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Accounting for Derivative Instruments and Hedging Activities (Tables)
 9 Months Ended
Sep. 30, 2013
Derivative [Line Items]  
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
The following table presents the volumes, fair values and locations of the Company's derivative instruments recorded on the balance sheets:
Puget Energy and Puget Sound Energy
September 30, 2013
December 31, 2012
(Dollars in Thousands)
Volumes
Assets 1
Liabilities 2
Volumes
Assets 1
Liabilities 2
Interest rate swap derivatives 3
$450 million
$
—

$
14,722

$450 million
$
—

$
21,524

Electric portfolio derivatives
*
7,844

72,439

*
9,557

131,193

Natural gas derivatives (MMBtus) 4
457,313,611
5,443

70,636

516,909,006
12,126

108,078

Total derivative contracts
 
$
13,287

$
157,797

 
$
21,683

$
260,795

Current
 
$
6,643

$
102,847

 
$
6,869

$
177,519

Long-term
 
6,644

54,950

 
14,814

83,276

Total derivative contracts
 
$
13,287

$
157,797

 
$
21,683

$
260,795


___________
* 
Electric portfolio derivatives consist of electric generation fuel of 161,231,611 One Million British Thermal Units (MMBtus) and purchased electricity of 9,891,125 Megawatt Hours (MWhs) at September 30, 2013, and 129,693,200 MMBtus and 10,722,415 MWhs at December 31, 2012.
1 
Balance sheet location: Current and Long-term Unrealized gain on derivative instruments.
2 
Balance sheet location: Current and Long-term Unrealized loss on derivative instruments.
3 
Interest rate swap contracts are only held at Puget Energy.
4 
PSE had a net derivative liability and an offsetting regulatory asset of $65.2 million at September 30, 2013 and $96.0 million at December 31, 2012 related to contracts used to economically hedge the cost of physical gas purchased to serve natural gas customers. All fair value adjustments on derivatives relating to the natural gas business have been deferred in accordance with ASC 980, “Regulated Operations” (ASC 980) due to the Purchased Gas Adjustment (PGA) mechanism.
Offsetting Assets and Liabilities
The following tables present the potential effect of netting arrangements, including rights of set-off associated with the Company's derivative assets and liabilities:

Puget Energy and Puget Sound Energy
 
 
 
 
At September 30, 2013
(Dollars in Thousands)
Gross Amount Recognized in the Statement of Financial Position 1
Gross Amounts Offset in the Statement of Financial Position
Net of Amounts Presented in the Statement of Financial Position
Gross Amounts Not Offset in the Statement of Financial Position
 
Commodity Contracts
Cash Collateral Received/Posted
Net Amount
Assets
 
 
 
 
 
 
Energy Derivative Contracts
$
13,287

$
—

$
13,287

$
(8,672
)
$
—

$
4,615

Liabilities
 
 
 
 
 
 
Energy Derivative Contracts
$
143,075

$
—

$
143,075

$
(8,672
)
$
—

$
134,403

Interest Rate Swaps 2
$
14,722

$
—

$
14,722

$
—

$
—

$
14,722

 
 
 
 
 
 
 
Puget Energy and Puget Sound Energy
 
 
 
 
At December 31, 2012
(Dollars in Thousands)
Gross Amount Recognized in the Statement of Financial Position 1
Gross Amounts Offset in the Statement of Financial Position
Net of Amounts Presented in the Statement of Financial Position
Gross Amounts Not Offset in the Statement of Financial Position
 
Commodity Contracts
Cash Collateral Received/Posted
Net Amount
Assets
 
 
 
 
 
 
Energy Derivative Contracts
$
21,683

$
—

$
21,683

$
(14,126
)
$
—

$
7,557

Liabilities
 
 
 
 
 
 
Energy Derivative Contracts
$
239,271

$
—

$
239,271

$
(14,126
)
$
—

$
225,145

Interest Rate Swaps 2
$
21,524

$
—

$
21,524

$
—

$
—

$
21,524

___________
1 
All Derivative Contract deals are executed under ISDA, NAESB and WSPP Master Netting Agreements with Right of Offset.
2 
In``terest Rate Swap Contracts are only held at Puget Energy.
Schedule of Credit Risk Related Contingent Features
The table below presents the fair value of the overall contractual contingent liability positions for the Company's derivative activity at September 30, 2013:

