Our operating and financing activities are exposed to certain risks, which are managed by using derivative instruments. All derivative instruments are recognized as either assets or liabilities at fair value on our consolidated balance sheets in accordance with the accounting requirements concerning derivative instruments and hedging activities.

The tables below present Networks' derivative positions as of December 31, 2021 and 2020, respectively, including those subject to master netting agreements and the location of the net derivative positions on our consolidated balance sheets:


As of December 31, 2021	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
(Millions)
Not designated as hedging instruments
Derivative assets	$	29	$	7	$	12	$	4
Derivative liabilities	(12)		(4)		(27)		(64)
	17		3		(15)		(60)
Designated as hedging instruments
Derivative assets	—		—		—		—
Derivative liabilities	—		—		(1)		—
	—		—		(1)		—
Total derivatives before offset of cash collateral	17		3		(16)		(60)
Cash collateral receivable	—		—		—		—
Total derivatives as presented in the balance sheet	$	17	$	3	$	(16)	$	(60)


As of December 31, 2020	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
(Millions)
Not designated as hedging instruments
Derivative assets	$	3	$	5	$	3	$	3
Derivative liabilities	(3)		(4)		(34)		(78)
	—		1		(31)		(75)
Designated as hedging instruments
Derivative assets	—		—		—		—
Derivative liabilities	—		—		(1)		—
	—		—		(1)		—
Total derivatives before offset of cash collateral	—		1		(32)		(75)
Cash collateral receivable	—		—		18		1
Total derivatives as presented in the balance sheet	$	—	$	1	$	(14)	$	(74)

NYSEG and RG&E have an electric commodity charge that passes costs for the market price of electricity through rates. We use electricity contracts, both physical and financial, to manage fluctuations in electricity commodity prices in order to provide price stability to customers. We include the cost or benefit of those contracts in the amount expensed for electricity purchased when the related electricity is sold. We record changes in the fair value of electric hedge contracts to derivative assets and/or liabilities with an offset to regulatory assets and/or regulatory liabilities, in accordance with the accounting requirements concerning regulated operations.

NYSEG and RG&E have purchased gas adjustment clauses that allow us to recover through rates any changes in the market price of purchased natural gas, substantially eliminating our exposure to natural gas price risk. NYSEG and RG&E use natural gas futures and forwards to manage fluctuations in natural gas commodity prices to provide price stability to customers. We include the cost or benefit of natural gas futures and forwards in the commodity cost that is passed on to customers when the related sales commitments are fulfilled. We record changes in the fair value of natural gas hedge contracts to derivative assets and/or liabilities with an offset to regulatory assets and/or regulatory liabilities in accordance with the accounting requirements for regulated operations.

The amounts for electricity hedge contracts and natural gas hedge contracts recognized in regulatory liabilities and assets as of December 31, 2021 and 2020 and amounts reclassified from regulatory assets and liabilities into income for the years ended December 31, 2021, 2020 and 2019 are as follows:


(Millions)	Loss or Gain Recognized in Regulatory Assets/Liabilities				Location of Loss (Gain) Reclassified from Regulatory Assets/Liabilities into Income	Loss (Gain) Reclassified from Regulatory Assets/Liabilities into Income
As of						For the Year Ended December 31,
December 31, 2021	Electricity		Natural Gas		2021	Electricity		Natural Gas
Regulatory assets	$	—	$	—	Purchased power, natural gas and fuel used	$	(23)	$	(11)
Regulatory liabilities	$	(16)	$	(3)
December 31, 2020					2020
Regulatory assets	$	17	$	1	Purchased power, natural gas and fuel used	$	55	$	4
Regulatory liabilities	$	—	$	—
					2019
					Purchased power, natural gas and fuel used	$	25	$	1

Pursuant to a PURA order, UI and Connecticut’s other electric utility, CL&P, each executed two long-term CfDs with certain incremental capacity resources, each of which specifies a capacity quantity and a monthly settlement that reflects the difference between a forward market price and the contract price. The costs or benefits of each contract will be paid by or allocated to customers and will be subject to a cost-sharing agreement between UI and CL&P pursuant to which approximately 20% of the cost or benefit is borne by or allocated to UI customers and approximately 80% is borne by or allocated to CL&P customers.

