Derivatives and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

Derivative Instruments And Hedging Activities Disclosure [Abstract]

The differential is calculated based on the notional amounts under the contracts, which are detailed in the table below (thousands of dekatherms):


	September 30, 2013		December 31, 2012
Contract notional amounts		15,662		14,579

Amount of Gain or Losses Recognized in Income on Derivatives

The following table sets forth the gains and (losses) recognized on the Company’s Swaps (derivatives) for the three-, nine-, and twelve-month periods ended September 30, 2013 and 2012 and their location in the Condensed Consolidated Statements of Income (thousands of dollars):

Gains (losses) recognized in income for derivatives not designated as hedging instruments:

(Thousands of dollars)


		Three Months Ended						Nine Months Ended						Twelve Months Ended
	Location of Gain or (Loss) Recognized in Income on Derivative	September 30						September 30						September 30
Instrument		2013			2012			2013			2012			2013			2012

Swaps	Net cost of gas sold	$	(353	)	$	3,617		$	(2,946	)	$	(945	)	$	(6,855	)	$	(9,607	)
Swaps	Net cost of gas sold		353	*		(3,617	)*		2,946	*		945	*		6,855	*		9,607	*

Total		$	—		$	—		$	—		$	—		$	—		$	—

*	Represents the impact of regulatory deferral accounting treatment under U.S. GAAP for rate-regulated entities.

Gains (Losses) Recognized in Other Comprehensive Income for Derivatives as Cash Flow Hedging Instruments

Gains (losses) recognized in other comprehensive income for derivatives designated as cash flow hedging instruments:

(Thousands of dollars)


	Three Months Ended				Nine Months Ended				Twelve Months Ended
	September 30				September 30				September 30
	2013		2012		2013		2012		2013		2012
Amount of gain/(loss) realized/ unrealized on FSIRS recognized in other comprehensive income on derivative	$	—	$	—	$	—	$	2,959	$	—	$	1,383

Fair Values of Swaps in Balance Sheet Location

The following table sets forth the fair values of the Company’s Swaps and their location in the balance sheets (thousands of dollars):

Fair values of derivatives not designated as hedging instruments:


September 30, 2013		Asset		Liability
Instrument	Balance Sheet Location	Derivatives		Derivatives			Net Total
Swaps	Other current liabilities	$	25	$	(4,282	)	$	(4,257	)
Swaps	Other deferred credits		8		(787	)		(779	)

Total		$	33	$	(5,069	)	$	(5,036	)


December 31, 2012		Asset		Liability
Instrument	Balance Sheet Location	Derivatives		Derivatives			Net Total
Swaps	Deferred charges and other assets	$	132	$	(126	)	$	6
Swaps	Other current liabilities		391		(2,467	)		(2,076	)
Swaps	Other deferred credits		233		(552	)		(319	)

Total		$	756	$	(3,145	)	$	(2,389	)

Paid to and Received from Counterparties for Settlements of Matured Swaps

The following table shows the amounts Southwest paid to and received from counterparties for settlements of matured Swaps.


(Thousands of dollars)	Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013		Twelve Months Ended September 30, 2013
Paid to counterparties	$	342	$	1,214	$	2,260

Received from counterparties	$	7	$	915	$	1,549

Regulatory Assets/Liabilities Offsetting the Derivatives at Fair Value in the Balance Sheet

The following table details the regulatory assets/(liabilities) offsetting the derivatives at fair value in the balance sheets (thousands of dollars).


September 30, 2013
Instrument	Balance Sheet Location	Net Total
Swaps	Prepaids and other current assets	$	4,257
Swaps	Deferred charges and other assets		779


December 31, 2012
Instrument	Balance Sheet Location	Net Total
Swaps	Other deferred credits	$	(6	)
Swaps	Prepaids and other current assets		2,076
Swaps	Deferred charges and other assets		319

Significant Other Observable Inputs

The following table sets forth the Company’s Level 2 financial assets and liabilities recorded at fair value:

Level 2 - Significant other observable inputs


(Thousands of dollars)	September 30, 2013			December 31, 2012
Assets at fair value:
Deferred charges and other assets - Swaps	$	—		$	6

Liabilities at fair value:
Other current liabilities - Swaps		(4,257	)		(2,076	)
Other deferred credits - Swaps		(779	)		(319	)

Net Assets (Liabilities)	$	(5,036	)	$	(2,389	)