ASU 2015-13 — Derivatives and Hedging (Topic 815)

Topic 815, Derivatives and Hedging, requires that a derivative contract be recognized at fair value unless the contract qualifies for a scope exception. The amendments in this Update clarify that the use of locational marginal pricing by an independent system operator to determine the transmission charge (or credit) does not constitute net settlement of a contract for the purchase or sale of electricity on a forward basis that necessitates transmission through, or delivery to a location within, a nodal energy market.

The amendments in this Update clarify that the use of locational marginal pricing by an independent system operator to determine the transmission charge (or credit) does not constitute net settlement of a contract for the purchase or sale of electricity on a forward basis that necessitates transmission through, or delivery to a location within, a nodal energy market. Consequently, the use of locational marginal pricing by the independent system operator does not cause that contract to fail to meet the physical delivery criterion of the normal purchases and normal sales scope exception.

This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF-15A—Derivatives and Hedging—Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts within Nodal Energy Markets (Topic 815), which has been deleted.

For more information, see the following:

Issued: August 10, 2015