6. DEBT

Short-Term Debt

At June 30, 2015, our short-term debt consisted of commercial paper notes payable with a maximum maturity of 111 days, an average maturity of 51 days, and an outstanding balance of $190.3 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 2014 Form 10-K for a description of the fair value hierarchy.

Long-Term Debt

At June 30, 2015, our utility segment had long-term debt of $601.7 million. Utility long-term debt consists of first mortgage bonds (FMBs) with maturity dates ranging from 2016 through 2042, interest rates ranging from 3.176% to 9.05%, and a weighted-average coupon rate of 5.70%. The utility redeemed $40 million of FMBs with a coupon rate of 4.70% in June 2015.

At June 30, 2015, our gas storage segment’s long-term debt consisted of $20 million of fixed-rate senior collateralized debt with a maturity date of November 30, 2016 and an interest rate of 7.75%. This debt is collateralized by all of the membership interests in Gill Ranch and is nonrecourse to NW Natural.

On April 28, 2015, Gill Ranch entered into an amendment to the loan agreement under which the earnings before interest, tax, depreciation, and amortization (EBITDA) covenant requirement is suspended through maturity of the loan. Previously, the covenant had been suspended through March 31, 2015, and the debt service reserve was set at $3 million. Under the amendment, the debt service reserve was fixed at $4.5 million as of June 30, 2015 with scheduled increases by contributions of $1.5 million on each of January 30, 2016 and August 30, 2016, respectively. Additionally, Gill Ranch must receive common equity contributions from its parent NWN Gas Storage of at least $2 million by August 31, 2015 and of at least $4 million by August 31, 2016.

Fair Value of Long-Term Debt

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 2014 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:



	June 30,				December 31,
In thousands	2015		2014		2014
Carrying amount	$	621,700	$	721,700	$	661,700
Estimated fair value	695,902		807,617		756,808

See Note 7 in our 2014 Form 10-K for additional information regarding our long-term debt.