(2) New Accounting Pronouncements

Recently Adopted Accounting Guidance

Reference Rate Reform

In March 2020, the FASB issued ~~Accounting Standards Update (ASU)~~ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. ASU 2020-04 provides temporary optional expedients and exceptions to the current guidance on contract modifications to ease the financial reporting burdens related to the expected market transition from ~~London Interbank Offered Rate (LIBOR)~~LIBOR and other interbank offered rates to alternative reference rates. In December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848". ASU 2022-06 postpones the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. ~~The Company has promissory notes that reference LIBOR.~~ As of March 31, ~~2023,~~2024, the Company is not aware of any current agreements that reference LIBOR and thus, has not utilized any ~~of the expedients discussed within this ASU; however, it~~practical expedients. The Company continues to ~~assess other~~monitor

whether any new agreements ~~to determine if~~are entered into which reference LIBOR ~~is included~~ and if the expedients would be utilized through the allowed period of December 31, 2024.

Accounting Pronouncements Issued but Not Yet Adopted

Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". ASU 2023-07 is intended to improve the disclosures for reportable segments and provide more detailed information about a reportable segment's expenses. This will require disclosure of significant segment expense categories, amounts for each reportable segment, disclosure of the title and position of the Chief Operating Decision Maker and how they use the measure of the segments profit or loss to assess performance and allocate resources. ASU 2023-07 will be effective for the Company in fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. As the amendment contemplates changes in disclosures only, it is not expected to have a material impact on the Company's results of operations, cash flows, or consolidated balance sheets; however, the Company continues to assess the impacts of the amendment.

Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". ASU 2023-09 will require disclosure of specific categories in a tabular rate reconciliation using both percentages and currency amounts, and provide additional information for reconciling items that meet a quantitative threshold. Further requirements include a qualitative description of the tax jurisdictions, an explanation of the reconciling items disclosed and disclosure regarding income taxes paid. ASU 2023-09 will eliminate the requirement to disclose the nature and estimate of range in unrecognized tax benefits and disclosures of the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized. ASU 2023-09 will be effective for the Company in annual periods beginning after December 15, 2024. As the amendment contemplates changes in disclosures only, it is not expected to have a material impact on the Company's results of operations, cash flows, or consolidated balance sheets; however, the Company continues to assess the impacts of the amendment.

Climate Related Disclosures

In March 2024, the Securities and Exchange Commission (SEC) issued Final Rule S7-10-22, "The Enhancement and Standardization of Climate-Related Disclosures for Investors". Final Rule S7-10-22 will require disclosure for material climate-related risks; activities to adapt or mitigate climate-related risks; information regarding the roles of management and the board of directors in managing climate-related risks and information on climate-related targets or goals that are material to the business. Additionally, the final rules require disclosure of Scope 1 and/or Scope 2 GHG emissions on a phased-in basis by certain larger registrants with material emissions. PSE is a non-accelerated filer and final rule S7-10-22 does not require non-accelerated filers to disclose GHG emissions. The Final Rules were set to become effective May 28, 2024, however the SEC decided to stay implementation pending resolution of appeals. As currently drafted, Final Rule S7-10-22 will be effective for the Company in fiscal year 2027. The final rule impacts disclosures only, and thus is not expected to have a material impact on the Company's results of operations, cash flows, or consolidated balance sheets; however, the Company continues to assess the impacts of the Final Rules and the cost of compliance.

(3) Revenue

The following tables present disaggregated revenue from contracts with customers, and other revenue by major source for the three months ended March 31, ~~2023~~2024 and March 31, ~~2022:~~2023:


Puget Energy and Puget Sound Energy
(Dollars in Thousands)	Three Months Ended March 31, 2024
Revenue from contracts with customers:	Electric		Natural Gas		Other1		Total
Retail
Residential	$	509,422	$	293,297	$	—	$	802,719
Commercial	310,585		125,887		—		436,472
Industrial	34,042		9,168		—		43,210
Other	6,618		—		—		6,618
Wholesale	117,517		—		—		117,517
Transmission and transportation	11,039		9,338		—		20,377
Miscellaneous2	4,294		103,562		8,477		116,333
Total revenue from contracts with customers	$	993,517	$	541,252	$	8,477	$	1,543,246
Total other revenue3	(5,001)		16,172		—		11,171
Total operating revenue	$	988,516	$	557,424	$	8,477	$	1,554,417

_____________

1 Other includes $8.4 million of Puget LNG revenues recorded at Puget Energy.

2 Miscellaneous natural gas revenue includes $107.8 million for the regulatory offset of CCA auction proceeds passed back to customers.

3 Total other revenue includes revenues from derivatives and alternative revenue programs that are not considered revenues from contracts with customers.


Puget Energy and Puget Sound Energy
(Dollars in Thousands)	Three Months Ended March 31, 2023
Revenue from contracts with customers:	Electric		Natural Gas		Other1		Total
Retail
Residential	$	470,855	$	350,024	$	—	$	820,879
Commercial	291,489		152,237		—		443,726
Industrial	33,847		11,091		—		44,938
Other	5,501		—		—		5,501
Wholesale	142,260		—		—		142,260
Transmission and transportation	14,486		5,694		—		20,180
Miscellaneous	3,991		(368)		13,769		17,392
Total revenue from contracts with customers	$	962,429	$	518,678	$	13,769	$	1,494,876
Total other revenue2	47,731		(1,420)		—		46,311
Total operating revenue	$	1,010,160	$	517,258	$	13,769	$	1,541,187

_____________

1 Other includes $4.5 million of Puget LNG revenues recorded at Puget Energy.

2 Total other revenue includes revenues from derivatives and alternative revenue programs that are not considered revenues from contracts with customers.

1718

Puget Energy and
Puget Sound Energy
(Dollars in Thousands) Three Months Ended March 31, 2022
Revenue from contracts with customers: Electric Natural Gas
Other1
Total
Retail
Residential $ 416,260 $ 292,596 $ — $ 708,856
Commercial 257,019 120,979 — 377,998
Industrial 30,073 8,085 — 38,158
Other 4,761 — — 4,761
Wholesale 13,147 — — 13,147
Transmission and transportation 11,222 5,446 — 16,668
Miscellaneous 1,150 309 10,712 12,171
Total revenue from contracts with customers $ 733,632 $ 427,415 $ 10,712 $ 1,171,759
Total other revenue2
22,745 (1,067) — 21,678
Total operating revenue $ 756,377 $ 426,348 $ 10,712 $ 1,193,437

~~_____________~~

1~~Other includes $0.1 million of Puget LNG revenues recorded at Puget Energy.~~

2~~Total other revenue includes revenues from derivatives and alternative revenue programs that are not considered revenues from contracts with customers.~~

Transaction Price Allocated to Remaining Performance Obligations

In December 2020, Puget LNG entered into a contract with one customer where Puget LNG is selling LNG over a 10-year delivery period beginning ~~April~~no later than 2024. The contract requires the customer to purchase a minimum annual quantity even if the customer does not take delivery. The price of the LNG includes a fixed charge, a fuel charge that includes both a market index and fixed margin component and other variable consideration. The fixed transaction price is allocated to the remaining performance obligations which is determined by the fixed charge components multiplied by the outstanding minimum annual quantity. Based on management’s best estimate of commencement, the Company expects to recognize this revenue over the following time periods:


Puget Energy
(Dollars in Thousands)	2024		2025		2026		2027		2028		Thereafter		Total
Remaining performance obligations	$	15,359	$	19,710	$	19,454	$	19,454	$	19,454	$	102,135	$	195,566

The Company has elected the optional exemption in ASC 606, "Revenues from Contracts with Customers", under which the Company does not disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. The primary sources of variability are (a) fluctuations in market index prices of natural gas used to determine aspects of variable pricing and (b) variation in volumes that may be delivered to the customer. Both sources of variability are expected to be resolved at or shortly before delivery of each unit of LNG or natural gas. As each unit of LNG or natural gas represents a separate performance obligation, future volumes are wholly unsatisfied.

(4) Accounting for Derivative Instruments and Hedging Activities

PSE employs various energy portfolio optimization strategies but is not in the business of assuming risk for the purpose of realizing speculative trading revenue. The nature of serving regulated electric customers with its portfolio of owned and contracted electric generation resources exposes PSE and its customers to some volumetric and commodity price risks within the sharing mechanism of the Power Cost Adjustment. Therefore, wholesale market transactions and PSE's related hedging strategies are focused on reducing costs and risks where feasible, thus reducing volatility in costs in the portfolio. In order to manage its exposure to the variability in future cash flows for forecasted energy transactions, PSE utilizes a programmatic hedging strategy, which extends out three years. PSE's hedging strategy includes a risk-responsive component for the core natural gas portfolio, which utilizes quantitative risk-based measures with defined objectives to balance both portfolio risk and

hedge costs.

PSE's energy risk portfolio management function monitors and manages these risks using analytical models and tools. In order to manage risks effectively, PSE enters into forward physical electric and natural gas purchase and sale agreements, fixed-for-floating swap contracts, and commodity call/put options. Currently, the Company does not apply cash flow hedge accounting and therefore records all mark-to-market gains or losses through earnings.

The Company manages its interest rate risk through the issuance of mostly fixed-rate debt with varied maturities. The Company utilizes internal cash from operations, borrowings under its commercial paper program and its credit facilities to meet short-term funding needs. The Company may enter into swap instruments or other financial hedge instruments to manage the interest rate risk associated with these debts.

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	Puget Energy and Puget Sound Energy
		March 31, 2023					December 31, 2022
		March 31, 2024
		March 31, 2024
		March 31, 2024														December 31, 2023
(Dollars in Thousands)	(Dollars in Thousands)	Volumes (millions)	Assets1		Liabilities2		Volumes (millions)	Assets1		Liabilities2		(Dollars in Thousands)	Volumes (millions)	Assets1	Liabilities2		Volumes (millions)	Assets1	Liabilities2
Electric portfolio derivatives	Electric portfolio derivatives	*	$	135,643	$	77,182	*	$	337,703	$	87,120
Natural gas derivatives (MMBtus)3	Natural gas derivatives (MMBtus)3	285	54,232		49,928		322	343,947		56,222
Total derivative contracts	Total derivative contracts		$	189,875	$	127,110		$	681,650	$	143,342
Current	Current		$	125,377	$	112,634		$	587,029	$	124,976
Long-term	Long-term		64,498		14,476			94,621		18,366
Total derivative contracts	Total derivative contracts		$	189,875	$	127,110		$	681,650	$	143,342

_______________

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 relating to the natural gas business have been deferred in accordance with ASC 980, “Regulated Operations,” due to the ~~purchased gas adjustment (PGA)~~PGA mechanism. The net derivative asset or liability and offsetting regulatory liability or asset are related to contracts used to economically hedge the cost of physical gas purchased to serve natural gas customers.

* Electric portfolio derivatives consist of electric generation fuel of ~~227.9~~297.8 million ~~British Thermal Units (MMBtu)~~MMBtu and purchased electricity of ~~3.9~~5.5 million ~~Megawatt hours (MWhs)~~MWhs at March 31, ~~2023,~~2024, and ~~234.9~~315.6 million MMBtus and ~~5.3~~2.3 million MWhs at December 31, ~~2022.~~2023.

It is the Company's policy to record all derivative transactions on a gross basis at the contract level without offsetting assets or liabilities. The Company generally enters into transactions using the following master agreements: WSPP ~~Inc. (WSPP)~~ agreements, which standardize physical power contracts; ~~International Swaps and Derivatives Association (ISDA)~~ISDA agreements, which standardize financial natural gas and electric contracts; and ~~North American Energy Standards Board (NAESB)~~NAESB agreements, which standardize physical natural gas contracts. The Company believes that such agreements reduce credit risk exposure because such agreements provide for the netting and offsetting of monthly payments as well as the right of set-off in the event of counterparty default. The set-off provision can be used as a final settlement of accounts which extinguishes the mutual debts owed between the parties in exchange for a new net amount. For further details regarding the fair value of derivative instruments, see Note 5, "Fair Value Measurements," in the Combined Notes to Consolidated Financial Statements included in Item 1 of this report.

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	Puget Energy and Puget Sound Energy																			Puget Energy and Puget Sound Energy
		At March 31, 2023
		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
	At March 31, 2024																						At March 31, 2024
	Gross Amount Recognized in the Statement of Financial Position1
(Dollars in Thousands)
(Dollars in Thousands)
(Dollars in Thousands)		(Dollars in Thousands)		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			Commodity Contracts			Cash Collateral Received/Posted			Net Amount		Commodity Contracts	Cash Collateral Received/Posted		Net Amount
Assets:	Assets:
Energy derivative contracts	Energy derivative contracts	$	189,875			$	—		$	189,875		$	(78,345)		$	—		$	111,530
Energy derivative contracts
Energy derivative contracts
Liabilities:	Liabilities:
Energy derivative contracts	Energy derivative contracts	$	127,110		$	—		$	127,110		$	(78,345)		$	(976)		$	47,789
Energy derivative contracts
Energy derivative contracts

Puget Energy and
Puget Sound Energy At December 31, 2022
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 $ 681,650 $ — $ 681,650 $ (125,334) $ — $ 556,316
Liabilities:
Energy derivative contracts $ 143,342 $ — $ 143,342 $ (125,334) $ (5,661) $ 12,347



Puget Energy and Puget Sound Energy	At December 31, 2023
	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	$	109,549	$	—	$	109,549	$	(82,206)	$	—	$	27,343
Liabilities:
Energy derivative contracts	$	223,837	$	—	$	223,837	$	(82,206)	$	(84)	$	141,547

_______________

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

The following table presents the effect and classification of the realized and unrealized gains (losses) of the Company's derivatives recorded on the statements of income:

Puget Energy and
Puget Sound Energy

Three Months Ended
March 31,

Puget Energy and
Puget Sound Energy

Three Months Ended
March 31,

(Dollars in Thousands)

Classification

2023

2022

(Dollars in Thousands)

Classification

2024

2023

Gas for power derivatives:

Unrealized

Unrealized gain (loss) on derivative instruments, net

(104,646)

86,873

Unrealized

Realized

Electric generation fuel

88,267

27,091

Power derivatives:

Unrealized

Unrealized gain (loss) on derivative instruments, net

(87,477)

45,048

Unrealized

Realized

Purchased electricity

51,017

2,591

Total gain (loss) recognized in income on derivatives

(52,839)

161,603

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is intended to promote understanding of the results of operations and financial condition, is provided as a supplement to, and should be read in conjunction with the financial statements and related notes thereto included elsewhere in this report on Form 10-Q. This section generally discusses the results of operations and changes in financial condition for the period ended March 31, ~~2023~~2024 compared to ~~2022.~~2023. For discussion related to the results of operations and changes in financial condition for the period ended March 31, ~~2022~~2023 compared to ~~2021~~2022 refer to Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations in our period ended March 31, ~~2022,~~2023, Form 10-Q, which was filed with the United States Securities and Exchange commission (SEC).The discussion contains forward-looking statements that involve risks and uncertainties, such as Puget Energy, Inc. (Puget Energy) and Puget Sound Energy, Inc. (PSE) objectives, expectations and intentions. Words or phrases such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “future,” “intends,” “may,” “might,” “plans,” “potential,” “predicts,” “projects,” “should,” “will likely result,” “will continue” and similar expressions are intended to identify certain of these forward-looking statements. However, these words are not the exclusive means of identifying such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Puget Energy's and PSE's actual results could differ materially from results that may be anticipated by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Forward-Looking Statements” included elsewhere in this report and in the section entitled "Risk Factors" included in Part I, Item 1A in Puget Energy's and PSE's Form 10-K for the period ended December 31, ~~2022.~~2023. Except as required by law, neither Puget Energy nor PSE undertakes any obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made in this report and in Puget Energy's and PSE's other reports filed with the SEC that attempt to advise interested parties of the risks and factors that may affect Puget Energy's and PSE's business, prospects and results of operations.

Overview

Puget Energy is an energy services holding company and substantially all of its operations are conducted through its wholly-owned subsidiary PSE, a regulated electric and natural gas utility company. PSE is the largest electric and natural gas utility in the state of Washington, primarily engaged in the business of electric transmission, distribution and generation and natural gas distribution. Puget Energy's business strategy is to generate stable cash flows by offering reliable electric and natural gas service in a cost-effective manner through PSE. Puget Energy also has a wholly-owned non-regulated subsidiary, Puget LNG, LLC (Puget LNG), which has the sole purpose of owning ~~developing~~ and ~~financing~~operating the non-regulated activity of the Tacoma liquefied natural gas (LNG) facility. All of Puget Energy's common stock is indirectly owned by Puget Holdings LLC (Puget Holdings). Puget Holdings is owned by a consortium of long-term infrastructure investors including the British Columbia Investment Management Corporation (BCIMC), the Alberta Investment Management Corporation (AIMCo), Ontario Municipal

Employee Retirement System (OMERS), PGGM Vermogensbeheer B.V., Macquarie Washington Clean Energy Investment, L.P., and Ontario Teachers’ Pension Plan Board. Puget Energy and PSE are collectively referred to herein as “the Company.”

PSE generates revenue and cash flow primarily from the sale of electric and natural gas services to residential and commercial customers within a service territory covering approximately 6,000 square miles, principally in the Puget Sound region of the state of Washington. PSE continually balances its load requirements, generation resources, purchase power agreements, and market purchases to meet customer demand. The Company's external financing requirements principally reflect the cash needs of its construction program, its schedule of maturing debt and certain operational needs. PSE requires access to bank and capital markets to meet its financing needs.

Factors and Trends Affecting PSE's Performance

PSE’s ongoing regulatory requirements and operational needs ~~necessitated~~necessitate the investment of substantial capital in ~~2023~~2024 and will continue to do so in future years. Because PSE intends to seek recovery of such investments through the regulatory process, its financial results depend heavily upon favorable outcomes from that process. The principal business, economic and other factors that affect PSE’s operations and financial performance include:

•The rates PSE is allowed to charge for its services;

•PSE’s ability to recover power costs that are subject to the Company's power cost adjustment mechanism that are included in rates, which are based on volume;

•Weather conditions, including the impact of temperature on customer load; the impact of extreme weather events on budgeted maintenance costs; and meteorological conditions such as snow-pack, stream-flow and wind-speed which affect power generation, supply and price;

•The effects of climate change, including changes in the environment that may affect energy costs or consumption, increase the Company’s costs, or adversely affect its operations;

•Regulatory decisions allowing PSE to recover purchased power and fuel costs, on a timely basis;

•PSE’s ability to supply electricity and natural gas, either through company-owned generation, purchase power contracts or by procuring natural gas or electricity in wholesale markets;

•Deferral of excess revenues if earnings exceed PSE's authorized rate of return (ROR) by more than 0.5%;

•Availability and access to capital and the cost of capital;

•Regulatory compliance costs, including those related to new and developing federal regulations of electric system reliability, state regulations of natural gas pipelines and federal, state and local environmental laws and regulations, such as the ~~Climate Commitment Act (CCA);~~Washington CCA;

•Wholesale commodity prices of electricity and natural gas;

•Increasing capital expenditures with additional depreciation and amortization;

•Failure to complete capital projects on schedule and within budget or the abandonment of capital projects, either of which could result in the Company’s inability to recover project ~~costs;~~costs or refund previously collected revenues;

•Changes in customer growth and customer usage;

•Tax reform, the effect of lower tax rates, and regulatory treatment of excess deferred tax balances on rate base and customer rates;

•General economic conditions, such as inflation, in PSE's ~~service~~operational territory and its effects on customer growth and use-per-customer;

•Federal, state, and local taxes;

•Employee workforce factors, including potential strikes, work stoppages, transitions in senior management, and loss or retirement of key personnel and availability of qualified personnel;

•The effectiveness of PSE’s risk management policies and procedures;

•~~Cyber security~~Cybersecurity incidents and/or attacks, data security breaches, or other malicious acts that cause damage to the Company’s generation and transmission facilities or information technology systems, or result in the release of confidential customer, employee, or Company information;

•Acts of war or terrorism locally or abroad, or the impact of civil unrest to infrastructure or preventing access to infrastructure and its impact on the supply chain and prices of goods and services;

•Natural disasters such as wildfires, earthquakes, hurricanes, floods, landslides, and windstorms, the rise in frequency and magnitude of extreme temperature events, and possible accidents, explosions, fires or mechanical breakdowns affecting or caused by PSE’s facilities or infrastructure may increase the Company's costs, impact PSE's generation,

transmission, and distribution systems, subject the Company to increased liability, and/or adversely affect its operations;

•Risks due to health crises, such as epidemics and pandemics, including supply shortages, rising costs, disruption to vendor or customer relationships, the potential for reputational harm, the impact of government, business and company closure of facilities, customer or contract defaults; concerns of safety to employees and customers, potential costs due to quarantining of employees and work-from-home policies, and the Company's and vendor staffing levels resulting from vaccination ~~mandates.~~mandates; and

•Legislative, regulatory, code, and/or ordinance changes that impact operations, electric and natural gas availability, sales, transmission, delivery, ~~systems,~~ and/or restrictions.

Regulation of PSE Rates and Recovery of PSE Costs

PSE's regulatory requirements, environmental compliance and operational needs require the investment of substantial capital in ~~2023~~2024 and future years. As PSE intends to seek recovery of these investments through the regulatory process, its financial results depend heavily upon outcomes from that process. The rates ~~that~~ PSE is allowed to charge for its services influence its financial condition, results of operations and liquidity. PSE is highly regulated and the rates that it charges its retail customers are approved by the Washington ~~Utilities and Transportation Commission (Washington Commission). The~~Commission. Prior to 2023, the Washington Commission ~~has traditionally~~ required ~~these~~that rates be determined based ~~to a large extent,~~ on historic test year costs plus weather normalized ~~assumptions about hydroelectric conditions and power costs in the relevant rate year.~~assumptions. Incremental customer growth and sales typically ~~have~~did not ~~provided~~provide sufficient revenue to cover general cost increases ~~over time~~ due to ~~the combined effects of~~

regulatory lag and attrition. ~~Absent a resolution for the impact of lag and attrition,~~Therefore, the Company ~~will need to~~would seek rate relief through a rate ~~case~~cases with the Washington ~~Commission. The Washington~~ Commission, ~~determines~~which would determine whether the Company's expenses and capital investments ~~are~~were reasonable and prudent for the provision of cost-effective, reliable and safe electric and natural gas service. If the Washington Commission ~~determines~~determined that a capital investment iswas not reasonable or prudent, the costs (including return on any resulting rate base) related to such capital investment ~~may~~would be disallowed, partially or entirely, and not recovered in rates.

Washington state law also requires PSE to pursue electric conservation that is cost-effective, reliable and feasible. PSE’s mandate to pursue electric conservation initiatives may have a negative impact on the electric business financial performance due to lost margins from lower sales volumes as variable power costs are not part of the decoupling mechanism. The Washington Commission and Washington state law also set natural gas conservation achievement standards for PSE. The effects of achieving these standards will, however, have only a slight negative impact on natural gas business financial performance due to the natural gas business being almost fully decoupled.

In ~~May~~ 2021, the Washington Governor signed legislation passed by the state legislature that ~~would require~~requires investor-owned utilities to file a ~~multiyear rate plan~~forward looking MYRP for two, three, or four years as part of a ~~general rate case (GRC)~~GRC filed with the Washington Commission on or after January 1, 2022. For the initial rate year, the legislation requires the Washington Commission to ascertain and determine the fair value for rate-making purposes of the property in service as of the date that rates go into effect. ~~Utilities would be~~Under the law, while utilities are required to file a MYRP (at least two years in length) the Washington Commission is not required to approve them. To the extent the Washington Commission approves a MYRP, utilities are bound to the first and second year of ~~a multiyear rate plan and can~~the MYRP but may file for a new rate plan in years three or four. If a company earns greater than a half percent above its authorized rate of return on a regulated basis, revenues above ~~the~~that level must be deferred for ~~funds~~refunds to customers or another determination by the Washington Commission in a subsequent adjudicative proceeding. The Washington Commission must also set performance measurements to assess a natural gas or electric company operating under a ~~multiyear rate plan.~~MYRP.

~~General Rate Case Filing~~

Washington State law also requires PSE ~~filed~~to pursue electric conservation that is cost-effective, reliable and feasible, and the Washington Decarbonization Act for Large Combination Utilities, introduced as house bill 1589, requires PSE to achieve two percent of electric load annually with conservation and energy efficiency resources unless the Washington Commission finds that a ~~GRC which included~~higher target is cost effective. The Washington Decarbonization Act for Large Combination Utilities was passed by the Washington State legislature in March 2024 and signed into law in April 2024. The law enables PSE, under the supervision of the Washington Commission, to plan for the electric and natural gas choices of our customers consistent with Washington State’s climate goals. The law consolidates multiple existing system plans into an integrated plan, and will be followed by three years of rulemaking and planning prior to the submission in 2027 of PSE’s first integrated system plan to the Washington Commission. The law also clarifies the application of three regulatory mechanisms for PSE: Certificate of Public Convenience and Necessity (CPCN), Construction Work in Progress (CWIP) and accelerated depreciation. The law requires PSE to file a ~~three-year multiyear rate plan,~~depreciation study with the Washington Commission ~~on January 31, 2022, requesting an overall increase in electric and~~that is intended to depreciate all natural gas ~~rates~~plants in service as of 13.6% and 13.0% respectively in 2023; 2.5% and 2.3%, respectively in 2024; and 1.2% and 1.8%, respectively, in 2025. PSE requested a return on equity of 9.9% in all three rate years. PSE requested an overall rate of return of 7.39% in 2023, 7.44% inJuly 1, 2024 ~~and 7.49% in 2025. The filing requested recovery of forecasted plant additions through 2022 as required by RCW 80.28.425 as well as forecasted plant additions through 2025,~~to no later than January 1, 2050. As PSE’s pending GRC was filed prior to the ~~final year~~passage of the ~~multiyear~~law, PSE will file depreciation studies in future rate ~~plan.~~

~~In August 2022, three separate partial multiparty settlement agreements were reached. On August 5, 2022, parties filed an unopposed partial multiparty settlement agreement relating to~~proceedings in a manner that conforms with the Voluntary Long Term Renewable Energy Purchase rider, known as Green Direct, resolving the method for calculating the energy credit Green Direct customers receive, among other matters. On August 26, 2022, six of the sixteen parties, includinglaw. PSE filed a ~~partial multiparty settlement agreement~~depreciation study with the Washington Commission determining that the regulated portion of the Tacoma LNG Facility will be included in rates, as a tracker, beginning in November 2023. Also, on August 26, 2022, twelve of the sixteen parties, including PSE, filed a partial multiparty settlement agreement with the Washington Commission for the remaining items in the GRC. The GRC settlement agreement set a two-year rate plan instead of a three-year plan as originally filed, provided a capital structure of 49.0% equity and 51.0% debt, and a return on equity of 9.4% with an overall rate of return of 7.16%.

On December 22, 2022, the Washington Commission issued an order on PSE’s 2022 GRC which approved, with conditions, three settlement agreements which cover a two-year period beginning January 1, 2023. The ruling provided for a weighted cost of capital of 7.16%, or 6.62% after-tax, and a capital structure of 49.0% in common equity in 2023 and 2024, with a return on equity of 9.4%. The order also provided for an update to power costs in 2023 and 2024 and authorizes PSE to seek recovery of the costs related to the Tacoma LNG Facility concurrent with its 2023 purchased gas adjustment (PGA) filing. PSE was also allowed to file two additional trackers that will request to recover all rate base, depreciation, and operations and maintenance (O&M) expenses related to investments under the Company’s Clean Energy Implementation Plan (CEIP) and Transportation Electrification Plan. The Transportation Electrification Plan was filed and had an effective date of March 1, 2023.

On December 27, 2022 PSE submitted compliance filings, including an update to power costs, and revised tariff sheets to comply with the order. On January 6, 2023, the Washington Commission rejected the compliance filing, in part, and required a revised compliance filing specific to electric rates to remove an additional $135.8 million related to PSE’s recovery of projected costs related to the modeling of the CCA impacts on PSE’s use of natural gas and coal-fired resources that had been included as part of ~~PSE's update to power costs in the compliance filing.~~

~~Natural gas rates became effective~~its GRC filing on January 7, 2023, resulting in an overall net revenue change of $70.8 million in 2023 and $19.5 million in 2024, representing increases of 6.4% and 1.65%, respectively. On January 10, 2023, the Washington Commission accepted the revised compliance filing with electric rates going into effect on January 11, 2023. The revisions reflected an overall net revenue change of $247.0 million in 2023 and $33.1 million inFebruary 15, 2024 which ~~represents an increase~~includes a request to shorten the depreciable lives of ~~10.75% and 1.33%, respectively. Per~~its gas assets by roughly ten years in most cases which is intended to start the ~~2022~~process to shorten lives to 2050 over time using a gradual approach. For additional information on PSE's GRC Final Order in Docket No. UE-220066, PCORC rates were set to zero as of January 11, 2023 and PSE agreed not to file a PCORC during 2023 and 2024, the two-year rate plan agreed to in the GRC settlement.

Prior rates were subject to the 2019 GRC and included a weighted cost of capital of 7.39% or 6.8% after-tax, a capital structure of 48.5% in common equity, and a return on equity of 9.4%. The annualized overall rate impacts were an electric revenue increase of $48.3 million, or 2.3%, and a natural gas increase of $4.9 million, or 0.6%, effective October 1, 2021. For further information,filings, see Note 4,7, "Regulation and Rates" in the Combined Notes to Consolidated Financial Statements included in Item 81 of this report.

On March 29, 2024, senate bill 5950 approved Washington State's operating budget, which included $150.0 million for public and private utilities to provide one-time bill rebates for low-and moderate-income residential electric customers. PSE expects to receive a share of the Washington total and will provide as rebates to low-and moderate-income electric customers.

Electric Rates

The following table sets forth electric rate adjustments approved by the Washington Commission and the corresponding expected annual impact on PSE's revenue based on the effective dates. For further information on descriptions of the rate adjustments, see Business, "Regulation and Rates" included in Item 1 or on prior filings, see Management's Discussion and Analysis, "Regulation of PSE Rates and Recovery of PSE Costs" included in Item 7, respectively, of the Company's Form 10-K for the period ended December 31, ~~2022.~~2023.


Electric	Schedule	Docket	Effective Date	Average Percentage Increase (Decrease) in Rates	Increase (Decrease) in Revenue (Dollars in Millions)
Bill discount rate rider	129D	230692	October 1, 2023	0.5%	$11.9
Clean energy implementation	141CEI	230591	September 1, 2023	0.9	31.4
Colstrip adjustment rider	141COL	230808	January 1, 2024	0.03	0.9
		220066	January 11, 2023	2.2	50.3
Conservation service rider	120	240138	May 1, 2024	0.7	20.7
		230139	May 1, 2023	(0.2)	(6.3)
		220137	May 1, 2022	1.0	21.6
Revenue Decoupling Adjustment Mechanism	142	240221	May 1, 2024	(0.3)	(9.5)
		230206	May 1, 20231	(1.5)	(37.6)
		220227	May 1, 20221,2	(1.0)	(23.5)
Energy charge credit recovery	141A	230825	January 1, 2024	(0.1)	(2.0)
		220066	January 11, 2023	1.5	35.3
Federal incentive tracker	95A	220794	January 1, 20233	1.3	1.0
		210821	January 1, 2022	0.1	(28.2)
Low income program	129	240194	May 1, 2024	2.7	29.2
		230694	October 1, 2023	(1.0)	(25.9)
		220656	October 1, 2022	1.1	25.8
Power adjustment clause - Schedule 95	Supplemental	230318	December 1, 20234	1.0	27.4
	2024 variable power cost update	230805	January 1, 2024	6.1	160.9
	2020 PCORC5	200980	October 1, 2021	3.3	70.9
Property tax tracker	140	240200	May 1, 2024	(0.7)	(18.7)
		230219	May 1, 2023	(0.2)	(4.4)
		220234	May 1, 2022	(0.3)	(5.8)
Rates not subject to refund	141N	230320	January 1, 2024	(3.1)	(76.2)
		220066	January 11, 2023	7.9	182.5
Rates subject to refund	141R	230320	January 1, 2024	4.2	105.6
		220066	January 11, 2023	4.0	91.7
Residential and exchange benefit6	194	230792	November 1, 2023	(0.4)	(9.9)
Transportation electrification plan	141TEP	240067	March 1, 2024	0.04	1.2
		230040	March 1, 2023	0.2	6.0
Voluntary long term renewable energy charge and credit	139	220066	January 1, 2024	—	(0.02)
			January 11, 2023	(0.2)	(4.7)

________________________

~~Climate Commitment Act Deferral~~

On December 29, 2022, PSE filed accounting petitions with the Washington Commission requesting authorization to defer costs and revenues associated with the Company’s compliance with the Climate Commitment Act (CCA) codified in law within Revised Code of Washington (RCW) 70A.65. On February 28, 2023, in Order 01 under Docket No. UE-220974 and UG-220975, the Washington Commission granted PSE approval to defer the cost of carbon allowances to comply with the CCA and the proceeds from no-cost allowances consigned to auction beginning January 1, 2023. This accounting treatment is necessary in order for PSE to defer and seek recovery of CCA costs that are not currently included in rates. As of March 31, 2023, PSE deferred $83.3 and $11.3 million of CCA compliance costs for natural gas and electric liabilities, respectively.

