FAIR VALUE MEASUREMENTS
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:
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| | December 31, 2025 |
| (in millions) | | Level 1 | | Level 2 | | Level 3 | | Total |
| Derivative assets | | | | | | | | |
| Natural gas contracts | | $ | 1.5 | | | $ | 18.3 | | | $ | — | | | $ | 19.8 | |
| FTRs and TCRs | | — | | | — | | | 6.5 | | | 6.5 | |
| Total derivative assets | | $ | 1.5 | | | $ | 18.3 | | | $ | 6.5 | | | $ | 26.3 | |
| | | | | | | | |
| Investments held in rabbi trust | | $ | 42.0 | | | $ | — | | | $ | — | | | $ | 42.0 | |
| | | | | | | | |
| Derivative liabilities | | | | | | | | |
| Natural gas contracts | | $ | 23.3 | | | $ | 8.4 | | | $ | — | | | $ | 31.7 | |
| FTRs and TCRs | | — | | | — | | | 0.8 | | | 0.8 | |
| Total derivative liabilities | | $ | 23.3 | | | $ | 8.4 | | | $ | 0.8 | | | $ | 32.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2024 |
| (in millions) | | Level 1 | | Level 2 | | Level 3 | | Total |
| Derivative assets | | | | | | | | |
| Natural gas contracts | | $ | 19.6 | | | $ | 13.7 | | | $ | — | | | $ | 33.3 | |
| FTRs and TCRs | | — | | | — | | | 7.8 | | | 7.8 | |
| Total derivative assets | | $ | 19.6 | | | $ | 13.7 | | | $ | 7.8 | | | $ | 41.1 | |
| | | | | | | | |
| Investments held in rabbi trust | | $ | 52.1 | | | $ | — | | | $ | — | | | $ | 52.1 | |
| | | | | | | | |
| Derivative liabilities | | | | | | | | |
| Natural gas contracts | | $ | 7.1 | | | $ | 6.8 | | | $ | — | | | $ | 13.9 | |
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 and TCRs, which are used at our electric utilities and certain of our non-utility wind parks to manage electric transmission congestion costs in the MISO Energy Markets and the Southwest Power Pool, Inc. Integrated Marketplace, respectively.
We hold investments in the Integrys rabbi trust. These investments are used to fund participants' benefits under the Integrys deferred compensation plan and certain Integrys non-qualified pension plans. These investments are included in other long-term assets on our balance sheets. During the years ended December 31, 2025, 2024, and 2023, the net unrealized gains included in earnings related to the investments held at the end of the period were $5.8 million, $9.0 million, and $10.0 million, respectively.
The following table summarizes the changes to derivatives classified as Level 3 in the fair value hierarchy at December 31:
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | | 2025 | | 2024 | | 2023 |
| Balance at the beginning of the period | | $ | 7.8 | | | $ | 7.2 | | | $ | 7.8 | |
| Purchases | | 23.7 | | | 28.7 | | | 21.0 | |
Net realized and unrealized losses included in earnings (1) | | — | | | (0.7) | | | (0.5) | |
| Sales | | (1.0) | | | — | | | — | |
| Settlements | | (24.8) | | | (27.4) | | | (21.1) | |
| Balance at the end of the period | | $ | 5.7 | | | $ | 7.8 | | | $ | 7.2 | |
Net unrealized gains included in earnings attributable to Level 3 derivatives held at the end of the reporting period (1) | | $ | 0.1 | | | $ | — | | | $ | 0.5 | |
(1) Amounts relate to FTRs and TCRs included in our non-utility energy infrastructure segment. These net realized and unrealized gains and losses are recorded in operating revenues on our income statements.
Fair Value of Financial Instruments
The following table shows the financial instruments included on our balance sheets that are not recorded at fair value at December 31:
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| | 2025 | | 2024 |
| (in millions) | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
| Preferred stock of subsidiary | | $ | 30.4 | | | $ | 21.2 | | | $ | 30.4 | | | $ | 21.2 | |
| Long-term debt, including current portion | | 20,017.5 | | | 19,609.1 | | | 18,907.1 | | | 17,840.8 | |
The fair values of our long-term debt and preferred stock are categorized within Level 2 of the fair value hierarchy.