APS 2015 Annual Report Download - page 154

Table of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides information about gains and losses from derivative instruments not designated as accounting
hedging instruments during the years ended December 31, 2015, 2014 and 2013 (dollars in thousands):
Financial Statement
Year Ended
December 31,
Commodity Contracts
Location
2015
2014
2013
Net Gain Recognized in Income
Operating revenues
$ 574
$ 324
$ 289
Net Loss Recognized in Income
Fuel and purchased power
(a)
(108,973)
(66,367)
(10,449)
Total
$ (108,399)
$ (66,043)
$ (10,160)
(a) Amounts are before the effect of PSA deferrals.
Derivative Instruments in the Consolidated Balance Sheets
Our derivative transactions are typically executed under standardized or customized agreements, which include collateral
requirements and, in the event of a default, would allow for the netting of positive and negative exposures associated with a single
counterparty. Agreements that allow for the offsetting of positive and negative exposures associated with a single counterparty are
considered master netting arrangements. Transactions with counterparties that have master netting arrangements are offset and reported
net on the Consolidated Balance Sheets. Transactions that do not allow for offsetting of positive and negative positions are reported
gross on the Consolidated Balance Sheets.
We do not offset a counterparty’s current derivative contracts with the counterparty’s non-current derivative contracts, although
our master netting arrangements would allow current and non-current positions to be offset in the event of a default. Additionally, in
the event of a default, our master netting arrangements would allow for the offsetting of all transactions executed under the master
netting arrangement. These types of transactions may include non-derivative instruments, derivatives qualifying for scope exceptions,
trade receivables and trade payables arising from settled positions, and other forms of non-cash collateral (such as letters of credit).
These types of transactions are excluded from the offsetting tables presented below.
The significant majority of our derivative instruments are not currently designated as hedging instruments. The Consolidated
Balance Sheets as of December 31, 2015 and December 31, 2014, include gross liabilities of $3 million and $4 million, respectively, of
derivative instruments designated as hedging instruments.
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