of the operational facilities as
judged by management. Inflation rates are also determined by considering the current inflation rates and
the expectations of future rates by economists. Operating costs are based on long-term budgets
escalated for inflation. Each operational facility has a 20 year capital plan that it follows to ensure the
maximum life of its assets is achieved. Foreign exchange rates are forecasted by using the spot rates
and the available forward rates, extrapolated beyond the period available. The inputs described above to
the discounted cash flow model require management to consider facts, trends and plans in making its
judgments as to what derives a reasonable fair value of its property, plant and equipment.
(iv) Financial instruments
The accounting policy relating to Brookfield Renewable’s financial instruments is described in
Note 2 (i) — Financial instruments in our audited consolidated financial statements. In applying the policy,
judgments are made in applying the criteria set out in IAS 39, Financial Instruments: Recognition and
Measurement (“IAS 39”), to record financial instruments at fair value through profit and loss, and the
assessments of the effectiveness of hedging relationships.
(v) Deferred income taxes
The accounting policy relating to Brookfield Renewable’s income taxes is described in Note 2 (k)
— Income taxes in our audited consolidated financial statements. In applying this policy, judgments are
made in determining the probability of whether deductions, tax credits and tax losses can be utilized.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 39
FUTURE CHANGES IN ACCOUNTING POLICIES
(i)
Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments (“IFRS 9”) which
reflects all phases of the financial instruments project and replaces IAS 39, Financial Instruments:
Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new
requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective
for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective
application is required, but comparative information is not compulsory. Early application of previous
versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before 1 February
2015. Management is currently evaluating the impact of IFRS 9 on the consolidated financial statements.
(ii)
Amendments to IFRS 10 and IAS 28
The amendments to IFRS 10, Consolidated Financial Statements (“IFRS 10”) and IAS 28,
Investments in Associates and Joint Ventures (2011) (“IAS 28”) address an acknowledged inconsistency
between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of
assets between an investor and its associate or joint venture. The main consequence of the amendments
is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a
subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not
constitute a business, even if the assets are housed in a subsidiary. The amendments are effective for
transactions occurring in annual periods beginning on or after 1 January 2016 with earlier application
permitted. Management is currently evaluating the impact of the amendments to IFRS 10 and IAS 28 on
the consolidated financial statements.
(iii) Revenue recognition
IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) was issued by IASB on May 28,
2014. IFRS 15 outlines a single comprehensive model to account for revenue arising from contracts with
customers and will replace the majority of existing IFRS requirements on revenue recognition including
IAS 18, Revenue, IAS 11, Construction Contracts and related interpretations. The core principle of the
standard is to recognize revenue to depict the transfer of goods and services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods and
services. The standard has prescribed a five-step model to apply the principles. The standard also
specifies how to account for the incremental costs of obtaining a contract and the costs directly related to
fulfilling a contract. IFRS 15 is effective for annual periods beginning on or after January 1, 2017.
Management is currently evaluating the impact of IFRS 15 on the consolidated financial statements.
ADOPTION OF ACCOUNTING STANDARDS
IFRIC 21, Levies was adopted and applied by Brookfield Renewable on January 1, 2014 and had no
material impact on the consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 40
DISCLOSURE CONTROLS AND PROCEDURES AND
FINANCIAL REPORTING
INTERNAL CONTROL OVER
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer,
has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of
the period covered by this Annual Report. Based on such evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that as of December 31, 2014, our disclosure controls and
procedures are designed at a reasonable assurance level and are effective to provide reasonable
assurance that material information we are required to disclose in reports that we file or submit under the
Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure. While disclosure controls and
procedures and internal controls over financial reporting were adequate and effective we continue to
implement certain measures to strengthen control processes and procedures.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Under the
supervision and with the participation of our management, including persons performing the functions of
principal executive and principal financial officers for us, we conducted an evaluation of the effectiveness
of our internal control over financial reporting as of December 31, 2014, based on the criteria set forth in
Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on evaluation under the Framework in Internal Control—Integrated
Framework, our management concluded that our internal control over financial reporting was effective as
of December 31, 2014.
Internal control systems, no matter how well designed, have inherent limitations. Therefore, even
those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Report of Independent Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2014 has
been audited by Ernst & Young, Chartered Professional Accountants, Chartered Accountants, who have
also audited our consolidated financial statements, as stated in their reports which are included herein.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives. In addition, the design of disclosure controls and
procedures must reflect the fact that there are resource constraints and that management is required to
apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control
There was no change in our internal control over financial reporting during the year ended
December 31, 2014, that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 41
OPERATIONAL REVIEW FOR THE THREE MONTHS ENDED DECEMBER 31, 2014
The following table reflects the actual and long-term average generation for the three months
ended December 31:
GENERATION (GWh)
Hydroelectric generation
United States
Canada
Brazil
Wind energy
United States
Canada
Europe
Actual Generation(1)
2013
2014
LTA Generation(1)
Actual vs. LTA
Prior Year
2014
2013
2014
2013
Variance of Results
Actual vs.
2,434
1,714
795
2,226
1,401
923
2,796
1,218
900
2,450
1,171
923
4,943
4,550
4,914
4,544
230
311
299
840
175
328
-
503
274
343
235
852
274
343
-
617
(362)
496
(105)
29
(44)
(32)
64
(12)
(224)
230
-
6
(99)
(15)
-
(114)
208
313
(128)
393
55
(17)
299
337
Other
Total(2)
571
(1) For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or
5,268
5,770
5,839
5,380
(112)
(159)
215
219
56
52
69
(4)
4
commercial operation date.
Includes 100% of generation from equity-accounted investments.
(2)
Generation levels during the three months ended December 31, 2014 totaled 5,839 GWh,
compared to the long-term average of 5,770 GWh, and an increase of 571 GWh as compared to the prior
year.
The hydroelectric portfolio generated 4,943 GWh, consistent with the long-term average of 4,914
GWh and an increase of 393 GWh from the prior year. Generation from existing hydroelectric assets was
4,634 GWh compared to 4,550 GWh for the prior year. The variance in year-over-year results from
existing facilities reflects strong inflows at our Ontario facilities and improved hydrological conditions in
New England and Louisiana, partly offset by lower inflows at our facilities in New York, Tennessee and
North Carolina. In Brazil, our generation for the quarter was below assured levels due to the continued
drought-like conditions; however, the impact was reduced by our participation in the hydrological
balancing pool. Our recently acquired and commissioned facilities contributed 309 GWh.
The wind portfolio generated 840 GWh, compared to the long-term average of 852 GWh and an
increase of 337 GWh as compared to the prior year. Generation from existing assets was higher
compared to the prior year due to improved wind conditions across the United States portfolio, and the
wind portfolio in Ireland contributed 299 GWh.
Our 110 MW natural gas-fired plant in Ontario had been operating on an uncontracted basis since
April 2014. Since then, the facility has had nominal generation as a result of low power prices relative to
gas market prices. The operations at this facility have temporarily been suspended but remain available
to be restarted should economic conditions allow.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 42
SUMMARY OF HISTORICAL QUARTERLY RESULTS ON A CONSOLIDATED BASIS
The following is a summary of unaudited quarterly financial information for the last twelve consecutive quarters:
2014
2013
2012
(MILLIONS, EXCEPT AS NOTED)
Generation (GWh) - LTA(1)(2)
Generation (GWh) - actual(1)(2)
Revenues
Adjusted EBITDA(3)
Funds From Operations(3)
Net income (loss)
Non-controlling interests
Preferred equity
Participating non-controlling
interests - in operating subsidiaries
General partnership interest in a
holding subsidiary held by Brookfield
Participating non-controlling interests - in a
holding subsidiary - Redeemable/Exchangeable
units held by Brookfield
Limited partners' equity
Basic and diluted earnings (loss)
per LP Unit
Average LP Units outstanding (millions)
Distributions:
Preferred equity
General partnership interest in a
holding subsidiary held by Brookfield
Participating non-controlling interests - in a
holding subsidiary - Redeemable/Exchangeable
units held by Brookfield
Limited partners' equity
(1)
(2)
(3)
Q4
Q4
Q2
Q3
Q1
Q1
5,770 5,065 6,691 5,770 5,380 4,960 6,171 5,325 4,606 4,049 4,998 4,549
5,839 4,383 6,615 5,711 5,268 5,154 6,265 5,535 4,053 2,971 4,101 4,817
$ 408 $ 342 $ 474 $ 480 $ 393 $ 392 $ 484 $ 437 $ 317 $ 229 $ 337 $ 426
318
175
319
162
360
185
195
74
272
137
273
116
221
87
260
108
360
198
223
61
357
187
118
11
Q3
Q1
Q4
Q3
Q2
Q2
9
10
10
9
10
10
10
7
6
4
3
3
(8)
(2)
21
40
(7)
8
24
16
(14)
(11)
(14)
(1)
-
-
-
1
-
-
-
1
(1)
-
-
-
14
16
31
(16)
(17)
(25)
20
21
72
37
38
125
10
11
24
5
5
28
22
22
78
30
31
85
(27)
(28)
(64)
(26)
(26)
(59)
4
4
(3)
14
15
31
0.11
0.11
143.3 143.3 135.3 133.0 132.9 132.9 132.9 132.9 132.9 132.9 132.9 132.9
(0.20)
(0.20)
(0.13)
0.23
0.04
0.17
0.08
0.03
0.29
0.15
9
1
10
10
2
1
9
2
10
10
10
1
1
1
7
1
6
1
3
1
4
1
3
1
50
56
50
56
51
53
50
51
47
48
47
49
47
48
47
48
45
45
45
46
45
47
44
45
Includes 100% of generation from equity-accounted investments.
For assets acquired or reaching commercial operation during the year, this figure is calculated from the acquisition or commercial operation date.
Non-IFRS measures. See "Cautionary Statement Regarding Use of Non-IFRS Measures", “Financial Review by Segments for the Year Ended December 31, 2014” and “Financial Review
by Segments for the Year Ended December 31, 2013”.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 43
RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
(a) Market risk
Market risk is defined for these purposes as the risk that the fair value or future cash flows of a
financial instrument held by Brookfield Renewable will fluctuate because of changes in market prices.
Brookfield Renewable faces market risk from foreign currency assets and liabilities, the impact of
changes in interest rates, and floating rate liabilities. Market risk is managed by funding assets with
financial liabilities in the same currency and with similar interest rate characteristics and holding financial
contracts, such as interest rate swaps and foreign exchange contracts, to minimize residual exposures.
Financial instruments held by Brookfield Renewable that are subject to market risk include borrowings
and financial instruments, such as interest rate, currency and commodity contracts. The categories of
financial instruments that can give rise to significant variability are described below:
(i) Electricity price risk
Electricity price risk is defined for these purposes as the risk that the fair value or future cash
flows of a financial instrument held by Brookfield Renewable will fluctuate because of changes in
commodity prices. Electricity price risk arises from the sale of Brookfield Renewable’s uncontracted
generation. Brookfield Renewable aims to sell the majority of its electricity under long-term contracts to
secure stable prices and mitigate its exposure to wholesale markets.
The table below summarizes the impact of changes in the market price of electricity as at
December 31. The impact is expressed in terms of the effect on net income and OCI. The sensitivities
are based on the assumption that the market price changes by five percent with all other variables held
constant.
Impact of a 5% change in the market price of electricity, on outstanding energy derivative
contracts, for the year ended December 31:
(MILLIONS)
5% increase
5% decrease
(ii) Foreign currency risk
Effect on net income
Effect on OCI
2014
2013
2012
2014
2013
2012
$
- $
-
- $
-
1 $
(9) $
1 $
(1)
9
(1)
-
-
Foreign currency risk is defined for these purposes as the risk that the fair value of a financial
instrument held by Brookfield Renewable will fluctuate because of changes in foreign currency rates.
Brookfield Renewable has exposure to the Canadian dollar, Brazil real and Euro through its
investments in foreign operations. Consequently, fluctuations in the U.S. dollar exchange rate against
these currencies increase the volatility of net income and other comprehensive income. Brookfield
Renewable holds foreign currency contracts primarily to mitigate this exposure.
The table below summarizes the impact of changes in the exchange rate as at December 31. The
impact is expressed in terms of the effect on income and OCI. The sensitivities are based on the
assumption that the currency exchange rate changes by five percent with all other variables held
constant.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 44
Impact of a 5% change in U.S. dollar exchange rates, on outstanding foreign exchange swaps, for
the year ended December 31:
(MILLIONS)
5% increase
5% decrease
(ii) Interest rate risk
Effect on net income
Effect on OCI
2014
2013
2012
2014
2013
2012
$
12 $
(12)
- $
-
- $
19 $
-
(19)
- $
-
-
-
Interest rate risk is defined for these purposes as the risk that the fair value or future cash flows of
a financial instrument held by Brookfield Renewable will fluctuate, because of changes in interest rates.
Brookfield Renewable’s assets largely consist of long duration physical assets. Brookfield
Renewable’s financial liabilities consist primarily of long-term fixed rate debt or floating-rate debt that has
been swapped to fixed rates with interest rate financial instruments. All non-derivative financial liabilities
are recorded at their amortized cost. Brookfield Renewable also holds interest rate contracts to lock-in
fixed rates on certain anticipated future debt issuances.
Brookfield Renewable will enter into interest rate swaps designed to minimize the exposure to
interest rate fluctuations on its variable rate debt. Fluctuations in interest rates could impact Brookfield
Renewable’s cash flows, primarily with respect to the interest payable against Brookfield Renewable’s
variable rate debt, which is limited to certain subsidiary borrowings with a total principal value of $2,552
million (2013: $1,515 million). Of this principal value, $1,237 million (2013: $806 million) has been hedged
through the use of interest rate swaps. The fair values of the recognized liability for the interest rate
swaps were calculated using a valuation model with observable interest rates.
The table below summarizes the impact of changes in the interest rate as at December 31. The
impact is expressed in terms of the effect on income and OCI. The sensitivities are based on the
assumption that the interest rate changes by one percent with all other variables held constant.
Impact of a 1% change in interest rates, on outstanding interest rate swaps and variable rate
debt, for the year ended December 31:
(MILLIONS)
1% increase
1% decrease
(b) Credit risk
Effect on net income
Effect on OCI
2014
2013
2012
2014
2013
$
(13) $
(7) $
(7) $
138 $
96 $
13
7
7
(138)
(96)
2012
51
(51)
Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfill its contractual
obligations. Brookfield Renewable’s exposure to credit risk in respect of financial instruments relates
primarily to counterparty obligations regarding energy contracts, interest rate swaps, forward foreign
exchange contracts and physical electricity and gas transactions.
Brookfield Renewable minimizes credit risk with counterparties through the selection, monitoring
and diversification of counterparties, and the use of standard trading contracts, and other credit risk
mitigation techniques. In addition, Brookfield Renewable’s power purchase agreements are reviewed
regularly and are almost exclusively with customers having long standing credit histories or investment
grade ratings, which limit the risk of non-collection. As at December 31, 2014, 99% (2013: 99%) of
Brookfield Renewable’s trade receivables of $91 million were current. See Note 7 - Trade receivables and
other current assets in our audited consolidated financial statements for additional details regarding
Brookfield Renewable’s trade receivables balance.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 45
The maximum credit exposure at December 31 was as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash(1)
Trade receivables and other short-term receivables
Financial instrument assets
Due from related parties
(1)
Includes both the current and long-term amounts.
(c) Liquidity risk
$
2014
150
313
131
66
63
$
2013
203
244
170
17
48
$
723
$
682
Liquidity risk is the risk that we cannot meet a demand for cash or fund an obligation when due.
Liquidity risk is mitigated by cash and cash equivalent balances and its access to undrawn credit facilities.
Details of the available portion of credit facilities are included in “Liquidity and Capital Resources”. We
also ensure that we have access to public capital markets and maintain a strong investment grade credit
rating of BBB (high).
We are also subject to the risk associated with debt financing. This risk is mitigated by the long-
term duration of debt instruments and the diversification in maturity dates over an extended period of
time.
The sensitivity analysis discussed above reflects only the risks associated with instruments that
we consider are market sensitive and the potential loss resulting from one or more selected hypothetical
changes. Therefore, the discussion above is not intended to reflect fully the risk exposure that we may
have.
RISK FACTORS
The following represents the most relevant risk factors relating to Brookfield Renewable’s
business. This contains only certain risk factors and is not all-inclusive. For a description of other possible
risks such as: force majeure, insurance limits, litigation, labor relations, risks associated with operating in
Brazil, greenfield development growth, sourcing and financing of acquisition opportunities, operational
arrangements with partially owned investments, new markets in foreign countries, general role,
relationship and operational issues with Brookfield Asset Management, general risks related to our limited
partnership units, general taxation issues – domestic and foreign, and risks associated to being a newly
formed partnership, please see the Form 20-F and other public disclosures which can be accessed at
EDGAR and SEDAR.
Management believes that, since the end of 2013 there have been no changes in the business
environment and risks that could affect Brookfield Renewable’s activities or results, other than risks
related to the volatility of supply and demand in the energy markets.
RISKS RELATED TO OUR OPERATIONS AND THE RENEWABLE POWER INDUSTRY
Changes to hydrology at our hydroelectric stations, wind conditions at our wind facilities or
weather conditions generally at any biomass cogeneration facilities could materially adversely
affect the volume of electricity generated.
The revenues generated by our facilities are proportional to the amount of electricity generated
which in turn is dependent upon available water flows, wind conditions and weather conditions generally.
Hydrology and wind conditions have natural variations from season to season and from year to year and
may also change permanently because of climate change or other factors. A natural disaster could also
impact water flows within the watersheds in which we operate. Water rights are also generally owned or
controlled by governments that reserve the right to control water levels or may impose water-use
requirements as a condition of license renewal. Wind energy is highly dependent on weather conditions
and, in particular, on wind conditions. The profitability of a wind facility depends not only on observed
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 46
wind conditions at the site, which are inherently variable, but also on whether observed wind conditions
are consistent with assumptions made during the project development phase. Weather conditions have
historically caused volatility in the ethanol and sugar industries. We recently entered into an agreement to
acquire biomass cogeneration facilities in Brazil with 175 MW of aggregate installed capacity. Because
sugar and ethanol mills are the feedstock suppliers of these facilities, a decline in sugarcane supply
caused by drought, frost or floods could limit the volume of energy these biomass cogeneration facilities
are able to generate. A sustained decline in water flow at our hydroelectric stations or in wind conditions
at our wind facilities or a sustained period of adverse weather at our biomass cogeneration facilities could
lead to a material adverse change in the volume of electricity generated, revenues and cash flow.
In Brazil, hydroelectric power generators have access to a hydrology balancing program (“MRE”),
which, within the limitation referred to below, stabilizes hydrology by assuring that all participant plants in
the MRE receive a reference amount of electricity, approximating long-term average irrespective of the
actual volume of energy generated whether above or below long-term average and substantially all our
assets are part of that pool. In cases of nationwide drought, when the pool as a whole is in shortfall
relative to the long-term average, an asset can expect to share the nationwide shortfall pro-rata with the
rest of the pool. In addition, specific rules provide the minimum percentages of the reference amount of
electricity that must be actually generated each year for assuring participation in the MRE. The energy
reference amount is assessed yearly according to the criteria of such regulation, and can be adjusted
positively or negatively. If the MRE is terminated or changed or Brookfield Renewable’s reference amount
is revised, Brookfield Renewable’s financial results would be exposed to variations in hydrology in Brazil.
Counterparties to our contracts may not fulfill their obligations and, as our contracts expire, we
may not be able to replace them with agreements on similar terms.
If, for any reason, any of the purchasers of power under such power purchase agreements,
including Brookfield Asset Management, are unable or unwilling to fulfill their contractual obligations
under the relevant power purchase agreement or if they refuse to accept delivery of power pursuant to
the relevant power purchase agreement, our assets, liabilities, business, financial condition, results of
operations and cash flow could be materially and adversely affected as we may not be able to replace the
agreement with an agreement on equivalent terms and conditions. External events, such as a severe
economic downturn, could impair the ability of some counterparties to the power purchase agreements or
some end use customers to pay for electricity received.
Certain portions of our hydroelectric portfolio will be subject to re-contracting in the future. We
cannot provide any assurance that we will be able to re-negotiate these contracts once their terms expire,
and even if we are able to do so, we cannot provide any assurance that we will be able to obtain the
same prices or terms we currently receive. If we are unable to renegotiate these contracts, or unable to
receive prices at least equal to the current prices we receive, our business, financial condition, results of
operation and prospects could be adversely affected.
Conversely, a significant percentage of our sales will be made by facilities subject to indefinite
term contracts with a subsidiary of Brookfield Asset Management (taking into account its rights of
renewal) at fixed prices per MWh of our electricity sold. Accordingly, with respect to those facilities, our
ability to realize improved revenues due to increases in market prices for renewable power may
be limited.
A significant portion of the power we generate is sold under long-term power purchase
agreements with Brookfield Asset Management, public utilities or industrial or commercial end-users,
some of whom may not be rated by any rating agency. For example, approximately 45% of our 2015
contracted generation is with Brookfield entities which are not rated and whose obligations are not
guaranteed by Brookfield Asset Management.
Increases in water rental costs (or similar fees) or changes to the regulation of water supply may
impose additional obligations on Brookfield Renewable.
Water rights are generally owned or controlled by governments that reserve the right to control
water levels or may impose water-use requirements as a condition of license renewal that differ from
those arrangements in place today. We are required to make rental payments and pay property taxes for
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 47
water rights or pay similar fees for use of water once our hydroelectric projects are in commercial
operation. Significant increases in water rental costs or similar fees in the future or changes in the way
that governments regulate water supply could have a material adverse effect on our assets, liabilities,
business, financial condition, results of operations and cash flow.
Supply and demand in the energy market, including the non-renewable energy market, is volatile
and such volatility could have an adverse impact on electricity prices and a material adverse
effect on Brookfield Renewable’s assets, liabilities, business, financial condition, results of
operations and cash flow.
A portion of Brookfield Renewable’s revenues are tied, either directly or indirectly, to the
wholesale market price for electricity in the markets in which Brookfield Renewable operates. Wholesale
market electricity prices are impacted by a number of factors including: the price of fuel (for example,
natural gas) that is used to generate other sources of electricity; the management of generation and the
amount of excess generating capacity relative to load in a particular market; the cost of controlling
emissions of pollution, including potentially the cost of carbon; the structure of the market; and weather
conditions that impact electrical load. More generally, there is uncertainty surrounding the trend in
electricity demand growth, which is greatly influenced by macroeconomic conditions, by absolute and
relative energy prices, and by developments
in energy conservation and demand-side
management. Correspondingly, from a supply perspective, there are uncertainties associated with the
timing of generating plant retirements – in part driven by environmental regulations – and with the scale,
pace and structure of replacement capacity, again reflecting a complex interaction of economic and
political pressures and environmental preferences. We expect that recent drops in oil prices – and by
extension, lower natural gas prices – will increase volatility and lower prices in certain power markets,
with a potentially adverse impact for any uncontracted generation. This volatility and uncertainty in the
energy market, including the non-renewable energy market, could have a material adverse effect on
Brookfield Renewable’s assets, liabilities, business, financial condition, results of operations and cash
flow.
Our operations are highly regulated and may be exposed to increased regulation which could
result in additional costs to Brookfield Renewable.
Our generation assets are subject to extensive regulation by various government agencies and
regulatory bodies in different countries at the federal, regional, state, provincial and local level. As legal
requirements frequently change and are subject to interpretation and discretion, we may be unable to
predict the ultimate cost of compliance with these requirements or their effect on our operations. Any new
law, rule or regulation could require additional expenditure to achieve or maintain compliance or could
adversely impact our ability to generate and deliver energy. Also, operations that are not currently
regulated may become subject to regulation which could result in additional cost to our business. Further,
changes in wholesale market structures or rules, such as generation curtailment requirements or
limitations to access the power grid, could have a material adverse effect on our ability to generate
revenues from our facilities. For example, in North America, many of our assets are subject to the
operating and market-setting rules determined by independent system operators, such as the ISO New
England. These independent system operators could introduce rules in a way that adversely impact our
operations.
There is a risk that our concessions and licenses will not be renewed.
We hold concessions and licenses and we have rights to operate our facilities which generally
include rights to the land and water required for power generation. We expect that our rights and/or our
licenses will be renewed by the applicable regulatory bodies in each country. However, if these regulatory
bodies do not grant us renewal rights, or if they decide to renew our concessions and licenses, as the
case may be, under conditions which would impose additional costs, or if additional restrictions such as
setting a price ceiling for energy sales, our profitability and operational activity could be adversely
impacted.
The cost of operating our plants could increase for reasons beyond our control.
While we currently maintain a low and competitive cost position, there is a risk that increases in
our cost structure that are beyond our control could materially adversely impact our financial
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 48
performance. Examples of such costs include compliance with new conditions imposed during the
relicensing process, municipal property taxes, water rental fees and the cost of procuring materials and
services required for our maintenance activities.
We may fail to comply with the conditions in, or may not be able to maintain, our governmental
permits.
Our generation assets and construction projects are required to comply with numerous
supranational (in the case of the European Union), federal, regional, state, provincial and local statutory
and regulatory standards and to maintain numerous licenses, permits and governmental approvals
required for operation. Some of the licenses, permits and governmental approvals that have been issued
to our operations contain conditions and restrictions, or may have limited terms. If we fail to satisfy the
conditions or comply with the restrictions imposed by our licenses, permits and governmental approvals,
or the restrictions imposed by any statutory or regulatory requirements, we may become subject to
regulatory enforcement action and the operation of the assets could be adversely affected or be subject
to fines, penalties or additional costs or revocation of regulatory approvals, permits or licenses. In
addition, we may not be able to renew, maintain or obtain all necessary licenses, permits and
governmental approvals required for the continued operation or further development of our projects, as a
result of which the operation or development of our assets may be limited or suspended. Our failure to
renew, maintain or obtain all necessary licenses, permits or governmental approvals may have a material
adverse effect on our assets, liabilities, business, financial condition, results of operations and cash flow.
