XML 60 R55.htm IDEA: XBRL DOCUMENT v2.4.0.6
Derivative Instruments and Hedging Activities (Tables)
 12 Months Ended
Dec. 31, 2012
Derivative Instruments and Hedging Activities [Line Items]  
Commodity Price Risk (Non-trading) - Economic Activity - Pre-tax Gains (Losses) Associated with Economic Activity

The unrealized gains (losses) for economic activity were as follows.

   2012 2011 2010
           
Operating Revenues         
 Unregulated retail electric and gas $ (17) $ 31 $ 1
 Wholesale energy marketing    (311)   1,407   (805)
Operating Expenses         
 Fuel   (14)   6   29
 Energy purchases   442   (1,123)   286
Commodity Volumetric Activity - Volumes of Derivative (Sales) Purchase Contracts

As of December 31, 2012, the net notional volumes of derivative (sales)/purchase contracts used in support of the various strategies discussed above were as follows.

    Volume
Commodity Unit of Measure 2013 2014 2015 Thereafter
           
Power MWh  (38,791,951)  (16,720,361)  1,636,197  3,871,199
Capacity MW-Month  (8,248,465)  (135,110)  (37,208)  525
Gas MMBtu  18,419,599  (21,663,269)  (10,386,745)  (5,027,288)
Coal Tons  (240,000)      
FTRs MW-Month  28,690  6,389  1,465  
Oil Barrels  (4,022,000)  240,000  300,000  180,000
Fair Value and Balance Sheet Location of Derivative Instruments

The following tables present the fair value and location of derivative instruments recorded on the Balance Sheets.

       December 31, 2012 December 31, 2011
       Derivatives designated as  Derivatives not designated Derivatives designated as  Derivatives not designated
       hedging instruments  as hedging instruments (a) hedging instruments  as hedging instruments (a)
       Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
Current:                        
 Price Risk Management                         
  Assets/Liabilities (b):                        
   Interest rate swaps $ 14 $ 22    $ 5 $ 3 $ 3    $ 5
   Cross-currency swaps       3            2      
   Foreign currency                        
    contracts      2      23   7    $ 11   
   Commodity contracts   59    $ 1,452   1,010   872   3   1,655   1,557
     Total current   73   27   1,452   1,038   882   8   1,666   1,562
Noncurrent:                        
 Price Risk Management                         
  Assets/Liabilities (b):                        
   Interest rate swaps   1         53            55
   Cross-currency swaps    14   1         24         
   Foreign currency                        
    contracts            19            
   Commodity contracts   27      530   556   42   2   854   783
     Total noncurrent   42   1   530   628   66   2   854   838
Total derivatives $ 115 $ 28 $ 1,982 $ 1,666 $ 948 $ 10 $ 2,520 $ 2,400

(a)       $300 million and $237 million of net gains associated with derivatives that were no longer designated as hedging instruments are recorded in AOCI at December 31, 2012 and 2011.

(b)       Represents the location on the Balance Sheet.

Pre-tax Gain (Loss) on Derivative Instruments Recognized in Income or on the Balance Sheet

The following tables present the pre-tax effect of derivative instruments recognized in income, OCI or regulatory assets and regulatory liabilities.

 Derivatives in Hedged Items in Location of Gain      
 Fair Value Hedging Fair Value Hedging (Loss) Recognized Gain (Loss) Recognized Gain (Loss) Recognized
 Relationships Relationships in Income in Income on Derivative  in Income on Related Item
            
2012          
 Interest rate swaps Fixed rate debt Interest Expense    $ 3
            
2011          
 Interest rate swaps Fixed rate debt Interest Expense $ 2 $ 25
     Other Income       
     (Expense) - net      22
2010          
 Interest rate swaps Fixed rate debt Interest Expense $ 48 $ (6)

