Puget Energy Reports 2004 Financial Results; Core Utility Earnings on

Puget Energy Reports 2004 Financial Results; Core Utility Earnings on Target; Decision to Monetize InfrastruX

    Business Editors

    BELLEVUE, Wash.--(BUSINESS WIRE)--Feb. 9, 2005--Puget Energy (NYSE:PSD) today reported income for common stock of $55 million, or $0.55 per diluted share, for the year ended 2004, compared with $116.2 million, or $1.22 per diluted share, in 2003.
    Puget Energy's full year 2004 results reflect a non-cash impairment charge of $76.6 million after-tax, or $0.77 per share, related to InfrastruX Group, an unregulated utility construction services subsidiary, and a previously reported Puget Sound Energy (PSE) regulatory disallowance of $28.2 million after-tax, or $0.28 per share.
    Excluding the InfrastruX impairment charge and the PSE regulatory disallowance, Puget Energy's full year 2004 financial performance improved compared to 2003 as a result of higher electric sales margins, lower interest expense and preferred stock dividends, and higher InfrastruX earnings.
    PSE, Puget Energy's core regulated utility business, reported full year 2004 earnings of $126.2 million, or $1.26 per share, reflecting a regulatory disallowance of $28.2 million after-tax, or $0.28 per share. In 2003, PSE's full year earnings were $114.7 million, or $1.20 per share.
    "I'm very proud of our utility Puget Sound Energy's performance this year," said Stephen P. Reynolds, Puget Energy President and CEO. "This is our core business. We reached several critical milestones in our drive to meet the growing energy needs of our dynamic service territory. We put into service new generation resources, enhanced our gas and electric distribution infrastructure and connected our 1-millionth electric customer.
    "We're executing well on our commitment to strengthen and diversify PSE's generation assets. The anticipated Hopkins Ridge and Wild Horse wind projects will broaden our resource portfolio. These environmentally friendly sources of energy will help protect our customers from volatile wholesale energy markets."
    In early 2005, Puget Energy completed a strategic review of InfrastruX and determined to monetize its investment in this business. "Ownership of InfrastruX no longer fits our strategy given the resource needs of our core utility business," said Reynolds. "We are taking decisive action concerning InfrastruX for the longer term interest of Puget Energy, its utility customers and stakeholders."

    Full Year 2004 Highlights:

    Table 1 below summarizes the items that impacted full year 2004 results for Puget Energy and its subsidiaries, PSE and InfrastruX. A discussion of full year 2004 results follows Table 1.

Table 1

Full Year 2004 vs. Full Year 2003 Cents per diluted EPS Reconciliation share ---------------------------------------------------------------------- Puget Energy Full Year 2003 reported earnings $1.22 InfrastruX Full Year 2003 reported earnings 0.02 ---------------------------------------------------------------------- PSE Full Year 2003 reported earnings 1.20 Increase in electric margin in 2004 0.04 Decrease in gas margin in 2004 (0.01) Increased depreciation and amortization expense in 2004 (0.06) Lower interest expense and preferred stock dividend in 2004 0.14 Increased income tax expense in 2004 (0.01) Non-recurring venture capital fund impairment loss in 2003 0.04 Share dilution due to more shares outstanding in 2004 (0.06) All other, net (0.02) ---------------------------------------------------------------------- PSE Full Year 2004 reported earnings $1.26 Add: InfrastruX Full Year 2004 reported earnings 0.06 Less: InfrastruX impairment charge in 2004 (0.77) ---------------------------------------------------------------------- Puget Energy Full Year 2004 reported earnings $0.55 ----------------------------------------------------------------------

    PSE Full Year 2004 Highlights:

    PSE's income increased by $11.5 million, or $0.06 per share, for the year ended 2004 to $126.2 million, or $1.26 per share, from $114.7 million, or $1.20 per share, for the year ended 2003. Summarized below are items that impacted PSE's full year results in 2004 as compared with 2003. All items discussed are pre-tax unless otherwise noted and all share amounts are presented on a diluted basis.

