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Fair value measurements
 9 Months Ended
Sep. 30, 2012
Fair Value Disclosures [Abstract]  
Fair value measurements
Fair value measurements
The Company measures its investments in certain fixed-income and equity securities at fair value with changes in fair value recognized in income. The Company anticipates using these investments to satisfy its obligations under its unfunded, nonqualified benefit plans for executive officers and certain key management employees, and invests in these fixed-income and equity securities for the purpose of earning investment returns and capital appreciation. These investments, which totaled $48.4 million, $33.6 million and $38.4 million, as of September 30, 2012 and 2011, and December 31, 2011, respectively, are classified as Investments on the Consolidated Balance Sheets. The net unrealized gains on these investments were $2.4 million and $4.7 million for the three and nine months ended September 30, 2012, respectively. The net unrealized losses on these investments were $6.7 million and $5.9 million for the three and nine months ended September 30, 2011, respectively. The change in fair value, which is considered part of the cost of the plan, is classified in operation and maintenance expense on the Consolidated Statements of Income.

The Company did not elect the fair value option, which records gains and losses in income, for its remaining available-for-sale securities, which include auction rate securities, mortgage-backed securities and U.S. Treasury securities. These available-for-sale securities are recorded at fair value and are classified as Investments on the Consolidated Balance Sheets. The Company's auction rate securities approximated cost and, as a result, there were no accumulated unrealized gains or losses recorded in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets related to these investments. In the second quarter of 2012, the Company sold its auction rate securities at cost and did not realize any gains or losses. Unrealized gains or losses on mortgage-backed securities and U.S. Treasury securities are recorded in accumulated other comprehensive income (loss). Details of available-for-sale securities were as follows:
September 30, 2012
Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
 
(In thousands)
Insurance investment contract
$
37,250

$
11,134

$
—

$
48,384

Mortgage-backed securities
8,391

175

(2
)
8,564

U.S. Treasury securities
1,758

47

—

1,805

Total
$
47,399

$
11,356

$
(2
)
$
58,753

December 31, 2011
Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
 
(In thousands)
Insurance investment contract
$
31,884

$
6,468

$
—

$
38,352

Auction rate securities
11,400

—

—

11,400

Mortgage-backed securities
8,206

95

(5
)
8,296

U.S. Treasury securities
1,619

37

—

1,656

Total
$
53,109

$
6,600

$
(5
)
$
59,704



The fair value of the Company's money market funds approximates cost.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The ASC establishes a hierarchy for grouping assets and liabilities, based on the significance of inputs. The Company's assets and liabilities measured at fair value on a recurring basis are as follows:
 
Fair Value Measurements at
September 30, 2012, Using
 
 
Quoted Prices in
Active Markets
for Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Balance at
September 30,
2012
 
(In thousands)
Assets:
 
 
 
 
Money market funds
$
—

$
21,816

$
—

$
21,816

Available-for-sale securities:
 
 
 
 
Insurance investment contract*
—

48,384

—

48,384

Mortgage-backed securities
—

8,564

—

8,564

U.S. Treasury securities
—

1,805

—

1,805

Commodity derivative instruments
—

22,719

—

22,719

Total assets measured at fair value
$
—

$
103,288

$
—

$
103,288

Liabilities:
 
 
 
 
Commodity derivative instruments
$
—

$
2,155

$
—

$
2,155

Interest rate derivative instruments
—

7,779

—

7,779

Total liabilities measured at fair value
$
—

$
9,934

$
—

$
9,934

*  The insurance investment contract invests approximately 28 percent in common stock of mid-cap companies, 28 percent in common stock of small-cap companies, 29 percent in common stock of large-cap companies and 15 percent in fixed-income and other investments.

 
Fair Value Measurements at
September 30, 2011, Using
 
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Balance at
September 30,
2011
 
(In thousands)
Assets:
 
 
 
 
Money market funds
$
—

$
56,194

$
—

$
56,194

Available-for-sale securities:
 
 
 
 
Insurance investment contract*
—

33,591

—

33,591

Auction rate securities
—

11,400

—

11,400

Mortgage-backed securities
—

8,570

—

8,570

U.S. Treasury securities
—

1,444

—

1,444

Commodity derivative instruments
—

54,369

—

54,369

Total assets measured at fair value
$
—

$
165,568

$
—

$
165,568

Liabilities:
 
 
 
 
Commodity derivative instruments
$
—

$
3,185

$
—

$
3,185

Interest rate derivative instruments
—

3,491

—

3,491

Total liabilities measured at fair value
$
—

$
6,676

$
—

$
6,676

*  The insurance investment contract invests approximately 34 percent in common stock of mid-cap companies, 33 percent in common stock of small-cap companies, 32 percent in common stock of large-cap companies and 1 percent in cash and cash equivalents.
 
Fair Value Measurements at
December 31, 2011, Using
 
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs
 (Level 3)
Balance at
December 31,
2011
 
(In thousands)
Assets:
 
 
 
 
Money market funds
$
—

$
97,500

$
—

$
97,500

Available-for-sale securities:
 
 
 
 
Insurance investment contract*
—

38,352

—

38,352

Auction rate securities
—

11,400

—

11,400

Mortgage-backed securities
—

8,296

—

8,296

U.S. Treasury securities
—

1,656

—

1,656

Commodity derivative instruments
—

30,455

—

30,455

Total assets measured at fair value
$
—

$
187,659

$
—

$
187,659

Liabilities:
 
 
 
 
Commodity derivative instruments
$
—

$
14,101

$
—

$
14,101

Interest rate derivative instruments
—

4,762

—

4,762

Total liabilities measured at fair value
$
—

$
18,863

$
—

$
18,863

* The insurance investment contract invests approximately 33 percent in common stock of mid-cap companies, 34 percent in common stock of small-cap companies, 32 percent in common stock of large-cap companies and 1 percent in cash and cash equivalents.

The estimated fair value of the Company's Level 2 money market funds and available-for-sale securities is determined using the market approach. The Level 2 money market funds consist of investments in short-term unsecured promissory notes and the value is based on comparable market transactions taking into consideration the credit quality of the issuer. The estimated fair value of the Company's Level 2 available-for-sale securities is based on comparable market transactions, other observable inputs or other sources, including pricing from outside sources such as the fund itself.

The estimated fair value of the Company's Level 2 commodity derivative instruments is based upon futures prices, volatility and time to maturity, among other things. Counterparty statements are utilized to determine the value of the commodity derivative instruments and are reviewed and corroborated using various methodologies and significant observable inputs. The Company's and the counterparties nonperformance risk is evaluated.

The estimated fair value of the Company's Level 2 interest rate derivative instruments is measured using quoted market prices or pricing models using prevailing market interest rates as of the measurement date. Counterparty statements are utilized to determine the value of the interest rate derivative instruments and are reviewed and corroborated using various methodologies and significant observable inputs. The Company's and the counterparties nonperformance risk is evaluated.

Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. For the three and nine months ended September 30, 2012, there were no transfers between Levels 1 and 2.

The Company's long-term debt is not measured at fair value on the Consolidated Balance Sheets and the fair value is being provided for disclosure purposes. The fair value was based on discounted future cash flows using current market interest rates. The estimated fair value of the Company's Level 2 long-term debt was as follows:
 
Carrying
Amount
Fair
Value
 
(In thousands)
Long-term debt at September 30, 2012
$
1,742,977

$
1,906,673

Long-term debt at September 30, 2011
$
1,423,614

$
1,568,942

Long-term debt at December 31, 2011
$
1,424,678

$
1,592,807



The carrying amounts of the Company's remaining financial instruments included in current assets and current liabilities approximate their fair values.