Fair value measurements

9 Months Ended

Sep. 30, 2011

Fair value measurements [Abstract]

Fair value measurements

13. 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 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 $33.6 million, $35.9 million and $39.5 million, as of September 30, 2011 and 2010, and December 31, 2010, respectively, are classified as Investments on the Consolidated Balance Sheets. The fair value of these investments decreased $6.7 million (before tax) and $5.9 million (before tax) for the three and nine months ended September 30, 2011. The increase in the fair value of these investments for the three and nine months ended September 30, 2010, was $3.2 million (before tax) and $2.2 million (before tax), 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 for its remaining available-for-sale securities, which include auction rate securities, 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. The Company's auction rate securities, which totaled $11.4 million at September 30, 2011 and 2010, and December 31, 2010, approximate cost and, as a result, there are no accumulated unrealized gains or losses recorded in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets related to these investments. Unrealized gains or losses on mortgage-backed securities and U.S. Treasury securities are recorded in accumulated other comprehensive income (loss) as discussed in Note 8.

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

	Fair Value Measurements at September 30, 2011, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at September 30, 2011
	(In thousands)
Assets:
Money market funds	$	—	$	56,194	$	—	$	56,194
Available-for-sale securities:
Insurance investment contract*		—		33,591		—		33,591
Auction rate securities		—		11,400		—		11,400
Mortgage-backed securities		—		8,570		—		8,570
U.S. Treasury securities		—		1,444		—		1,444
Commodity derivative instruments - current		—		38,794		—		38,794
Commodity derivative instruments - noncurrent		—		15,575		—		15,575
Total assets measured at fair value	$	—	$	165,568	$	—	$	165,568
Liabilities:
Commodity derivative instruments - current	$	—	$	3,028	$	—	$	3,028
Commodity derivative instruments - noncurrent		—		157		—		157
Interest rate derivative instruments - noncurrent		—		3,491		—		3,491
Total liabilities measured at fair value	$	—	$	6,676	$	—	$	6,676
* The insurance investment contract invests approximately 34 percent in common stock of mid-cap companies, 33 percent in common stock of small-cap companies, 32 percent in common stock of large-cap companies and 1 percent in cash and cash equivalents.

	Fair Value Measurements at September 30, 2010, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at September 30, 2010
	(In thousands)
Assets:
Money market funds	$	2,835	$	—	$	—	$	2,835
Available-for-sale securities:
Fixed-income securities		—		11,400		—		11,400
Insurance contract*		—		35,902		—		35,902
Commodity derivative instruments - current		—		26,803		—		26,803
Commodity derivative instruments - noncurrent		—		8,423		—		8,423
Total assets measured at fair value	$	2,835	$	82,528	$	—	$	85,363
Liabilities:
Commodity derivative instruments - current	$	—	$	25,803	$	—	$	25,803
Commodity derivative instruments - noncurrent		—		2,263		—		2,263
Total liabilities measured at fair value	$	—	$	28,066	$	—	$	28,066
* Invested in mutual funds.

	Fair Value Measurements at December 31, 2010, 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, 2010
	(In thousands)
Assets:
Money market funds	$	—	$	166,620	$	—	$	166,620
Available-for-sale securities:
Fixed-income securities		—		11,400		—		11,400
Insurance investment contract*		—		39,541		—		39,541
Commodity derivative instruments - current		—		15,123		—		15,123
Commodity derivative instruments - noncurrent		—		4,104		—		4,104
Total assets measured at fair value	$	—	$	236,788	$	—	$	236,788
Liabilities:
Commodity derivative instruments - current	$	—	$	24,428	$	—	$	24,428
Commodity derivative instruments - noncurrent		—		6,483		—		6,483
Total liabilities measured at fair value	$	—	$	30,911	$	—	$	30,911
* The insurance investment contract invests approximately 35 percent in common stock of mid-cap companies, 33 percent in common stock of small-cap companies, 31 percent in common stock of large-cap companies and 1 percent in cash and cash equivalents.

The estimated fair value of the Company's Level 1 money market funds is determined using the market approach and is valued at the net asset value of shares held by the Company, based on published market quotations in active markets.

The estimated fair value of the Company's Level 2 money market funds and available-for-sale securities is determined using the market approach. The Level 2 money market funds consist of investments in short-term unsecured promissory notes and the value is based on comparable market transactions taking into consideration the credit quality of the issuer. The estimated fair value of the Company's Level 2 available-for-sale securities is based on comparable market transactions, other observable inputs or other sources, including pricing from outside sources such as the fund itself.

The estimated fair value of the Company's Level 2 commodity derivative instruments is based upon futures prices, volatility and time to maturity, among other things. Counterparty statements are utilized to determine the value of the commodity derivative instruments and are reviewed and corroborated using various methodologies and significant observable inputs. The nonperformance risk of the counterparties in addition to the Company's nonperformance risk is also evaluated.

The estimated fair value of the Company's Level 2 interest rate derivative instruments is measured using quoted market prices or pricing models using prevailing market interest rates as of the measurement date. Counterparty statements are utilized to determine the value of the interest rate derivative instruments and are reviewed and corroborated using various methodologies and significant observable inputs.

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 and nine months ended September 30, 2011, there were no transfers between Levels 1 and 2.

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, and was based on quoted market prices of the same or similar issues. The estimated fair value of the Company's long-term debt was as follows:

	Carrying Amount		Fair Value
	(In thousands)
Long-term debt at September 30, 2011	$	1,423,614	$	1,568,942
Long-term debt at September 30, 2010	$	1,510,588	$	1,679,979
Long-term debt at December 31, 2010	$	1,506,752	$	1,621,184

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