National Grid 2008 Annual Report Download - page 319

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 54779
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: 113
Description: EXH 2(B).6.1
0/3717.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/717/3*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 54779
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: 113 Description: EXH 2(B).6.1
0/3717.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/717/3*
The
g
ains and losses on the derivatives that are deferred and reported in accumulated other comprehensive income will be
reclassified as purchased ener
g
y expense in the periods in which expense is impacted by the variability of the cash flows of the
hed
g
ed item. For the twelve months ended March 31, 2007, the realized net loss of $37 million from hed
g
in
g
instruments, as
shown in the table above, was recorded to
g
as purchases and was offset by a correspondin
g
increase in the cost of a
comparable amount of
g
as. For the twelve months ended March 31, 2006, a realized net
g
ain of $36 million was recorded to
gas purchases and was offset by a corresponding decrease in the cost of a comparable amount of gas.
The actual amounts to be recorded in purchased energy expense are dependent on future chan
g
es in the contract values. The
majority of these deferred amounts will be reclassified to expense within the next twelve months. A nominal amount of the
hed
g
in
g
instruments extend into April 2008. There were no
g
ains or losses recorded durin
g
the fiscal year ended March 31,
2007 from the discontinuance of gas futures or electricity swap cash flow hedges.
The deferred
g
ain on NYMEX electric swap contracts to hed
g
e electricity purchases was $0.8 million and $0.3 million for the
fiscal years ended March 31, 2007 and 2006, respectively.
NEP
As a result of a USGen bankruptcy settlement a
g
reement (Bankruptcy Settlement), the Company resumed the performance
and payment obli
g
ations under power supply contracts that had been transferred to USGen when the Company divested its
g
eneratin
g
business. As of March 31, 2007 and 2006, the Company had recorded a derivative liability of approximately
$251 million and $294 million, respectively, for the above-market portion of the Contracts with an equal offset to a
correspondin
g
re
g
ulatory asset. The performance and payment obli
g
ations will not affect the results of operations, as the
Company will recover the above-market cost of the Contracts from customers throu
g
h the CTC. In accordance with the
Bankruptcy Settlement, the Company received proceeds of approximately $196 million in June 2005 from USGen. That amount
relates in part to the Contracts and the Company is creditin
g
that amount to customers throu
g
h a reduction in rates throu
g
h
December 31, 2009.
NOTE F – EMPLOYEE BENEFITS
Summary
The Company and its subsidiaries have non-contributory defined benefit pension plans and postretirement benefit plans other
than pensions (the Plans) covering substantially all employees. With the exception of New England-based union-represented
employees, employees hired on or after July 15, 2002 participate under a non-contributory defined benefit cash balance
pension plan design. Under that design, pay-based credits are applied based on service time, and interest credits are applied
based on
F-28
Balances as of March 31, 2007
Accumulated Loss Reclass
Accumulated Deferred to
Re
g
ulator
y
OCI**, net of Income Tax Commodit
y
Derivative Instrument Asset* Deferral tax on OCI** Costs
(In thousands of dollars
)
No
n
-
q
ualified for Hed
g
e Accountin
g
NYMEX futures – IPP swaps/non-MRA IPP $ 4,627.0 $ 2,272.1 $ — $ — $(101,132.4)
Notes:
* Differences between asset and re
g
ulatory or other comprehensive income deferral represent contracts settled for the
following month.
** Other comprehensive income (OCI)