XML 89 R12.htm IDEA: XBRL DOCUMENT v3.20.4
FAIR VALUE MEASUREMENTS (Notes)
 12 Months Ended
Dec. 31, 2020
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements - The following tables set forth our recurring fair value measurements for the periods indicated:
 December 31, 2020
 Level 1Level 2Level 3Total - GrossNetting (a)Total - Net
 
(Thousands of dollars)
Derivative assets      
Commodity contracts
Financial contracts$6,697 $— $103,801 $110,498 $(110,498)$— 
Total derivative assets$6,697 $— $103,801 $110,498 $(110,498)$— 
Derivative liabilities
Commodity contracts
Financial contracts$(10,489)$— $(135,122)$(145,611)$145,611 $— 
Interest-rate contracts— (203,407)— (203,407)— (203,407)
Total derivative liabilities$(10,489)$(203,407)$(135,122)$(349,018)$145,611 $(203,407)
(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At December 31, 2020, we held no cash and posted $63.1 million of cash with various counterparties, including $35.1 million of cash collateral that is offsetting derivative net liability positions under master-netting arrangements in the table above. The remaining $28.0 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheet.

 December 31, 2019
 Level 1Level 2Level 3Total - GrossNetting (a)Total - Net
 
(Thousands of dollars)
Derivative assets      
Commodity contracts
Financial contracts$10,892 $— $55,557 $66,449 $(28,588)$37,861 
Interest-rate contracts— 581 — 581 — 581 
Total derivative assets$10,892 $581 $55,557 $67,030 $(28,588)$38,442 
Derivative liabilities
      
Commodity contracts
Financial contracts$(4,811)$— $(24,785)$(29,596)$28,588 $(1,008)
Interest-rate contracts— (201,941)— (201,941)— (201,941)
Total derivative liabilities$(4,811)$(201,941)$(24,785)$(231,537)$28,588 $(202,949)
(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At December 31, 2019, we held no cash and posted $8.8 million of cash with various counterparties, which is included in other current assets in our Consolidated Balance Sheet.

The following table sets forth a reconciliation of our Level 3 fair value measurements for the periods indicated:
 Years Ended
December 31,
Derivative Assets (Liabilities)20202019
 
(Thousands of dollars)
Net assets at beginning of period$30,772 $40,484 
Total changes in fair value:
Settlements included in net income (a)(31,660)(40,344)
New Level 3 derivatives included in other comprehensive loss (b)(36,568)30,627 
Unrealized change included in other comprehensive loss (b)6,135 5 
Net assets (liabilities) at end of period$(31,321)$30,772 
(a) - Included in commodity sales revenues/cost of sales and fuel in our Consolidated Statements of Income.
(b) - Included in change in fair value of derivatives in our Consolidated Statements of Comprehensive Income.
During the years ended December 31, 2020 and 2019, there were no transfers in or out of Level 3 of the fair value hierarchy.

Other Financial Instruments - The approximate fair value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings is equal to book value due to the short-term nature of these items. Our cash and cash equivalents are composed of bank and money market accounts and are classified as Level 1. Our short-term borrowings are classified as Level 2 since the estimated fair value of the short-term borrowings can be determined using information available in the commercial paper market.

The estimated fair value of our consolidated long-term debt, including current maturities, was $16.3 billion and $13.8 billion at December 31, 2020 and 2019, respectively. The book value of our consolidated long-term debt, including current maturities, was $14.2 billion and $12.5 billion at December 31, 2020 and 2019, respectively. The estimated fair value of the aggregate senior notes outstanding was determined using quoted market prices for similar issues with similar terms and maturities. The estimated fair value of our consolidated long-term debt is classified as Level 2.

Nonrecurring Fair Value Measurements - In 2020, we incurred noncash impairment charges for certain long-lived assets and equity investments. The valuation of these assets and investments required the use of significant unobservable inputs. To estimate the fair value, we used two generally accepted valuation approaches, an income approach and a market approach. Under the income approach, our discounted cash flow analysis included the following inputs that are not readily available: a discount rate reflective of industry cost of capital, our estimated contract rates, volumes, operating margins, operating and maintenance costs and capital expenditures. Under the market approach, our inputs included EBITDA multiples, which were estimated from recent peer acquisition transactions, and forecasted EBITDA, which incorporates inputs similar to those used under the income approach. The estimated fair value of these assets is classified as Level 3. See Note A for additional information about our impairment charges.