--	PSE's electric margin increased by $5.9 million, or $0.04 per share. PSE's electric margin was favorably impacted by an electric rate tariff increase effective May 24, 2004 primarily as a result of cost recovery associated with the Frederickson 1 combined cycle natural gas facility that was placed into service on April 30, 2004. Electric margin was also bolstered by a 1.5 percent increase in retail sales volumes, primarily driven by customer growth of 2.2 percent. PSE's electric customers totaled approximately 1,001,200 at year-end 2004. PSE's electric margin represents electric sales to retail and transportation customers less the cost of generating and purchasing electricity.
--	PSE's gas margin decreased by $1.8 million, or $0.01 per share, due to lower sales volumes resulting from slightly warmer temperatures and higher natural gas prices. Natural gas sales volumes declined by 1.5 percent in spite of a 3.7 percent increase in the number of gas customers to nearly 672,000 at year-end 2004. Gas prices at the closest regional delivery point, the Sumas hub, increased from 2003 average levels of $4.66 to $5.26 per dekatherm. Higher natural gas prices are passed on to customers through PSE's Purchased Gas Adjustment mechanism (PGA). PSE's gas margin represents natural gas sales to retail and transportation customers less the cost of purchasing and transporting natural gas.

Heating Degree Heating Degree Days % Change Days % Change ---------------------------------------------------------------------- 2004 Normal 2004 vs. Normal 2004 2003 2004 vs. 2003 ---------------------------------------------------------------------- 4,421 4,818 8% warmer 4,421 4,527 2% warmer ----------------------------------------------------------------------

--	PSE's depreciation and amortization expense increased by $8.5 million, or $0.06 per share, as a result of utility plant additions, including an $81 million investment in the Frederickson 1 electric generating facility in 2004.
--	PSE's other income increased by $2.8 million after-tax, or $0.03 per share. Other income in 2003 was adversely impacted by a write-down of $4 million after-tax, or $0.04 per share, in the carrying value of a non-utility venture capital investment.
--	PSE's interest expense declined by $13 million and preferred stock dividends declined by $5.2 million. Together, this represents an after-tax savings of $14 million, or $0.14 per share, and reflects the redemption of high cost debt and preferred stock.
--	The dilutive impact of an increase in Puget Energy common shares outstanding reduced per share earnings by $0.06. Puget Energy average common shares outstanding increased to approximately 100 million for the year ended 2004 as compared with approximately 95 million shares for 2003. During the fourth quarter 2003, Puget Energy sold approximately $100 million of common stock. The net proceeds were invested in PSE and were used to redeem approximately $94 million of high-cost preferred stock.
--	PSE's operating income tax expense increased by $6.2 million primarily as a result of the absence of $9.3 million of non-recurring federal income tax benefits reflected in 2003 results, offset by a non-recurring federal income tax benefit of $1.4 million in 2004 related to a 2001 tax audit.

    InfrastruX Group (InfrastruX) Full Year 2004 Highlights:

    InfrastruX, the unregulated utility construction services subsidiary of Puget Energy, reported a loss, net of minority interest, of $70.6 million, or $0.70 per share, for the full year 2004, reflecting a $76.6 million, or $0.77 per share, after-tax non-cash impairment charge. Excluding the impairment charge, InfrastruX's full year 2004 earnings, net of minority interest, were $5.9 million, or $0.06 per share, compared with $1.6 million, or $0.02 per share, in 2003.
    The impairment charge reflects Puget Energy's revised expectations for this business due to ongoing challenges in the utility construction services sector. Puget Energy's $110 million investment in InfrastruX was reduced by $76.6 million.

    Puget Energy Fourth-Quarter 2004 Highlights:

    Table 2 below provides a summary of items that impacted fourth quarter 2004 financial results for Puget Energy, PSE and InfrastruX. A discussion of these items follows the table below.

