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Fair Value (Tables)
12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Schedule of Carrying Value and Estimated Fair Value of Financial Instruments

The following table sets forth the carrying value and estimated fair value of the Company’s financial instruments not reported at estimated fair value on the Consolidated Balance Sheets as of December 31 (dollars in thousands):

 

 

 

2022

 

 

2021

 

 

 

Carrying
Value

 

 

Estimated
Fair Value

 

 

Carrying
Value

 

 

Estimated
Fair Value

 

Long-term debt (Level 2)

 

$

1,113,500

 

 

$

966,881

 

 

$

963,500

 

 

$

1,157,651

 

Long-term debt (Level 3)

 

 

1,200,000

 

 

 

881,480

 

 

 

1,200,000

 

 

 

1,366,619

 

Snettisham finance lease obligation (Level 3)

 

 

45,730

 

 

 

41,700

 

 

 

48,815

 

 

 

54,000

 

Long-term debt to affiliated trusts (Level 3)

 

 

51,547

 

 

 

42,836

 

 

 

51,547

 

 

 

43,299

 

Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis

The following table discloses by level within the fair value hierarchy the Company’s assets and liabilities measured and reported on the Consolidated Balance Sheets as of December 31, 2022 at fair value on a recurring basis (dollars in thousands):

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Counterparty
and Cash
Collateral
Netting (1)

 

 

Total

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy commodity derivatives (2)

 

$

 

 

$

146,232

 

 

$

288

 

 

$

(136,605

)

 

$

9,915

 

Foreign currency exchange derivatives

 

 

 

 

 

43

 

 

 

 

 

 

 

 

 

43

 

Interest rate swap derivatives

 

 

 

 

 

11,184

 

 

 

 

 

 

 

 

 

11,184

 

Equity investments (3)

 

 

 

 

 

 

 

 

54,284

 

 

 

 

 

 

54,284

 

Deferred compensation assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income securities (3)

 

 

1,267

 

 

 

 

 

 

 

 

 

 

 

 

1,267

 

Equity securities (3)

 

 

6,132

 

 

 

 

 

 

 

 

 

 

 

 

6,132

 

Total

 

$

7,399

 

 

$

157,459

 

 

$

54,572

 

 

$

(136,605

)

 

$

82,825

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy commodity derivatives (2)

 

$

 

 

$

258,769

 

 

$

18,022

 

 

$

(242,044

)

 

$

34,747

 

Foreign currency exchange derivatives

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Interest rate swap derivatives

 

 

 

 

 

52

 

 

 

 

 

 

 

 

 

52

 

Total

 

$

 

 

$

258,824

 

 

$

18,022

 

 

$

(242,044

)

 

$

34,802

 

The following table discloses by level within the fair value hierarchy the Company’s assets and liabilities measured and reported on the Consolidated Balance Sheets as of December 31, 2021 at fair value on a recurring basis (dollars in thousands):

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Counterparty
and Cash
Collateral
Netting (1)

 

 

Total

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy commodity derivatives (2)

 

$

 

 

$

34,119

 

 

$

143

 

 

$

(31,354

)

 

$

2,908

 

Interest rate swap derivatives

 

 

 

 

 

2,319

 

 

 

 

 

 

(1,170

)

 

 

1,149

 

Deferred compensation assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual Funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed income securities (3)

 

 

1,809

 

 

 

 

 

 

 

 

 

 

 

 

1,809

 

Equity securities (3)

 

 

7,594

 

 

 

 

 

 

 

 

 

 

 

 

7,594

 

Total

 

$

9,403

 

 

$

36,438

 

 

$

143

 

 

$

(32,524

)

 

$

13,460

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy commodity derivatives (2)

 

$

 

 

$

41,733

 

 

$

7,914

 

 

$

(40,443

)

 

$

9,204

 

Foreign currency exchange derivatives

 

 

 

 

 

19

 

 

 

 

 

 

 

 

 

19

 

Interest rate swap derivatives

 

 

 

 

 

25,274

 

 

 

 

 

 

(1,170

)

 

 

24,104

 

Total

 

$

 

 

$

67,026

 

 

$

7,914

 

 

$

(41,613

)

 

$

33,327

 

 

