XML 34 R22.htm IDEA: XBRL DOCUMENT
v3.21.2

DERIVATIVE INSTRUMENTS | 9 Months Ended
--- | ---
Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS We use derivatives as part of our risk management program to manage the risks associated with the price volatility of interest rates, purchased power, generation, and natural gas costs for the benefit of our customers and shareholders. Our approach is non-speculative and designed to mitigate risk. Regulated hedging programs are approved by our state regulators. We record derivative instruments on our balance sheets as an asset or liability measured at fair value unless they qualify for the normal purchases and sales exception and are so designated. We continually assess our contracts designated as normal and will discontinue the treatment of these contracts as normal if the required criteria are no longer met. Changes in the derivative's fair value are recognized currently in earnings unless specific hedge accounting criteria are met or we receive regulatory treatment for the derivative. For most energy-related physical and financial contracts in our regulated operations that qualify as derivatives, our regulators allow the effects of fair value accounting to be offset to regulatory assets and liabilities. None of our derivatives are designated as hedging instruments, with the exception of our interest rate swaps, which have been designated as cash flow hedges. On our balance sheets, we classify derivative assets and liabilities as current or long-term based on the maturities of the underlying contracts. Derivative assets and liabilities not shown separately on our balance sheets are included in the other current and other long-term line items. The following table shows our derivative assets and derivative liabilities.
|  | September 30, 2021 |  | December 31, 2020
(in millions) |  | Derivative Assets |  | Derivative Liabilities |  | Derivative Assets |  | Derivative Liabilities
Current |  |  |  |  |  |  |  |
Natural gas contracts |  | $ | 204.7 |  |  | $ | 20.6 |  |  | $ | 13.0 |  |  | $ | 12.9 |
FTRs |  | 3.7 |  |  | — |  |  | 2.4 |  |  | — |
Coal contracts |  | 38.7 |  |  | — |  |  | 1.6 |  |  | 0.8 |
Interest rate swaps |  | — |  |  | 1.7 |  |  | — |  |  | 6.8 |
Total current |  | 247.1 |  |  | 22.3 |  |  | 17.0 |  |  | 20.5 |
Long-term |  |  |  |  |  |  |  |
Natural gas contracts |  | 17.5 |  |  | — |  |  | 0.7 |  |  | 1.2 |
Coal contracts |  | 5.5 |  |  | — |  |  | 0.2 |  |  | 0.4 |
Total long-term |  | 23.0 |  |  | — |  |  | 0.9 |  |  | 1.6 |
Total |  | $ | 270.1 |  |  | $ | 22.3 |  |  | $ | 17.9 |  |  | $ | 22.1 |
Realized gains (losses) on derivatives not designated as hedging instruments are primarily recorded in cost of sales on the income statements. Our estimated notional sales volumes and realized gains (losses) were as follows:
|  | Three Months Ended September 30, 2021 |  | Three Months Ended September 30, 2020
(in millions) |  | Volumes |  | Gains |  | Volumes |  | Gains (Losses)
Natural gas contracts |  | 39.4 Dth |  | $ | 41.2 |  |  | 36.2 Dth |  | $ | (12.0) |
FTRs |  | 6.3 MWh |  | 3.0 |  |  | 8.3 MWh |  | 1.1 |
Total |  |  |  | $ | 44.2 |  |  |  |  | $ | (10.9) |
|  | Nine Months Ended September 30, 2021 |  | Nine Months Ended September 30, 2020
(in millions) |  | Volumes |  | Gains |  | Volumes |  | Gains (Losses)
Natural gas contracts |  | 147.1 Dth |  | $ | 38.5 |  |  | 139.3 Dth |  | $ | (53.9) |
FTRs |  | 22.1 MWh |  | 15.3 |  |  | 22.7 MWh |  | 3.1 |
Total |  |  |  | $ | 53.8 |  |  |  |  | $ | (50.8) |
On our balance sheets, the amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are not offset against the fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement. At September 30, 2021 and December 31, 2020, we had posted cash collateral of $10.5 million and $18.9 million, respectively. These amounts were recorded on our balance sheets in other current assets. At September 30, 2021, we had also received cash collateral of $134.1 million. This amount was recorded on our balance sheet in other current liabilities. The following table shows derivative assets and derivative liabilities if derivative instruments by counterparty were presented net on our balance sheets:
|  | September 30, 2021 |  | December 31, 2020
(in millions) |  | Derivative Assets |  | Derivative Liabilities |  | Derivative Assets |  | Derivative Liabilities |
Gross amount recognized on the balance sheet |  | $ | 270.1 |  |  | $ | 22.3 |  |  | $ | 17.9 |  |  | $ | 22.1 |  |
Gross amount not offset on the balance sheet |  | (134.9) |  | (1) | (1.3) |  |  | (6.9) |  |  | (7.7) |  | (2)
Net amount |  | $ | 135.2 |  |  | $ | 21.0 |  |  | $ | 11.0 |  |  | $ | 14.4 |  |
(1)Includes cash collateral received of $133.6 million. (2)Includes cash collateral posted of $0.8 million. Cash Flow Hedges As of September 30, 2021, we had two interest rate swaps with a combined notional value of $250.0 million to hedge the variable interest rate risk associated with our 2007 Junior Notes. The swaps provide a fixed interest rate of 4.9765% on $250.0 million of the $500.0 million of outstanding 2007 Junior Notes through November 15, 2021. As these swaps qualify for cash flow hedge accounting treatment, the related gains and losses are being deferred in accumulated other comprehensive loss and are being amortized to interest expense as interest is accrued on the 2007 Junior Notes. We previously entered into forward interest rate swap agreements to mitigate the interest rate exposure associated with the issuance of long-term debt related to the acquisition of Integrys. These swap agreements were settled in 2015, and we continue to amortize amounts out of accumulated other comprehensive loss into interest expense over the periods in which the interest costs are recognized in earnings. The table below shows the amounts related to these cash flow hedges recorded in other comprehensive income (loss) and in earnings, along with our total interest expense on the income statements:
|  | Three Months Ended September 30 |  | Nine Months Ended September 30
(in millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Derivative loss recognized in other comprehensive loss |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (5.8) |
Net derivative loss reclassified from accumulated other comprehensive loss to interest expense |  | (1.4) |  |  | (1.3) |  |  | (4.1) |  |  | (2.0) |
Total interest expense line item on the income statements |  | 118.0 |  |  | 122.0 |  |  | 357.5 |  |  | 375.8 |
We estimate that during the next twelve months $0.4 million will be reclassified from accumulated other comprehensive loss as an increase to interest expense.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration