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FAIR VALUE MEASUREMENTS
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

Fair value accounting rules provide a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are defined as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are observable, either directly or indirectly, but are not quoted prices included within Level 1. Level 2 includes those financial instruments that are valued using external inputs within models or other valuation methods.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methods that result in management's best estimate of fair value. Level 3 instruments include those that may be more structured or otherwise tailored to customers' needs.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. We use a mid-market pricing convention (the mid-point price between bid and ask prices) as a practical measure for valuing certain derivative assets and liabilities. We primarily use a market approach for recurring fair value measurements and attempt to use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

When possible, we base the valuations of our derivative assets and liabilities on quoted prices for identical assets and liabilities in active markets. These valuations are classified in Level 1. The valuations of certain contracts not classified as Level 1 may be based on quoted market prices received from counterparties and/or observable inputs for similar instruments. Transactions valued using these inputs are classified in Level 2. Certain derivatives, such as FTRs, are categorized in Level 3 due to the significance of unobservable or internally-developed inputs. Our FTRs are valued using MISO auction prices.
The following tables summarize our financial assets and liabilities that were accounted for at fair value on a recurring basis, categorized by level within the fair value hierarchy:
June 30, 2026
(in millions)Level 1Level 2Level 3Total
Derivative assets
Natural gas contracts$0.3 $6.5 $— $6.8 
FTRs— — 10.2 10.2 
Total derivative assets$0.3 $6.5 $10.2 $17.0 
Derivative liabilities
Natural gas contracts$5.4 $1.2 $— $6.6 

December 31, 2025
(in millions)Level 1Level 2Level 3Total
Derivative assets
Natural gas contracts$0.1 $5.5 $— $5.6 
FTRs— — 2.3 2.3 
Total derivative assets$0.1 $5.5 $2.3 $7.9 
Derivative liabilities
Natural gas contracts$3.4 $0.6 $— $4.0 

The derivative assets and liabilities listed in the tables above include options, futures, physical commodity contracts, and other instruments used to manage market risks related to changes in commodity prices. They also include FTRs, which are used to manage electric transmission congestion costs in the MISO Energy and Operating Reserves Markets.

The following table summarizes the changes to derivatives classified as Level 3 in the fair value hierarchy:
Three Months Ended June 30Six Months Ended June 30
(in millions)2026202520262025
Balance at the beginning of the period$0.7 $0.4 $2.3 $2.0 
Purchases11.4 7.2 11.4 7.2 
Sales(0.1)— (0.2)— 
Settlements(1.8)(1.3)(3.3)(2.9)
Balance at the end of the period$10.2 $6.3 $10.2 $6.3 

Fair Value of Financial Instruments

The following table shows the financial instruments included on our balance sheets that were not recorded at fair value:
June 30, 2026December 31, 2025
(in millions)Carrying AmountFair ValueCarrying AmountFair Value
Long-term debt$2,257.4 $1,898.8 $1,959.3 $1,626.0 

The fair value of our long-term debt is categorized within Level 2 of the fair value hierarchy.