Derivative Instruments Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Derivative Instruments [Abstract]

Fair Value of Derivative Instruments Table

The following tables present information about CERC’s derivative instruments and hedging activities. The first two tables provide a balance sheet overview of CERC’s Derivative Assets and Liabilities as of December 31, 2011 and June 30, 2012, while the last table provides a breakdown of the related income statement impacts for the three and six months ended June 30, 2011 and 2012.

Fair Value of Derivative Instruments
		December 31, 2011
Total derivatives not designated as hedging instruments	Balance Sheet Location	Derivative Assets Fair Value (2) (3)		Derivative Liabilities Fair Value (2) (3)
		(in millions)
Natural gas derivatives (1)	Current Assets	$	88	$	1
Natural gas derivatives (1)	Other Assets	20		—
Natural gas derivatives (1)	Current Liabilities	15		110
Natural gas derivatives (1)	Other Liabilities	—		13
Total		$	123	$	124

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(1) Natural gas contracts are subject to master netting arrangements and are presented on a net basis in the Condensed Consolidated Balance Sheets. This netting causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Condensed Consolidated Balance Sheets.

(2) The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling 633 billion cubic feet (Bcf) or a net 84 Bcf long position.  Of the net long position, basis swaps constitute 74 Bcf and volumes associated with price stabilization activities of the Natural Gas Distribution business segment constitute 6 Bcf.

(3) The net of total non-trading derivative assets and liabilities is a $55 million asset as shown on CERC’s Condensed Consolidated Balance Sheets, and is comprised of the natural gas contracts derivative assets and liabilities separately shown above offset by collateral netting of $56 million.

Fair Value of Derivative Instruments
		June 30, 2012
Total derivatives not designated as hedging instruments	Balance Sheet Location	Derivative Assets Fair Value (2) (3)		Derivative Liabilities Fair Value (2) (3)
		(in millions)
Natural gas derivatives (1)	Current Assets	$	68	$	1
Natural gas derivatives (1)	Other Assets	22		—
Natural gas derivatives (1)	Current Liabilities	12		56
Natural gas derivatives (1)	Other Liabilities	1		18
Total		$	103	$	75

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(1) Natural gas contracts are subject to master netting arrangements and are presented on a net basis in the Condensed Consolidated Balance Sheets. This netting causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Condensed Consolidated Balance Sheets.

(2) The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling 785 Bcf or a net 114 Bcf long position.  Of the net long position, basis swaps constitute 71 Bcf.

(3) The net of total non-trading derivative assets and liabilities is a $48 million asset as shown on CERC’s Condensed Consolidated Balance Sheets, and is comprised of the natural gas contracts derivative assets and liabilities separately shown above offset by collateral netting of $20 million.

Income Statement Impact of Derivative Activity Table

Income Statement Impact of Derivative Activity
		Three Months Ended June 30,
Total derivatives not designated as hedging instruments	Income Statement Location	2011			2012
		(in millions)
Natural gas derivatives	Gains (Losses) in Revenue	$	9		$	(8	)
Natural gas derivatives (1)	Gains (Losses) in Expense: Natural Gas	(12		)	13
Total		$	(3	)	$	5

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(1) The Gains (Losses) in Expense: Natural Gas includes $(17) million of costs in 2011 associated with price stabilization activities of the Natural Gas Distribution business segment that will be ultimately recovered through purchased gas adjustments. There are no such costs associated with price stabilization activities of the Natural Gas Distribution business segment in the three months ended June 30, 2012.

Income Statement Impact of Derivative Activity
		Six Months Ended June 30,
Total derivatives not designated as hedging instruments	Income Statement Location	2011			2012
		(in millions)
Natural gas derivatives	Gains (Losses) in Revenue	$	14		$	43
Natural gas derivatives (1)	Gains (Losses) in Expense: Natural Gas	(49		)	(68		)
Total		$	(35	)	$	(25	)

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(1) The Gains (Losses) in Expense: Natural Gas includes $(62) million and $(38) million of costs in 2011 and 2012, respectively, associated with price stabilization activities of the Natural Gas Distribution business segment that will be ultimately recovered through purchased gas adjustments.