~~Revenue Decoupling Adjustment Mechanism~~

While fluctuations in weather conditions will continue to affect PSE's billed revenue and energy supply expenses from month to month, PSE's decoupling mechanisms assist in mitigating the impact of weather on operating revenue and net income. The Washington Commission has allowed PSE to record a monthly adjustment to its electric and natural gas operating revenues related to electric transmission and distribution, natural gas operations and general administrative costs and fixed production costs from most residential, commercial and industrial customers to mitigate the effects of abnormal weather, conservation impacts and changes in usage patterns per customer. As a result, these electric and natural gas revenues are recovered on a per customer basis regardless of actual consumption levels. PSE's energy supply costs, which are part of the power cost adjustment (PCA) and PGA mechanisms, are not included in the decoupling mechanism. The revenue recorded under the decoupling mechanisms will be affected by customer growth and not actual consumption except for fixed production costs, which are held at the level of cost from the most recent rate proceeding and are not impacted by customer growth. Following each calendar year, PSE will recover from, or refund to, customers the difference between allowed decoupling revenue and the corresponding actual revenue during the following May to April time period.

On January 6, 2023, the Washington Commission approved the natural gas 2022 GRC filing. As part of this filing the annual gas delivery allowed revenue was updated to reflect changes in the approved revenue requirement. Additionally, the Commission approved the removal of the earnings test from the decoupling mechanism in accordance with RCW 80.28.425(6). The changes took effect on January 7, 2023.

On January 10, 2023, the Washington Commission approved the electric 2022 GRC filing. As part of this filing the annual electric delivery and fixed power cost allowed revenue was updated to reflect changes in the approved revenue requirement. Additionally, the Commission approved the removal of the earnings test from the decoupling mechanism in accordance with RCW 80.28.425(6). The changes took effect on January 11, 2023.

On March 31, 2023, PSE performed an analysis to determine if electric and natural gas decoupling revenue deferrals would be collected from customers within 24 months of the annual period, per ASC 980. If not, for U.S. Generally Accepted Accounting Principles (GAAP) purposes only, PSE would need to record a reserve against the decoupling revenue and corresponding regulatory asset balance. Once the reserve is probable of collection within 24 months from the end of the annual period, the reserve can be recognized as decoupling revenue. The analysis indicated that electric and natural gas deferred revenue will be collected within 24 months of the annual period; therefore, no reserve adjustment was booked to 2023 electric or natural gas decoupling revenue. At March 31, 2022, the analysis indicated that electric and natural gas deferred revenue was estimated to be collected within 24 months of the annual period in 2022; therefore, no reserve adjustment was booked to 2022 electric or natural gas decoupling revenue.

~~The Washington Commission approved the following PSE requests to change rates for prior deferrals under its electric and natural gas decoupling mechanisms:~~

Effective Date Average
Percentage
Increase (Decrease)
in Rates
Increase (Decrease)
in Revenue
(Dollars in Millions)1
Electric:
May 1, 2023 (1.5)% $(37.6)
May 1, 20222
(1.0) (23.5)
May 1, 20213
1.0 21.4
January 1, 2021 (1.0) (20.6)
October 15, 20204
(0.5) (10.2)
Natural Gas:
May 1, 2023 (1.3)% $(16.4)
May 1, 2022 (0.7) (7.4)
May 1, 2021 1.5 15.0

~~__________________~~

11.For ~~electric and natural gas~~ rates effective May 1, 2023 ~~May 1, 2022~~ and May 1, ~~2021,~~2022, there were no excess earnings that impacted the approved revenue change.

22.For the ~~electric~~ rates effective May 1, 2022, there was $8.0 million of excess deferred revenues for delivery and fixed power costs which could not be set in rates until May 1, 2023 due to the 3% rate cap.

33. ~~For~~The 2022 rate period represented the ~~electric rates effective May 1, 2021, there was $24.1 million~~final year of ~~excess deferred revenues for delivery and fixed power costs which could not~~the ten-year period used to pass back the Treasury Grants included in Schedule 95A (Federal Incentive Tracker). The overall rate now represents a surcharge as amounts from the 2022 filing are expected to be ~~set in rates until May 1, 2022 due to the 3% rate cap.~~over-distributed.

44.The ~~2019 GRC final order lengthened the recovery period~~Schedule 95 Supplemental PCA mechanism rates from the ~~original one-year recovery~~prior year that recovers the 2022 imbalance (effective December 1, 2023).

5.Schedule 95 update through PCORC filing. Per the 2022 GRC Final Order in Docket No. UE-220066, PCORC rates were set to ~~a two-year recovery~~zero as of ~~April 2022. The remaining decoupling amortization balances~~January 11, 2023.

6.Total credit to be passed back to eligible customers is $88.1 million for ~~delivery and fixed power costs of $1.7 million were included in electric decoupling mechanism tariff rates, effective May 1, 2022.~~2023.

~~Electric~~Natural Gas Rates

The following ~~electric~~table sets forth natural gas rate ~~schedules were filed with the Washington Commission or~~adjustments approved by the Washington Commission ~~after~~and the ~~Form 10-K for~~corresponding expected annual impact on PSE's revenue based on the period ended December 31, 2022 was filed on February 23, 2023 along with the comparison period, if applicable. Additionally, the following electric rate schedules include details for three months ended March 31, 2023 as compared to 2022.effective dates. For further information on descriptions of the rate adjustments, see Business, "Regulation and Rates" included in Item 1 or on prior filings, see Management's Discussion and Analysis, "Regulation of PSE Rates and Recovery of PSE Costs" included in Item 7, respectively, of the Company's Form 10-K for the period ended December 31, ~~2022.~~2023.

~~Conservation Service Rider~~


Natural gas	Schedule	Docket	Effective Date	Average Percentage Increase (Decrease) in Rates	Increase (Decrease) in Revenue (Dollars in Millions)
Bill discount rate rider	129D	230693	October 1, 2023	1.1%	$13.1
CCA - greenhouse gas emissions cap & invest	111	230968	January 1, 2024	3.0	29.1
		230756	November 1, 2023	2.1	27.2
		230470	October 1, 20231	3.2	16.8
Conservation service rider	120	240139	May 1, 2024	0.7	6.8
		230140	May 1, 2023	0.4	4.7
		220138	May 1, 2022	0.3	3.2
Cost recovery mechanism for pipeline replacement	149	220067	January 7, 2023	(2.0)	(22.6)
		220590	November 1, 2022	0.4	4.6
Revenue Decoupling Adjustment Mechanism	142	240222	May 1, 2024	2.7	28.0
		230207	May 1, 20232	(1.3)	(16.4)
		220228	May 1, 20222	(0.7)	(7.4)
Distribution pipeline provisional recovery	141D	220067	January 1, 2024	(0.01)	(0.1)
			January 7, 2023	0.3	3.0
Low income program	129	240195	May 1, 2024	4.6	10.2
		230695	October 1, 2023	0.2	1.9
		220657	October 1, 2022	(0.04)	(0.4)
Property tax tracker	140	240201	May 1, 2024	(0.5)	(5.6)
		230220	May 1, 2023	(0.02)	(0.2)
		220235	May 1, 2022	0.02	0.2
Purchased gas adjustment	101, 106	230769	November 1, 2023	(24.2)	(309.4)
		220715	November 1, 2022	14.9	155.3
Rates not subject to refund	141N	230889	January 1, 2024	(2.3)	(27.6)
		220067	January 7, 2023	(0.1)	(1.6)
Rates subject to refund	141R	230889	January 1, 2024	4.0	47.2
		230323	November 1, 2023	(0.1)	(1.4)
		220067	January 7, 2023	4.1	45.5

The electric conservation rider collects revenue to cover the costs incurred in providing services and programs for conservation. Rates change annually on May 1 to collect the annual budget that started the prior January and to true-up for actual compared to forecast conservation expenditures from the prior year, as well as actual compared to the forecasted load set in rates.

~~The following table sets forth conservation rider rate adjustments approved by the Washington Commission and the corresponding expected annual impact on PSE’s revenue based on the effective dates:~~

Effective Date Average
Percentage
Increase (Decrease)
in Rates Increase
(Decrease)
in Revenue
(Dollars in Millions)
May 1, 2023 (0.2)% $(6.3)
May 1, 2022 1.0 21.6
__________________________

~~Power Cost Adjustment Clause~~

~~PSE updated its Schedule 95 rates in~~Per UG-230470, the ~~Power Cost Adjustment Clause~~ tariff ~~to reflect the transition fee as required by Section 12 of the Special Contract, a non-prescribed commercial/industrial rate contract. Additionally, Schedule 95 rates also~~

include portions of fixed power cost adjustments per the allowed decoupling rate re-allocation resulting from a Special Contract customer becoming a transportation customer as well as small variable power cost adjustments.

PSE exceeded the $20.0 million cumulative deferral balance in its PCA mechanism in 2022. During 2022, actual power costs were higher than baseline power costs, thereby, creating an under-recovery of $110.1 million. Under the terms of the PCA’s sharing mechanism for under-recovered power costs, PSE absorbed $35.5 million of the under-recovered amount, and customers were responsible for the remaining $74.6 million, or $76.1 million including interest. On April 28, 2023, PSE filed the 2022 PCA report with the Washington Commission and proposed to recover the 2022 deferred balance from Decemberwas effective October 1, 2023 ~~through~~until December 31, ~~2024.~~

~~PSE exceeded the $20.0 million cumulative deferral balance in its PCA mechanism in 2021. During 2021, actual power~~2023 and would recover costs were higher than baseline power costs, thereby, creating an under-recovery of $68.0 million. Under the terms of the PCA’s sharing mechanism for under-recovered power costs, PSE absorbed $31.3 million of the under-recovered amount, and customers were responsible for the remaining $36.7 million, or $38.4 million including interest. On October 27, 2022, the Washington Commission approved PSE's 2021 PCA report that proposes to recover the deferred balance for 2021 PCA period by keeping the current rates and allowing recoverypass back credits from ~~January 1, 2023 through November 30, 2023.~~

~~The following table sets forth power cost adjustment clause filing approved by the Washington Commission and the corresponding expected annual impact on PSE’s revenue based on the effective dates:~~

Effective Date Average
Percentage
Increase (Decrease)
in Rates Increase
(Decrease)
in Revenue
(Dollars in Millions)
December 1, 20201
2.1% $43.9

~~______________~~

1 The Schedule 95 PCA mechanism rates from the prior year that recover the 2019 imbalance (effective December 1, 2020) have been extending through December 31, 2022 to recover the imbalance attributable to 2020. PSE filed the PCA imbalance rate extension with the Washington Commission to recover PCA imbalance attributable to 2021 from JanuaryAugust 1, 2023 to ~~November 30,~~December 31, 2023.

~~Power Cost Adjustment Mechanism~~

~~PSE currently has a PCA mechanism~~For rates effective May 1, 2023 and May 1, 2022, there were no excess earnings that ~~provides for~~impacted the deferral of power costs that vary from the “power cost baseline” level of power costs. The “power cost baseline” levels are set, in part, based on normalized assumptions about weather and hydroelectric conditions. Excess power costs or savings are apportioned between PSE and its customers pursuant to the graduated scale set forth in the PCA mechanism and will trigger a surcharge or refund when the cumulative deferral trigger is reached.

~~Effective January 1, 2017, the following graduated scale is used in the PCA mechanism:~~

approved revenue change.
Company's Share Customers’ Share
Annual Power Cost Variability Over Under Over Under
Over or under collected by up to $17 million 100% 100% —% —%
Over or under collected by between $17 million - $40 million 35 50 65 50
Over or under collected beyond $40 + million 10 10 90 90

For the three months ended March 31, 2023, in its PCA mechanism, PSE over recovered its allowable costs by $12.9 million of which zero was apportioned to customers and $1.1 million of interest was accrued on the deferred customer balance. This compares to an under recovery of allowable costs of $10.6 million for the three months ended March 31, 2022, of which zero was apportioned to customers and $0.3 million of interest was accrued on the total deferred customer balance.

~~Property Tax Tracker~~

The purpose of the property tax tracker is to pass through the cost of all property taxes incurred by the Company. The mechanism acts as a tracker rate schedule and collects the total amount of property taxes assessed. The tracker is adjusted each year in May based on that year's assessed property taxes and true-up from the prior year.

The following table sets forth property tax tracker mechanism rate adjustments approved by the Washington Commission and the corresponding expected annual impact on PSE’s revenue based on the effective dates:

Effective Date Average
Percentage
Increase (Decrease)
in Rates Increase (Decrease)
in Revenue
(Dollars in Millions)
May 1, 2023 (0.2)% $(4.4)
May 1, 2022 (0.3) (5.8)

~~Natural Gas Rates~~

The following natural gas rate schedules were filed with the Washington Commission or approved by the Washington Commission after the Form 10-K for the period ended December 31, 2022 was filed on February 23, 2023 along with the comparison period, if applicable. Additionally, the following natural gas rate schedules include details for the three months ended March 31, 2023 as compared to 2022. For further information on prior filings, see Management's Discussion and Analysis, "Regulation of PSE Rates and Recovery of PSE Costs" included in Item 7 of the Company's Form 10-K for the period ended December 31, 2022.

~~Conservation Service Rider~~

The natural gas conservation rider collects revenue to cover the costs incurred in providing services and programs for conservation. Rates change annually on May 1 to collect the annual budget that started the prior January and to true-up for actual compared to forecast conservation expenditures from the prior year, as well as actual compared to the forecasted load set in rates.

~~The following table sets forth conservation rider rate adjustments approved by the Washington Commission and the corresponding expected annual impact on PSE's revenue based on the effective dates:~~

Effective Date Average
Percentage
Increase (Decrease)
in Rates Increase (Decrease)
in Revenue
(Dollars in Millions)
May 1, 2023 0.4% $4.7
May 1, 2022 0.3 3.2

~~Property Tax Tracker~~

The purpose of the property tax tracker mechanism is to pass through the cost of all property taxes incurred by the Company. The mechanism removed property taxes from general rates and included those costs for recovery in an adjusting tariff rate. After the implementation, the mechanism acts as a tracker rate schedule and collects the total amount of property taxes assessed. The tracker is adjusted each year in May based on that year's assessed property taxes and true-up from the prior year.

~~The following table sets forth property tax tracker mechanism rate adjustments approved by the Washington Commission and the corresponding impact on PSE's revenue based on the effective dates:~~

Effective Date Average Percentage Increase (Decrease) in Rates Increase (Decrease) in Revenue (Dollars in Millions)
May 1, 2023 (0.02)% $(0.2)
May 1, 2022 0.02 0.2

3836

~~Purchased Gas Adjustment~~

PSE has a PGA mechanism that allows PSE to recover expected natural gas supply and transportation costs and defer, as a receivable or liability, any natural gas supply and transportation costs that exceed or fall short of this expected natural gas cost amount in PGA mechanism rates, including accrued interest. PSE is authorized by the Washington Commission to accrue carrying costs on PGA receivable and payable balances. A receivable or payable balance in the PGA mechanism reflects an under recovery or over recovery, respectively, of natural gas cost through the PGA mechanism. Rates typically change annually on November 1, although out-of-cycle rate changes are allowed at other times of the year if needed.

