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EX-32.2 - EX-32.2 - OLD DOMINION ELECTRIC COOPERATIVEcik0000885568-ex322_11.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

 

ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

or

 

 

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 000-50039

 

OLD DOMINION ELECTRIC COOPERATIVE

(Exact name of registrant as specified in its charter)

 

 

VIRGINIA

 

23-7048405

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S.  employer

identification no.)

 

4201 Dominion Boulevard, Glen Allen, Virginia

 

23060

(Address of principal executive offices)

 

(Zip code)

 

(804) 747-0592

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  ý

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “larger accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Larger accelerated filer

 

¨

  

Accelerated filer

 

¨

 

 

 

 

 

 

 

Non-accelerated filer

 

ý

  

Smaller reporting company

 

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

The Registrant is a membership corporation and has no authorized or outstanding equity securities.

 

 

 


GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Form 10-Q are defined below:

 

Abbreviation or Acronym

 

Definition

 

 

 

Alstom

 

Alstom Power, Inc.

 

 

 

Bear Island

 

Bear Island Paper WB LLC

 

 

 

Clover

 

Clover Power Station

 

 

 

CPCN

 

Certificate of Public Convenience and Necessity

 

 

 

EPC

 

Engineering, procurement, and construction

 

 

 

FERC

 

Federal Energy Regulatory Commission

 

 

 

GAAP

 

Accounting principles generally accepted in the United States

 

 

 

Mitsubishi

 

Mitsubishi Hitachi Power Systems Americas, Inc.

 

 

 

MPSC

 

Maryland Public Service Commission

 

 

 

MW

 

Megawatt(s)

 

 

 

MWh

 

Megawatt hour(s)

 

 

 

North Anna

 

North Anna Nuclear Power Station

 

 

 

ODEC, We, Our

 

Old Dominion Electric Cooperative

 

 

 

PJM

 

PJM Interconnection, LLC

 

 

 

REC

 

Rappahannock Electric Cooperative

 

 

 

RTO

 

Regional transmission organization

 

 

 

TEC

 

TEC Trading, Inc.

 

 

 

VSCC

 

Virginia State Corporation Commission

 

 

 

Wildcat Point

 

Wildcat Point Generation Facility

 

 

 

XBRL

 

Extensible Business Reporting Language

 

 

2


OLD DOMINION ELECTRIC COOPERATIVE

INDEX

 

 

 

Page

Number

 

 

 

PART I.  Financial Information

 

 

 

 

 

Item 1.  Financial Statements

 

 

 

 

 

Condensed Consolidated Balance Sheets – June 30, 2016 (unaudited) and December 31, 2015

 

4

 

 

 

Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital (unaudited) – Three and Six Months Ended June 30, 2016 and 2015

 

5

 

 

 

Condensed Consolidated Statements of Cash Flows (unaudited) – Six Months Ended June 30, 2016 and 2015

 

6

 

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

 

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

13

 

 

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

 

22

 

 

 

Item 4.  Controls and Procedures

 

22

 

 

 

PART II.  Other Information

 

23

 

 

 

Item 1.  Legal Proceedings

 

23

 

 

 

Item 1A.  Risk Factors

 

23

 

 

 

Item 5.  Other Information

 

23

 

 

 

Item 6.  Exhibits

 

24

 

3


OLD DOMINION ELECTRIC COOPERATIVE

PART 1.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

June 30,

2016

 

 

December 31,

2015

 

 

 

(in thousands)

 

 

 

(unaudited)

 

 

 

 

 

ASSETS:

 

 

 

 

 

 

 

 

Electric Plant:

 

 

 

 

 

 

 

 

Property, plant, and equipment

 

$

1,741,729

 

 

$

1,722,477

 

Less accumulated depreciation

 

 

(835,425

)

 

 

(821,947

)

Net Property, plant, and equipment

 

 

906,304

 

 

 

900,530

 

Nuclear fuel, at amortized cost

 

 

19,067

 

 

 

