Derivative Instruments

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The following table shows our derivative assets and derivative liabilities, along with their classification on our balance sheets. None of our derivatives are designated as hedging instruments, with the exception of our interest rate swaps, which have been designated as cash flow hedges.



	December 31, 2019				December 31, 2018
(in millions)	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
Other current
Natural gas contracts	$	3.4	$	21.8	$	7.7	$	5.3
FTRs	3.1		—		7.4		—
Coal contracts	0.2		0.2		0.2		0.1
Interest rate swaps	—		2.8		—		0.4
Total other current	6.7		24.8		15.3		5.8

Other long-term
Natural gas contracts	—		0.9		0.4		0.2
Coal contracts	0.2		—		0.2		—
Interest rate swaps	—		3.2		—		1.9
Total other long-term	0.2		4.1		0.6		2.1
Total	$	6.9	$	28.9	$	15.9	$	7.9

Realized gains (losses) on derivatives not designated as hedging instruments are primarily recorded in cost of sales on the income statements. Our estimated notional sales volumes and realized gains (losses) were as follows for the years ended:



	December 31, 2019				December 31, 2018			December 31, 2017
(in millions)	Volumes	Gains (Losses)			Volumes	Gains		Volumes	Gains (Losses)
Natural gas contracts	183.9 Dth	$	(27.1	)	173.2 Dth	$	24.6	123.1 Dth	$	(8.0	)
Petroleum products contracts	— gallons	—			6.0 gallons	1.6		18.0 gallons	(1.3		)
FTRs	31.2 MWh	16.3			30.5 MWh	15.9		36.2 MWh	14.0
Total		$	(10.8	)		$	42.1		$	4.7

At December 31, 2019 and 2018, we had posted cash collateral of $34.4 million and $2.7 million, respectively, in our margin accounts. At December 31, 2018, we had also received cash collateral of $0.2 million in our margin accounts. We had not received any cash collateral at December 31, 2019.

The following table shows derivative assets and derivative liabilities if derivative instruments by counterparty were presented net on our balance sheets:



	December 31, 2019							December 31, 2018
(in millions)	Derivative Assets			Derivative Liabilities				Derivative Assets				Derivative Liabilities
Gross amount recognized on the balance sheet	$	6.9		$	28.9			$	15.9			$	7.9
Gross amount not offset on the balance sheet	(1.4		)	(21.4		)	⁽¹⁾	(4.0		)	⁽²⁾	(4.9		)	⁽³⁾
Net amount	$	5.5		$	7.5			$	11.9			$	3.0


⁽¹⁾	Includes cash collateral posted of $20.0 million.


⁽²⁾	Includes cash collateral received of $0.2 million.


⁽³⁾	Includes cash collateral posted of $1.1 million.

Cash Flow Hedges

Effective January 1, 2019, we adopted ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities. The amendments in this update expand the strategies that qualify for hedge accounting, amend the presentation and disclosure requirements related to hedging activities, and provide overall targeted improvements to simplify hedge accounting in certain situations. The adoption of this standard did not have a significant impact on our financial statements.

As of December 31, 2019, we had two interest rate swaps with a combined notional value of $250.0 million to hedge the variable interest rate risk associated with our 2007 Junior Notes. The swaps provide a fixed interest rate of 4.9765% on $250.0 million of the $500.0 million of outstanding 2007 Junior Notes through November 15, 2021. As these swaps qualified for cash flow hedge accounting treatment, the related gains and losses are being deferred in accumulated other comprehensive loss and are being amortized to interest expense as interest is accrued on the 2007 Junior Notes.

We previously entered into forward interest rate swap agreements to mitigate the interest rate exposure associated with the issuance of long-term debt related to the acquisition of Integrys. These swap agreements were settled in 2015, and we continue to amortize amounts out of accumulated other comprehensive loss into interest expense over the periods in which the interest costs are recognized in earnings.

The table below shows the amounts related to these cash flow hedges recorded in other comprehensive loss and in earnings, along with our total interest expense on the income statements, for the years ended December 31:



(in millions)	2019			2018			2017
Derivative losses recognized in other comprehensive loss	$	(4.8	)	$	(2.9	)	$	—
Net derivative gains reclassified from accumulated other comprehensive loss to interest expense	1.1			1.6			2.2
Total interest expense line item on the income statements	501.5			445.1			415.7

We estimate that during the next twelve months, $1.0 million will be reclassified from accumulated other comprehensive loss as an increase to interest expense.