Puget Energy and Puget Sound Energy
Contingent Feature
(Dollars in Thousands)
Fair Value 1
Liability
Posted
Collateral
Contingent
Collateral
Credit rating 2
$
(37,598
)
$
—

$
37,598

Requested credit for adequate assurance
(31,358
)
—

—

Forward value of contract 3
(168
)
—

—

Total
$
(69,124
)
$
—

$
37,598


__________
1 
Represents the derivative fair value of contracts with contingent features for counterparties in net derivative liability positions. Excludes NPNS, accounts payable and accounts receivable.
2 
Failure by PSE to maintain an investment grade credit rating from each of the major credit rating agencies provides counterparties a contractual right to demand collateral.
3 
Collateral requirements may vary, based on changes in the forward value of underlying transactions relative to contractually defined collateral thresholds.
PUGET ENERGY [Member]
  
Derivative [Line Items]  
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance
The following tables present the effect and locations of the Company's derivatives not designated as hedging instruments, recorded on the statements of income:

Puget Energy
 
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in Thousands)
Location
2013
2012
2013
2012
Interest rate contracts:
Other deductions
$
(470
)
$
1,512

$
1,790

$
(5,258
)
 
Interest expense
(3,625
)
(7,548
)
(4,301
)
(26,812
)
Commodity contracts:
 
 
 

 
 
Electric derivatives
Unrealized gain (loss) on derivative instruments, net 1
8,888

67,442

57,203

124,641

 
Electric generation fuel
(9,142
)
(26,998
)
(22,710
)
(52,972
)
 
Purchased electricity
2,281

(22,249
)
(32,909
)
(107,201
)
Total gain (loss) recognized in income on derivatives
 
$
(2,068
)
$
12,159

$
(927
)
$
(67,602
)
___________
1 
The nine months ended September 30, 2012, differs from the amount stated in the statements of income as it does not include amortization related to contracts that were recorded at fair value at the time of the February 2009 merger and subsequently designated as NPNS of $2.2 million.
Subsidiaries [Member]
  
Derivative [Line Items]  
Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance
Puget Sound Energy
 
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in Thousands)
Location
2013
2012
2013
2012
Commodity contracts:
 
 
 
 
 
Electric derivatives
Unrealized gain (loss) on derivative instruments, net
$
8,888

$
65,594

$
54,252

$
115,309

 
Electric generation fuel
(9,142
)
(26,998
)
(22,710
)
(52,972
)
 
Purchased electricity
2,281

(22,249
)
(32,909
)
(107,202
)
Total gain (loss) recognized in income on derivatives
 
$
2,027

$
16,347

$
(1,367
)
$
(44,865
)
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

    
Puget Sound Energy
 
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in Thousands)
Location
2013
2012
2013
2012
Interest rate contracts:
Interest expense
$
(122
)
$
(122
)
$
(366
)
$
(366
)
Commodity contracts:
 
 
 
 
 
Electric derivatives
Electric generation fuel
—

—

—

97

 
Purchased electricity
—

(2,240
)
(2,786
)
(9,708
)
Total
 
$
(122
)
$
(2,362
)
$
(3,152
)
$
(9,977
)
Parent [Member]
  
Derivative [Line Items]  
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)
The following tables present the Company's pre-tax gain (loss) of derivatives that were in a previous cash flow hedge relationship, reclassified out of accumulated OCI into income:

Puget Energy
 
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in Thousands)
Location
2013
2012
2013
2012
Interest rate contracts:
Interest expense
$
(1,247
)
$
(1,623
)
$
(3,886
)
$
(16,386
)
Commodity contracts:
 
 
 
 
 
Electric derivatives
Electric generation fuel
—

—

—

100

 
Purchased electricity
—

(392
)
164

(380
)
Total
 
$
(1,247
)
$
(2,015
)
$
(3,722
)
$
(16,666
)