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Cost and Fair Value Basis of Long-Term Debt
 6 Months Ended
Jun. 30, 2012
Disclosure Cost And Fair Value Basis Of Long Term Debt [Abstract]  
Cost and Fair Value Basis of Long-Term Debt Text Block

7.       Cost and Fair Value Basis of Debt

 

Cost and Fair Value of Short-Term Debt

 

Our short-term debt consists of commercial paper and notes payable with an average maturity date of September 17, 2012 and an outstanding balance of $113.2 million as of June 30, 2012. The fair value of our commercial paper approximates the amortized cost using Level 2 inputs. Level 2 in the fair value hierarchy are inputs that have significant other observable inputs.

 

Cost of Long-Term Debt

 

Our utility's long-term debt consists of secured medium-term notes (MTNs) with maturity dates ranging from 2014 through 2035, interest rates ranging from 3.176 percent to 9.05 percent, and a weighted-average coupon rate of 5.85 percent. In March of 2012, we redeemed $40 million of MTNs. See Note 14 for more information regarding the bond purchase agreement for the sale and issuance of first mortgage bonds subsequent to June 30, 2012.

 

Our gas storage segment's long-term debt consists of $40 million of fixed and variable senior secured notes with a maturity date of November 30, 2016. The $20 million fixed rate notes have an interest rate of 7.75 percent, and the $20 million variable rate notes currently have an interest rate of 7.00 percent. The notes are secured by all of the membership interests in Gill Ranch Storage, LLC and are nonrecourse to NW Natural. See Note 7 in our 2011 Form 10-K for more detail on our long-term debt.

 

Fair Value of Long-Term Debt

 

As our outstanding debt does not trade in active markets, we used interest rates of other companies' outstanding debt issuances that actively trade in public markets and have similar credit ratings, terms and remaining maturities to estimate the fair value of our long-term debt issuances. These inputs are Level 2 inputs. The following table provides an estimate of the fair value of our long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:  

 

  June 30,  December 31,
Thousands  2012  2011  2011
Carrying amount $ 641,700 $ 591,700 $ 681,700
Estimated fair value $ 768,429 $ 678,281 $ 808,724