Allegheny Power 2014 Annual Report Download - page 110

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95
Rollforward of Level 3 Measurements
The following table provides a reconciliation of changes in the fair value of NUG contracts, LCAPP contracts, and FTRs that are
classified as Level 3 in the fair value hierarchy for the periods ended December 31, 2014 and December 31, 2013:
NUG Contracts(1) LCAPP Contracts(1) FTRs
Derivative
Assets Derivative
Liabilities Net Derivative
Assets Derivative
Liabilities Net Derivative
Assets Derivative
Liabilities Net
(In millions)
January 1, 2013
Balance $ 36 $ (290) $ (254) $ — $ (144) $ (144) $ 8$ (9) $ (1)
Unrealized gain (loss) (8) (17) (25) — (22) (22) 3 1 4
Purchases — — — — — — 6 (15) (9)
Terminations(2) — — — — 166 166 — — —
Settlements (8) 85 77 — — — (13) 11 (2)
December 31, 2013
Balance $ 20 $ (222) $ (202) $ — $ — $ — $ 4$(12) $ (8)
Unrealized gain (loss) 2 (2) — — — — 47 (1) 46
Purchases — — — — — — 26 (16) 10
Settlements (20) 71 51 — — — (38) 15 (23)
December 31, 2014
Balance $ 2 $ (153) $ (151) $ — $ — $ — $ 39 $ (14) $ 25
(1) Changes in the fair value of NUG and LCAPP contracts are subject to regulatory accounting treatment and do not impact earnings.
(2) LCAPP contracts are financially settled agreements associated with capacity in New Jersey. During the fourth quarter of 2013, all LCAPP
contracts were terminated after being declared unconstitutional by the U.S. District Court for the District of New Jersey.
Level 3 Quantitative Information
The following table provides quantitative information for FTRs and NUG contracts that are classified as Level 3 in the fair value
hierarchy for the period ended December 31, 2014:
Fair Value, Net
(In millions) Valuation
Technique Significant Input Range Weighted
Average Units
FTRs $ 25 Model RTO auction clearing prices ($7.20) to $19.30 $1.40 Dollars/MWH
NUG Contracts $ (151) Model Generation
Regional electricity prices 500 to 4,756,000
$44.40 to $69.80 950,000
$51.80 MWH
Dollars/MWH