PURA has determined that costs associated with these CfDs will be fully recoverable by UI and CL&P through electric rates, and UI has deferred recognition of costs (a regulatory asset) or obligations (a regulatory liability), including carrying costs. For those CfDs signed by CL&P, UI records its approximate 20% portion pursuant to the cost-sharing agreement noted above. As of December 31, 2021, UI has recorded a gross derivative asset of $2 million ($0 of which is related to UI’s portion of the CfD signed by CL&P), a regulatory asset of $73 million, a gross derivative liability of $75 million ($72 million of which is related to UI’s portion of the CfD signed by CL&P) and a regulatory liability of $0. As of December 31, 2020, UI has recorded a gross derivative asset of $2 million ($0 of which is related to UI’s portion of the CfD signed by CL&P), a regulatory asset of $86 million, a gross derivative liability of $88 million ($85 million of which is related to UI’s portion of the CfD signed by CL&P) and a regulatory liability of $0.

Certain foreign currency exchange contracts are not designated as hedging instruments. For the years ended December 31, 2021 and 2020, we recorded a gain of $0 and $4 million, respectively, related to our foreign currency contracts not designated as hedging instruments, included in "Other income" in our consolidated statements of income. No amounts were recorded for the year ended December 31, 2019.


Year Ended December 31,	(Loss) Gain Recognized in OCI on Derivatives (a)		Location of Loss Reclassified from Accumulated OCI into Income	Loss (Gain) Reclassified from Accumulated OCI into Income		Total amount per Income Statement
(Millions)
2021
Interest rate contracts	$	—	Interest expense	$	4	$	298
Commodity contracts	2		Purchased power, natural gas and fuel used	(1)		1,719
Foreign currency exchange contracts	(5)			—
Total	$	(3)		$	3
2020
Interest rate contracts	$	—	Interest expense	$	4	$	316
Commodity contracts	(1)		Purchased power, natural gas and fuel used	1		1,379
Foreign currency exchange contracts	1			—
Total	$	—		$	5
2019
Interest rate contracts	$	—	Interest expense	$	6	$	310
Commodity contracts	—		Purchased power, natural gas and fuel used	1		1,509
Foreign currency exchange contracts	(1)			—
Total	$	(1)		$	7

On June 20, 2019, Networks entered into a forward contract to hedge the foreign currency exchange risk of approximately $100 million in forecasted capital expenditures through June 2023. The forward foreign currency contracts, which were designated and qualified as cash flow hedges, were settled in December 2021. The net loss of $5 million in accumulated OCI on the foreign exchange derivative will be reclassified into earnings over the useful life of the underlying capital expenditures.

The net loss in accumulated OCI related to previously settled forward starting swaps and accumulated amortization is $47 million and $51 million as of December 31, 2021 and 2020, respectively. We recorded $4 million, $4 million and $6 million in net derivative losses related to discontinued cash flow hedges during the years ended December 31, 2021, 2020 and 2019, respectively. We will amortize approximately $4 million of discontinued cash flow hedges in 2022.

Unrealized losses of $1 million on hedge derivatives are reported in OCI because the forecasted transaction is considered to be probable as of December 31, 2021. We expect that immaterial amounts of those losses will be reclassified into earnings within the next twelve months. The maximum length of time over which we are hedging our exposure to the variability in future cash flows for forecasted fleet fuel transactions is twelve months.

Renewables sells fixed-price gas and power forwards to hedge our merchant wind assets from declining commodity prices for our Renewables business. Renewables also purchases fixed-price gas and basis swaps and sells fixed-price power in the forward market to hedge the spark spread or heat rate of our merchant thermal assets and enters into tolling arrangements to sell the output of its thermal generation facilities.

Renewables has proprietary trading operations that enter into fixed-price power and gas forwards in addition to basis swaps. The intent is to speculate on fixed-price commodity and basis volatility in the U.S. commodity markets.

Renewables will periodically designate derivative contracts as cash flow hedges for both its thermal and wind portfolios. The fair value changes are recorded in OCI. For thermal operations, Renewables will periodically designate both fixed price

NYMEX gas contracts and natural gas basis swaps that hedge the fuel requirements of its Klamath Plant in Klamath, Oregon. Renewables will also designate fixed price power swaps at various locations in the U.S. market to hedge future power sales from its Klamath facility and various wind farms.


