Entergy 2009 Annual Report Download - page 143
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Entergy Corporation and Subsidiaries
Notes to Financial Statements
139
Entergy's exposure to market risk is determined by a number of factors, including the size, term,
composition, and diversification of positions held, as well as market volatility and liquidity. For instruments such as
options, the time period during which the option may be exercised and the relationship between the current market
price of the underlying instrument and the option's contractual strike or exercise price also affects the level of market
risk. A significant factor influencing the overall level of market risk to which Entergy is exposed is its use of hedging
techniques to mitigate such risk. Entergy manages market risk by actively monitoring compliance with stated risk
management policies as well as monitoring the effectiveness of its hedging policies and strategies. Entergy's risk
management policies limit the amount of total net exposure and rolling net exposure during the stated periods. These
policies, including related risk limits, are regularly assessed to ensure their appropriateness given Entergy's
objectives.
Derivatives
The fair values of Entergy's derivative instruments in the consolidated balance sheet as of December 31,
2009 are as follows:
Instrument Balance Sheet Location Fair Value Business
Derivatives designated as
hedging instruments
Assets:
Electricity futures, forwards,
and swaps Prepayments and other (current portion) $109 million Non-Utility Nuclear
Electricity futures, forwards,
and swaps
Other deferred debits and other assets
(non-current portion) $91 million Non-Utility Nuclear
Derivatives not designated
as hedging instruments
Assets:
Natural gas swaps Prepayments and other $8 million Utility
141