Table 2

Fourth Quarter 2004 vs. Fourth Quarter 2003 Cents per diluted EPS Reconciliation share ---------------------------------------------------------------------- Puget Energy Q4 2003 reported earnings $0.44 InfrastruX Q4 2003 reported earnings 0.01 ---------------------------------------------------------------------- PSE Q4 2003 reported earnings 0.44 Increase in electric margin in 2004 0.08 Decrease in gas margin in 2004 (0.02) Increased depreciation & amortization expense in 2004 (0.02) Lower interest expense in 2004 0.02 Lower income tax expense in 2004 0.05 Increase in other income in 2004 0.06 Impact of share dilution from more shares outstanding in 2004 (0.01) All other, net (0.01) ---------------------------------------------------------------------- PSE Q4 2004 reported earnings $0.59 Add: InfrastruX Q4 2004 reported earnings 0.02 Less: InfrastruX Q4 2004 impairment charge in 2004 (0.77) ---------------------------------------------------------------------- Puget Energy Q4 2004 reported earnings $(0.16) ----------------------------------------------------------------------

    Puget Energy's fourth-quarter 2004 loss for common stock was $15.7 million or $0.16 per share, compared with income of $43.0 million, or $0.44 per share, for the same period in 2003. These results reflect a $76.6 million, or $0.77 per share, after-tax non-cash impairment charge taken by InfrastruX in the fourth quarter 2004.

    PSE Fourth-Quarter 2004 Highlights:

    PSE's fourth quarter earnings in 2004 were $59.2 million, or $0.59 per share, compared with $42.3 million, or $0.44 per share, in the fourth quarter of 2003. Summarized below are items that impacted PSE's fourth quarter results in 2004 as compared with 2003. All items are pre-tax unless otherwise noted and all share amounts are presented on a diluted basis.

--	PSE's electric margin increased by $12.2 million, or $0.08 per share, despite a disallowance of $2.8 million related to the May 2004 Tenaska regulatory order as described in further detail in Puget Energy's August 5, 2004 Form 8-K and June 30, 2004 Form 10-Q filed with the Securities and Exchange Commission (SEC). The improved margin is primarily attributable to an electric rate tariff increase effective May 24, 2004 related the Frederickson 1 plant acquisition and the absence of excess power costs during the quarter.
--	PSE's gas margin decreased by $3.5 million, or $0.02 per share, due to slightly warmer temperatures and lower customer usage in response to higher natural gas prices.

Heating Heating Degree Days % Change Degree Days % Change ------------ -------- ----------- ----------- Month 2004 2004 Ending 2004 Normal vs. Normal 2004 2003 vs. 2003 ---------------------------------------------------------------------- October 355 383 7% warmer 355 326 9% colder November 596 592 1% colder 596 656 9% warmer December 691 754 8% warmer 691 713 3% warmer ---------------------------------------------------------------------- 4th Quarter 1,642 1,729 5% warmer 1,642 1,695 3% warmer ----------------------------------------------------------------------

--	PSE's depreciation and amortization expense increased by $2.7 million or $0.02 per share as a result of utility plant additions. This trend is likely to accelerate in 2005 and beyond as PSE invests in its energy delivery and generation infrastructure to support service territory growth.
--	PSE's other income increased by $6.4 million after-tax, or $0.06 per share. Other income in 2003 was adversely impacted by a write-down of $4 million after-tax in the carrying value of a non-utility venture capital investment in the fourth quarter of 2003.
--	PSE's interest expense in the fourth quarter 2004 declined by $2.6 million, contributing $0.02 per share.
--	The dilutive impact of an increase in Puget Energy common shares outstanding reduced per share earnings by $0.01. Puget Energy's common shares outstanding increased to approximately 100 million shares, as compared with approximately 97 million shares for the same period in 2003.
--	PSE's common equity ratio was 40.1 percent at December 31, 2004 compared with 40 percent at December 31, 2003. PSE is well ahead of the July 2002 rate settlement requirement to rebuild its common equity ratio to 39 percent by the end of 2005.
--	PSE's effective income tax rate on operating income was 40.5 percent as compared with 43.1 percent in the fourth quarter of 2003 before a non-recurring federal income tax benefit of $1.4 million recorded in the fourth quarter 2004, contributing $0.05 per share.

    InfrastruX Group (InfrastruX) Fourth-Quarter 2004 Highlights:

    InfrastruX's fourth quarter 2004 revenues reached $102.4 million, a 20 percent increase from 2003 levels, resulting in income of $1.9 million, or $0.02 per share, prior to reflecting a $76.6 million, or $0.77 per share, after-tax non-cash impairment charge. In the fourth quarter 2003, InfrastruX's income was $0.7 million, or $0.01 per share.

    2005 Outlook:

    Puget Energy will provide 2005 earnings guidance after the Washington Utilities and Transportation Commission (WUTC) rules on PSE's pending electric and natural gas general-rate increase requests, anticipated to be issued no later than March 5, 2005. PSE has requested increases of 7.1 percent, or $99.8 million annually, and 6.3 percent, or $46.2 million annually, for electric and natural gas customers, respectively.

    Conference Call:

    Puget Energy will provide additional information regarding its fourth-quarter 2004 results during a conference call for analysts scheduled at 10:00 a.m. EST (7:00 a.m. PST) on Thursday, February 10, 2005. The call will be broadcast live through a Web cast at www.pse.com by accessing the Investors section of the Web site. The Web cast will be archived and available for replay following the call. A tape-recorded replay of the call will be available two hours after completion of the conference call on February 10, 2005 through midnight (EST) on Thursday, February 24, 2005 by dialing 1-888-286-8010 and entering the conference identification number at 17161164.

    Form 10K and Annual Report for 2004

    Puget Energy will file its Form 10-K Annual Report for 2004 with the Securities and Exchange Commission (SEC) on or before March 15, 2005, a copy of which will be available through the SEC's website at www.sec.gov or the Company's website at www.pse.com. Investors are encouraged to read the financial statements and disclosures that will be contained in the Form 10-K filing.

    Puget Energy is an energy services holding company that conducts all of its operations through its subsidiaries, PSE and InfrastruX Group. PSE is a regulated utility company that generates, purchases and sells electricity; and purchases, transports and sells natural gas. The service territory of PSE covers approximately 6,000 square miles, principally in the Puget Sound region of Washington State. InfrastruX specializes in contracting services to other gas and electric utilities primarily in the Midwest, Texas, and the south-central and eastern United States regions.

    CAUTIONARY STATEMENT:

    Certain statements contained in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, among which include Puget Energy's plans with respect to InfrastruX and any proceeds from its possible sale or monetization, Puget Sound Energy's plans relating to utility plant additions and expenses, and factors that could impact Puget Energy's earnings guidance for the year-end 2005. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect actual results include, among others, governmental policies and regulatory actions, including those of the WUTC, and weather conditions. More information about these and other factors that potentially could affect the company's financial results is included in Puget Energy's and PSE's most recent annual report on Form 10-K, quarterly report on Form 10-Q and in their other public filings filed with the Securities and Exchange Commission. Except as required by law, Puget Energy and PSE undertake no obligation to update any forward-looking statements.

PUGET ENERGY -- SUMMARY INCOME STATEMENT ---------------------------------------- (In thousands, except per- share amounts)

Unaudited Unaudited Three months ended Twelve months ended 12/31(1) 12/31 ------------------- ----------------------- 2004 2003 2004 2003 ------------------- -----------------------