15,720

 

Construction work in progress

 

 

658,038

 

 

 

541,323

 

Net Electric Plant

 

 

1,583,409

 

 

 

1,457,573

 

Investments:

 

 

 

 

 

 

 

 

Nuclear decommissioning trust

 

 

151,224

 

 

 

145,715

 

Lease deposits

 

 

103,295

 

 

 

101,816

 

Unrestricted investments and other

 

 

7,099

 

 

 

7,093

 

Total Investments

 

 

261,618

 

 

 

254,624

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

1,923

 

 

 

58,383

 

Accounts receivable

 

 

4,810

 

 

 

10,960

 

Accounts receivable–deposits

 

 

 

 

 

1,200

 

Accounts receivable–members

 

 

78,589

 

 

 

83,248

 

Fuel, materials, and supplies

 

 

60,830

 

 

 

63,829

 

Prepayments and other

 

 

3,051

 

 

 

4,683

 

Total Current Assets

 

 

149,203

 

 

 

222,303

 

Deferred Charges:

 

 

 

 

 

 

 

 

Regulatory assets

 

 

53,530

 

 

 

61,073

 

Other

 

 

2,229

 

 

 

6,026

 

Total Deferred Charges

 

 

55,759

 

 

 

67,099

 

Total Assets

 

$

2,049,989

 

 

$

2,001,599

 

CAPITALIZATION AND LIABILITIES:

 

 

 

 

 

 

 

 

Capitalization:

 

 

 

 

 

 

 

 

Patronage capital

 

$

396,884

 

 

$

390,976

 

Non-controlling interest

 

 

5,712

 

 

 

5,704

 

Total Patronage capital and Non-controlling interest

 

 

402,596

 

 

 

396,680

 

Long-term debt

 

 

1,018,149

 

 

 

1,017,926

 

Revolving credit facility

 

 

66,600

 

 

 

 

Total long-term debt and revolving credit facility

 

 

1,084,749

 

 

 

1,017,926

 

Total Capitalization

 

 

1,487,345

 

 

 

1,414,606

 

Current Liabilities:

 

 

 

 

 

 

 

 

Long-term debt due within one year

 

 

28,292

 

 

 

28,292

 

Accounts payable

 

 

131,579

 

 

 

109,887

 

Accounts payable–members

 

 

62,326

 

 

 

98,462

 

Accrued expenses

 

 

7,265

 

 

 

5,580

 

Deferred energy

 

 

38,249

 

 

 

27,835

 

Total Current Liabilities

 

 

267,711

 

 

 

270,056

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

 

 

 

Asset retirement obligations

 

 

120,579

 

 

 

118,200

 

Obligations under long-term lease

 

 

93,774

 

 

 

90,622

 

Regulatory liabilities

 

 

78,740

 

 

 

73,702

 

Other

 

 

1,840

 

 

 

34,413

 

Total Deferred Credits and Other Liabilities

 

 

294,933

 

 

 

316,937

 

Commitments and Contingencies

 

 

 

 

 

 

Total Capitalization and Liabilities

 

$

2,049,989

 

 

$

2,001,599

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

4


OLD DOMINION ELECTRIC COOPERATIVE

CONDENSED CONSOLIDATED STATEMENTS OF REVENUES,

EXPENSES, AND PATRONAGE CAPITAL (UNAUDITED)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(in thousands)

 

 

(in thousands)

 

Operating Revenues

 

$

199,149

 

 

$

249,341

 

 

$

455,608

 

 

$

541,597

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fuel

 

 

30,266

 

 

 

35,652

 

 

 

64,588

 

 

 

79,228

 

Purchased power

 

 

80,999

 

 

 

107,155

 

 

 

220,281

 

 

 

296,433

 

Transmission

 

 

30,772

 

 

 

28,073

 

 

 

62,360

 

 

 

55,158

 

Deferred energy

 

 

8,869

 

 

 

25,671

 

 

 

10,414

 

 

 

1,694

 

