XML 62 R35.htm IDEA: XBRL DOCUMENT v2.4.1.9
Fair Value of Financial Assets and Liabilities (Tables)
 12 Months Ended
Dec. 31, 2014
Fair Value Disclosures [Abstract]  
Gross Notional Amounts of Commodity FTRs
The following table details the gross notional amounts of commodity FTRs at Dec. 31, 2014 and 2013:
(Amounts in Thousands) (a)
 
Dec. 31, 2014
 
Dec. 31, 2013
MWh of electricity
 
6,930

 
5,989


(a)
Amounts are not reflective of net positions in the underlying commodities.
Financial Impact of Qualifying Cash Flow Hedges on Accumulated Other Comprehensive Loss
Financial Impact of Qualifying Cash Flow Hedges — The impact of qualifying interest rate cash flow hedges on SPS’ accumulated other comprehensive loss, included in the statements of common stockholder’s equity and in the statements of comprehensive income, is detailed in the following table:
(Thousands of Dollars)
 
2014
 
2013
 
2012
Accumulated other comprehensive loss related to cash flow hedges at Jan. 1
 
$
(1,161
)
 
$
(1,332
)
 
$
(1,504
)
After-tax net realized losses on derivative transactions reclassified into earnings
 
172

 
171

 
172

Accumulated other comprehensive loss related to cash flow hedges at Dec. 31
 
$
(989
)
 
$
(1,161
)
 
$
(1,332
)
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 Dec. 31, 2014:
 
 
Dec. 31, 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
 
$
—

 
$
—

 
$
25,774

 
$
25,774

 
$
(9,890
)
 
$
15,884

Total current derivative assets
 
$
—

 
$
—

 
$
25,774

 
$
25,774

 
$
(9,890
)
 
15,884

PPAs (a)
 
 
 
 
 
 
 
 
 
 
 
7,892

Current derivative instruments
 
 
 
 
 
 
 
 
 
 
 
$
23,776

Noncurrent derivative assets
 
 
 
 
 
 
 
 
 
 
 
 
PPAs (a)
 
 
 
 
 
 
 
 
 
 
 
$
33,164

Noncurrent derivative instruments
 
 
 
 
 
 
 
 
 
 
 
$
33,164

Current derivative liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Other derivative instruments:
 
 
 
 
 
 
 
 
 
 
 
 
Electric commodity
 
$
—

 
$
—

 
$
9,890

 
$
9,890

 
$
(9,890
)
 
$
—

Total current derivative liabilities
 
$
—

 
$
—

 
$
9,890

 
$
9,890

 
$
(9,890
)
 
—

PPAs (a)
 
 
 
 
 
 
 
 
 
 
 
3,565

Current derivative instruments
 
 
 
 
 
 
 
 
 
 
 
$
3,565

Noncurrent derivative liabilities
 
 
 
 
 
 
 
 
 
 
 
 
PPAs (a)
 
 
 
 
 
 
 
 
 
 
 
$
30,643

Noncurrent derivative instruments
 
 
 
 
 
 
 
 
 
 
 
$
30,643


(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 consolidated 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, 2014. At Dec. 31, 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 consolidated 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 table presents the changes in Level 3 commodity derivatives for the years ended Dec. 31, 2014 and 2013:
 
 
Year Ended Dec. 31
(Thousands of Dollars)
 
2014
 
2013
Balance at Jan. 1
 
$
9,933

 
$
—

Purchases
 
50,244

 
9,933

Settlements
 
(44,283
)
 
—

Net transactions recorded during the period:
 


 
 
Losses recognized as regulatory assets
 
(10
)
 
—

Balance at Dec. 31
 
$
15,884

 
$
9,933
Carrying Amount and Fair Value of Long-term Debt
As of Dec. 31, 2014 and 2013, other financial instruments for which the carrying amount did not equal fair value were as follows:
 
 
2014
 
2013
(Thousands of Dollars)
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
Long-term debt, including current portion
 
$
1,349,691

 
$
1,572,414

 
$
1,199,865

 
$
1,307,035