6. DEBT

Short-Term Debt

At March 31, 2014, our short-term debt consisted of commercial paper notes payable with a maximum and an average maturity of less than 30 days, and an outstanding balance of $32.6 million. The carrying cost of our commercial paper approximates fair value using Level 2 inputs due to the short-term nature of the notes. See Note 2 in our 2013 Form 10-K for a description of the fair value hierarchy.

Current Maturities of Long-Term Debt

The utility has first mortgage bonds (FMBs) with maturity dates in the 12-month period ending March 31, 2015 totaling $60 million, which consists of $50 million of FMBs with a coupon rate of 3.95% and maturity in July 2014 and $10 million of FMBs with a coupon rate of 8.26% and maturity in September 2014.

In addition, in April 2014, Gill Ranch amended its loan agreement with Prudential. The amendment requires Gill Ranch to pay back $20 million of variable-rate outstanding debt during the second quarter of 2014, with the remaining $20 million of fixed-rate debt scheduled to mature on November 30, 2016. The $20 million of debt to be prepaid had an interest rate of 7.00% as of March 31, 2014. As part of the amended agreement, the EBITDA covenant requirement is suspended through March 31, 2015 with lower EBITDA hurdles thereafter. The amendment also fixes the debt service reserve at $3 million. At March 31, 2014, we were in compliance with all covenants and restrictions under the debt agreement.

Long-Term Debt

Our utility's long-term debt, including current maturities, consisted of $701.7 million of first mortgage bonds (FMBs) as of March 31, 2014, with maturity dates ranging from 2014 through 2042, interest rates ranging from 3.176% to 9.05%, and a weighted-average coupon rate of 5.55%. We did not redeem any FMBs during the three months ended March 31, 2014.

At March 31, 2014, our gas storage segment’s long-term debt consisted of $20 million of senior secured debt with a maturity date of November 30, 2016 and an interest rate of 7.75%. The $20 million variable interest rate portion of this debt has been classified with current maturities as it is expected to be paid during the second quarter of 2014. The debt is secured by all of the membership interests in Gill Ranch and is nonrecourse to NW Natural.

Our outstanding debt does not trade in active markets. We estimate the fair value of our debt using utility companies with similar credit ratings, terms, and remaining maturities to our debt that actively trade in public markets. These valuations are based on Level 2 inputs as defined in the fair value hierarchy. See Note 2 in our 2013 Form 10-K.

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:



	March 31,				December 31,
In thousands	2014		2013		2013
Carrying amount	$	741,700	$	691,700	$	741,700
Estimated fair value	820,458		825,038		806,359

See Note 7 in our 2013 Form 10-K for more detail on our long-term debt.