Derivatives and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Notional Amounts under Swaps Contracts

The differential is calculated based on the notional amounts under the contracts, which are detailed in the table below (thousands of dekatherms):

	September 30, 2015		December 31, 2014
Contract notional amounts		8,192		5,105

Amount of Gain or Losses Recognized in Income on Derivatives

The following table sets forth the gains and (losses) recognized on the Company’s Swaps (derivatives) for the three-, nine-, and twelve-month periods ended September 30, 2015 and 2014 and their location in the Condensed Consolidated Statements of Income:

Gains (losses) recognized in income for derivatives not designated as hedging instruments:
(Thousands of dollars)
	Location of Gain or (Loss) Recognized in Income on Derivative	Three Months Ended						Nine Months Ended						Twelve Months Ended
		September 30						September 30						September 30
Instrument		2015			2014			2015			2014			2015			2014
Swaps	Net cost of gas sold	$	(3,282	)	$	(2,277	)	$	(4,689	)	$	3,630		$	(10,682	)	$	7,552
Swaps	Net cost of gas sold		3,282	*		2,277	*		4,689	*		(3,630	)*		10,682	*		(7,552	)*
Total		$	—		$	—		$	—		$	—		$	—		$	—

* Represents the impact of regulatory deferral accounting treatment under U.S. GAAP for rate-regulated entities.

Fair Values of Swaps in Condensed Consolidated Balance Sheets

The following table sets forth the fair values of the Company’s Swaps and their location in the Condensed Consolidated Balance Sheets (thousands of dollars):

Fair values of derivatives not designated as hedging instruments:
September 30, 2015		Asset Derivatives		Liability Derivatives			Net Total
Instrument	Balance Sheet Location
Swaps	Other current liabilities	$	—	$	(3,425	)	$	(3,425	)
Swaps	Other deferred credits		—		(1,462	)		(1,462	)
Total		$	—	$	(4,887	)	$	(4,887	)
December 31, 2014		Asset Derivatives		Liability Derivatives			Net Total
Instrument	Balance Sheet Location
Swaps	Other current liabilities	$	—	$	(5,062	)	$	(5,062	)
Swaps	Other deferred credits		—		(363	)		(363	)
Total		$	—	$	(5,425	)	$	(5,425	)

Paid to and Received from Counterparties for Settlements of Matured Swaps

The following table shows the amounts Southwest paid to and received from counterparties for settlements of matured Swaps.

	Three Months Ended		Nine Months Ended		Twelve Months Ended
(Thousands of dollars)	September 30, 2015		September 30, 2015		September 30, 2015
Paid to counterparties	$	568	$	5,228	$	5,971
Received from counterparties	$	—	$	—	$	120

Regulatory Assets/Liabilities Offsetting Derivatives at Fair Value in Condensed Consolidated Balance Sheets

The following table details the regulatory assets/(liabilities) offsetting the derivatives at fair value in the Condensed Consolidated Balance Sheets (thousands of dollars).

September 30, 2015
Instrument	Balance Sheet Location	Net Total
Swaps	Prepaids and other current assets	$	3,425
Swaps	Deferred charges and other assets		1,462
December 31, 2014
Instrument	Balance Sheet Location	Net Total
Swaps	Prepaids and other current assets	$	5,062
Swaps	Deferred charges and other assets		363

Significant Other Observable Inputs

The following table sets forth by level within the three-level fair value hierarchy that ranks the inputs used to measure fair value by their reliability, the Company’s financial assets and liabilities that were accounted for at fair value:

Level 2—Significant other observable inputs
(Thousands of dollars)	September 30, 2015			December 31, 2014
Liabilities at fair value:
Other current liabilities—Swaps	$	(3,425	)	$	(5,062	)
Other deferred credits—Swaps		(1,462	)		(363	)
Net Assets (Liabilities)	$	(4,887	)	$	(5,425	)