National Grid 2008 Annual Report Download - page 317

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 63060
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 111
Description: EXH 2(B).6.1
0/3715.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/715/3*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 63060
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 111 Description: EXH 2(B).6.1
0/3715.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/715/3*
NOTE D – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The followin
g
table details the components of accumulated other comprehensive income (loss) for the fiscal years ended
March 31, 2007 and 2006:
NOTE E – DERIVATIVE CONTRACTS AND HEDGING ACTIVITIES
Niagara Mohawk
In the normal course of business, the Company is a party to derivative financial instruments (derivatives) that are principally
used to mana
g
e commodity prices associated with its natural
g
as and electric operations. These financial exposures are
monitored and managed as an integral part of the Company’s overall Financial Risk Mana
g
ement Policy. At the core of the
policy is a condition that the Company will en
g
a
g
e in activities at risk only to the extent that those activities fall within
commodities and financial markets to which it has a physical market exposure in terms and volumes consistent with its core
business. The Company does not issue or intend to hold derivative instruments for speculative tradin
g
purposes. Derivatives
are accounted for accordin
g
to SFAS No. 133 as amended, which requires derivatives to be reported at fair value as assets or
liabilities on the balance sheet. Chan
g
es in the fair value of instruments that qualify for hed
g
e accountin
g
are deferred in
Accumulated Other Comprehensive Income and will be reclassified throu
g
h purchased electricity or
g
as expense within the
next twelve months. Other instruments are deferred in re
g
ulatory assets or liabilities accordin
g
to current rate a
g
reements and
are reclassified through purchased electricity or gas expense in the hedge months. The Company’s rate a
g
reements allow for
the pass-through of the commodity costs of electricity and natural gas, including the costs of the hedging programs.
Nia
g
ara Mohawk has ei
g
ht indexed swap contracts, expirin
g
in fiscal year 2009 (June 2008), which resulted from the Master
Restructurin
g
A
g
reement. These derivatives are not desi
g
nated as hed
g
in
g
instruments and are covered by re
g
ulatory rulin
g
s
that allow the
g
ains and losses to be recorded as re
g
ulatory assets or re
g
ulatory liabilities. As of March 31, 2007 and 2006, the
Company had recorded liabilities at net present value of $268 million and $537 million, respectively, for these swap contracts
and had recorded a corresponding swap contracts regulatory asset. The asset and liability are amortized over
F-26
Unrealized Total
Gains and Accumulated
(Losses) on Pension Other
Available-for- Liabilit
y
Cash Flow Com
p
rehensive
Sale Securities Ad
j
ustment Hed
g
es Income
(
Loss
)
(In thousands
)
March 31, 2005 $ 3,868 $ (188,841) $ 12,812 $ (172,161)
Other comprehensive income (loss), net of
taxes Unrealized
g
ains on securities 6,217 6,217
Change in additional minimum pension liability 182,489 182,489
Hed
g
in
g
activit
y
4,009 4,009
Reclassification adjustment for loss included
in net income (3,236) (21,574) (24,810)
March 31, 2006 $6,849$
(
6,352
)
$
(
4,753
)
$
(
4,256
)
Other comprehensive income (loss), net of
taxes Unrealized gains on securities 6,003 6,003
Chan
g
e in additional minimum
p
ension liabilit
y
(
6,278
)
(
6,278
)
Adjustment for the adoption of SFAS No. 158 (398,145) (398,145)
Hedging activity (17,526) (17,526)
Reclassification adjustment for gain (loss)
included in net income (3,570) 22,034 18,464
March 31, 2007 $ 9,282 $ (410,775) $ (245) $ (401,738)