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Derivative Instruments

9 Months Ended

Sep. 30, 2023

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 September 30, 2023, GRE’s swaps and options were traded on the Intercontinental Exchange.

The summarized volume of GRE’s outstanding contracts and options at September 30, 2023 was as follows (MWh – Megawatt hour and Dth – Decatherm):

Settlement Dates	Volume
	Electricity (in MWH)		Gas (in Dth)
Fourth quarter 2023		789,300		19,152
First quarter 2024		13,040		1,137,500
Second quarter 2024		—		—
Third quarter of 2024		24,208		—
Fourth quarter of 2024		—		—
First quarter of 2025		—		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	September 30, 2023		December 31, 2022
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Energy contracts and options¹	Other current assets	$	865	$	2,799
Energy contracts and options	Other assets		730		1,261
Total derivatives not designated or not qualifying as hedging instruments — Assets		$	1,595	$	4,060

Liability Derivatives	Balance Sheet Location	September 30, 2023		December 31, 2022
		(in thousands)
Derivatives not designated or not qualifying as hedging instruments:
Energy contracts and options¹	Other current liabilities	$	2,380	$	1,800
Energy contracts and options	Other liabilities		12		1,057
Total derivatives not designated or not qualifying as hedging instruments — Liabilities		$	2,392	$	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 September 30,					Nine Months Ended September 30,
hedging instruments	on Derivatives		2023			2022		2023			2022
		(in thousands)					(in thousands)
Energy contracts and options	Cost of revenues	$	(4,461	)	$	35,011	$	(21,590	)	$	102,060