Fair Value of Financial Assets and Liabilities

9 Months Ended

Sep. 30, 2013

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

Note 11. Fair Value of Financial Assets and Liabilities

The accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires certain disclosures about assets and liabilities measured at fair value. A hierarchal framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance. The three levels in the hierarchy are as follows:

Level 1 -	Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices.
Level 2 -	Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reporting date. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, or priced with discounted cash flow or option pricing models using highly observable inputs.
Level 3 -	Significant inputs to pricing have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those valued with models requiring significant management judgment or estimation.

Specific valuation methods include the following:

Cash equivalents, accounts receivable, accounts payable, and short-term borrowings carrying amounts approximated the fair value because of the short-term maturity of the instruments.

Long-term debt fair values were estimated using the published quoted market price, if available, or the discounted cash flow analysis, based on the current rates available using a risk-free rate (a U.S. Treasury securities yield curve) plus a risk premium of 1.19%.

Advances for construction fair values were estimated using broker quotes from companies that frequently purchase these investments.

	September 30, 2013
			Fair Value
	Cost		Level 1		Level 2		Level 3		Total
Money Market Investment	$	48,847	$	48,847					$	48,847
Total	$	48,847	$	48,847					$	48,847
Long -term debt, including current maturities	$	478,240	$	—	$	570,058	$	—	$	570,058
Advances for construction	184,879		—		71,242		—		71,242
Total	$	663,119	$	—	$	641,300	$	—	$	641,300

	December 31, 2012
			Fair Value
	Cost		Level 1		Level 2		Level 3		Total
Long -term debt, including current maturities	$	481,250	$	—	$	613,211	$	—	$	613,211
Advances for construction	187,584		—		70,914		—		70,914
Total	$	668,834	$	—	$	684,125	$	—	$	684,125