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, which consist of an insurance contract, 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 $69.1 million, $67.8 million and $67.5 million, at March 31, 2016 and 2015, and December 31, 2015, respectively, are classified as Investments on the Consolidated Balance Sheets. The net unrealized gains on these investments were $1.6 million and $2.0 million for the three months ended March 31, 2016 and 2015, 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 available-for-sale securities, which include 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. Unrealized gains or losses are recorded in accumulated other comprehensive income (loss). Details of available-for-sale securities were as follows:



March 31, 2016	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Mortgage-backed securities	$	10,467	$	46	$	(14	)	$	10,499
Total	$	10,467	$	46	$	(14	)	$	10,499



March 31, 2015	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Mortgage-backed securities	$	7,792	$	58	$	(18	)	$	7,832
U.S. Treasury securities	2,337		9		(4		)	2,342
Total	$	10,129	$	67	$	(22	)	$	10,174



December 31, 2015	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Mortgage-backed securities	$	9,128	$	19	$	(49	)	$	9,098
U.S. Treasury securities	1,315		—		(6		)	1,309
Total	$	10,443	$	19	$	(55	)	$	10,407

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 estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach.

The Company's Level 2 money market funds are valued at the net asset value of shares held at the end of the quarter, based on published market quotations on active markets, or using other known sources including pricing from outside sources.

The estimated fair value of the Company's Level 2 mortgage-backed securities and U.S. Treasury securities are based on comparable market transactions, other observable inputs or other sources, including pricing from outside sources.

The estimated fair value of the Company's Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data.

The estimated fair value of the Company's Level 2 RIN obligations are based on the market approach using quoted prices from an independent pricing service. RINs are assigned to biofuels produced or imported into the United States as required by the EPA, which sets annual quotas for the percentage of biofuels that must be blended into transportation fuels consumed in the United States. As a producer of diesel fuel, Dakota Prairie Refinery is required to blend biofuels into the fuel it produces at a rate that will meet the EPA's quota. RINs are purchased in the open market to satisfy the requirement as Dakota Prairie Refinery is currently unable to blend biofuels into the diesel fuel it produces.

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 months ended March 31, 2016 and 2015, there were no transfers between Levels 1 and 2.

The Company's assets and liabilities measured at fair value on a recurring basis were as follows:



	Fair Value Measurements at March 31, 2016, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at March 31, 2016
	(In thousands)
Assets:
Money market funds	$	—	$	1,442	$	—	$	1,442
Insurance contract*	—		69,110		—		69,110
Available-for-sale securities:
Mortgage-backed securities	—		10,499		—		10,499
Total assets measured at fair value	$	—	$	81,051	$	—	$	81,051
Liabilities:
RIN obligations	$	—	$	4,951	$	—	$	4,951
Total liabilities measured at fair value	$	—	$	4,951	$	—	$	4,951

* The insurance contract invests approximately 9 percent in common stock of mid-cap companies, 6 percent in common stock of small-cap companies, 18 percent in common stock of large-cap companies, 65 percent in fixed-income investments, 1 percent in target date investments and 1 percent in cash equivalents.



	Fair Value Measurements at March 31, 2015, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at March 31, 2015
	(In thousands)
Assets:
Money market funds	$	—	$	1,087	$	—	$	1,087
Insurance contract*	—		67,797		—		67,797
Available-for-sale securities:
Mortgage-backed securities	—		7,832		—		7,832
U.S. Treasury securities	—		2,342		—		2,342
Total assets measured at fair value	$	—	$	79,058	$	—	$	79,058

* The insurance contract invests approximately 20 percent in common stock of mid-cap companies, 18 percent in common stock of small-cap companies, 28 percent in common stock of large-cap companies, 32 percent in fixed-income investments, 1 percent in target date investments and 1 percent in cash equivalents.



	Fair Value Measurements at December 31, 2015, 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, 2015
	(In thousands)
Assets:
Money market funds	$	—	$	1,420	$	—	$	1,420
Insurance contract*	—		67,459		—		67,459
Available-for-sale securities:
Mortgage-backed securities	—		9,098		—		9,098
U.S. Treasury securities	—		1,309		—		1,309
Total assets measured at fair value	$	—	$	79,286	$	—	$	79,286
Liabilities:
RIN obligations	$	—	$	3,052	$	—	$	3,052
Total liabilities measured at fair value	$	—	$	3,052	$	—	$	3,052

* The insurance contract invests approximately 9 percent in common stock of mid-cap companies, 7 percent in common stock of small-cap companies, 19 percent in common stock of large-cap companies, 63 percent in fixed-income investments, 1 percent in target date investments and 1 percent in cash equivalents.

The Company applies the provisions of the fair value measurement standard to its nonrecurring, non-financial measurements, including long-lived asset impairments. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. The Company reviews the carrying value of its long-lived assets, excluding goodwill, whenever events or changes in circumstances indicate that such carrying amounts may not be recoverable.

The Company performed a fair value assessment of the assets and liabilities classified as held for sale. For more information on this Level 3 nonrecurring fair value measurement, see Note 9.

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 only. 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 March 31, 2016	$	1,927,054	$	1,996,415
Long-term debt at March 31, 2015	$	2,183,644	$	2,334,339
Long-term debt at December 31, 2015	$	1,865,163	$	1,887,373

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