# ASC 815-980-25: Derivatives and Hedging — Regulated Operations — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/815/980/#25-recognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:41:34.252Z to 2026-09-10T01:41:34.252Z Record version: sha256:0df0092e3b8e9405d073124d977e28c5a31779ee699f40a2ce00a391587ae262 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-980-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/815/980/#25-recognition) SEC content: no #### Long-Term Power Sales Contracts ##### [815-980-25-1](https://asc.understandingaccounting.org/asc/815/980/#815-980-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:34.252Z to 2026-09-10T01:41:34.252Z Record version: sha256:25158167647b95dd71f316f00b52e0c6d699add1f46842a9e2c0c742fd38dbaf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In general, [nonutility generators](https://asc.understandingaccounting.org/glossary/n/#nonutility-generators "Entities owning electric generating plants built either for their own energy needs or to sell power, usually to rate-regulated entities, under long-term power sales contracts.") are not regulated and do not meet the criteria of an entity with regulated operations as provided in paragraph [980-10-15-2](https://asc.understandingaccounting.org/asc/980/10/#980-10-15-2). However, since nonutility generators provide many of the same services as entities with regulated operations, the guidance for nonutility generators on accounting for [contracts](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") that meet the definition of a derivative is included in paragraphs [980-815-25-4 through 25-6](https://asc.understandingaccounting.org/asc/815/980/#815-980-25-4) . That portion of this Subsection assumes the seller of power under the long-term contract does not meet the criteria for application of this Topic. ##### [815-980-25-2](https://asc.understandingaccounting.org/asc/815/980/#815-980-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:34.252Z to 2026-09-10T01:41:34.252Z Record version: sha256:d3e1e862332df6265bec2324433b816a7104dcccba731ec8e1950716648e6e2b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Nonutility generators provide a significant percentage of new electric generating capacity in the United States. Some of these generating plants are built by users primarily for their own energy needs while others are built specifically to sell power, usually to rate-regulated utilities, under long-term power sales contracts. Those contracts price the power sold under a wide variety of terms and arrangements. ##### [815-980-25-3](https://asc.understandingaccounting.org/asc/815/980/#815-980-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:34.252Z to 2026-09-10T01:41:34.252Z Record version: sha256:96c9ca0e5860f452ccbc5f691001d5608ead44c6c0d67e3b3b1da9f4b5148879 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The long-term power sales contracts may provide for any of the following: 1. a Stated prices per kilowatt hour that increase, decrease, or remain level over the term of the contract 2. b Formula-based prices per kilowatt hour 3. c Billings that are a combination of stated prices and formula-based prices per kilowatt hour. ##### [815-980-25-4](https://asc.understandingaccounting.org/asc/815/980/#815-980-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:34.252Z to 2026-09-10T01:41:34.252Z Record version: sha256:41d36f077ac80b0d00edf40ae17867358f88bbf0fecd84b42283a6ded05e189f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a long-term power sales contract meets the definition of a derivative under Topic 815, then it would be marked to fair value through earnings, unless designated as a hedging instrument in certain types of hedging relationships. Otherwise, the guidance in Topic 606 on revenue from contracts with customers would apply. Some long-term power sales contracts that meet the definition of a derivative may qualify for the normal purchases and normal sales scope exception contained in paragraph [815-10-15-13(b)](https://asc.understandingaccounting.org/asc/815/10/#815-10-15-13), in which case the long-term power sales contract would be accounted for under this Section. ##### [815-980-25-5](https://asc.understandingaccounting.org/asc/815/980/#815-980-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:34.252Z to 2026-09-10T01:41:34.252Z Record version: sha256:a4af8b088cbe6c6f125c000a985662b67a975636873fe041dbea9f9afd06c668 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Long-term power sales contracts that are accounted for as derivatives may possibly qualify as hedging instruments in [all-in-one hedges](https://asc.understandingaccounting.org/glossary/a/#all-in-one-hedge "In an all-in-one hedge, a derivative instrument that will involve gross settlement is designated as the hedging instrument in a cash flow hedge of the variability of the consideration to be paid or received in the forecasted transaction that will occur upon gross settlement of the derivative instrument itself."). The guidance in Section 815-10-55 may be relevant. ##### [815-980-25-6](https://asc.understandingaccounting.org/asc/815/980/#815-980-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:34.252Z to 2026-09-10T01:41:34.252Z Record version: sha256:a0eebb844161902a9fd40aa233f196a23ba525fb067b3603f3dcb3b952f169b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a discussion of issues involved in accounting for derivative contracts held for trading purposes and contracts involved in energy trading and risk management activities, see paragraph [815-10-45-9](https://asc.understandingaccounting.org/asc/815/10/#815-10-45-9).