             Gain (Loss) Recognized
             in Income on Derivative
     Derivative Gain   Gain (Loss) Reclassified (Ineffective Portion and
   Derivative  (Loss) Recognized in Location of Gain (Loss) from AOCI into Income Amount Excluded from
   Relationships  OCI (Effective Portion) Recognized in Income (Effective Portion) Effectiveness Testing)
2012           
 Cash Flow Hedges:           
  Interest rate swaps $ (28) Interest Expense $ (18)   
        Other Income (Expense) - net   1   
  Cross-currency swaps   (15) Interest Expense   (2)   
        Other Income (Expense) - net   (23)   
  Commodity contracts   114 Wholesale energy marketing   891 $ (1)
        Depreciation   2   
        Energy purchases   (139)   (2)
 Total $ 71   $ 712 $ (3)
 Net Investment Hedges:           
  Foreign currency contracts $ (7)        
               
2011           
 Cash Flow Hedges:           
  Interest rate swaps $ (55) Interest Expense $ (13) $ (13)
  Cross-currency swaps   (35) Interest Expense   5   
        Other Income (Expense) - net   29   
  Commodity contracts   431 Wholesale energy marketing   835   (39)
        Fuel   1   
        Depreciation   2   
        Energy purchases   (243)   1
 Total $ 341   $ 616 $ (51)
 Net Investment Hedges:           
  Foreign currency contracts $ 6        
               
2010           
 Cash Flow Hedges:           
  Interest rate swaps $ (145) Interest Expense $ (4) $ (17)
        Other Income (Expense) - net   (30)   
  Cross-currency swaps   25 Interest Expense   2   
        Other Income (Expense) - net   16   
  Commodity contracts   487 Wholesale energy marketing   680   (201)
        Fuel   2   
        Depreciation   2   
        Energy purchases   (458)   3
 Total $ 367   $ 210 $ (215)
 Net Investment Hedges:           
  Foreign currency contracts $ 5        

Derivatives Not Designated as Location of Gain (Loss) Recognized in         
Hedging Instruments  Income on Derivatives  2012  2011  2010
            
Foreign currency contracts Other Income (Expense) - net $ (52) $ 65 $ 3
Interest rate swaps Interest Expense   (8)   (8)   
Commodity contracts Utility      (1)   (2)
  Unregulated retail electric and gas   30   39   11
  Wholesale energy marketing   1,191   1,606   (70)
  Net energy trading margins (a)   8   (6)   1
  Fuel      (1)   12
  Energy purchases   (965)   (1,493)   (405)
  Total $ 204 $ 201 $ (450)
            
Derivatives Not Designated as Location of Gain (Loss) Recognized as         
Hedging Instruments Regulatory Liabilities/Assets  2012  2011   
            
Interest rate swaps Regulatory assets - noncurrent $ 1 $ (26)   
            
Derivatives Designated as Location of Gain (Loss) Recognized as         
Cash Flow Hedges Regulatory Liabilities/Assets  2012  2011   
            
Interest rate swaps Regulatory liabilities - noncurrent $ 14      

(a)       Differs from the Statement of Income due to intra-month transactions that PPL defines as spot activity, which is not accounted for as a derivative.

Credit Risk-Related Contingent Features

At December 31, 2012, the effect of a decrease in credit ratings below investment grade on derivative contracts that contain credit risk-related contingent features and were in a net liability position is summarized as follows:

       PPL      
    PPL Energy Supply LKE LG&E
               
Aggregate fair value of derivative instruments in a net liability             
 position with credit risk-related contingent provisions $ 219 $ 142 $ 39 $ 39
Aggregate fair value of collateral posted on these derivative instruments   39   7   32   32
Aggregate fair value of additional collateral requirements in the event of            
 a credit downgrade below investment grade (a)   202  155   9  9

(a)       Includes the effect of net receivables and payables already recorded on the Balance Sheet.

