CenterPoint Energy 2014 Annual Report Download - page 107

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________________
For CenterPoint Energy’
s price stabilization activities of the Natural Gas Distribution business segment, the settled costs of derivatives are
ultimately recovered through purchased gas adjustments. Accordingly, the net unrealized gains and losses associated with these contracts are
recorded as net regulatory assets. Realized and unrealized gains and losses on other derivatives are recognized in the Statements of Consolidated
Income as revenue for retail sales derivative contracts and as natural gas expense for financial natural gas derivatives and non-
retail related
physical natural gas derivatives. Unrealized gains and losses on indexed debt securities are recorded as Other Income (Expense) in the
Statements of Consolidated Income.
97
Fair Value of Derivative Instruments
December 31, 2013
Total derivatives not designated
as hedging instruments
Balance Sheet
Location
Derivative
Assets
Fair Value
Derivative
Liabilities
Fair Value
(in millions)
Natural gas derivatives (1) (2) (3)
Current Assets: Non-trading derivative assets
$
28
$
4
Natural gas derivatives (1) (2)
Other Assets: Non-trading derivative assets
10
—
Natural gas derivatives (1) (2)
Current Liabilities: Non-trading derivative liabilities
4
21
Natural gas derivatives (1) (2)
Other Liabilities: Non-trading derivative liabilities
1
5
Indexed debt securities derivative
Current Liabilities
—
455
Total
$
43
$
485
(1) The fair value shown for natural gas contracts is comprised of derivative gross volumes totaling 607 Bcf or a net 46
Bcf long position.
Of the net long position, basis swaps constitute 99 Bcf.
(2)
Natural gas contracts are presented on a net basis in the Consolidated Balance Sheets. Natural gas contracts are subject to master netting
arrangements. This netting applies to all undisputed amounts due or past due and causes derivative assets (liabilities) to be ultimately
presented net in a liability (asset) account within the Consolidated Balance Sheets. The net of total non-
trading derivative assets and
liabilities was a $13 million asset as shown on CenterPoint Energy’
s Consolidated Balance Sheets (and as detailed in the table below),
and was comprised of the natural gas contracts derivative assets and liabilities separately shown above, offset by collateral netting of
less than $1 million .
(3) The $28 million Derivative Current Asset includes $1 million
related to physical forwards purchased from Enable.
Offsetting of Natural Gas Derivative Assets and Liabilities
December 31, 2013
Gross Amounts
Recognized (1)
Gross Amounts Offset in the
Consolidated Balance Sheets
Net Amount Presented in the
Consolidated Balance Sheets
(2)
(in millions)
Current Assets: Non-trading derivative assets
$
32
$
(8
)
$
24
Other Assets: Non-trading derivative assets
11
(1
)
10
Current Liabilities: Non-trading derivative liabilities
(25
)
8
(17
)
Other Liabilities: Non-trading derivative liabilities
(5
)
1
(4
)
Total
$
13
$
—
$
13
(1)
Gross amounts recognized include some derivative assets and liabilities that are not subject to master netting arrangements.
(2)
The derivative assets and liabilities on the Consolidated Balance Sheets exclude accounts receivable or accounts payable that, should
they exist, could be used as offsets to these balances in the event of a default.