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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2014

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

The following table presents the fair value hierarchy by level, the carrying value for cash, cash equivalents, restricted cash, notes receivable and short-term debt. The carrying values below are representative of fair values due to the short-term nature of these financial instruments.



	Carrying / Fair Value						Carrying / Fair Value
Puget Energy	At March 31, 2014						At December 31, 2013
(Dollars in Thousands)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash and Cash Equivalents	$	23,581	$	—	$	23,581	$	44,302	$	—	$	44,302
Restricted Cash	25,437		—		25,437		7,171		—		7,171
Notes Receivable and Other	—		54,542		54,542		—		53,449		53,449
Total assets	$	49,018	$	54,542	$	103,560	$	51,473	$	53,449	$	104,922
Liabilities:
Short-term debt	$	—	$	—	$	—	$	162,000	$	—	$	162,000
Total liabilities	$	—	$	—	$	—	$	162,000	$	—	$	162,000



	Carrying / Fair Value						Carrying / Fair Value
Puget Sound Energy	At March 31, 2014						At December 31, 2013
(Dollars in Thousands)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Cash and Cash Equivalents	$	23,556	$	—	$	23,556	$	44,111	$	—	$	44,111
Restricted Cash	25,437		—		25,437		7,171		—		7,171
Notes Receivable and Other	—		54,542		54,542		—		53,449		53,449
Total assets	$	48,993	$	54,542	$	103,535	$	51,282	$	53,449	$	104,731
Liabilities:
Short-term debt	$	—	$	—	$	—	$	162,000	$	—	$	162,000
Short-term debt owed to parent	—		29,598		29,598		—		29,598		29,598
Total liabilities	$	—	$	29,598	$	29,598	$	162,000	$	29,598	$	191,598

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		March 31, 2014				December 31, 2013
(Dollars in Thousands)	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities:
Junior subordinated notes	2	$	250,000	$	280,137	$	250,000	$	269,366
Long-term debt (fixed-rate), net of discount	2	4,686,259		5,875,347		4,683,476		5,594,314
Long-term debt (variable-rate)	2	299,000		299,000		299,000		299,000
Total		$	5,235,259	$	6,454,484	$	5,232,476	$	6,162,680

Puget Sound Energy		March 31, 2014				December 31, 2013
(Dollars in Thousands)	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities:
Junior subordinated notes	2	$	250,000	$	280,137	$	250,000	$	269,366
Long-term debt (fixed-rate), net of discount	2	3,513,258		4,239,741		3,513,258		4,038,455
Total		$	3,763,258	$	4,519,878	$	3,763,258	$	4,307,821

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation



Puget Energy and Puget Sound Energy	Three Months Ended March 31,
Level 3 Roll-Forward Net Asset/(Liability)	2014									2013
(Dollars in Thousands)	Electric			Gas			Total			Electric			Gas			Total
Balance at beginning of period	$	(15,421	)	$	(361	)	$	(15,782	)	$	(33,924	)	$	(1,602	)	$	(35,526	)
Changes during period:
Realized and unrealized energy derivatives:
Included in earnings ¹	(2,745		)	—			(2,745		)	1,598			—			1,598
Included in regulatory assets / liabilities	—			259			259			—			674			674
Settlements²	321			(410		)	(89		)	6,384			(733		)	5,651
Transferred into Level 3	3,100			(585		)	2,515			(7,700		)	—			(7,700		)
Transferred out of Level 3	139			(6		)	133			7,200			127			7,327
Balance at end of period	$	(14,606	)	$	(1,103	)	$	(15,709	)	$	(26,442	)	$	(1,534	)	$	(27,976	)

_________


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 $(9.2) million and $1.4 million for the three months ended March 31, 2014 and 2013, respectively.


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

Fair Value Inputs, Assets and Liabilities, Quantitative Information

Below are the forward price ranges for the Company's purchased commodity contracts, as of March 31, 2014:



(Dollars in Thousands)
	Fair Value						Range
Derivative Instrument	Assets ¹		Liabilities ¹		Valuation Technique	Unobservable Input	Low	High	Weighted Average
Electric	$	5,040	$	19,646	Discounted cash flow	Power Prices	$4.38 per MWh	$49.95 per MWh	$35.67 per MWh
Natural gas	$	2,550	$	3,653	Discounted cash flow	Natural Gas Prices	$3.62 per MMBtu	$4.63 per MMBtu	$4.04 per MMBtu

__________


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

PUGET ENERGY [Member]

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 Energy	Fair Value						Fair Value
Puget Energy	At March 31, 2014						At December 31, 2013
(Dollars in Thousands)	Level 2		Level 3		Total		Level 2		Level 3		Total
Interest rate derivative instruments	$	12,126	$	—	$	12,126	$	13,223	$	—	$	13,223
Total derivative liabilities	$	12,126	$	—	$	12,126	$	13,223	$	—	$	13,223

Subsidiaries [Member]

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 Energy and	Fair Value						Fair Value
Puget Sound Energy	At March 31, 2014						At December 31, 2013
(Dollars in Thousands)	Level 2		Level 3		Total		Level 2		Level 3		Total
Assets:
Electric derivative instruments	$	18,866	$	5,040	$	23,906	$	14,661	$	3,818	$	18,479
Natural gas derivative instruments	25,253		2,550		27,803		5,448		2,673		8,121
Total assets	$	44,119	$	7,590	$	51,709	$	20,109	$	6,491	$	26,600
Liabilities:
Electric derivative instruments	$	14,719	$	19,646	$	34,365	$	18,073	$	19,239	$	37,312
Natural gas derivative instruments	10,513		3,653		14,166		32,642		3,034		35,676
Total liabilities	$	25,232	$	23,299	$	48,531	$	50,715	$	22,273	$	72,988

- 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.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

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Reference 3: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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