Consolidated  Notes to the  Financial  Statements 134 Note 53 – Financial instruments (continued) Electricity derivatives – cash flow hedges Electricity derivatives – economic hedges The following table details the movements in the hedging reserve from electricity derivatives: During the year a net fair value loss of $304.6 million (2011: gain of $219.1 million) was recognised in profit or loss by the consolidated entity. The consolidated entity has entered into certain derivative instruments for economic hedging purposes under the Board-approved risk  management policies, which do not satisfy the requirements for hedge accounting under AASB 139  Financial Instruments: Recognition and  Measurement . These derivatives are therefore required to be categorised as held for trading and are classified in the statement of financial  position as economic hedges. Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognised  immediately in profit or loss as part of gain/(loss) in fair value of electricity derivatives. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately to profit or  loss. During the year, no hedges were de-designated and all underlying forecast transactions remain highly probable to occur as originally  forecast. The effective portion of changes in the fair value of electricity derivatives that are designated and qualify as cash flow hedges is recognised  in other comprehensive income. The gain or loss relating to the ineffective portion of the hedge is recognised immediately in profit or loss as  part of gain/(loss) in fair value of electricity derivatives. Amounts previously recognised in other comprehensive income and accumulated in  equity in the hedging reserve are reclassified to profit or loss and included in cost of sales in each period in which the underlying purchase or  sale transactions are recognised.  The hedged anticipated electricity purchase and sale transactions are expected to occur continuously over the next five years from the end  of the reporting period consistent with the forecast demand from customers over this period. Derivative financial instruments are used by the consolidated entity in the normal course of business in order to hedge exposure to  fluctuations in electricity prices. The aggregate notional volumes of the outstanding electricity derivatives at 30 June 2012 were  43.8 million MWh (2011: 101.3 million MWh). Electricity derivatives are either designated in cash flow hedge relationships or remain  non-designated. The following table details the fair value of electricity derivatives outstanding at the end of the reporting period: 2012  $m  2011  $m  Energy derivative financial assets – current Electricity derivatives – cash flow hedges 120.6  22.7  Electricity derivatives – economic hedges 58.8  222.2  179.4  244.9  Energy derivative financial assets – non-current Electricity derivatives – cash flow hedges 429.7  51.2  429.7  51.2  Energy derivative financial liabilities – current Electricity derivatives – cash flow hedges 27.0  123.2  Electricity derivatives – economic hedges 368.1  259.5  395.1  382.7  Energy derivative financial liabilities – non-current Electricity derivatives – cash flow hedges 5.3  3.1  5.3  3.1 Hedging reserve 2012  $m  2011  $m  Balance at beginning of financial year (40.3) (138.3) Loss in fair value of cash flow hedges 50.0  (27.4) Reclassified to cost of sales 104.1  169.9  Income tax on items taken directly to or transferred from equity (46.2) (44.5) Balance at end of financial year 67.6  (40.3) Cash flow ineffectiveness loss recognised immediately in profit or loss –  0.3