PPL Energy Supply LLC [Member]
  
Derivative Instruments and Hedging Activities [Line Items]  
Commodity Price Risk (Non-trading) - Economic Activity - Pre-tax Gains (Losses) Associated with Economic Activity

The unrealized gains (losses) for economic activity were as follows.

   2012 2011 2010
           
Operating Revenues         
 Unregulated retail electric and gas $ (17) $ 31 $ 1
 Wholesale energy marketing    (311)   1,407   (805)
Operating Expenses         
 Fuel   (14)   6   29
 Energy purchases   442   (1,123)   286
Commodity Volumetric Activity - Volumes of Derivative (Sales) Purchase Contracts

As of December 31, 2012, the net notional volumes of derivative (sales)/purchase contracts used in support of the various strategies discussed above were as follows.

    Volume
Commodity Unit of Measure 2013 2014 2015 Thereafter
           
Power MWh  (38,791,951)  (16,720,361)  1,636,197  3,871,199
Capacity MW-Month  (8,248,465)  (135,110)  (37,208)  525
Gas MMBtu  18,419,599  (21,663,269)  (10,386,745)  (5,027,288)
Coal Tons  (240,000)      
FTRs MW-Month  28,690  6,389  1,465  
Oil Barrels  (4,022,000)  240,000  300,000  180,000
Fair Value and Balance Sheet Location of Derivative Instruments

The following tables present the fair value and location of derivative instruments recorded on the Balance Sheets.

       December 31, 2012 December 31, 2011
       Derivatives designated as Derivatives not designated Derivatives designated as Derivatives not designated
       hedging instruments  as hedging instruments (a) hedging instruments  as hedging instruments (a)
       Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
Current:                        
 Price Risk Management                         
  Assets/Liabilities (b):                        
   Commodity contracts $ 59    $ 1,452 $ 1,010 $ 872 $ 3 $ 1,655 $ 1,557
     Total current   59      1,452   1,010   872   3   1,655   1,557
Noncurrent:                        
 Price Risk Management                         
  Assets/Liabilities (b):                        
   Commodity contracts   27      530   556   42   2   854   783
     Total noncurrent   27      530   556   42   2   854   783
Total derivatives $ 86    $ 1,982 $ 1,566 $ 914 $ 5 $ 2,509 $ 2,340

(a)       $300 million and $237 million of net gains associated with derivatives that were no longer designated as hedging instruments are recorded in AOCI at December 31, 2012 and 2011.

(b)       Represents the location on the Balance Sheet.

Pre-tax Gain (Loss) on Derivative Instruments Recognized in Income or on the Balance Sheet

The following tables present the pre-tax effect of derivative instruments recognized in income or OCI. There were no gains (losses) on interest rate swaps for 2012.

 Derivatives in Hedged Items in Location of Gain      
 Fair Value Hedging Fair Value Hedging (Loss) Recognized Gain (Loss) Recognized Gain (Loss) Recognized
 Relationships Relationships in Income in Income on Derivative  in Income on Related Item
            
2011          
 Interest rate swaps Fixed rate debt Interest Expense    $ 2
            
2010          
 Interest rate swaps Fixed rate debt Interest Expense    $ 2

             Gain (Loss) Recognized
             in Income on Derivative
     Derivative Gain   Gain (Loss) Reclassified (Ineffective Portion and
   Derivative  (Loss) Recognized in Location of Gain (Loss) from AOCI into Income Amount Excluded from
   Relationships  OCI (Effective Portion) Recognized in Income (Effective Portion) Effectiveness Testing)
2012           
 Cash Flow Hedges:           
  Commodity contracts $ 114 Wholesale energy marketing $ 891 $ (1)
        Depreciation   2   
        Energy purchases   (139)   (2)
 Total $ 114   $ 754 $ (3)
               
2011           
 Cash Flow Hedges:           
  Commodity contracts $ 431 Wholesale energy marketing $ 835 $ (39)
        Fuel   1   
        Depreciation   2   
        Energy purchases   (243)   1
 Total $ 431   $ 595 $ (38)
               
