Accounting for Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2026

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table presents the volumes, fair values and classification of the Company's derivative instruments recorded on the balance sheets:


Puget Energy and Puget Sound Energy
	At June 30, 2026					At December 31, 2025
(Dollars in Thousands)	Volumes (millions)	Assets1		Liabilities2		Volumes (millions)	Assets1		Liabilities2
Electric portfolio derivatives3	*	$	37,801	$	465,515	*	$	41,974	$	493,334
Natural gas derivatives (MMBtus)3	231	5,680		63,582		289	6,735		80,087
Total derivative contracts		$	43,481	$	529,097		$	48,709	$	573,421
Current		$	38,293	$	305,722		$	37,448	$	359,890
Long-term		5,188		223,375			11,261		213,531
Total derivative contracts		$	43,481	$	529,097		$	48,709	$	573,421

_______________

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

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

3 All fair value adjustments on derivatives have been deferred in accordance with ASC 980, “Regulated Operations.” The net derivative asset or liability and offsetting regulatory liability or asset are related to contracts used to economically hedge the cost of electricity and physical gas purchased to serve customers.

* Electric portfolio derivatives consist of electric generation fuel of 237.9 million MMBtu and purchased electricity of 27.2 million MWhs at June 30, 2026, and 252.9 million MMBtus and 33.8 million MWhs at December 31, 2025.

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, 2026
	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	$	43,481	$	—	$	43,481	$	(39,790)	$	—	$	3,691
Liabilities:
Energy derivative contracts	$	529,097	$	—	$	529,097	$	(39,790)	$	(43,629)	$	445,678



Puget Energy and Puget Sound Energy	At December 31, 2025
	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	$	48,709	$	—	$	48,709	$	(44,271)	$	—	$	4,438
Liabilities:
Energy derivative contracts	$	573,421	$	—	$	573,421	$	(44,271)	$	(54,521)	$	474,629

_______________

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

Schedule of Credit Risk Related Contingent Features

The following table presents the aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position and the amount of additional collateral the Company could be required to post:


Puget Energy and Puget Sound Energy
(Dollars in Thousands)	At June 30, 2026						At December 31, 2025
	Fair Value1		Posted		Contingent		Fair Value1		Posted		Contingent
Contingent Feature	Liability		Collateral		Collateral		Liability		Collateral		Collateral
Credit rating2	$	238,318	$	—	$	238,318	$	253,105	$	—	$	253,105
Requested credit for adequate assurance	20,833		—		—		21,927		—		—
Forward value of contract3	43,629		52,260		N/A		54,521		77,969		N/A
Total	$	302,780	$	52,260	$	238,318	$	329,553	$	77,969	$	253,105

_______________

1 Represents the derivative fair value of contracts with contingent features for counterparties in net derivative liability positions. Excludes 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.