On October 28, 2021, the Washington Commission approved PSE's request for November 2021 PGA rates in Docket No. UG-210721, effective November 1, 2021. As part of that filing, PSE requested an annual revenue increase of $59.1 million; where PGA rates, under Schedule 101, increase annual revenue by $80.6 million, and the tracker rates under Schedule 106, decrease annual revenue by $21.5 million. The annual 2021 PGA rate increases were in addition to continuing the collection on the remaining balance of $69.4 million under Supplemental Schedule 106B, which were set, in effect, through September 30, 2023 per the 2019 GRC.

On October 27, 2022, the Washington Commission approved PSE's request for PGA rates in Docket No. UG-220715, effective November 1, 2022. As part of that filing, PSE requested an annual revenue increase of $155.3 million; where PGA rates, under Schedule 101, increase annual revenue by $142.1 million, and the tracker rates under Schedule 106, increase annual revenue by $13.2 million.

On November 15, 2022, the Federal Energy Regulatory Commission (FERC) approved a settlement of a counterparty, FERC Docket No. RP17-346. Under the terms, PSE was allocated $24.2 million related to PSE natural gas services which was recorded on December 31, 2022 and included in the table below. The 2022 GRC order requires PSE to amortize the refund in 2023 as a credit against natural gas costs and therefore pass back the refund to customers through the PGA mechanism.

~~The following table presents the PGA mechanism balances and activity at March 31, 2023 and December 31, 2022:~~
(Dollars in Thousands) March 31, December 31,
PGA receivable balance and activity 2023 2022
PGA receivable beginning balance $ (3,536) $ 57,935
Actual natural gas costs 138,178 457,950
Allowed PGA recovery (234,372) (496,879)
Interest (348) 1,674
Refund/interest from counterparty settlement (2,836) (24,216)
PGA (liability)/ receivable ending balance $ (102,914) $ (3,536)

~~For additional information, see Note 7, "Regulation and Rates" in the Combined Notes to Consolidated Financial Statements included in Item 1 of this report.~~

Access to Debt Capital

PSE relies on access to bank borrowings and short-term money markets as sources of liquidity and longer-term capital markets to fund its utility construction program, to meet maturing debt obligations and other capital expenditure requirements not satisfied by cash flow from its operations or equity investment from its parent, Puget Energy. Neither Puget Energy nor PSE have any debt outstanding whose maturity would accelerate upon a credit rating downgrade. However, a ratings downgrade could adversely affect the Company's ability to refinance existing or issue new long-term debt or obtain access to new or renew existing credit facilities, ~~and~~could increase the cost of issuing long-term debt and maintaining credit ~~facilities.~~facilities, and could impact the Company's ability to pay dividends. For example, under Puget Energy's and PSE's credit facilities, the borrowing costs increase as their respective credit ratings decline due to increases in credit spreads and commitment fees. If PSE is unable to access debt capital on reasonable terms, its ability to pursue improvements or generating capacity acquisitions, which may be relied on for future growth and to otherwise implement its strategy, could be adversely affected. PSE monitors the credit environment and expects to continue to be able to access the capital markets to meet its short-term and long-term borrowing needs.

Regulatory Compliance Costs and Expenditures

PSE's operations are subject to extensive federal, state and local laws and regulations. These laws and regulations cover electric system reliability, natural gas pipeline system safety and energy market transparency, among other areas. Environmental laws and regulations related to air and water quality, ~~including~~ climate change and endangered species protection, waste handling

and disposal (including generation by-products such as coal ash), remediation of ~~contamination~~contaminated sites and the environmental impacts of siting new facilities also impact the Company's operations. PSE must spend significant resources to fulfill requirements set by regulatory agencies, many of which have greatly expanded mandates on measures including resource planning, remediation, monitoring, pollution control equipment and emissions-related abatement and fees.

In 2021, the Washington Legislature adopted the CCA, which establishes a ~~greenhouse gases (GHG)~~GHG emissions cap-and-invest program that ~~caps~~requires covered entities to purchase allowances to cover their GHG emissions with a cap on available allowances beginning on January 1, 2023 ~~and makes further reductions to the cap~~that declines annually through 2050. The ~~Washington Department of Ecology (WDOE)~~WDOE published final regulations to implement the program on September 29, 2022, ~~which became~~ effective on October 30, 2022. The WDOE also indicated that it will have subsequent rulemakings ~~that will build~~building off initial rulemaking aswhile program implementation ~~gets~~is underway and progress with Washington ~~State~~ carbon goals are evaluated. ~~For further details on~~

While the ~~CCA see Part I Item 1 "Recent and Future Environmental Law and Regulation"~~Washington Commission has approved the recovery of natural gas CCA-related costs, which has led to increases in ~~the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Based on the rules passed in 2022, there is potential for PSE’s compliance with the CCA to result in increased~~ costs to customers, ~~or amounts that~~it has indicated these revenues are subject-to-refund, and there is a risk PSE may ultimately not be able to recover ~~through electric~~all costs. Electric CCA-related costs have not yet been approved for recovery at this time and ~~natural gas rates. Potential~~it is uncertain what obligation may be borne by customers or at risk for recovery. PSE faces continued risks associated with ~~CCA compliance could include:~~the program, including the evolving nature of the CCA rulemaking ~~as indicated by WDOE, market uncertainty based on rule~~and related interpretation ~~during implementation,~~of the rules, unresolved recovery methodology for CCA’s impact on energy costs, company costs, customer rate impacts, and cash, liquidity and credit volatility. For additional information, see Note 7, "Regulation and Rates" in the Combined Notes to Consolidated Financial Statements included in Item 1 of this report.

Compliance with these or other future regulations, such as those pertaining to climate change, could require significant capital expenditures by PSE and may adversely affect PSE's financial position, results of operations, cash flows and liquidity.

Other Challenges and Strategies

Competition

PSE’s electric and natural gas utility retail customers generally do not have the ability to choose their electric or natural gas supplier; therefore, PSE’s business has historically been recognized as a natural and regulated monopoly. However, PSE faces competition from public utility districts and municipalities or efforts by citizens organizing to form such entities that want to establish their own government-owned utility, as a result of which PSE may lose a number of customers. PSE also faces increasing competition for sales to its retail customers through alternative methods of electric energy generation, including solar and other self-generation methods. In addition, PSE’s natural gas customers may elect to use heating oil, propane or other fuels instead of using and purchasing natural gas from PSE.

Results of Operations

Puget Sound Energy

The following discussion should be read in conjunction with the unaudited consolidated financial statements and the related notes included elsewhere in this document. The following discussion provides the significant items that impacted PSE’s results of operations for the three months ended March 31, ~~2023~~2024 and March 31, ~~2022.~~2023.

Non-GAAP Financial Measures - Electric and Natural Gas Margins

The following discussion includes financial information prepared in accordance with GAAP, as well as two other financial measures, electric margin and natural gas margin, that are considered “non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial position or cash flows that includes adjustments that result in a presentation that is not defined by GAAP. The presentation of electric margin and natural gas margin is intended to supplement an understanding of PSE’s operating performance. Electric margin and natural gas margin are used by PSE to determine whether PSE is collecting the appropriate amount of revenue from its customers in order to provide adequate recovery of operating costs, including interest and equity returns. PSE’s electric margin and natural gas margin measures may not be comparable to other companies’ electric margin and natural gas margin measures. Furthermore, these measures are not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.

The following table presents operating income and a reconciliation of utility electric and natural gas margins to the most directly comparable GAAP measure, operating income:

Puget Sound Energy
(Dollars in Thousands) Three Months Ended
March 31,
2023 2022
Operating income (loss) $ 80,976 $ 374,138
Electric operating revenue 1,010,160 756,377
Purchased electricity (339,816) (238,203)
Electric generation fuel (150,254) (60,644)
Residential exchange 23,531 23,070
Electric margin (non-GAAP) $ 543,621 $ 480,600
Natural gas operating revenue 517,258 426,348
Purchased natural gas (235,482) (177,333)
Natural gas margin (non-GAAP) $ 281,776 $ 249,015
Other operating revenue 9,233 10,677
Unrealized gain (loss) on derivative instruments, net (192,123) 131,921
Utility operation and maintenance (194,991) (170,300)
Non-utility expense and other (8,014) (12,814)
Depreciation and amortization (225,262) (193,845)
Taxes other than income taxes (133,264) (121,116)
Operating income (loss) $ 80,976 $ 374,138


Puget Sound Energy
(Dollars in Thousands)	Three Months Ended March 31,
	2024		2023
Operating income (loss)	$	221,429	$	80,976
Electric operating revenue	988,516		1,010,160
Purchased electricity	(385,765)		(339,816)
Electric generation fuel	(117,557)		(150,254)
Residential exchange	26,298		23,531
Electric margin (non-GAAP)	$	511,492	$	543,621
Natural gas operating revenue	557,820		517,258
Purchased natural gas	(271,353)		(235,482)
Natural gas margin (non-GAAP)	$	286,467	$	281,776
Other operating revenue	101		9,233
Unrealized gain (loss) on derivative instruments, net	(15,665)		(192,123)
Utility operation and maintenance	(203,117)		(194,991)
Non-utility expense and other	(3,147)		(8,014)
Depreciation and amortization	(228,024)		(225,262)
Taxes other than income taxes	(126,678)		(133,264)
Operating income (loss)	$	221,429	$	80,976

4138

Electric Margin

Electric margin represents 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.

The following chart displays the details of PSE's electric margin changes for the three months ended March 31, ~~2022~~2024 and 2023:

______________

* Includes decoupling cash collections, ROR excess earnings, and decoupling 24-month revenue reserve.

Three Months Ended March 31, ~~2023~~2024 Compared to ~~2022~~2023

Electric Operating Revenue

Electric operating revenues ~~increased $253.8~~decreased $21.6 million from the prior year primarily due to ~~an increase~~a decrease in transportation and other revenue of $63.2 million and a decrease in sales to other utilities of ~~$127.9~~$31.0 million partially offset by an increase in electric retail sales of ~~$93.6~~$59.0 million, ~~an increase in transportation and other revenue of $46.2 million and~~ an increase in other decoupling revenue of ~~$4.8~~$9.5 million ~~partially offset by a decrease~~and an increase in decoupling revenue of ~~$18.8~~$4.0 million. These items are discussed in detail below.

•Electric retail sales increased ~~$93.6~~$59.0 million due to an increase of ~~$80.3~~$63.4 million in rates compared to the prior year and ~~$13.3~~partially offset by $4.4 million from ~~an increase~~a decrease in retail electricity usage of ~~1.7%~~0.5%. The increase in rates is primarily due to the tariffs filed pursuant to the Company's ~~most recent GRC~~2024 variable power cost update effective January ~~11, 2023.~~1, 2024 and rate increases from the 2022 GRC. See "Regulation of PSE Rates and Recovery of PSE Costs" included in this Item 2 of this report and Part II, Item 7, Management's Discussion and Analysis, "Regulation of PSE Rates and Recovery of PSE Costs" included in the Company's Annual Report on Form 10-K for the period ended December 31, ~~2022~~2023 for electric rate changes. The ~~increase~~decrease in retail usage was primarily due to ~~an increase~~a decrease in residential and ~~commercial~~industrial usage of ~~2.1%~~0.6% and ~~1.1%~~4.7%, respectively. ~~Customer~~The slight decrease in customer usage ~~increased due to an increase in retail customers of 1.1% and~~was partially driven by a ~~slight increase~~4.6% decrease in heating degree days ~~of 1.0% due to lower than normal temperatures~~ in the three months ended March 31, ~~2023~~2024 as compared to ~~2022.~~2023.

•Sales to other utilities ~~increased $127.9~~decreased $31.0 million primarily due to a ~~229.0%~~35.8% decrease in the average price of electric wholesale sales. Lower wholesale power prices in February and March were primarily the result of lower wholesale market natural gas prices. The effect of lower power prices was partially offset by a 22.3% increase in wholesale sales volume and a 161.3% increase in electric wholesale sales price. Higher wholesale sales volumes were the result of increased volume from PSE gas-fired generation, which increased 149.6% in 2023 compared to 2022, particularly in March 2023, driven

4239

~~by greater value~~volume due to increased volume from PSE natural gas-fired generation, which increased 21.1% in ~~the market. The increase in wholesale sales price was driven by increases in~~2024 compared to 2023. Lower natural gas fuel prices ~~that fuel~~made natural gas-fired ~~electric~~ generation ~~following constrained supply along with increased demand.~~more economic to dispatch in 2024 compared to 2023.

•Decoupling revenue ~~decreased $18.8~~increased $4.0 million ~~primarily attributable to~~driven by a ~~$16.1~~$3.9 million ~~and $2.7 million decrease~~increase in ~~delivery and~~ fixed production cost deferral ~~revenues, respectively.~~revenues. This was driven primarily by ~~higher rates and~~lower usage in the ~~current period~~three months ended March 31, 2024 compared to ~~the same period in 2022.~~2023. This resulted in actual electric revenues being higher than allowed decoupling deferral revenues by a ~~greater~~lower margin in ~~the current year~~2024 compared to ~~the prior year.~~2023.

•Other decoupling revenue increased ~~$4.8~~$9.5 million ~~primarily~~ due to changes in amortization rates. In the current period, overcollections from residential customers were amortized, whereas undercollections from residential customers were amortized in the prior period. This was partially offset by a $3.0 million decrease related to GAAP alternative revenue program recognition guidelines. As of the three months ended March 31, ~~2022, there~~2024 more overcollected balances were ~~$3.0 million of deferred 2021 GAAP alternative decoupling revenues that were recognized, whereas none were recognized in the current period.~~refunded as compared to 2023.

•Transportation and other revenue ~~increased $46.2~~decreased $63.2 million primarily due to a ~~$39.8~~$59.1 million ~~increase~~decrease in net wholesale non-core natural gas ~~financial hedging gains~~sales. The decrease in wholesale non-core natural gas sales was primarily driven by an increase of $37.8 million in financial hedging costs in 2024 compared to 2023 as natural gas hedges moved to a loss in 2024 as compared to a gain in 2023. Additionally, net wholesale non-core natural gas sales decreased $21.3 million which was primarily driven by a 20.1% decrease in the volume of gas sold at an average price ~~of natural gas sold~~ that was ~~85.4% higher~~66.4% lower and a 64.8% decrease in ~~2023 compared to 2022, partially offset by a total $35.1 million increase in~~ the average cost of the natural gas sold due to higher natural gas prices. Also contributing to the change in the net whole non-core gas sales was a $16.1 million increase in natural gas financial hedging gains. Additionally, an increase of $4.8 million was due to an Internal Revenue Service Private Letter Ruling in 2022, which included amortization to offset recovery through rates in 2022. The increases were partially offset by a $2.6 million deferral for over recovery of 2023 Green Direct energy credits approved in the 2022 GRC.sales.

Electric Power Costs

Electric power costs increased ~~$190.8~~$10.5 million primarily due to an increase of ~~$101.6~~$45.9 million of purchased electricity ~~costs and an increase~~costs; partially offset by a decrease of electric generation fuel costs of ~~$89.6~~$32.7 million and an increase in residential exchange credits of $2.8 million. These items are discussed in detail ~~below.~~below:

•Purchased electricity expense increased ~~$101.6~~$45.9 million primarily due to increased wholesale purchase prices, which were ~~59.2%~~12.9% higher ~~than~~ in ~~2022, driven by open market purchases as well as PPA contracts added after~~the three months ended March 31, ~~2022. The increase from~~2024 compared to 2023. Additionally, wholesale electricity purchase volumes increased slightly by 0.6%. Higher average wholesale purchase prices and purchase volumes were ~~partially offset~~the result of extraordinarily high prices driven by a ~~10.4% decrease in wholesale electricity purchase volumes.~~January 2024 cold weather event with unusually low temperatures and high PSE retail demand.

•Electric generation fuel ~~increased $89.6~~decreased $32.7 million primarily due to a ~~$89.0~~$31.4 million ~~increase~~decrease in natural ~~gas-fired generation~~gas fuel costs resulting from lower wholesale market natural gas prices.

