We are exposed to credit risk as a result of entering into these arrangements. Credit risk is the potential loss resulting from a counterparty's nonperformance under an agreement. We have established policies and procedures to manage credit risk through counterparty analysis, exposure calculation and monitoring, exposure limits, collateralization and certain other contractual provisions.

It is possible that volatility in commodity prices could cause us to have credit risk exposures with one or more counterparties. If such counterparties fail to perform their obligations, we could suffer a financial loss. However, as of March 31, 2025, all of the counterparties with transaction amounts outstanding under our derivative programs are rated investment grade by the major rating agencies or have provided a guaranty from one of their affiliates that is rated investment grade.

We have entered into International Swaps and Derivatives Association agreements with our natural gas derivative counterparties that mitigate credit exposure by creating contractual rights relating to creditworthiness, collateral, termination and netting (which, in certain cases, allows us to use the net value of affected transactions with the same counterparty in the event of default by the counterparty or early termination of the agreement).

Additionally, we have implemented procedures to monitor the creditworthiness of our counterparties and to evaluate nonperformance in valuing counterparty positions. We have contracted with a third party to assist in monitoring certain of our counterparties' credit standing and condition. Net liability positions are generally not adjusted as we use derivative transactions as hedges and have the ability and intent to perform under each of our contracts. In the instance of net asset positions, we consider general market conditions and the observable financial health and outlook of specific counterparties, forward looking data such as credit default swaps, when available, and historical default probabilities from credit rating agencies in evaluating the potential impact of nonperformance risk to derivative positions.

The contractual agreements contain provisions that could require us or the counterparty to post collateral or credit support. The amount of collateral or credit support that could be required is calculated as the difference between the aggregate fair value of the hedges and pre-established credit thresholds. The credit thresholds are contingent upon each party's credit ratings from the major credit rating agencies. The collateral and credit support requirements vary by contract and by counterparty.

Under the natural gas swap arrangements, we pay the counterparty a fixed price for specified natural gas quantities and receive a payment for such quantities based on a market price index. These payment obligations are netted, such that if the market price index is lower than the fixed price, we will make a net payment, and if the market price index is higher than the fixed price, we will receive a net payment.

At March 31, 2025 and December 31, 2024, the estimated fair values of our natural gas contracts were net assets of approximately $59,792,000 and $28,624,000, respectively.

At March 31, 2025 and December 31, 2024, one of our counterparties was required to post credit collateral totaling $15,200,000 and $500,000, respectively, under our natural gas swap agreements. Such posted collateral is classified as restricted cash and included in the Restricted cash and short-term investments line item within our unaudited consolidated balance sheets.

The following table reflects the notional volume of our natural gas derivatives as of March 31, 2025 that is expected to settle or mature each year:


Year			Natural Gas Swaps (MMBTUs) (in millions)
2025			21.9
2026			23.0
2027			12.7
2028			4.4
2029			3.7
2030			2.5
Total			68.2

The table below reflects the fair value of derivative instruments subject to the right of setoff and their effect on our consolidated balance sheets at March 31, 2025 and December 31, 2024. We have elected to offset the recognized fair value amounts for multiple derivative instruments executed with the same counterparty in our financial statements when a legal right of setoff exists.


	Consolidated Balance Sheet Location	Fair Value
		2025						2024
		Assets		Liabilities		Net Carrying Value Presented on the Balance Sheet		Assets		Liabilities		Net Carrying Value Presented on the Balance Sheet
Assets		(dollars in thousands)
Natural gas swaps	Other current assets	$	42,157	$	(59)	$	42,098	$	19,527	$	(1,563)	$	17,964
Natural gas swaps	Other deferred charges	22,065		(4,371)		17,694		17,566		(5,279)		12,287
Liabilities
Natural gas swaps	Other current liabilities	$	—	$	—	$	—	$	290	$	(1,917)	$	(1,627)
Natural gas swaps	Other deferred credits	—		—		—		—		—		—
Total		$	64,222	$	(4,430)	$	59,792	$	37,383	$	(8,759)	$	28,624

The following table presents the gross realized gains and (losses) on derivative instruments recognized in net margins for the three months ended March 31, 2025 and 2024.


	Statement of Revenues and Expenses Location	Three Months Ended March 31,
		2025		2024
		(dollars in thousands)
Natural gas swaps gains	Fuel	$	2,366	$	41
Natural gas swaps losses	Fuel	(1,359)		(8,452)
Total		$	1,007	$	(8,411)

The following table presents the unrealized gains on derivative instruments deferred on the balance sheet at March 31, 2025 and December 31, 2024.


	Balance Sheet Location	2025		2024
		(dollars in thousands)
Natural gas swaps	Regulatory liability	$	59,792	$	28,624
Total		$	59,792	$	28,624