Contract or notional amounts and terms of marketing activities and derivative commodity instruments |
The contract or notional amounts and terms of the natural gas derivative commodity instruments held at our utilities are composed of both long and short positions. We were in a net long position as of: | | | | | | | | | | | | June 30, 2019 | | December 31, 2018 | | Notional (MMBtus) | | Maximum Term (months) (a) | | Notional (MMBtus) | | Maximum Term (months) (a) | Natural gas futures purchased | 2,480,000 |
| | 18 | | 4,000,000 |
| | 24 | Natural gas options purchased, net | 2,160,000 |
| | 9 | | 4,320,000 |
| | 13 | Natural gas basis swaps purchased | 2,360,000 |
| | 18 | | 3,960,000 |
| | 24 | Natural gas over-the-counter swaps, net (b) | 6,020,000 |
| | 23 | | 3,660,000 |
| | 24 | Natural gas physical contracts, net (c) | 1,717,075 |
| | 9 | | 18,325,852 |
| | 30 |
__________ | | (a) | Term reflects the maximum forward period hedged. |
| | (b) | As of June 30, 2019, 2,130,000 MMBtus were designated as cash flow hedges. |
(c) Volumes exclude contracts that qualify for the normal purchase, normal sales exception.
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Derivative Instruments, Gain (Loss) |
The impacts of cash flow hedges on our Condensed Consolidated Statements of Income is presented below for the three and six months ended June 30, 2019 and 2018. Note that this presentation does not reflect gains or losses arising from the underlying physical transactions; therefore, it is not indicative of the economic profit or loss we realized when the underlying physical and financial transactions were settled. | | | | | | | | Three Months Ended June 30, 2019 | (in thousands) | Derivatives in Cash Flow Hedging Relationships | | Location of Reclassifications from AOCI into Income | | Amount of Gain/(Loss) Reclassified from AOCI into Income | Interest rate swaps | | Interest expense | | $ | (713 | ) | Commodity derivatives | | Fuel, purchased power and cost of natural gas sold | | 83 |
| Total | | | | $ | (630 | ) |
| | | | | | | | Three Months Ended June 30, 2018 | (in thousands) | Derivatives in Cash Flow Hedging Relationships | | Location of Reclassifications from AOCI into Income | | Amount of Gain/(Loss) Reclassified from AOCI into Income | Interest rate swaps | | Interest expense | | $ | (713 | ) | Commodity derivatives | | Fuel, purchased power and cost of natural gas sold | | (163 | ) | Total | | | | $ | (876 | ) |
| | | | | | | | Six Months Ended June 30, 2019 | (in thousands) | Derivatives in Cash Flow Hedging Relationships | | Location of Reclassifications from AOCI into Income | | Amount of Gain/(Loss) Reclassified from AOCI into Income | Interest rate swaps | | Interest expense | | $ | (1,426 | ) | Commodity derivatives | | Fuel, purchased power and cost of natural gas sold | | 637 |
| Total | | | | $ | (789 | ) |
| | | | | | | | Six Months Ended June 30, 2018 | (in thousands) | Derivatives in Cash Flow Hedging Relationships | | Location of Reclassifications from AOCI into Income | | Amount of Gain/(Loss) Reclassified from AOCI into Income | Interest rate swaps | | Interest expense | | $ | (1,426 | ) | Commodity derivatives | | Fuel, purchased power and cost of natural gas sold | | (784 | ) | Total | | | | $ | (2,210 | ) |
The following tables summarize the gains and losses arising from hedging transactions that were recognized as a component of other comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018. | | | | | | | | | | | | | | Three Months Ended June 30, | | 2019 | | 2018 | | (in thousands) | Increase (decrease) in fair value: | | | | Forward commodity contracts | $ | (518 | ) | | $ | 48 |
| Recognition of (gains) losses in earnings due to settlements: | | | | Interest rate swaps | 713 |
| | 713 |
| Forward commodity contracts | (83 | ) | | 163 |
| Total other comprehensive income (loss) from hedging | $ | 112 |
| | $ | 924 |
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| | | | | | | | | | Six Months Ended June 30, | | 2019 | | 2018 | | (in thousands) | Increase (decrease) in fair value: | | | | Forward commodity contracts | $ | (284 | ) | | $ | (249 | ) | Recognition of (gains) losses in earnings due to settlements: | | | | Interest rate swaps | 1,426 |
| | 1,426 |
| Forward commodity contracts | (637 | ) | | 784 |
| Total other comprehensive income (loss) from hedging | $ | 505 |
| | $ | 1,961 |
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Derivatives Not Designated as Hedge Instruments
The following table summarizes the impacts of derivative instruments not designated as hedge instruments on our Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019 and 2018 (in thousands). Note that this presentation does not reflect gains or losses arising from the underlying physical transactions; therefore, it is not indicative of the economic profit or loss we realized when the underlying physical and financial transactions were settled. | | | | | | | | | | | | | | | | | Three Months Ended June 30, | | | 2019 | | 2018 | Derivatives Not Designated as Hedging Instruments | Location of Gain/(Loss) on Derivatives Recognized in Income | Amount of Gain/(Loss) on Derivatives Recognized in Income | | Amount of Gain/(Loss) on Derivatives Recognized in Income | | | | | | Commodity derivatives | Fuel, purchased power and cost of natural gas sold | $ | (1,185 | ) | | $ | 771 |
| | | $ | (1,185 | ) | | $ | 771 |
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| | | | | | | | | | | | Six Months Ended June 30, | | | 2019 | | 2018 | Derivatives Not Designated as Hedging Instruments | Location of Gain/(Loss) on Derivatives Recognized in Income | Amount of Gain/(Loss) on Derivatives Recognized in Income | | Amount of Gain/(Loss) on Derivatives Recognized in Income | | | | | | Commodity derivatives | Fuel, purchased power and cost of natural gas sold | $ | (1,160 | ) | | $ | 1,025 |
| | | $ | (1,160 | ) | | $ | 1,025 |
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As discussed above, financial instruments used in our regulated utilities are not designated as cash flow hedges. However, there is no earnings impact because the unrealized gains and losses arising from the use of these financial instruments are recorded as Regulatory assets or Regulatory liabilities. The net unrealized losses included in our Regulatory asset or Regulatory liability accounts related to the hedges in our utilities were $3.9 million and $6.2 million for June 30, 2019 and December 31, 2018, respectively.
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