Operations and maintenance

 

 

12,618

 

 

 

12,910

 

 

 

25,177

 

 

 

28,835

 

Administrative and general

 

 

10,156

 

 

 

9,974

 

 

 

20,795

 

 

 

20,491

 

Depreciation and amortization

 

 

11,630

 

 

 

11,527

 

 

 

23,168

 

 

 

22,201

 

Amortization of regulatory asset/(liability), net

 

 

646

 

 

 

792

 

 

 

77

 

 

 

1,586

 

Accretion of asset retirement obligations

 

 

1,211

 

 

 

1,292

 

 

 

2,421

 

 

 

2,372

 

Taxes, other than income taxes

 

 

2,098

 

 

 

2,081

 

 

 

4,219

 

 

 

4,192

 

Total Operating Expenses

 

 

189,265

 

 

 

235,127

 

 

 

433,500

 

 

 

512,190

 

Operating Margin

 

 

9,884

 

 

 

14,214

 

 

 

22,108

 

 

 

29,407

 

Other expense, net

 

 

(905

)

 

 

(823

)

 

 

(1,949

)

 

 

(1,687

)

Investment income

 

 

1,327

 

 

 

1,624

 

 

 

1,465

 

 

 

2,956

 

Interest charges, net

 

 

(7,341

)

 

 

(12,012

)

 

 

(15,706

)

 

 

(24,780

)

Income taxes

 

 

(2

)

 

 

(2

)

 

 

(3

)

 

 

(2

)

Net Margin including Non-controlling interest

 

 

2,963

 

 

 

3,001

 

 

 

5,915

 

 

 

5,894

 

Non-controlling interest

 

 

(8

)

 

 

(9

)

 

 

(7

)

 

 

(8

)

Net Margin attributable to ODEC

 

 

2,955

 

 

 

2,992

 

 

 

5,908

 

 

 

5,886

 

Patronage Capital - Beginning of Period

 

 

393,929

 

 

 

381,991

 

 

 

390,976

 

 

 

379,097

 

Patronage Capital - End of Period

 

$

396,884

 

 

$

384,983

 

 

$

396,884

 

 

$

384,983

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5


OLD DOMINION ELECTRIC COOPERATIVE

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

Six Months Ended June 30,

 

 

 

2016

 

 

2015

 

 

 

(in thousands)

 

Operating Activities:

 

 

 

 

 

 

 

 

Net Margin including Non-controlling interest

 

$

5,915

 

 

$

5,894

 

Adjustments to reconcile net margin to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

23,168

 

 

 

22,201

 

Other non-cash charges

 

 

9,216

 

 

 

9,113

 

Amortization of lease obligations

 

 

3,152

 

 

 

2,944

 

Interest on lease deposits

 

 

(1,479

)

 

 

(1,441

)

Change in current assets

 

 

16,640

 

 

 

(13,494

)

Change in deferred energy

 

 

10,414

 

 

 

1,694

 

Change in current liabilities

 

 

(49,221

)

 

 

25,469

 

Change in regulatory assets and liabilities

 

 

8,339

 

 

 

3,793

 

Change in deferred charges-other and deferred credits and other liabilities-other

 

 

104

 

 

 

5,239

 

Net Cash Provided by Operating Activities

 

 

26,248

 

 

 

61,412

 

Investing Activities:

 

 

 

 

 

 

 

 

Purchases of held to maturity securities

 

 

 

 

 

(130,000

)

Proceeds from sale of held maturity securities

 

 

 

 

 

100,000

 

Increase in other investments

 

 

(1,270

)

 

 

(2,909

)

Electric plant additions

 

 

(148,038

)

 

 

(113,038

)

Net Cash Used for Investing Activities

 

 

(149,308

)

 

 

(145,947

)

Financing Activities:

 

 

 

 

 

 

 

 

Issuance of long-term debt

 

 

 

 

 

332,000

 

Debt issuance costs

 

 

 

 

 

(1,754

)

Draws on revolving credit facility

 

