Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Fair Value Inputs, Assets and Liabilities, Quantitative Information [Table Text Block]

Below are the significant unobservable inputs used in the fourth quarter in estimating the fair value of the Rock Island long-term power purchase contract during the period ended December 31, 2012:



Valuation Technique	Unobservable Input	Low	High	Weighted Average
Discounted cash flow	Power prices	$16.94 per MWh	$70.89 per MWh	$49.40 per MWh
Discounted cash flow	Power contract costs (in thousands)	$1,777 per qtr	$7,133 per qtr	$6,603 per qtr

Below are the forward price ranges for the Company's purchased commodity contracts, as of December 31, 2012:



(Dollars in Thousands)
	Fair Value				Range
Derivative Instrument	Assets ¹	Liabilities ¹	Valuation Technique	Unobservable Input	Low	High	Weighted Average
Electric	$8,298	$42,221	Discounted cash flow	Power Prices	$13.39 per MWh	$67.79 per MWh	$45.11 per MWh
Natural gas	$5,357	$6,960	Discounted cash flow	Natural Gas Prices	$3.76 per MMBtu	$5.07 per MMBtu	$4.26 per MMBtu

_______________


¹	The valuation techniques, unobservable inputs and ranges are the same for asset and liability positions.

Below are significant unobservable inputs used in the first quarter in estimating the fair value of the Wells Hydro long-term power purchase contract during the period ended March 31, 2012:



Valuation Technique	Unobservable Input	Low	High	Weighted Average
Discounted cash flow	Power prices	$10.36 per MWh	$49.78 per MWh	$34.98 per MWh
Discounted cash flow	Power contract costs (in thousands)	$3,185 per qtr	$5,030 per qtr	$4,663 per qtr

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis



Puget Energy	Carrying / Fair Value At December 31, 2012						Carrying / Fair Value At December 31, 2011
(Dollars in Thousands)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash and Cash Equivalents	$	105,000	$	30,542	$	135,542	$	14,809	$	22,426	$	37,235
Restricted Cash	914		2,786		3,700		2,043		2,140		4,183
Notes Receivable and Other	—		63,802		63,802		—		73,031		73,031
Total assets	$	105,914	$	97,130	$	203,044	$	16,852	$	97,597	$	114,449
Liabilities:
Short Term Debt	$	181,000	$	—	$	181,000	$	—	$	25,000	$	25,000
Total liabilities	$	181,000	$	—	$	181,000	$	—	$	25,000	$	25,000

Fair Value Inputs, Liabilities, Quantitative Information

The fair value of the junior subordinated and long-term notes were estimated using the discounted cash flow method with U.S. Treasury yields and Company credit spreads as inputs, interpolating to the maturity date of each issue. Carrying values and estimated fair values were as follows:



Puget Energy		December 31, 2012				December 31, 2011
(Dollars in Thousands)	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities:
Junior subordinated notes	2	$	250,000	$	264,842	$	250,000	$	248,583
Long-term debt (fixed-rate), net of discount	2	4,662,200		6,197,179		4,197,511		5,503,571
Long-term debt (variable-rate), net of discount	2	434,000		434,000		829,856		856,978
Total		$	5,346,200	$	6,896,021	$	5,277,367	$	6,609,132

Puget Sound Energy		December 31, 2012				December 31, 2011
(Dollars in Thousands)	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities:
Junior subordinated notes	2	$	250,000	$	264,842	$	250,000	$	248,583
Long-term debt (fixed-rate), net of discount	2	3,526,258		4,628,509		3,523,845		4,499,295
Total		$	3,776,258	$	4,893,351	$	3,773,845	$	4,747,878

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]



