Derivatives and Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [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):

	December 31, 2016		December 31, 2015
Contract notional amounts		10,543		7,407

Amount of Gain or Losses Recognized in Income on Derivatives

The following table sets forth the gains and (losses) recognized on Southwest’s Swaps (derivatives) for the years ended December 31, 2016, 2015, and 2014 and their location in the Consolidated Statements of Income:

Gains (losses) recognized in income for derivatives not designated as hedging instruments:

(Thousands of dollars)

Instrument	Location of Gain or (Loss) Recognized in Income on Derivative		2016			2015			2014
Swaps		Net cost of gas sold	$	5,006		$	(7,598	)	$	(2,363	)
Swaps		Net cost of gas sold		(5,006	)*		7,598	*		2,363	*
Total			$	—		$	—		$	—

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

Fair Values of Swaps in Consolidated Balance Sheets

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

Fair values of derivatives not designated as hedging instruments:

December 31, 2016 Instrument	Balance Sheet Location		Asset Derivatives		Liability Derivatives			Net Total
Swaps		Deferred charges and other assets	$	899	$	(54	)	$	845
Swaps		Prepaids and other current assets		3,551		(19	)		3,532
Total			$	4,450	$	(73	)	$	4,377
December 31, 2015 Instrument	Balance Sheet Location		Asset Derivatives		Liability Derivatives			Net Total
Swaps		Other current liabilities	$	—	$	(4,267	)	$	(4,267	)
Swaps		Other deferred credits		4		(1,223	)		(1,219	)
Total			$	4	$	(5,490	)	$	(5,486	)

Paid to and Received from Counterparties for Settlements of Matured Swaps

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

	Year ended December 31, 2016		Year ended December 31, 2015		Year ended December 31, 2014
(Thousands of dollars)
Paid to counterparties	$	5,583	$	7,537	$	829
Received from counterparties	$	726	$	—	$	4,713

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 Consolidated Balance Sheets (thousands of dollars).

December 31, 2016 Instrument	Balance Sheet Location	Net Total
Swaps	Other deferred credits	$	(845	)
Swaps	Other current liabilities		(3,532	)
December 31, 2015 Instrument	Balance Sheet Location	Net Total
Swaps	Prepaids and other current assets	$	4,267
Swaps	Deferred charges and other assets		1,219

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, financial assets and liabilities that were accounted for at fair value (see Note 10 – Pension and Other Post Retirement Benefits for definitions of the levels of the fair value hierarchy):

Level 2 – Significant other observable inputs

	December 31, 2016		December 31, 2015
(Thousands of dollars)
Assets at fair value:
Prepaids and other current assets – Swaps	$	3,532	$	—
Deferred charges and other assets – Swaps		845		—
Liabilities at fair value:
Other current liabilities – Swaps		—		(4,267	)
Other deferred credits – Swaps		—		(1,219	)
Net Assets (Liabilities)	$	4,377	$	(5,486	)