Operating revenues Electric(2) $404,778 $386,510 $1,423,034 $1,400,743 Gas 284,703 251,524 769,306 634,230 Other 104,971 89,815 376,473 347,830 -------- -------- ---------- ---------- Total operating revenues 794,452 727,849 2,568,813 2,382,803 -------- -------- ---------- ---------- Operating expenses Purchased electricity(2) 205,764 201,927 723,567 714,469 Purchased gas 180,618 147,337 451,302 327,132 Electric generation fuel 20,640 17,584 80,772 64,999 Residential exchange (50,674) (51,289) (174,473) (173,840) Unrealized (gain) loss on derivative instruments 516 (278) (526) 106 Utility operations & maintenance 77,083 78,070 291,232 289,702 Other operations & maintenance 89,609 74,900 322,517 303,972 Depreciation & amortization 63,228 60,442 246,842 236,866 Conservation amortization 4,942 9,544 22,688 33,458 Goodwill impairment (5) 91,196 --- 91,196 --- Taxes other than income taxes 62,843 60,608 221,981 208,395 Income taxes 30,656 36,010 74,964 72,369 -------- -------- ---------- ---------- Total operating expenses 776,421 634,855 2,352,062 2,077,628 -------- -------- ---------- ---------- Operating income 18,031 92,994 216,751 305,175 Other income (net of tax) 2,324 (4,050) 4,292 1,564 -------- -------- ---------- ---------- Income before interest charges & minority interest 20,355 88,944 221,043 306,739 Interest charges Interest expense 43,496 45,483 172,999 183,973 Mandatorily redeemable securities interest expense(3) 23 24 91 1,072 -------- -------- ---------- ---------- Total interest charges 43,519 45,507 173,090 185,045 -------- -------- ---------- ---------- Minority interest (7,477) 71 (7,069) 177 -------- -------- ---------- ---------- Net income (loss) before cumulative effect of accounting change (15,687) 43,366 55,022 121,517 FAS-143 transition adjustment loss (net of tax) --- --- --- 169 -------- -------- ---------- ---------- Net Income (loss) (15,687) 43,366 55,022 121,348 Less preferred stock dividend accruals(3) --- 373 --- 5,151 -------- -------- ---------- ---------- Income (loss) for common stock $(15,687) $ 42,993 $ 55,022 $ 116,197 ======== ======== ========== ==========

Common shares outstanding 99,765 96,669 99,470 94,750 Diluted shares outstanding 99,765 97,228 99,911 95,309 -------- -------- ---------- ---------- Basic earnings per common share before cumulative effect of accounting change $ (0.16) $ 0.44 $ 0.55 $ 1.23 Cumulative effect of accounting change --- --- --- --- -------- -------- ---------- ---------- Basic earnings per common share $ (0.16) $ 0.44 $ 0.55 $ 1.23 ======== ======== ========== ==========

Diluted earnings per common share before cumulative effect of accounting change $ (0.16) $ 0.44 $ 0.55 $ 1.22 Cumulative effect of accounting change --- --- --- --- -------- -------- ---------- ---------- Diluted earnings per common share(4) $ (0.16) $ 0.44 $ 0.55 $ 1.22 ======== ======== ========== ==========

(1) Partial-year results may not accurately predict full-year performance, as earnings are significantly affected by weather. (2) Effective January 1, 2004, non-trading derivative instruments meeting Emerging Issues Task Force Issue No. 03-11 must be shown net in the income statement. Previous year amounts have been reclassified to conform to the current presentation. (3) Effective July 1, 2003, SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity," requires companies with equity that has characteristics of debt to classify their dividends as interest expense instead of as preferred stock dividends. (4) Diluted earnings per common share include the dilutive effect of securities related to employee compensation plans. (5) Puget Energy goodwill impairment charge was $76.6 million after income tax benefit of $7.0 million and minority interest of $7.6 million.