•Residential exchange credits increased by $2.8 million due to ~~increased~~a 0.4% change in the amount of credits to be passed back to customers effective November 1, 2023, see Management's Discussion and Analysis, "Regulation of PSE ~~gas-fired generation, which increased 149.6%~~Rates and Recovery of PSE Costs" included in ~~2023 compared to 2022 and 13.6% higher unit production costs from higher natural gas prices,~~this Item 2 of this report; partially offset by a decrease in residential usage of 0.6% as discussed above in ~~sales to other utilities~~electric retail sales.

4340

Natural Gas Margin

Natural gas margin is natural gas sales to retail and transportation customers less the cost of natural gas purchased, including transportation costs to bring natural gas to PSE’s service territory. The PGA mechanism passes through increases or decreases in the natural gas supply portion of the natural gas service rates to customers based upon changes in the price of natural gas purchased from producers and wholesale marketers or changes in natural gas pipeline transportation costs. PSE's margin or net income is not affected by changes under the PGA mechanism because over- and ~~under- recoveries~~under-recoveries of natural gas costs included in baseline PGA rates are deferred and either refunded to or collected from customers in future periods.

The following chart displays the details of PSE's natural gas margin changes for the three months ended March 31, ~~2022~~2024 and 2023:

______________

* Includes decoupling cash collections, ROR excess earnings, and decoupling 24-month revenue reserve.

Three Months Ended March 31, ~~2023~~2024 Compared to ~~2022~~2023

Natural Gas Operating Revenue

Natural gas operating revenue increased ~~$90.9~~$40.6 million primarily due to increases in ~~retail sales of $91.7 million, other decoupling revenue of $2.7 million and~~ transportation and other revenue of ~~$1.9~~$108.1 million, decoupling revenue of $11.2 million and other decoupling revenue of $6.4 million; partially offset by a decrease in ~~decoupling revenue~~retail sales of ~~$5.4~~$85.1 million. These items are discussed in detail below.

•Natural gas retail sales revenue ~~increased $91.7~~decreased $85.1 million primarily due to ~~an increase~~a decrease in rates of ~~$78.3~~$57.7 million and ~~an increase of $13.3 million due to an increase~~a decrease in natural gas load of ~~2.5%.~~6.2%, or $27.4 million. The ~~increase~~decrease in rates is ~~primarily~~ due to ~~the tariffs filed pursuant to~~a decrease in the Company's most recent PGA ~~and GRC~~rates effective ~~and~~ November ~~1, 2022 and January 7, 2023, respectively.~~2023. See "Regulation of PSE Rates and Recovery of PSE Costs" included in this Item 2 of this report and Part II, Item 7, Management's Discussion and Analysis, "Regulation of PSE Rates and Recovery of PSE Costs" included in the Company's Annual Report on Form 10-K for the period ended December 31, 2022 for natural gas rate changes. The ~~increase~~decrease in load is primarily driven by ~~a 1.9%~~decreased usage of 5.9%, 5.8% and ~~2.8% increase~~18.5% in residential, commercial and ~~commercial usage,~~industrial customers, respectively. Customer usage ~~increased~~decreased due to ~~an increase in retail customers of 0.7% and an increase~~a decrease in heating degree days of ~~1.0% due to lower than normal~~4.6% from warmer temperatures in the three months ended March 31, ~~2023~~2024 as compared to ~~2022.~~2023.

4441

•Decoupling revenue ~~decreased $5.4~~increased $11.2 million primarily attributable to higher delivery rates and lower usage in the ~~current period~~three months ended March 31, 2024 as compared to ~~the same period in 2022.~~2023. This resulted in actual natural gas revenues being ~~higher~~lower than allowed natural gas revenues in the ~~current period,~~three months ended March 31, 2024, whereas in ~~the same period in 2022,~~2023, actual natural gas revenues were ~~lower~~higher than allowed revenues.

•Other decoupling revenue increased ~~$2.7~~$6.4 million primarily due to ~~a decrease in current period amortization~~increased refunds of prior year ~~decoupling revenues~~overcollections as compared to 2023.

•Transportation and other revenue increased $108.1 million primarily due to $107.8 million related to the ~~same period in 2022. This is attributable to decreased amortization rates, which decreases the rate at which deferral revenues are~~regulatory offset of CCA auction proceeds passed back to ~~customers.~~customers, which were passed through to customers as credits on billed revenue included within natural gas retail revenues above; and an increase of $3.8 million related to industrial transportation revenue. The increases were partially offset by a net deferral related to the bill discount rider of $4.4 million.

Natural Gas Energy Costs

•Purchased natural gas expense increased ~~$58.1~~$35.9 million primarily due to an increase of $147.0 million in amortization of deferred CCA emission allowance costs, which were passed through to customers as billed revenue included within natural gas retail revenues above. The increase was partially offset by a decrease in the PGA rates in November ~~2022~~2023 and ~~an increase~~a decrease in natural gas usage of ~~2.5%~~6.2% as stated in the natural gas retail sales section above. See "Regulation of PSE Rates and Recovery of PSE Costs" included in this Item 2 of this report for natural gas rate changes and details on the PGA.

Other Operating Expenses and Other Income (Deductions)

The following chart displays the details of PSE's operating expenses and other income (deductions) for the three months ended March 31, ~~2022~~2024 and 2023:

Three Months Ended March 31, ~~2023~~2024 Compared to ~~2022~~

2023

•Net unrealized (gain) loss on derivative instruments decreased ~~$324.0~~$176.5 million to a net loss of ~~$192.1~~$15.7 million for the three months ended March 31, ~~2023.~~2024. The primary driver was the ~~change~~net settlements of electric and natural gas trades previously recorded as $82.7 million and $105.6 million in loss, respectively. This was partially offset as the weighted average forward prices for electric ~~and natural gas. Specifically, electric prices~~ decreased ~~22.1%~~11.1% resulting in ~~an $84.1~~a $28.5 million loss for ~~electric. Natural~~electric and the weighted average forward price for natural gas ~~prices decreased 63.3%~~increased 4.9% resulting in a ~~$130.3~~$16.7 million ~~loss~~gain for natural gas. ~~The other driver is related to the net settlements of electric trades previously recorded as $48.4 million in gain and of natural gas trades previously recorded at a $61.2 million in gain.~~ For further details, see Note 4, "Accounting for Derivative Instruments and ~~Hedging"~~Hedging Activities" in the Combined Notes to Consolidated Financial Statements included in Item 1 of this report.

•Utility operations and maintenance expense increased ~~$24.7~~$8.1 million primarily due to increases in the following: (i) ~~$6.9~~$5.6 million of customer service expenses due to increased low-income assistance, (ii) $3.5 million in outside consulting fees related to strategic planning and execution of management's initiatives, (iii) $2.5 million of injuries and damages expense, (iv) $2.4 million in electric first response, safety, and training expenses, (v) $2.0 million in Colstrip decommissioning expenses, (vi) $1.8 million of pension related expenses, (vii) $1.5 million of overhead line maintenance due to storm related ~~activities, (viii) $1.3~~expenses driven by a cold weather event in January 2024, (ii) $2.7 million ~~of other generation~~related to CEIP, transportation electrification and Colstrip trackers, (iii) $1.7 million in materials specific to transmission maintenance, ~~costs due~~(iv) $1.7 million related to ~~higher wind turbine maintenance~~collections and ~~(ix)~~uncollectible accounts expenses, (v) $1.7 million in bill processing and call center expenses, and (vi) $1.2 million ~~of steam plant maintenance costs due to higher major maintenance amortization expense.~~in pension related expenses. These increases were partially offset by a $6.8 million decrease in customer service expense driven by decreased low income assistance.

•Non-utility expense and other expense decreased $4.8 million primarily ~~due to~~driven by a decrease of ~~$2.3~~$4.2 million in biogas purchase expense ~~and~~due to a decrease ~~of $3.1 million~~in biogas purchased in the ~~long-term incentive plan, as~~three months ended March 31, 2024 compared to ~~2022, due to an increase in 2022 funding as of March 31, 2022.~~2023.

4643

•Depreciation and amortization expense increased ~~$31.4~~$2.8 million due to: (i) $12.5 million increase in electric amortization primarily due to a $6.2 million reduction in the Lower Snake River treasury grant amortization from 2022 to 2023 and a $2.8 million addition of 2022 storm cost amortization, (ii) $8.1 million increase in conservation amortization due to an increase in conservation rider rates effective May 1, 2022, (see "Regulation of PSE Rates and Recovery of PSE Costs" included in this Item 2 of this report), (iii) $6.5 million increase in natural gas distribution depreciation primarily due to $211.2 million in net additions to natural gas distribution assets and due to the increase in depreciation rates per the 2022 GRC, (iv) $2.7$2.1 million increase in electric distribution depreciation from 2023 primarily ~~due to $278.1~~driven by $324.4 million in net additions of electric distribution assets, ~~and due to the increase in depreciation rates per the 2022 GRC and (v) $2.1~~(ii) $1.7 million increase in electric ~~production~~transmission depreciation from 2023 primarily ~~due to $27.8~~driven by a $301.7 million in net additions of electric ~~production~~transmission assets, and ~~due to the~~(iii) $1.3 million increase in natural gas distribution depreciation ~~rates per the 2022 GRC. The~~from 2023 primarily driven by $199.7 million in net additions in natural gas distribution assets. These increases were partially offset by a $2.1 million decrease in electric ~~general plant and other depreciation of $1.2 million~~amortization primarily due to ~~decreased asset retirement costs.~~a decrease in Get to Zero electric tranche amortization of $1.9 million.

•Taxes other than income taxes ~~increased $12.1~~decreased $6.6 million primarily due ~~to a $7.3~~to: (i) $3.2 million ~~increase~~decrease in state excise ~~tax and an increase of $6.3~~taxes, (ii) $2.4 million decrease in municipal taxes, ~~both of which were driven by the increase in retail revenue in 2023 as compared to 2022. The increases were partially offset by a~~and (iii) $1.7 million decrease ~~of $1.4 million~~ in property taxes.

Other Income, Interest Expense and Income Tax Expense

•Other income/expense ~~changed$2.5~~increased $3.9 million from ~~net other income of $7.8 million in 2022 to~~ net other income of $10.3 million in ~~2023. Other expenses decreased $0.6 million and~~2023 to net other income ~~increased $1.9~~of $14.2 million ~~which was primarily~~in 2024, due to ~~(i) $2.2~~an increase of $3.5 million in ~~taxable interest~~other income and ~~dividend income, (ii) $1.8~~a decrease of $0.4 million in ~~the non-service cost component of the qualified pension net periodic benefit cost for 2023 compared to 2022 and (iii) $1.4 million in gain on corporate life insurance policies.~~other expense. The increase in other income was ~~partially offset by a decrease of $2.5 million in Advanced Metering Infrastructure (AMI)~~primarily due to a ~~change~~$2.9 million increase in ~~AMI return deferral per the 2022 GRC.~~allowance for funds used during construction (AFUDC) due to an increase in eligible CWIP.

•Interest expense increased ~~$2.4~~$6.2 million primarily due to an increase of ~~$1.6~~$5.5 million in ~~common~~ interest expense due to ~~an increase in interest rates on commercial paper borrowings in~~the May 2023 ~~compared to 2022,~~PSE bond issuance and an increase of ~~$1.2~~$1.9 million ~~related to~~in interest expense ~~recognized~~due to a higher issuance of commercial paper debt in ~~conjunction with PSE's deferred compensation liability.~~2024 compared to 2023.

•Income tax expense ~~decreased $32.4~~increased $17.8 million primarily driven by ~~a decrease~~an increase in pre-tax book income.

Puget Energy

Primarily, all operations of Puget Energy are conducted through PSE. Puget Energy's net income (loss) for the three months ended March 31, ~~2022~~2024 and 2023 is as follows:

Three Months Ended March 31, ~~2023~~2024 compared to ~~2022~~2023

Summary Results of Operation

Puget Energy’s net income ~~decreased~~increased by ~~$278.3 million, which~~$129.9 million. This is primarily attributable to ~~(i) a decrease~~an increase in PSE's net income of ~~$260.5~~$120.4 million, ~~(ii)~~ a decrease in tax expense of $9.1 million driven by a decrease in pre-tax book income ~~tax benefit of $16.0 million due to the timing of net settlements on electric~~ and ~~natural gas trades, which decreased Puget Energy's effective tax rate more in 2022 compared to 2023, and (iii) an increase~~a decrease in net loss of ~~$4.2~~$3.9 million at Puget ~~LNG due to additional operational expenses as Puget LNG commenced commercial operations in February 2022. These decreases were partially offset by less interest expense of $3.6 million.~~LNG.

Capital Requirements

Contractual Obligations and Commercial Commitments

In addition to the contractual obligations and consolidated commercial commitments disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, during the three months ended March 31, ~~2023,~~2024, the Company entered into new Electric Portfolio and Electric Wholesale Market Transaction contracts with estimated payment obligations totaling ~~$3.3 billion~~$357.0 million through ~~2051.~~2026.

For further information, see Part II, Item 8, Note 16, "Commitments and Contingencies" in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~

~~The following are the Company's aggregate commercial commitments as of March 31, 2023:~~

Puget Energy and
Puget Sound Energy Amount of Commitments
Expiration Per Period
(Dollars in Thousands) Total Less than 1 Year 1-3 Years 3-5 Years Thereafter
Commercial commitments:
PSE revolving credit facility1
$ 800,000 $ — $ — $ 800,000 $ —
Inter-company short-term debt2
30,000 — — — 30,000
Total PSE commercial commitments 830,000 — — 800,000 30,000
Puget Energy revolving credit facility3
800,000 — — 800,000 —
Less: Inter-company short-term debt elimination (30,000) — — — (30,000)
Total Puget Energy commercial commitments $ 1,600,000 $ — $ — $ 1,600,000 $ —

~~_______________~~

1.As of March 31, 2023, PSE had a credit facility which provides $800.0 million of short-term liquidity needs and includes a backstop to the Company's commercial paper program. The credit facility matures in May 2027. The credit facility also includes a swingline feature allowing same day availability on borrowings up to $75.0 million and an expansion feature that, upon the banks' approval, would increase the total size of the facility to $1.4 billion. As of March 31, 2023, no loans or letters of credit were outstanding under the credit facility and $137.0 million was outstanding under the commercial paper program. The credit agreement is syndicated among numerous lenders. Outside of the credit agreement, PSE has a $2.3 million letter of credit in support of a long-term transmission contract and had $6.0 million issued under a standby letter of credit with TD Bank in support of natural gas purchases.

2.~~As of March 31, 2023, PSE had a revolving credit facility with Puget Energy in the form of a promissory note to borrow up to $30.0 million.~~

3.As of March 31, 2023, Puget Energy had a revolving senior secured credit facility totaling $800.0 million, which matures in May 2027. The revolving senior secured credit facility is syndicated among numerous lenders. The revolving senior secured credit facility also has an expansion feature that, upon the banks' approval, would increase the size of the facility to $1.3 billion. As of March 31, 2023, there was $135.0 million drawn and outstanding under the Puget Energy credit facility,~~of which $34.3 million was classified as long-term debt and $100.7 million was classified as short-term debt.~~2023.

Off-Balance Sheet Arrangements

As of March 31, ~~2023,~~2024, the Company had no off-balance sheet arrangements that have or are reasonably likely to have a material effect on the Company's financial condition. The Company does have standby letter of credit arrangements. For more

information, see Note 10, "Other" in the Combined Notes to Consolidated Financial Statements included in Item 1 of this report.

