XML 23 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
Derivative Instruments
 3 Months Ended
Mar. 31, 2017
Derivative Instruments [Abstract]  
Derivative Instruments

Note 5—Derivative Instruments

 

The primary risk managed by the Company using derivative instruments is commodity price risk, which is accounted for in accordance with Accounting Standards Codification 815—Derivatives and Hedging. Natural gas and electricity put and call options and swaps are entered into as hedges against unfavorable fluctuations in market prices of natural gas and electricity. The Company does not apply hedge accounting to these options or swaps, therefore the changes in fair value are recorded in earnings. By using derivative instruments to mitigate exposures to changes in commodity prices, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk. The Company minimizes the credit or repayment risk in derivative instruments by entering into transactions with high-quality counterparties. At March 31, 2017 and December 31, 2016, GRE’s swaps and options were traded on the New York Mercantile Exchange.

 

The summarized volume of GRE’s outstanding contracts and options at March 31, 2017 was as follows (MWh – Megawatt hour and Dth – Decatherm):

  

Commodity Settlement Dates Volume
Electricity April 2017 16,000 MWh
Electricity June 2017 153,120 MWh
Electricity July 2017 334,000 MWh
Electricity August 2017 420,900 MWh
Electricity September 2017 75,200 MWh
Electricity October 2017 241,120 MWh
Electricity November 2017 213,360 MWh
Electricity December 2017 283,200 MWh
Electricity January 2018 362,560 MWh
Electricity February 2018 329,600 MWh
Electricity March 2018 179,520 MWh
Electricity April 2018 67,200 MWh
Electricity May 2018 70,400 MWh
Electricity June 2018 67,200 MWh
Electricity July 2018 67,200 MWh
Electricity August 2018 73,600 MWh
Electricity September 2018 60,800 MWh
Electricity October 2018 147,200 MWh
Electricity November 2018 134,400 MWh
Electricity December 2018 128,000 MWh
Natural gas October 2017 200,000 Dth
Natural gas November 2017 1,100,000 Dth
Natural gas December 2017 700,000 Dth
Natural gas February 2018 888,400 Dth
Natural gas March 2018 600,000 Dth

 

The fair value of outstanding derivative instruments recorded in the accompanying consolidated balance sheets were as follows:

 

Asset Derivatives Balance Sheet Location March 31,
2017		  December 31, 
2016		 
    (in thousands) 
Derivatives not designated or not qualifying as hedging instruments:        
Energy contracts and options Other current assets $4,842  $2,651 

 

Liability Derivatives          
           
Derivatives not designated or not qualifying as hedging instruments:          
Energy contracts and options Energy hedging contracts $2,546  $1,727 

 

 The effects of derivative instruments on the consolidated statements of operations were as follows:

 

  Amount of Gain (Loss) Recognized on Derivatives 
  Three Months Ended
March 31,		 

 Derivatives not designated or not qualifying as hedging instruments

 Location of Gain (Loss) Recognized on Derivatives 2017  2016 
    (in thousands) 
      
Energy contracts and options Cost of revenues $(1,248) $361