 

92,100

 

 

 

104,000

 

Repayments on revolving credit facility

 

 

(25,500

)

 

 

(190,000

)

Net Cash Provided by Financing Activities

 

 

66,600

 

 

 

244,246

 

Net Change in Cash and Cash Equivalents

 

 

(56,460

)

 

 

159,711

 

Cash and Cash Equivalents - Beginning of Period

 

 

58,383

 

 

 

1,424

 

Cash and Cash Equivalents - End of Period

 

$

1,923

 

 

$

161,135

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 

6


OLD DOMINION ELECTRIC COOPERATIVE

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

1.

General

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, which include only normal recurring adjustments, necessary for a fair statement of our consolidated financial position as of June 30, 2016, our consolidated results of operations for the three and six months ended June 30, 2016 and 2015, and cash flows for the six months ended June 30, 2016 and 2015.  The consolidated results of operations for the three and six months ended June 30, 2016, are not necessarily indicative of the results to be expected for the entire year.  These financial statements should be read in conjunction with the financial statements and notes thereto included in our 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The accompanying financial statements reflect the consolidated accounts of Old Dominion Electric Cooperative and TEC.  We are a not-for-profit wholesale power supply cooperative, incorporated under the laws of the Commonwealth of Virginia in 1948.  We have two classes of members.  Our Class A members are eleven customer-owned electric distribution cooperatives engaged in the retail sale of power to member customers located in Virginia, Delaware, and Maryland.  Our sole Class B member is TEC, a taxable corporation owned by our member distribution cooperatives.  Our board of directors is composed of two representatives from each of the member distribution cooperatives and one representative from TEC.  In accordance with Consolidation Accounting, TEC is considered a variable interest entity for which we are the primary beneficiary.  We have eliminated all intercompany balances and transactions in consolidation.  The assets and liabilities and non-controlling interest of TEC are recorded at carrying value and the consolidated assets were $5.7 million at June 30, 2016 and December 31, 2015.  The income taxes reported on our Condensed Consolidated Statement of Revenues, Expenses, and Patronage Capital relate to the tax provision for TEC.  As TEC is wholly-owned by our Class A members, its equity is presented as a non-controlling interest in our consolidated financial statements.

Our rates are set periodically by a formula that was accepted for filing by FERC, but are not regulated by the respective public service commissions of the states in which our member distribution cooperatives operate.  See Note 5—Other—FERC Proceeding Related to Formula Rate below.

We comply with the Uniform System of Accounts as prescribed by FERC.  In conformity with GAAP, the accounting policies and practices applied by us in the determination of rates are also employed for financial reporting purposes.

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported therein.  Actual results could differ from those estimates.

We do not have any other comprehensive income for the periods presented.

 

As a result of the adoption of Accounting Standards Update 2015-03 Interest-Imputation of Interest (Subtopic 835-30), we have reclassified debt issuance costs from deferred charges-other to long-term debt in the prior year's Condensed Consolidated Balance Sheet to conform to the current year's presentation.

 

 

 

 

2.

Fair Value Measurements

The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3).  In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy.  The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy.  Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

7


The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015: 

 

 

 

 

 

 

Quoted Prices

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in Active

 

 

Significant

 

 

 

 

 

 

 

 

 

 

Markets for

 

 

Other

 

 

Significant

 

 

 

 

 

 

Identical

 

 

Observable

 

 

Observable

 

 

June 30,

 

 

Assets

 

 

Inputs

 

 

Inputs

 

 

2016

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

(in thousands)

 

Nuclear decommissioning trust (1)

$

48,583

 

 

$

48,583

 

 

$

 

 

$

 

Nuclear decommissioning trust - Net Asset Value (1)(2)

 

102,641

 

 

 

 

 

 

 

 

 

 

Unrestricted investments and other (3)

 

215

 

 

 

 

 

 

215

 

 

 

 

Derivatives - gas and power (4)

 

1,592

 

 

 

1,592

 

 

 