Utility Construction Program

The Company’s construction programs for generating facilities, the electric transmission system, the natural gas and electric distribution systems and the Tacoma LNG facility are designed to meet regulatory requirements, support customer growth and improve energy system reliability. The Company had adjusted capital expenditures, resulting in a decrease of ~~$47.6~~$52.2 million compared to forecasted amounts for the three months ended March 31, ~~2023.~~2024. The decrease was primarily due to underruns of (i) ~~permitting delays with the Energize Eastside substation~~strategic project spend driven by timing and ~~transmission upgrade~~ project schedule constraints, (ii) electric reliability initiatives driven by project savings, and (iii) IT operations spend driven by timing of ~~thermal and wind generation maintenance, and (iii) timing of technology expenditures offset by higher gas new customer construction and public improvement work.~~project spend. Construction expenditures, excluding equity AFUDC, totaled ~~$229.0~~$375.3 million for the three months ended March 31, ~~2023.~~2024. Presently planned utility construction expenditures, excluding equity AFUDC, are as follows:


Capital Expenditure Projections	Capital Expenditure Projections
(Dollars in Millions)	(Dollars in Millions)	2023	2024	2025
(Dollars in Millions)
(Dollars in Millions)						2024	2025	2026
Total energy delivery, technology and facilities expenditures	Total energy delivery, technology and facilities expenditures	$1,146.7	$1,311.9	$1,304.2	Total energy delivery, technology and facilities expenditures	$1,716.0	$1,936.4	$2,231.7

~~Long Term Debt~~

For more information on ~~the Company's~~PSE's credit facilities, long term debt, demand promissory note, and shelf registrations see Part II, Item 8, Note 7, "Long-Term Debt" and Note 8, "Liquidity Facilities and Other Financing Arrangements" in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Puget Energy

~~Credit Facility~~

On May 16, 2022, Puget Energy entered into a new $800.0 million credit facility to replace the existing facility. The terms and conditions, including fees, financial covenant, expansion feature and credit spreads remain substantially the same. The base interest rate on loans has changed to the SOFR, as the LIBOR is being discontinued in 2023. The proceeds of the PE credit facility are to be used for general corporate purposes. The maturity date of the credit facility is May 14, 2027. The Puget Energy revolving senior secured credit facility also has an accordion feature, upon receipt of commitments from one or more lenders, could increase the size of the facility up to $1.3 billion.

The revolving senior secured credit facility provides Puget Energy the ability to borrow based on a prime based rate or SOFR, in either case, plus a spread based on Puget Energy's credit ratings. Puget Energy must pay a commitment fee on the unused portion of the facility. As of March 31, 2023, there was $135.0 million drawn and outstanding under the facility. As of the date of this report, interest was calculated as SOFR plus 0.10% SOFR adjustment plus 1.75% spread over the adjusted SOFR rate and the commitment fee was 0.275%.

The revolving senior secured credit facility contains usual and customary affirmative and negative covenants. The credit agreement also contains a leverage ratio that requires the ratio of (a) total funded indebtedness to (b) total capitalization to be 65.0% or less at all times. As of March 31, 2023, Puget Energy was in compliance with all applicable covenants.

~~On September 26, 2022, PE borrowed $50.0 million on the credit facility and contributed the proceeds to PSE as an equity contribution. The equity proceeds will be used for general corporate purposes.~~

~~Shelf Registrations~~

In March 2022, Puget Energy filed an S-3 Registration statement under which it may issue up to $1.0 billion aggregate principal amount of senior notes secured by Puget Energy's assets. As of the date of this report, $550.0 million was available to be issued. The shelf registration will expire in March 2025.

~~Long-Term Debt~~

On March 17, 2022, Puget Energy issued $450.0 million of senior secured notes at an interest rate of 4.224%. The notes mature on March 15, 2032, and pay interest semi-annually on March 15 and September 15of each year. Proceeds from the issuance of the notes were invested in short-term money market funds, and then used to repay Puget Energy's $450.0 million 5.625% notes that were originally scheduled to mature July 2022.

On April 28, 2022, Puget Energy redeemed the $450.0 million 5.625% senior secured notes due July 2022 and paid related expenses for a total redemption price of $457.2 million, which includes repayment of the $450.0 million principal amount and $7.2 million of accrued interest expense.

For further information, see Part II, Item 8, Note 7, "Long-Term Debt" and Note 8, "Liquidity Facilities and Other Financing Arrangements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Dividend Payment Restrictions

Puget Energy’s ability to pay dividends is also limited by the merger order issued by the Washington Commission in 2009. Pursuant to the merger order, Puget Energy may not declare or make a distribution unless on such date Puget Energy’s ratio of consolidated EBITDA to consolidated interest expense for the four most recently ended fiscal quarters prior to such date is equal to or greater than 2.0 to 1.0. Puget Energy's EBITDA to interest expense was ~~3.9~~3.7 to 1.0 for the twelve months ended March 31, ~~2023.~~2024.

At March 31, ~~2023,~~2024, the Company was in compliance with all applicable covenants, including those pertaining to the payment of dividends.

For further information on Puget Energy's credit facilities, shelf registrations, and long-term debt, see Part II, Item 8, Note 7, "Long-Term Debt" and Note 8, "Liquidity Facilities and Other Financing Arrangements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Other

New Accounting Pronouncements

For the discussion of new accounting pronouncements, see Note 2, "New Accounting Pronouncements" in the Combined Notes to Consolidated Financial Statements included in Item 1 of this report.

Washington Clean Energy Transformation Act

In May 2019, Washington ~~State~~ passed the ~~Clean Energy Transformation Act (CETA),~~CETA, which supports Washington's clean energy economy and transitioning to a clean, affordable, and reliable energy future. The CETA requires all electric utilities to eliminate coal-fired generation from their ~~allocation of electricity~~electric supply to customers by December 31, 2025; requires all electric utilities to be carbon-neutral by January 1, 2030 through a combination of non-emitting electric generation, renewable generation, and/or alternative compliance options; and makes it the state policy that, by 2045, 100% of electric generation and retail electricity sales will come from renewable or non-emitting resources. ~~Clean energy implementation plans~~CEIPs are required every four years from each investor-owned utility (IOU). The plan must propose interim targets for meeting the 2045 standard between 2030 and 2045 and describe an actionable plan that the IOU intends to pursue to meet the standard. The Washington Commission may approve, reject or recommend alterations to an IOU’s plan. The Company intends to seek recovery of any costs associated with CETA through the regulatory process. On December 17, 2021, PSE filed its ~~Final~~final CEIP, which ~~proposes~~proposed a plan for the implementation of CETA for 2022-2025 and ~~projects costs~~ associated ~~with its implementation. The Washington Commission held a hearing on January 31, 2023. Once the CEIP is approved by~~project costs. On June 6, 2023, the Washington Commission approved ~~costs will be recovered through~~PSE’s CEIP, subject to conditions. On November 2, 2023, PSE filed a Biennial CEIP Update with the ~~CEIP tracker approved in the 2022 GRC.~~Washington Commission.

Washington Climate Commitment Act

In 2021, ~~the~~ Washington ~~Legislature~~ adopted the CCA, which establishes a GHG emissions cap-and-invest program that ~~caps~~requires covered entities, including electric and gas utilities, to purchase allowances to cover their GHG emissions with a cap on available allowances beginning on January 1, 2023 ~~and makes further reductions to the cap~~that declines annually through 2050. The ~~Washington Department of Ecology (WDOE)~~WDOE published final regulations ~~to implement the program~~ on September 29, 2022, ~~which became~~ effective on October 30, 2022. ~~In general, the program will require covered entities to obtain emission allowances or offset credits for covered emissions and the WDOE provides the annual allowance budget based on the cap.~~ Allowances can be obtained through quarterly auctions, or bought and sold on a secondary market.

~~The CCA regulates PSE both as~~As an electric utility, ~~and as a natural gas distribution utility.~~ PSE is required to obtain emission allowances or offset credits for GHG emissions associated with electricity generated in or imported into the state to serve Washington ~~State~~ load, and all electricity generated by Washington ~~State~~ PSE facilities with total annual emissions exceeding 25,000 metric tons of carbon dioxide equivalent per year. As an electric utility subject to Washington’s CETA, which is discussed below, PSE ~~will receive~~receives emission allowances from WDOE at no cost through 2050 for direct emissions associated with electricity used to serve Washington State load to ~~mitigate impacts to~~eliminate the cost burden of the program on electric ratepayers.

As a gas utility, PSE ~~will also be~~is required to obtain emission allowances for GHG emissions associated with (i) natural gas supplied to customers and (ii) any ~~facilities associated with its~~ natural gas system associated facilities with ~~total facility~~ emissions that exceed 25,000 metric tons of carbon dioxide equivalent per year. PSE ~~will receive~~receives some no-cost emission allowances ~~to cover its natural gas obligation at no cost~~from WDOE to mitigate impacts to ~~customers; the amount will be~~natural gas ratepayers. WDOE's allocation of no-cost allowances to PSE is based on a percentage of PSE baseline natural gas system related emissions (determined from ~~2015 - 2019~~2015-2019 natural gas system related emissions) ~~that will decline to mitigate rate impacts to certain natural gas customers.~~ and declines annually in proportion with the Washington State carbon goals reaching zero no-cost allowances in 2050.

Offset credit use is limited and is not additive to allowances; the WDOE ~~will reduce the cap proportionally for~~subtracts any offsets ~~used.~~used from the total allowance budget. In the first compliance period, 2023-2026, participating entities can cover up to 5% of their emissions with offset credits, and can cover an additional 3% with credits from projects on federally recognized Tribal lands. In the second compliance period, 2027-2030, the general limit drops to 4%, with an additional 2% from projects on Tribal lands.

~~Related Party Transactions~~

In ~~August 2015, PSE filed a proposal with~~2023, the ~~Washington Commission~~WDOE announced an intent to ~~develop a LNG facility at the Port of Tacoma. The Tacoma LNG facility provides peak-shaving services to PSE’s natural gas customers, and provides LNG as fuel to~~

~~transportation customers, particularly in the marine market. Following a mediation process and the filing of a settlement stipulation by PSE and all parties, the Washington Commission issued~~pursue an order on October 31, 2016, that allowed PSE’s parent company, Puget Energy, to create a wholly-owned subsidiary, named Puget LNG, which was formed on November 29, 2016, for the sole purpose of owning, developing and financing the non-regulated activity of the Tacoma LNG facility. Puget LNG has entered into one fuel supply agreement with ~~a maritime customer~~California to link with its cap and trade program which is ~~marketing the facility’s output to other potential customers.~~

In February 2022, the Tacoma LNG facility at the Port of Tacoma completed commissioning and commenced commercial operations. Pursuant to the Commission’s order, Puget LNG is allocated approximately 57.0% of the capital and operating costs of the Tacoma LNG facility and PSE will be allocated the remaining 43.0% of the capital and operating costs. PSE and Puget LNG are considered related parties with similar ownership by Puget Energy. Therefore, capital and operating costs that occur under PSE and are allocated to Puget LNG are related party transactions by nature. Per this allocation of costs, $244.9 million of non-utility plant and $7.8 million of operating costs related to Puget LNG's portion of the Tacoma LNG facility are reported in the Puget Energy "Other property and investments" and "Non-utility expense and other" financial statement line items, respectively, as of March 31, 2023. The portion of the Tacoma LNG facility allocated to PSE is subject to regulationadministered by the ~~Washington Commission.~~California Air Resources Board.

Integrated Resource Plans, Resource Acquisition and Development

The 2021 Integrated Resource Plan marked a major departure from past Integrated Resource Plans (IRP) due in large part to the passage of CETA. The new electric progress report rules, Washington Administrative Code 480-100-625 Integrated Resource Plan Development and Timing, outlines the requirements for this report. The two-year progress report must be filed at least every two years after the utility files it’s IRP. The final 2023 Electric Progress Report and the Gas Utility IRP were filed on March 31, 2023.

On February 10, 2023 the FERC approved a voluntary regional resource adequacy program that PSE plans to participate in along with other utilities in the Western United States and Canada. The program is intended to help the region anticipate its future power supply needs as natural gas-fired and coal power plants retire and are replaced by variable renewable energy resources such as wind and solar.

For further information, see Part I, Item I “Integrated Resource Plans, Resource Acquisition and Development” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Environmental Remediation

The Company is subject to federal and state requirements for protection of the environment, including those for ~~release~~the discharge of hazardous materials and remediation of contaminated sites. A potentially responsible party has joint and several liability under existing U.S. environmental laws. In instances where we have been designated a potentially responsible party by the Environmental Protection Agency or state environmental agency, we are potentially liable for the cost of remediating contamination at current work sites and former work sites. Such sites include former manufactured gas plants operated by PSE predecessors, such as Gas Works Park on the shore of Lake Union in Seattle, orand contaminated facilities with other connections to PSE predecessors, such as the location of a long-defunct creosote manufacturer which had purchased waste products from PSE predecessors ~~the~~(e.g. Quendall Terminals site on Lake Washington in Renton, ~~Washington.~~Washington). In each case, PSE assesses, based on in-depth studies, expert analyses and legal reviews, our environmental remediation obligations related to the contaminated sites, including assessments of ranges and probabilities of recoveries from other responsible parties and/or insurance carriers. PSE develops a range of reasonably estimable costs that includes a low and high end of a range for all remediation sites for which we have sufficient information. There are some potential remediation obligations where the costs of remediation cannot be reasonably estimated. Liabilities are recorded based on the best estimate or the low end of a range of reasonably possible costs expected to be incurred to remediate sites. ~~It is~~It’s possible that costs are incurred in excess of the recorded amounts because of changes in laws and/or regulations, the solvency of other liable parties, higher than expected costs and/or the discovery of new or additional contamination. The Company believes a significant portion of its past and future environmental remediation costs are recoverable from insurance companies, from third parties and/or from customers under a Washington Commission order.

For additional information see Item 8, Note 4, "Regulation and Rates" to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~

~~Human Capital~~

Information regarding the Company’s human capital measures and objectives is contained in the Environmental, Social and Governance (ESG) report that can be found on the Company’s website, www.pse.com. The information on the Company’s website is not, and will not be deemed to be a part of this Quarterly Report on Form 10-Q or incorporated into the Company’s other filings with the SEC.

~~Other Legal Matters~~

On October 3, 2022, a putative class-action complaint was filed against PSE in the Pierce County Superior Court of Washington, alleging violations of state wage-and-hour laws. Subsequently, PSE removed the case from state court to the U.S. District Court for the Western District of Washington. Class has not been certified and the plaintiff currently seeks remand back to state court. The case is in early stages of discovery and due to the inherent difficult of predicting the course of legal action relating to this class-action allegation, such as eventual scope, duration or outcome, the Company is currently unable to estimate the amount or range of any potential loss that could result from an unfavorable outcome arising from this matter.2023.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

The Company is exposed to various forms of market risk, consisting primarily of ~~fluctuations~~adverse changes in commodity prices, counterparty credit risk, as well as interest rate risk. PSE actively manages market risk and maintains risk policies and procedures designed to ~~help~~discourage unauthorized risk-taking, reduce commodity price volatility, and manage the various ~~risks.~~risks inherent to the energy portfolio. There have been no material changes to market risks affecting the Company from those set forth in Part II, Item 7A - "Quantitative and Qualitative Disclosures about Market Risk" in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Commodity Price Risk

The nature of serving regulated electric and natural gas customers with its portfolio of owned and contracted electric generation resources exposes PSE and its customers to some volumetric and commodity price risks. PSE’s Energy Risk Management Committee establishes energy risk management policies and procedures to manage commodity and volatility risks and the related effects on credit, tax, accounting, financing and liquidity.

PSE's objective is to minimize commodity price exposure and risks associated with volumetric variability in the natural gas and electric portfolios. It is not engaged in the business of assuming risk for the purpose of speculative trading. PSE hedges open natural gas and electric positions to reduce both the portfolio risk and the volatility risk in prices.

Counterparty Credit Risk

PSE is exposed to credit risk primarily through buying and selling electricity and natural gas to serve customers. Credit risk is the potential loss resulting from a counterparty's non-performance under an agreement. PSE manages credit risk with

policies and procedures for counterparty analysis and measurement, monitoring and mitigation of exposure. Additionally, PSE has entered into commodity master arrangements (i.e., WSPP, ~~Inc. (WSPP), International Swaps and Derivatives Association (ISDA)~~ISDA or ~~North American Energy Standards Board (NAESB))~~NAESB) with its counterparties to mitigate credit exposure.

Interest Rate Risk

The Company believes its interest rate risk primarily relates to the use of short-term debt instruments, variable-rate leases and anticipated long-term debt financing needed to fund capital requirements. The Company manages its interest rate risk through the issuance of mostly fixed-rate debt with varied maturities. The Company utilizes internal cash from operations and borrowings under its commercial paper program, and its credit facilities to meet short-term funding needs. During periods of financial market or interest rate volatility, the Company may utilize its credit facilities for short term funding needs instead of the commercial paper program. Credit facility borrowings are based on a more stable base rate and the credit spread is fixed. Short-term obligations are commonly refinanced with fixed-rate bonds or notes when needed and when interest rates are considered favorable. The Company may also enter into swaps or other financial hedge instruments to manage the interest rate risk associated with the debt.

