v3.26.1
Derivative Instruments and Hedging Activity
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activity Derivative Instruments and Hedging Activity
XPLR uses derivative instruments (primarily interest rate swaps) to manage the interest rate cash flow risk associated with outstanding and expected future debt issuances and borrowings and to manage the physical and financial risks inherent in the sale of electricity. XPLR records all derivative instruments that are required to be marked to market as either assets or liabilities on its condensed consolidated balance sheets and measures them at fair value each reporting period. XPLR does not utilize hedge accounting for its derivative instruments. All changes in the interest rate contract derivatives' fair value are recognized in interest expense and the equity method investees' related activity is recognized in equity in earnings of equity method investees in XPLR's condensed consolidated statements of income (loss). At June 30, 2026 and December 31, 2025, the net notional amounts of the interest rate contracts were approximately $2.0 billion and $2.2 billion, respectively. All changes in commodity contract derivatives' fair value are recognized in operating revenues in XPLR's condensed consolidated statements of income (loss). At June 30, 2026 and December 31, 2025, XPLR had derivative commodity contracts for power with net notional volumes of approximately 1.7 million MWh and 3.1 million MWh, respectively. Cash flows from the interest rate and commodity contracts are reported in cash flows from operating activities in XPLR's condensed consolidated statements of cash flows.

Fair Value Measurement of Derivative Instruments – The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or other observable inputs (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. XPLR uses different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or similar assets and liabilities for those assets and liabilities that are measured at fair value on a recurring basis. Certain financial instruments may be valued using multiple inputs including discount rates, counterparty credit ratings and credit enhancements. XPLR’s assessment of the significance of any particular input to the fair value measurement requires judgment and may affect the placement of those assets and liabilities within the fair value hierarchy levels. Non-performance risk, including the consideration of a credit valuation adjustment, is also considered in the determination of fair value for all assets and liabilities measured at fair value. Transfers between fair value hierarchy levels occur at the beginning of the period in which the transfer occurred.

XPLR estimates the fair value of its derivative instruments using an income approach based on a discounted cash flows valuation technique utilizing the net amount of estimated future cash inflows and outflows related to the agreements. The primary inputs used in the fair value measurements include the contractual terms of the derivative agreements, current interest rates and credit profiles. The significant inputs for the resulting fair value measurement of interest rate contracts are market-observable inputs and the measurements are reported as Level 2 in the fair value hierarchy.
The tables below present XPLR's gross derivative positions, based on the total fair value of each derivative instrument, at June 30, 2026 and December 31, 2025 as well as the location of the net derivative positions, based on the expected timing of future payments, on XPLR's condensed consolidated balance sheets.

June 30, 2026
Level 1Level 2Level 3
Netting(a)
Total
(millions)
Assets:
Interest rate contracts$— $71 $— $— $71 
Commodity contracts$— $— $6 $— 6 
Total derivative assets$77 
Liabilities:
Interest rate contracts$— $3 $— $— $3 
Commodity contracts$— $— $8 $— 8 
Total derivative liabilities$11 
Net fair value by balance sheet line item:
Current other assets
$19 
Noncurrent other assets
58 
Total derivative assets$77 
Current other liabilities$7 
Noncurrent other liabilities4 
Total derivative liabilities$11 
____________________
(a)    Includes the effect of the contractual ability to settle contracts under master netting arrangements.

December 31, 2025
Level 1Level 2Level 3
Netting(a)
Total
(millions)
Assets:
Interest rate contracts$— $62 $— $— $62 
Commodity contracts$— $— $3 $— 3 
Total derivative assets$65 
Liabilities:
Interest rate contracts$— $10 $— $— $10 
Commodity contracts$— $— $10 $— 10 
Total derivative liabilities$20 
Net fair value by balance sheet line item:
Current other assets
$22 
Noncurrent other assets
43 
Total derivative assets$65 
Current other liabilities$17 
Noncurrent other liabilities3 
Total derivative liabilities$20 
____________________
(a)    Includes the effect of the contractual ability to settle contracts under master netting arrangements.
Financial Statement Impact of Derivative Instruments – Gains (losses) related to XPLR's derivatives are recorded in XPLR's condensed consolidated statements of income (loss) as follows:

Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(millions)
Interest rate contracts – interest expense$21 $(24)$30 $(103)
Interest rate contracts – loss from discontinued operations$— $(3)$— $(13)
Commodity contracts – operating revenues$3 $1 $5 $— 

Credit-Risk-Related Contingent Features – Certain of XPLR's derivative instruments contain credit-related cross-default and material adverse change triggers, none of which contain requirements to maintain certain credit ratings or financial ratios. At June 30, 2026 and December 31, 2025, the aggregate fair value of XPLR's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately $3 million and $10 million, respectively.