2010           
 Cash Flow Hedges:           
  Interest rate swaps   Discontinued Operations (net of       
         income taxes)    $ (3)
  Cross-currency swaps$ 25 Discontinued Operations (net of       
         income taxes) $ 18   
  Commodity contracts   487 Wholesale energy marketing   680   (201)
        Fuel   2   
        Depreciation   2   
        Energy purchases   (458)   3
 Total $ 512   $ 244 $ (201)
 Net Investment Hedges:           
  Foreign currency contracts $ 5        

Derivatives Not Designated as Location of Gain (Loss) Recognized in         
Hedging Instruments  Income on Derivatives  2012  2011  2010
            
Foreign currency contracts Discontinued Operations         
   (net of income taxes)       $ 3
Commodity contracts Unregulated retail electric and gas $ 30 $ 39   11
  Wholesale energy marketing   1,191   1,606   (70)
  Net energy trading margins (a)   8   (6)   1
  Fuel      (1)   12
  Energy purchases   (965)   (1,493)   (405)
  Total $ 264 $ 145 $ (448)

(a)       Differs from the Statement of Income due to intra-month transactions that PPL Energy Supply defines as spot activity, which is not accounted for as a derivative.

Credit Risk-Related Contingent Features

At December 31, 2012, the effect of a decrease in credit ratings below investment grade on derivative contracts that contain credit risk-related contingent features and were in a net liability position is summarized as follows:

       PPL      
    PPL Energy Supply LKE LG&E
               
Aggregate fair value of derivative instruments in a net liability             
 position with credit risk-related contingent provisions $ 219 $ 142 $ 39 $ 39
Aggregate fair value of collateral posted on these derivative instruments   39   7   32   32
Aggregate fair value of additional collateral requirements in the event of            
 a credit downgrade below investment grade (a)   202  155   9  9

(a)       Includes the effect of net receivables and payables already recorded on the Balance Sheet.

LG And E And KU Energy LLC [Member]
  
Derivative Instruments and Hedging Activities [Line Items]  
Fair Value and Balance Sheet Location of Derivative Instruments

The following table presents the fair value and location of derivative instruments recorded on the Balance Sheets:

       December 31, 2012 December 31, 2011
       Derivatives designated as  Derivatives not designated Derivatives designated as  Derivatives not designated
       hedging instruments  as hedging instruments  hedging instruments  as hedging instruments
Current: Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
 Other Current                         
  Assets/Liabilities (a):                        
   Interest rate swaps $ 14       $ 5          $ 5
     Total current   14         5            5
Noncurrent:                        
 Price Risk Management                         
  Assets/Liabilities (a):                        
   Interest rate swaps            53            55
     Total noncurrent            53            55
Total derivatives $ 14       $ 58          $ 60
                              

(a)       Represents the location on the Balance Sheet.

Pre-tax Gain (Loss) on Derivative Instruments Recognized in Income or on the Balance Sheet

The following tables present the pre-tax effect of derivative instruments recognized in income or regulatory assets and regulatory liabilities for the periods ended December 31, 2012, 2011 and 2010, for the Successor and Predecessor.

    Successor  Predecessor
        Two Months Ended  Ten Months Ended
Derivatives Not Designated as Location of Gain (Loss) Recognized in December 31, December 31, December 31,  October 31,
Hedging Instruments  Income on Derivatives 2012 2011 2010  2010
                
Interest rate swaps Interest Expense $ (8) $ (8) $ (1)  $ (7)
Commodity contracts Operating Revenues      (1)   (2)    3
  Total $ (8) $ (9) $ (3)  $ (4)
                
                
Derivatives Not Designated as Location of Gain (Loss) Recognized as         
Hedging Instruments Regulatory Liabilities/Assets December 31, 2012 December 31, 2011
                
Interest rate swaps Regulatory assets - noncurrent $    1 $     (26)
                
