The first consideration is whether the entity should be consolidated under the variable interest entity (VIE) consolidation model. One of the most critical steps in applying this model is assessing whether an entity is a VIE. There is a specific consideration for limited partnerships in applying this model when determining if the equity holders as a group have the power to direct the activities that most significantly impact the entity’s economic performance, including whether the equity holders in a limited partnership hold decision making rights. If the single power plant entity is determined to be a VIE, it will be consolidated by the party that is the primary beneficiary. Refer to CG 4 and CG 5 for further discussion on determining whether a limited partnership or similar entity is considered a VIE and identification of the primary beneficiary.

If the single power plant entity is not a VIE, the reporting entity must consider whether the single power plant entity should be consolidated under the voting interest model. In considering consolidation as a voting interest entity, all rights of shareholders or partners, such as kick-out and participating rights, are considered in determining control. The shareholder or partner that has control when considering all of these rights will consolidate the entity. Refer to CG 7 for further discussion on determining whether an entity should be consolidated under the voting interest model.