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Price Risk Management (Notes) | 9 Months Ended
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Sep. 30, 2013
Price Risk Management Note [Abstract] |
Price Risk Management | PRICE RISK MANAGEMENT PGE participates in the wholesale marketplace in order to balance its supply of power, which consists of its own generation combined with wholesale market transactions, to meet the needs of its retail customers, manage risk, and administer its existing long-term wholesale contracts. Such activities include fuel and power purchases and sales resulting from economic dispatch decisions for Company-owned generation. As a result, PGE is exposed to commodity price risk and foreign currency exchange rate risk, from which changes in prices and/or rates may affect the Company’s financial position, results of operations, or cash flows. PGE utilizes derivative instruments to manage its exposure to commodity price risk and foreign currency exchange rate risk in order to reduce volatility in net power costs for its retail customers. These derivative instruments may include forwards, futures, swaps, and option contracts for electricity, natural gas, oil, and foreign currency, which are recorded at fair value on the condensed consolidated balance sheets, with changes in fair value recorded in the condensed consolidated statements of income. In accordance with the ratemaking and cost recovery process authorized by the OPUC, PGE recognizes a regulatory asset or liability to defer the gains and losses from derivative instruments until realized. This accounting treatment defers the fair value gains and losses on derivative instruments until settlement of the associated derivative instrument. PGE may designate certain derivative instruments as cash flow hedges or may use derivative instruments as purely economic hedges. The Company does not engage in trading activities for non-retail purposes. PGE’s Assets and Liabilities from price risk management activities consist of the following (in millions):
| September 30, 2013 |  | December 31, 2012 |
Current assets: |  |  |  |
Commodity contracts: |  |  |  |
Electricity | $ | — |  |  | $ | 1 |  |
Natural gas | 1 |  |  | 3 |  |
Total current derivative assets | 1 |  | (1) | 4 |  | (1)
Noncurrent assets: |  |  |  |
Commodity contracts—Natural gas | — |  | (2) | 2 |  | (2)
Total derivative assets not designated as hedging instruments | $ | 1 |  |  | $ | 6 |  |
Total derivative assets | $ | 1 |  |  | $ | 6 |  |
Current liabilities: |  |  |  |
Commodity contracts: |  |  |  |
Electricity | $ | 42 |  |  | $ | 44 |  |
Natural gas | 47 |  |  | 83 |  |
Total current derivative liabilities | 89 |  |  | 127 |  |
Noncurrent liabilities: |  |  |  |
Commodity contracts: |  |  |  |
Electricity | 36 |  |  | 38 |  |
Natural gas | 35 |  |  | 35 |  |
Total noncurrent derivative liabilities | 71 |  |  | 73 |  |
Total derivative liabilities not designated as hedging instruments | $ | 160 |  |  | $ | 200 |  |
Total derivative liabilities | $ | 160 |  |  | $ | 200 |  |
(1) | Included in Other current assets on the condensed consolidated balance sheets.
(2) | Included in Other noncurrent assets on the condensed consolidated balance sheets.
PGE’s net volumes related to its Assets and Liabilities from price risk management activities resulting from its derivative transactions, which are expected to deliver or settle through 2017, were as follows (in millions):
| September 30, 2013 |  | December 31, 2012
Commodity contracts: |  |  |  |  |
Electricity | 12 |  | MWh |  | 11 |  | MWh
Natural gas | 104 |  | Decatherms |  | 86 |  | Decatherms
Oil | (1 | ) | Gallons |  | — |  | Gallons
Foreign currency | $ | 7 |  | Canadian |  | $ | 7 |  | Canadian
PGE has elected to report gross on the balance sheet the positive and negative exposures resulting from derivative instruments with counterparties under agreements that meet the definition of a master netting arrangement. In the case of default on, or termination of, any contract under the master netting arrangements, these agreements provide for the net settlement of all related contractual obligations with a counterparty through a single payment. These types of transactions may include non-derivative instruments, derivatives qualifying for scope exceptions, receivables and payables arising from settled positions, and other forms of non-cash collateral, such as letters of credit, which are excluded from the offsetting table presented below. Information related to Price risk management liabilities subject to master netting agreements is as follows (in millions):
|  |  |  |  |  |  |  | Gross Amounts Not Offset in |  |
|  | Gross |  | Gross |  | Net |  | Condensed Consolidated |  |
|  | Amounts |  | Amounts |  | Amounts |  | Balance Sheets |  |
|  | Recognized |  | Offset |  | Presented |  | Derivatives |  | Cash Collateral(1) |  | Net Amount
As of September 30, 2013: |  |  |  |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts: |  |  |  |  |  |  |  |  |  |  |  |
Electricity(2) |  | $ | 14 |  |  | $ | — |  |  | $ | 14 |  |  | $ | (14 | ) |  | $ | — |  |  | $ | — |
Natural gas(2) |  | 3 |  |  | — |  |  | 3 |  |  | (3 | ) |  | — |  |  | — |
|  | $ | 17 |  |  | $ | — |  |  | $ | 17 |  |  | $ | (17 | ) |  | $ | — |  |  | $ | — |
As of December 31, 2012: |  |  |  |  |  |  |  |  |  |  |  |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Commodity contracts: |  |  |  |  |  |  |  |  |  |  |  |
Electricity(2) |  | $ | 20 |  |  | $ | — |  |  | $ | 20 |  |  | $ | (20 | ) |  | $ | — |  |  | $ | — |
Natural gas(2) |  | 7 |  |  | — |  |  | 7 |  |  | (7 | ) |  | — |  |  | — |
|  | $ | 27 |  |  | $ | — |  |  | $ | 27 |  |  | $ | (27 | ) |  | $ | — |  |  | $ | — |
(1) | As of September 30, 2013 and December 31, 2012, the Company had collateral posted of $6 million and $18 million, respectively, which consists entirely of letters of credit.