We may experience equipment failure.
Our generation assets may not continue to perform as they have in the past and there is a risk of
equipment failure due to wear and tear, latent defect, design error, operator error or early obsolescence,
among other things, which could have a material adverse effect on our assets, liabilities, business,
financial condition, results of operations and cash flow. In particular, wind generation turbines are less
commercially proven than hydroelectric assets and have shorter lifespans.
The occurrence of dam failures could result in a loss of generating capacity and repairing such
failures could require us to expend significant amounts of capital and other resources.
The occurrence of dam failures at any of our hydroelectric generating stations or the occurrence
of dam failures at other generating stations or dams operated by third parties whether upstream or
downstream of our hydroelectric generating stations could result in a loss of generating capacity and
repairing such failures could require us to expend significant amounts of capital and other resources.
Such failures could result in damage to the environment or damages and harm to third parties or the
public, which could expose us to significant liability.
We are subject to foreign currency risk which may adversely affect the performance of
our operations.
A significant portion of our current operations are in countries where the U.S. dollar is not the
functional currency. These operations pay distributions in currencies other than the U.S. dollar, which we
must convert to U.S. dollars prior to making distributions. A significant depreciation in the value of such
foreign currencies or measures which may be introduced by foreign governments to control inflation or
deflation may have a material adverse effect on our business, financial condition, results of operations
and cash flows.
The ability to deliver electricity to our various counterparties requires the availability of and
access to interconnection facilities and transmission systems.
Our ability to sell electricity is impacted by the availability of and access to the various
transmission systems to deliver power to its contractual delivery point and the arrangements and facilities
for interconnecting the generation projects to the transmission systems. The absence of this availability
and access, our inability to obtain reasonable terms and conditions for interconnection and transmission
agreements, the operational failure of existing interconnection facilities or transmission facilities, the lack
of adequate capacity on such interconnection or transmission facilities, may have a material adverse
effect on our ability to deliver electricity to our various counterparties or the requirement of counterparties
to accept and pay for energy delivery, which could materially and adversely affect our assets, liabilities,
business, financial condition, results of operations and cash flow.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 49
Our operations are exposed to health, safety, security and environmental risks.
The ownership, construction and operation of our generation assets carry an inherent risk of
liability related to public safety, health, safety, security and the environment, including the risk of
government imposed orders to remedy unsafe conditions and/or to remediate or otherwise address
environmental contamination or damage. We could also be exposed to potential penalties for
contravention of health, safety, security and environmental laws and potential civil liability. In the ordinary
course of business we incur capital and operating expenditures to comply with health, safety, security and
environmental laws to obtain and comply with licenses, permits and other approvals and to assess and
manage related risks. The costs to comply with these laws (and any future laws or amendments enacted)
may increase over time and result in additional material expenditures. We may become subject to
government orders, investigations, inquiries or other proceedings (including civil claims) relating to health,
safety, security and environmental matters as a result of which our operations may be limited or
suspended. The occurrence of any of these events or any changes, additions to or more rigorous
enforcement of health, safety, security and environmental laws could have a material and adverse impact
on operations and result in additional material expenditures. Additional environmental, health and safety
issues relating to presently known or unknown matters may require unanticipated expenditures, or result
in fines, penalties or other consequences (including changes to operations) that may be material and
adverse to our business and results of operations.
We may suffer a significant loss resulting from fraud, bribery, corruption other illegal acts,
inadequate or failed internal processes or systems, or from external events.
We may suffer a significant loss resulting from fraud, bribery, corruption, other illegal acts,
inadequate or failed internal processes or systems, or from external events, such as the occurrence of
disasters or security threats affecting our ability to operate. We operate in different markets and rely on
our employees and certain third parties to follow our policies and processes as well as applicable laws in
their activities. Risk of illegal acts or failed systems is managed through our infrastructure, controls,
systems and people, complemented by central groups focusing on enterprise-wide management of
specific operational risks such as fraud, trading, outsourcing, and business disruption, as well as
personnel and systems risks. Specific programs, policies, standards, methodologies and training have
been developed to support the management of these risks. These risks can result in direct or indirect
financial loss, reputational impact or regulatory censure.
We rely on computerized business systems.
Our business places significant reliance on information technology. In addition, our business also
relies upon telecommunication services to remotely monitor and control our assets and interface with
regulatory agencies, wholesale power markets and customers. The information and embedded systems
of key business partners and regulatory agencies are also important to our operations. In light of this, we
may be subject to cybersecurity risks or other breaches of information technology security. A breach of
our cyber/data security measures or the failure or malfunction of any of our computerized business
systems, associated backup or data storage systems for a significant time period could have a material
adverse effect on our business operations, financial reporting, financial condition and results of
operations.
There are general industry risks associated with operating in power markets in North America,
Latin America and Europe.
We operate in power markets in North America, Latin America and Europe (currently Canada, the
United States, Brazil, the Republic of Ireland and Northern Ireland), each of which is affected by
competition, price, supply of and demand for power, the location of import/export transmission lines and
overall political, economic and social conditions and policies. A general and extended decline in the North
American, Latin American or European economies, or in the economies of the specific countries in which
we operate, or sustained conservation efforts to reduce electricity consumption, could have the effect of
reducing demand for electric energy over time.
Advances in technology could impair or eliminate the competitive advantage of our projects.
There are other alternative technologies that can produce renewable power, such as fuel cells,
microturbines and photovoltaic (solar) cells. These alternative technologies currently produce electricity at
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 50
a higher average price than our generation facilities; however, research and development activities are
ongoing to seek improvements in such alternative technologies and their cost of producing electricity is
gradually declining. Additionally, research and developments activities are ongoing to seek improvements
and reductions in carbon emissions from conventional fossil fuel generation. It is possible that advances
will further reduce the cost of alternative methods of power generation. If this were to happen, the
competitive advantage of our projects may be significantly impaired or eliminated and our assets,
liabilities, business, financial condition, results of operations and cash flow could be materially and
adversely affected as a result.
RISKS RELATED TO FINANCING
Our ability to finance our operations is subject to various risks relating to the state of the capital
markets.
Brookfield Renewable and certain of its subsidiaries have corporate debt and many operating
entities have limited recourse project level debt (the majority of which is non-recourse to Brookfield
Renewable), that will need to be replaced from time to time. Brookfield Renewable’s financings may
contain conditions that limit its ability to repay indebtedness prior to maturity without incurring penalties,
which may limit its capital markets flexibility. Refinancing risk includes, among other factors, dependence
on continued operating performance of Brookfield Renewable’s assets, future electricity market prices,
future capital markets conditions, the level of future interest rates and investors’ assessment of Brookfield
Renewable’s credit risk at such time. In addition, certain of our financings are, and future financings may
be exposed to floating interest rate risks, and if interest rates increase, an increased proportion of our
cash flow may be required to service indebtedness. Future acquisitions, development and construction of
new facilities and other capital expenditures will be financed out of cash generated from our operations,
borrowings and possible future sales of equity. Our ability to obtain financing to finance our growth is
dependent on, among other factors, the overall state of the capital markets, continued operating
performance of our assets, future electricity market prices, the level of future interest rates and investors’
assessment of our credit risk at such time, and investor appetite for investments in renewable energy and
infrastructure assets in general and in Brookfield Renewable’s securities in particular. To the extent that
external sources of capital become limited or unavailable or available on onerous terms, our ability to
make necessary capital investments to construct new or maintain existing facilities will be impaired, and
as a result, our business, financial condition, results of operations and prospects may be materially and
adversely affected.
We are subject to operating and financial restrictions through covenants in our loan, debt and
security agreements.
Brookfield Renewable, BRELP and its subsidiaries are or will in the future be subject to operating
and financial restrictions through covenants in our loan, debt and security agreements. These restrictions
prohibit or limit our ability to, among other things, incur additional debt, provide guarantees for
indebtedness, create liens, dispose of assets, liquidate, dissolve, amalgamate, consolidate or effect
corporate or capital reorganizations, declare distributions, issue equity interests and create subsidiaries.
A financial covenant in our corporate bonds and in our corporate bank credit facilities limits our overall
indebtedness to a percentage of total capitalization, a restriction which may limit our ability to obtain
additional financing, withstand downturns in our business and take advantage of business and
development opportunities. If we breach our covenants, our credit facilities may be terminated or come
due and such event may cause our credit rating to deteriorate and subject Brookfield Renewable and its
subsidiaries to higher interest and financing costs. We may also be required to seek additional debt
financing on terms that include more restrictive covenants, require repayment on an accelerated schedule
or impose other obligations that limit our ability to grow our business, acquire needed assets or take other
actions that we might otherwise consider appropriate or desirable.
Changes in our credit ratings may have an adverse effect on our financial position and ability to
raise capital.
The credit rating assigned to Brookfield Renewable or any of our subsidiaries’ debt securities may
not remain in effect for any given period of time. A rating may be changed by the relevant rating agency.
A lowering or withdrawal of such ratings may have an adverse effect on our financial position and ability
to raise capital.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 51
RISKS RELATED TO OUR GROWTH STRATEGY
Government regulations providing incentives for renewable energy could change at any time.
Development of renewable energy sources and the overall growth of the renewable energy
industry are dependent on state or provincial, national, supranational and international policies in support
of such development. In particular, Canada and the United States, two of our principal markets, and their
respective provinces and states, have pursued for several years, and in many cases continue to pursue,
policies of active support for renewable energy. In Brazil, SHPPs benefit from a special discount for the
use of the transmission and distribution system which enables them to secure higher electricity prices in
the market. Policies which incentivize the development of renewables include renewable energy purchase
obligations imposed on local service entities, tax incentives, including investment tax credits, production
tax credits and accelerated depreciation and direct subsidies. In the Republic of Ireland, the majority of
our assets are underpinned by the REFIT program that ensures generators receive a minimum fixed
annual electricity price, indexed by inflation annually over a contract term of 15 years. Our Northern Irish
wind assets similarly earn sterling denominated revenues by receiving a minimum fixed price Renewable
Obligation Certificate for twenty years, in addition to the market price.
The attractiveness of renewable energy to purchasers, as well as the economic return available
to project sponsors, is often dependent on the cost of fossil fuels as well as the level of incentives
available, and the availability of such incentives is uncertain. There is a risk that government regulations
that provide incentives for renewable energy, or that have increased emission standards or other
environmental regulation of traditional thermal coal-fired generation, could change at any time in a
manner that adversely impacts the market for renewables generally. Any such change may impact the
competitiveness of renewable energy generally and the economic value and ability to develop our
projects in particular. In addition, some of these incentives are subject to sunset provisions which mean
they will expire unless renewed. The budget difficulties facing many governments create greater
challenges and uncertainty in getting incentives renewed. In addition, even if incentives are renewed prior
to their expiration, uncertainty regarding renewal can create substantial risks and delays for developers of
renewable power projects. As a result, we may face reduced ability to develop our project pipeline and
realize our development growth objectives. We may also suffer material write-offs of development assets
as a result.
We may be unable to identify sufficient investment opportunities and complete transactions as
planned.
Our strategy for building LP Unitholder value is to seek to acquire or develop high-quality assets
and businesses that generate sustainable and increasing cash flows, with the objective of achieving
appropriate risk-adjusted returns on our invested capital over the long-term. However, there is no
certainty that we will be able to find sufficient investment opportunities and complete transactions that
meet our investment criteria. Our investment criteria consider, among other things, the financial,
operating, governance and strategic merits of a proposed acquisition and, as such, there is no certainty
that we will be able to acquire or develop additional high-quality assets at attractive prices to continue
growing our business. Competition for assets is significant and competition from other well-capitalized
investors or companies may significantly increase the purchase price or prevent us from completing an
acquisition. Further, our growth initiatives are subject to a number of closing conditions, including, as
applicable, third party consents, regulatory approvals (including competition authorities) and other third
party approvals that are beyond our control and may not be satisfied. If all or some of our growth
initiatives are unable to be completed on the terms agreed, we may need to delay certain acquisitions or
terminate these acquisitions altogether.
Future growth of our portfolio may subject us to additional risks and the expected benefits of our
transactions may not materialize.
Our strategy is to continue to expand our business through acquisitions and developments. If we
are not able to complete our growth initiatives as expected in whole or in part, we may not be able to
identify alternative investments that are of a comparable quality to those contemplated in the growth
initiatives, in a timely manner, or at all. In addition, if returns are lower than anticipated from new
acquisitions or projects, we may not be able to achieve growth in our distributions in line with our stated
goals and the market value of our LP Units may decline. Further, acquisitions involve risks that could
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 52
materially and adversely affect our business, including risks related to the integration of the assets or
businesses and integration or retention of personnel relating to the acquired assets or companies and the
inability to achieve potential synergies. In addition, liabilities may exist that Brookfield Renewable does
not discover in its due diligence prior to the consummation of an acquisition, or circumstances may exist
with respect to the entities or assets acquired that could lead to future liabilities and, in each case,
Brookfield Renewable may not be entitled to sufficient, or any, recourse against the vendors or
contractual counterparties to an acquisition agreement. The discovery of any material liabilities
subsequent to an acquisition, as well as the failure of a new acquisition to perform according to
expectations, could have a material adverse effect on Brookfield Renewable’s assets, liabilities, business,
financial condition, results of operations and cash flow.
The development of our generating facilities is subject to various construction risks and risks
associated with the various types of arrangements we enter into with communities and joint
venture partners.
Our ability to develop an economically successful project is dependent on, among other things,
our ability to construct a particular project on-time and on-budget. The construction and development of
generating facilities is subject to various environmental, engineering and construction risks that could
result in cost-overruns, delays and reduced performance. A number of factors that could cause such
delays, cost over-runs or reduced performance include, but are not limited to, permitting delays, changing
engineering and design requirements, the costs of construction, the performance and necessary
experience of contractors, labor disruptions and inclement weather. In addition, we enter into various
types of arrangements with communities and joint venture partners, including in some cases, Aboriginal
peoples, for the development of projects. Certain of these communities and partners may have or may
develop interests or objectives which are different from or even in conflict with our objectives. Any such
differences could have a negative impact on the success of our projects.
RISKS RELATED TO OUR RELATIONSHIP WITH BROOKFIELD ASSET MANAGEMENT
Brookfield will exercise substantial influence over Brookfield Renewable and we are highly
dependent on the Service Provider.
Brookfield Asset Management is the sole shareholder of the managing general partner of
Brookfield Renewable. As a result of its ownership of the managing general partner, Brookfield Asset
Management will be able to control the appointment and removal of the managing general partner’s
directors and, accordingly, exercise substantial influence over Brookfield Renewable. In addition,
Brookfield Renewable holds its interest in its operating entities indirectly and will hold any future
acquisitions indirectly through BRELP, the general partner of which is indirectly owned by Brookfield
Asset Management. As Brookfield Renewable’s only substantial asset is the limited partnership interests
that it holds in BRELP, except future rights under the Voting Agreement, Brookfield Renewable will not
have a right to participate directly in the management or activities of BRELP or its holding entities,
including with respect to the making of decisions (although it will have the right to remove and replace the
general partner of BRELP).
Brookfield Renewable and BRELP depend on the management and administration services
provided by or under the direction of the Service Provider under the Master Services Agreement.
Brookfield Asset Management personnel and support staff that provide services to us under the Master
Services Agreement are not required to have as their primary responsibility the management and
administration of Brookfield Renewable or BRELP or to act exclusively for either of us and the Master
Services Agreement does not require any specific individuals to be provided by Brookfield Asset
Management. Any failure to effectively manage our current operations or to implement our strategy could
have a material adverse effect on our business, financial condition and results of operations. The Master
Services Agreement continues in perpetuity, until terminated in accordance with its terms.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 53
ADDITIONAL INFORMATION
Additional information, including our Form 20-F filed with the SEC and securities regulators in
Canada, are available on our website at www.brookfieldrenewable.com, on SEC’s website at
www.sec.gov and on SEDAR’s website at www.sedar.com.
SUBSEQUENT EVENTS
In February 2015, we completed the acquisition of two advanced hydroelectric development
projects totaling 47 MW in Brazil. Once fully commissioned, the projects are expected to generate 280
GWh annually. The acquisition was completed with institutional partners, and Brookfield Renewable
retains an approximate 40% interest.
In February 2015, we entered into an agreement to acquire two wind facilities in Portugal with an
aggregate capacity of 123 MW. The portfolio is expected to generate 260 GWh annually. The acquisition
is being pursued with institutional partners, and Brookfield Renewable will retain an approximate 40%
interest. The transaction is expected to close in 2015, subject to regulatory approvals and closing
conditions.
In February 2015, construction on two Irish wind facilities totaling 125 MW was completed, and
the facilities were fully commissioned. The facilities are expected to generate 349 GWh annually.
In February 2015, we up-financed indebtedness associated with a 45 MW hydroelectric facility in
British Columbia by issuing C$90 million ($71 million) of bonds with an interest rate of 2.95%, maturing in
May 2023.
In February 2015, we secured a 12 month extension on $75 million of holding company-level debt
associated with a portfolio of hydroelectric and wind facilities in the United States held through the
Brookfield Americas Infrastructure Fund. The debt bears interest at LIBOR plus 2.75%, and matures in
February 2016.
In February 2015, we announced an increase in LP Unitholder distributions to $1.66 per LP Unit
on an annualized basis, an increase of 11 cents per LP Unit, to take effect with the first quarter
distribution payable in March 2015.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 54
FINANCIAL REVIEW BY SEGMENTS FOR THE YEAR ENDED DECEMBER 31, 2014
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net income and cash flows from operating activities for the
year ended December 31:
(MILLIONS)
Revenues
Other income
Share of cash earnings from equity-accounted
investments
Direct operating costs
Adjusted EBITDA(1)
Fixed earnings adjustment(2)
Interest expense - borrowings
Management service costs
Current income taxes
Less: cash portion of non-controlling interests
Preferred equity
Participating non-controlling interests - in
operating subsidiaries
Funds From Operations(1)
Less: adjusted sustaining capital expenditures(3)
Adjusted Funds From Operations(1)
Add: adjusted sustaining capital expenditures
Add: cash portion of non-controlling interests
Less: fixed earnings adjustment
Other items:
Depreciation and amortization
Unrealized financial instruments gain
Share of non-cash loss from equity-
accounted investments
Deferred income tax recovery
Other
Net income
Adjustments for non-cash items
Dividends received from equity accounted
investments
Co-generation
Hydroelectric
$
1,378 $
10
Wind
297 $
-
and Other
2013
2014
29 $ 1,704 $ 1,706
11
10
-
26
(368)
1,046
-
(242)
-
(18)
-
(70)
227
11
(86)
-
-
-
(86)
(57)
-
(87)
(51)
-
26
(524)
1,216
11
(415)
(51)
(18)
21
(530)
1,208
-
(410)
(41)
(19)
-
-
(38)
(38)
(37)
(98)
688 $
(47)
105 $
-
(233) $
$
$
(145)
560 $
(58)
502
58
183
(11)
(548)
10
(23)
29
3
203 $
497
(107)
594
(56)
538
56
144
-
(535)
37
(12)
18
(31)
215
514
Changes in due to or from related parties
Net change in working capital balances
Cash flows from operating activities
(1) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”.
(2) The fixed earnings adjustment relates to Brookfield Renewable’s investment in the acquisition of the wind portfolio in Ireland.
Pursuant to the terms of the purchase and sale agreement, Brookfield Renewable acquired an economic interest in the wind
portfolio from January 1, 2014. The transaction closed on June 30, 2014, and accordingly under IFRS, the $11 million net Funds
From Operations contribution was recorded as part of the purchase price.
$
(3) Based on long-term sustaining capital expenditure plans.
30
(10)
(20)
700 $
16
(11)
1
735
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 55
FINANCIAL REVIEW BY SEGMENTS FOR THE YEAR ENDED DECEMBER 31, 2013
The following table reflects Adjusted EBITDA, Funds From Operations, Adjusted Funds From
Operations, and provides a reconciliation to net income (loss) and cash flows from operating activities for
the year ended December 31:
(MILLIONS)
Revenues
Other income
Share of cash earnings from equity-accounted
investments
Direct operating costs
Adjusted EBITDA(1)
Interest expense - borrowings
Management service costs
Current income taxes
Less: cash portion of non-controlling interests
Preferred equity
Participating non-controlling interests - in
operating subsidiaries
Funds From Operations(1)
Less: adjusted sustaining capital expenditures(2)
Adjusted Funds From Operations(1)
Add: adjusted sustaining capital expenditures
Add: cash portion of non-controlling interests
Other items:
Depreciation and amortization(3)
Unrealized financial instruments gain (loss)
Share of non-cash loss from equity-
accounted investments
Deferred income tax recovery
Other
Net income (loss)
Adjustments for non-cash items
Dividends received from equity accounted
investments
Co-generation
Hydroelectric
$
1,377 $
11
Wind
258 $
-
and Other
2012
2013
71 $ 1,706 $ 1,309
16
11
-
21
(364)
1,045
(235)
-
(20)
-
(60)
198
(82)
-
-
-
(106)
(35)
(93)
(41)
1
21
(530)
1,208
(410)
(41)
(19)
13
(486)
852
(411)
(36)
(14)
-
-
(37)
(37)
(16)
(81)
709 $
(26)
90 $
-
(205) $
$
(107)
594 $
(56)
538
56
144
(28)
347
(52)
295
52
44
(535)
37
(483)
(23)
(12)
18
(31)
215 $
514
(18)
54
(16)
(95)
503
$
16
(11)
1
735 $
12
15
(22)
413
Changes in due to or from related parties
Net change in working capital balances
Cash flows from operating activities
(1) Non-IFRS measures. See “Cautionary Statement Regarding Use of Non-IFRS Measures”.
(2) Based on long-term sustaining capital expenditure plans.
(3) See Note 2(f) - Change in accounting estimates in our audited consolidated financial statements concerning changes in
$
estimates related to depreciation expense.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 56
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements and information, within the meaning of Canadian
securities laws and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities
Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe
harbor” of the United States Private Securities Litigation Reform Act of 1995 and in any applicable
Canadian securities regulations, concerning the business and operations of Brookfield Renewable.
Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections,
guidance or other statements that are not statements of fact. Forward-looking statements in this Annual
Report include statements regarding the quality of Brookfield Renewable’s assets and the resiliency of
the cash flow they will generate, Brookfield Renewable’s anticipated financial performance, future
commissioning of assets, contracted portfolio, technology diversification, acquisition opportunities,
expected completion of acquisitions, future energy prices and demand for electricity, economic recovery,
achievement of long-term average generation, project development and capital expenditure costs,
diversification of shareholder base, energy policies, economic growth, growth potential of the renewable
asset class, the future growth prospects and distribution profile of Brookfield Renewable and Brookfield
Renewable’s access to capital. Forward-looking statements can be identified by the use of words such as
“plans”, “expects”, “scheduled”, “estimates”, “intends”, “anticipates”, “believes”, “potentially”, “tends”,
“continue”, “attempts”, “likely”, “primarily”, “approximately”, “endeavours”, “pursues”, “strives”, “seeks”, or
variations of such words and phrases, or statements that certain actions, events or results “may”, “could”,
“would”, “might” or “will” be taken, occur or be achieved. Although we believe that our anticipated future
results, performance or achievements expressed or implied by the forward-looking statements and
information in this Annual Report are based upon reasonable assumptions and expectations, we cannot
assure you that such expectations will prove to have been correct. You should not place undue reliance
on forward-looking statements and information as such statements and information involve known and
unknown risks, uncertainties and other factors which may cause our actual results, performance or
achievements to differ materially from anticipated future results, performance or achievement expressed
or implied by such forward-looking statements and information.
Factors that could cause actual results to differ materially from those contemplated or implied by forward-
looking statements include, but are not limited to: our limited operating history; the fact that we are not
subject to the same disclosure requirements as a U.S. domestic issuer; risks commonly associated with a
separation of economic interest from control or the incurrence of debt at multiple levels within our
organizational structure; the risk that we may be deemed an “investment company” under the Investment
Company Act; the risk that the effectiveness of our internal controls over financial reporting could have a
material effect on our business; changes to hydrology at our hydroelectric stations, to wind conditions at
our wind facilities or to weather generally at any biomass cogeneration facilities; the risk that
counterparties to our contracts do not fulfill their obligations, and as our contracts expire, we may not be
able to replace them with agreements on similar terms; increases in water rental costs (or similar fees) or
changes to the regulation of water supply; volatility in supply and demand in the energy market; risks
relating to the increasing amount of uncontracted generation in our portfolio; exposure to additional costs
as a result of our operations being highly regulated and exposed to increased regulation; the risk that our
concessions and licenses will not be renewed; increases in the cost of operating our plants; our failure to
comply with conditions in, or our inability to maintain, governmental permits; equipment failure; dam
failures and the costs of repairing such failures; exposure to force majeure events; exposure to
uninsurable
to
interconnection facilities and transmission systems; health, safety, security and environmental risks;
disputes, governmental and regulatory investigations and litigation; local communities affecting our
operations; losses resulting from fraud, bribery, corruption, other illegal acts, inadequate or failed internal
processes or systems, or from external events; risks relating to our reliance on computerized business
systems; general industry risks relating to operating in the North American, Latin American and European
power market sectors; advances in technology that impair or eliminate the competitive advantage of our
projects; newly developed technologies in which we invest not performing as anticipated; labour
disruptions and economically unfavourable collective bargaining agreements; our inability to finance our
operations due to the status of the capital markets; the operating and financial restrictions imposed on us
by our loan, debt and security agreements; changes in our credit ratings; changes to government
regulations that provide incentives for renewable energy; our inability to identify sufficient investment
in currency exchange rates; availability and access
losses; adverse changes
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 57
opportunities and complete transactions; risks related to the growth of our portfolio and our inability to
realize the expected benefits of our transactions, including transactions that have been announced by not
yet closed; our inability to develop existing sites or find new sites suitable for the development of
greenfield projects; risks associated with the development of our generating facilities and the various
types of arrangements we enter into with communities and joint venture partners; Brookfield Asset
Management’s election not to source acquisition opportunities for us and our lack of access to all
renewable power acquisitions that Brookfield Asset Management identifies; our lack of control over our
operations conducted through joint ventures, partnerships and consortium arrangements; our ability to
issue equity or debt for future acquisitions and developments will be dependent on capital markets;
foreign laws or regulation to which we become subject as a result of future acquisitions in new markets;
and the departure of some or all of Brookfield’s key professionals.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. The
forward-looking statements represent our views as of the date of this Annual Report and should not be
relied upon as representing our views as of any date subsequent to February 27, 2015, the date of this
Annual Report. While we anticipate that subsequent events and developments may cause our views to
change, we disclaim any obligation to update the forward-looking statements, other than as required by
applicable law. For further information on these known and unknown risks, please see “Risk Factors”
included in our Form 20-F.
CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS MEASURES
This Annual Report contains references to Adjusted EBITDA, Funds From Operations and Adjusted
Funds From Operations which are not generally accepted accounting measures under IFRS and
therefore may differ from definitions of Adjusted EBITDA, Funds From Operations and Adjusted Funds
From Operations used by other entities. We believe that Adjusted EBITDA, Funds From Operations and
Adjusted Funds From Operations are useful supplemental measures that may assist investors in
assessing the financial performance and the cash anticipated to be generated by our operating portfolio.
Neither Adjusted EBITDA, Funds From Operations nor Adjusted Funds From Operations should be
considered as the sole measure of our performance and should not be considered in isolation from, or as
a substitute for, analysis of our financial statements prepared in accordance with IFRS.
A reconciliation of Adjusted EBITDA, Funds From Operations and Adjusted Funds From Operations to
net income (loss) and cash flows from operating activities is presented in our Management’s Discussion
and Analysis. We have also provided a reconciliation of Adjusted EBITDA and Funds From Operations to
net income (loss) in Note 24 - Segmented information in our audited consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 58
MANAGEMENT’S RESPONSIBILITY
Management’s Responsibility for Financial Statements
The accompanying consolidated financial statements have been prepared by the Brookfield Renewable
Energy Partners L.P. (“Brookfield Renewable”) management which is responsible for their integrity,
consistency, objectivity and reliability. To fulfill this responsibility, Brookfield Renewable maintains
policies, procedures and systems of internal control to ensure that its reporting practices and accounting
and administrative procedures are appropriate to provide a high degree of assurance that relevant and
reliable financial information is produced and assets are safeguarded. These controls include the careful
selection and training of employees, the establishment of well-defined areas of responsibility and
accountability for performance, and the communication of policies and code of conduct throughout the
company.
These consolidated financial statements have been prepared in conformity with International Financial
Reporting Standards as issued by the International Accounting Standards Board and, where appropriate,
reflect estimates based on management’s judgment.
Ernst & Young LLP, the Independent Registered Chartered Accountants appointed by the directors of the
general partner of Brookfield Renewable, have audited the consolidated financial statements in
accordance with the standards of the Public Company Accounting Oversight Board (United States) to
enable them to express to the partners their opinion on the consolidated financial statements. Their report
outlines the scope of their examination and opinion on the consolidated financial statements.
The consolidated financial statements have been further reviewed and approved by the Board of
Directors of the general partner of Brookfield Renewable acting through its Audit Committee, which is
comprised of directors who are not officers or employees of Brookfield Renewable. The Audit Committee,
which meets with the auditors and management to review the activities of each and reports to the Board
of Directors, oversees management’s responsibilities for the financial reporting and internal control
systems. The auditors have full and direct access to the Audit Committee and meet periodically with the
committee both with and without management present to discuss their audit and related findings.
Richard Legault
Chief Executive Officer
February 27, 2015
Nicholas Goodman
Chief Financial Officer
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 59
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Partners of Brookfield Renewable Energy Partners L.P.
We have audited the accompanying consolidated financial statements of Brookfield Renewable Energy
Partners L.P. (“Brookfield Renewable”), which comprise the consolidated balance sheets as at December
31, 2014 and 2013, and the related consolidated statements of income (loss), comprehensive income
(loss), changes in equity and cash flows for each of the years in the three-year period ended December
31, 2014, and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and
the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide
a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of Brookfield Renewable Energy Partners L.P. as at December 31, 2014 and 2013 and its
financial performance and their cash flows for each of the years in the three-year period ended December
31, 2014, in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 60
Other Matter
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), Brookfield Renewable’s internal control over financial reporting as of December
31, 2014, based on the criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report
dated February 27, 2015 expressed an unqualified opinion on Brookfield Renewable’s internal control
over financial reporting.
Toronto, Canada
February 27, 2015
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 61
INTERNAL CONTROL OVER FINANCIAL REPORTING
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Brookfield Renewable Energy Partners, L.P. (“Brookfield Renewable”) is responsible for
establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and
the Chief Financial Officer and effected by the Board of Directors, management and other personnel to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board as defined in Regulation 240.13a–15(f) or
240.15d–15(f).
Management assessed the effectiveness of Brookfield Renewable’s internal control over financial
reporting as of December 31, 2014, based on the criteria set forth in Internal Control – Integrated
Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this assessment, management concludes that, as of December 31, 2014,
Brookfield Renewable’s internal control over financial reporting is effective. Management excluded from
its design and assessment of internal control over financial reporting the internal controls of the Maine
Hydroelectric Generation Portfolio, Pennsylvania Hydroelectric Generation Facility and Ireland Wind
Portfolio, whose total assets, net assets, total revenues and net income on a combined basis constitute
approximately 12%, 10%, 6% and 1%, respectively, of the consolidated financial statement amounts as of
and for the year ended December 31, 2014.
Brookfield Renewable’s internal control over financial reporting as of December 31, 2014, has been
audited by Ernst & Young LLP, the Independent Registered Public Accounting Firm, who also audited
Brookfield Renewable’s consolidated financial statements for the year ended December 31, 2014. As
stated in the Report of Independent Registered Public Accounting Firm, Ernst & Young LLP expressed an
unqualified opinion on the effectiveness of Brookfield Renewable’s internal control over financial reporting
as of December 31, 2014.
Richard Legault
Chief Executive Officer
February 27, 2015
Nicholas Goodman
Chief Financial Officer
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 62
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Partners of Brookfield Renewable Energy Partners L.P.
We have audited Brookfield Renewable Energy Partners L.P. (“Brookfield Renewable”)’s internal control
over financial reporting as at December 31, 2014, based on the criteria established in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). Brookfield Renewable’s management is responsible
for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Brookfield Renewable’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, internal control over
financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future periods are subject to the risk that the
controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting,
management’s assessment of and conclusion on the effectiveness of internal control over financial
reporting did not include the internal controls of the Maine Hydroelectric Generation Portfolio,
Pennsylvania Hydroelectric Generation Facility and Ireland Wind Portfolio, which are included in the 2014
consolidated financial statements of Brookfield Renewable and constituted approximately 12% and 10%
of total and net assets, respectively, as of December 31, 2014 and 6% and 1% of revenues and net
income, respectively, for the year then ended. Our audit of internal control over financial reporting of
Brookfield also did not include an evaluation of the internal control over financial reporting of the Maine
Hydroelectric Generation Portfolio, Pennsylvania Hydroelectric Generation Facility and Ireland Wind
Portfolio.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 63
In our opinion, Brookfield Renewable maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2014, based on the COSO criteria.
We have also audited, in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States), the 2014 consolidated
financial statements of Brookfield Renewable and our report dated February 27, 2015 expressed an
unqualified opinion on those financial statements.
Toronto, Canada
February 27, 2015
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 64
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31
(MILLIONS)
Assets
Current assets
Cash and cash equivalents
Restricted cash
Trade receivables and other current assets
Financial instrument assets
Due from related parties
Financial instrument assets
Equity-accounted investments
Property, plant and equipment, at fair value
Deferred income tax assets
Other long-term assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Financial instrument liabilities
Due to related parties
Current portion of long-term debt
Financial instrument liabilities
Long-term debt and credit facilities
Deferred income tax liabilities
Other long-term liabilities
Equity
Non-controlling interests
Preferred equity
Participating non-controlling interests - in operating
subsidiaries
General partnership interest in a holding subsidiary
held by Brookfield
Participating non-controlling interests - in a holding subsidiary
- Redeemable/Exchangeable units held by Brookfield
Limited partners' equity
Notes
2014
2013
5
6
7
8
9
8
10
11
15
12
13
8
9
14
8
14
15
16
18
18
18
18
19
$
$
$
150 $
232
201
48
63
694
18
273
18,566
142
156
19,849 $
253 $
99
79
256
687
75
7,422
2,637
147
10,968
203
169
204
2
48
626
15
290
15,741
117
210
16,999
229
64
110
517
920
9
6,106
2,265
163
9,463
728
796
2,062
1,303
59
54
2,865
3,167
8,881
19,849 $
2,657
2,726
7,536
16,999
$
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of Brookfield Renewable Energy Partners L.P.:
Patricia Zuccotti
Director
David Mann
Director
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 65
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS, EXCEPT AS NOTED)
Revenues
Other income
Direct operating costs
Management service costs
Interest expense – borrowings
Share of earnings from equity-accounted investments
Unrealized financial instruments gain (loss)
Depreciation
Other
Income (loss) before income taxes
Income tax recovery (expense)
Current
Deferred
Net income (loss)
Net income (loss) attributable to:
Non-controlling interests
Preferred equity
Participating non-controlling interests - in
operating subsidiaries
General partnership interest in a holding
subsidiary held by Brookfield
Participating non-controlling interests - in a
holding subsidiary - Redeemable/
Exchangeable units held by Brookfield
Limited partners' equity
Basic and diluted earnings (loss) per LP Unit
Notes
9
21
9
14
10
8
11
11
15
15
18
18
18
18
19
2014
2012
$ 1,704 $ 1,706 $ 1,309
2013
10
(524)
(51)
(415)
3
10
(548)
3
192
(18)
29
11
11
(530)
(41)
(410)
9
37
(535)
(31)
216
(19)
18
(1)
$
203 $
215 $
16
(486)
(36)
(411)
(5)
(23)
(483)
(16)
(135)
(14)
54
40
(95)
$
38 $
37 $
16
51
1
55
58
41
1
67
69
203 $
215 $
(40)
(1)
(35)
(35)
(95)
0.42 $
0.52 $
(0.26)
$
$
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 66
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS)
Net income (loss)
Other comprehensive income (loss) that will not be
reclassified to net income (loss)
Notes
2014
2013
$ 203 $ 215 $
Revaluations of property, plant and equipment
10,11
1,700
(211)
Actuarial (losses) gains on defined benefit plans
Deferred income taxes on above items
Total items that will not be reclassified to net income (loss)
Other comprehensive income (loss) that may be reclassified to
net income (loss)
Financial instruments designated as cash-flow hedges
(Losses) gains arising during the year
Reclassification adjustments for amounts recognized in
net income (loss)
Foreign currency translation
20
15
8
8
Deferred income taxes on above items
Total items that may be reclassified subsequently to net income (loss)
15
Other comprehensive income (loss)
Comprehensive income (loss)
Comprehensive income (loss) attributable to:
Non-controlling interests
Preferred equity
Participating non-controlling interests - in operating subsidiaries
General partnership interest in a holding subsidiary held by
Brookfield
Participating non-controlling interests - in a holding subsidiary -
Redeemable/Exchangeable units held by Brookfield
Limited partners' equity
18
18
18
18
19
The accompanying notes are an integral part of these consolidated financial statements.
2012
(95)
784
(8)
(224)
552
(8)
(369)
1,323
12
104
(95)
(60)
60
37
-
(398)
3
(455)
868
(1)
(501)
(11)
(453)
(548)
(16)
(145)
(1)
(125)
427
$ 1,071 $ (333) $ 332
$
(31) $
(16) $
23
310
140
(26)
8
(5)
3
379
(224)
163
405
169
$ 1,071 $ (333) $ 332
(228)
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 67
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated other comprehensive income
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS)
Balance, as at December 31, 2011
Net income
Other comprehensive (loss) income
Preferred shares issued
Capital contributions (Note 18)
Distributions or dividends declared
Other
Change in period
Balance, as at December 31, 2012
Limited
partners'
equity
Foreign
currency Revaluation
surplus
translation
$
(9) $
194 $ 3,015 $
(35)
-
-
-
(183)
-
(218)
(227) $
-
(69)
-
-
-
-
(69)
125 $ 3,285 $
-
270
-
-
-
-
270
$
Actuarial
losses on
defined
benefit Cash flow
hedges
plans
Total
limited
partners'
equity
Participating
non-controlling
interests - in
operating
subsidiaries
Preferred
equity
General
partnership
interest in
a holding
subsidiary
held by
Brookfield
Participating
non-controlling
interests - in a
holding subsidiary
- Redeemable
/Exchangeable
units held by
Brookfield
Total
equity
(8) $
-
(3)
-
-
-
-
(3)
(11) $
(31) $ 3,161 $
-
6
-
-
-
-
6
(35)
204
-
-
(183)
-
(14)
(25) $ 3,147 $
241 $
16
7
252
-
(16)
-
259
500 $
629 $
(40)
14
-
455
(24)
(6)
399
1,028 $
64 $
(1)
4
-
-
(4)
-
(1)
63 $
3,089 $ 7,184
(95)
427
252
455
(406)
(9)
624
3,070 $ 7,808
(35)
198
-
-
(179)
(3)
(19)
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 68
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Accumulated other comprehensive income
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS)
Balance, as at December 31, 2012
Net income
Other comprehensive (loss) income
Preferred shares issued
Capital contributions (Note 18)
Distributions or dividends declared
Distribution reinvestment plan
Other
Change in period
Balance, as at December 31, 2013
Balance, as at December 31, 2013
Net income
Other comprehensive income (loss)
Issuance of LP Units (Note 18)
Net proceeds
Adjustment
Capital contributions (Note 18)
Distributions or dividends declared
Distribution reinvestment plan
Other
Change in period
Balance, as at December 31, 2014
$
$
$
$
Limited
partners'
equity
(227) $
69
-
-
-
(193)
2
12
(110)
(337) $
(337) $
58
-
285
(38)
-
(216)
3
4
96
(241) $
Foreign
currency Revaluation
surplus
translation
Actuarial
(losses)
gains on
defined
benefit Cash flow
hedges
Total
limited
partners'
equity
125 $ 3,285 $
-
(208)
-
-
-
-
-
(208)
-
(111)
-
-
-
-
(14)
(125)
(83) $ 3,160 $
(83) $ 3,160 $
-
(158)
-
527
-
-
-
-
-
-
(158)
(241) $ 3,685 $
-
-
-
-
-
(2)
525
plans
(11) $
-
4
-
-
-
-
-
4
(7) $
(7) $
-
(2)
-
-
-
-
-
-
(2)
(9) $
(25) $ 3,147 $
-
18
-
-
-
-
-
18
(7) $ 2,726 $
69
(297)
-
-
(193)
2
(2)
(421)
(7) $ 2,726 $
-
(20)
58
347
-
-
-
-
-
-
(20)
(27) $ 3,167 $
285
(38)
-
(216)
3
2
441
Preferred
equity
500 $
37
(53)
349
-
(37)
-
-
296
796 $
796 $
38
(69)
-
-
-
(38)
-
1
(68)
728 $
Participating
non-controlling
interests - in
operating
subsidiaries
General
partnership
interest in
a holding
subsidiary
held by
Brookfield
Participating
non-controlling
interests - in a
holding subsidiary
- Redeemable
/Exchangeable
units held by
Brookfield
1,028 $
41
99
-
265
(122)
-
(8)
275
1,303 $
1,303 $
51
259
-
-
610
(149)
-
(12)
759
2,062 $
63 $
1
(6)
-
-
(4)
-
-
(9)
54 $
54 $
1
7
-
1
-
(6)
-
2
5
59 $
Total
equity
3,070 $ 7,808
215
(548)
349
265
(544)
2
(11)
(272)
2,657 $ 7,536
67
(291)
-
-
(188)
-
(1)
(413)
2,657 $ 7,536
203
868
55
324
-
37
-
(201)
-
(7)
208
285
-
610
(610)
3
(14)
1,345
2,865 $ 8,881
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 69
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31
(MILLIONS)
Operating activities
Net income (loss)
Adjustments for the following non-cash items:
Depreciation
Unrealized financial instrument (gain) loss
Share of earnings from equity accounted investments
Deferred income tax recovery
Other non-cash items
Dividends received from equity-accounted investments
Changes in due to or from related parties
Net change in working capital balances
Financing activities
Long-term debt - borrowings
Long-term debt - repayments
Capital contributions from participating non-controlling interests -
in operating subsidiaries
Issuance of preferred shares
Issuance of LP Units
Distributions paid:
To participating non-controlling interests - in operating
subsidiaries and preferred equity
To unitholders of Brookfield Renewable or BRELP
Investing activities
Acquisitions
Investment in:
Sustaining capital expenditures
Development and construction of renewable power
generating assets
Investment tax credits related to renewable power generating assets
Due to or from related parties
Investment in securities
Restricted cash and other
Foreign exchange loss on cash
Cash and cash equivalents
(Decrease) increase
Balance, beginning of year
Balance, end of year
Supplemental cash flow information:
Interest paid
Interest received
Income taxes paid
Notes
2014
2013
2012
$
203 $
215 $
(95)
11
8
10
15
10
22
14
14
18
18
18
18
19
4
11
11
11
548
(10)
(3)
(29)
(9)
30
(10)
(20)
700
535
(37)
(9)
(18)
43
16
(11)
1
735
483
23
5
(54)
46
12
15
(22)
413
2,118
(1,046)
1,353
(1,683)
1,193
(1,140)
610
-
285
265
337
-
434
248
-
(188)
(480)
1,299
(157)
(378)
(263)
(38)
(362)
335
(1,838)
(241)
(775)
(108)
(79)
(55)
(78)
23
-
(25)
(11)
(2,037)
(15)
(147)
-
-
-
70
(397)
(9)
$
$
(53)
203
150 $
406 $
10
33
66
137
203 $
388 $
11
29
(307)
209
157
(28)
(29)
(828)
(8)
(88)
225
137
380
16
10
The accompanying notes are an integral part of these consolidated financial statements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 70
BROOKFIELD RENEWABLE ENERGY PARTNERS L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS
The business activities of Brookfield Renewable Energy Partners L.P. (“Brookfield Renewable”) consist of
owning a portfolio of renewable power generating facilities in the United States, Canada, Brazil and
Europe.
Brookfield Renewable is a publicly traded limited partnership established under the laws of Bermuda
pursuant to an amended and restated limited partnership agreement dated November 20, 2011.
The registered office of Brookfield Renewable is 73 Front Street, Fifth Floor, Hamilton HM12, Bermuda.
The immediate parent of Brookfield Renewable is its general partner, Brookfield Renewable Partners
Limited (“BRPL”). The ultimate parent of Brookfield Renewable is Brookfield Asset Management Inc.
(“Brookfield Asset Management”). Brookfield Asset Management and its subsidiaries, other than
Brookfield Renewable, are also individually and collectively referred to as Brookfield in these financial
statements.
Brookfield Renewable’s non-voting limited partnership units (“LP Units”) are traded under the symbol
“BEP” on the New York Stock Exchange and under the symbol “BEP.UN” on the Toronto Stock
Exchange.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The
accounting policies used in the consolidated financial statements are based on the IFRS applicable as at
December 31, 2014, and encompasses individual IFRS, International Accounting Standards (“IAS”), and
interpretations made by the International Financial Reporting Interpretations Committee (“IFRIC”) and the
Standing Interpretations Committee (“SIC”). The policies set out below are consistently applied to all
periods presented, unless otherwise noted.
These consolidated financial statements have been authorized for issuance by the Board of Directors of
its general partner, BRPL, on February 27, 2015.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
All figures are presented in millions of United States (“U.S.”) dollars unless otherwise noted.
(b) Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for the
revaluation of property, plant and equipment and certain assets and liabilities which have been measured
at fair value. Cost is recorded based on the fair value of the consideration given in exchange for assets.
Consolidation
(i)
These consolidated financial statements include the accounts of Brookfield Renewable and its
subsidiaries, which are the entities over which Brookfield Renewable has control. An investor controls an
investee when it is exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. Non-controlling interests in the
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 71
equity of Brookfield Renewable’s subsidiaries are shown separately in equity in the consolidated balance
sheets.
issued
addition, BRELP
redeemable-exchangeable
Brookfield Renewable has entered into a voting agreement with Brookfield, which provides Brookfield
Renewable with control of the general partner of Brookfield Renewable Energy L.P. (“BRELP”), a holding
subsidiary. Accordingly, Brookfield Renewable consolidates the accounts of BRELP and its subsidiaries.
In
to Brookfield
(“Redeemable/Exchangeable partnership units”), pursuant to which the holder may at its request require
BRELP to redeem the Redeemable/Exchangeable partnership units for cash consideration. This right is
subject to Brookfield Renewable’s right of first refusal which entitles it, at its sole discretion, to elect to
acquire all of the Redeemable/Exchangeable partnership units so presented to BRELP that are tendered
for redemption in exchange for LP Units. As Brookfield Renewable, at its sole discretion, has the right to
settle the obligation with LP Units, the Redeemable/Exchangeable partnership units are classified as
equity of Brookfield Renewable (“Participating non-controlling interests – in a holding subsidiary –
Redeemable/Exchangeable units held by Brookfield”).
partnership
units
Brookfield Renewable has entered into voting agreements with Brookfield, whereby Brookfield
Renewable gained control of the entities that own certain U.S., Brazil and Europe renewable power
generating operations. These voting agreements provide Brookfield Renewable the authority to direct the
election of the Boards of Directors of the relevant entities, among other things, and therefore provide
Brookfield Renewable with control. Accordingly, Brookfield Renewable consolidates the accounts of these
entities. Refer to Note 9 - Related party transactions for further information.
The voting agreements do not represent business combinations in accordance with IFRS 3, Business
Combinations (“IFRS 3”), as all combining businesses are ultimately controlled by Brookfield Asset
Management both before and after the transactions were completed. Brookfield Renewable accounts for
these transactions involving entities under common control in a manner similar to a pooling of interest
which requires the presentation of pre-voting agreement financial information as if the transactions had
always been in place. Refer to Note 2(o)(ii) - Critical judgments in applying accounting policies - Common
control transactions for Brookfield Renewable’s policy on accounting for transactions under common
control.
Equity-accounted investments and joint ventures
(ii)
Equity-accounted investments are entities over which Brookfield Renewable has significant influence or
joint arrangements representing joint ventures. Significant influence is the ability to participate in the
financial and operating policy decisions of the investee, but it has no control or joint control over those
investees. Such investments are accounted for using the equity method.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the
arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities
require unanimous consent of the parties sharing control. Brookfield Renewable accounts for its interests
in joint ventures using the equity method.
Under the equity method, the carrying value of an interest in an investee is initially recognized at cost and
adjusted for Brookfield Renewable’s share of net income, other comprehensive income (“OCI”),
distributions by the equity-accounted investment and other adjustments to Brookfield Renewable’s
proportionate interest in the investee.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
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(c) Foreign currency translation
All figures reported in the consolidated financial statements and tabular disclosures to the consolidated
financial statements are reflected in millions of U.S. dollars, which is the functional currency of Brookfield
Renewable. Each of the foreign operations included in these consolidated financial statements
determines its own functional currency, and items included in the financial statements of each subsidiary
are measured using that functional currency.
Assets and liabilities of foreign operations having a functional currency other than the U.S. dollar are
translated at the rate of exchange prevailing at the reporting date and revenues and expenses at the rate
of exchange prevailing at the dates of the transactions during the period. Gains or losses on translation of
foreign subsidiaries are included in OCI. Gains or losses on foreign currency denominated balances and
transactions that are designated as hedges of net investments in these operations are reported in the
same manner.
the consolidated
financial statements of Brookfield Renewable,
In preparing
foreign currency
denominated monetary assets and liabilities are translated into the functional currency using the closing
rate at the applicable consolidated balance sheet dates. Non-monetary assets and liabilities,
denominated in a foreign currency and measured at fair value, are translated at the rate of exchange
prevailing at the date when the fair value was determined and non-monetary assets measured at
historical cost are translated at the historical rate. Revenues and expenses are measured in the functional
currency at the rates of exchange prevailing at the dates of the transactions with gains or losses included
in income.
(d) Cash and cash equivalents
Cash and cash equivalents include cash, term deposits and money market instruments with original
maturities of less than 90 days.
(e) Restricted cash
Restricted cash includes cash and cash equivalents, where the availability of funds is restricted by credit
agreements.
(f) Property, plant and equipment and revaluation method
Power generating assets are classified as property, plant and equipment and are accounted for using the
revaluation method under IAS 16, Property, Plant and Equipment (“IAS 16”). Property, plant and
equipment are initially measured at cost and subsequently carried at their revalued amount, being the fair
value at the date of the revaluation, less any subsequent accumulated depreciation and any subsequent
accumulated impairment losses.
Brookfield Renewable generally determines the fair value of its property, plant and equipment by using a
20-year discounted cash flow model. This model incorporates future cash flows from long-term power
purchase agreements that are in place where it is determined that the power purchase agreements are
linked specifically to the related power generating assets. The model also includes estimates of future
electricity prices, anticipated long-term average generation, estimated operating and capital expenditures,
and assumptions about future inflation rates and discount rates by geographical location. Construction
work-in-progress (“CWIP”) is revalued when sufficient information exists to determine fair value using the
discounted cash flow method. Revaluations are made on an annual basis as at December 31 to ensure
that the carrying amount does not differ significantly from fair value. For power generating assets
acquired through business combinations during the year, Brookfield Renewable initially measures the
assets at fair value consistent with the policy described in Note 2(l) – Business combinations.
