Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Gross Notional Amounts of Commodity FTRs

The following table details the gross notional amounts of commodity FTRs at June 30, 2014 and Dec. 31, 2013:

(Amounts in Thousands)(a)	June 30, 2014	Dec. 31, 2013
Megawatt hours of electricity	16,190	5,989

^(a) Amounts are not reflective of net positions in the underlying commodities.

Derivative Assets and Liabilities Measured at Fair Value on a Recurring Basis by Hierarchy Level

Recurring Fair Value Measurements — The following table presents for each of the fair value hierarchy levels, SPS’ derivative assets and liabilities measured at fair value on a recurring basis at June 30, 2014:

	June 30, 2014
	Fair Value						Fair Value Total		Counterparty Netting (b)
(Thousands of Dollars)	Level 1		Level 2		Level 3							Total
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	57,572	$	57,572	$	(23,630	)	$	33,942
Total current derivative assets	$	—	$	—	$	57,572	$	57,572	$	(23,630	)	33,942
PPAs (a)												7,893
Current derivative instruments												$	41,835
Noncurrent derivative assets
PPAs (a)												$	37,110
Noncurrent derivative instruments												$	37,110
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	23,630	$	23,630	$	(23,630	)	$	—
Total current derivative liabilities	$	—	$	—	$	23,630	$	23,630	$	(23,630	)	—
PPAs (a)												3,565
Current derivative instruments												$	3,565
Noncurrent derivative liabilities
PPAs (a)												$	32,425
Noncurrent derivative instruments												$	32,425

^(a) In 2003, as a result of implementing new guidance on the normal purchase exception for derivative accounting, SPS began recording several long-term PPAs at fair value due to accounting requirements related to underlying price adjustments. As these purchases are recovered through normal regulatory recovery mechanisms in the respective jurisdictions, the changes in fair value for these contracts were offset by regulatory assets and liabilities. During 2006, SPS qualified these contracts under the normal purchase exception. Based on this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b) SPS nets derivative instruments and related collateral in its balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at June 30, 2014. At June 30, 2014, derivative assets and liabilities include no obligations to return cash collateral or rights to reclaim cash collateral. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

The following table presents for each of the fair value hierarchy levels, SPS’ derivative assets and liabilities measured at fair value on a recurring basis at Dec. 31, 2013:

	Dec. 31, 2013
	Fair Value						Fair Value Total		Counterparty Netting (b)
(Thousands of Dollars)	Level 1		Level 2		Level 3							Total
Current derivative assets
Other derivative instruments:
Electric commodity	$	—	$	—	$	16,420	$	16,420	$	(6,487	)	$	9,933
Total current derivative assets	$	—	$	—	$	16,420	$	16,420	$	(6,487	)	9,933
PPAs (a)												7,893
Current derivative instruments												$	17,826
Noncurrent derivative assets
PPAs (a)												$	41,056
Noncurrent derivative instruments												$	41,056
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	6,487	$	6,487	$	(6,487	)	$	—
Total current derivative liabilities	$	—	$	—	$	6,487	$	6,487	$	(6,487	)	—
PPAs (a)												3,583
Current derivative instruments												$	3,583
Noncurrent derivative liabilities
PPAs (a)												$	34,207
Noncurrent derivative instruments												$	34,207

^(a)  In 2003, as a result of implementing new guidance on the normal purchase exception for derivative accounting, SPS began recording several long-term PPAs at fair value due to accounting requirements related to underlying price adjustments. As these purchases are recovered through normal regulatory recovery mechanisms in the respective jurisdictions, the changes in fair value for these contracts were offset by regulatory assets and liabilities. During 2006, SPS qualified these contracts under the normal purchase exception. Based on this qualification, the contracts are no longer adjusted to fair value and the previous carrying value of these contracts will be amortized over the remaining contract lives along with the offsetting regulatory assets and liabilities.

^(b)  SPS nets derivative instruments and related collateral in its balance sheet when supported by a legally enforceable master netting agreement, and all derivative instruments and related collateral amounts were subject to master netting agreements at Dec. 31, 2013. At Dec. 31, 2013, derivative assets and liabilities include no obligations to return cash collateral or rights to reclaim cash collateral. The counterparty netting amounts presented exclude settlement receivables and payables and non-derivative amounts that may be subject to the same master netting agreements.

Changes in Level 3 Commodity Derivatives

The following tables present the changes in Level 3 commodity derivatives for the three and six months ended June 30, 2014, and there were no Level 3 commodity derivatives during the three and six months ended June 30, 2013:

(Thousands of Dollars)	Three Months Ended June 30, 2014
Balance at April 1	$	5,791
Purchases	38,419
Settlements	(13,554		)
Net transactions recorded during the period:
Gains recognized as regulatory assets and liabilities	3,286
Balance at June 30	$	33,942

(Thousands of Dollars)	Six Months Ended June 30, 2014
Balance at Jan. 1	$	9,933
Purchases	39,475
Settlements	(14,655		)
Net transactions recorded during the period:
Losses recognized as regulatory assets and liabilities	(811		)
Balance at June 30	$	33,942

Carrying Amount and Fair Value of Long-term Debt

As of June 30, 2014 and Dec. 31, 2013, other financial instruments for which the carrying amount did not equal fair value were as follows:

	June 30, 2014				Dec. 31, 2013
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	1,349,518	$	1,541,197	$	1,199,865	$	1,307,035