XML 21 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
Summary of Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
Summary of Significant Accounting Policies

Basis of Presentation
Puget Energy, Inc. (Puget Energy) is an energy services holding company that owns Puget Sound Energy, Inc. (PSE).  PSE is a public utility incorporated in the state of Washington that furnishes electric and natural gas services in a territory covering approximately 6,000 square miles, primarily in the Puget Sound region.  Following the merger with Puget Holdings LLC (Puget Holdings) on February 6, 2009, Puget Energy is an indirect wholly-owned subsidiary of Puget Holdings.
The consolidated financial statements of Puget Energy reflect the accounts of Puget Energy and its subsidiary, PSE.  PSE’s consolidated financial statements include the accounts of PSE and its subsidiaries.  Puget Energy and PSE are collectively referred to herein as “the Company.”  The consolidated financial statements are presented after elimination of intercompany transactions.  PSE’s consolidated financial statements continue to be accounted for on a historical basis and do not include any purchase accounting adjustments.
The consolidated financial statements contained in this Form 10-Q are unaudited.  In the respective opinions of the management of Puget Energy and PSE, all adjustments necessary for a fair statement of the results for the interim periods have been reflected and were of a normal recurring nature.  These consolidated financial statements should be read in conjunction with the audited financial statements (and the Combined Notes thereto) included in the combined Puget Energy and PSE Annual Report on Form 10-K for the year ended December 31, 2012.
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform to the current year presentation.

Revenue Recognition
Operating utility revenue is recognized when the basis of services is rendered, which includes estimated unbilled revenue. PSE's unbilled revenue uses meter readings from its automated meter reading (AMR) system. The estimate calculates unbilled usage at the end of each month as the difference between the customer meter readings on the last day of the month and the last customer meter readings billed. The unbilled usage is then priced at published rates for each schedule to estimate the unbilled revenues by customer.
Sales to other utilities are recognized in accordance with Accounting Standards Codification (ASC) 605, “Revenue Recognition” (ASC 605) and ASC 815, “Derivatives and Hedging” (ASC 815). Non-utility subsidiaries recognize revenue when services are performed or upon the sale of assets. Revenue from retail sales is billed based on tariff rates approved by the Washington Commission. Sales of Renewable Energy Credits (RECs) are deferred as a regulatory liability.
PSE collected Washington State excise taxes (which are a component of general retail customer rates) and municipal taxes totaling $51.5 million and $128.4 million for the three and six months ended June 30, 2013, respectively, and $53.7 million and $134.7 million for the three and six months ended June 30, 2012, respectively.  The Company reports the collection of such taxes on a gross basis in operating revenue and as expense in taxes other than income taxes in the accompanying consolidated statements of income.
Beginning July 1, 2013, PSE's electric and gas operations contain a revenue decoupling mechanism under which PSE's actual energy delivery revenues related to electric transmission and distribution, gas operations and general administrative costs are compared with authorized revenues allowed under the mechanism. Any differences are deferred to a regulatory asset for under recovery or regulatory liability for over recovery. Revenues associated with power costs under the PCA mechanism and PGA rates are excluded from the decoupling mechanism.

Statements of Cash Flows
The Company has refinancing transactions that do not result in an actual exchange of cash. For these transactions, the Company evaluates if the non-exchange of cash is for convenience purposes and if so, the Company considers the transaction as if it had constructively received and disbursed the cash and presents the transaction as gross on the financing section of the statements of cash flows.
The Company revised its Consolidated Statement of Cash Flows due to an immaterial error. Revisions were made in the second quarter ended June 30, 2013 on the Company's Consolidated Statement of Cash Flows to reflect energy efficiency expenditures as operating cash outflows instead of investing cash outflows. The Company determined energy efficiency expenditures should have been classified as operating activities instead of investing activities. These revisions decreased net cash provided by operating activities and decreased net cash used by investing activities. The revision does not affect the net change in cash and cash equivalents for any of the periods, and has no effect on the Company's Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, and Consolidated Statement of Common Shareholder's Equity. The Company has evaluated the effects of these errors and concluded that none of them are material to any of the Company's previously issued quarterly or annual Financial Statements. Nevertheless, the Company has elected to revise the Consolidated Statement of Cash Flows in this report to correct for the effect of these errors and properly reflect the revised values.
 
The amounts on prior period Consolidated Statements of Cash Flows that have been revised are summarized below:
 
 
As Reported
As Revised
Puget Energy
Three Months Ended
March 31,
Year Ended December 31,
Three Months Ended
March 31,
Year Ended December 31,
(Dollars in Thousands)
2013
2012
2011
2010
2013
2012
2011
2010
Operating Activities:
 
 
 
 
 
 
 
 
Regulatory Assets
$
(6,411
)
$
(64,368
)
$
30,232

$
26,198

$
(28,953
)
$
(170,374
)
$
(64,173
)
$
(69,528
)
Net Cash Provided by Operating Activities
$
323,807

$
888,691

$
1,010,328

$
865,949

$
301,265

$
782,685

$
915,923

$
770,223

Investing Activities:
 
 
 
 
 
 
 
 
Energy Efficiency Expenditures
$
(22,542
)
$
(106,006
)
$
(94,405
)
$
(95,726
)
$
—

$
—

$
—

$
—

Net Cash Used in Investing Activities
$
(86,362
)
$
(798,976
)
$
(1,076,815
)
$
(905,767
)
$
(63,820
)
$
(692,970
)
$
(982,410
)
$
(810,041
)


 
 
As Reported
As Revised
Puget Sound Energy
Three Months Ended
March 31,
Year Ended December 31,
Three Months Ended
March 31,
Year Ended December 31,
(Dollars in Thousands)
2013
2012
2011
2010
2013
2012
2011
2010
Operating Activities:
 
 
 
 
 
 
 
 
Regulatory Assets
$
(6,411
)
$
(64,368
)
$
29,271

$
26,198

$
(28,953
)
$
(170,374
)
$
(65,134
)
$
(69,528
)
Net Cash Provided by Operating Activities
$
332,243

$
903,888

$
903,422

$
575,775

$
309,701

$
797,882

$
809,017

$
480,049

Investing Activities:
 
 
 
 
 
 
 
 
Energy Efficiency Expenditures
$
(22,542
)
$
(106,006
)
$
(94,405
)
$
(95,726
)
$
—

$
—

$
—

$
—

Net Cash Used in Investing Activities
$
(86,298
)
$
(778,075
)
$
(1,060,588
)
$
(905,767
)
$
(63,756
)
$
(672,069
)
$
(966,183
)
$
(810,041
)


 
As Reported
As Revised
Puget Energy
Three Months Ended
March 31,
Six Months Ended
June 30,
Nine Months Ended September 30,
Three Months Ended
March 31,
Six Months Ended
June 30,
Nine Months Ended September 30,
(Dollars in Thousands)
2012
2012
2012
2012
2012
2012
Operating Activities:
 
 
 
 
 
 
Regulatory Assets
$
(48,185
)
$
(61,856
)
$
(60,434
)
$
(70,842
)
$
(110,088
)
$
(130,536
)
Net Cash Provided by Operating Activities
$
273,604

$
545,857

$
696,242

$
250,947

$
497,625

$
626,140

Investing Activities:
 
 
 
 
 
 
Energy Efficiency Expenditures
$
(22,657
)
$
(48,232
)
$
(70,103
)
$
—

$
—

$
—

Net Cash Used in Investing Activities
$
(225,955
)
$
(474,903
)
$
(673,248
)
$
(203,298
)
$
(426,671
)
$
(603,145
)


 
As Reported
As Revised
Puget Sound Energy
Three Months Ended
March 31,
Six Months Ended
June 30,
Nine Months Ended September 30,
Three Months Ended
March 31,
Six Months Ended
June 30,
Nine Months Ended September 30,
(Dollars in Thousands)
2012
2012
2012
2012
2012
2012
Operating Activities:
 
 
 
 
 
 
Regulatory Assets
$
(48,185
)
$
(61,856
)
$
(60,434
)
$
(70,842
)
(110,088
)
$
(130,536
)
Net Cash Provided by Operating Activities
$
261,229

$
566,429

$
717,894

$
238,572

$
518,197

$
647,792

Investing Activities:
 
 
 
 
 
 
Energy Efficiency Expenditures
$
(22,657
)
$
(48,232
)
$
(70,103
)
$
—

$
—

$
—

Net Cash Used in Investing Activities
$
(211,766
)
$
(454,128
)
$
(652,411
)
$
(189,109
)
$
(405,896
)
$
(582,308
)
Basis of Presentation

Basis of Presentation
Puget Energy, Inc. (Puget Energy) is an energy services holding company that owns Puget Sound Energy, Inc. (PSE).  PSE is a public utility incorporated in the state of Washington that furnishes electric and natural gas services in a territory covering approximately 6,000 square miles, primarily in the Puget Sound region.  Following the merger with Puget Holdings LLC (Puget Holdings) on February 6, 2009, Puget Energy is an indirect wholly-owned subsidiary of Puget Holdings.
The consolidated financial statements of Puget Energy reflect the accounts of Puget Energy and its subsidiary, PSE.  PSE’s consolidated financial statements include the accounts of PSE and its subsidiaries.  Puget Energy and PSE are collectively referred to herein as “the Company.”  The consolidated financial statements are presented after elimination of intercompany transactions.  PSE’s consolidated financial statements continue to be accounted for on a historical basis and do not include any purchase accounting adjustments.
The consolidated financial statements contained in this Form 10-Q are unaudited.  In the respective opinions of the management of Puget Energy and PSE, all adjustments necessary for a fair statement of the results for the interim periods have been reflected and were of a normal recurring nature.  These consolidated financial statements should be read in conjunction with the audited financial statements (and the Combined Notes thereto) included in the combined Puget Energy and PSE Annual Report on Form 10-K for the year ended December 31, 2012.
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Revenue Recognition

Revenue Recognition
Operating utility revenue is recognized when the basis of services is rendered, which includes estimated unbilled revenue. PSE's unbilled revenue uses meter readings from its automated meter reading (AMR) system. The estimate calculates unbilled usage at the end of each month as the difference between the customer meter readings on the last day of the month and the last customer meter readings billed. The unbilled usage is then priced at published rates for each schedule to estimate the unbilled revenues by customer.
Sales to other utilities are recognized in accordance with Accounting Standards Codification (ASC) 605, “Revenue Recognition” (ASC 605) and ASC 815, “Derivatives and Hedging” (ASC 815). Non-utility subsidiaries recognize revenue when services are performed or upon the sale of assets. Revenue from retail sales is billed based on tariff rates approved by the Washington Commission. Sales of Renewable Energy Credits (RECs) are deferred as a regulatory liability.
PSE collected Washington State excise taxes (which are a component of general retail customer rates) and municipal taxes totaling $51.5 million and $128.4 million for the three and six months ended June 30, 2013, respectively, and $53.7 million and $134.7 million for the three and six months ended June 30, 2012, respectively.  The Company reports the collection of such taxes on a gross basis in operating revenue and as expense in taxes other than income taxes in the accompanying consolidated statements of income.
Beginning July 1, 2013, PSE's electric and gas operations contain a revenue decoupling mechanism under which PSE's actual energy delivery revenues related to electric transmission and distribution, gas operations and general administrative costs are compared with authorized revenues allowed under the mechanism. Any differences are deferred to a regulatory asset for under recovery or regulatory liability for over recovery. Revenues associated with power costs under the PCA mechanism and PGA rates are excluded from the decoupling mechanism.
Statements of Cash Flows
Statements of Cash Flows
The Company has refinancing transactions that do not result in an actual exchange of cash. For these transactions, the Company evaluates if the non-exchange of cash is for convenience purposes and if so, the Company considers the transaction as if it had constructively received and disbursed the cash and presents the transaction as gross on the financing section of the statements of cash flows.