PUGET SOUND ENERGY -- UTILITY OPERATING DATA --------------------------------------------

Three months ended Twelve months ended 12/31 12/31 ------------------------------------------------- 2004 2003 2004 2003 ------------------------------------------------- Energy sales revenues ($ in thousands; unaudited) Electricity Residential $ 169,811 $ 165,066 $ 628,869 $ 607,341 Commercial 152,095 147,751 580,973 558,983 Industrial 23,461 22,985 88,779 89,291 Other retail sales, including change in unbilled 23,509 24,136 12,310 17,045 ---------- ---------- ----------- ----------- Subtotal, retail sales 368,876 359,938 1,310,931 1,272,660 Transportation, including change in unbilled 3,365 2,313 10,707 11,542 Sales to other utilities & marketers(1) 17,719 15,435 56,512 82,788 Other(2) 14,818 8,824 44,884 33,753 ---------- ---------- ----------- ----------- Total electricity sales 404,778 386,510 1,423,034 1,400,743 Gas Residential 183,588 165,046 478,969 401,717 Commercial 81,679 70,018 225,834 178,153 Industrial 13,364 10,574 38,800 29,728 ---------- ---------- ----------- ----------- Subtotal, retail sales 278,631 245,638 743,603 609,598 Transportation 3,289 3,293 12,968 13,796 Other 2,783 2,593 12,735 10,836 ---------- ---------- ----------- ----------- Total gas sales 284,703 251,524 769,306 634,230 ---------- ---------- ----------- ----------- Total energy sales revenues $ 689,481 $ 638,034 $ 2,192,340 $ 2,034,973 ---------------------------------------------------------------------- Energy sales volumes (Unaudited) Electricity (in mWh) Residential 2,660,232 2,665,562 10,028,150 9,845,854 Commercial 2,133,829 2,121,607 8,449,566 8,222,166 Industrial 344,201 342,591 1,352,660 1,372,815 Other, including change in unbilled 323,625 345,104 53,816 158,520 ---------- ---------- ----------- ----------- Subtotal, retail sales 5,461,887 5,474,864 19,884,192 19,599,355 Transportation, including change in unbilled 515,346 499,196 1,988,966 2,020,562 Sales to other utilities & marketers(1) 386,824 425,352 1,317,394 2,166,657 ---------- ---------- ----------- ----------- Total mWh 6,364,057 6,399,412 23,190,552 23,786,574 Gas (in 000's of therms) Residential 173,908 185,083 489,036 500,116 Commercial 87,557 90,390 270,305 268,304 Industrial 15,075 14,308 49,217 47,276 Transportation 52,808 54,213 201,642 209,497 ---------- ---------- ----------- ----------- Total gas volumes 329,348 343,994 1,010,200 1,025,193 ---------------------------------------------------------------------- Margins(3)($ in thousands; unaudited) Electric $ 188,105 $ 175,858 $ 640,102 $ 634,242 Gas 79,343 82,813 242,378 244,213 ---------------------------------------------------------------------- Customers served(4) (Unaudited) Electricity Residential 882,554 860,372 874,205 854,088 Commercial 110,302 109,561 109,660 108,479 Industrial 3,940 3,967 3,953 3,952 Other 2,286 2,097 2,194 2,060 Transportation 17 16 17 16 ---------- ---------- ----------- ----------- Total electricity customers 999,099 976,013 990,029 968,595 Gas Residential 615,766 591,646 605,505 583,439 Commercial 49,868 47,817 49,001 47,388 Industrial 2,700 2,718 2,710 2,721 Transportation 129 132 129 134 ---------- ---------- ----------- ----------- Total gas customers 668,463 642,313 657,345 633,682 ---------------------------------------------------------------------- Weather (Unaudited) Actual heating degree days 1,642 1,695 4,421 4,527 Normal heating degree days(5) 1,729 1,729 4,818 4,797

(1) Effective January 1, 2004, non-trading derivative instruments meeting Emerging Issues Task Force Issue No. 03-11 must be shown net in the income statement. Previous year amounts have been reclassified to conform to the current presentation. (2) Includes Conservation Trust collection and sales of non-core gas supplies. As of the third quarter 2003 the Conservation Trust payments to bondholders are no longer shown as a reduction in revenue but as an expense due to the consolidation of the Conservation Trust onto PSE's books beginning July 1, 2003. There is no impact on net income. (3) 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. (4) Customers represents average served during the period. (5) 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. Heating degree days in 2004 are adjusted for leap year by adding the February 28th heating degree day amount.