As of December 31,	2021	2020
(MWh/Dth in Millions)
Wholesale electricity purchase contracts	4	3
Wholesale electricity sales contracts	10	7
Natural gas and other fuel purchase contracts	20	24
Financial power contracts	9	12
Basis swaps - purchases	30	35
Basis swaps - sales	—	2


As of December 31,	2021		2020
(Millions)
Wholesale electricity purchase contracts	$	36	$	4
Wholesale electricity sales contracts	(77)		11
Natural gas and other fuel purchase contracts	6		—
Financial power contracts	35		66
Basis swaps - purchases	—		7

Total	$	—	$	88

On May 27, 2021, Renewables entered into a forward interest rate swap, with a total notional amount of $935 million, to hedge the issuance of forecasted variable rate debt. The forward interest rate swap is designated and qualifies as a cash flow hedge. As part of the financial close of Vineyard Wind 1 described in Note 22, this hedge was novated to the lending institutions and the notional value changed to $956 million. As of December 31, 2021, the fair value of the interest rate swap was a $58 million non-current liability. The gain or loss on the interest rate swap is reported as a component of accumulated OCI and will be reclassified into earnings in the period or periods during which the related interest expense on the debt is incurred.

The tables below present Renewables' derivative positions as of December 31, 2021 and 2020, respectively, including those subject to master netting agreements and the location of the net derivative position on our consolidated balance sheets:


As of December 31, 2021	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
(Millions)
Not designated as hedging instruments
Derivative assets	$	29	$	70	$	52	$	9
Derivative liabilities	(11)		(14)		(65)		(11)
	18		56		(13)		(2)
Designated as hedging instruments
Derivative assets	—		—		5		6
Derivative liabilities	—		—		(67)		(142)
	—		—		(62)		(136)
Total derivatives before offset of cash collateral	18		56		(75)		(138)
Cash collateral payable	—		—		27		57
Total derivatives as presented in the balance sheet	$	18	$	56	$	(48)	$	(81)


As of December 31, 2020	Current Assets		Noncurrent Assets		Current Liabilities		Noncurrent Liabilities
(Millions)
Not designated as hedging instruments
Derivative assets	$	47	$	89	$	2	$	9
Derivative liabilities	(23)		(2)		(4)		(11)
	24		87		(2)		(2)
Designated as hedging instruments
Derivative assets	8		15		2		7
Derivative liabilities	(5)		(6)		(3)		(10)
	3		9		(1)		(3)
Total derivatives before offset of cash collateral	27		96		(3)		(5)
Cash collateral (payable) receivable	(9)		(18)		—		—
Total derivatives as presented in the balance sheet	$	18	$	78	$	(3)	$	(5)


	Year Ended December 31, 2021
	Trading		Non-trading		Total amount per income statement
(Millions)
Operating Revenues
Wholesale electricity purchase contracts	$	1	$	(1)
Wholesale electricity sales contracts	(2)		(33)
Financial power contracts	4		(42)
Financial and natural gas contracts	(1)		(25)
Total loss included in operating revenues	$	2	$	(101)	$	6,974

Purchased power, natural gas and fuel used
Wholesale electricity purchase contracts	$	—	$	32


Financial and natural gas contracts	—		12
Total gain included in purchased power, natural gas and fuel used	$	—	$	44	$	1,719

Total Gain (Loss)	$	2	$	(57)


	Year Ended December 31, 2020
	Trading		Non-trading		Total amount per income statement
(Millions)
Operating Revenues
Wholesale electricity purchase contracts	$	(1)	$	—
Wholesale electricity sales contracts	(1)		6
Financial power contracts	2		—
Financial and natural gas contracts	—		(13)
Total (loss) gain included in operating revenues	$	—	$	(7)	$	6,320

Purchased power, natural gas and fuel used
Wholesale electricity purchase contracts	$	—	$	(4)


Financial and natural gas contracts	—		6
Total gain included in purchased power, natural gas and fuel used	$	—	$	2	$	1,379

Total Loss	$	—	$	(5)


	Year Ended December 31, 2019
	Trading		Non-trading		Total amount per income statement
(Millions)
Operating Revenues
Wholesale electricity purchase contracts	$	(1)	$	—
Wholesale electricity sales contracts	3		40
Financial power contracts	(3)		23
Financial and natural gas contracts	(1)		1
Total (loss) gain included in operating revenues	$	(2)	$	64	$	6,336

Purchased power, natural gas and fuel used


Financial power contracts	—		(1)
Financial and natural gas contracts	—		15
Total gain included in purchased power, natural gas and fuel used	$	—	$	14	$	1,509

