# ASC 815-980: Derivatives and Hedging — Regulated Operations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/815/980/) 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): 2026-09-10T01:41:23.271Z to 2026-09-10T01:41:34.252Z Record version: sha256:ecaaf67c3d110dfc23364e79f5bf9408909418044d860525e39b8290db80a36d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-980: Derivatives and Hedging — Regulated Operations ### Machine-generated study aids ```json { "summary": "ASC 815-980 addresses long-term power sales contracts, including those entered into by nonutility generators that sell power (often to rate-regulated utilities) under contracts with stated prices, formula-based prices, or a combination. The core rule is that if such a contract meets the definition of a derivative, it is marked to fair value through earnings unless designated in a qualifying hedging relationship; otherwise Topic 606 applies. Contracts that qualify for the normal purchases and normal sales scope exception in 815-10-15-13(b) are accounted for under this Section rather than as derivatives.", "key_points": [ "This Subtopic provides guidance for long-term power sales contracts (815-980-05-1) and applies to nonutility generators because they provide many of the services of entities with regulated operations (815-980-15-2).", "Long-term power supply contracts within the scope of Topic 842 on leases are excluded; see Subtopic 842-10 to determine whether the arrangement contains a lease (815-980-15-3).", "Nonutility generators generally are not regulated and do not meet the criteria of an entity with regulated operations in paragraph 980-10-15-2, yet guidance for them is provided in paragraphs 980-815-25-4 through 25-6 (815-980-25-1).", "Long-term power sales contracts may provide for stated prices per kilowatt hour that increase, decrease, or remain level, formula-based prices, or a combination of both (815-980-25-3).", "A long-term power sales contract meeting the definition of a derivative is marked to fair value through earnings unless designated as a hedging instrument in certain hedging relationships; otherwise Topic 606 applies (815-980-25-4).", "Contracts meeting the derivative definition may qualify for the normal purchases and normal sales scope exception in paragraph 815-10-15-13(b), in which case they are accounted for under this Section (815-980-25-4).", "Long-term power sales contracts accounted for as derivatives may possibly qualify as hedging instruments in all-in-one hedges, with guidance in Section 815-10-55 potentially relevant (815-980-25-5); for trading and energy risk management activities see paragraph 815-10-45-9 (815-980-25-6)." ], "categories": [ "Derivatives and hedging", "Industry-specific", "Recognition", "Revenue" ], "audience_level": "advanced", "student_note": "This is a narrow, industry-specific bridge between the derivative rules and the utility/energy sector: the practical question is almost always whether a power contract is a lease (842), a derivative (815), a normal purchase/normal sale, or just a revenue contract (606). A common misunderstanding is assuming nonutility generators are outside this guidance because they are not rate-regulated — the Subtopic expressly extends to them.", "related_topics": [ "980-10", "815-10", "842-10", "606", "980-815" ], "key_concepts": [ "long-term power sales contract", "nonutility generator", "regulated operations", "normal purchases and normal sales scope exception", "derivative definition", "all-in-one hedge", "fair value through earnings", "embedded lease" ] } ``` Source downloaded (UTC): 2026-09-10T01:41:23.271Z to 2026-09-10T01:41:23.271Z Record version: sha256:f38366abe17036885b15b3413ad31fdf02fb29619b4e3aea50d3b7249adf2a92 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-980-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/815/980/#00-status) SEC content: no ##### [815-980-00-1](https://asc.understandingaccounting.org/asc/815/980/#815-980-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:23.271Z to 2026-09-10T01:41:23.271Z Record version: sha256:db5177a611d5260a1ac30194260e59371cc80d505632e9a4e9679a5479151db3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
All-in-One HedgeAddedAccounting Standards Update No. 2014-0905/28/2014
ContractAddedAccounting Standards Update No. 2014-0905/28/2014
Nonutility GeneratorsAddedAccounting Standards Update No. 2014-0905/28/2014
980-815-05-1AddedAccounting Standards Update No. 2014-0905/28/2014
980-815-15-1 through 15-3
AddedAccounting Standards Update No. 2014-0905/28/2014
980-815-15-3AmendedAccounting Standards Update No. 2016-0202/25/2016
980-815-25-1 through 25-6
AddedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T01:41:26.671Z to 2026-09-10T01:41:26.671Z Record version: sha256:7fde0b510976f4d9683d6c1c4d07e2e4c7ad51fa81ee1d076bf6e437ac6c512e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-980-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/815/980/#05-overview-and-background) SEC content: no ##### [815-980-05-1](https://asc.understandingaccounting.org/asc/815/980/#815-980-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:26.671Z to 2026-09-10T01:41:26.671Z Record version: sha256:5e7fa09862298d0f0a8d22a478ee3e48b90d093f02c63c318eaf92d7f4d0f72d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance for long-term power sales contracts. Source downloaded (UTC): 2026-09-10T01:41:29.350Z to 2026-09-10T01:41:29.350Z Record version: sha256:02f895b24e6588708835d2d0ab972b314fbec5d6703e97b0d38e965894614170 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 815-980-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/815/980/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [815-980-15-1](https://asc.understandingaccounting.org/asc/815/980/#815-980-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:29.350Z to 2026-09-10T01:41:29.350Z Record version: sha256:90e145a4b4a39338c9e6008b61c3fce9aa374a2fd23cb482f754854d0a1658a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic; see Section 980-10-15, with specific qualifications and exceptions noted below. #### Entities ##### [815-980-15-2](https://asc.understandingaccounting.org/asc/815/980/#815-980-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:29.350Z to 2026-09-10T01:41:29.350Z Record version: sha256:9c1a9090dcb85189d7274f3b140533d015677313b0141fab32927d585ffc6994 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to [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.") as they provide many of the services of entities with regulated operations. #### Transactions ##### [815-980-15-3](https://asc.understandingaccounting.org/asc/815/980/#815-980-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:41:29.350Z to 2026-09-10T01:41:29.350Z Record version: sha256:258ef06bee1f4e2c230114771a2c1460c505828bbb27a2bc127300e4cb17a883 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The scope of this Subtopic excludes long-term power supply contracts if they are within the scope of Topic 842 on leases. For the considerations required to determine whether a long-term power sales contract arrangement contains a lease, see Subtopic 842-10. 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).