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Accounting for Derivative Instruments and Hedging Activities (Tables)
 9 Months Ended
Sep. 30, 2014
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, 2014
December 31, 2013
(Dollars in Thousands)
Volumes
Assets 1
Liabilities 2
Volumes
Assets 1
Liabilities 2
Interest rate swap derivatives 3
$450 million
$
—

$
9,560

$450 million
$
—

$
13,223

Electric portfolio derivatives
*
7,160

33,172

*
18,479

37,312

Natural gas derivatives (MMBtus) 4
394.3 million
12,390

19,135

423.5 million
8,121

35,676

Total derivative contracts
 
$
19,550

$
61,867

 
$
26,600

$
86,211

Current
 
$
14,832

$
37,410

 
$
18,867

$
48,049

Long-term
 
4,718

24,457

 
7,733

38,162

Total derivative contracts
 
$
19,550

$
61,867

 
$
26,600

$
86,211


___________
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 
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 PGA mechanism. The net derivative asset or liability and offsetting regulatory liability or asset are related to contracts used to economically hedge the cost of physical gas purchased to serve natural gas customers.
* 
Electric portfolio derivatives consist of electric generation fuel of 147.4 million One Million British Thermal Units (MMBtus) and purchased electricity of 5.4 million Megawatt Hours (MWhs) at September 30, 2014, and 145.6 million MMBtus and 8.6 million MWhs at December 31, 2013.
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
 
 
 
 
September 30, 2014
 
 
 
 
 
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
 

(Dollars in Thousands)
Commodity Contracts
Cash Collateral Received/Posted
Net Amount
Assets
 
 
 
 
 
 
Energy Derivative Contracts
$
19,550

$
—

$
19,550

$
(15,996
)
$
—

$
3,554

Liabilities
 
 
 
 
 
 
Energy Derivative Contracts
$
52,307

$
—

$
52,307

$
(15,996
)
$
—

$
36,311

Interest Rate Swaps 2
$
9,560

$
—

$
9,560

$
—

$
—

$
9,560

 
 
 
 
 
 
 
Puget Energy and Puget Sound Energy
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
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
 

(Dollars in Thousands)
Commodity Contracts
Cash Collateral Received/Posted
Net Amount
Assets
 
 
 
 
 
 
Energy Derivative Contracts
$
26,600

$
—

$
26,600

$
(19,491
)
$
—

$
7,109

Liabilities
 
 
 
 
 
 
Energy Derivative Contracts
$
72,988

$
—

$
72,988

$
(19,491
)
$
—

$
53,497

Interest Rate Swaps 2
$
13,223

$
—

$
13,223

$
—

$
—

$
13,223

___________
1 
All Derivative Contract deals are executed under ISDA, NAESB and WSPP Master Netting Agreements with Right of Offset.
2 
Interest Rate Swap Contracts are only held at Puget Energy.
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 previously in a cash flow hedge relationship, and subsequently reclassified out of accumulated OCI into income:

Puget Energy
 
Three Months Ended September 30,
Nine Months Ended
September 30
(Dollars in Thousands)
Location
2014
2013
2014
2013
Interest rate contracts:
Interest expense
$
—

$
(1,247
)
$
(144
)
$
(3,886
)
Commodity contracts:
 
 
 
 
 
Electric derivatives
Electric generation fuel
—

—

—

—

 
Purchased electricity
—

—

(534
)
164

Total
 
$
—

$
(1,247
)
$
(678
)
$
(3,722
)
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, 2014:

Puget Energy and Puget Sound Energy
Contingent Feature
Fair Value 1
Posted
Contingent
(Dollars in Thousands)
Liability
Collateral
Collateral
Credit rating 2
$
(12,891
)
$
—

$
12,891

Requested credit for adequate assurance
(15,337
)
—

—

Forward value of contract 3
(20
)
—

—

Total
$
(28,248
)
$
—

$
12,891


__________
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.
Parent Company [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
2014
2013
2014
2013
Interest rate contracts:
Non-hedged interest rate swap
(expense) income
$
(323
)
$
(470
)
$
(2,430
)
$
1,790

 
Interest expense
1,241

(3,625
)
398

(4,301
)
Commodity contracts:
 
 
 

 
 
Electric derivatives
Unrealized gain (loss) on derivative instruments, net
(32,648
)
8,888

(7,714
)
57,203

 
Electric generation fuel
(420
)
(9,142
)
8,271

(22,710
)
 
Purchased electricity
972

2,281

2,687

(32,909
)
Total gain (loss) recognized in income on derivatives
 
$
(31,178
)
$
(2,068
)
$
1,212

$
(927
)
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
2014
2013
2014
2013
Commodity contracts:
 
 
 
 
 
Electric derivatives
Unrealized gain (loss) on derivative instruments, net
$
(32,648
)
$
8,888

$
(8,284
)
$
54,252

 
Electric generation fuel
(420
)
(9,142
)
8,271

(22,710
)
 
Purchased electricity
972

2,281

2,687

(32,909
)
Total gain (loss) recognized in income on derivatives
 
$
(32,096
)
$
2,027

$
2,674

$
(1,367
)
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
2014
2013
2014
2013
Interest rate contracts:
Interest expense
$
(122
)
$
(122
)
$
(366
)
$
(366
)
Commodity contracts:
 
 
 
 
 
Electric derivatives
Electric generation fuel
—

—

—

—

 
Purchased electricity
—

—

(1,104
)
(2,786
)
Total
 
$
(122
)
$
(122
)
$
(1,470
)
$
(3,152
)