UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 20232024

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

For the Transition period from ________ to ________
Commission File NumberExact name of registrant as specified in its charter, state of incorporation,
address of principal executive offices, telephone number
I.R.S.
Employer
Identification
Number
pelogo2015q1a18.jpg
1-16305
PUGET ENERGY, INC.
A Washington Corporation
355 110th Ave NE
Bellevue, Washington 98004
(425) 454-6363
91-1969407
pselogo2015q1a18.jpg
1-4393
PUGET SOUND ENERGY, INC.
A Washington Corporation
355 110th Ave NE
Bellevue, Washington 98004
(425) 454-6363
91-0374630
Securities Registered pursuant to Section 12(b) of the Securities Exchange Act of 1934
Title of each classTrading Symbol(s)Name of each exchange on which registered
N/AN/AN/A

Indicate by check mark whether the registrants: (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
Puget Energy, Inc.Yes/X/No/  / Puget Sound Energy, Inc.Yes/X/No/  /
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Puget Energy, Inc.Yes/X/No/  / Puget Sound Energy, Inc.Yes/X/No/  /
Indicate by check mark whether registrant isthe registrants are a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer", "accelerated filer," a smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Puget Energy, Inc.Large accelerated filer/  /Accelerated filer/  /Non-accelerated Filer/X/Smaller reporting company/  /Emerging growth company/  /
Puget Sound Energy, Inc.Large accelerated filer/  /Accelerated filer/  /Non-accelerated Filer/X/Smaller reporting company/  /Emerging growth company/  /
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. / /

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Puget Energy, Inc.Yes/  /No/X/Puget Sound Energy, Inc.Yes/  /No/X/
All of the outstanding shares of voting stock of Puget Energy, Inc. are held by Puget Equico LLC, an indirect wholly-owned subsidiary of Puget Holdings LLC.  All of the outstanding shares of voting stock of Puget Sound Energy, Inc. are held by Puget Energy, Inc.



Table of Contents
Page
  
 Puget Energy, Inc.
 
 
 
  
 Puget Sound Energy, Inc.
 
 
 
  
 Notes
 
  
  
  
  
  
  
  
 

2


DEFINITIONS
ASUAccounting Standards Update
ASCAccounting Standards Codification
CCAClimate Commitment Act
CEIPClean Energy Implementation Plan
CETAClean Energy Transformation Act
EBITDAEarnings Before Interest, Tax, Depreciation and Amortization
FASBFinancial Accounting Standards Board
GAAPU.S. Generally Accepted Accounting Principles
GHGGreenhouse gas
GRCGeneral Rate Case
IBEWInternational Brotherhood of Electrical Workers
ISDAInternational Swaps and Derivatives Association
LIBORLondon Interbank Offered Rate
LNGLiquefied Natural Gas
MMBtuOne Million British Thermal Units
MWhMegawatt Hour (one MWh equals one thousand kWh)
MYRPMulti-year Rate Plan
NAESBNorth American Energy Standards Board
NPNSNormal Purchase Normal Sale
PCAPower Cost Adjustment
PCORCPower Cost Only Rate Case
PGAPurchased Gas Adjustment
PTCsProduction Tax Credits
PSEPuget Sound Energy, Inc.
Puget EnergyPuget Energy, Inc.
Puget HoldingsPuget Holdings LLC
Puget LNGPuget LNG, LLC
SERPSupplemental Executive Retirement Plan
UAThe United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada
Washington CommissionWashington Utilities and Transportation Commission
WDOEWashington Department of Ecology
WSPPWSPP, Inc.


3


FILING FORMAT
This combined Quarterly Report on Form 10-Q is separately filed by Puget Energy, Inc. (Puget Energy) and Puget Sound Energy, Inc. (PSE).  Information in this filing relating to PSE is filed by PSE on its own behalf. PSE makes no representation as to information relating to Puget Energy (except as it may relate to PSE) or any other affiliate or subsidiary of Puget Energy. Any references in this report to “the Company” are to Puget Energy and PSE collectively.

3


FORWARD-LOOKING STATEMENTS
Puget Energy and PSE include the following cautionary statements in this Form 10-Q to make applicable and to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by or on behalf of Puget Energy or PSE.  This report includes forward-looking statements, which are statements of expectations, beliefs, plans, objectives and assumptions of future events or performance.  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” or similar expressions are intended to identify certain of these forward-looking statements and may be included in discussion of, among other things, our anticipated operating or financial performance, business plans and prospects, planned capital expenditures and other future expectations. In particular, these include statements relating to future actions, business plans and prospects, future performance expenses, the outcome of contingencies, such as legal proceedings, government regulation and financial results.
Forward-looking statements reflect current expectations and involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed.  There can be no assurance that Puget Energy’s and PSE’s expectations, beliefs or projections will be achieved or accomplished.  
In addition to other factors and matters discussed elsewhere in this report, some important risks that could cause actual results or outcomes for Puget Energy and PSE to differ materially from past results and those discussed in the forward-looking statements include:
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, includingcosts, and subject the global Coronavirus Disease 2019 (COVID-19) pandemic, and responsesCompany 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 variousin 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.

Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.  New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.  For further information, see Part I, Item 1A, “Risk Factors” in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2022.2023.

4


PART I                    FINANCIAL INFORMATION

Item 1.                      Financial Statements

PUGET ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
(Unaudited)


Three Months Ended
March 31,
20232022
Three Months Ended
March 31,
Three Months Ended
March 31,
202420242023
Operating revenue:Operating revenue:
Electric
Electric
ElectricElectric$1,010,160 $756,377 
Natural gasNatural gas517,258 426,348Natural gas557,424 517,258517,258
OtherOther13,769 10,712Other8,477 13,76913,769
Total operating revenueTotal operating revenue1,541,187 1,193,437 
Operating expenses:Operating expenses:
Energy costs:Energy costs:
Energy costs:
Energy costs:
Purchased electricity
Purchased electricity
Purchased electricityPurchased electricity339,816 238,203385,765 339,816339,816
Electric generation fuelElectric generation fuel150,254 60,644Electric generation fuel117,557 150,254150,254
Residential exchangeResidential exchange(23,531)(23,070)Residential exchange(26,298)(23,531)(23,531)
Purchased natural gasPurchased natural gas235,482 177,333Purchased natural gas271,353 235,482235,482
Unrealized (gain) loss on derivative instruments, netUnrealized (gain) loss on derivative instruments, net192,123 (131,921)Unrealized (gain) loss on derivative instruments, net15,665 192,123192,123
Utility operations and maintenanceUtility operations and maintenance194,991 170,300Utility operations and maintenance203,117 194,991194,991
Non-utility expense and otherNon-utility expense and other16,046 15,419Non-utility expense and other10,943 16,04616,046
Depreciation & amortizationDepreciation & amortization188,717 164,576Depreciation & amortization191,876 188,717188,717
Conservation amortizationConservation amortization38,219 30,141Conservation amortization37,832 38,21938,219
Taxes other than income taxesTaxes other than income taxes133,690 121,377Taxes other than income taxes126,311 133,690133,690
Total operating expensesTotal operating expenses1,465,807 823,002 
Operating income (loss)Operating income (loss)75,380 370,435 
Other income (expense):Other income (expense):
Other incomeOther income13,698 13,164
Other income
Other income16,981 13,698
Other expenseOther expense(2,477)(3,154)Other expense(2,103)(2,477)(2,477)
Interest charges:Interest charges:
AFUDC
AFUDC
AFUDCAFUDC5,608 4,1299,087 5,6085,608
Interest expenseInterest expense(90,042)(86,468)Interest expense(102,448)(90,042)(90,042)
Income (loss) before income taxesIncome (loss) before income taxes2,167 298,106 
Income tax (benefit) expenseIncome tax (benefit) expense2,198 19,811Income tax (benefit) expense11,904 2,1982,198
Net income (loss)Net income (loss)$(31)$278,295 

The accompanying notes are an integral part of the financial statements.
5


PUGET ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in Thousands)
(Unaudited)

Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
20232022 20242023
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 

The accompanying notes are an integral part of the financial statements.
6


PUGET ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)



ASSETS
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 plantElectric plant$10,431,708 $10,300,895 
Natural gas plantNatural gas plant4,778,660 4,721,982 
Common plantCommon plant1,098,813 1,103,783 
Less: Accumulated depreciation and amortizationLess: Accumulated depreciation and amortization(4,448,520)(4,341,789)
Net utility plantNet utility plant11,860,661 11,784,871 
Other property and investments:Other property and investments:
GoodwillGoodwill1,656,513 1,656,513 
Goodwill
Goodwill
Other property and investmentsOther property and investments318,265 328,535 
Total other property and investmentsTotal other property and investments1,974,778 1,985,048 
Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents110,974 105,740 
Cash and cash equivalents
Cash and cash equivalents
Restricted cashRestricted cash20,329 63,045 
Accounts receivable, net of allowance for doubtful accounts of $44,228 and $41,962, respectively603,944 673,236 
Accounts receivable, net of allowance for doubtful accounts of $43,263 and $38,211, respectively
Unbilled revenueUnbilled revenue263,420 284,022 
Materials and supplies, at average costMaterials and supplies, at average cost136,745 132,172 
Materials and supplies, at average cost
Materials and supplies, at average cost
Fuel and natural gas inventory, at average costFuel and natural gas inventory, at average cost56,562 94,075 
Unrealized gain on derivative instrumentsUnrealized gain on derivative instruments125,377 587,029 
GHG emission allowances
Prepaid expense and otherPrepaid expense and other42,208 41,940 
Power contract acquisition adjustment gainPower contract acquisition adjustment gain16,807 16,736 
Total current assetsTotal current assets1,376,366 1,997,995 
Other long-term and regulatory assets:Other long-term and regulatory assets:
Power cost adjustment mechanismPower cost adjustment mechanism101,577 112,207 
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 contractsRegulatory assets related to power contracts7,621 7,904 
Other regulatory assetsOther regulatory assets827,659 784,231 
Unrealized gain on derivative instrumentsUnrealized gain on derivative instruments64,498 94,621 
Power contract acquisition adjustment gainPower contract acquisition adjustment gain42,525 46,924 
Operating lease right-of-use assetOperating lease right-of-use asset190,640 193,509 
OtherOther196,464 180,204 
Total other long-term and regulatory assetsTotal other long-term and regulatory assets1,430,984 1,419,600 
Total assetsTotal assets$16,642,789 $17,187,514 

The accompanying notes are an integral part of the financial statements.