Puget Energy and Puget Sound Energy	Twelve Months Ended December 31,
Level 3 Roll-Forward Net (Liability)	2012									2011									2010
(Dollars in Thousands)	Electric			Gas			Total			Electric			Gas			Total			Electric			Gas			Total
Balance at beginning of period	$	(90,311	)	$	(5,041	)	$	(95,352	)	$	(87,436	)	$	(3,859	)	$	(91,295	)	$	(96,330	)	$	(4,003	)	$	(100,333	)
Changes during period
Realized and unrealized energy derivatives:
Included in earnings ¹	(21,362		)	—			(21,362		)	(56,499		)	—			(56,499		)	(112,180		)	—			(112,180		)
Included in regulatory assets / liabilities	—			(1,937		)	(1,937		)	—			(250		)	(250		)	—			(2,665		)	(2,665		)
Settlements²	59,133			969			60,102			40,900			(3,418		)	37,482			30,625			(793		)	29,832
Transferred into Level 3	(55,548		)	(297		)	(55,845		)	(759		)	453			(306		)	326			(101		)	225
Transferred out of Level 3	74,164			4,704			78,868			13,483			2,033			15,516			90,123			3,703			93,826
Balance at end of period	$	(33,924	)	$	(1,602	)	$	(35,526	)	$	(90,311	)	$	(5,041	)	$	(95,352	)	$	(87,436	)	$	(3,859	)	$	(91,295	)

_______________


¹	Income Statement location: Unrealized (gain) loss on derivative instruments, net. Includes unrealized gains (losses) on derivatives still held in position as of the reporting date for electric derivatives of $(15.2) million, $(55.2) million, and $(89.4) million for the twelve months ended December 31, 2012, 2011 and 2010, respectively.


²	The Company had no purchases, sales or issuances during the reported periods.

Realiz

Fair Value, Measurements, Recurring

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The Company did not have any transfers between Level 2 and Level 1 during the twelve months ended December 31, 2012 and 2011.



Puget Energy	Fair Value						Fair Value
Puget Energy	At December 31, 2012						At December 31, 2011
(Dollars in Thousands)	Level 2		Level 3		Total		Level 2		Level 3		Total
Interest rate derivative instruments	$	21,524	$	—	$	21,524	$	52,409	$	—	$	52,409
Total derivative liabilities	$	21,524	$	—	$	21,524	$	52,409	$	—	$	52,409



Puget Energy and Puget Sound Energy	Fair Value						Fair Value
Puget Energy and Puget Sound Energy	At December 31, 2012						At December 31, 2011
(Dollars in Thousands)	Level 2		Level 3		Total		Level 2		Level 3		Total
Assets:
Electric derivative instruments	$	1,259	$	8,298	$	9,557	$	2,340	$	8,380	$	10,720
Natural gas derivative instruments	6,769		5,357		12,126		—		6,011		6,011
Total assets	$	8,028	$	13,655	$	21,683	$	2,340	$	14,391	$	16,731
Liabilities:
Electric derivative instruments	$	88,971	$	42,221	$	131,192	$	165,643	$	98,691	$	264,334
Natural gas derivative instruments	101,119		6,960		108,079		195,852		11,052		206,904
Total liabilities	$	190,090	$	49,181	$	239,271	$	361,495	$	109,743	$	471,238

PUGET SOUND ENERGY, INC.

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis



Puget Sound Energy	Carrying / Fair Value At December 31, 2012						Carrying / Fair Value At December 31, 2011
(Dollars in Thousands)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash and Cash Equivalents	$	105,000	$	30,530	$	135,530	$	9,200	$	21,810	$	31,010
Restricted Cash	914		2,786		3,700		2,043		2,140		4,183
Notes Receivable and Other	—		63,802		63,802		—		73,031		73,031
Total assets	$	105,914	$	97,118	$	203,032	$	11,243	$	96,981	$	108,224
Liabilities:
Short Term Debt	$	181,000	$	—	$	181,000	$	—	$	25,000	$	25,000
Short Term Debt owed to parent	—		29,598		29,598		—		29,998		29,998
Total liabilities	$	181,000	$	29,598	$	210,598	$	—	$	54,998	$	54,998

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details