Item 4. Controls and Procedures

Puget Energy

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of Puget Energy’s management, including the President and Chief Executive Officer and ~~Executive Vice President and~~ Chief Financial Officer, Puget Energy has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31, ~~2023,~~2024, the end of the period covered by this report. Based upon that evaluation, the President and Chief Executive Officer ~~and Executive Vice President~~ and Chief Financial Officer of Puget Energy concluded that these disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There have been no changes in Puget Energy’s internal control over financial reporting during the quarter ended March 31, ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, Puget Energy’s internal control over financial reporting.

Puget Sound Energy

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of PSE’s management, including the President and Chief Executive Officer and ~~Executive Vice President and~~ Chief Financial Officer, PSE has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31, ~~2023,~~2024, the end of the period covered by this report. Based upon that evaluation, the President and Chief Executive Officer ~~and Executive Vice President~~ and Chief Financial Officer of PSE concluded that these disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There have been no changes in PSE’s internal control over financial reporting during the quarter ended March 31, ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, PSE’s internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

Contingencies arising out of the Company's normal course of business existed as of March 31, ~~2023.~~2024. Litigation is subject to numerous uncertainties and the Company is unable to predict the ultimate outcome of these matters. For further details, ~~on legal proceedings,~~ see Note 8, "Commitments and Contingencies" in the Combined Notes to Consolidated Financial Statements included in Item 1 of this ~~report~~report.

SEC regulations require the Company to disclose certain information about proceedings arising under federal, state or local environmental provisions if the Company reasonably believes that such proceedings may result in monetary sanctions above a stated threshold. Pursuant to the SEC regulations and ~~see "Other Legal Matters" included in this Item 2 of this report.~~

~~Given~~given the size of the Company's operations, ~~we have~~the Company elected ~~to adopt~~ a

threshold of $1.0 million ~~in expected sanctions related to required disclosures~~for purposes of ~~environmental~~determining whether disclosure of any such proceedings ~~to which the government~~ is ~~a party.~~required. As of the date of this filing, we are not aware of any matters that exceed this threshold and meet the definition for disclosure.

Item 1A. Risk Factors

There have been no material changes from the risk factors set forth in Part I, Item 1A, "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. Although the Company has not been materially affected, the following represents an ongoing risk that the Company continues to monitor.

The changing resource composition of the region and within PSE’s generation portfolio may be insufficient to meet customers’ energy demands. Growing variance in actual and forecasted load or generation could impact the cost of balancing generation resources and may inhibit the Company’s ability to meet retail load obligations or make PSE more reliant on wholesale markets which could have a significant impact on energy costs. Furthermore, as climate change results in more frequent extreme weather conditions and seasonal fluctuations become more pronounced, the variability of load and generation increase. As the Company and other utilities in the region continue to add solar- and wind-powered generation capacity, each of which is a climate-dependent resource, the Company’s ability to reliably and cost effectively serve retail loads may become more challenging, adversely impacting the Company’s financial condition, customer satisfaction, and reputation.

Item 5. Other Information

During the three months ended March 31, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

Item 6. Exhibits

Included in the Exhibit Index are a list of exhibits filed as part of this Quarterly Report on Form 10-Q.

EXHIBIT INDEX


3(i).1			Amended Articles of Incorporation of Puget Energy , In c .Inc. (incorporated herein by reference to Exhibit 3.1 to Puget Energy’s Current Report on Form 8-K, dated February 6, 2009, Commission File No. 1-16305).
3(i).2			Amended and Restated Articles of Incorporation of Puget Sound Energy, Inc. (incorporated herein by reference to Exhibit 3.2 to Puget Sound Energy’s Current Report on Form 8-K, dated February 6, 2009, Commission File No. 1-4393).
3(ii).1			Amended and Restated Bylaws of Puget Energy, Inc. (i ~~ncorporated~~(incorporated herein by reference to Exhibit 3.3 to Puget Energy's Annual Report on Form 10-K, dated February 25, 2022, Commission File No. 001-16305).
3(ii).2			Amended and Restated Bylaws of Puget Sound Energy, Inc. (i ~~ncorporated~~(incorporated herein by reference to Exhibit 3.4 to Puget Sound Energy's Annual Report on Form 10-K dated February 25, 2022, Commission File No. 001-04393).
22.1*			Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize Securities of the Registrant.
31.1*			Chief Executive Officer certification of Puget Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			~~Principal~~Chief Financial Officer certification of Puget Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3*			Chief Executive Officer certification of Puget Sound Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.4*			~~Principal~~Chief Financial Officer certification of Puget Sound Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			~~Principal~~Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101			Financial statements from the Quarterly Report on Form 10-Q of Puget Energy, Inc. and Puget Sound Energy, Inc. for the quarter ended March 31, ~~2023~~2024 filed on May ~~10, 2023~~1, 2024 formatted in Inline XBRL: (i) the Consolidated Statement of Income (Unaudited), (ii) the Consolidated Statements of Comprehensive Income (Unaudited), (iii) the Consolidated Balance Sheets (Unaudited), (iv) the Consolidated Statements of Cash Flows (Unaudited), (v) the Consolidated Statements of Common Shareholder's Equity (Unaudited), and (vi) the Notes to Consolidated Financial Statements
104			Cover Page Interactive Data File (embedded within the Inline XBRL document).

__________________

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.


		PUGET ENERGY, INC. PUGET SOUND ENERGY, INC.
		/s/ Stacy Smith
		Stacy Smith Controller & Principal Accounting Officer
Date:	May ~~10, 2023~~1, 2024

5954


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A


●			Governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission (FERC) and the Washington ~~Utilities and Transportation~~ Commission, ~~(Washington Commission),~~ that may affect our ability to recover costs and earn a reasonable return, including but not limited to disallowance or delays in the recovery of capital investments and operating costs and discretion over allowed return on investment;
●			Changes in, adoption of and compliance with laws and regulations, including decisions and policies concerning the environment, climate change, greenhouse gas or other emissions or by-products of electric generation (including coal ash or other substances), or natural gas distribution and sales, natural resources, and fish and wildlife (including the Endangered Species Act) as well as the risk of litigation arising from such matters, whether involving public or private claimants or regulatory investigative or enforcement measures;
●			Changes in tax law, related regulations or differing interpretation, or enforcement of applicable law by the Internal Revenue Service (IRS) or other taxing jurisdiction; and PSE's ability to recover costs in a timely manner arising from such changes;
●			Inability to realize deferred tax assets and use ~~production tax credits (PTCs)~~PTCs due to insufficient future taxable income;
●			Accidents or natural disasters, such as hurricanes, windstorms, earthquakes, floods, landslides, fires and wildfires (either affecting or caused by PSE's facilities or infrastructure), extreme weather conditions ~~landslides,~~ and other acts of God, terrorism, asset-based or cyber-based attacks, pandemic or similar significant events, which can interrupt service and lead to lost revenue, cause temporary supply disruptions and/or price spikes in the cost of fuel and raw materials, ~~and~~ impose extraordinary ~~costs;~~
●			~~The impact of widespread health developments, including~~costs, and subject the ~~global Coronavirus Disease 2019 (COVID-19) pandemic, and responses~~Company to such developments (such as voluntary and mandatory quarantines, government stay at home orders, restrictions on travel, commercial, social and other activities, and the impact of vaccination mandates on employee and vendor staffing levels) could materially and adversely affect, among other things, electric and natural gas demand, customers’ ability to pay, supply chains, availability of skilled work-force, contract counterparties, liquidity and financial markets;liability;
●			Commodity price risks associated with procuring natural gas and power in wholesale markets from creditworthy counterparties;
●			Wholesale market disruption, which may result in a deterioration of market liquidity, increase the risk of counterparty default, affect the regulatory and legislative process in unpredictable ways, negatively affect wholesale energy prices and/or impede PSE's ability to manage its energy portfolio risks and procure energy supply, affect the availability and access to capital and credit markets and/or impact delivery of energy to PSE from its suppliers;
●			Financial difficulties of other energy companies and related events, which may affect the regulatory and legislative process in unpredictable ways, adversely affect the availability of and access to capital and credit markets and/or impact delivery of energy to PSE from its suppliers;
●			The effect of wholesale market structures (including, but not limited to, regional market designs or transmission organizations) or other related federal initiatives;
●			PSE electric or natural gas distribution system failure, blackouts or large curtailments of transmission systems (whether PSE's or others'), or failure of the interstate natural gas pipeline delivering to PSE's system, all of which can affect PSE's ability to deliver power or natural gas to its customers and generating facilities;
●			Electric plant generation and transmission system outages, which can have an adverse impact on PSE's expenses with respect to repair costs, added costs to replace energy or higher costs associated with dispatching a more expensive generation resource;
●			The ability to restart generation following a regional transmission disruption;
●			The ability of a natural gas or electric plant to operate as intended;
●			PSE's resource adequacy needs to meet the ~~Clean Energy Transformation Act (CETA)~~Washington CETA and the ~~Climate Commitment Act (CCA)~~Washington CCA requirements, through a combination of owned or contracted resources, may significantly increase purchased power and gas costs if pricing pressures and supply constraints on resource acquisitions increase;
●			Changes in climate, weather conditions, or sustained extreme weather events in ~~the Pacific Northwest,~~PSE's operational territory, which could have effects on customer usage and PSE's revenue and expenses;
●			Regional or national weather conditions (including conditions and events associated with climate change), wildfires, droughts, earthquakes, and other natural disasters, which could impact PSE's ability to procure adequate supplies of natural gas, fuel or purchased power to serve its customers and the cost of procuring such supplies;
●			Variable hydrological conditions, which can impact streamflow and PSE's ability to generate electricity from hydroelectric facilities;
●			Variable wind conditions, which can impact PSE's ability to generate electricity from wind facilities;
●			The ability to renew contracts for electric and natural gas supply and the price of renewal;
●			Industrial, commercial and residential growth and demographic patterns in the service territories of PSE;
●			General economic conditions in ~~the Pacific Northwest,~~PSE's operational territory, such as inflation, which may impact customer consumption or affect PSE's accounts receivable;
●			The loss of significant customers, changes in the business of significant customers or the condemnation of PSE's facilities as a result of municipalization or other government action or negotiated settlement, which may result in changes in demand for PSE's services;
●			The failure of information systems or the failure to secure information system data, which may impact the operations and cost of PSE's customer service, generation, distribution and transmission;
●			Opposition and social activism that may hinder PSE's ability to perform work or construct infrastructure;
●			Capital market conditions, including changes in the availability of capital and interest rate fluctuations;
●			General economic and political conditions, such as the effects of geopolitical tensions related to the ongoing Russia-Ukraine and Israel-Hamas conflicts, recessions, fuel prices, international currency fluctuations, corruption, political instability, acts of war, and local and national elections;
●			Employee workforce factors including strikes; work stoppages; retirements; absences due to pandemics, accidents, natural disasters or other significant, unforeseeable events; availability of qualified employees or the loss of a key executive;
●			PSE's service territory operates within a region of high demand for skilled workers resulting in significant competition and inflated wages, which puts pressure on PSE's ability to attract, retain and compensate employees;
●			The ability to obtain insurance coverage, the availability of insurance for certain specific losses, including those arising from catastrophic events such as wildfires and the cost of such insurance;
●			Changes in Puget Energy's or PSE's credit ratings, which may have an adverse impact on the availability and cost of capital for Puget Energy or PSE generally;
●			Deteriorating values of the equity, fixed income and other markets which could significantly impact the value of investments of PSE's retirement plan, post-retirement medical benefit plan trusts and the funding of obligations thereunder; and
●			Recent laws enacted, amended or proposed ~~or passed by various~~in Washington and other municipalities in PSE's service territory, ~~including Seattle, seek to reduce or eliminate the use of natural gas in various contexts, such as for space, cooking, and water heating in new commercial and multifamily buildings. Such laws~~ may impact PSE’s operations ~~due to costs and delays from incremental permitting and other requirements that are outside PSE's control.~~by, among others: changing system planning; changing existing statutory targets; electrification requirements; or establishing Washington Commission requirements.


		Three Months Ended March 31,
	Three Months Ended March 31,							Three Months Ended March 31,
		2023		2022		2024	2023
Net income (loss)	Net income (loss)	$	(31)	$	278,295
Other comprehensive income (loss):	Other comprehensive income (loss):
Net unrealized gain (loss) from pension and postretirement plans, net of tax of $(176) and $487, respectively		(658)		1,831
Net unrealized gain (loss) from pension and postretirement plans, net of tax of $1,694 and $(176), respectively
Net unrealized gain (loss) from pension and postretirement plans, net of tax of $1,694 and $(176), respectively
Net unrealized gain (loss) from pension and postretirement plans, net of tax of $1,694 and $(176), respectively

Other comprehensive income (loss)	Other comprehensive income (loss)	(658)		1,831

Other comprehensive income (loss)

Other comprehensive income (loss)
Comprehensive income (loss)	Comprehensive income (loss)	$	(689)	$	280,126


		March 31, 2023		December 31, 2022
Utility plant (at original cost, including construction work in progress of $943,177 and $861,801 respectively):
	March 31, 2024					March 31, 2024	December 31, 2023
Utility plant (at original cost, including construction work in progress of $1,276,957 and $1,156,265 respectively):
Electric plant
Electric plant
Electric plant	Electric plant	$	10,431,708	$	10,300,895
Natural gas plant	Natural gas plant	4,778,660		4,721,982
Common plant	Common plant	1,098,813		1,103,783
Less: Accumulated depreciation and amortization	Less: Accumulated depreciation and amortization	(4,448,520)		(4,341,789)
Net utility plant	Net utility plant	11,860,661		11,784,871
Other property and investments:	Other property and investments:
Goodwill	Goodwill	1,656,513		1,656,513
Goodwill
Goodwill
Other property and investments	Other property and investments	318,265		328,535
Total other property and investments	Total other property and investments	1,974,778		1,985,048
Current assets:	Current assets:
Cash and cash equivalents	Cash and cash equivalents	110,974		105,740
Cash and cash equivalents
Cash and cash equivalents
Restricted cash	Restricted cash	20,329		63,045
Accounts receivable, net of allowance for doubtful accounts of $44,228 and $41,962, respectively		603,944		673,236
Accounts receivable, net of allowance for doubtful accounts of $43,263 and $38,211, respectively
Unbilled revenue	Unbilled revenue	263,420		284,022

Materials and supplies, at average cost	Materials and supplies, at average cost	136,745		132,172
Materials and supplies, at average cost
Materials and supplies, at average cost
Fuel and natural gas inventory, at average cost	Fuel and natural gas inventory, at average cost	56,562		94,075
Unrealized gain on derivative instruments	Unrealized gain on derivative instruments	125,377		587,029
GHG emission allowances
Prepaid expense and other	Prepaid expense and other	42,208		41,940
Power contract acquisition adjustment gain	Power contract acquisition adjustment gain	16,807		16,736
Total current assets	Total current assets	1,376,366		1,997,995
Other long-term and regulatory assets:	Other long-term and regulatory assets:

Power cost adjustment mechanism	Power cost adjustment mechanism	101,577		112,207

Power cost adjustment mechanism

Power cost adjustment mechanism

Regulatory assets related to power contracts
Regulatory assets related to power contracts
Regulatory assets related to power contracts	Regulatory assets related to power contracts	7,621		7,904
Other regulatory assets	Other regulatory assets	827,659		784,231
Unrealized gain on derivative instruments	Unrealized gain on derivative instruments	64,498		94,621
Power contract acquisition adjustment gain	Power contract acquisition adjustment gain	42,525		46,924
Operating lease right-of-use asset	Operating lease right-of-use asset	190,640		193,509
Other	Other	196,464		180,204
Total other long-term and regulatory assets	Total other long-term and regulatory assets	1,430,984		1,419,600
Total assets	Total assets	$	16,642,789	$	17,187,514


