Allegheny Power 2010 Annual Report Download - page 105
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90
The following tables summarize the fair value of commodity derivatives on FirstEnergy’s Consolidated Balance Sheets:
Cash Flow Hedges
Derivative Assets Derivative Liabilities
Fair Value Fair Value
December 31, December 31, December 31, December 31,
2010 2009 2010 2009
(In millions) (In millions)
Electricity Forwards Electricity Forwards
Current Assets $ 55 $ 3 Current Liabilities $ 58 $ 7
Noncurrent Assets 49 11 Noncurrent Liabilities 43 12
Natural Gas Futures Natural Gas Futures
Current Assets - - Current Liabilities - 9
Noncurrent Assets - - Noncurrent Liabilities - -
Other Other
Current Assets - - Current Liabilities - 2
Noncurrent Assets - - Noncurrent Liabilities - -
$ 104 $14 $ 101 $30
Economic Hedges
Derivative Assets Derivative Liabilities
Fair Value Fair Value
December 31, December 31, December 31, December 31,
2010 2009 2010 2009
(In millions) (In millions)
NUG Contracts NUG Contracts
Power Purchase Power Purchase
Contract Asset $ 122 $ 200 Contract Liability $ 466 $ 643
Other Other
Current Assets 96 - Current Liabilities 208 106
Noncurrent Assets 50 19 Noncurrent Liabilities 38 97
268 219 712 846
Total Commodity Derivatives $ 372 $233 Total Commodity Derivatives $ 813 $876
Electricity forwards are used to balance expected sales with expected generation and purchased power. Natural gas
futures are entered into based on expected consumption of natural gas, primarily used in FirstEnergy’s peaking units.
Heating oil futures are entered into based on expected consumption of oil and the financial risk in FirstEnergy’s coal
transportation contracts. Derivative instruments are not used in quantities greater than forecasted needs. The following
table summarizes the volume of FirstEnergy’s outstanding derivative transactions as of December 31, 2010:
Purchases Sales Net Units
(In thousands)
Electricity Forwards 42,227 (45,164) (2,937) MWH
The effect of derivative instruments on the Consolidated Statements of Income and Comprehensive Income for the years
ended December 31, 2010 and 2009 are summarized in the following tables:
Derivatives in Cash Flow Hedging Relationships Electricity Natural Gas Heating Oil
Forwards Futures Futures Total
(In millions)
2010
Gain (Loss) Recognized in AOCL (Effective Portion) $ - $ (1) $ - $ (1)
Effective Gain (Loss) Reclassified to: (1)
Purchased Power Expense (12) - - (12)
Fuel Expense - (10) (3) (13)
2009
Gain (Loss) Recognized in AOCL (Effective Portion) $ 7 $ (9) $ 1 $ (1)
Effective Gain (Loss) Reclassified to:
(1)
Purchased Power Expense (6) - - (6)
Fuel Expense - (9) (12) (21)
(1) The ineffective portion was immaterial.