(1)
The Company is permitted to net derivative assets and derivative liabilities with the same counterparty when a legally enforceable master netting agreement exists. In addition, the Company nets derivative assets and derivative liabilities against any payables and receivables for cash collateral held or placed with these same counterparties.
(2)
The level 3 energy commodity derivative balances are associated with natural gas exchange agreements
(3)
These assets are included in other property and investments-net and other non-current assets on the Consolidated Balance Sheets.
Schedule of Quantitative Information

The following table presents the quantitative information which was used to estimate the fair values of the Level 3 assets and liabilities above as of December 31, 2022 (dollars in thousands):

 

 

 

Fair Value (Net) at

 

 

 

 

 

 

 

 

 

December 31, 2022

 

 

Valuation Technique

 

Unobservable Input

 

Range

Natural gas exchange

 

$

(17,734

)

 

Internally derived
weighted average
cost of gas

 

Forward purchase prices

 

$2.89 - $4.19/mmBTU
$
3.47 Weighted Average

 

 

 

 

 

 

 

Forward sales prices

 

$3.11 - $23.47/mmBTU
$
8.88 Weighted Average

 

 

 

 

 

 

 

Purchase volumes

 

140,000 - 370,000 mmBTUs

 

 

 

 

 

 

 

Sales volumes

 

75,000 - 310,000 mmBTUs

 

 

Fair Value at

 

 

 

 

 

 

 

 

 

December 31, 2022

 

 

Valuation Technique

 

Unobservable Input

 

Range

Equity investments

 

$

54,284

 

 

Market approach

 

Comparable enterprise values

 

$130,000-$388,600
$
246,000 Average

 

 

 

 

 

 

 

Time to liquidity event

 

2 years

 

 

 

 

 

 

 

Marketability discount

 

30%

 

 

 

 

 

Discounted cash flows

 

Revenue market multiples

 

1.44x to 6.55x Revenue
2.88x Average

 

 

 

 

 

 

 

Market multiple reduction

 

30% to 50%
40% Average

 

 

 

 

 

 

 

Discount rate

 

25%

 

 

 

 

 

 

 

Revenue market multiples

 

$4,000-$337,000

 

 

 

 

 

 

 

Terminal date

 

2024

Schedule of Activity For Energy Commodity Derivative Assets (Liabilities) Measured At Fair Value Using Significant Unobservable Inputs (Level 3)

The following table presents activity for assets and liabilities measured at fair value using significant unobservable inputs (Level 3) for the years ended December 31 (dollars in thousands):

 

 

 

Natural Gas Exchange Agreement (1)

 

 

Equity Investments

 

 

Total

 

Year ended December 31, 2022:

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2022

 

$

(7,771

)

 

$

 

 

$

(7,771

)

Transfers in (2)

 

 

 

 

 

20,902

 

 

 

20,902

 

Total gains or (losses) (realized/unrealized):

 

 

 

 

 

 

 

 

 

Included in regulatory assets

 

 

(4,740

)

 

 

 

 

 

(4,740

)

Recognized in net income

 

 

 

 

 

33,382

 

 

 

33,382

 

Settlements

 

 

(5,223

)

 

 

 

 

 

(5,223

)

Ending balance as of December 31, 2022

 

$

(17,734

)

 

$

54,284

 

 

$

36,550

 

Year ended December 31, 2021:

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2021

 

$

(8,410

)

 

$

 

 

$

(8,410

)

Total gains or (losses) (realized/unrealized):

 

 

 

 

 

 

 

 

 

Included in regulatory assets

 

 

4,292

 

 

 

 

 

 

4,292

 

Settlements

 

 

(3,653

)

 

 

 

 

 

(3,653

)

Ending balance as of December 31, 2021

 

$

(7,771

)

 

$

 

 

$

(7,771

)

Year ended December 31, 2020:

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2020

 

$

(2,976

)

 

$

 

 

$

(2,976

)

Total gains or (losses) (realized/unrealized):

 

 

 

 

 

 

 

 

 

Included in regulatory assets

 

 

(4,311

)

 

 

 

 

 

(4,311

)

Settlements

 

 

(1,123

)

 

 

 

 

 

(1,123

)

Ending balance as of December 31, 2020

 

$

(8,410

)

 

$

 

 

$

(8,410

)

 

(1)
There were no purchases, issuances or transfers from other categories of any derivatives instruments during the periods presented in the table above.
(2)
The Company elected to account for certain equity investments at recurring fair value in 2022, as such the transfer in represents the value as of the election. See further discussion within Note 7.