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Accordingly, in the year of acquisition, power generating assets are not revalued at year-end unless there
is an indication that assets are impaired.
Where the carrying amount of an asset increased as a result of a revaluation, the increase is recognized
in income to the extent the increase reverses a previously recognized decrease recorded through income,
with the remainder of the increase recognized in OCI and accumulated in equity under revaluation surplus
and non-controlling interest. Where the carrying amount of an asset decreased, the decrease is
recognized in OCI to the extent that a balance exists in revaluation surplus with respect to the asset, with
the remainder of the decrease recognized in income.
Depreciation on power generating assets is calculated on a straight-line basis over the estimated service
lives of the assets, which are as follows:
Dams
Penstocks
Powerhouses
Hydroelectric generating units
Wind generating units
Gas-fired co-generating units
Other assets
Estimated service lives
Up to 115 years
Up to 60 years
Up to 115 years
Up to 115 years
Up to 22 years
Up to 40 years
Up to 60 years
Costs are allocated to significant components of property, plant and equipment. When items of property,
plant and equipment have different useful lives, they are accounted for as separate items (significant
components) and depreciated separately. To ensure the accuracy of useful lives and residual values, a
review is conducted annually.
Depreciation is calculated based on the cost of the asset less its residual value. Depreciation commences
when the asset is in the location and conditions necessary for it to be capable of operating in the manner
intended by management. It ceases at the earlier of the date the asset is classified as held-for-sale and
the date the asset is derecognized. An item of property, plant and equipment and any significant
component is derecognized upon disposal or when no future economic benefits are expected from its
use. Other assets include equipment, buildings and leasehold improvements. Buildings, furniture and
fixtures, leasehold improvements and office equipment are recorded at historical cost, less accumulated
depreciation. Land and CWIP are not subject to depreciation.
The depreciation of property, plant and equipment in Brazil is based on the duration of the authorization
or the useful life of a concession asset. The weighted-average remaining duration at December 31, 2014
is 15 years (2013: 16 years). Since land rights are part of the concession or authorization, this cost is also
subject to depreciation.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount
of the asset, and the net amount is applied to the revalued amount of the asset.
Gains and losses on disposal of an item of property, plant and equipment are recognized in ‘Other’ in the
consolidated statements of income (loss). The revaluation surplus is reclassified within the respective
components of equity and not reclassified to net income (loss) when the assets are disposed.
Change in accounting estimates
In 2012, Brookfield Renewable retained third party engineers to review the estimated useful lives of
certain assets. As a result, Brookfield Renewable revised the estimated remaining useful life of certain
assets to more accurately reflect the period over which they provide economic benefits. Brookfield
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Renewable accounted for these changes in accordance with IAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors (“IAS 8”), which requires a change in an accounting estimate to be
applied prospectively from the date of the change based on timing of completion of the review. The
effective dates of changes were January 1, 2012, April 1, 2012 or July 1, 2012 based on the timing of
completion of the review. The consolidated statements of income (loss) reflect a decrease in depreciation
of $112 million for the year ended December 31, 2012 as a result of the changes in accounting estimate.
(g) Asset impairment
At each balance sheet date, management assesses whether there is any indication that assets are
impaired. For non-financial tangible and intangible assets (including equity-accounted investments), an
impairment is recognized if the recoverable amount, determined as the greater of the estimated fair value,
less costs to sell, and the discounted future cash flows generated from use and eventual disposal of an
asset or cash-generating unit, is less than its carrying value. The projections of future cash flows take into
account the relevant operating plans and management’s best estimate of the most probable set of
conditions anticipated to prevail. Should an impairment loss subsequently reverse, the carrying amount of
the asset is increased to the lesser of the revised estimate of the recoverable amount, and the carrying
amount that would have been recorded had no impairment loss been recognized previously.
(h) Trade receivables and other current assets
Trade receivables and other current assets are recognized initially at fair value, and subsequently
measured at amortized cost using the effective interest method, less any allowance for uncollectability.
(i) Financial instruments
All financial instruments are classified into one of the following categories: assets and liabilities at fair
value through profit or loss (“FVTPL”), cash, loans and receivables, financial instruments used for
hedging, and other financial liabilities. All financial instruments are recorded at fair value at recognition.
Subsequent to initial recognition, financial assets classified as loans and receivables, and other financial
liabilities are measured at amortized cost using the effective interest method. Financial assets and
financial liabilities classified as financial instruments used for cash-flow hedging continue to be
recognized at fair value through OCI. Other financial assets and financial liabilities and non-hedging
financial instruments are recorded at fair value through profit and loss.
Brookfield Renewable presents the liability and equity components separately upon recognition of such
financial instruments. The amount of accretion relating to the liability component is recognized in profit or
loss; and the amount of consideration relating to the equity component is recognized in equity.
Brookfield Renewable selectively utilizes derivative financial instruments to manage financial risks,
including interest rate, commodity and foreign exchange risks. A derivative is a financial instrument, which
requires little or no initial investment, settles at a future date, and has a value that changes in response to
the change in a specified variable such as an interest rate, financial instrument price, commodity price,
foreign exchange rate, index of prices or rates, credit rating or credit index. Hedge accounting is applied
when the derivative is designated as a hedge of a specific exposure, and it is highly probable that it will
continue to be effective as a hedge based on an expectation of offsetting cash flows or fair value. Hedge
accounting is discontinued prospectively when the derivative no longer qualifies as a hedge or the
hedging relationship is terminated. Once discontinued, the cumulative change in fair value of a derivative
that was previously recorded in equity by the application of hedge accounting is recognized in income
over the remaining term of the original hedging relationship, unless the originally forecasted transaction is
no longer expected to occur, at which point it is released to income. The fair values of derivative financial
instruments are included in financial instrument assets or financial instrument liabilities, respectively.
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Items qualifying as hedges
(i)
Cash flow hedge
The effective portion of unrealized gains and losses on interest rate forward and swap contracts
designated as hedges of future interest rate payments are included in equity as cash flow hedges when
the interest rate risk relates to an anticipated interest payment. The periodic exchanges of payments on
interest rate swap contracts designated as hedges of debt are recorded on an accrual basis as an
adjustment to interest expense. The periodic exchanges of payments on interest rate contracts
designated as hedges of future interest payments are recorded in income over the term of the
corresponding interest payments.
Net investment hedge
Realized and unrealized gains and losses on foreign exchange forward contracts designated as hedges
of currency risks are included in equity when the currency risk relates to a net investment in a subsidiary
with a functional currency other than the U.S. dollar and are included in income in the period in which the
subsidiary is disposed.
Items not qualifying as hedges
(ii)
Upon initial recognition of a derivative financial instrument that is not designated as a hedge, a derivative
asset or liability is recorded with an offsetting deferred liability or asset, respectively. Gains or losses
arising from changes in fair value of the derivative asset or liability are recognized in income through fair
value gains or losses in the period the changes occur. The deferred liability or asset is amortized through
income, on a straight-line basis, over the life of the derivative financial instrument.
(iii) Available-for-sale investments
Investments in publicly quoted equity and debt securities are categorized as available-for-sale when it is
not Brookfield Renewable’s strategic intent to sell the securities and the securities were not acquired
principally for their near-term sale. Available-for-sale equity and debt investments are recorded at fair
value with unrealized gains and losses recorded in OCI. Realized gains and losses are recorded in
income when investments are sold and are calculated using the average carrying amount of securities
sold. If the fair value of an investment declines below the carrying amount, qualitative and quantitative
assessments of whether the impairment is either significant or prolonged is undertaken. All relevant facts
and circumstances in this assessment are undertaken to determine, particularly the length of time and
extent to which fair value has been less than the carrying amount.
(j) Revenue and expense recognition
Revenue from the sale of electricity is recorded when it is delivered. The revenue must be considered
collectible and the costs incurred to provide the electricity to be measurable before recognizing the
related revenue. Costs related to the purchases of power or fuel are recorded upon delivery. All other
costs are recorded as incurred.
(k) Income taxes
Current income tax assets and liabilities are measured at the amount expected to be paid to tax
authorities, net of recoveries, based on the tax rates and laws enacted or substantively enacted at the
balance sheet dates. Current income tax assets and liabilities are included in trade receivables and other
current assets and accounts payable and accrued liabilities, respectively.
Deferred tax is recognized on taxable temporary differences between the tax bases and the carrying
amounts of assets and liabilities. Deferred tax is not recognized if the temporary difference arises from
goodwill or from initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither taxable profit nor accounting profit. Deferred income tax assets are
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recognized for all deductible temporary differences, carry forwards of unused tax credits and unused tax
losses, to the extent that it is probable that deductions, tax credits and tax losses can be utilized. The
carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the
extent it is no longer probable that the income tax assets will be recovered. Deferred income tax assets
and liabilities are measured at the tax rates that are expected to apply to the year when the assets are
realized or the liabilities settled, using the tax rates and laws enacted or substantively enacted at the
balance sheet dates.
Current and deferred income taxes relating to items recognized directly in OCI are also recognized
directly in OCI.
(l) Business combinations
The acquisition of a business is accounted for using the acquisition method. The consideration for an
acquisition is measured at the aggregate of the fair values, at the date of exchange, of the assets
transferred, the liabilities incurred to former owners of the acquired business, and equity instruments
issued by the acquirer in exchange for control of the acquired business. The acquired business’
identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS
3 are recognized at their fair values at the acquisition date, except for income taxes which are measured
in accordance with IAS 12, Income Taxes, share-based payments which are measured in accordance
with IFRS 2, Share-based Payment and non-current assets that are classified as held-for-sale which are
measured at fair value less costs to sell in accordance with IFRS 5, Non-Current Assets Held for Sale and
Discontinued Operations. The non-controlling interest in the acquiree is initially measured at the non-
controlling interest’s proportion of the net fair value of the identifiable assets, liabilities and contingent
liabilities recognized.
To the extent that the aggregate of the fair value of consideration paid, the amount of any non-controlling
interest and the fair value of any previously held interest in the acquiree exceeds the fair value of the net
identifiable tangible and intangible assets, goodwill is recognized. To the extent that this difference is
negative, the amount is recognized as a gain in income.
When a business combination is achieved in stages, previously held interests in the acquired entity are
re-measured to fair value at the acquisition date, which is the date control is obtained, and the resulting
gain or loss, if any, is recognized in income. Amounts arising from interests in the acquired business prior
to the acquisition date that have previously been recognized in OCI are reclassified to income. Upon
disposal or loss of control of a subsidiary, the carrying amount of the net assets of the subsidiary
(including any OCI relating to the subsidiary) are derecognized with the difference between any proceeds
received and the carrying amount of the net assets recognized as a gain or loss in income.
(m) Other items
Capitalized costs
(i)
Capitalized costs related to CWIP include all eligible expenditures incurred in connection with the
development and construction of the power generating asset. The expenditures consist of cost of
materials, direct labor and any other costs directly attributable to bringing the asset to a working condition
for its intended use, and the costs of dismantling and removing the items and restoring the site on which
they are located. Interest and borrowings costs are capitalized when activities that are necessary to
prepare the asset for its intended use or sale are in progress, expenditures for the asset have been
incurred and funds have been used or borrowed to fund the construction or development. Capitalization
of costs ceases when the asset is ready for its intended use.
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Pension and employee future benefits
(ii)
Pension and employee future benefits are recognized in the consolidated financial statements in respect
of employees of the operating entities within Brookfield Renewable. The costs of retirement benefits for
defined benefit plans and post-employment benefits are recognized as the benefits are earned by
employees. The project unit credit method, using the length of service and management’s best estimate
assumptions, is used to value its pension and other retirement benefits. Assets are valued at fair value for
purposes of calculating the expected return on plan assets. All actuarial gains and losses are recognized
immediately through OCI in order for the net pension asset or liability recognized in the consolidated
balance sheets to reflect the full value of the plan deficit or surplus. Net interest is calculated by applying
the discount rate to the net defined benefit asset or liability. Changes in the net defined benefit obligation
related to service costs (comprising of current service costs, past services costs, gains and losses on
curtailments and non-routine settlements), and net interest expense or income are recognized in the
consolidated statements of income (loss).
Re-measurements, comprising of actuarial gains or losses, the effect of the asset ceiling, and the return
on plan assets (excluding net interest), are recognized immediately in the consolidated balance sheets
with a corresponding debit or credit to retained earnings through OCI in the period in which they occur.
Re-measurements are not reclassified to profit or loss in subsequent periods. For defined contribution
plans, amounts are expensed based on employee entitlement.
(iii) Decommissioning, restoration and environmental liabilities
Legal and constructive obligations associated with the retirement of property, plant and equipment are
recorded as liabilities when those obligations are incurred and are measured at the present value of the
expected costs to settle the liability, discounted at a current credit-adjusted pre-tax rate specific to the
liability. The liability is accreted up to the date the liability will be incurred with a corresponding charge to
operating expenses. The carrying amount of decommissioning, restoration and environmental liabilities is
reviewed annually with changes in the estimates of timing or amount of cash flows added to or deducted
from the cost of the related asset.
Interest and borrowing costs
(iv)
Interest and borrowing costs are capitalized when such costs are directly attributable to the acquisition,
construction or production of a qualifying asset. A qualifying asset is an asset that takes a substantial
period of time to prepare for its intended use.
(v) Provisions
A provision is a liability of uncertain timing or amount. A provision is recognized if Brookfield Renewable
has a present legal or constructive obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation and the amount can be reliably estimated. Provisions
are not recognized for future operating losses. The provision is measured at the present value of the best
estimate of the expenditures expected to be required to settle the obligation using a discount rate that
reflects the current market assessments of the time value of money and the risks specific to the
obligation. Provisions are re-measured at each balance sheet date using the current discount rate. The
increase in the provision due to the passage of time is recognized as interest expense.
Interest income
(vi)
Interest income is earned with the passage of time and is recorded on an accrual basis.
(vii) Government grants
Brookfield Renewable becomes eligible for government grants by constructing or purchasing renewable
power generating assets, and by bringing those assets to commercial operation, coupled with a
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successful application to the applicable program or agency. The assessment of whether or not a project
has complied with the conditions and that there is reasonable assurance the grants will be received will
be undertaken on a case by case basis. Brookfield Renewable reduces the cost of the asset by the
amount of the grant. The grant amounts are recognized in income on a systematic basis as a reduction
of depreciation over the periods, and in the proportions, in which depreciation on those assets is charged.
With respect to grants related to income, the government assistance (in the form of the difference
between market price and guaranteed fixed price) typically becomes payable once electricity is produced
and delivered to the relevant grid. It is at this point that the receipt of the grant becomes reasonably
assured, and therefore the grant is recognized as revenue in the month that delivery of the electricity
occurs.
(n) Critical estimates
Brookfield Renewable makes estimates and assumptions that affect the carrying value of assets and
liabilities, disclosure of contingent assets and liabilities and the reported amount of income and OCI for
the year. Actual results could differ from these estimates. The estimates and assumptions that are critical
to the determination of the amounts reported in the consolidated financial statements relate to the
following:
Property, plant and equipment
(i)
The fair value of Brookfield Renewable’s property, plant and equipment is calculated using estimates and
assumptions about future electricity prices from renewable sources, anticipated long-term average
generation, estimated operating and capital expenditures, future inflation rates and discount rates, as
described in Note 11 - Property, plant and equipment, at fair value. Judgment is involved in determining
the appropriate estimates and assumptions in the valuation of Brookfield Renewable’s property, plant and
equipment. See Note 2(o)(iii) - Critical judgments in applying accounting policies - Property, plant and
equipment for further details.
Estimates of useful lives and residual values are used in determining depreciation and amortization. To
ensure the accuracy of useful lives and residual values, these estimates are reviewed on an annual basis.
Financial instruments
(ii)
Brookfield Renewable makes estimates and assumptions that affect the carrying value of its financial
instruments, including estimates and assumptions about future electricity prices, long-term average
generation, capacity prices, discount rates and the timing of energy delivery. Non-financial instruments
are valued using estimates of future electricity prices which are estimated by considering broker quotes
for the years in which there is a liquid market and, for the subsequent years, Brookfield Renewable’s best
estimate of electricity prices that would allow new entrants into the market. The fair value of interest rate
swaps is the estimated amount that another party would receive or pay to terminate the swap agreements
at the reporting date, taking into account current market interest rates. This valuation technique
approximates the net present value of future cash flows. See Note 8 - Risk management and financial
instruments for more details.
(iii) Deferred income taxes
The consolidated financial statements include estimates and assumptions for determining the future tax
rates applicable to subsidiaries and identifying the temporary differences that relate to each subsidiary.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply during
the year when the assets are realized or the liabilities settled, using the tax rates and laws enacted or
substantively enacted at the consolidated balance sheet dates. Operating plans and forecasts are used to
estimate when the temporary difference will reverse.
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(o) Critical judgments in applying accounting policies
The following are the critical judgments that have been made in applying the accounting policies used in
the consolidated financial statements and that have the most significant effect on the amounts in the
consolidated financial statements:
Preparation of consolidated financial statements
(i)
These consolidated financial statements present the financial position, results of operations and cash
flows of Brookfield Renewable. Judgment is required in determining what assets, liabilities and
transactions are recognized in the consolidated financial statements as pertaining to Brookfield
Renewable’s operations.
(ii) Common control transactions
Common control business combinations specifically fall outside of scope of IFRS 3 and as such
management has used its judgment to determine an appropriate policy to account for these transactions,
considering other relevant accounting guidance that is within the framework of principles in IFRS and that
reflects the economic reality of the transactions, in accordance with IAS 8. As a result, the consolidated
financial statements account for assets and liabilities acquired at the previous carrying value on the
predecessor’s financial statements. Differences between the consideration given and the assets and
liabilities received are recorded directly to equity.
Property, plant and equipment
(iii)
The accounting policy relating to Brookfield Renewable’s property, plant and equipment is described in
Note 2(f) - Property, plant and equipment and revaluation method. In applying this policy, judgment is
used in determining whether certain costs are additions to the carrying amount of the property, plant and
equipment as opposed to repairs and maintenance. If an asset has been developed, judgment is required
to identify the point at which the asset is capable of being used as intended and to identify the directly
attributable costs to be included in the carrying value of the development asset. The useful lives of
property, plant and equipment are determined by independent engineers periodically with an annual
review by management.
Annually, Brookfield Renewable determines the fair value of its property, plant and equipment using a
methodology that it has judged to be reasonable. The methodology is generally a 20-year discounted
cash flow model. Twenty years is the period considered reasonable as Brookfield Renewable has 20-year
capital plans and it believes a reasonable third party would be indifferent between extending the cash
flows further in the model versus using a discounted terminal value.
The valuation model incorporates future cash flows from long-term power purchase agreements that are
in place where it is determined that the power purchase agreements are linked specifically to the related
power generating assets. With respect to estimated future generation that does not incorporate long-term
power purchase agreement pricing, the cash flow model uses estimates of future electricity prices using
broker quotes from independent sources for the years in which there is a liquid market. The valuation of
power generating assets not linked to long-term power purchase agreements also requires the
development of a long-term estimate of future electricity prices. In this regard the valuation model uses a
discount to the all-in cost of construction with a reasonable return, to secure energy from new renewable
on-shore wind development resources as the benchmark that will establish the market price for electricity
for renewable resources.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from renewable
sources to meet future demand growth by the year 2020. This year is viewed as the point when
generators in North America must build additional capacity to maintain system reliability and provide an
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adequate level of reserve generation with the retirement of older coal-fired plants and with the
Environmental Protection Agency emission compliance deadlines. Brookfield Renewable has estimated a
discount to these new-build wind prices to determine renewable electricity prices for hydroelectric
facilities. In Brazil, the estimate of future electricity prices is based on a similar approach as applied in
North America using a forecast of the all-in cost of hydroelectric and wind development.
Terminal values are included in the valuation of hydroelectric assets in the United States and Canada.
For the hydroelectric assets in Brazil, cash flows have been included based on the duration of the
authorization or useful life of a concession asset without consideration of potential renewal value.
Discount rates are determined each year by considering the current interest rates, average market cost of
capital as well as the price risk and the geographical location of the operational facilities as judged by
management. Inflation rates are also determined by considering the current inflation rates and the
expectations of future rates by economists. Operating costs are based on long-term budgets escalated
for inflation. Each operational facility has a 20-year capital plan that it follows to ensure the maximum life
of its assets is achieved. Foreign exchange rates are forecasted by using the spot rates and the available
forward rates, extrapolated beyond the period available. The inputs described above to the discounted
cash flow model require management to consider facts, trends and plans in making its judgments as to
what derives a reasonable fair value of its property, plant and equipment.
(iv) Financial instruments
The accounting policy relating to Brookfield Renewable’s financial instruments is described in Note 2(i) -
Financial instruments. In applying the policy, judgments are made in applying the criteria set out in IAS
39, Financial Instruments: Recognition and Measurement (“IAS 39”), to record financial instruments at fair
value through profit and loss, and the assessments of the effectiveness of hedging relationships.
(v) Deferred income taxes
The accounting policy relating to Brookfield Renewable’s income taxes is described in Note 2(k) - Income
taxes. In applying this policy, judgments are made in determining the probability of whether deductions,
tax credits and tax losses can be utilized.
(p) New interpretation adopted by Brookfield Renewable
(i)
Levies Imposed by Governments
IFRIC 21, Levies (“IFRIC 21”) provides guidance on when to recognize a liability for a levy imposed by a
government, both for levies that are accounted for in accordance with IAS 37, Provisions, Contingent
Liabilities and Contingent Assets, and those where the timing and amount of the levy is certain. IFRIC 21
identifies the obligating event for the recognition of a liability as the activity that triggers the payment of
the levy in accordance with the relevant legislation. A liability is recognized progressively if the obligating
event occurs over a period of time or, if an obligation is triggered on reaching a minimum threshold, the
liability is recognized when that minimum threshold is reached.
IFRIC 21 was adopted and applied by Brookfield Renewable on January 1, 2014, which had no material
impact on the consolidated financial statements.
(q) Future changes in accounting policies
(i)
Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9, Financial Instruments (“IFRS 9”) which reflects
all phases of the financial instruments project and replaces IAS 39, Financial Instruments: Recognition
and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for
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classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual
periods beginning on or after 1 January 2018, with early application permitted. Retrospective application
is required, but comparative information is not compulsory. Early application of previous versions of IFRS
9 (2009, 2010 and 2013) is permitted if the date of initial application is before 1 February 2015.
Management is currently evaluating the impact of IFRS 9 on the consolidated financial statements.
(ii)
Amendments to IFRS 10 and IAS 28
The amendments to IFRS 10, Consolidated Financial Statements (“IFRS 10”) and IAS 28, Investments in
Associates and Joint Ventures (2011) (“IAS 28”) address an acknowledged inconsistency between the
requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between
an investor and its associate or joint venture. The main consequence of the amendments is that a full
gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or
not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a
business, even if the assets are housed in a subsidiary. The amendments are effective for transactions
occurring in annual periods beginning on or after 1 January 2016 with earlier application permitted.
Management is currently evaluating the impact of the amendments to IFRS 10 and IAS 28 on the
consolidated financial statements.
(iii) Revenue recognition
IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) was issued by the IASB on May 28, 2014.
IFRS 15 outlines a single comprehensive model to account for revenue arising from contracts with
customers and will replace the majority of existing IFRS requirements on revenue recognition including
IAS 18, Revenue, IAS 11, Construction Contracts and related interpretations. The core principle of the
standard is to recognize revenue to depict the transfer of goods and services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods and
services. The standard has prescribed a five-step model to apply the principles. The standard also
specifies how to account for the incremental costs of obtaining a contract and the costs directly related to
fulfilling a contract. IFRS 15 is effective for annual periods beginning on or after January 1, 2017.
Management is currently evaluating the impact of IFRS 15 on the consolidated financial statements.
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3. PRINCIPAL SUBSIDIARIES
The following table lists the subsidiaries of Brookfield Renewable which, in the opinion of management,
significantly affects its financial position and results of operations as at December 31, 2014:
Jurisdiction of
Incorporation
Percentage of
voting securities
or Organization
owned or controlled
Alta Wind VIII LLC(1)
Barra do Braúna Energética S.A.
BIF II Safe Harbor Holdings LLC(1)
Black Bear Hydro Partners, LLC(1)
Brookfield BRP Canada Corp.
Brookfield BRP Holdings (Canada) Inc.
Brookfield Energia Comercializadora Ltda
Brookfield Power US Holding America Co.
Brookfield Power Wind Prince LP
Brookfield Smoky Mountain Hydropower LLC(1)
Brookfield White Pine Hydro LLC(1)
Catalyst Old River Hydroelectric Limited Partnership(2)
Comber Wind Limited Partnership
Coram California Development, L.P.(1)
Energética Campos de Cima da Serra Ltda
Erie Boulevard Hydropower, L.P.
Garracummer Wind Farm Limited(1)
Gosfield Wind Limited Partnership
Granite Reliable Power, LLC(1)
Great Lakes Hydro America, LLC
Great Lakes Power Limited
Hawks Nest Hydro LLC
Itiquira Energética S.A.
Knockacummer Wind Farm Limited(1)
Kwagis Power Limited Partnership
Lièvre Power L.P.
Mississagi Power Trust
Powell River Energy Inc.
Rumford Falls Hydro LLC
Safe Harbor Water Power Corporation(1)
Serra Dos Cavalinhos II Energética S.A.
Delaware
Brazil
Delaware
Delaware
Alberta
Ontario
Brazil
Delaware
Ontario
Delaware
Delaware
Louisiana
Ontario
Delaware
Brazil
Delaware
Republic of Ireland
Ontario
Delaware
Delaware
Ontario
Delaware
Brazil
Republic of Ireland
British Columbia
Québec
Québec
Québec
Delaware
Pennsylvania
Brazil
California
(%)
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
100
89.5
100
100
100
100
100
75
100
100
100
100
100
100
100
Windstar Energy, LLC
(1)
(2)
Voting control held through voting agreements with Brookfield.
