Waste Management 2013 Annual Report Download - page 197

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Electricity Commodity Derivatives
We use short-term, “receive fixed, pay variable” electricity commodity swaps to reduce the variability in
our revenues and cash flows caused by fluctuations in the market prices for electricity. We hedged 1.55 million
megawatt hours, or approximately 50%, of Wheelabrator’s 2011 merchant electricity sales; approximately
630,000 megawatt hours, or approximately 20%, of the segment’s 2012 merchant electricity sales and
1.73 million megawatt hours, or approximately 56%, of the segment’s 2013 merchant electricity sales. The swaps
executed through December 31, 2013 are expected to hedge approximately 480,000 megawatt hours, or
approximately 15%, of Wheelabrator’s 2014 merchant electricity sales.
There was no significant ineffectiveness associated with our cash flow hedges during the years ended
December 31, 2013, 2012 or 2011. Refer to Note 14 for information regarding the impacts of our cash flow
derivatives on our comprehensive income and results of operations.
Credit-Risk-Related Contingent Features
Our interest rate derivative instruments have in the past, and may in the future, contain provisions related to
the Company’s credit rating. These provisions generally provide that if the Company’s credit rating were to fall
to specified levels below investment grade, the counterparties have the ability to terminate the derivative
agreements, resulting in settlement of all affected transactions. As of December 31, 2013 and 2012, we did not
have any interest rate derivatives outstanding that contained these credit-risk-related features.
9. Income Taxes
Provision for Income Taxes
Our “Provision for income taxes” consisted of the following (in millions):
Years Ended December 31,
2013 2012 2011
Current:
Federal ..................................................... $389 $268 $240
State ....................................................... 79 72 38
Foreign ..................................................... 45 36 35
513 376 313
Deferred:
Federal ..................................................... (82) 48 162
State ....................................................... (14) 17 36
Foreign ..................................................... (53) 2 —
(149) 67 198
Provision for income taxes ....................................... $364 $443 $511
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