XML 43 R25.htm IDEA: XBRL DOCUMENT
v3.23.2

DERIVATIVES | 6 Months Ended
--- | ---
Jun. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES | DERIVATIVES Use of Derivative Instruments The Utility is exposed to commodity price risk as a result of its electricity and natural gas procurement activities. Procurement costs are recovered through rates. The Utility uses both derivative and non-derivative contracts to manage volatility in customer rates due to fluctuating commodity prices. Derivatives include contracts, such as power purchase agreements, forwards, futures, swaps, options, and CRRs that are traded either on an exchange or over-the-counter. Derivatives are presented in the Utility’s Condensed Consolidated Balance Sheets and recorded at fair value and on a net basis in accordance with master netting arrangements for each counterparty. The fair value of derivative instruments is further offset by cash collateral paid or received where the right of offset and the intention to offset exist. Price risk management activities that meet the definition of derivatives are recorded at fair value on the Condensed Consolidated Balance Sheets. These instruments are not held for speculative purposes and are subject to certain regulatory requirements. The Utility expects to fully recover through rates all costs related to derivatives under the applicable ratemaking mechanism in place as long as the Utility’s price risk management activities are carried out in accordance with CPUC directives. Therefore, all unrealized gains and losses associated with the change in fair value of these derivatives are deferred and recorded within the Utility’s regulatory assets and liabilities on the Condensed Consolidated Balance Sheets. Net realized gains or losses on commodity derivatives are recorded in the cost of electricity or the cost of natural gas with corresponding increases or decreases to regulatory balancing accounts for recovery from or refund to customers. The Utility elects the normal purchase and sale exception for eligible derivatives. Eligible derivatives are those that require physical delivery in quantities that are expected to be used by the Utility over a reasonable period in the normal course of business, and do not contain pricing provisions unrelated to the commodity delivered. These items are not reflected in the Condensed Consolidated Balance Sheets at fair value. Volume of Derivative Activity The volumes of the Utility’s outstanding derivatives were as follows:
|  |  |  | Contract Volume at
Underlying Product |  | Instruments |  | June 30, 2023 |  | December 31, 2022
Natural Gas (1) (MMBtus (2)) |  | Forwards, Futures and Swaps |  | 246,078,190 |  |  | 171,212,813 |
|  | Options |  | 44,745,000 |  |  | 27,785,000 |
Electricity (MWh) |  | Forwards, Futures and Swaps |  | 9,389,471 |  |  | 10,814,728 |
|  | Options |  | 277,200 |  |  | 215,600 |
|  | Congestion Revenue Rights (3) |  | 180,123,433 |  |  | 205,743,505 |
(1) Amounts shown are for the combined positions of the electric fuels and core gas supply portfolios. (2) Million British Thermal Units. (3) CRRs are financial instruments that enable the holders to manage variability in electric energy congestion charges due to transmission grid limitations. Presentation of Derivative Instruments in the Financial Statements As of June 30, 2023, the Utility’s outstanding derivative balances were as follows:
| Commodity Risk
(in millions) | Gross Derivative Balance |  | Netting |  | Cash Collateral |  | Total Derivative Balance
Current assets – other | $ | 147 |  |  | $ | (11) |  |  | $ | 31 |  |  | $ | 167 |
Other noncurrent assets – other | 239 |  |  | — |  |  | — |  |  | 239 |
Current liabilities – other | (80) |  |  | 11 |  |  | 16 |  |  | (53) |
Noncurrent liabilities – other | (164) |  |  | — |  |  | 1 |  |  | (163) |
Total commodity risk | $ | 142 |  |  | $ | — |  |  | $ | 48 |  |  | $ | 190 |
As of December 31, 2022, the Utility’s outstanding derivative balances were as follows:
| Commodity Risk
(in millions) | Gross Derivative Balance |  | Netting |  | Cash Collateral |  | Total Derivative Balance
Current assets – other | $ | 824 |  |  | $ | (170) |  |  | $ | 537 |  |  | $ | 1,191 |
Other noncurrent assets – other | 306 |  |  | — |  |  | — |  |  | 306 |
Current liabilities – other | (238) |  |  | 170 |  |  | 16 |  |  | (52) |
Noncurrent liabilities – other | (177) |  |  | — |  |  | — |  |  | (177) |
Total commodity risk | $ | 715 |  |  | $ | — |  |  | $ | 553 |  |  | $ | 1,268 |
Cash inflows and outflows associated with derivatives are included in operating cash flows on the Utility’s Condensed Consolidated Statements of Cash Flows. Some of the Utility’s derivative instruments, including power purchase agreements, contain collateral posting provisions tied to the Utility’s credit rating from each of the major credit rating agencies, also known as a credit-risk-related contingent feature. Multiple credit agencies continue to rate the Utility below investment grade, which results in the Utility posting additional collateral. As of June 30, 2023, the Utility satisfied or has otherwise addressed its obligations related to the credit-risk related contingency features.

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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration