XML 101 R19.htm IDEA: XBRL DOCUMENT v2.4.0.8
Accounting for Derivative Instruments and Hedging Activities (Tables)
 6 Months Ended
Jun. 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
June 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
$
—

$
13,706

$450 million
$
—

$
21,524

Electric portfolio derivatives
*
10,474

83,957

*
9,557

131,193

Natural gas derivatives (MMBtus) 4
459,420,774
6,417

76,767

516,909,006
12,126

108,078

Total derivative contracts
 
$
16,891

$
174,430

 
$
21,683

$
260,795

 
 
 
 
 
 
 
Current
 
$
10,026

$
115,038

 
$
6,869

$
177,519

Long-term
 
6,865

59,392

 
14,814

83,276

Total derivative contracts
 
$
16,891

$
174,430

 
$
21,683

$
260,795


___________
* 
Electric portfolio derivatives consist of electric generation fuel of 143,999,235 MMBtus and purchased electricity of 7,797,825 MWhs at June 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 $70.4 million at June 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 reclassified to a deferred account 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 June 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
$
16,891

$
—

$
16,891

$
(10,434
)
$
—

$
6,457

Liabilities
 
 
 
 
 
 
Energy Derivative Contracts
$
160,725

$
—

$
160,725

$
(10,434
)
$
—

$
150,291

Interest Rate Swaps 2
$
13,706

$
—

$
13,706

$
—

$
—

$
13,706

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 
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 June 30, 2013:

Puget Energy and Puget Sound Energy
Contingent Feature
(Dollars in Thousands)
Fair Value 1
Liability
Posted
Collateral
Contingent
Collateral
Credit rating 2
$
(26,147
)
$
—

$
26,147

Requested credit for adequate assurance
(26,762
)
—

—

Forward value of contract 3
(710
)
—

—

Total
$
(53,619
)
$
—

$
26,147


__________
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
June 30,
Six Months Ended
June 30,
(Dollars in Thousands)
Location
2013
2012
2013
2012
Interest rate contracts:
Other deductions
$
1,232

$
(7,297
)
$
2,260

$
(6,770
)
 
Interest expense
1,902

(9,902
)
(676
)
(19,264
)
Commodity contracts:
 
 
 

 
 
Electric derivatives
Unrealized gain (loss) on derivative instruments, net 1
(27,376
)
64,076

48,316

57,199

 
Electric generation fuel
(930
)
(2,981
)
(13,568
)
(25,974
)
 
Purchased electricity
(3,704
)
(39,540
)
(35,189
)
(84,953
)
Total gain (loss) recognized in income on derivatives
 
$
(28,876
)
$
4,356

$
1,143

$
(79,762
)
___________
1 
The six months ended June 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
June 30,
Six Months Ended
June 30,
(Dollars in Thousands)
Location
2013
2012
2013
2012
Commodity contracts:
 
 
 
 
 
Electric derivatives
Unrealized gain (loss) on derivative instruments, net
$
(27,376
)
$
59,850

$
45,365

$
49,715

 
Electric generation fuel
(930
)
(2,981
)
(13,568
)
(25,974
)
 
Purchased electricity
(3,704
)
(39,540
)
(35,189
)
(84,953
)
Total gain (loss) recognized in income on derivatives
 
$
(32,010
)
$
17,329

$
(3,392
)
$
(61,212
)
Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)

    
Puget Sound Energy
 
Three Months Ended
June 30,
Six Months Ended
June 30,
(Dollars in Thousands)
Location
2013
2012
2013
2012
Interest rate contracts:
Interest expense
$
(122
)
$
(122
)
$
(244
)
$
(244
)
Commodity contracts:
 
 
 
 
 
Electric derivatives
Electric generation fuel
—

(4,414
)
—

97

 
Purchased electricity
—

—

(2,786
)
(7,468
)
Total
 
$
(122
)
$
(4,536
)
$
(3,030
)
$
(7,615
)
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
June 30,
Six Months Ended
June 30,
(Dollars in Thousands)
Location
2013
2012
2013
2012
Interest rate contracts:
Interest expense
$
(1,325
)
$
(10,905
)
$
(2,639
)
$
(14,763
)
Commodity contracts:
 
 
 
 
 
Electric derivatives
Electric generation fuel
—

—

—

100

 
Purchased electricity
—

(188
)
164

12

Total
 
$
(1,325
)
$
(11,093
)
$
(2,475
)
$
(14,651
)