		March 31, 2023		December 31, 2022
	March 31, 2024								March 31, 2024			December 31, 2023
Capitalization:	Capitalization:
Common shareholder’s equity:	Common shareholder’s equity:
Common shareholder’s equity:
Common shareholder’s equity:
Common stock $0.01 par value, 1,000 shares authorized, 200 shares outstanding
Common stock $0.01 par value, 1,000 shares authorized, 200 shares outstanding
Common stock $0.01 par value, 1,000 shares authorized, 200 shares outstanding	Common stock $0.01 par value, 1,000 shares authorized, 200 shares outstanding	$	—	$	—
Additional paid-in capital	Additional paid-in capital	3,523,532		3,523,532
Retained earnings	Retained earnings	1,437,167		1,465,331
Accumulated other comprehensive income (loss), net of tax	Accumulated other comprehensive income (loss), net of tax	(25,432)		(24,774)
Total common shareholder’s equity	Total common shareholder’s equity	4,935,267		4,964,089
Long-term debt:	Long-term debt:
First mortgage bonds and senior notes	First mortgage bonds and senior notes	4,662,000		4,662,000
First mortgage bonds and senior notes
First mortgage bonds and senior notes
Pollution control bonds	Pollution control bonds	161,860		161,860

Long-term debt
Long-term debt
Long-term debt	Long-term debt	2,034,300		2,034,300
Debt discount issuance costs and other	Debt discount issuance costs and other	(191,744)		(194,787)
Total long-term debt	Total long-term debt	6,666,416		6,663,373
Total capitalization	Total capitalization	11,601,683		11,627,462
Current liabilities:	Current liabilities:
Accounts payable	Accounts payable	409,130		665,750
Accounts payable
Accounts payable
Short-term debt	Short-term debt	237,700		441,300

Accrued expenses:	Accrued expenses:

Accrued expenses:

Accrued expenses:
Taxes
Taxes
Taxes	Taxes	200,050		116,098
Salaries and wages	Salaries and wages	47,616		60,537
Interest	Interest	77,202		62,148
Unrealized loss on derivative instruments	Unrealized loss on derivative instruments	112,634		124,976
Power contract acquisition adjustment loss	Power contract acquisition adjustment loss	1,586		1,638
Operating lease liabilities	Operating lease liabilities	20,254		20,342
Compliance obligation						Compliance obligation	37,987			937
Other	Other	83,088		70,685
Total current liabilities	Total current liabilities	1,189,260		1,563,474
Other long-term and regulatory liabilities:	Other long-term and regulatory liabilities:
Deferred income taxes
Deferred income taxes
Deferred income taxes	Deferred income taxes	928,320		985,947
Unrealized loss on derivative instruments	Unrealized loss on derivative instruments	14,476		18,366
Purchased gas adjustment liability	Purchased gas adjustment liability	102,914		3,536
Regulatory liabilities	Regulatory liabilities	890,059		1,147,143
Regulatory liability for deferred income taxes	Regulatory liability for deferred income taxes	797,697		811,161
Regulatory liabilities related to power contracts	Regulatory liabilities related to power contracts	59,332		63,660
Power contract acquisition adjustment loss	Power contract acquisition adjustment loss	6,035		6,266
Operating lease liabilities	Operating lease liabilities	177,516		181,265
Finance lease liabilities	Finance lease liabilities	101,717		102,518		Finance lease liabilities	98,761	99,512			99,512
Compliance obligation	Compliance obligation	94,626		—		Compliance obligation	120,278	168,879			168,879
Other deferred credits	Other deferred credits	679,154		676,716
Total long-term and regulatory liabilities	Total long-term and regulatory liabilities	3,851,846		3,996,578
Commitments and contingencies (Note 8)	Commitments and contingencies (Note 8)					Commitments and contingencies (Note 8)
Total capitalization and liabilities	Total capitalization and liabilities	$	16,642,789	$	17,187,514


[X]			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


[ ]			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number			Exact name of registrant as specified in its charter, state of incorporation, address of principal executive offices, telephone number			I.R.S. Employer Identification Number


1-16305			PUGET ENERGY, INC. A Washington Corporation 355 110th Ave NE Bellevue, Washington 98004 (425) 454-6363			91-1969407


1-4393			PUGET SOUND ENERGY, INC. A Washington Corporation 355 110th Ave NE Bellevue, Washington 98004 (425) 454-6363			91-0374630


		Page
Definitions		3
Filing Format		43
Forward-Looking Statements		4

Part I.	Financial Information	5

Item 1.	Financial Statements	5
	Puget Energy, Inc.
	Consolidated Statements of Income – Three Months Ended March ~~31, 2023~~ 3 1 , 202 4 and ~~2022~~2023	5
	Consolidated Statements of Comprehensive Income – Three Months Ended March ~~31, 2023~~ 3 1 , 202 4 and ~~2022~~2023	6
	Consolidated Balance Sheets – March ~~31,~~ 3 1 , 202 34 and December 31, 20202223	7
	Consolidated Statements of Common Shareholder's Equity - March ~~31, 2023~~ 3 1 , 202 4 and December 31, ~~2022~~2023	8
	Consolidated Statements of Cash Flows – Three Months Ended ~~March 31, 2023~~Ma rch 3 1 , 202 4 and ~~2022~~2023	9

	Puget Sound Energy, Inc.
	Consolidated Statements of Income – Three Months ~~EndedMarch~~ 3 1 ~~, 202~~3 ~~and 20~~22	12
	~~Consolidated Statements of Comprehensive Income – ThreeMonths~~ Ended March 3 1 , 202 34 and 20202223	12
	Consolidated Statements of Comprehensive Income – Three Months Ended March 3 1 , 202 4 and 2023	11
	Consolidated Balance Sheets – March 3 1 , 202 34 and December 31, 20202223	12
	Consolidated Statements of Common Shareholder's Equity -March ~~March~~ 3 1 , 202 34 , and December 31, 202 23	13
	Consolidated Statements of Cash Flows – Three Months Ended March ~~31, 2023~~ 3 1 , 202 4 and ~~2022~~202 3	14

	Notes
	Combined Notes to Consolidated Financial Statements	15

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	5650

Item 4.	Controls and Procedures	5751

Part II.	Other Information	5751

Item 1.	Legal Proceedings	5751

Item 1A.	Risk Factors	5752

Item 5.	Other Information	52

Item 6.	Exhibits	5752

Exhibit Index		5853

Signatures		5954


ASU			Accounting Standards Update
ASC			Accounting Standards Codification
CCA			Climate Commitment Act
CEIP			Clean Energy Implementation Plan
CETA			Clean Energy Transformation Act
EBITDA			Earnings Before Interest, Tax, Depreciation and Amortization
FASB			Financial Accounting Standards Board
GAAP			U.S. Generally Accepted Accounting Principles
GHG			Greenhouse gas
GRC			General Rate Case
IBEW			International Brotherhood of Electrical Workers
ISDA			International Swaps and Derivatives Association
LIBOR			London Interbank Offered Rate
LNG			Liquefied Natural Gas
MMBtu			One Million British Thermal Units
MWh			Megawatt Hour (one MWh equals one thousand kWh)
MYRP			Multi-year Rate Plan
NAESB			North American Energy Standards Board
NPNS			Normal Purchase Normal Sale
PCA			Power Cost Adjustment
PCORC			Power Cost Only Rate Case
PGA			Purchased Gas Adjustment
PTCs			Production Tax Credits
PSE			Puget Sound Energy, Inc.
Puget Energy			Puget Energy, Inc.
Puget Holdings			Puget Holdings LLC
Puget LNG			Puget LNG, LLC
SERP			Supplemental Executive Retirement Plan
UA			The United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada
Washington Commission			Washington Utilities and Transportation Commission
WDOE			Washington Department of Ecology
WSPP			WSPP, Inc.


	Common Stock
		Shares
		Shares
		Shares																				Amount				Retained Earnings				Total Equity

		Common Stock			Additional Paid-in Capital								Accumulated Other Comprehensive Income (Loss)
		Shares	Amount				Retained Earnings								Total Equity
Balance at December 31, 2021		200	$	—			$	3,523,532			$	1,067,216			$	(27,432)			$	4,563,316
Net income (loss)		—	—		—				278,295				—				278,295
Common stock dividend paid		—	—		—				(939)				—				(939)
Other comprehensive income (loss)		—	—		—				—				1,831				1,831
Balance at March 31, 2022		200	$	—	$	3,523,532			$	1,344,572			$	(25,601)			$	4,842,503

Balance at December 31, 2022

Balance at December 31, 2022

Balance at December 31, 2022	Balance at December 31, 2022	200	$	—	$	3,523,532			$	1,465,331			$	(24,774)			$	4,964,089
Net income (loss)	Net income (loss)	—	—		—				(31)				—				(31)		Net income (loss)		—		—			(31)		—			(31)
Common stock dividend paid	Common stock dividend paid	—	—		—				(28,133)				—				(28,133)		Common stock dividend paid		—		—			(28,133)		—			(28,133)
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—				—				(658)				(658)		Other comprehensive income (loss)		—				—				(658)
Balance at March 31, 2023	Balance at March 31, 2023	200	$	—	$	3,523,532			$	1,437,167			$	(25,432)			$	4,935,267

Balance at December 31, 2023

Balance at December 31, 2023

Balance at December 31, 2023
Net income (loss)																			Net income (loss)		—	—		—			129,909		—			129,909
Common stock dividend paid																			Common stock dividend paid		—	—		—			(84,050)		—			(84,050)
Other comprehensive income (loss)																			Other comprehensive income (loss)		—	—		—			—		(2,399)			(2,399)
Balance at March 31, 2024


Puget Energy and Puget Sound Energy	Three Months Ended March 31,
(Dollars in Thousands)	2023		2022
Allowance for credit losses:
Beginning balance	$	41,962	$	34,958
Provision for credit loss expense 1	9,482		9,767
Receivables charged-off	(7,216)		(3,492)

Total ending allowance balance	$	44,228	$	41,233


Puget Energy and Puget Sound Energy
(Dollars in Thousands)	Three Months Ended March 31, 2022
Revenue from contracts with customers:	Electric		Natural Gas		Other1		Total
Retail
Residential	$	416,260	$	292,596	$	—	$	708,856
Commercial	257,019		120,979		—		377,998
Industrial	30,073		8,085		—		38,158
Other	4,761		—		—		4,761
Wholesale	13,147		—		—		13,147
Transmission and transportation	11,222		5,446		—		16,668
Miscellaneous	1,150		309		10,712		12,171
Total revenue from contracts with customers	$	733,632	$	427,415	$	10,712	$	1,171,759
Total other revenue2	22,745		(1,067)		—		21,678
Total operating revenue	$	756,377	$	426,348	$	10,712	$	1,193,437


Puget Energy and Puget Sound Energy
(Dollars in Thousands)	At March 31, 2023						At December 31, 2022
	Fair Value1		Posted		Contingent		Fair Value1		Posted		Contingent
Contingent Feature	Liability		Collateral		Collateral		Liability		Collateral		Collateral
Credit rating2	$	1,878	$	—	$	1,878	$	3,157	$	—	$	3,157
Requested credit for adequate assurance	28,717		—		—		4,157		—		—
Forward value of contract3	976		6,284		N/A		5,661		56,200		N/A
Total	$	31,571	$	6,284	$	1,878	$	12,975	$	56,200	$	3,157


Puget Energy and Puget Sound Energy	Three Months Ended March 31,
(Dollars in Thousands)	2023						2022
Level 3 Roll-Forward Net Asset/(Liability)	Electric		Natural Gas		Total		Electric		Natural Gas		Total
Balance at beginning of period	$	116,078	$	(127)	$	115,951	$	(42,752)	$	(2,120)	$	(44,872)
Changes during period:
Realized and unrealized energy derivatives:
Included in earnings1	(18,766)		—		(18,766)		38,820		—		38,820
Included in regulatory assets / liabilities	—		(91)		(91)		—		415		415
Settlements	(27,795)		263		(27,532)		(2,254)		324		(1,930)
Transferred into Level 3	—		—		—		—		—		—
Transferred out of Level 3	217		170		387		176		169		345
Balance at end of period	$	69,734	$	215	$	69,949	$	(6,010)	$	(1,212)	$	(7,222)


Puget Energy and Puget Sound Energy	Puget Energy and Puget Sound Energy	Fair Value						Range
(Dollars in Thousands)	(Dollars in Thousands)	Assets1		Liabilities1		Valuation Technique	Unobservable Input	Low		High		Weighted Average
(Dollars in Thousands)
(Dollars in Thousands)														Assets1	Liabilities1	Valuation Technique	Unobservable Input	Low	High	Weighted Average
Electric	Electric	$	82,391	$	12,657	Discounted cash flow	Power prices (per MWh)	$	50.46	$	232.35	$	118.08
Natural gas	Natural gas	$	910	$	695	Discounted cash flow	Natural gas prices (per MMBtu)	$	1.33	$	7.58	$	3.91


Puget Energy	Puget Energy	Qualified Pension Benefits				SERP Pension Benefits				Other Benefits				Puget Energy	Qualified Pension Benefits		SERP Pension Benefits			Other Benefits
		Three Months Ended March 31,
	Three Months Ended March 31,																				Three Months Ended March 31,
(Dollars in Thousands)	(Dollars in Thousands)	2023		2022		2023		2022		2023		2022		(Dollars in Thousands)	2024	2023		2024	2023			2024	2023
Components of net periodic benefit cost:	Components of net periodic benefit cost:
Service cost
Service cost
Service cost	Service cost	$	4,632	$	6,797	$	71	$	139	$	47	$	55
Interest cost	Interest cost	7,929		6,087		424		313		115		81
Expected return on plan assets	Expected return on plan assets	(12,652)		(12,777)		—		—		(79)		(99)
Amortization of prior service cost	Amortization of prior service cost	—		—		73		72		7		6
Amortization of net loss (gain)	Amortization of net loss (gain)	(862)		1,628		—		618		(51)		(4)
Net periodic benefit cost	Net periodic benefit cost	$	(953)	$	1,735	$	568	$	1,142	$	39	$	39


	Company’s Share				Customers' Share
Annual Power Cost Variability	Over		Under		Over		Under
Over or under collected by up to $17 million	100	%	100	%	—	%	—	%
Over or under collected by between $17 million - $40 million	35		50		65		50
Over or under collected beyond $40 + million	10		10		90		90


Puget Energy and Puget Sound Energy
(Dollars in Thousands)	At March 31,		At December 31,
PGA (liability)/receivable balance and activity	2023		2022
PGA (liability)/receivable beginning balance	$	(3,536)	$	57,935
Actual natural gas costs	138,178		457,950
Allowed PGA recovery	(234,372)		(496,879)
Interest	(348)		1,674
Refund/interest from counterparty settlement	(2,836)		(24,216)
PGA (liability)/receivable ending balance	$	(102,914)	$	(3,536)


Effective Date	Average Percentage Increase (Decrease) in Rates	Increase (Decrease) in Revenue (Dollars in Millions)
May 1, 2023	(0.2)%	$(6.3)
May 1, 2022	1.0	21.6


	Company's Share		Customers’ Share
Annual Power Cost Variability	Over	Under	Over	Under
Over or under collected by up to $17 million	100%	100%	—%	—%
Over or under collected by between $17 million - $40 million	35	50	65	50
Over or under collected beyond $40 + million	10	10	90	90


Effective Date	Average Percentage Increase (Decrease) in Rates	Increase (Decrease) in Revenue (Dollars in Millions)
May 1, 2023	(0.02)%	$(0.2)
May 1, 2022	0.02	0.2


(Dollars in Thousands)	March 31,		December 31,
PGA receivable balance and activity	2023		2022
PGA receivable beginning balance	$	(3,536)	$	57,935
Actual natural gas costs	138,178		457,950
Allowed PGA recovery	(234,372)		(496,879)
Interest	(348)		1,674
Refund/interest from counterparty settlement	(2,836)		(24,216)
PGA (liability)/ receivable ending balance	$	(102,914)	$	(3,536)


Puget Energy and Puget Sound Energy	Amount of Commitments Expiration Per Period
(Dollars in Thousands)	Total		Less than 1 Year		1-3 Years		3-5 Years		Thereafter
Commercial commitments:
PSE revolving credit facility1	$	800,000	$	—	$	—	$	800,000	$	—
Inter-company short-term debt2	30,000		—		—		—		30,000
Total PSE commercial commitments	830,000		—		—		800,000		30,000
Puget Energy revolving credit facility3	800,000		—		—		800,000		—
Less: Inter-company short-term debt elimination	(30,000)		—		—		—		(30,000)
Total Puget Energy commercial commitments	$	1,600,000	$	—	$	—	$	1,600,000	$	—