PUGET ENERGY -- SEGMENT RESULTS ------------------------------- (In thousands) Regulated Puget Three months ended Utility Energy 12/31/04 (Unaudited) Operations InfrastruX Other(1) Total ---------------------- ----------------------------------------------- Revenues $ 689,481 $ 102,440 $ 2,531 $ 794,452 Depreciation and amortization 58,465 4,699 64 63,228 Income taxes 35,601 (5,478) 533 30,656 Operating income (loss) 97,110 (80,113) 1,034 18,031 Interest charges 41,512 1,945 62 43,519 Net income (loss)(2) 58,056 (74,626) 883 (15,687) Goodwill, net - 43,503 - 43,503 Total assets 5,511,631 251,097 70,641 5,833,369 ---------------------------------------------------------------------- Three months ended 12/31/03 (Unaudited) --------------------------------------------------------------------- Revenues $ 638,034 $ 85,625 $ 4,190 $ 727,849 Depreciation and amortization 55,777 4,603 62 60,442 Income taxes 34,294 630 1,086 36,010 Operating income 88,365 2,216 2,413 92,994 Interest charges 44,088 1,367 52 45,507 Net income (loss)(2) 44,136 830 (1,600) 43,366 ---------------------------------------------------------------------- Twelve months ended 12/31/04 (Unaudited) --------------------------------------------------------------------- Revenues $2,192,340 $ 369,936 $ 6,537 $ 2,568,813 Depreciation and amortization 228,310 18,276 256 246,842 Income taxes 75,755 (1,793) 1,002 74,964 Operating income (loss) 285,258 (70,928) 2,421 216,751 Interest charges 166,411 6,460 219 173,090 Net income (loss)(2) 123,401 (70,388) 2,009 55,022 ---------------------------------------------------------------------- Twelve months ended 12/31/03 (Unaudited) --------------------------------------------------------------------- Revenues $2,034,973 $ 341,787 $ 6,043 $ 2,382,803 Depreciation and amortization 219,851 16,779 236 236,866 Income taxes 69,823 1,594 952 72,369 Operating income 295,219 7,452 2,504 305,175 Interest charges 179,437 5,485 123 185,045 Net income (loss)(2) 118,967 1,943 438 121,348 ---------------------------------------------------------------------- Goodwill at 12/31/03 $ - $ 133,302 $ - $ 133,302 Total assets at 12/31/03 5,281,474 342,332 75,196 5,699,002 ----------------------------------------------------------------------

(1) Includes the non-regulated subsidiaries of Puget Sound Energy and miscellaneous holding company expenses. The principal non-regulated subsidiary of PSE is a real estate development company. (2) InfrastruX net income (loss) is presented net of minority interest.

PUGET SOUND ENERGY - CAPITALIZATION -----------------------------------

(Unaudited) At December 31, At December 31, (In thousands) 2004 2003 --------------------------------------------------------------------- Amount % Amount % ----------------------------------------------------------------------

Junior Subordinated Debentures of the Corporation Payable to a Subsidiary Trust Holding Mandatorily Redeemable Preferred Securities $ 280,250 7.1% $ 280,250 7.2% Mandatorily Redeemable Preferred Stock and Long-term debt, including current maturities 2,097,249 52.8% 2,054,894 52.8% Common Equity 1,592,433 40.1% 1,555,469 40.0% ---------------------------------------------------------------------- Total capitalization including short-term debt $3,969,932 100.0% $3,890,613 100.0% ----------------------------------------------------------------------

--30--APG/se*

CONTACT: Puget Energy Media: Grant Ringel, 888-831-7250 or Analysts: Durga D. Waite, 425-462-3808

KEYWORD: WASHINGTON INDUSTRY KEYWORD: UTILITIES EARNINGS CONFERENCE CALLS SOURCE: Puget Energy

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