Fair Value Measurements

12 Months Ended

Sep. 30, 2015

We report certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We record cash and cash equivalents, accounts receivable and accounts payable at carrying value, which substantially approximates fair value due to the short-term nature of these assets and liabilities. For other financial assets and liabilities, we primarily use quoted market prices and other observable market pricing information to minimize the use of unobservable pricing inputs in our measurements when determining fair value. The methods used to determine fair value for our assets and liabilities are fully described in Note 2.

Fair value measurements also apply to the valuation of our pension and post-retirement plan assets. The fair value of these assets is presented in Note 6.

Quantitative Disclosures

Financial Instruments

The classification of our fair value measurements requires judgment regarding the degree to which market data are observable or corroborated by observable market data. The following tables summarize, by level within the fair value hierarchy, our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2015 and 2014. As required under authoritative accounting literature, assets and liabilities are categorized in their entirety based on the lowest level of input that is significant to the fair value measurement.



	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)⁽¹⁾		Significant Other Unobservable Inputs (Level 3)		Netting and Cash Collateral⁽²⁾			September 30, 2015
	(In thousands)
Assets:
Financial instruments
Regulated distribution segment	$	—	$	746	$	—	$	—		$	746
Nonregulated segment	—		91,363		—		(82,509		)	8,854
Total financial instruments	—		92,109		—		(82,509		)	9,600
Hedged portion of gas stored underground	43,901		—		—		—			43,901
Available-for-sale securities
Money market funds	—		1,072		—		—			1,072
Registered investment companies	40,619		—		—		—			40,619
Bonds	—		32,509		—		—			32,509
Total available-for-sale securities	40,619		33,581		—		—			74,200
Total assets	$	84,520	$	125,690	$	—	$	(82,509	)	$	127,701
Liabilities:
Financial instruments
Regulated distribution segment	$	—	$	120,107	$	—	$	—		$	120,107
Nonregulated segment	—		125,983		—		(125,983		)	—
Total liabilities	$	—	$	246,090	$	—	$	(125,983	)	$	120,107



	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)⁽¹⁾		Significant Other Unobservable Inputs (Level 3)		Netting and Cash Collateral⁽³⁾			September 30, 2014
	(In thousands)
Assets:
Financial instruments
Regulated distribution segment	$	—	$	36,140	$	—	$	—		$	36,140
Nonregulated segment	25		68,998		—		(46,298		)	22,725
Total financial instruments	25		105,138		—		(46,298		)	58,865
Hedged portion of gas stored underground	40,492		—		—		—			40,492
Available-for-sale securities
Money market funds	—		2,185		—		—			2,185
Registered investment companies	44,014		—		—		—			44,014
Bonds	—		33,414		—		—			33,414
Total available-for-sale securities	44,014		35,599		—		—			79,613
Total assets	$	84,531	$	140,737	$	—	$	(46,298	)	$	178,970
Liabilities:
Financial instruments
Regulated distribution segment	$	—	$	21,856	$	—	$	—		$	21,856
Nonregulated segment	12		72,044		—		(72,056		)	—
Total liabilities	$	12	$	93,900	$	—	$	(72,056	)	$	21,856

⁽¹⁾

Our Level 2 measurements consist of over-the-counter options and swaps, which are valued using a market-based approach in which observable market prices are adjusted for criteria specific to each instrument, such as the strike price, notional amount or basis differences, municipal and corporate bonds, which are valued based on the most recent available quoted market prices and money market funds which are valued at cost.

⁽²⁾

This column reflects adjustments to our gross financial instrument assets and liabilities to reflect netting permitted under our master netting agreements and the relevant authoritative accounting literature. In addition, as of September 30, 2015 we had $43.5 million of cash held in margin accounts to collateralize certain financial instruments. Of this amount, $34.6 million was used to offset current and noncurrent risk management liabilities under master netting agreements and the remaining $8.9 million is classified as current risk management assets.

⁽³⁾

This column reflects adjustments to our gross financial instrument assets and liabilities to reflect netting permitted under our master netting agreements and the relevant authoritative accounting literature. In addition, as of September 30, 2014 we had $25.8 million of cash held in margin accounts to collateralize certain financial instruments. Of this amount, $3.1 million was used to offset current and noncurrent risk management liabilities under master netting agreements and the remaining $22.7 million is classified as current risk management assets.

Available-for-sale securities are comprised of the following:



	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
	(In thousands)
As of September 30, 2015
Domestic equity mutual funds	$	27,643	$	7,332	$	(456	)	$	34,519
Foreign equity mutual funds	5,261		905		(66		)	6,100
Bonds	32,423		106		(20		)	32,509
Money market funds	1,072		—		—			1,072
	$	66,399	$	8,343	$	(542	)	$	74,200
As of September 30, 2014
Domestic equity mutual funds	$	26,633	$	10,136	$	—		$	36,769
Foreign equity mutual funds	5,382		1,863		—			7,245
Bonds	33,266		161		(13		)	33,414
Money market funds	2,185		—		—			2,185
	$	67,466	$	12,160	$	(13	)	$	79,613

At September 30, 2015 and 2014, our available-for-sale securities included $41.7 million and $46.2 million related to assets held in separate rabbi trusts for our supplemental executive retirement plans as discussed in Note 6. At September 30, 2015 we maintained investments in bonds that have contractual maturity dates ranging from October 2015 through September 2020.

Other Fair Value Measures

In addition to the financial instruments above, we have several financial and nonfinancial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, accounts payable and debt. The nonfinancial assets and liabilities include asset retirement obligations and pension and post-retirement plan assets. We record cash and cash equivalents, accounts receivable, accounts payable and debt at carrying value. For cash and cash equivalents, accounts receivable and accounts payable, we consider carrying value to materially approximate fair value due to the short-term nature of these assets and liabilities.

Our debt is recorded at carrying value. The fair value of our debt is determined using third party market value quotations, which are considered Level 1 fair value measurements for debt instruments with a recent, observable trade or Level 2 fair value measurements for debt instruments where fair value is determined using the most recent available quoted market price. The following table presents the carrying value and fair value of our debt as of September 30, 2015:



	September 30, 2015
	(In thousands)
Carrying Amount	$	2,460,000
Fair Value	$	2,669,323

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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