Accounting for Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2017

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
	At September 30, 2017						At December 31, 2016
(Dollars in Thousands)	Volumes		Assets1		Liabilities2		Volumes	Assets1		Liabilities2
Interest rate swap derivatives3	$	—	$	—	$	—	$450 million	$	—	$	141
Electric portfolio derivatives	*		11,656		39,622		*	36,460		41,329
Natural gas derivatives (MMBtus)4	305.3 million		7,826		25,776		336.4 million	26,619		19,101
Total derivative contracts	**		$	19,482	$	65,398	**	$	63,079	$	60,571
Current	**		$	16,605	$	49,820	**	$	54,341	$	44,310
Long-term	**		2,877		15,578		**	8,738		16,261
Total derivative contracts	**		$	19,482	$	65,398	**	$	63,079	$	60,571

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¹  Balance sheet locations: Current and Long-term Unrealized gain on derivative instruments.

²  Balance sheet locations: Current and Long-term Unrealized loss on derivative instruments.

³  Interest rate swap contracts are only held at Puget Energy, and matured January 2017.

⁴  All fair value adjustments on derivatives relating to the natural gas business have been deferred in accordance with ASC 980, “Regulated Operations,” due to the purchased gas adjustment (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 165.0 million One Million British Thermal Units (MMBtu) and purchased electricity of 2.6 million Megawatt Hours (MWhs) at September 30, 2017, and 186.8 million MMBtus and 3.6 million MWhs at December 31, 2016.

** Not meaningful and/or applicable.

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, 2017
	Gross Amount Recognized in the Statement of Financial Position1		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	$	19,482	$	—	$	19,482	$	(12,961	)	$	—		$	6,521
Liabilities:
Energy derivative contracts	65,398		—		65,398		(12,961		)	(739		)	51,698

Puget Energy and Puget Sound Energy
	At December 31, 2016
	Gross Amount Recognized in the Statement of Financial Position1		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	$	63,079	$	—	$	63,079	$	(42,858	)	$	—	$	20,221
Liabilities:
Energy derivative contracts	60,430		—		60,430		(42,858		)	—		17,572
Interest rate swaps2	141		—		141		—			—		141

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¹  All derivative contract deals are executed under ISDA, NAESB and WSPP master netting agreements with right of set-off.

²  Interest 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, 2017:

Puget Energy and Puget Sound Energy
(Dollars in Thousands)	At September 30, 2017						At December 31, 2016
	Fair Value1		Posted		Contingent		Fair Value1		Posted		Contingent
Contingent Feature	Liability		Collateral		Collateral		Liability		Collateral		Collateral
Credit rating2	$	6,113	$	—	$	6,113	$	4,894	$	—	$	4,894
Requested credit for adequate assurance	27,214		—		—		7,427		—		—
Forward value of contract3	739		1,384		—		507		—		—
Total	$	34,066	$	1,384	$	6,113	$	12,828	$	—	$	4,894

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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 table presents the effect and locations of the realized and unrealized gains (losses) of the Company's derivatives recorded on the statements of income:

Puget Energy and Puget Sound Energy		Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in Thousands)	Location	2017			2016			2017			2016
Interest rate contracts1:
	Non-hedged interest rate swap (expense) income	$	—		$	563		$	28		$	(651	)
	Interest expense	—			(349		)	—			(349		)
Gas for Power Derivatives:
Unrealized	Unrealized gain (loss) on derivative instruments, net	903			(8,873		)	(20,979		)	41,957
Realized	Electric generation fuel	(6,753		)	(3,194		)	(14,773		)	(36,204		)
Power Derivatives:
Unrealized	Unrealized gain (loss) on derivative instruments, net	(880		)	2,546			(2,119		)	15,261
Realized	Purchased electricity	(4,356		)	(1,282		)	(14,434		)	(16,077		)
Total gain (loss) recognized in income on derivatives		$	(11,086	)	$	(10,589	)	$	(52,277	)	$	3,937