Fair Value Of Financial Instruments

12 Months Ended

Dec. 31, 2019

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments

Note 12 – Fair Value of Financial Instruments

Financial instruments are recorded at carrying value in the financial statements and approximate fair value, with the exception of long-term debt, as of the dates presented. The fair value of these instruments is disclosed below in accordance with current accounting guidance related to financial instruments.

The fair value of loans payable is determined based on its carrying amount and utilizing level 1 methods and assumptions. As of December 31, 2019 and 2018, the carrying amount of the Company’s loans payable was $25,724 and $15,449, which equates to their estimated fair value. The fair value of the interest rate swap agreements is determined by discounting the future net cash flows utilizing level 2 methods and assumptions. As of December 31, 2018, the fair value of the Company’s interest rate swap agreements, which were settled in April 2019, represented a liability of $59,779. The fair value of cash and cash equivalents, which is comprised of uninvested cash and the proceeds from the April 2019 issuances of common stock, tangible equity units, and long-term debt for the Peoples Gas Acquisition, which are held in an interest-bearing account, is determined based on level 1 methods and assumptions. As of December 31, 2019 and 2018, the carrying amounts of the Company's cash and cash equivalents were $1,868,922 and $3,627, which equates to their fair value. The Company’s assets underlying the deferred compensation and non-qualified pension plans are determined by the fair value of mutual funds, which are based on quoted market prices from active markets utilizing level 1 methods and assumptions. As of December 31, 2019 and 2018, the carrying amount of these securities was $23,419 and

$20,388, which equates to their fair value, and is reported in the consolidated balance sheet in deferred charges and other assets.   

Unrealized gains and losses on equity securities held in conjunction with our non-qualified pension plan is as follows:

	Years ended December 31,
	2019		2018
Net gain (loss) recognized during the period on equity securities	$	293	$	(95)
Less: net gain / loss recognized during the period on equity securities sold during the period		-		-
Unrealized gain (loss) recognized during the reporting period on equity securities still held at the reporting date	$	293	$	(95)

The net gain (loss) recognized on equity securities is presented on the consolidated statements of net income on the line item “Other.” Additionally, the unrealized gain recognized during 2017 was reported on the consolidated statements of comprehensive income.

The carrying amounts and estimated fair values of the Company’s long-term debt is as follows:

	December 31,
		2019		2018
Carrying amount	$	3,077,400	$	2,563,660
Estimated fair value		3,324,377		2,588,086

The fair value of long-term debt has been determined by discounting the future cash flows using current market interest rates for similar financial instruments of the same duration utilizing level 2 methods and assumptions. The Company’s customers’ advances for construction have a carrying value of $95,556 and $93,343 at December 31, 2019 and 2018, respectively. Their relative fair values cannot be accurately estimated because future refund payments depend on several variables, including new customer connections, customer consumption levels and future rate increases. Portions of these non-interest bearing instruments are payable annually through 2029 and amounts not paid by the respective contract expiration dates become non-refundable. The fair value of these amounts would, however, be less than their carrying value due to the non-interest bearing feature.