|
Exact
name of registrant as specified
|
I.R.S.
|
|
in
its charter, state of incorporation,
|
Employer
|
Commission
|
address
of principal executive offices,
|
Identification
|
File
Number
|
Telephone
|
Number
|
1-16305
|
PUGET
ENERGY, INC.
|
91-1969407
|
|
A
Washington Corporation
|
|
|
10885
- N.E. 4th Street, Suite 1200
|
|
|
Bellevue,
Washington 98004-5591
|
|
|
(425)
454-6363
|
|
1-4393
|
PUGET
SOUND ENERGY, INC.
|
91-0374630
|
|
A
Washington Corporation
|
|
|
10885
- N.E. 4th Street, Suite 1200
|
|
|
Bellevue,
Washington 98004-5591
|
|
|
(425)
454-6363
|
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
o
|
Soliciting
material pursuant to Rule 14a−12 under the Exchange Act (17 CFR
240.14a−12)
|
o
|
Pre−commencement
communications pursuant to Rule 14d−2(b) under the Exchange Act
(17 CFR 240.14d−2(b))
|
o
|
Pre−commencement
communications pursuant to Rule 13e−4(c) under the Exchange Act
(17 CFR 240.13e−4(c))
|
· |
2006
net income from continuing operations of $167.3 million or $1.44
per
share, excluding 44
cents related to the sale of InfrastruX
|
· |
2006
earnings of $1.52 per share from Puget Sound Energy (PSE) compared
to
earnings of $1.42 in 2005
|
· |
Fourth
quarter 2006 earnings of 49 cents per share compared to 52 cents
per share
in 2005
|
Table
1: Puget Energy Reported Calendar Year Earnings
|
|||||||
Net
Income (Loss) in millions of dollars
|
2006
|
2005
|
|||||
Continuing
Operations - PSE
|
$
|
176.7
|
$
|
146.8
|
|||
Continuing
Operations - Charitable Foundation Funding
|
(9.8
|
)
|
--
|
||||
Continuing
Operations - Other
|
0.4
|
(0.6
|
)
|
||||
Continuing
Operations
|
167.3
|
146.2
|
|||||
Discontinued
Operations (InfrastruX)
|
51.9
|
9.5
|
|||||
Puget
Energy
|
$
|
219.2
|
$
|
155.7
|
|||
Earnings
per Diluted Share
|
|||||||
Continuing
Operations - PSE
|
$
|
1.52
|
$
|
1.42
|
|||
Continuing
Operations - Charitable Foundation Funding
|
(0.08
|
)
|
--
|
||||
Continuing
Operations - Other
|
--
|
--
|
|||||
Continuing
Operations
|
1.44
|
1.42
|
|||||
Discontinued
Operations (InfrastruX)
|
0.44
|
0.09
|
|||||
Puget
Energy
|
$
|
1.88
|
$
|
1.51
|
|||
Diluted
common shares outstanding (millions)
|
116.5
|
103.1
|
Table
2: Puget Energy 2006 vs. 2005
EPS
Reconciliation for Continuing Operations
|
Per
diluted share
|
|||
Puget
Energy’s 2005 earnings from PSE
|
$
|
1.42
|
||
Increase
in electric margin
|
0.26
|
|||
Increase
in gas margin
|
0.13
|
|||
Increase
in utility operations and maintenance expense
|
(0.12
|
)
|
||
Increase
in depreciation and amortization expense
|
(0.12
|
)
|
||
Increase
in other income, net of expenses and taxes
|
0.09
|
|||
All
other variances, net
|
0.05
|
|||
Impact
of dilution from higher common shares outstanding
|
(0.19
|
)
|
||
Puget
Energy 2006 earnings from PSE
|
$
|
1.52
|
||
Charitable
foundation establishment and funding
|
(0.08
|
)
|
||
Puget
Energy's 2006 earnings from continuing operations
|
$
|
1.44
|
· |
As
of Dec. 31, 2006, PSE provided service to 1,039,400 electric customers
and
713,000 natural gas customers, representing a 2.1 percent and 2.8
percent
increase, respectively, over 2005
levels.
|
· |
Overall,
2006 temperatures and degree days in the Pacific Northwest were similar
to
2005, with both years slightly warmer than historic averages.
|
· |
PSE's
2006 retail sales volumes for both electricity and natural gas increased
by 3.1 percent and 4.7 percent, respectively, over 2005 levels reflecting
strong economic conditions in the Pacific Northwest.
|
· |
PSE’s
2006 electric margin increased by $46 million before taxes, or 26
cents
per share, primarily as a result of higher retail sales volumes and
favorable hydroelectric conditions. Electric margin also increased
as a result of the recovery in electric rates of PSE’s 150-megawatt
Hopkins Ridge wind-powered electric generating facility brought into
service in November 2005.
|
· |
PSE's
2006 gas margin increased by $22.6 million before taxes, or 13 cents
per
share, as a result of higher sales volumes and a 3.5 percent increase
in
general tariff natural gas rates effective March 1, 2005. PSE’s 2005
gas margin was adversely impacted by a one-time true-up of previously
reported gas costs, resulting in a $4.5 million decrease in gas margin.
|
· |
PSE’s
2006 utility operations and maintenance expense increased by $21.3
million
before taxes, or 12 cents per share, over 2005 levels. Electric
generating facility costs in 2006 increased by $11.9 million while
higher
electric transmission and distribution repair costs following severe
wind
storms in the first and fourth quarters of 2006 accounted for $7.2
million
in additional expense over 2005 levels.
|
· |
PSE’s
2006 depreciation and amortization expense increased by $20.7 million
before taxes, or 12 cents per share, due to additional utility plant
placed in service. Depreciation recorded on PSE's Hopkins Ridge
wind-powered electric generating facility brought into service in
November
2005 increased by $8.1 million and was fully recovered in electric
rates.
|
· |
Puget
Energy's other income, net of other expenses and taxes, increased
by $0.4
million in 2006. Puget Energy's 2006 other income was impacted by a
$9.8 million after-tax charge related to establishing and funding
the
Puget Sound Energy Foundation. Excluding this charge, other income
increased by $10.2 million, or 9 cents per share, in 2006 compared
to
2005. The $10.2 million increase is the result of higher equity
Accumulated Funds Used.
|
· |
In
October 2005, Puget Energy sold 15 million shares of common stock
in a
secondary offering. Net proceeds totaling approximately $310 million
were invested in PSE and were used to reduce short-term debt incurred
primarily to fund the utility’s construction program. The average
number of diluted common shares in 2006 increased to 116.5 million
compared to 103.1 million in 2005 resulting in earnings dilution
of 19
cents per share.
|
Table
3: Fourth Quarter 2006 vs. Fourth Quarter 2005
EPS
Reconciliation
|
Per
diluted share
|
|||
Puget
Energy’s fourth quarter 2005 earnings from continuing
operations
|
$
|
0.52
|
||
Increase
in
electric margin
|
0.01
|
|||
Increase
in gas
margin
|
0.02
|
|||
Increase
in utility
operations and maintenance expense
|
(0.02
|
)
|
||
Increase
in
depreciation and amortization expense
|
(0.03
|
)
|
||
Increase
in other
income net of other expenses and taxes
|
0.02
|
|||
Increase
in
interest expense
|
(0.02
|
)
|
||
All
other,
net
|
0.03
|
|||
Impact
of dilution
from higher common shares outstanding
|
(0.04
|
)
|
||
Puget
Energy’s fourth quarter 2006 earnings from continuing
operations
|
$
|
0.49
|
PUGET
ENERGY -- SUMMARY INCOME STATEMENT
|
||||||||||||||||
(In
thousands, except per-share amounts)
|
||||||||||||||||
Unaudited
|
Unaudited
|
|||||||||||||||
Three
months ended 12/311
|
Twelve
months ended 12/311
|
|||||||||||||||
2006
|
2005
|
2006
|
2005
|
|||||||||||||
Operating
revenues
|
||||||||||||||||
Electric
|
$
|
530,096
|
$
|
472,323
|
$
|
1,777,745
|
$
|
1,612,869
|
||||||||
Gas
|
401,463
|
357,778
|
1,120,118
|
952,515
|
||||||||||||
Other
|
2,714
|
960
|
7,830
|
7,826
|
||||||||||||
Total
operating revenues
|
934,273
|
831,061
|
2,905,693
|
2,573,210
|
||||||||||||
Operating
expenses
|
||||||||||||||||
Purchased
electricity
|
294,008
|
272,439
|
917,801
|
860,422
|
||||||||||||
Electric
generation fuel
|
25,162
|
18,919
|
97,320
|
73,318
|
||||||||||||
Residential
exchange
|
(32,396
|
)
|
(53,814
|
)
|
(163,622
|
)
|
(180,491
|
)
|
||||||||
Purchased
gas
|
269,897
|
233,083
|
723,232
|
592,120
|
||||||||||||
Unrealized
net (gain) on derivative instruments
|
(143
|
)
|
77
|
71
|
472
|
|||||||||||
Utility
operations & maintenance
|
95,944
|
92,957
|
354,590
|
333,256
|
||||||||||||
Other
operations & maintenance
|
1,003
|
613
|
3,041
|
2,657
|
||||||||||||
Depreciation
& amortization
|
68,382
|
63,351
|
262,341
|
241,634
|
||||||||||||
Conservation
amortization
|
9,683
|
7,562
|
32,320
|
24,308
|
||||||||||||
Taxes
other than income taxes
|
75,470
|
68,737
|
255,712
|
233,742
|
||||||||||||
Income
taxes
|
32,441
|
33,957
|
96,271
|
88,609
|
||||||||||||
Total
operating expenses
|
839,451
|
737,881
|
2,579,077
|
2,270,047
|
||||||||||||
Operating
income
|
94,822
|
93,180
|
326,616
|
303,163
|
||||||||||||
Other
income (deductions):
|
||||||||||||||||
Other
income
|
11,876
|
7,453
|
29,962
|
16,803
|
||||||||||||
Charitable
foundation funding
|
---
|
---
|
(15,000
|
)
|
---
|
|||||||||||
Other
expense
|
(5,365
|
)
|
(3,060
|
)
|
(9,999
|
)
|
(11,063
|
)
|
||||||||
Income
taxes
|
3
|
(268
|
)
|
3,784
|
2,569
|
|||||||||||
Interest
Charges:
|
||||||||||||||||
Debt
portion of AFUDC
|
5,636
|
3,310
|
15,874
|
9,493
|
||||||||||||
Interest
expense
|
(49,793
|
)
|
(44,284
|
)
|
(183,922
|
)
|
(174,591
|
)
|
||||||||
Mandatorily
redeemable securities interest expense
|
(23
|
)
|
(23
|
)
|
(91
|
)
|
(91
|
)
|
||||||||
Net
income from continuing operations
|
57,156
|
56,308
|
167,224
|
146,283
|
||||||||||||
Income
from discontinued operations, net of tax
|
---
|
8,607
|
51,903
|
9,514
|
||||||||||||
Net
income before cumulative effect of
|
||||||||||||||||
accounting
change
|
57,156
|
64,915
|
219,127
|
155,797
|
||||||||||||
Cumulative
effect of accounting change
|
---
|
(71
|
)
|
89
|
(71
|
)
|
||||||||||
Income
for Common Stock
|
$
|
57,156
|
$
|
64,844
|
$
|
219,216
|
$
|
155,726
|
||||||||
Common
shares outstanding
|
116,577
|
108,067
|
115,999
|
102,570
|
||||||||||||
Diluted
shares outstanding
|
116,808
|
108,598
|
116,457
|
103,111
|
||||||||||||
Basic
earnings per common share before cumulative effect
|
||||||||||||||||
of
accounting change from continuing operations
|
$
|
0.49
|
$
|
0.52
|
$
|
1.44
|
$
|
1.43
|
||||||||
Basic
earnings from discontinued operations
|
---
|
0.08
|
0.45
|
0.09
|
||||||||||||
Cumulative
effect from accounting change
|
---
|
----
|
---
|
---
|
||||||||||||
Basic
earnings per common share
|
$
|
0.49
|
$
|
0.60
|
$
|
1.89
|
$
|
1.52
|
||||||||
Diluted
earnings per common share before cumulative effect
|
||||||||||||||||
of
accounting change from continuing operations
|
$
|
0.49
|
$
|
0.52
|
$
|
1.44
|
$
|
1.42
|
||||||||
Diluted
earnings from discontinued operations
|
---
|
0.08
|
0.44
|
0.09
|
||||||||||||
Cumulative
effect from accounting change
|
---
|
---
|
---
|
---
|
||||||||||||
Diluted
earnings per common share2
|
$
|
0.49
|
$
|
0.60
|
$
|
1.88
|
$
|
1.51
|
1
|
Partial-year
results may not accurately predict full-year performance, as earnings
are
significantly affected by weather.
|
||||||||||
2
|
Diluted
earnings per common share include the dilutive effect of securities
related to employee compensation
plans.
|
PUGET
SOUND ENERGY -- UTILITY OPERATING DATA
|
||||||||||||||||
Three
months ended 12/31
|
Twelve
months ended 12/31
|
|||||||||||||||
2006
|
2005
|
2006
|
2005
|
|||||||||||||
Energy
sales revenues ($
in thousands; unaudited)
|
||||||||||||||||
Electricity | ||||||||||||||||
Residential
|
$
|
228,961
|
$
|
193,667
|
$
|
788,237
|
$
|
690,184
|
||||||||
Commercial
|
185,833
|
167,935
|
702,754
|
629,008
|
||||||||||||
Industrial
|
26,614
|
25,020
|
103,043
|
93,922
|
||||||||||||
Other
retail sales, including change in unbilled
|
44,338
|
30,897
|
35,399
|
23,313
|
||||||||||||
Subtotal,
retail sales
|
485,746
|
417,519
|
1,629,433
|
1,436,427
|
||||||||||||
Transportation,
including change in unbilled
|
2,709
|
2,285
|
11,488
|
9,027
|
||||||||||||
Sales
to other utilities & marketers
|
28,141
|
31,209
|
85,003
|
105,027
|
||||||||||||
Other1
|
13,500
|
21,310
|
51,820
|
62,388
|
||||||||||||
Total
electricity sales
|
530,096
|
472,323
|
1,777,744
|
1,612,869
|
||||||||||||
Gas
|
||||||||||||||||
Residential
|
261,609
|
231,702
|
697,632
|
592,361
|
||||||||||||
Commercial
|
114,662
|
102,454
|
335,661
|
281,332
|
||||||||||||
Industrial
|
17,663
|
16,070
|
57,062
|
48,318
|
||||||||||||
Subtotal,
retail sales
|
393,934
|
350,226
|
1,090,355
|
922,011
|
||||||||||||
Transportation
|
3,461
|
3,334
|
13,269
|
13,277
|
||||||||||||
Other
|
4,067
|
4,218
|
16,494
|
17,227
|
||||||||||||
Total
gas sales
|
401,462
|
357,778
|
1,120,118
|
952,515
|
||||||||||||
Total
energy sales revenues
|
$
|
931,558
|
$
|
830,101
|
$
|
2,897,862
|
$
|
2,565,384
|
||||||||
Energy
sales volumes (unaudited)
|
||||||||||||||||
Electricity
(in mWh)
|
||||||||||||||||
Residential
|
2,783,172
|
2,806,076
|
10,593,340
|
10,321,984
|
||||||||||||
Commercial
|
2,224,648
|
2,215,240
|
8,939,155
|
8,647,478
|
||||||||||||
Industrial
|
331,998
|
343,024
|
1,368,672
|
1,357,973
|
||||||||||||
Other,
including change in unbilled
|
470,314
|
374,406
|
197,878
|
145,403
|
||||||||||||
Subtotal,
retail sales
|
5,810,132
|
5,738,746
|
21,099,045
|
20,472,838
|
||||||||||||
Transportation,
including change in unbilled
|
488,357
|
513,938
|
2,091,981
|
2,030,457
|
||||||||||||
Sales
to other utilities & marketers
|
518,444
|
388,480
|
2,067,849
|
1,887,007
|
||||||||||||
Total
mWh
|
6,816,933
|
6,641,164
|
25,258,875
|
24,390,302
|
||||||||||||
Gas
(in 000's of therms)
|
||||||||||||||||
Residential
|
193,794
|
187,233
|
533,370
|
510,026
|
||||||||||||
Commercial
|
94,325
|
92,743
|
291,065
|
275,755
|
||||||||||||
Industrial
|
14,976
|
15,083
|
51,889
|
49,979
|
||||||||||||
Transportation
|
54,272
|
52,634
|
206,367
|
198,504
|
||||||||||||
Total
gas volumes
|
357,367
|
347,693
|
1,082,691
|
1,034,264
|
||||||||||||
Margins2
($
in thousands; unaudited)
|
||||||||||||||||
Electric
|
$
|
189,749
|
$
|
187,888
|
$
|
737,518
|
$
|
691,494
|
||||||||
Gas
|
96,350
|
92,353
|
286,984
|
264,370
|
||||||||||||
Weather
(unaudited)
|
||||||||||||||||
Actual
heating degree days
|
1,756
|
1,678
|
4,476
|
4,489
|
||||||||||||
Normal
heating degree days3
|
1,729
|
1,729
|
4,797
|
4,797
|
||||||||||||
Customers
served at December 314
(unaudited)
|
||||||||||||||||
Electricity
|
||||||||||||||||
Residential
|
918,165
|
901,384
|
||||||||||||||
Commercial
|
114,598
|
110,534
|
||||||||||||||
Industrial
|
3,781
|
3,682
|
||||||||||||||
Other
|
2,810
|
2,482
|
||||||||||||||
Transportation
|
18
|
18
|
||||||||||||||
Total
electricity customers
|
1,039,372
|
1,018,100
|
||||||||||||||
Gas
|
||||||||||||||||
Residential
|
658,119
|
639,771
|
||||||||||||||
Commercial
|
52,069
|
50,999
|
||||||||||||||
Industrial
|
2,662
|
2,640
|
||||||||||||||
Transportation
|
124
|
124
|
||||||||||||||
Total
gas customers
|
712,974
|
693,534
|
1
|
Includes
sales of non-core gas supplies.
|
|||||||||||||||
2
|
Electric
margin is electric sales to retail and transportation customers
less the
cost of generating and purchasing electric energy sold to
customers, including transmission costs, to bring electric energy
to PSE's
service territory. Gas margin is gas sales to retail and transportation
customers less the cost of gas purchased, including gas transportation
costs, to bring gas to PSE's service
territory.
|
|||||||||||||||
3
|
Seattle-Tacoma
Airport statistics reported by NOAA which are based on a 30-year
average,
1971-2000. Heating degree days measure how
far the daily average temperature falls below 65 degrees.
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4
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Customers
represents average served at month
end.
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PUGET
ENERGY, INC.
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PUGET
SOUND ENERGY, INC.
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By:
/s/ James W. Eldredge
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Dated:
February 6, 2007
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James
W. Eldredge
Vice
President, Corporate Secretary
and
Chief Accounting Officer
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