DERIVATIVES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVES | DERIVATIVES Tri-State is exposed to certain risks in the normal course of operations in providing reliable and affordable wholesale power to its Utility Members including commodity price risk arising from fluctuations in energy and related commodity markets. To manage this exposure, Tri-State may enter into a variety of physically- or financially-settled commodity contracts of various maturities, such as forwards, futures, swaps, options and other derivative instruments. Derivatives that have not been designated or do not qualify for the normal purchases and normal sales exception, are recognized as assets or liabilities at fair value on Tri-State’s consolidated statements of financial position with changes in the fair value recorded in current earnings unless hedge accounting is applied or changes in fair value are deferred as regulatory assets or liabilities, as applicable. Tri-State participation in the SPP regional transmission organization exposes Tri-State to transmission congestion costs. In order to manage these costs, Tri-State purchases market products, such as TCRs, that hedges price volatility in congestion charges. TCRs are financial instruments that do not convey physical rights to move electricity. Rather, TCRs provide financial compensation that entitle the holder to receive compensation for transmission congestion charges that arise when the transmission grid is congested in the day-ahead market. TCRs are acquired through annual and monthly auctions as well as an annual long-term congestion rights allocation process. Because of the financial, rather than physical, nature of TCRs, Tri-State accounts for these instruments as derivatives. TCRs do not qualify for the normal purchases and normal sales exception. Outstanding derivative instruments, excluding those designated as normal purchases and normal sales, were as follows (dollars in thousands):
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