Fair value measurements

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Fair value measurements

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, which consist of an insurance contract, 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 $53.3 million, $48.7 million and $48.9 million, as of March 31, 2013 and 2012, and December 31, 2012, respectively, are classified as Investments on the Consolidated Balance Sheets. The net unrealized gains on these investments were $4.4 million and $5.0 million for the three months ended March 31, 2013 and 2012, 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, which records gains and losses in income, 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 approximated cost and, as a result, there were no accumulated unrealized gains or losses recorded in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets related to these investments. In the second quarter of 2012, the Company sold its auction rate securities at cost and did not realize any gains or losses. Unrealized gains or losses on mortgage-backed securities and U.S. Treasury securities are recorded in accumulated other comprehensive income (loss). Details of available-for-sale securities were as follows:

March 31, 2013	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Insurance contract	$	37,270	$	16,064	$	—		$	53,334
Mortgage-backed securities	8,749		133		(3		)	8,879
U.S. Treasury securities	1,301		39		—			1,340
Total	$	47,320	$	16,236	$	(3	)	$	63,553

March 31, 2012	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Insurance contract	$	37,250	$	11,454	$	—		$	48,704
Auction rate securities	11,400		—		—			11,400
Mortgage-backed securities	7,952		119		(1		)	8,070
U.S. Treasury securities	1,968		49		(1		)	2,016
Total	$	58,570	$	11,622	$	(2	)	$	70,190

December 31, 2012	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Insurance contract	$	37,250	$	11,648	$	—		$	48,898
Mortgage-backed securities	8,054		144		(3		)	8,195
U.S. Treasury securities	1,763		43		—			1,806
Total	$	47,067	$	11,835	$	(3	)	$	58,899

The fair value of the Company's money market funds approximates cost.

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 estimated fair values of the Company's assets and liabilities measured on a recurring basis are determined using the market approach.

The Company's 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 mortgage-backed securities and U.S. Treasury securities are based on comparable market transactions, other observable inputs or other sources, including pricing from outside sources.

The estimated fair value of the Company's Level 2 insurance contract is based on contractual cash surrender values that are determined primarily by investments in managed separate accounts of the insurer. These amounts approximate fair value. The managed separate accounts are valued based on other observable inputs or corroborated market data.

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 Company's and the counterparties' 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. The Company's and the counterparties' nonperformance risk is also evaluated.

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 months ended March 31, 2013 and 2012, there were no transfers between Levels 1 and 2.

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

	Fair Value Measurements at March 31, 2013, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at March 31, 2013
	(In thousands)
Assets:
Money market funds	$	—	$	31,281	$	—	$	31,281
Available-for-sale securities:
Insurance contract*	—		53,334		—		53,334
Mortgage-backed securities	—		8,879		—		8,879
U.S. Treasury securities	—		1,340		—		1,340
Commodity derivative instruments	—		6,179		—		6,179
Total assets measured at fair value	$	—	$	101,013	$	—	$	101,013
Liabilities:
Commodity derivative instruments	$	—	$	7,987	$	—	$	7,987
Interest rate derivative instruments	—		4,458		—		4,458
Total liabilities measured at fair value	$	—	$	12,445	$	—	$	12,445

*  The insurance contract invests approximately 29 percent in common stock of mid-cap companies, 28 percent in common stock of small-cap companies, 28 percent in common stock of large-cap companies and 15 percent in fixed-income and other investments.

	Fair Value Measurements at March 31, 2012, Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at March 31, 2012
	(In thousands)
Assets:
Money market funds	$	—	$	9,942	$	—	$	9,942
Available-for-sale securities:
Insurance contract*	—		48,704		—		48,704
Auction rate securities	—		11,400		—		11,400
Mortgage-backed securities	—		8,070		—		8,070
U.S. Treasury securities	—		2,016		—		2,016
Commodity derivative instruments	—		27,280		—		27,280
Total assets measured at fair value	$	—	$	107,412	$	—	$	107,412
Liabilities:
Commodity derivative instruments	$	—	$	26,330	$	—	$	26,330
Interest rate derivative instruments	—		3,321		—		3,321
Total liabilities measured at fair value	$	—	$	29,651	$	—	$	29,651

*  The insurance contract invests approximately 29 percent in common stock of mid-cap companies, 29 percent in common stock of small-cap companies, 29 percent in common stock of large-cap companies and 13 percent in fixed-income and other investments.

	Fair Value Measurements at December 31, 2012, 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, 2012
	(In thousands)
Assets:
Money market funds	$	—	$	24,240	$	—	$	24,240
Available-for-sale securities:
Insurance contract*	—		48,898		—		48,898
Mortgage-backed securities	—		8,195		—		8,195
U.S. Treasury securities	—		1,806		—		1,806
Commodity derivative instruments	—		18,304		—		18,304
Total assets measured at fair value	$	—	$	101,443	$	—	$	101,443
Liabilities:
Interest rate derivative instruments	$	—	$	6,255	$	—	$	6,255
Total liabilities measured at fair value	$	—	$	6,255	$	—	$	6,255

* The insurance contract invests approximately 28 percent in common stock of mid-cap companies, 28 percent in common stock of small-cap companies, 29 percent in common stock of large-cap companies and 15 percent in fixed-income and other investments.

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. The fair value was based on discounted future cash flows using current market interest rates. The estimated fair value of the Company's Level 2 long-term debt was as follows:

	Carrying Amount		Fair Value
	(In thousands)
Long-term debt at March 31, 2013	$	1,789,663	$	1,925,859
Long-term debt at March 31, 2012	$	1,416,189	$	1,578,395
Long-term debt at December 31, 2012	$	1,744,975	$	1,888,135

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