Total (Loss) Gain	$	(2)	$	78


Years Ended December 31,	Gain (Loss) Recognized in OCI on Derivatives (a)		Location of Loss (Gain) Reclassified from Accumulated OCI into Income	Loss (Gain) Reclassified from Accumulated OCI into Income		Total amount per Income Statement
(Millions)
2021
Interest rate contracts	$	(58)	Interest Expense	$	—	$	298
Commodity contracts	$	(142)	Operating revenues	$	(3)	$	6,974
Total	$	(200)		$	(3)
2020
Commodity contracts	$	1	Operating revenues	$	6	$	6,320

2019
Commodity contracts	$	(5)	Operating revenues	$	3	$	6,336

Amounts are reclassified from accumulated OCI into income in the period during which the transaction being hedged affects earnings or when it becomes probable that a forecasted transaction being hedged would not occur. Notwithstanding future changes in prices, approximately $59 million of gain included in accumulated OCI at December 31, 2021 is expected to be reclassified into earnings within the next twelve months. We recorded immaterial amounts of net derivative losses related to discontinued cash flow hedges for the years ended December 31, 2021, 2020 and 2019.

The net loss in accumulated OCI related to previously settled interest rate contracts is $48 million and $57 million as of December 31, 2021 and 2020, respectively. We amortized into income $9 million, $8 million and $2 million of the loss related to the settled interest rate contracts for the years ended December 31, 2021, 2020 and 2019, respectively. We will amortize approximately $9 million of the net loss on the interest rate contracts during 2022.


Years Ended December 31,	(Loss) Recognized in OCI on Derivatives (a)		Location of Loss Reclassified from Accumulated OCI into Income	Loss Reclassified from Accumulated OCI into Income		Total amount per Income Statement
(Millions)
2021
Interest rate contracts	$	—	Interest expense	$	9	$	298

2020
Interest rate contracts	$	(27)	Interest expense	$	8	$	316

2019
Interest rate contracts	$	(24)	Interest expense	$	2	$	310

On July 15, 2021, Corporate entered into an interest rate swap to hedge the fair value of $750 million of existing debt included in "Non-current debt" on our consolidated balance sheets. The interest rate swap is designated and qualifies as a fair value hedge. The change in the fair value of the interest rate swap and the offsetting change in the fair value of the underlying debt are reported as components of "Interest expense."


(millions)	Fair value of hedge		Location of (Gain) Recognized in Income Statement	(Gain) Recognized in Income Statement		Year to date total per Income Statement
As of December 31, 2021				Year Ended December 31, 2021
Current Assets	$	—	Interest Expense	$	(3)	$	298
Non-current liabilities	$	(19)

	Cumulative effect on hedged debt
Current debt	$	—
Non-current debt	$	19

NYSEG and RG&E face risks related to counterparty performance on hedging contracts due to counterparty credit default. We have developed a matrix of unsecured credit thresholds that are applicable based on the respective counterparty’s or the counterparty guarantor’s credit rating, as provided by Moody’s or Standard & Poor’s. When our exposure to risk for a counterparty exceeds the unsecured credit threshold, the counterparty is required to post additional collateral or we will no longer transact with the counterparty until the exposure drops below the unsecured credit threshold.

The wholesale power supply agreements of UI contain default provisions that include required performance assurance, including certain collateral obligations, in the event that UI’s credit ratings on senior debt were to fall below investment grade. If such an event had occurred as of December 31, 2021, UI would have had to post an aggregate of approximately $19 million in collateral.

We have various master netting arrangements in the form of multiple contracts with various single counterparties that are subject to contractual agreements that provide for the net settlement of all contracts through a single payment. Those arrangements reduce our exposure to a counterparty in the event of a default on or termination of any single contract. For financial statement presentation purposes, we offset fair value amounts recognized for derivative instruments and fair value amounts recognized for the right to reclaim or the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement. The amount of cash collateral under master netting arrangements that has not been offset against net derivative positions was $67 million and $18 million as of December 31, 2021 and 2020, respectively. Derivative instruments settlements and collateral payments are included throughout the "Changes in operating assets and liabilities" section of operating activities in the consolidated statements of cash flows.

Certain of our derivative instruments contain provisions that require us to maintain an investment grade credit rating on our debt from each of the major credit rating agencies. If our debt were to fall below investment grade, we would be in violation of those provisions and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit risk related contingent features that are in a liability position as of December 31, 2021 is $0, for which we have posted collateral.