                
Derivatives Designated as Location of Gain (Loss) Recognized as         
Cash Flow Hedges Regulatory Liabilities/Assets December 31, 2012 December 31, 2011
                
Interest rate swaps Regulatory liabilities - noncurrent $    14       
Credit Risk-Related Contingent Features

At December 31, 2012, the effect of a decrease in credit ratings below investment grade on derivative contracts that contain credit risk-related contingent features and were in a net liability position is summarized as follows:

       PPL      
    PPL Energy Supply LKE LG&E
               
Aggregate fair value of derivative instruments in a net liability             
 position with credit risk-related contingent provisions $ 219 $ 142 $ 39 $ 39
Aggregate fair value of collateral posted on these derivative instruments   39   7   32   32
Aggregate fair value of additional collateral requirements in the event of            
 a credit downgrade below investment grade (a)   202  155   9  9

(a)       Includes the effect of net receivables and payables already recorded on the Balance Sheet.

Louisville Gas And Electric Co [Member]
  
Derivative Instruments and Hedging Activities [Line Items]  
Fair Value and Balance Sheet Location of Derivative Instruments

The following table presents the fair value and location of derivative instruments recorded on the Balance Sheets:

       December 31, 2012 December 31, 2011
       Derivatives designated as  Derivatives not designated Derivatives designated as  Derivatives not designated
       hedging instruments  as hedging instruments  hedging instruments  as hedging instruments
Current: Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
 Other Current                         
  Assets/Liabilities (a):                        
   Interest rate swaps $ 7       $ 5          $ 5
     Total current   7         5            5
Noncurrent:                        
 Price Risk Management                         
  Assets/Liabilities (a):                        
   Interest rate swaps            53            55
     Total noncurrent            53            55
Total derivatives $ 7       $ 58          $ 60

(a)       Represents the location on the balance sheet.

Pre-tax Gain (Loss) on Derivative Instruments Recognized in Income or on the Balance Sheet

The following tables present the pre-tax effect of derivative instruments recognized in income or regulatory assets and regulatory liabilities for the periods ended December 31, 2012, 2011 and 2010, for the Successor and Predecessor.

    Successor  Predecessor
    Year Ended  Year Ended  Two Months Ended  Ten Months Ended
Derivatives Not Designated as Location of Gain (Loss) Recognized in December 31, December 31, December 31,  October 31,
Hedging Instruments  Income on Derivatives 2012 2011 2010  2010
                
Interest rate swaps Interest Expense $ (8) $ (8) $ (1)  $ (7)
Commodity contracts Operating Revenues      (1)   (2)    3
  Total $ (8) $ (9) $ (3)  $ (4)
                
                
Derivatives Not Designated as Location of Gain (Loss) Recognized as         
Hedging Instruments Regulatory Liabilities/Assets December 31, 2012 December 31, 2011
                
Interest rate swaps Regulatory assets - noncurrent $    1 $     (26)
                
                
Derivatives Designated as Location of Gain (Loss) Recognized as         
Cash Flow Hedges Regulatory Liabilities/Assets December 31, 2012 December 31, 2011
                
Interest rate swaps Regulatory liabilities - noncurrent $    7       
Credit Risk-Related Contingent Features

At December 31, 2012, the effect of a decrease in credit ratings below investment grade on derivative contracts that contain credit risk-related contingent features and were in a net liability position is summarized as follows:

       PPL      
    PPL Energy Supply LKE LG&E
               
Aggregate fair value of derivative instruments in a net liability             
 position with credit risk-related contingent provisions $ 219 $ 142 $ 39 $ 39
Aggregate fair value of collateral posted on these derivative instruments   39   7   32   32
Aggregate fair value of additional collateral requirements in the event of            
 a credit downgrade below investment grade (a)   202  155   9  9

(a)       Includes the effect of net receivables and payables already recorded on the Balance Sheet.