(2) | Included in Liabilities from price risk management activities—current and Liabilities from price risk management activities—noncurrent.
Net realized and unrealized (gains) losses on derivative transactions not designated as hedging instruments are recorded in Purchased power and fuel in the condensed consolidated statements of income and were as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2013 |  | 2012 |  | 2013 |  | 2012
Commodity contracts: |  |  |  |  |  |  |
Electricity | $ | (1 | ) |  | $ | (3 | ) |  | $ | 17 |  |  | $ | 40 |
Natural Gas | 10 |  |  | (19 | ) |  | 30 |  |  | 6 |
Net unrealized and certain net realized (gains) losses presented in the table above are offset within the condensed consolidated statements of income by the effects of regulatory accounting. Of the net (gains) losses recognized in Net income for the three months ended September 30, 2013 and 2012, net losses of $7 million and net gains of $30 million, respectively, have been offset, with net losses of $66 million and $14 million offset for the nine months ended September 30, 2013 and 2012, respectively. Assuming no changes in market prices and interest rates, the following table indicates the year in which the net unrealized loss recorded as of September 30, 2013 related to PGE’s derivative activities would become realized as a result of the settlement of the underlying derivative instrument (in millions):
| 2013 |  | 2014 |  | 2015 |  | 2016 |  | 2017 |  | Total
Commodity contracts: |  |  |  |  |  |  |  |  |  |  |
Electricity | $ | 8 |  |  | $ | 40 |  |  | $ | 23 |  |  | $ | 7 |  |  | $ | — |  |  | $ | 78 |
Natural gas | 21 |  |  | 34 |  |  | 11 |  |  | 11 |  |  | 4 |  |  | 81 |
Net unrealized loss | $ | 29 |  |  | $ | 74 |  |  | $ | 34 |  |  | $ | 18 |  |  | $ | 4 |  |  | $ | 159 |
PGE’s secured and unsecured debt is currently rated at investment grade by Moody’s Investors Service (Moody’s) and Standard and Poor’s Ratings Services (S&P). Should Moody’s and/or S&P reduce their rating on PGE’s unsecured debt to below investment grade, the Company could be subject to requests by certain wholesale counterparties to post additional performance assurance collateral, in the form of cash or letters of credit, based on total portfolio positions with each of those counterparties. Certain other counterparties would have the right to terminate their agreements with the Company. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that were in a liability position as of September 30, 2013 was $138 million, for which PGE has posted $26 million in collateral, consisting entirely of letters of credit. If the credit-risk-related contingent features underlying these agreements were triggered at September 30, 2013, the cash requirement to either post as collateral or settle the instruments immediately would have been $138 million. As of September 30, 2013, PGE has posted an additional $36 million in cash collateral which is classified as Margin deposits on the Company’s condensed consolidated balance sheet, for derivative instruments with no credit-risk related contingent features. Counterparties representing 10% or more of Assets and Liabilities from price risk management activities as of September 30, 2013 or December 31, 2012 were as follows:
| September 30, 2013 |  | December 31, 2012
Assets from price risk management activities: |  |  |
Counterparty A | 21 | % |  | — | %
Counterparty B | 14 |  |  | — |
Counterparty C | 11 |  |  | — |
Counterparty D | 9 |  |  | 21 |
Counterparty E | 4 |  |  | 11 |
Counterparty F | 1 |  |  | 13 |
Counterparty G | — |  |  | 10 |
| 60 | % |  | 55 | %
Liabilities from price risk management activities: |  |  |
Counterparty H | 16 | % |  | — | %
Counterparty I | 14 |  |  | 24 |
Counterparty A | 10 |  |  | 14 |
Counterparty E | 10 |  |  | 8 |
Counterparty J | 9 |  |  | 10 |
| 59 | % |  | 56 | %
See Note 3 for additional information concerning the determination of fair value for the Company’s Assets and Liabilities from price risk management activities.

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- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708775-113959 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624163-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5708773-113959 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41635-113959 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624258-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5618551-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80748-113994 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624181-113959 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7668309&loc=d3e80784-113994 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41620-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624177-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579245-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5580258-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5579240-113959 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41641-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7476318&loc=d3e41638-113959 Reference 20: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=7476318&loc=SL5624171-113959 + Details
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