Non-voting economic interest held through preferred shares and secured notes.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 83
4. BUSINESS COMBINATIONS
The following investments were accounted for using the acquisition method, and the results of operations
have been included in the consolidated financial statements since the respective dates of acquisition.
Completed During 2014
Maine Hydroelectric Generation Portfolio
In January 2014, Brookfield Renewable acquired a 70 MW portfolio of hydroelectric facilities that are
expected to generate 372 GWh annually (“Maine Hydro”). The acquisition was completed with institutional
partners, and Brookfield Renewable retains an approximate 40% controlling interest in the portfolio. Total
cash consideration was $244 million. The acquisition costs of $2 million were expensed as incurred.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $21 million (unaudited) for the year ended December 31, 2014.
California Hydroelectric Generation Facility
In February 2014, Brookfield Renewable acquired the remaining 50% interest in a 30 MW hydroelectric
facility in California (the “California Hydro Step Acquisition”). The total cash consideration was $11 million.
The acquisition was completed with institutional partners, and Brookfield Renewable retains an
approximate 22% controlling interest in the facility.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $1 million (unaudited) for the year ended December 31, 2014.
Pennsylvania Hydroelectric Generation Facility
In March 2014, Brookfield Renewable acquired a 33% economic and 50% voting interest in a 417 MW
hydroelectric facility in Pennsylvania (“Pennsylvania Hydro”) which is expected to generate 1,129 GWh
annually. Total cash consideration was $295 million. Brookfield Renewable accounted for its acquired
33% economic interest using the equity method.
In August 2014, Brookfield Renewable acquired the remaining 67% economic and 50% voting interest in
Pennsylvania Hydro (the “Pennsylvania Hydro Step Acquisition”) for additional cash consideration of $614
million, and began consolidating the operating results, cash flows and net assets of Pennsylvania Hydro.
Prior to the Pennsylvania Hydro Step Acquisition, Brookfield Renewable re-measured its previously held
33% economic interest to fair value, and the net impact of this re-measurement was not material. The
Pennsylvania Hydro Step Acquisition was completed with institutional partners, and Brookfield
Renewable retains an approximate 40% controlling interest. Total acquisition costs of $2 million relating
to both the Pennsylvania Hydro and Pennsylvania Hydro Step Acquisition were expensed as incurred.
If the acquisition had taken place at the beginning of the year the additional revenue from the acquisition
would have been $99 million (unaudited) for the year ended December 31, 2014.
Ireland Wind Portfolio
In June 2014, Brookfield Renewable acquired the wind portfolio of Bord Gáis Energy comprising 326 MW
of operating wind capacity across 17 wind projects in Ireland which is expected to generate 837 GWh
annually. The acquisition was completed with institutional partners, and Brookfield Renewable retains an
approximate 40% controlling interest. Total consideration of €524 million ($718 million) included €521
million ($713 million) in cash increased for post-closing adjustments. The acquisition costs of $12 million
were expensed as incurred.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $92 million (unaudited) for the year ended December 31, 2014.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 84
Preliminary price allocations, at fair values, with respect to the acquisitions were as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash
Trade receivables and other current assets
Property, plant and equipment, at fair value
Other long-term assets
Current liabilities
Long-term debt
Other long-term liabilities
Net assets acquired
Maine California Pennsylvania
Ireland
Total
$
7 $
4 $
15 $
35 $
-
13
220
6
(1)
-
(1)
61
12
34
-
-
-
11
12
10
81
1,040
1,075
2,416
-
-
(13)
(5)
-
(4)
(77)
(76)
-
(75)
(232)
(107)
6
(80)
(322)
(189)
$
244 $
67 $
909 $
718 $ 1,938
The estimated fair values of the assets acquired and liabilities assumed are expected to be finalized
within 12 months of the acquisition date.
Completed During 2013
Northeastern United States Hydroelectric Generation Portfolio
In March 2013, Brookfield Renewable acquired a 100% interest in a 360 MW portfolio of hydroelectric
facilities. Total consideration was paid as follows: $57 million that included $55 million in cash and $2
million related to the pre-closing payments and working capital adjustments; holding and project level
notes, with a face value of $700 million, were also assumed. The acquisition costs of $8 million were
expensed as incurred. In September 2013, upon the closing of a private fund sponsored by Brookfield
Asset Management, institutional partners co-invested 49.9% in these facilities for $205 million.
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $104 million (unaudited) for the year ended December 31, 2013.
California Wind Generation Portfolio
In August 2012, Brookfield Renewable acquired 16% of the outstanding common shares of Western Wind
Energy Corp. (“Western Wind”) for a total cash consideration of $25 million.
On November 26, 2012, Brookfield Renewable launched an offer to purchase, through an indirect wholly-
owned subsidiary, all of the issued and outstanding common shares of Western Wind (excluding those
Brookfield Renewable already owns) for C$2.50 in cash per common share. This offer was subsequently
increased to C$2.60 per common share. On February 21, 2013, Brookfield Renewable announced that it
was successful in its bid for Western Wind and following take up of the tendered shares, would own
66.1% of the issued and outstanding common shares.
On March 1, 2013, the Board of Directors were replaced by directors appointed by Brookfield Renewable
and, as a result Brookfield Renewable began consolidating the operating results, cash flows and net
assets of Western Wind. Further, Brookfield Renewable was required to re-measure its previously held
16% interest to fair value, and the net impact of this re-measurement was not material.
On March 7, 2013, Brookfield Renewable increased its ownership to 93% of the outstanding common
shares for additional cash consideration of $143 million. As Brookfield Renewable held more than 90% of
the common shares, on May 21, 2013, it acquired all of the remaining common shares on the same terms
that the common shares were acquired under the offer, for additional cash consideration of $15 million.
The common shares of Western Wind were delisted from the TSX Venture Exchange on May 24, 2013.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 85
If the acquisition had taken place at the beginning of the year the revenue from the acquisition would
have been $38 million (unaudited) for the year ended December 31, 2013.
Canadian Hydroelectric Generation Facility
In March 2013, Brookfield Renewable acquired the remaining 50% interest, previously held by its partner,
in a hydroelectric facility in Canada taking its total investment to 100% (the “Canadian Hydro Step
Acquisition”).
The Canadian Hydro Step Acquisition included cash consideration of $32 million and the assumption of
the partner’s portion of the non-recourse debt. Prior to the Canadian Hydro Step Acquisition, Brookfield
Renewable’s financial interest amounted to $22 million. Brookfield Renewable re-measured its previously
held 50% interest to fair value and reversed any amounts previously recorded in OCI. In addition, $30
million related to revaluation surplus on the initial 50% interest was reclassified within equity of which $14
million related to limited partners’ equity.
If the acquisition had taken place at the beginning of the year the revenue would have been $22 million
(unaudited) for the year ended December 31, 2013.
Purchase price allocations, at fair values, with respect to the acquisitions were as follows:
(MILLIONS)
United States
California
Canada
Northeastern
Cash and cash equivalents
$
- $
Restricted cash
Other current assets
Property, plant and equipment, at fair value
Other long-term assets
Current liabilities
Long-term debt
Other long-term liabilities
Non-controlling interests
Net assets acquired
32
12
721
22
(10)
(720)
-
-
2
8
9
453
30
(23)
(250)
(43)
(68)
$
6
$
-
9
213
-
(29)
(105)
(39)
-
$
57
$
118
$
55
$
Total
8
40
30
1,387
52
(62)
(1,075)
(82)
(68)
230
During the years ended December 31, 2014 and 2013, the purchase price allocations for the acquisitions
in 2013 and 2012, respectively, were finalized. No material changes to the provisional purchase price
allocations disclosed in the audited consolidated financial statements for 2013 and 2012 had to be
considered for acquisitions made in the respective years.
Completed During 2012
California Wind Generation Portfolio
In March 2012, the following investments were made by Brookfield Renewable and certain institutional
partners through BAIF U.S. Renewable Power Holdings LLC (“BAIF U.S. Holdings”), in which Brookfield
Renewable holds a 22% controlling interest. The investments were accounted for using the acquisition
method, and the results of operations have been included in the audited consolidated financial statements
since the respective dates of acquisition.
BAIF U.S. Holdings acquired 100% interests in two wind facilities in California. BAIF U.S. Holdings also
acquired the remaining 50% interest in a wind facility, bringing Brookfield Renewable’s total investment to
100% (the “California Wind Step Acquisition”). Total consideration paid of $206 million for these interests
included $180 million in cash and the settlement of certain liabilities.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 86
The California Wind Step Acquisition required Brookfield Renewable to re-measure its previously held
50% interest to fair value of $63 million and to reverse any amounts previously recorded in OCI related to
the initial 50% interest. Net income for year ended December 31, 2012 reflects an expense of $11 million
related to the reclassification from OCI on financial instruments designated as cash flow hedges prior to
the California Wind Step Acquisition. In addition, $5 million related to revaluation surplus on the initial
50% interest was reclassified within equity.
Acquisition costs of $2 million related to the above acquisitions were expensed as incurred.
These wind facilities are now all in commercial operation.
Brazil Hydroelectric Generation Facility
In July 2012, a Brookfield Americas Infrastructure Fund (“BAIF”) entity, in which Brookfield Renewable
holds a 25% controlling interest, acquired a 100% interest in a hydroelectric facility in Brazil for cash
consideration of $14 million. A bargain purchase gain of $12 million was recognized, from the excess fair
value of the assets acquired over the consideration paid. The bargain purchase gain was recorded in
Other, and acquisition costs were expensed at the acquisition date.
Southern United States Hydroelectric Generation Portfolio
In November 2012, BAIF U.S. Holdings acquired a 100% interest in a portfolio of hydroelectric facilities,
located in Tennessee and North Carolina in the southern region of the United States, for cash
consideration of $597 million. The acquisition costs of $7 million were expensed as incurred. If the
acquisition had taken place at the beginning of the year, assuming long-term average generation,
revenue would have increased by $56 million (unaudited) for the year ended December 31, 2012.
Purchase price allocations, at fair values, with respect to the acquisitions in 2012 were as follows:
(MILLIONS)
Current assets(1)
Property, plant and equipment, at fair value
Other long-term assets
Current liabilities
Long-term debt
California
Brazil United States
$
50
$
- $
4
$
Total
54
Southern
748
9
(102)
(436)
32
-
-
(6)
26
594
1,374
-
(1)
-
$
597
$
9
(103)
(442)
892
Net assets acquired
(1)
Includes $49 million of cash and cash equivalents.
$
269
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 87
5. CASH AND CASH EQUIVALENTS
Brookfield Renewable’s cash and cash equivalents as at December 31 are as follows:
(MILLIONS)
Cash
Short-term deposits
6. RESTRICTED CASH
Brookfield Renewable’s restricted cash as at December 31 is as follows:
(MILLIONS)
Development projects
Operations
Total
Less: non-current
Current
2014
128
22
150
2014
75
238
313
(81)
232
$
$
$
$
2013
164
39
203
2013
42
202
244
(75)
169
$
$
$
$
Refer to Note 12 – Other long-term assets for information on long-term restricted cash.
7. TRADE RECEIVABLES AND OTHER CURRENT ASSETS
Brookfield Renewable’s trade receivables and other current assets as at December 31 are as follows:
(MILLIONS)
Trade receivables
Other short-term receivables
Prepaids and others
2014
91
40
70
201
$
$
2013
105
65
34
204
$
$
As at December 31, 2014, 99% (2013: 99%) of trade receivables were current. Trade receivables are
generally on 30-day terms and credit limits are assigned and monitored for all counterparties. In
determining the recoverability of trade receivables, management performs a risk analysis considering the
type and age of the outstanding receivables and the credit worthiness of the counterparties.
Management also reviews trade receivable balances on an ongoing basis. Bad debt expense related to
trade receivables is recognized at the time an account is deemed uncollectible. Accordingly, as at
December 31, 2014 and 2013 an allowance for doubtful accounts was not deemed necessary.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 88
8. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
RISK MANAGEMENT
Brookfield Renewable’s activities expose it to a variety of financial risks, including market risk (i.e.,
commodity price risk, interest rate risk, and foreign currency risk), credit risk and liquidity risk. Brookfield
Renewable uses financial instruments primarily to manage these risks.
(a) Market risk
Market risk is defined for these purposes as the risk that the fair value or future cash flows of a financial
instrument held by Brookfield Renewable will fluctuate because of changes in market prices.
Brookfield Renewable faces market risk from foreign currency assets and liabilities, the impact of changes
in interest rates, and floating rate liabilities. Market risk is managed by funding assets with financial
liabilities in the same currency and with similar interest rate characteristics and holding financial contracts,
such as interest rate swaps and foreign exchange contracts, to minimize residual exposures. Financial
instruments held by Brookfield Renewable that are subject to market risk include borrowings and financial
instruments, such as interest rate, currency and commodity contracts. The categories of financial
instruments that can give rise to significant variability are described below:
(i) Electricity price risk
Electricity price risk is defined for these purposes as the risk that the fair value or future cash flows of a
financial instrument held by Brookfield Renewable will fluctuate because of changes in commodity prices.
Electricity price risk arises from the sale of Brookfield Renewable’s uncontracted generation. Brookfield
Renewable aims to sell electricity under long-term contracts to secure stable prices and mitigate its
exposure to wholesale markets.
The table below summarizes the impact of changes in the market price of electricity as at December 31.
The impact is expressed in terms of the effect on net income and OCI. The sensitivities are based on the
assumption that the market price changes by five percent with all other variables held constant.
Impact of a 5% change in the market price of electricity, on outstanding energy derivative contracts, for
the year ended December 31:
(MILLIONS)
5% increase
5% decrease
(ii) Foreign currency risk
Effect on net income
Effect on OCI
2014
2013
2012
2014
2013
2012
$
- $
-
- $
-
1 $
(9) $
1 $
(1)
9
(1)
-
-
Foreign currency risk is defined for these purposes as the risk that the fair value of a financial instrument
held by Brookfield Renewable will fluctuate because of changes in foreign currency rates.
Brookfield Renewable has exposure to the Canadian dollar, Brazil real and Euro through its investments
in foreign operations. Consequently, fluctuations in the U.S. dollar exchange rate against these currencies
increase the volatility of net income and other comprehensive income. Brookfield Renewable holds
foreign currency contracts primarily to mitigate this exposure.
The table below summarizes the impact of changes in the exchange rate as at December 31. The impact
is expressed in terms of the effect on income and OCI. The sensitivities are based on the assumption that
the currency exchange rate changes by five percent with all other variables held constant.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 89
Impact of a 5% change in U.S. dollar exchange rates, on outstanding foreign exchange swaps, for the
year ended December 31:
(MILLIONS)
5% increase
5% decrease
(iii) Interest rate risk
Effect on net income
Effect on OCI
2014
2013
2012
2014
2013
2012
$
12 $
(12)
- $
-
- $
19 $
-
(19)
- $
-
-
-
Interest rate risk is defined for these purposes as the risk that the fair value or future cash flows of a
financial instrument held by Brookfield Renewable will fluctuate, because of changes in interest rates.
Brookfield Renewable’s assets largely consist of long duration physical assets. Brookfield Renewable’s
financial liabilities consist primarily of long-term fixed rate debt or floating-rate debt that has been
swapped to fixed rates with interest rate financial instruments. All non-derivative financial liabilities are
recorded at their amortized cost. Brookfield Renewable also holds interest rate contracts to lock-in fixed
rates on certain anticipated future debt issuances.
Brookfield Renewable will enter into interest rate swaps designed to minimize the exposure to interest
rate fluctuations on its variable rate debt. Fluctuations in interest rates could impact Brookfield
Renewable’s cash flows, primarily with respect to the interest payable against Brookfield Renewable’s
variable rate debt, which is limited to certain subsidiary borrowings with a total principal value of $2,552
million (2013: $1,515 million). Of this principal value, $1,237 million (2013: $806 million) has been hedged
through the use of interest rate swaps. The fair values of the recognized liability for the interest rate
swaps were calculated using a valuation model with observable interest rates.
The table below summarizes the impact of changes in the interest rate as at December 31. The impact is
expressed in terms of the effect on income and OCI. The sensitivities are based on the assumption that
the interest rate changes by one percent with all other variables held constant.
Impact of a 1% change in interest rates, on outstanding interest rate swaps and variable rate debt, for the
year ended December 31:
(MILLIONS)
1% increase
1% decrease
(b) Credit risk
Effect on net income
Effect on OCI
2014
2013
2012
2014
2013
$
(13) $
(7) $
(7) $
138 $
96 $
13
7
7
(138)
(96)
2012
51
(51)
Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfill its contractual
obligations. Brookfield Renewable’s exposure to credit risk in respect of financial instruments relates
primarily to counterparty obligations regarding energy contracts, interest rate swaps, forward foreign
exchange contracts and physical electricity and gas transactions.
Brookfield Renewable minimizes credit risk with counterparties through the selection, monitoring and
diversification of counterparties, and the use of standard trading contracts, and other credit risk mitigation
techniques. In addition, Brookfield Renewable’s power purchase agreements are reviewed regularly and
are almost exclusively with customers having long standing credit histories or investment grade ratings,
which limit the risk of non-collection. See Note 7 - Trade receivables and other current assets, for
additional details regarding Brookfield Renewable’s trade receivables balance.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 90
The maximum credit exposure at December 31 was as follows:
(MILLIONS)
Cash and cash equivalents
Restricted cash(1)
Trade receivables and other short-term receivables
Financial instrument assets
Due from related parties
(1)
Includes both the current and long-term amounts.
(c) Liquidity risk
$
2014
150
313
131
66
63
$
2013
203
244
170
17
48
$
723
$
682
Liquidity risk is the risk that Brookfield Renewable cannot meet a demand for cash or fund an obligation
when due. Liquidity risk is mitigated by Brookfield Renewable’s cash and cash equivalent balances and
its access to undrawn credit facilities. Details of the available portion of credit facilities are included in
Note 14 – Long-term debt and credit facilities. Brookfield Renewable also ensures that it has access to
public capital markets and maintains a strong investment grade credit rating of BBB (high).
Brookfield Renewable is also subject to the risk associated with debt financing. This risk is mitigated by
the long-term duration of debt instruments and the diversification in maturity dates over an extended
period of time.
The sensitivity analysis discussed above reflects the risks associated with instruments that Brookfield
Renewable considers are market sensitive and the potential loss resulting from one or more selected
hypothetical changes. Therefore, the discussion above is not intended to reflect fully Brookfield
Renewable’s risk exposure.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 91
CASH OBLIGATIONS
The table below classifies the cash obligations related to Brookfield Renewable’s liabilities into relevant
maturity groupings based on the remaining period from the balance sheet dates to the contractual
maturity date. As the amounts are the contractual undiscounted cash flows (gross of unamortized
financing fees and accumulated amortization, where applicable), they may not agree with the amounts
disclosed in the consolidated balance sheets.
AS AT DECEMBER 31, 2014
(MILLIONS)
Accounts payable and accrued liabilities
Financial instrument liabilities(1)
Due to related parties
Other long-term liabilities - concession payments
Long-term debt and credit facilities(1)
Interest payable on long-term debt(2)
Total
AS AT DECEMBER 31, 2013
(MILLIONS)
Accounts payable and accrued liabilities
Financial instrument liabilities(1)
Due to related parties
Other long-term liabilities - concession payments
Long-term debt and credit facilities(1)
Interest payable on long-term debt(2)
Total
(1)
(2)
99
79
1
256
392
< 1 year 2-5 years
> 5 years
$
253 $
- $
- $
68
-
5
7
-
13
Total
253
174
79
19
3,339
1,287
4,146
1,468
7,741
3,147
$
1,080 $
4,699 $
5,634 $ 11,413
< 1 year 2-5 years
> 5 years
$
229 $
- $
- $
64
110
1
517
364
9
-
5
2,395
1,199
-
-
117
3,752
1,640
Total
229
73
110
123
6,664
3,203
$
1,285 $
3,608 $
5,509 $ 10,402
Includes both the current and long-term amounts.
Represents aggregate interest payable expected to be paid over the entire term of the obligations, if held to maturity. Variable
rate interest payments have been calculated based on estimated interest rates.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 92
Brookfield Renewable classifies its assets and liabilities as outlined below:
AS AT DECEMBER 31, 2014
(MILLIONS)
Cash and cash equivalents
Restricted cash
Trade receivables and other current assets(2)
Due from related parties(2)
Financial instrument assets(3)
Equity-accounted investments
Property, plant and equipment, at fair value
Deferred income tax assets
Other long-term assets
$
$
Total assets
Accounts payable and accrued liabilities(2)
Financial instrument liabilities(3)
Due to related parties(2)
Long-term debt and credit facilities(2)(3)
Deferred income tax liabilities
Other long-term liabilities
Cash, loans
and
Assets
receivables (liabilities)(1)
$
150 $
232
-
201
- $
-
-
-
Derivatives
used for
hedging
Other
financial
liabilities
Non-financial
assets and
non-financial
liabilities
- $
-
-
-
-
52
-
-
-
-
- $
-
-
-
-
-
-
-
-
-
Total
150
232
201
63
66
- $
-
-
-
-
-
273
273
18,566
18,566
142
33
142
156
174
-
-
79
-
7,678
- $
-
-
-
253
174
79
7,678
-
-
-
2,637
2,637
147
-
147
63
-
-
-
-
-
14
-
-
-
92
31
-
-
-
-
-
-
-
-
-
-
738 $
45 $
52 $
- $ 19,014 $ 19,849
- $
- $
- $ 253 $
Total liabilities
(1)
(2)
(3)
$
Measured at fair value with all gains and losses recorded in the consolidated statement of income (loss).
Measured at fair value at inception and subsequently recorded at amortized cost using the effective interest rate method.
Includes both the current and long-term amounts.
174 $ 8,157 $ 2,637 $ 10,968
- $
- $
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 93
AS AT DECEMBER 31, 2013
(MILLIONS)
Cash and cash equivalents
Restricted cash
Trade receivables and other current assets(1)
Due from related parties(1)(2)
Financial instrument assets(2)
Equity-accounted investments
Property, plant and equipment, at fair value
Deferred income tax assets
Other long-term assets
Total assets
Accounts payable and accrued liabilities(1)
Financial instrument liabilities(2)
Due to related parties(1)
Long-term debt and credit facilities(1)(2)
Deferred income tax liabilities
Other long-term liabilities
Cash, loans Derivatives
used for
hedging
and
receivables
$
203 $
- $
- $
Non-financial
assets and
non-financial
liabilities
Other
financial
liabilities
169
204
48
-
-
-
-
96
-
-
-
17
-
-
-
-
-
-
-
-
-
-
-
-
Total
203
169
204
48
17
- $
-
-
-
-
290
290
15,741
15,741
117
114
117
210
$
$
720 $
17 $
- $ 16,262 $ 16,999
- $
- $ 229 $
- $
229
-
-
-
-
-
73
-
-
110
- 6,623
-
-
-
73
110
6,623
-
-
-
2,265
2,265
163
-
163
$
- $
73 $ 7,125 $ 2,265 $ 9,463
Total liabilities
(1)
(2)
Measured at fair value at inception and subsequently recorded at amortized cost using the effective interest rate method.
Includes both the current and long-term amounts.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Fair values determined using valuation models require the use of assumptions concerning the amount
and timing of estimated future cash flows and discount rates. In determining those assumptions,
management looks primarily to external readily observable market inputs such as interest rate yield
curves, currency rates, and price, as applicable. The fair value of interest rate swap contracts, which form
part of financing arrangements, is calculated by way of discounted cash flows, using market interest rates
and applicable credit spreads.
A fair value measurement of a non-financial asset is the consideration that would be received in an
orderly transaction between market participants, considering the highest and best use of the asset.
Assets and liabilities measured at fair value are categorized into one of three hierarchy levels, described
below. Each level is based on the transparency of the inputs used to measure the fair values of assets
and liabilities.
Level 1 – inputs are based on unadjusted quoted prices in active markets for identical assets and
liabilities;
Level 2 – inputs, other than quoted prices in Level 1, that are observable for the asset or liability, either
directly or indirectly; and
Level 3 – inputs for the asset or liability that are not based on observable market data.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 94
The following table presents Brookfield Renewable’s assets and liabilities measured and disclosed at fair
value classified by the fair value hierarchy as at December 31:
(MILLIONS)
Assets measured at fair value:
Cash and cash equivalents
Restricted cash(1)
Financial instrument assets(1)
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Available-for-sale investments(2)
Property, plant and equipment
Liabilities measured at fair value:
Financial instrument liabilities(1)
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Liabilities for which fair value is disclosed:
Long-term debt and credit facilities
Level 1
Level 2
Level 3
2014
2013
$ 150 $
313
- $
-
-
-
-
31
-
-
-
-
-
31
-
35
-
-
-
(170)
(4)
(8,434)
- $
150 $
-
-
-
-
-
313
31
-
35
31
203
244
-
17
-
-
18,566
18,566
15,741
-
-
-
-
-
(170)
(4)
(8,434)
(3)
(70)
-
(7,128)
9,004
Total
(1)
(2) Available-for-sale investments represent investment in securities (see Note 12 – Other long-term assets).
Includes both the current and long-term amounts.
$ 494 $ (8,542) $ 18,566 $ 10,518 $
There were no transfers between levels during the year ended December 31, 2014.
The aggregate amount of Brookfield Renewable’s net financial instrument positions as at December 31
are as follows:
(MILLIONS)
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Total
Less: current portion
Long-term portion
2014
2013
Net (Assets)
Assets
Liabilities
Liabilities Net Liabilities
$
31 $
- $
-
35
66
48
170
4
174
99
$
18 $
75 $
(31)
170
(31)
108
51
57
$
$
3
53
-
56
62
(6)
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 95
The following table presents the change in Brookfield Renewable’s total net financial instrument liability
position as at and for the year ended December 31:
(MILLIONS)
Balance, beginning of year
Note
2014
2013
2012
$
56 $ 145 $ 114
Increases (decreases) in the net financial instrument liability position:
Unrealized loss (gain) through income on energy derivative contracts
(a)
3
(18)
(16)
Unrealized (gain) loss through OCI on energy derivative
contracts
Unrealized (gain) loss through income on interest rate swaps
Unrealized loss (gain) through OCI on interest rate swaps
Unrealized (gain) through income on foreign exchange swaps
Unrealized (gain) through OCI on foreign exchange swaps
Acquisitions, settlements and other
Balance, end of year
Derivative liabilities not designated as hedging instruments:
Energy derivative contracts
Interest rate swaps
Net positions
Derivative liabilities designated as hedging instruments:
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Net positions
Derivative assets not designated as hedging instruments:
Foreign exchange swaps
Net positions
Derivative assets designated as hedging instruments:
Energy derivative contracts
Interest rate swaps
Foreign exchange swaps
Net positions
Total net positions
(a) Energy derivative contracts
(a)
(b)
(b)
(c)
(c)
(37)
-
93
(13)
(65)
71
7
(19)
(65)
-
-
6
4
12
(4)
-
-
35
$ 108 $
56 $ 145
(a) $
(b)
$
- $
-
- $
- $
-
- $
13
67
80
(a) $
- $
3 $
(b)
170
68
(c) $
4 $
- $
-
65
-
$ 174 $
71 $
65
(c) $
(14) $
$
(14) $
- $
- $
(a) $
(31) $
- $
(b)
(c)
-
(15)
(21)
-
$
(52) $
(15) $
-
-
-
-
-
-
$ 108 $
56 $ 145
Brookfield Renewable has entered into long-term energy derivative contracts primarily to stabilize the
price of gas purchases or eliminate the price risk on the sale of certain future power generation. Certain
energy contracts are recorded in Brookfield Renewable’s consolidated financial statements at an amount
equal to fair value, using quoted market prices or, in their absence, a valuation model using both internal
and third-party evidence and forecasts.
For the year ended December 31, 2014, gains of $4 million, relating to energy derivative contracts were
realized and reclassified from OCI to net income (loss) (2013 and 2012: $nil).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 96
Based on market prices as of December 31, 2014, unrealized gains of $18 million (2013: $3 million loss
and 2012: $4 million loss) recorded in accumulated other comprehensive income (“AOCI”) on energy
derivative contracts are expected to be settled or reclassified into income in the next twelve months. The
actual amount reclassified from AOCI, however, could vary due to future changes in market prices.
(b) Interest rate swaps
Brookfield Renewable has entered into interest rate swap contracts primarily to minimize exposure to
interest rate fluctuations on its variable rate debt or to lock in interest rates on future debt refinancing. All
interest rate swap contracts are recorded in the consolidated financial statements at an amount equal to
fair value.
At December 31, 2014, agreements with a total notional value of $2,119 million were outstanding (2013:
$1,600 million) including notional values of $9 million (2013: $10 million) associated with agreements that
are not formally designated as hedging instruments. The fixed interest rates resulting from these
agreements range from 0.38% to 5.54% (2013: 0.38% to 5.30%).
For the year ended December 31, 2014, losses of $4 million, relating to cash flow hedges were realized
and reclassified from OCI to net income (loss) (2013: losses of $1 million and 2012: $16 million loss).
Based on market prices as of December 31, 2014, unrealized losses of $95 million (2013: $ 59 million
loss and 2012: $109 million loss) recorded in AOCI on interest rate swaps are expected to be settled or
reclassified into income in the next twelve months. The actual amount reclassified from AOCI, however,
could vary due to future changes in market rates.
(c) Foreign exchange swaps
Brookfield Renewable has entered into foreign exchange swaps to minimize its exposure to currency
fluctuations impacting its investments in foreign operations, and to fix the exchange rate on certain
anticipated transactions denominated in foreign currencies.
At December 31, 2014, agreements with a total notional value of $656 million were outstanding (2013:
$nil) including $254 million (2013: $nil) associated with agreements that are not formally designated as
hedging instruments.
Based on market prices as of December 31, 2014, unrealized gains of $26 million (2013 and 2012: $nil)
recorded in AOCI on foreign exchange swaps are expected to be settled or reclassified into income in the
next twelve months. The actual amount reclassified from AOCI, however, could vary due to future
changes in market rates.
9. RELATED PARTY TRANSACTIONS
Brookfield Renewable’s related party transactions are recorded at the exchange amount. Brookfield
Renewable’s related party transactions are primarily with Brookfield Asset Management and its
subsidiaries. Brookfield Renewable and Brookfield had entered into, or amended, the following material
agreements:
Principal Agreements
Limited Partnership Agreements
Each of the amended and restated limited partnership agreements of Brookfield Renewable and BRELP
outline the key terms of the partnerships, including provisions relating to management, protections for
limited partners, capital contributions, distributions and allocation of income and losses. BRELP’s general
partner is entitled to receive incentive distributions from BRELP as a result of its ownership of the general
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 97
partnership interest in BRELP. The incentive distributions are to be calculated in increments based on the
amount by which quarterly distributions on the limited partnership units of BRELP exceed specified target
levels as set forth in the amended and restated partnership agreement.
Master Services Agreement
Brookfield Renewable entered into an agreement with Brookfield Asset Management pursuant to which
Brookfield Asset Management has agreed to provide oversight of the business and provide the services
of senior officers to Brookfield Renewable for a management service fee. The fee is paid on a quarterly
basis and has a fixed quarterly component of $5 million and a variable component calculated as a
percentage of the increase in the total capitalization value of Brookfield Renewable over an initial
reference value (subject to an annual escalation by a specified inflation factor beginning on January 1,
2013). Total capitalization value as of December 31, 2014 is $11 billion, which against the initial reference
value of $8 billion and factoring in the annual amount of $20 million (as adjusted for inflation), resulted in
a management service fee payment for the year ended December 31, 2014 of $51 million (2013: $41
million, 2012: $36 million).
BRELP Voting Agreement
In 2011, we entered into a voting agreement with Brookfield pursuant to which Brookfield Renewable,
through BRPL, has a number of voting rights, including the right to direct all eligible votes in the election
of the directors of BRELP’s general partner.
Revenue Agreements
Contract Amendments
In 2011, two long-term power purchase agreements associated with the generating assets in Ontario held
by the Mississagi Power Trust (“MPT”), and Great Lakes Power Limited (“GLPL”) were amended.
The amended GLPL power purchase agreement requires Brookfield to support the price that GLPL
receives for energy generated by certain facilities in Canada at a price of C$82 per MWh subject to an
annual adjustment equal to 40% of the Consumer Price Index (“CPI”) in the previous year. The GLPL
agreement has an initial term to 2029, and the contract automatically renews for successive 20-year
periods with certain termination provisions. If the contract is not terminated prior to 2029, the price under
this agreement reverts back to the original C$68 per MWh subject to an annual adjustment equal to 40%
of the CPI for each year.
The amended MPT power purchase agreement requires Brookfield to purchase the energy generated at
a price of C$103 per MWh subject to an annual adjustment equal to 20% of the CPI in the previous year.
The MPT contract terminates on December 1, 2029 and MPT has been granted the unilateral option to
terminate the agreement, on 120 days written notice, at certain times between 2017 and 2024.
Energy Revenue Agreement
In 2011, an agreement was entered into between Brookfield and Brookfield Power U.S. Holdings America
Co. (“BPUSHA”) that indirectly owns substantially all of the U.S. facilities of Brookfield Renewable.
Brookfield will support the price that BPUSHA receives for energy generated by certain facilities in the
United States at a price $75 per MWh. This price is to be increased annually on January 1 by an amount
equal to 40% of the increase in the CPI during the previous calendar year, but not exceeding an increase
of 3% in any calendar year. This agreement will have an initial term of 20 years, with automatic renewals
for successive 20-year periods with certain termination provisions.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 98
Other Revenue Agreements
Pursuant to a 20-year power purchase agreement, Brookfield purchases all energy from several power
facilities in Maine and New Hampshire held by Great Lakes Holding America (“GLHA”) at $37 per MWh.
The energy rates are subject to an annual adjustment equal to 20% of the increase in the CPI during the
previous year.
Pursuant to a 20-year power purchase agreement, Brookfield purchases all energy from Lievre Power in
Quebec at C$68 per MWh. The energy rates are subject to an annual adjustment equal to the lesser of
40% of the increase in the CPI during the previous calendar year or 3%.
Pursuant to a power guarantee agreement, Brookfield will purchase all energy from the two facilities of
Hydro Pontiac Inc. at a price of C$68 per MWh, to be increased annually each calendar year beginning in
2010 by an amount equal to 40% of the increase in the CPI during the previous calendar year. This
power guarantee agreement is scheduled to commence in 2019 for one facility and in 2020 for the other,
upon the expiration of existing power agreements. This agreement has an initial term to 2029 and
automatically renews for successive 20-year period with certain termination provisions.
Pursuant to a 10-year Wind Levelization agreement expiring in 2019, Brookfield mitigates any potential
wind variation from the expected annual generation of 506 GWh with regards to the Prince Wind assets in
Ontario. Any excess generation compared to the expected generation results in a payment from
Brookfield Renewable to Brookfield, while a shortfall would result in a payment from Brookfield to
Brookfield Renewable.
Power Services Agreements
Power Agency Agreements
Certain Brookfield Renewable subsidiaries have entered into Power Agency Agreements appointing
Brookfield as the exclusive agent of the owner in respect of the sales of electricity, including the
procurement of transmission and other additional services. In addition, Brookfield will schedule, dispatch
and arrange for transmission of the power produced and the power supplied to third-parties in accordance
with prudent industry practice. Pursuant to each Agreement, Brookfield will be entitled to be reimbursed
for any third-party costs incurred, and, in certain cases, receives an additional fee for its services in
connection with the sale of power and for providing the other services.
Energy Marketing Agreement
Brookfield has agreed to provide energy marketing services to Brookfield Renewable’s North American
businesses. Under this Agreement, Brookfield Renewable pays an annual energy marketing fee of $18
million per year (subject to increase by a specified inflation factor beginning on January 1, 2013). See
Note 21 - Direct operating costs.
Voting Agreements
Brookfield Renewable entered into voting agreements with Brookfield whereby Brookfield, as managing
member of entities related to the Brookfield Americas Infrastructure Fund (the “BAIF Entities”) in which
Brookfield Renewable holds investments in certain United States and Brazil power generating operations
with institutional investors, agreed to assign to Brookfield Renewable their voting rights to elect the
Boards of Directors of the BAIF Entities. Brookfield Renewable’s economic interests in the BAIF Entities
in the United States and Brazil are 22% and 25%, respectively.
Brookfield Renewable entered into voting agreements with certain Brookfield subsidiaries whereby these
subsidiaries, as managing members of entities related to Brookfield Infrastructure Fund II (the “BIF II
Entities”) in which Brookfield Renewable holds investments in certain United States and Europe power
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 99
generating operations with institutional investors, agreed to provide to Brookfield Renewable the authority
to direct the election of the Boards of Directors of the BIF II Entities. Brookfield Renewable’s economic
interests in the BIF II Entities are between 40% and 50.1%.
The following table reflects the related party agreements and transactions on the consolidated statements
of income (loss), for the year ended December 31:
(MILLIONS)
Revenues
Power purchase and revenue agreements
Wind levelization agreement
Direct operating costs
Energy purchases
Energy marketing fee
Insurance services
Management service costs
2014
2013
2012
$
$
$
$
$
433 $
456 $
6
6
439 $
462 $
(9) $
(36) $
(21)
(29)
(59) $
(51) $
(20)
(26)
(82) $
(41) $
376
2
378
(40)
(18)
(18)
(76)
(36)
The following table reflects the impact of the related party agreements and transactions on the
consolidated balance sheets as at December 31:
Related party
2014
2013
(MILLIONS)
Current assets
Due from related parties
Amounts due from
Current liabilities
Due to related parties
Amount due to
Brookfield
Equity accounted investments and other
Brookfield
$
$
$
54 $
9
63 $
36
12
48
56 $
48
21
2
62
-
$
79 $
110
Accrued distributions payable on LP
Units and Redeemable/Exchangeable
partnership units
Amount due to
Brookfield
Equity accounted investments and other
Current assets
Amounts due from Brookfield are non-interest bearing, unsecured and due on demand.
Current liabilities
Amounts due to Brookfield are unsecured, payable on demand and relate to recurring transactions.
With the change in timing of the quarterly distributions that took effect in the first quarter of 2014, the
distribution payable as at December 31, 2014 represents distributions declared with respect to one month
in the fourth quarter of 2014. Distributions payable as at December 31, 2013 represented the distribution
declared for the fourth quarter of 2013.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 100
10. EQUITY-ACCOUNTED INVESTMENTS
The following are Brookfield Renewable’s equity-accounted investments as at December 31:
(MILLIONS)
Bear Swamp Power Co. L.L.C.
Galera Centrais Eletricas S.A.
Pingston Power Inc.
Brookfield Americas Infrastructure Fund Investees United States
United States,
Brookfield Infrastructure Fund II Investees
Europe
United States
Brazil
Canada
Principal place Ownership
interest
of business
%
50 $
50
50
14 - 50
$
Carrying value
2014
177 $
38
56
-
2
273 $
2013
138
58
51
40
3
290
The following table outlines the changes in Brookfield Renewable’s equity-accounted investments for the
year ended December 31:
(MILLIONS)
Balance, beginning of year
Acquisitions (see Note 4):
California Wind Step Acquisition
California Hydro Step Acquisition
Canada Hydro Step Acquisition
Revaluation recognized through OCI
Share of OCI
Share of net income (loss)
Dividends declared
Foreign exchange loss
Other
Balance, end of year
$
$
2014
290 $
-
(39)
-
56
1
3
(27)
(11)
-
273 $
2013
344 $
-
-
(19)
(15)
1
9
(18)
(12)
-
290 $
The following tables summarize certain financial information of equity-accounted investments:
(MILLIONS)
As at December 31:
Current assets
Property, plant and equipment, at fair value
Other assets
Current liabilities
Long-term debt
Other liabilities
(MILLIONS)
For the year ended December 31
Revenue
Net income (loss)
Share of net income (loss)
Cash earnings
Non-cash loss
2014
$
42 $
708
74
27
184
70
2013
110 $
19
21
(12)
$
2014
109 $
6
26
(23)
2012
405
(63)
-
-
16
-
(5)
(12)
(5)
8
344
2013
54
726
93
27
202
64
2012
106
(12)
13
(18)
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 101
11. PROPERTY, PLANT AND EQUIPMENT, AT FAIR VALUE
The following table presents a reconciliation of property, plant and equipment at fair value:
(MILLIONS)
Hydroelectric(1) Wind energy
CWIP generation
Total
As at December 31, 2011
$ 12,079 $
1,450 $ 386 $
87 $ 14,002
Co-
Additions
Acquisitions through business combinations
Investment tax credit
Transfers and other
Items recognized through OCI
Change in fair value
Foreign exchange
Items recognized through net income
Change in fair value
Depreciation
As at December 31, 2012
Additions
Acquisitions through business combinations
Investment tax credit
Transfers and other
Items recognized through OCI
Change in fair value
Foreign exchange
Items recognized through net income
Change in fair value
Depreciation
As at December 31, 2013
Additions
Acquisitions through business combinations
Transfers and other
Items recognized through OCI
Change in fair value
Foreign exchange
Items recognized through net income
Change in fair value
Depreciation
2
618
(13)
107
637
(70)
-
581
(196)
315
175
-
429
(558)
62
40
82
(8)
(20)
(349)
(4)
(113)
-
-
-
-
-
4
(13)
2
11
(21)
317
1,374
(209)
(18)
768
(36)
(13)
(483)
$ 12,991 $
2,249 $ 392 $
70 $ 15,702
18
927
(24)
183
(215)
(672)
(21)
(381)
-
225
430
-
30
-
(4)
(205)
8
(90)
24
(25)
(3)
(142)
-
-
-
-
-
-
(19)
(2)
9
(12)
243
1,387
(24)
(26)
(202)
(789)
(15)
(535)
$
12,806 $
2,448 $
441 $
46 $ 15,741
7
1,325
377
1,587
(671)
22
(384)
34
1,057
173
34
31
(423)
57
(222)
1
(160)
-
(15)
-
-
-
-
-
-
(2)
1
(4)
214
2,416
(15)
1,644
(910)
24
(548)
$
15,069 $
3,246 $
210 $
41 $ 18,566
As at December 31, 2014
(1)
Includes intangible assets, the value of which is not material.
The fair value of Brookfield Renewable’s property, plant and equipment is calculated as described in
Notes 2(f) - Property, plant and equipment and revaluation method and 2(n) - Critical estimates.
Judgment is involved in determining the appropriate estimates and assumptions in the valuation of
Brookfield Renewable’s property, plant and equipment. See Note 2(o)(iii) - Critical judgments in applying
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 102
accounting policies – Property, plant and equipment. Brookfield Renewable has classified it’s property,
plant and equipment under level 3 of the fair value hierarchy.
Discount rates, terminal capitalization rates and exit dates used in the valuation methodology, are
provided in the following table:
United States
Canada
Brazil
2014
2013
2014
2013
2014
2013
Discount rate
Contracted
Uncontracted
Terminal capitalization rate(1)
Exit date
(1)
5.2%
7.1%
7.1%
5.8%
7.6%
7.1%
4.8%
6.7%
6.5%
5.1%
6.9%
6.4%
8.4%
9.7%
N/A
2029
9.1%
10.4%
N/A
2029
2034
The terminal capitalization rate applies only to hydroelectric assets in the United States and Canada.
2033
2033
2034
The following table summarizes the impact of a change in discount rates and terminal capitalization rates
on the fair value of property, plant and equipment:
(BILLIONS)
50 bps increase in discount rates
50 bps decrease in discount rates
50 bps increase in terminal capitalization rate(1)
50 bps decrease in terminal capitalization rate(1)
( 1 )
0.4
The terminal capitalization rate applies only to hydroelectric assets in the United States and Canada.
$
$
2014
(1.3)
1.5
(0.3)
2013
(1.1)
1.3
(0.3)
0.3
Terminal values are included in the valuation of hydroelectric assets in the United States and Canada.
For the hydroelectric assets in Brazil, cash flows have been included based on the duration of the
authorization or useful life of a concession asset without consideration of potential renewal value. The
weighted-average remaining duration at December 31, 2014, is 15 years (2013: 16 years). Consequently,
there is no terminal value attributed to the hydroelectric assets in Brazil.
The following table summarizes the percentage of total generation contracted under power purchase
agreements:
1 - 10 years
11 - 20 years
United States
55%
43%
Canada
88%
66%
Brazil
48%
38%
The following table summarizes power prices from long-term power purchase agreements that are linked
specifically to the related power generating assets:
Per MWh(1)
1 - 10 years
11 - 20 years
(1)
Assumes nominal prices based on weighted-average generation.
United States
Canada
$
$
90 C$
103 C$
91 R$
96 R$
Brazil
247
361
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 103
The following table summarizes the estimates of future electricity prices:
Per MWh(1)
1 - 10 years
11 - 20 years
(1)
Assumes nominal prices based on weighted-average generation.
United States
Canada
$
$
74 C$
120 C$
105 R$
134 R$
Brazil
261
382
A 5% change in the estimates of future electricity prices would increase or decrease the fair value of
property, plant and equipment by approximately $500 million.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from renewable
sources to meet future demand growth by the year 2020. A one year change would increase or decrease
the fair value of property, plant and equipment by approximately $225 million.
Had Brookfield Renewable’s revalued property, plant and equipment been measured on a historical cost
basis, the carrying amounts, net of accumulated depreciation would have been as follows at December
31:
(MILLIONS)
Hydroelectric
Wind
Other(1)
2014
6,435
2,729
267
9,431
$
$
2013
5,305
1,935
386
7,626
$
$
(1)
Included within the “Other” category are gas-fired generating units and CWIP.
12. OTHER LONG-TERM ASSETS
The composition of Brookfield Renewable’s other long-term assets as at December 31 is presented in the
following table:
(MILLIONS)
Water rights
Restricted cash
Available-for-sale investments
Unamortized financing fees
Other
Accumulated
Amortization Net Book Value Net book value
Cost
2014
$
-
$
81
31
37
39
$
188
$
$
- $
81
31
9
35
2013
74
75
-
11
50
$
156
$
210
-
-
-
(28)
(4)
(32)
Brookfield Renewable is required to pay the Brazilian Federal Government for the usage of public assets
(“Water rights”) over the concession terms associated with certain of its Brazilian facilities. Water rights
are monetarily adjusted by the Brazilian General Market Price Index. During the year ended December
31, 2014, the concession agreement associated with a facility was terminated, and accordingly, as at
December 31, 2014, an asset of $nil million (2013: $74 million) was included in other long-term assets
and corresponding liability of $13 million associated with another of the facilities was recorded within
other long-term liabilities (Note 16) (2013: $89 million).
At December 31, 2014, $81 million of restricted cash (2013: $75 million) was held to satisfy lease
payments and credit agreements.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 104
13. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Brookfield Renewable’s accounts payable and accrued liabilities as at December 31 are as follows:
(MILLIONS)
Operating accrued liabilities
Interest payable on corporate and subsidiary borrowings
Accounts payable
LP Unitholders’ distribution and preferred dividends payable(1)
Other
$
2014
131
44
29
19
30
$
2013
101
49
31
40
8
(1)
229
Includes amounts payable only to external LP Unitholders. Amounts payable to Brookfield are included in due to related
parties. Refer to Note 9 - Related party transactions.
253
$
$
14. LONG-TERM DEBT AND CREDIT FACILITIES
The composition of debt obligations as at December 31 is presented in the following table:
(MILLIONS EXCEPT AS NOTED)
Corporate borrowings
Series 3 (CDN$200)
Series 4 (CDN$150)
Series 6 (CDN$300)
Series 7 (CDN$450)
Series 8 (CDN$400)
Subsidiary borrowings
United States
Canada
Brazil
Europe
Credit facilities
Total debt
Add: Unamortized premiums(1)
Less: Unamortized financing fees(1)
Less: Current portion
2014
Weighted-average
Interest
rate (%)
Term
(years)
2013
Weighted-average
Interest
rate (%)
Term
(years)
5.3
5.8
6.1
5.1
4.8
5.3
5.3
5.7
7.3
3.5
5.3
1.4
3.8
$
21.9
1.9
5.8
7.1
6.7
8.3
13.8
10.4
12.5
10.4
4.5
$
$
$
$
$
172
129
258
388
344
1,291
3,468
1,798
189
594
6,049
401
7,741
8
(71)
(256)
5.3
5.8
6.1
5.1
4.8
5.3
6.0
5.8
7.4
-
6.0
1.4
4.8
$
22.9
2.9
6.8
8.1
7.7
9.7
15.2
11.1
-
11.8
3.8
$
$
$
$
$
188
141
282
424
377
1,412
2,826
1,877
238
-
4,941
311
6,664
11
(52)
(517)
(1)
Unamortized premiums and unamortized financing fees are amortized to interest expense over the terms of the borrowing.
$
7,422
$
6,106
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 105
Future maturities of Brookfield Renewable’s debt obligations, for each of the next five years and
thereafter are as follows:
(MILLIONS)
Corporate borrowings(1)
Subsidiary borrowings(1)
United States
Canada
Brazil
Europe
2015
2016
2017
2018
2019 Thereafter
Total
$
- $
258 $
- $
172 $
- $
861 $ 1,291
147
53
23
33
256
347
135
22
36
798
784
49
21
40
894
777
54
20
41
67
52
19
44
1,064
182
1,346
1,455
84
400
4,146
3,468
1,798
189
594
7,340
Credit facilities
401
401
583 $ 4,146 $ 7,741
Subsidiary borrowings and corporate borrowings include $8 million and $71 million of unamortized premiums and deferred
financing fees, respectively.
894 $ 1,064 $
-
798 $
-
256 $
-
-
-
$
(1)
Future maturities of borrowings for interests accounted for on an equity-accounted basis for each of the
next five years and thereafter are as follows:
(MILLIONS)
United States
Canada
2015
2016
- $
30
- $
-
2017
125 $
-
30 $
- $
125 $
$
$
- $
-
- $
- $
-
- $
2018
2019 Thereafter
Total
125
30
- $
-
- $
155
The unamortized financing fees of each debt obligation as at December 31 are as follows:
(MILLIONS)
Corporate borrowings
Unamortized financing fees, beginning of year
Additional financing fees
Amortization of financing fees
Unamortized financing fees, end of year
Subsidiary borrowings
Unamortized financing fees, beginning of year
Additional financing fees
Amortization of financing fees
Other
Unamortized financing fees, end of year
Total
2014
2013
2012
$
$
$
$
$
6
-
(1)
5
46
39
(13)
(6)
66
71
$
$
$
$
$
8
-
(2)
6
46
17
(17)
-
46
52
$
$
$
$
$
6
3
(1)
8
49
15
(18)
-
46
54
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 106
Long-term debt and credit facilities are recorded at amortized cost.
The following table provides information about management’s best estimate of the fair value of long-term
debt and credit facilities as at December 31:
(MILLIONS)
Corporate borrowings
Subsidiary borrowings
United States
Canada
Brazil
Europe
Credit facilities
$
$
2014
Carrying value(1)
1,286
$
$
3,435
1,784
189
583
5,991
401
2013
Fair value Carrying value(1)
1,406
1,428
$
3,769
2,013
189
634
6,605
401
$
2,804
1,864
238
-
4,906
311
$
$
Fair value
1,535
2,988
2,056
238
-
5,282
311
$
Net of unamortized financing fees and premium.
(1)
Corporate borrowings
7,678
$
8,434
$
6,623
$
7,128
Corporate borrowings are obligations of a finance subsidiary of Brookfield Renewable, Brookfield
Renewable Energy Partners ULC (“BREP Finance”) (Note 23 - Subsidiary public issuers). BREP Finance
may redeem some or all of the borrowings from time to time, pursuant to the terms of the indenture. The
balance is payable upon maturity, and interest on corporate borrowings is paid semi-annually. The term
notes payable by BREP Finance are unconditionally guaranteed by Brookfield Renewable, BRELP and
certain other subsidiaries.
