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Derivative Instruments

3 Months Ended

Mar. 31, 2023

Derivative Instruments [Abstract]

Derivative Instruments

Note 7—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, 2023, GRE’s swaps and options were traded on the Intercontinental Exchange. 

The summarized volume of GRE’s outstanding contracts and options at March 31, 2023 was as follows (MWh – Megawatt hour and Dth – Decatherm):

Settlement Dates		Volume
		Electricity (in MWH)				Gas (in Dth)
Second quarter 2023			31,728				13,072
Third quarter 2023			45,056				—
Fourth quarter 2023			108,332				610,000
First quarter 2024			6,160				910,000
Second quarter 2024			—				—
Third quarter of 2024			16,592				—
Fourth quarter of 2024			—				—
First quarter of 2025			13,520				225,000
Second quarter of 2025			—				227,500
Third quarter of 2025			—				230,000
Fourth quarter of 2025			—				230,000
First quarter of 2026			—				—
Second quarter of 2026			—				—
Third quarter of 2026			3,520				—

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

Asset Derivatives		Balance Sheet Location		March 31, 2023				December 31, 2022
				(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Energy contracts and options1		Other current assets		$	586			$	2,799
Energy contracts and options		Other assets			1,040				1,261
Total derivatives not designated or not qualifying as hedging instruments — Assets				$	1,626			$	4,060
Liability Derivatives		Balance Sheet Location		March 31, 2023				December 31, 2022
				(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Energy contracts and options1		Other current liabilities		$	3,444			$	1,800
Energy contracts and options		Other liabilities			115				1,057
Total derivatives not designated or not qualifying as hedging instruments — Liabilities				$	3,559			$	2,857

(1) The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months.

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

				Amount of (Loss) Gain Recognized on Derivatives
Derivatives not designated or not qualifying as		Location of Gain Recognized		Three Months Ended March 31,
hedging instruments		on Derivatives			2023				2022
				(in thousands)
Energy contracts and options		Cost of revenues		$	(11,175	)		$	37,512

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- References

No definition available.

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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://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-URI https://asc.fasb.org/topic&trid=2229140

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 5
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008

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