 

 

 

 

Total Financial Assets

$

153,031

 

 

$

50,175

 

 

$

215

 

 

$

 

 

 

 

 

 

 

Quoted Prices

 

 

 

 

 

 

 

 

 

 

 

 

 

 

in Active

 

 

Significant

 

 

 

 

 

 

 

 

 

 

Markets for

 

 

Other

 

 

Significant

 

 

 

 

 

 

Identical

 

 

Observable

 

 

Observable

 

 

December 31,

 

 

Assets

 

 

Inputs

 

 

Inputs

 

 

2015

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

(in thousands)

 

Nuclear decommissioning trust (1)

$

46,051

 

 

$

46,051

 

 

$

 

 

$

 

Nuclear decommissioning trust - Net Asset Value (1)(2)

 

99,664

 

 

 

 

 

 

 

 

 

 

Unrestricted investments and other (3)

 

211

 

 

 

 

 

 

211

 

 

 

 

Total Financial Assets

$

145,926

 

 

$

46,051

 

 

$

211

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives - gas and power (4)

$

3,653

 

 

$

3,653

 

 

$

 

 

$

 

Total Financial Liabilities

$

3,653

 

 

$

3,653

 

 

$

 

 

$

 

 

 

 

(1)

For additional information about our nuclear decommissioning trust see Note 4 below.

 

(2)

Nuclear decommissioning trust includes investments measured at net asset value per share (or its equivalent) as a practical expedient and these investments have not been categorized in the fair value hierarchy.  The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Condensed Consolidated Balance Sheet.

 

(3)

Unrestricted investments and other includes investments that are related to equity securities.

 

(4)

Derivatives - gas and power represent natural gas futures contracts which are indexed against NYMEX.  For additional information about our derivative financial instruments, see Note 1 of the Notes to Consolidated Financial Statements in our 2015 Annual Report on Form 10-K.

We did not have any financial assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category.

 

 

 

 

3.

Derivatives and Hedging

We are exposed to market price risk by purchasing power to supply the power requirements of our member distribution cooperatives that are not met by our owned generation.  In addition, the purchase of fuel to operate our generating facilities also exposes us to market price risk.  To manage this exposure, we utilize derivative instruments.  See Note 1 of the Notes to Consolidated Financial Statements in our 2015 Annual Report on Form 10-K.

Changes in the fair value of our derivative instruments accounted for at fair value are recorded as a regulatory asset or regulatory liability.  The change in these accounts is included in the operating activities section of our Condensed Consolidated Statements of Cash Flows.

Excluding contracts accounted for as normal purchase/normal sale, we had the following outstanding derivative instruments:

 

 

 

 

 

As of

 

 

As of

 

 

 

 

 

June 30, 2016

 

 

December 31, 2015

 

Commodity

 

Unit of Measure

 

Quantity

 

 

Quantity

 

Natural Gas

 

MMBTU

 

 

9,480,000

 

 

 

10,620,000

 

8


 

 

The fair value of our derivative instruments, excluding contracts accounted for as normal purchase/normal sale, was as follows:

 

 

 

 

 

Fair Value

 

 

 

 

 

As of

June 30,

 

 

As of

December 31,

 

 

 

Balance Sheet Location

 

2016

 

 

2015

 

 

 

 

 

(in thousands)

 

Derivatives in an asset position:

 

 

 

 

 

 

 

 

 

 

Natural gas futures contracts

 

Deferred charges-other

 

$

1,592

 

 

$

 

Total derivatives in an asset position

 

 

 

$

1,592

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives in a liability position:

 

 

 

 

 

 

 

 

 

 

Natural gas futures contracts

 

Deferred credits and other liabilities-other

 

$

 

 

$

3,653

 

Total derivatives in a liability position

 

 

 

$

 

 

$

3,653

 

 

The Effect of Derivative Instruments on the Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital for the Three and Six Months Ended June 30, 2016 and 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount of Gain

 

 

Amount of Gain

 