Subsidiary borrowings
Subsidiary borrowings are generally asset-specific, long-term, non-recourse borrowings denominated in
the domestic currency of the subsidiary. Subsidiary borrowings in the United States, Canada and Europe
consist of both fixed and floating interest rate debt. Brookfield Renewable uses interest rate swap
agreements to minimize its exposure to floating interest rates. Subsidiary borrowings in Brazil consist of
floating interest rates of Taxa de Juros de Longo Prazo, the Brazil National Bank for Economic
Development’s long-term interest rate, or Interbank Deposit Certificate rate, plus a margin.
During the year ended December 31, 2014, Brookfield Renewable completed the following financings:
In January 2014, the $279 million bridge loan associated with a 360 MW operating hydroelectric portfolio
located in New England was refinanced to July 2017 at LIBOR plus 2.25%.
In February 2014, as part of the Maine Hydro acquisition, $140 million of financing was obtained through
a bond issuance with a 5.5% interest rate maturing in February 2024.
In March 2014, Brookfield Renewable up-financed indebtedness associated with a 349 MW Ontario
hydroelectric portfolio through the issuance of C$90 million of senior and C$60 million of subordinate
bonds with interest rates of 3.8% and 5.0%, respectively, maturing in June 2023.
In June 2014, Brookfield Renewable refinanced a $125 million debt facility associated with a 167 MW
hydroelectric portfolio in New England through the issuance of 8-year notes maturing in January 2022 at
a fixed rate of 4.59%.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 107
In June 2014, as part of the acquisition of the 326 MW Irish wind portfolio, Brookfield Renewable
assumed a €169 million ($232 million) loan with a fixed interest rate of 4.6%, including the related interest
rate swaps, maturing in December 2026.
In August 2014, Brookfield Renewable secured a €160 million ($210 million) term loan for 153 MW of its
wind facilities in Ireland with an initial fixed interest rate of 2.9%, including the related interest rate swaps,
maturing in December 2026.
In October 2014, Brookfield Renewable secured a $560 million term loan associated with Pennsylvania
Hydro. A portion of the proceeds was used primarily to prepay the high-yielding $65 million bond initially
assumed in connection with the Pennsylvania Hydro Step Acquisition. The debt bears interest at LIBOR
plus 1.75%, with the margin increasing 25 basis points annually, and matures in June 2018.
In November 2014, Brookfield Renewable secured an 18-month extension on a $250 million term loan
associated with a hydroelectric portfolio in Tennessee and North Carolina with a fixed interest rate of
3.20%, including the related interest rate swaps, and maturing in May 2016.
In December 2014, Brookfield Renewable secured a €188 million ($227 million) construction and term
loan for 137 MW of its development projects in Ireland. An amount of €168 million ($203 million) was
initially drawn on the loan at a rate of 2.82%, maturing in December 2027.
Credit facilities
In August 2014, Brookfield Renewable extended the maturity for $1,280 million of its corporate credit
facilities to June 2019 and reduced the applicable margin by five basis points from 1.25% to 1.20%. The
credit facilities are used for general working capital purposes. The credit facility is available by way of
advances in Canadian dollars, U.S. dollars, Euro (€) or British Pound Sterling (£) in the form of (i)
Canadian prime rate loans (ii) U.S. base rate loans (iii) bankers’ acceptance (“BA”) rate loans (iv) LIBOR
loans (v) EURIBOR loans and (vi) letters of credit. Refer to Note 25 – Commitments, contingencies and
guarantees for further details. The credit facility bears interest at the applicable BA rate, LIBOR or
EURIBOR plus an applicable margin. The applicable margin is tiered on the basis of Brookfield
Renewable’s unsecured long-term debt rating. Standby fees are charged on the undrawn balance.
In addition, Brookfield Asset Management provided a $200 million committed unsecured revolving credit
facility maturing in December 2015, at LIBOR plus 2%.
Brookfield Renewable and its subsidiaries issue letters of credit from some of its credit facilities for
general corporate purposes which include, but are not limited to, security deposits, performance bonds
and guarantees for debt service reserve accounts.
The following table summarizes the available portion of credit facilities as at December 31:
(MILLIONS)
Authorized credit facilities
Draws on credit facilities(1)
Issued letters of credit
Available portion of credit facilities
(1)
Amounts are unsecured and revolving. Interest rate is at the LIBOR plus 1.20% (December 31, 2013: 1.25%).
2014
2013
$
1,480
$
1,480
(401)
(227)
$
852
$
(311)
(212)
957
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 108
15. INCOME TAXES
The major components of income tax recovery (expense) for the year ended December 31 are as follows:
(MILLIONS)
Income tax recovery (expense) applicable to:
Current taxes
Attributed to the current period
Deferred taxes
Income taxes - origination and reversal of temporary differences
Relating to change in tax rates / imposition of new tax laws
Relating to unrecognized temporary differences and tax losses
Total income tax recovery (expense)
2014
2013
2012
$
$
$
$
(18) $
(19) $
(14)
30 $
15
(16)
29 $
11 $
24 $
14
(20)
18 $
(1) $
82
(5)
(23)
54
40
The major components of deferred income tax recovery (expense) for the year ended December 31
recorded directly to OCI are as follows:
(MILLIONS)
Deferred income taxes attributed to:
Financial instruments designated as cash flow hedges
Other
Revaluation surplus
Origination and reversal of temporary differences
Relating to changes in tax rates / imposition of new tax laws
2014
2013
2012
12 $
(8)
(11) $
-
(1)
-
(408)
38
(366) $
98
6
93 $
(218)
(6)
(225)
$
$
Brookfield Renewable’s effective income tax (expense) recovery for the year ended December 31 is
different from its recovery at its statutory income tax rate due to the differences below:
(MILLIONS)
Statutory income tax (expense) recovery(1)
(Reduction) increase resulting from:
Increase in tax assets not recognized
Deemed profit method differences in Brazil
Differences between statutory rate and future tax rate
Losses (gains) recorded not taxable to Brookfield Renewable
Other
2014
2013
$
(66) $
(76) $
(16)
8
65
11
9
(20)
12
69
13
1
2012
47
(23)
7
25
(24)
8
Effective income tax recovery (expense)
(1)
40
Statutory income tax (expense) recovery is calculated at the domestic rates applicable to the profits in the country concerned.
11 $
(1) $
$
The above reconciliation has been prepared by aggregating the information for all of Brookfield
Renewable’s subsidiaries using the domestic rate in each tax jurisdiction.
The taxable temporary difference attributable to the Brookfield Renewable’s interest in its subsidiaries,
associates, and joint ventures is $376 million.
Brookfield Renewable’s effective income tax rate was 5.76% for the year ended December 31, 2014
(2013: 0.46%). The effective tax rate is less than the statutory rate primarily due to rate differentials and
non-controlling interests income not subject to tax.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 109
The following table details the expiry date, if applicable, of the unrecognized deferred tax assets as at
December 31:
(MILLIONS)
2015 to 2019
2020 and thereafter
$
$
2014
1
77
78
$
$
2013
1
62
63
The deferred tax assets and liabilities of the following temporary differences have been recognized in the
consolidated financial statements for the year ended December 31:
Recognized
in Net
(MILLIONS)
Non-capital losses
Amount available for future
deductions
Difference between tax and carrying
value
Jan 1,
2014
341 $
$
(loss)
46 $
income Recognized
Business
in Equity Combinations
Foreign
Exchange
15 $
10 $
(9) $
Dec 31,
2014
403
110
(12)
-
-
(10)
88
(2,599)
(5)
(366)
(130)
114
(2,986)
Net deferred tax (liabilities) assets
$ (2,148) $
29 $ (351) $ (120) $
95 $ (2,495)
Recognized
in Net
(MILLIONS)
Non-capital losses
Amount available for future
deductions
Difference between tax and carrying
value
Jan 1,
2013
270 $
$
(loss)
32 $
income Recognized
Business
in Equity Combinations
Foreign
Exchange
7 $
41 $
(9) $
Dec 31,
2013
341
131
(13)
-
-
(8)
110
(2,669)
(1)
97
(123)
97
(2,599)
Net deferred tax (liabilities) assets
$ (2,268) $
18 $
104 $
(82) $
80 $ (2,148)
Recognized
in Net
(MILLIONS)
Non-capital losses
Amount available for future
deductions
Difference between tax and carrying
value
Jan 1,
2012
168 $
$
(loss)
97 $
income Recognized
Business
in Equity Combinations
Foreign
Exchange
- $
- $
5 $
Dec 31,
2012
270
138
(14)
-
-
7
131
(2,367)
(29)
(225)
(2)
(46)
(2,669)
Net deferred tax (liabilities) assets
$ (2,061) $
54 $ (225) $
(2) $
(34) $ (2,268)
The deferred income tax liabilities includes $2,650 million (2013: $2,283 million) of liabilities which relate
to property, plant and equipment revaluations included in equity.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 110
16. OTHER LONG-TERM LIABILITIES
Brookfield Renewable’s other long-term liabilities as at December 31 are comprised of the following:
(MILLIONS)
Concession payment liability
Decommissioning retirement obligations
Pension obligations (Note 20)
Other
$
$
2014
13
48
63
23
2013
89
28
33
13
$
147
$
163
At December 31, 2014, Brookfield Renewable recorded a liability associated with a future obligation
relating to concession payments of $13 million (2013: $89 million). During the year ended December 31,
2014, the concession agreement associated with one of the facilities in Brazil was terminated. The future
obligation is being settled through monthly payments made over the concession term.
Brookfield Renewable has recorded decommissioning retirement obligations associated with certain
power generating assets. The estimated cost of decommissioning activities is based on a third party
assessment. The decommissioning retirement obligation of $48 million at December 31, 2014 (2013: $28
million) has been established for hydroelectric and wind operation sites in Canada and United States that
are expected to be restored between the years 2031 to 2138.
17. CAPITAL MANAGEMENT
Brookfield Renewable’s primary capital management objectives are to ensure the sustainability of its
capital to support continuing operations, meet its financial obligations, allow for growth opportunities and
provide stable distributions to its LP Unitholders. Brookfield Renewable’s capital is monitored through
total debt to capitalization which is defined as the total long-term debt and credit facilities divided by total
long-term debt and credit facilities plus equity.
Brookfield Renewable has provided covenants to certain of its lenders for its corporate borrowings and
credit facilities. The covenants require Brookfield Renewable to meet minimum debt to capitalization
ratios. Subsidiaries of Brookfield Renewable have provided covenants to certain of their lenders for their
property-specific borrowings. These covenants vary from one credit agreement to another and include
ratios that address debt service coverage. Certain lenders have also put in place requirements that oblige
Brookfield Renewable and its subsidiaries to maintain debt and capital expenditure reserve accounts. The
consequences to the subsidiaries as a result of failure to comply with their covenants could include a
limitation of distributions from the subsidiaries to Brookfield Renewable, as well as repayment of
outstanding debt. Brookfield Renewable is dependent on the distributions made by its subsidiaries to
service its debt.
Financial covenants associated with Brookfield Renewable’s various banking and credit arrangements
are reviewed regularly and controls are in place to maintain compliance with these covenants. Brookfield
Renewable complied with all material financial covenants for the years ended December 31, 2014, 2013
and 2012.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 111
Brookfield Renewable’s strategy during 2014, which was unchanged from 2013, was to maintain the
measure set out in the following schedule as at December 31:
(MILLIONS)
Total debt
Current portion of long-term debt
Long-term debt and credit facilities
Deferred income tax liabilities, net(1)
Preferred equity
Participating non-controlling interests - in operating subsidiaries
General partnership interest in a holding subsidiary held by
Brookfield
Participating non-controlling interests - in a holding
subsidiary - Redeemable/Exchangeable units held by Brookfield
Limited partners' equity
Total capitalization
Debt to total capitalization
(1)
Deferred income tax liabilities minus deferred income tax asset.
18. NON-CONTROLLING INTERESTS
2014
2013
$
256 $
7,422
7,678
2,495
728
2,062
517
6,106
6,623
2,148
796
1,303
59
54
2,865
3,167
19,054 $
40%
2,657
2,726
16,307
41%
$
Brookfield Renewable’s non-controlling interests are comprised of the following as at December 31:
(MILLIONS)
Preferred equity
Participating non-controlling interests - in operating subsidiaries
General partnership interest in a holding subsidiary held by Brookfield
Participating non-controlling interests - in a holding subsidiary -
Redeemable/Exchangeable units held by Brookfield
Total
Preferred equity
2014
$
728 $
2,062
59
2,865
$
5,714 $
2013
796
1,303
54
2,657
4,810
Brookfield Renewable’s preferred equity as at December 31 consists of Class A Preference Shares as
follows:
Earliest
(MILLIONS)
Series 1 (CDN$250)
Series 3 (CDN$250)
Series 5 (CDN$175)
Series 6 (CDN$175)
Shares
outstanding
10
10
7
7
34
Cumulative
dividend
rate
permitted Dividends declared
For the year ended
redemption
date
5.25% Apr 30, 2015 $
4.40% Jul 31, 2019
5.00% Apr 30, 2018
5.00% Jul 31, 2018
2014
2013
12 $
10
8
8
13 $
11
8
5
2014
214 $
214
150
150
$
38 $
37 $
728 $
2013
234
234
164
164
796
The holders of the Series 1 preferred shares are entitled to receive fixed cumulative dividends. The
dividend rate will reset on April 30, 2015 and every five years thereafter at a rate equal to the then five-
year Government of Canada Bond yield plus 2.62%.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 112
The holders of the Series 3 preferred shares are entitled to receive fixed cumulative dividends. The
dividend will reset on July 31, 2019 and every five years thereafter at a rate equal to the then five year
Government of Canada Bond yield plus 2.94%.
The holders of Series 1 and Series 3 preferred shares will have the right, at their option, to convert their
shares into Class A preferred shares, Series 2 and Series 4, respectively, on a one-for-one basis on the
earliest permitted redemption date and every five years thereafter. The holders of the Series 2 and Series
4 preferred shares will be entitled to receive floating rate cumulative preferential cash dividends, equal to
the T-Bill Rate plus 2.62% and T-Bill Rate plus 2.94%, respectively.
The holders of the Series 5 and 6 preferred shares are entitled to receive fixed cumulative dividends.
Brookfield Renewable, BRELP and certain holding company subsidiaries fully and unconditionally
guarantee the payment of dividends on all of the Class A Preference Shares, the amount due on
redemption, and the amounts due on the liquidation, dissolution or winding-up of Brookfield Renewable
Power Preferred Equity Inc. (“BRP Equity”).
The Class A Preference Shares do not have a fixed maturity date and are not redeemable at the option of
the holders. As at December 31, 2014, none of the issued Class A Preference Shares have ever been
redeemed by BRP Equity.
Participating non-controlling interests – in operating subsidiaries
The net change in participating non-controlling interests – in operating entities is as follows:
(MILLIONS)
As at December 31, 2011
Net income
OCI
Capital contributions(1)
Distributions
Other
As at December 31, 2012
Net income
OCI
Capital contributions(1)
Distributions
Other
As at December 31, 2013
Net income
OCI
Capital contributions(1)
Distributions
Other
As at December 31, 2014
Interests held by third parties
(1)
Brookfield
Americas
Brookfield
Infrastructure Infrastructure The Catalyst
Brookfield
Energia
Group Renovável
Fund
380 $
(44)
24
447
-
(1)
806 $
21
133
51
(119)
(1)
891 $
14
54
-
(45)
-
914 $
Fund II
- $
-
-
-
-
-
- $
1
(2)
214
-
(6)
207 $
22
187
610
(89)
-
937 $
$
$
$
$
74 $
2
(7)
-
(6)
(5)
58 $
1
(10)
-
(3)
-
46 $
-
-
-
(3)
(11)
32 $
Other
8 $
-
25
8
-
-
Total
629
(40)
14
455
(24)
(6)
41 $ 1,028
41
-
99
4
265
-
(122)
-
(2)
(8)
43 $ 1,303
51
1
10
259
-
610
-
(149)
(1)
(12)
53 $ 2,062
167 $
2
(28)
-
(18)
-
123 $
18
(26)
-
-
1
116 $
14
8
-
(12)
-
126 $
25%
50-60%
Capital contributions from non-controlling interests are for the purposes of acquisitions and fund expenses of Brookfield Americas Infrastructure
Fund and Brookfield infrastructure Fund II.
24-30%
75-80%
23-50%
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 113
The following tables summarize certain financial information of operating subsidiaries that have non-
controlling interests that are material to Brookfield Renewable:
Brookfield
Americas
Brookfield
(MILLIONS)
Interests held by third parties
Place of business
For the year ended December 31, 2012:
Revenue
Net (loss) income
Total comprehensive (loss) income
Net (loss) income allocated to
non-controlling interests
For the year ended December 31, 2013:
Revenue
Net income
Total comprehensive income (loss)
Net income allocated to
non-controlling interests
As at December 31, 2013:
Property, plant and equipment, at fair value
Total assets
Total borrowings
Total liabilities
Carrying value of non-controlling interests
For the year ended December 31, 2014:
Revenue
Net income
Total comprehensive income
Net income allocated to
non-controlling interests
As at December 31, 2014:
Property, plant and equipment, at fair value
Total assets
Total borrowings
Total liabilities
Carrying value of non-controlling interests
Infrastructure Infrastructure The Catalyst
Group
Fund II
Fund
Other
Total
75-80%
50-60%
25%
United States United States
Brazil
Europe United States
23-50%
United States
Brazil
Canada
$
$
86 $
(55)
(60)
- $
-
-
137 $
10
(103)
30 $
6
111
253
(39)
(52)
(44)
-
2
2
(40)
195 $
23
258
74 $
2
(1)
188 $
72
(15)
25 $
2
2
482
99
244
21
1
18
1
41
$ 1,841 $
1,973
784
830
891 $
$
735 $ 1,039 $
794
349
379
207 $
1,161
578
597
116 $
520 $ 4,135
4,503
575
1,767
56
80
1,886
89 $ 1,303
$
164 $
18
85
211 $
46
422
162 $
56
87
31 $
3
45
568
123
639
14
22
14
1
51
$ 1,959 $ 3,316 $ 1,049 $
3,572
1,617
1,946
2,021
777
853
914 $
1,159
539
556
126 $
937 $
$
494 $ 6,818
7,281
529
2,986
53
73
3,428
85 $ 2,062
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 114
The following table summarizes certain financial information regarding General partnership interest in a
holding subsidiary held by Brookfield and Participating non-controlling interests – in a holding subsidiary -
Redeemable/Exchangeable units held by Brookfield:
(MILLIONS)
For the year ended December 31:
Revenue
Net income (loss)
Comprehensive income (loss)
Net income (loss) allocated to(1):
GP interest
Redeemable/Exchangeable partnership units
As at December 31:
Property, plant and equipment, at fair value
Total assets
Total borrowings
Total liabilities
Carrying value of(2):
GP interest
Redeemable/Exchangeable partnership units
(1)
2014
2013
2012
$
1,704 $
203
1,071
1,706 $
215
(333)
1,309
(95)
332
1
55
1
67
(1)
(35)
$ 18,566 $ 15,741
16,999
6,623
9,463
19,849
7,678
10,968
59
2,865
54
2,657
Allocated based on weighted-average GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and
138.8 million, respectively (2013 and 2012: 2.7 million, 129.7 million, and 132.9 million, respectively).
Allocated based on outstanding GP interest, Redeemable/Exchangeable partnership units and LP Units of 2.7 million, 129.7 million, and 143.4
million, respectively (2013: 2.7 million, 129.7 million, and 133.0 million, respectively).
(2)
As at December 31, 2014, general partnership units, representing the 1% general partnership interest in
BRELP held by Brookfield (“GP interest”), and Redeemable/Exchangeable partnership units outstanding
were 2,651,506 (December 31, 2013: 2,651,506) and 129,658,623 (December 31, 2013: 129,658,623),
respectively.
Distributions
The composition of the distributions for the year ended December 31 is presented in the following table:
(MILLIONS, EXCEPT AS NOTED)
General partnership interest in a holding subsidiary held by Brookfield $
Incentive distribution
Participating non-controlling interests - in a holding subsidiary -
Redeemable/Exchangeable units held by Brookfield
$
$
$
2014
2013
4 $
2
6 $
201 $
207 $
4
-
4
188
192
General partnership interest in a holding subsidiary held by Brookfield and Participating non-controlling
interests – in a holding subsidiary - Redeemable/Exchangeable partnership units held by Brookfield
Brookfield, as the owner of the 1% GP interest in BRELP, is entitled to regular distributions plus an
incentive distribution based on the amount by which quarterly distributions exceed specified target levels.
To the extent that LP Unit distributions exceed $0.375 per LP Unit per quarter, the incentive is 15% of
distributions above this threshold. To the extent that quarterly LP Unit distributions exceed $0.4225 per
LP Unit, the incentive distribution is equal to 25% of distributions above this threshold.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 115
Consolidated equity includes Redeemable/Exchangeable partnership units and the GP interest. The
Redeemable/Exchangeable partnership units are held 100% by Brookfield, which at its discretion has the
right to redeem these units for cash consideration. No Redeemable/Exchangeable partnership units have
been redeemed for cash consideration. Since this redemption right is subject to Brookfield Renewable’s
right, at its sole discretion, to satisfy the redemption request with LP Units of Brookfield Renewable, the
Redeemable/Exchangeable partnership units are classified as equity in accordance with IAS 32, Financial
Instruments: Presentation. The Redeemable/Exchangeable partnership units and GP interest are
presented as non-controlling interests since they provide Brookfield the direct economic benefits and
exposures to the underlying performance of BRELP. The LP Units issued by Brookfield Renewable and
the Redeemable/Exchangeable partnership units issued by its subsidiary BRELP have the same
economic attributes
the redemption right described above. The
for
Redeemable/Exchangeable partnership units and the GP interest participate in earnings and distributions
on a per unit basis equivalent to the per unit participation of the LP Units of Brookfield Renewable.
in all respects, except
Issuance of LP Units
On June 10, 2014, Brookfield Renewable completed a bought deal LP Unit offering which included
10,250,000 LP Units at a price of C$31.70 per LP Unit for gross proceeds of C$325 million ($297 million)
(the “Offering”). Brookfield Renewable incurred C$13 million ($12 million) in transaction costs associated
with the Offering. Proceeds from the Offering were used to purchase additional limited partnership units of
BRELP. The excess of the consideration paid over the carrying value of the additional limited partnership
units of BRELP purchased by Brookfield Renewable resulted in adjustments to the General partnership
interest in a holding subsidiary held by Brookfield and Participating non-controlling interests – in a holding
subsidiary - Redeemable/Exchangeable partnership units held by Brookfield of $1 million and $37 million,
respectively. BRELP ultimately used the net proceeds to repay outstanding indebtedness and for general
corporate purposes.
19. LIMITED PARTNERS’ EQUITY
Limited partners’ equity
As at December 31, 2014, LP Units outstanding were 143,356,854 (December 31, 2013: 132,984,913)
including 40,026,986 (December 31, 2013: 40,026,986) held by Brookfield. Brookfield owns all general
partnership interests in Brookfield Renewable representing a 0.01% interest.
During 2012, a distribution re-investment plan was implemented, allowing holders of LP Units who are
resident in Canada to acquire additional LP Units by reinvesting all or a portion of their cash distributions
without paying commissions. During the year ended December 31, 2014, 121,941 LP Units (2013: 82,997
LP Units) were issued.
As a result of the Offering (Note 18), Brookfield’s direct and indirect interest of 169,685,609 LP Units and
Redeemable/Exchangeable partnership units, now represents approximately 62% of Brookfield
Renewable on a fully-exchanged basis.
On an unexchanged basis, Brookfield holds a 28% direct limited partnership interest in Brookfield
Renewable, a 47% direct interest in BRELP through the ownership of Redeemable/Exchangeable
partnership units and a direct 1% GP interest in BRELP.
Distributions
Distributions may be made by the general partner of Brookfield Renewable with the exception of
instances that there is insufficient cash available, payment rends Brookfield Renewable unable to pay its
debt or payment of which might leave Brookfield Renewable unable to meet any future contingent
obligations.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 116
For the year ended December 31, 2014, Brookfield Renewable declared distributions on its LP Units of
$216 million or $1.55 per LP Unit (2013: $193 million or $1.45 per LP Unit; 2012: $183 million or $1.38
per LP Unit).
The composition of the distribution is presented in the following table:
(MILLIONS)
Brookfield
External LP Unitholders
2014
62
154
216
$
$
2013
58
135
193
$
$
20. PENSION AND EMPLOYEE FUTURE BENEFITS
Brookfield Renewable offers a number of pension plans to its employees, as well as certain health care,
dental care, life insurance and other benefits to certain retired employees pursuant to Brookfield
Renewable’s policy. The plans are funded by contributions from Brookfield Renewable and from plan
members. Pension benefits are based on length of service and final average earnings and some plans
are indexed for inflation after retirement. The pension plans relating to employees of Brookfield
Renewable have been included in the consolidated financial statements.
The Brookfield Renewable Pension Governance Committee
the
implementation of strategic decisions and monitoring of the administration of Brookfield Renewable’s
defined benefit pension plans. Specifically, the BRGC will establish the investment strategies, approve
the funding policies as well as assess that Brookfield Renewable has complied with all applicable law,
fiduciary, reporting and disclosure requirements.
responsible
(BRGC)
for
is
Actuarial valuations for Brookfield Renewable’s pension plans are required as per governing provincial or
federal regulations. For Québec and the United States registered plans, actuarial valuations are required
annually. For Ontario registered plans, actuarial valuations are required on a triennial basis if the funding
level of the plan is above a certain threshold. Currently, all Ontario registered plans are on a triennial
schedule. The dates of the most recent actuarial valuations for Brookfield Renewable’s pension and non-
pension benefit plans range from November 1, 2013 to July 1, 2014. Brookfield Renewable measures its
accrued benefit obligations and the fair value of plan assets for accounting purposes as at December 31
of each year.
