Derivatives and Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2018

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):

	March 31, 2018		December 31, 2017
Contract notional amounts		11,391		10,929

Amount of Gain or Losses Recognized in Income on Derivatives

The following table sets forth the gains and (losses) recognized on the Swaps (derivatives) for the three- and twelve-month periods ended March 31, 2018 and 2017 and their location in the Condensed Consolidated Statements of Income for both the Company and Southwest:

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

(Thousands of dollars)
		Three Months Ended						Twelve Months Ended
	Location of Gain or (Loss) Recognized in Income on Derivative	March 31						March 31
Instrument		2018			2017			2018			2017
Swaps	Net cost of gas sold	$	(5,196	)	$	(5,137	)	$	(11,631	)	$	1,081
Swaps	Net cost of gas sold		5,196	*		5,137	*		11,631	*		(1,081	)*
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 Condensed Consolidated Balance Sheets for both the Company and Southwest (thousands of dollars):

Fair values of derivatives not designated as hedging instruments:

March 31, 2018 Instrument	Balance Sheet Location	Asset Derivatives		Liability Derivatives			Net Total
Swaps	Other current liabilities	$	11	$	(5,875	)	$	(5,864	)
Swaps	Other deferred credits		—		(2,397	)		(2,397	)
Total		$	11	$	(8,272	)	$	(8,261	)
December 31, 2017 Instrument	Balance Sheet Location	Asset Derivatives		Liability Derivatives			Net Total
Swaps	Other current liabilities	$	11	$	(4,468	)	$	(4,457	)
Swaps	Other deferred credits		19		(1,342	)		(1,323	)
Total		$	30	$	(5,810	)	$	(5,780	)

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		Twelve Months Ended
(Thousands of dollars)	March 31, 2018		March 31, 2018
Paid to counterparties	$	2,715	$	4,514

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 for both the Company and Southwest (thousands of dollars).

March 31, 2018 Instrument	Balance Sheet Location	Net Total
Swaps	Prepaids and other current assets	$	5,864
Swaps	Deferred charges and other assets		2,397
December 31, 2017 Instrument	Balance Sheet Location	Net Total
Swaps	Prepaids and other current assets	$	4,457
Swaps	Deferred charges and other assets		1,323

Summary of Financial Assets and Liabilities at Fair Value

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 financial assets and liabilities that were accounted for at fair value by both the Company and Southwest:

Level 2 - Significant other observable inputs

(Thousands of dollars)	March 31, 2018			December 31, 2017
Liabilities at fair value:
Other current liabilities - Swaps	$	(5,864	)	$	(4,457	)
Other deferred credits - Swaps		(2,397	)		(1,323	)
Net Assets (Liabilities)	$	(8,261	)	$	(5,780	)