 

 

Amount of Gain

 

 

Location of

 

(Loss) Reclassified

 

 

(Loss) Reclassified

 

 

 

(Loss) Recognized

 

 

Gain (Loss)

 

from Regulatory

 

 

from Regulatory

 

 

 

in Regulatory

 

 

Reclassified

 

Asset/Liability

 

 

Asset/Liability

 

 

 

Asset/Liability for

 

 

from Regulatory

 

into Income for

 

 

into Income for

 

Derivatives Accounted for

 

Derivatives as of

 

 

Asset/Liability

 

the Three Months

 

 

the Six Months

 

Utilizing Regulatory Accounting

 

June 30,

 

 

into Income

 

Ended June 30,

 

 

Ended June 30,

 

 

 

2016

 

 

2015

 

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

(in thousands)

 

 

 

 

(in thousands)

 

 

(in thousands)

 

Natural gas futures contracts (1)

 

$

2,093

 

 

$

(4,663

)

 

Fuel

 

$

(1,475

)

 

$

(952

)

 

$

(2,498

)

 

$

(1,658

)

Purchased power contracts

 

 

 

 

 

 

 

Purchased Power

 

 

 

 

 

 

 

 

 

 

 

(14

)

Total

 

$

2,093

 

 

$

(4,663

)

 

 

 

$

(1,475

)

 

$

(952

)

 

$

(2,498

)

 

$

(1,672

)

 

 

(1)

As of June 30, 2016, includes $0.5 million of gain on NYMEX contracts designated for July 2016 that were physically sold in June 2016 and the impact on the Condensed Consolidated Statements of Revenues, Expenses, and Patronage Capital has been deferred until July 2016.

Our hedging activities expose us to credit-related risks.  We use hedging instruments, including forwards, futures, financial transmission rights, and options, to mitigate our power market price risks.  Because we rely substantially on the use of hedging instruments, we are exposed to the risk that counterparties will default in performance of their obligations to us.  Although we assess the creditworthiness of counterparties and other credit issues related to these hedging instruments, and we may require our counterparties to post collateral with us, defaults may still occur.  Defaults may take the form of failure to physically deliver purchased energy or failure to pay.  If a default occurs, we may be forced to enter into alternative contractual arrangements or purchase energy in the forward, short-term, or spot markets at then-current market prices that may exceed the prices previously agreed upon with the defaulting counterparty.

 

 

 

9


4.

Investments

Investments were as follows at June 30, 2016 and December 31, 2015:

 

 

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

Carrying

 

Description

 

Designation

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

 

Value

 

 

 

 

 

(in thousands)

 

June 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nuclear decommissioning trust (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities

 

Available for sale

 

$

43,511

 

 

$

4,927

 

 

$

 

 

$

48,438

 

 

$

48,438

 

Equity securities

 

Available for sale

 

 

72,936

 

 

 

30,993

 

 

 

(1,288

)

 

 

102,641

 

 

 

102,641

 

Cash and other

 

Available for sale

 

 

145

 

 

 

 

 

 

 

 

 

145

 

 

 

145

 

Total Nuclear Decommissioning Trust

 

 

 

$

116,592

 

 

$

35,920

 

 

$

(1,288

)

 

$

151,224

 

 

$

151,224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Deposits (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government obligations

 

Held to maturity

 

$

103,295

 

 

$

4,998

 

 

$

 

 

$

108,293

 

 

$

103,295

 

Total Lease Deposits

 

 

 

$

103,295

 

 

$

4,998

 

 

$

 

 

$

108,293

 

 

$

103,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrestricted investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government obligations

 

Held to maturity

 

$

2,002

 

 

$

4

 

 

$

 

 

$

2,006

 

 

$

2,002

 

Debt securities

 

Held to maturity

 

 

2,689

 

 

 

18

 

 

 

 

 

 

2,707

 

 

 

2,689

 

Total Unrestricted Investments

 

 

 

$

4,691

 

 

$

22

 

 

$