Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Gross Notional Amounts of Commodity FTRs

The following table details the gross notional amounts of commodity FTRs at June 30, 2017 and Dec. 31, 2016:

(Amounts in Thousands) (a)	June 30, 2017	Dec. 31, 2016
Megawatt hours of electricity	9,326	2,685

^(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, 2017:

	June 30, 2017
	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	$	—	$	—	$	32,492	$	32,492	$	(3,827	)	$	28,665
Total current derivative assets	$	—	$	—	$	32,492	$	32,492	$	(3,827	)	28,665
PPAs (a)												3,159
Current derivative instruments												$	31,824
Noncurrent derivative assets
PPAs (a)												$	20,533
Noncurrent derivative instruments												$	20,533
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	3,827	$	3,827	$	(3,827	)	$	—
Total current derivative liabilities	$	—	$	—	$	3,827	$	3,827	$	(3,827	)	—
PPAs (a)												3,565
Current derivative instruments												$	3,565
Noncurrent derivative liabilities
PPAs (a)												$	21,731
Noncurrent derivative instruments												$	21,731

^(a) 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, 2017. At June 30, 2017, 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, 2016:

	Dec. 31, 2016
	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	$	—	$	—	$	3,254	$	3,254	$	(1,299	)	$	1,955
Total current derivative assets	$	—	$	—	$	3,254	$	3,254	$	(1,299	)	1,955
PPAs (a)												3,159
Current derivative instruments												$	5,114
Noncurrent derivative assets
PPAs (a)												$	22,113
Noncurrent derivative instruments												$	22,113
Current derivative liabilities
Other derivative instruments:
Electric commodity	$	—	$	—	$	1,299	$	1,299	$	(1,299	)	$	—
Total current derivative liabilities	$	—	$	—	$	1,299	$	1,299	$	(1,299	)	—
PPAs (a)												3,565
Current derivative instruments												$	3,565
Noncurrent derivative liabilities
PPAs (a)												$	23,513
Noncurrent derivative instruments												$	23,513

^(a)  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, 2016. At Dec. 31, 2016, 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 three and six months ended June 30, 2017 and 2016:

	Three Months Ended June 30
(Thousands of Dollars)	2017			2016
Balance at April 1	$	1,192		$	1,730
Purchases	35,822			1,956
Settlements	(14,098		)	(7,130		)
Net transactions recorded during the period:
Net gains recognized as regulatory assets and liabilities	5,749			4,514
Balance at June 30	$	28,665		$	1,070

	Six Months Ended June 30
(Thousands of Dollars)	2017			2016
Balance at Jan. 1	$	1,955		$	5,060
Purchases	39,333			3,800
Settlements	(30,498		)	(14,122		)
Net transactions recorded during the period:
Net gains recognized as regulatory assets and liabilities	17,875			6,332
Balance at June 30	$	28,665		$	1,070

Carrying Amount and Fair Value of Long-term Debt

As of June 30, 2017 and Dec. 31, 2016, other financial instruments for which the carrying amount did not equal fair value were as follows:

	June 30, 2017				Dec. 31, 2016
(Thousands of Dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current portion	$	1,636,478	$	1,777,264	$	1,635,858	$	1,741,502