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Risk Management Activities (Tables)
6 Months Ended
Jun. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
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.
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

 
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


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


 
 
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



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.