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Derivative Instruments (Tables)
 12 Months Ended
Dec. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
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, 2013 and 2012, while the last table provides a breakdown of the related income statement impacts for the years ending December 31, 2013, 2012 and 2011.
Fair Value of Derivative Instruments
 
 
December 31, 2013
Total derivatives not designated
as hedging instruments
 
Balance Sheet
Location
 
Derivative
Assets
Fair Value
 
Derivative
Liabilities
Fair Value
 
 
 
 
(in millions)
Natural gas derivatives (1) (2) (3)
 
Current Assets: Non-trading derivative assets
 
$
28

 
$
4

Natural gas derivatives (1) (3)
 
Other Assets: Non-trading derivative assets
 
10

 
—

Natural gas derivatives (1) (3)
 
Current Liabilities: Non-trading derivative liabilities
 
4

 
21

Natural gas derivatives (1) (3)
 
Other Liabilities: Non-trading derivative liabilities
 
1

 
5

Total                                                                          
 
$
43

 
$
30

________________
(1)
The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling 607 Bcf or a net 46 Bcf long position.  Of the net long position, basis swaps constitute 99 Bcf.

(2)
The $28 million Derivative Current Asset includes $1 million related to physical forwards purchased from Enable.

(3)
Natural gas contracts are presented on a net basis in the Consolidated Balance Sheets. Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Consolidated Balance Sheets. The net of total non-trading derivative assets and liabilities was a $13 million asset as shown on CERC’s Consolidated Balance Sheets (and as detailed in the table below), and was comprised of the natural gas contracts derivative assets and liabilities separately shown above offset by collateral netting of less than $1 million.

Offsetting of Natural Gas Derivative Assets and Liabilities
 
 
December 31, 2013
 
 
Gross Amounts Recognized (1)
 
Gross Amounts Offset in the Consolidated Balance Sheets
 
Net Amount Presented in the Consolidated Balance Sheets (2)
 
 
(in millions)
Current Assets: Non-trading derivative assets
 
$
32

 
$
(8
)
 
$
24

Other Assets: Non-trading derivative assets
 
11

 
(1
)
 
10

Current Liabilities: Non-trading derivative liabilities
 
(25
)
 
8

 
(17
)
Other Liabilities: Non-trading derivative liabilities
 
(5
)
 
1

 
(4
)
Total
 
$
13

 
$
—

 
$
13

________________
(1)
Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.

(2)
The derivative assets and liabilities on the Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should they exist, could be used as offsets to these balances in the event of a default.


Fair Value of Derivative Instruments
 
 
December 31, 2012
Total derivatives not designated
as hedging instruments
 
Balance Sheet
Location
 
Derivative
Assets
Fair Value
 
Derivative
Liabilities
Fair Value
 
 
 
 
(in millions)
Natural gas derivatives (1) (2)
 
Current Assets: Non-trading derivative assets
 
$
37

 
$
1

Natural gas derivatives (1) (2)
 
Other Assets: Non-trading derivative assets
 
6

 
—

Natural gas derivatives (1) (2)
 
Current Liabilities: Non-trading derivative liabilities
 
5

 
27

Natural gas derivatives (1) (2)
 
Other Liabilities: Non-trading derivative liabilities
 
1

 
4

Total
 
$
49

 
$
32

________________
(1)
The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling 489 billion cubic feet (Bcf) or a net 101 Bcf long position.  Of the net long position, basis swaps constitute 73 Bcf.

(2)
Natural gas contracts are presented on a net basis in the Consolidated Balance Sheets. Natural gas contracts are subject to master netting arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately presented net in a liability (asset) account within the Consolidated Balance Sheets. The net of total non-trading derivative assets and liabilities was a $26 million asset as shown on CERC’s Consolidated Balance Sheets (and as detailed in the table below), and was comprised of the natural gas contracts derivative assets and liabilities separately shown above offset by collateral netting of $9 million.

Offsetting of Natural Gas Derivative Assets and Liabilities
 
 
December 31, 2012
 
 
Gross Amounts Recognized (1)
 
Gross Amounts Offset in the Consolidated Balance Sheets
 
Net Amount Presented in the Consolidated Balance Sheets (2)
 
 
(in millions)
Current Assets: Non-trading derivative assets
 
$
42

 
$
(6
)
 
$
36

Other Assets: Non-trading derivative assets
 
7

 
(1
)
 
6

Current Liabilities: Non-trading derivative liabilities
 
(28
)
 
14

 
(14
)
Other Liabilities: Non-trading derivative liabilities
 
(4
)
 
2

 
(2
)
Total
 
$
17

 
$
9

 
$
26

________________
(1)
Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.

(2)
The derivative assets and liabilities on the Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should they exist, could be used as offsets to these balances in the event of a default.
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance
For CERC’s price stabilization activities of the Natural Gas Distribution business segment, the settled costs of derivatives are ultimately recovered through purchased gas adjustments. Accordingly, the net unrealized gains and losses associated with these contracts are recorded as net regulatory assets. Realized and unrealized gains and losses on other derivatives are recognized in the Statements of Consolidated Income as revenue for retail sales derivative contracts and as natural gas expense for financial natural gas derivatives and non-retail related physical natural gas derivatives.
Income Statement Impact of Derivative Activity
 
 
 
 
Year Ended December 31,
Total derivatives not designated
as hedging instruments
 
Income Statement Location
 
2013
 
2012
 
2011
 
 
 
 
(in millions)
 
 
Natural gas derivatives
 
Gains (Losses) in Revenue
 
$
11

 
$
43

 
$
102

Natural gas derivatives (1) (2)
 
Gains (Losses) in Expense: Natural Gas
 
10

 
(63
)
 
(144
)
Total
 
$
21

 
$
(20
)
 
$
(42
)
 ________________
(1)
The Gains (Losses) in Expense: Natural Gas includes $(2) million during the year ended December 31, 2013 related to physical forwards purchased from Enable.

(2)
The Gains (Losses) in Expense: Natural Gas includes $-0-, $(38) million and $(107) million of costs in 2013, 2012 and 2011, respectively, associated with price stabilization activities of the Natural Gas Distribution business segment that will be ultimately recovered through purchased gas adjustments.
Credit Quality Of Counterparties
In addition to the risk associated with price movements, credit risk is also inherent in CERC’s non-trading derivative activities. Credit risk relates to the risk of loss resulting from non-performance of contractual obligations by a counterparty. The following table shows the composition of counterparties to the non-trading derivative assets of CERC as of December 31, 2013 and 2012 (in millions):
 
December 31, 2013
 
December 31, 2012
 
Investment
Grade(1)
 
Total
 
Investment
Grade(1)
 
Total
Energy marketers
$
1

 
$
4

 
$
1

 
$
1

Financial institutions
1

 
9

 
—

 
—

Retail end users (2)
1

 
21

 
—

 
41

Total
$
3

 
$
34

 
$
1

 
$
42

 ________________
(1)
“Investment grade” is primarily determined using publicly available credit ratings and considering credit support (such as parent company guarantees) and collateral, which encompass cash and standby letters of credit. For unrated counterparties, CERC determines a synthetic credit rating by performing financial statement analysis and considering contractual rights and restrictions and collateral.

(2)
Retail end users represent customers who have contracted to fix the price of a portion of their physical gas requirements for future periods.