The benefit liabilities represent the amount of pension and other employee future benefits that Brookfield
Renewable’s employees and retirees have earned at year-end. The benefit obligation under these plans
is determined through periodic actuarial reports which were based on the assumptions indicated in the
following table.
Actuarial assumptions as at December 31:
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
benefit plans
pension plans
pension plans
pension plans
benefit plans
benefit plans
2014
(%)
2013
(%)
2012
(%)
2.6 - 4.2
2.0 - 2.5
4.0 - 4.3
N/A
4.0 - 5.0
2.0 - 2.5
4.9 - 5.0
N/A
3.5 - 4.5
2.0 - 2.8
4.1 - 4.5
N/A
2.5 - 4.0
N/A
3.0 - 4.0
6.5 - 7.2
2.5 - 4.0
N/A
3.0 - 3.0
6.5 - 7.7
3.0 - 4.0
N/A
3.0 - 3.0
6.4 - 7.8
Discount rate
Rate of price inflation
Rate of compensation
increases
Health care trend rate(1)
(1)
Assumed immediate trend rate at year end.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 117
Plan obligations and the annual pension expense are determined on an actuarial basis and are affected
by numerous assumptions and estimates including the market value of plan assets, estimates of the long-
term rate of return on plan assets, discount rates, rate of compensation increases and other assumptions.
The discount rate, rate of price inflation and inflation-linked assumptions and health care cost trend rate
are the assumptions that generally have the most significant impact on the benefit obligations.
The discount rate for benefit obligation purposes is the rate at which the pension obligation could be
effectively settled. Rate of compensation increases reflect the best estimate of merit increases to be
provided, consistent with assumed inflation rates.
A 50 basis point change in the assumptions mentioned before, used for the calculation of the benefit
obligations as at December 31, 2014, would result in the following increase (decrease) of the benefit
obligations:
(MILLIONS)
Discount rate
50 basis point increase
50 basis point decrease
Rate of price inflation and inflation-linked assumptions
50 basis point increase
50 basis point decrease
Health care cost trend rate
50 basis point increase
50 basis point decrease
Defined benefit
pension plans
Non-pension
benefit plans
(8)
9
4
(3)
N/A
N/A
(3)
4
N/A
N/A
3
(3)
The sensitivity analysis presented above may not be representative of the actual change in the defined
benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another
as some of the assumptions may be correlated.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 118
Expense recognized in the consolidated statements of income (loss) and consolidated statements of
comprehensive income (loss) for the year ended December 31:
(MILLIONS)
Current service costs
Past service costs
Interest expense
Administrative expenses
Recognized in consolidated
statement of income (loss)
Remeasurement of the net
defined benefit liability:
Return on plan assets
Actuarial changes arising
from changes in
demographic assumptions
Actuarial changes arising
from changes in
financial assumptions
Experience adjustments
Recognized in consolidated
statement of comprehensive
income (loss)
Total
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
pension plans benefit plans
pension plans benefit plans
2012
2013
2
2
$
$
-
1
1
1
1
1
pension plans benefit plans
2014
3
$
1
-
1
1
(1)
1
-
1
2
1
-
1
2
1
-
$
$
$
5
4
5
1
4
4
(4)
-
(7)
1
2
2
8
(2)
3
-
(4)
-
-
-
(3)
-
(2)
-
-
1
7
1
2
(1)
2
6
$
3
8
$
5
9
$
(9)
(4)
$
(3)
(2)
$
6
10
$
The amounts included in the consolidated balance sheets arising from Brookfield Renewable’s obligations
in respect of its defined benefit plans are as follows:
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
benefit plans
pension plans
pension plans
pension plans
benefit plans
benefit plans
(MILLIONS)
Present value of defined
benefit obligation
Fair value of plan assets
Net liability
2014
2013
2012
$
$
128
(108)
20
$
$
43
-
43
$
$
80
(74)
6
$
$
27
-
27
$
$
82
(64)
18
$
$
29
-
29
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 119
Defined benefit obligations
The movement in the defined benefit obligation for the year ended December 31 is as follows:
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
benefit plans
pension plans
pension plans
pension plans
benefit plans
benefit plans
(MILLIONS)
Balance, beginning of year
Current service cost
Past service cost
Interest expense
Remeasurement losses (gains)
Actuarial changes arising
from changes in
$
2014
$
80
3
1
4
$
27
1
2
1
2013
$
82
2
1
4
$
29
1
(1)
1
2012
$
73
2
-
4
23
1
2
1
demographic assumptions
1
2
2
-
-
1
Actuarial changes arising
from changes in
financial assumptions
Experience adjustments
Benefits paid
Business combination
Exchange differences
Balance, end of year
8
(2)
(4)
42
(5)
128
$
3
-
(1)
10
(2)
43
$
$
(4)
-
(3)
-
(4)
80
$
(3)
-
(1)
1
-
27
$
7
1
(3)
(2)
-
82
$
2
(1)
(1)
-
1
29
Expected employer’s contributions to the defined benefit plans for the year ended December 31, 2015 are
$8 million.
Fair value of plan assets
The movement in the fair value of plan assets for the year ended December 31 is as follows:
Defined benefit Non-pension Defined benefit Non-pension Defined benefit Non-pension
benefit plans
pension plans
pension plans
pension plans
benefit plans
benefit plans
(MILLIONS)
Balance, beginning of year
Interest income
Return on plan assets
Employer contributions
Business combination
Benefits paid
Exchange differences
Balance, end of year
$
$
2014
$
74
4
4
8
28
(4)
(6)
108
-
-
-
1
-
(1)
-
-
$
$
2013
$
64
3
7
7
-
(3)
(4)
74
-
-
-
1
-
(1)
-
-
$
$
2012
$
56
3
2
7
(2)
(3)
1
64
-
-
-
1
-
(1)
-
-
$
$
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 120
The composition of plan assets as at December 31 is as follows:
Asset category:
Equity securities
Debt securities
Mutual funds
2014
(%)
49
36
15
100
2013
(%)
69
31
-
100
21. DIRECT OPERATING COSTS
Brookfield Renewable’s direct operating costs for the year ended December 31 are comprised of the
following:
(MILLIONS)
Operations, maintenance and administration
Water royalties, property taxes and other
Fuel and power purchases
Energy marketing fees (Note 9)
Total direct operating costs
$
$
2014
353
130
20
21
2013
331
137
42
20
$
2012
292
112
64
18
$
524
$
530
$
486
The remuneration of key management personnel of Brookfield Renewable for the years ended December
31, was as follows:
(MILLIONS)
Share-based benefits
Salaries and benefits
2014
12
4
16
$
$
2013
6
3
9
$
$
2012
7
3
10
$
$
Key management personnel include those individuals having authority and responsibility for planning,
directing and controlling the activities of Brookfield Renewable, directly or indirectly. Share-based benefits
relate to costs allocated from Brookfield Asset Management.
22. SUPPLEMENTAL INFORMATION
The net change in working capital balances for the year ended December 31 shown in the consolidated
statements of cash flows is comprised of the following:
(MILLIONS)
Trade receivables and other current assets
Accounts payable and accrued liabilities
Other assets and liabilities
2014
20
$
(54)
14
(20)
$
2013
47
(42)
(4)
1
$
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 121
23. SUBSIDIARY PUBLIC ISSUERS
The following tables provide consolidated summary financial information for Brookfield Renewable, BRP
Equity, and BREP Finance:
(MILLIONS)
As at December 31, 2014:
Current assets
Long-term assets
Current liabilities
Long-term liabilities
Preferred equity
Participating non-controlling interests -
in operating subsidiaries
Participating non-controlling interests -
in a holding subsidiary - Redeemable/
Exchangeable units held by Brookfield
As at December 31, 2013:
Current assets
Long-term assets
Current liabilities
Long-term liabilities
Preferred equity
Participating non-controlling interests -
in operating subsidiaries
Participating non-controlling interests -
in a holding subsidiary - Redeemable/
Exchangeable units held by Brookfield
(1)
(2)
Brookfield
Renewable
BRP
Equity
BREP
Other Consolidating
Finance Subsidiaries(1) adjustments(2)
Brookfield
Renewable
consolidated
$
21 $
- $ 1,307 $
697 $ (1,331)
$
694
3,166
717
20
-
-
-
-
9
-
728
-
-
-
16
1,286
-
-
-
19,148
1,954
9,706
-
2,062
2,865
(3,876)
(1,312)
19,155
687
(711)
10,281
-
-
-
728
2,062
2,865
$
48 $
- $ 1,429 $
632 $ (1,483)
$
626
2,728
785
50
10
-
17
-
-
-
-
-
1,406
796
-
-
-
-
-
16,365
2,278
7,914
-
1,303
2,657
(3,505)
(1,435)
(777)
-
-
-
16,373
920
8,543
796
1,303
2,657
Includes subsidiaries of Brookfield Renewable, other than BRP Equity and BREP Finance.
Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a
consolidated basis.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 122
(MILLIONS)
For the year ended Dec 31, 2014
Revenues
Net income (loss)
For the year ended Dec 31, 2013
Revenues
Net income (loss)
For the year ended Dec 31, 2012
Revenues
Brookfield
Renewable
BRP
BREP
Renewable
Equity Finance Subsidiaries(1) adjustments(2) consolidated
Other Consolidating
Brookfield
$
$
$
- $
- $
- $
1,704 $
- $
1,704
58
-
(1)
204
(58)
203
- $
- $
- $
1,706 $
- $
1,706
69
-
-
215
(69)
215
- $
- $
- $
1,309 $
- $
1,309
Net (loss) income
(1)
(95)
Includes subsidiaries of Brookfield Renewable, other than BRP Equity and BREP Finance, general partnership interest in a
holding subsidiary held by Brookfield and participating non-controlling
-
Redeemable/Exchangeable units held by Brookfield
Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a
consolidated basis.
in a holding subsidiary
interests
(35)
(93)
35
(2)
(2)
-
-
See Note 14 – Long-term debt and credit facilities for additional details regarding the mid-term corporate
notes issued by BREP Finance. See Note 18 – Non-controlling interests for additional details regarding
Class A Preference Shares issued by BRP Equity.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 123
24. SEGMENTED INFORMATION
Brookfield Renewable operates renewable power generating assets, which include conventional
hydroelectric facilities located in the United States, Canada and Brazil, and wind facilities located in the
United States, Canada and Europe. Brookfield Renewable also operates two co-generation (“Co-gen”)
facilities. Brookfield Renewable’s President and Chief Executive Officer and Chief Financial Officer
(collectively, the chief operating decision maker or “CODM”) evaluates the business based on the type of
power generation (Hydroelectric, Wind and Co-gen). Hydroelectric and Wind are further evaluated by
geography (United States, Canada, Brazil and Europe). The “Other” segment includes CWIP and
corporate.
In accordance with IFRS 8, Operating Segments, Brookfield Renewable discloses information about its
reportable segments based upon the measures used by the CODM in assessing performance. The
accounting policies of the reportable segments are the same as those described in Note 2 – Basis of
presentation and significant accounting policies. Brookfield Renewable analyzes the performance of its
operating segments based on revenues, Adjusted EBITDA, and Funds From Operations.
Adjusted EBITDA means revenues less direct costs (including energy marketing costs), plus Brookfield
Renewable’s share of cash earnings from equity-accounted investments and other income, before
interest, income taxes, depreciation, management service costs and the cash portion of non-controlling
interests.
Funds From Operations is defined as Adjusted EBITDA less interest, current income taxes and
management service costs, which is then adjusted for the cash portion of non-controlling interests. For
the year ended December 31, 2014, Funds From Operations include the earnings received from the wind
portfolio Brookfield Renewable acquired in Ireland, reflecting its economic interest from January 1, 2014
to June 30, 2014. This amount represents an acquisition price adjustment under IFRS 3 (see Note 4 -
Business combinations) but is included in Funds From Operations for purposes of reporting operating
results to Brookfield Renewable’s CODM.
Transactions between the reportable segments occur at fair value.
Effective January 1, 2015, the geographies by which the CODM evaluates the business has changed.
While the CODM continues to evaluate the business based on the type of power generation
(Hydroelectric, Wind, and Co-gen), it further evaluates by geography and so the United States and
Canada segments have been combined into the “North America” segment, while the “Latin America”
segment includes the former Brazil segment. The “Europe”, “Co-Gen” and “Other” segments were not
affected as a result of these changes. These changes will allow the CODM to more effectively evaluate
the business in a manner aligned with the continental operating platforms.
In February 2015, Brookfield Renewable announced the appointment of a President and Chief Operating
Officer. The President and Chief Operating Officer will join the Chief Executive Officer and Chief Financial
Officer in evaluating Brookfield Renewable’s results, managing its operations and allocating its resources
by segment, and accordingly beginning on the date of the appointment the CODM will collectively include
all three aforementioned members of senior management.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 124
The following segmented information is regularly reported to our CODM.
Hydroelectric
Wind energy
Co-gen
Other
Total
U.S. Canada
Brazil
U.S. Canada Europe
$ 719 $ 394 $ 265 $ 129 $ 123 $
45 $
29 $
- $ 1,704
Interest expense - borrowings
(153)
(70)
(19)
(39)
(38)
520
328
198
90
108
29
(9)
11
-
(68)
1,216
(87)
(415)
(MILLIONS)
For the year ended
December 31, 2014:
Revenues
Adjusted EBITDA
Funds From Operations prior to
non-controlling interests
Cash portion of non-controlling
interests
Funds From Operations
Depreciation
For the year ended
December 31, 2013:
Revenues
Adjusted EBITDA
Funds From Operations prior to
non-controlling interests
Cash portion of non-controlling
interests
Funds From Operations
Depreciation
For the year ended
December 31, 2012:
Revenues
Adjusted EBITDA
Interest expense - borrowings
(148)
(64)
(23)
(38)
(44)
494 330
221
85
113
-
-
23
-
(58)
1,208
(93)
(410)
366
258
162
51
70
31
11
(206)
743
(83)
(2)
(13)
283
256
149
(159)
(82)
(143)
(34)
17
(63)
-
70
(72)
(13)
18
(25)
-
(38)
(183)
11
(244)
560
(4)
-
(548)
$ 677 $ 399 $ 301 $ 125 $ 133 $
- $
71 $
- $ 1,706
343 266
181
47
69
-
23
(191)
738
(69)
-
(12)
274 266
169
(140)
(85)
(156)
(26)
21
(65)
-
69
(77)
-
-
-
-
(37)
(144)
23
(228)
594
(12)
-
(535)
$ 438 $ 272 $ 340 $
58 $ 131 $
- $
70 $
- $ 1,309
Interest expense - borrowings
(137)
(65)
(58)
(23)
(44)
294 213
236
31
113
-
-
20
-
(55)
(84)
852
(411)
Funds From Operations prior to
non-controlling interests
Cash portion of non-controlling
interests
Funds From Operations
Depreciation
159 148
162
8
69
-
20
(175)
391
(11)
-
(11)
148 148
151
(6)
2
-
69
(116)
(81)
(152)
(38)
(75)
-
-
-
-
(16)
20
(191)
(44)
347
(21)
-
(483)
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 125
The following table reconciles Adjusted EBITDA and Funds From Operations, presented in the above
tables, to net income (loss) as presented in the consolidated statements of income (loss), for the year
ended December 31:
(MILLIONS)
Revenues
Other income
Share of cash earnings from equity-accounted investments
Direct operating costs
Adjusted EBITDA
Fixed earnings adjustment(1)
Interest expense - borrowings
Management service costs
Current income tax expense
Funds From Operations prior to non-controlling interests
Less: cash portion of non-controlling interests
Preferred equity
Participating non-controlling interests - in operating
subsidiaries
Funds From Operations
Add: cash portion of non-controlling interests
Less: fixed earnings adjustment
Depreciation
Unrealized financial instruments gain (loss)
Share of non-cash loss from equity-accounted investments
Deferred income tax recovery
Other
Notes
2014
2013
2012
9
$
1,704 $
1,706 $
1,309
10
26
(524)
1,216
11
(415)
(51)
(18)
743
11
21
(530)
1,208
-
(410)
(41)
(19)
738
16
13
(486)
852
-
(411)
(36)
(14)
391
(38)
(37)
(16)
(145)
560
183
(11)
(548)
10
(23)
29
3
(107)
594
144
-
(535)
37
(12)
18
(31)
(28)
347
44
-
(483)
(23)
(18)
54
(16)
10
21
14
9
15
18
18
18
11
8
10
15
4
Net income (loss)
(1)
(95)
The fixed earnings adjustment relates to Brookfield Renewable’s investment in the acquisition of the wind portfolio in Ireland.
Pursuant to the terms of the purchase and sale agreement, Brookfield Renewable acquired an economic interest in the wind
portfolio from January 1, 2014. The transaction closed on June 30, 2014, and accordingly under IFRS, the $11 million net
Funds From Operations contribution was recorded as part of the purchase price.
215 $
203 $
$
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 126
The following table presents information about Brookfield Renewable’s certain balance sheet items on a
segmented basis:
(MILLIONS)
As at December 31, 2014:
Property, plant and
equipment, at fair value
Total assets
Total borrowings
Total liabilities
For the year ended
December 31, 2014:
Additions to property, plant
and equipment
As at December 31, 2013:
Property, plant and
equipment, at fair value
Total assets
Total borrowings
Total liabilities
For the year ended
December 31, 2013:
Hydroelectric
Wind energy
Co-gen Other(1)
Total
U.S. Canada
Brazil
U.S. Canada
Europe
$ 7,835 $ 5,144 $ 2,090 $ 1,176 $ 1,118 $
952 $
41 $
210 $ 18,566
8,376
5,262
2,257
1,265
1,145
1,085
43
416
19,849
2,814
1,155
4,345
2,214
189
300
621
706
629
865
583
747
-
1
1,687
7,678
1,790
10,968
1,330
2
-
5
15
1,071
-
207
2,630
$ 5,771 $ 4,830 $ 2,205 $ 1,198 $ 1,250 $
- $
46 $
441 $ 15,741
6,248
4,998
2,492
1,282
1,297
2,157
1,143
3,330
2,144
238
406
647
720
721
995
-
-
-
-
62
620
16,999
-
4
1,717
6,623
1,864
9,463
-
255
1,606
Additions to property, plant
and equipment
(1)
Includes CWIP and corporate.
715
206
-
430
-
The following information is about Brookfield Renewable’s equity accounted investments:
(MILLIONS)
U.S. Canada
Brazil
U.S. Canada
Europe
Hydroelectric
Wind energy
Co-gen
Other
Total
As at December 31, 2014
As at December 31, 2013
$
$
177 $
56 $
38 $
181 $
51 $
58 $
- $
- $
- $
- $
2 $
- $
- $
- $
- $
- $
273
290
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 127
25. COMMITMENTS, CONTINGENCIES AND GUARANTEES
Commitments
In the course of its operations, Brookfield Renewable and its subsidiaries have entered into agreements
for the use of water, land and dams. Payment under those agreements varies with the amount of power
generated. The various agreements are renewable and extend up to 2091.
Brookfield Renewable has recorded decommissioning retirement obligations associated with its power
generating assets. Refer to Note 16 – Other long-term liabilities for details.
In November 2014, Brookfield Renewable entered into an agreement to acquire a 488 MW portfolio in
Brazil comprising hydroelectric, wind, and biomass generating capacity. The portfolio is expected to
generate 2,100 GWh annually. The transaction is expected to close in the first half of 2015, subject to
regulatory approvals and closing conditions. Also in November 2014, Brookfield Renewable signed an
agreement to acquire two advanced hydroelectric development projects in Brazil totaling 47 MW which,
once fully commissioned, are expected to generate 280 GWh annually. Brookfield Renewable completed
this acquisition in February 2015; refer to Note 26 – Subsequent events. These acquisitions are being
pursued with our institutional partners, and Brookfield Renewable will retain an approximate 40% interest.
The remaining development project costs on the 25 MW hydroelectric project in Brazil and three wind
facilities in Ireland totaling 137 MW of capacity, are expected to be $164 million. As at December 31,
2014, restricted cash in the amount of $56 million was held and reserved for the purpose of funding the
remaining costs. The project in Brazil is expected to be fully operational in 2017 and the wind facilities in
Ireland during 2015.
At the balance sheet date, Brookfield Renewable had commitments for future minimum lease payments
under non-cancellable leases which fall due as follows:
(MILLIONS)
Operating leases
Capital leases
Total
Contingencies
2015
2016
2017
2018
2019 Thereafter
Total
21 $
22 $
19 $
18 $
17 $
151 $
248
-
-
-
-
1
43
44
21 $
22 $
19 $
18 $
18 $
194 $
292
$
$
Brookfield Renewable and its subsidiaries are subject to various legal proceedings, arbitrations and
actions arising in the normal course of business. While the final outcome of such legal proceedings and
actions cannot be predicted with certainty, it is the opinion of management that the resolution of such
proceedings and actions will not have a material impact on Brookfield Renewable’s consolidated financial
position or results of operations.
Brookfield Renewable, on behalf of Brookfield Renewable’s subsidiaries, and the subsidiaries themselves
have provided letters of credit, which include, but are not limited to, guarantees for debt service reserves,
capital reserves, construction completion and performance. The activity on the issued letters of credit by
Brookfield Renewable can be found in Note 14 – Long-term debt and credit facilities.
Brookfield Renewable along with institutional investors have provided letters of credit, which include, but
are not limited to, guarantees for debt service reserves, capital reserves, construction completion and
performance as it relates to interests in the Brookfield Americas Infrastructure Fund and the Brookfield
Infrastructure Fund II. As at December 31, 2014, letters of credit issued by Brookfield Renewable along
with institutional investors were $125 million (2013: $93 million).
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 128
Guarantees
In the normal course of operations, Brookfield Renewable and its subsidiaries execute agreements that
provide for indemnification and guarantees to third parties of transactions such as business dispositions,
capital project purchases, business acquisitions, and sales and purchases of assets and services.
Brookfield Renewable has also agreed to indemnify its directors and certain of its officers and employees.
The nature of substantially all of the indemnification undertakings prevents Brookfield Renewable from
making a reasonable estimate of the maximum potential amount that Brookfield Renewable could be
required to pay third parties as the agreements do not always specify a maximum amount and the
amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which
cannot be determined at this time. Historically, neither Brookfield Renewable nor its subsidiaries have
made material payments under such indemnification agreements.
26. SUBSEQUENT EVENTS
In February 2015, we completed the acquisition of two advanced hydroelectric development projects
totaling 47 MW in Brazil. Once fully commissioned, the projects are expected to generate 280 GWh
annually. The acquisition was completed with institutional partners, and Brookfield Renewable retains an
approximate 40% interest.
In February 2015, we entered into an agreement to acquire two wind facilities in Portugal with an
aggregate capacity of 123 MW. The portfolio is expected to generate 260 GWh annually. The acquisition
is being pursued with institutional partners, and Brookfield Renewable will retain an approximate 40%
interest. The transaction is expected to close in 2015, subject to regulatory approvals and closing
conditions.
In February 2015, construction on two Irish wind facilities totaling 125 MW was completed, and the
facilities were fully commissioned. The facilities are expected to generate 349 GWh annually.
In February 2015, we up-financed indebtedness associated with a 45 MW hydroelectric facility in British
Columbia by issuing C$90 million ($71 million) of bonds with an interest rate of 2.95%, maturing in May
2023.
In February 2015, we secured a 12 month extension on $75 million of holding company-level debt
associated with a portfolio of hydroelectric and wind facilities in the United States held through the
Brookfield Americas Infrastructure Fund. The debt bears interest at LIBOR plus 2.75%, and matures in
February 2016.
In February 2015, we announced an increase in LP Unitholder distributions to $1.66 per LP Unit on an
annualized basis, an increase of 11 cents per LP Unit, to take effect with the first quarter distribution
payable in March 2015.
Brookfield Renewable Energy Partners L.P.
Annual Report
December 31, 2014
Page 129
GENERAL INFORMATION
Corporate Office
73 Front Street
Fifth Floor
Hamilton, HM12
Bermuda
Tel: (441) 294-3304
Fax: (441) 516-1988
www.brookfieldrenewable.com
Officers of Brookfield
Renewable Energy Partners
L.P.’s Service Provider, BRP
Energy Group L.P.
Harry Goldgut
Group Chairman
Richard Legault
Chief Executive Officer
Sachin Shah
President and Chief Operating
Officer
Nicholas Goodman
Chief Financial Officer
Transfer Agent & Registrar
Computershare Trust Company
of Canada
100 University Avenue
9th floor
Toronto, Ontario, M5J 2Y1
Tel Toll Free: (800) 564-6253
Fax Toll Free: (888) 453-0330
www.computershare.com
Directors of the General Partner of
Brookfield Renewable Energy Partners L.P.
Jeffrey Blidner
Eleazar de Carvalho Filho
John Van Egmond
David Mann
Lou Maroun
Patricia Zuccotti
Lars Josefsson
Exchange Listing
NYSE: BEP (LP Units)
TSX: BEP.UN (LP Units)
TSX: BRF.PR.A (Preferred shares – Series 1)
TSX: BRF.PR.C (Preferred shares – Series 3)
TSX: BRF.PR.E (Preferred shares – Series 5)
TSX: BRF.PR.F (Preferred shares – Series 6)
Investor Information
Brookfield
Renewable
at
Visit
www.brookfieldrenewable.com for more information.
The 2014 Annual Report and Form 20-F is also
available online. For detailed and up-to-date news
and information, please visit the News Release
section.
online
Additional financial information is filed electronically
with various securities regulators in United States
and Canada through EDGAR at www.sec.gov and
through SEDAR at www.sedar.com.
Shareholder enquiries should be directed to the
Investor Relations Department at (416) 359-1955 or
unitholderenquiries@brookfieldrenewable.com
NYSE:
BEP
TSX:
BEP.UN
www.brookfieldrenewable.com