PUGET ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)



CAPITALIZATION AND LIABILITIES
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 outstandingCommon stock $0.01 par value, 1,000 shares authorized, 200 shares outstanding$— $— 
Additional paid-in capitalAdditional paid-in capital3,523,532 3,523,532 
Retained earningsRetained earnings1,437,167 1,465,331 
Accumulated other comprehensive income (loss), net of taxAccumulated other comprehensive income (loss), net of tax(25,432)(24,774)
Total common shareholder’s equityTotal common shareholder’s equity4,935,267 4,964,089 
Long-term debt:Long-term debt:
First mortgage bonds and senior notesFirst mortgage bonds and senior notes4,662,000 4,662,000 
First mortgage bonds and senior notes
First mortgage bonds and senior notes
Pollution control bondsPollution control bonds161,860 161,860 
Long-term debt
Long-term debt
Long-term debtLong-term debt2,034,300 2,034,300 
Debt discount issuance costs and otherDebt discount issuance costs and other(191,744)(194,787)
Total long-term debtTotal long-term debt6,666,416 6,663,373 
Total capitalizationTotal capitalization11,601,683 11,627,462 
Current liabilities:Current liabilities:
Accounts payableAccounts payable409,130 665,750 
Accounts payable
Accounts payable
Short-term debtShort-term debt237,700 441,300 
Accrued expenses:Accrued expenses:
Accrued expenses:
Accrued expenses:
Taxes
Taxes
TaxesTaxes200,050 116,098 
Salaries and wagesSalaries and wages47,616 60,537 
InterestInterest77,202 62,148 
Unrealized loss on derivative instrumentsUnrealized loss on derivative instruments112,634 124,976 
Power contract acquisition adjustment lossPower contract acquisition adjustment loss1,586 1,638 
Operating lease liabilitiesOperating lease liabilities20,254 20,342 
Compliance obligationCompliance obligation37,987 937
OtherOther83,088 70,685 
Total current liabilitiesTotal current liabilities1,189,260 1,563,474 
Other long-term and regulatory liabilities:Other long-term and regulatory liabilities:
Deferred income taxes
Deferred income taxes
Deferred income taxesDeferred income taxes928,320 985,947 
Unrealized loss on derivative instrumentsUnrealized loss on derivative instruments14,476 18,366 
Purchased gas adjustment liabilityPurchased gas adjustment liability102,914 3,536 
Regulatory liabilitiesRegulatory liabilities890,059 1,147,143 
Regulatory liability for deferred income taxesRegulatory liability for deferred income taxes797,697 811,161 
Regulatory liabilities related to power contractsRegulatory liabilities related to power contracts59,332 63,660 
Power contract acquisition adjustment lossPower contract acquisition adjustment loss6,035 6,266 
Operating lease liabilitiesOperating lease liabilities177,516 181,265 
Finance lease liabilitiesFinance lease liabilities101,717 102,518Finance lease liabilities98,761 99,51299,512
Compliance obligationCompliance obligation94,626 Compliance obligation120,278 168,879168,879
Other deferred creditsOther deferred credits679,154 676,716 
Total long-term and regulatory liabilitiesTotal long-term and regulatory liabilities3,851,846 3,996,578 
Commitments and contingencies (Note 8)Commitments and contingencies (Note 8)Commitments and contingencies (Note 8)
Total capitalization and liabilitiesTotal capitalization and liabilities$16,642,789 $17,187,514 

The accompanying notes are an integral part of the financial statements.
7


PUGET ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY
(Dollars in Thousands)
(Unaudited)
Common Stock
Shares
Shares
SharesAmountRetained EarningsTotal Equity
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)
SharesAmountRetained EarningsTotal Equity
Balance at December 31, 2021200$— $3,523,532 $1,067,216 $(27,432)$4,563,316 
Net income (loss)278,295 278,295 
Common stock dividend paid(939)(939)
Other comprehensive income (loss)1,831 1,831 
Balance at March 31, 2022200$— $3,523,532 $1,344,572 $(25,601)$4,842,503 
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022Balance at December 31, 2022200$— $3,523,532 $1,465,331 $(24,774)$4,964,089 
Net income (loss)Net income (loss)(31)(31)Net income (loss)(31)(31)
Common stock dividend paidCommon stock dividend paid(28,133)(28,133)Common stock dividend paid(28,133)(28,133)
Other comprehensive income (loss)Other comprehensive income (loss)(658)(658)Other comprehensive income (loss)(658)
Balance at March 31, 2023Balance at March 31, 2023200$— $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 paidCommon stock dividend paid— — (84,050)— (84,050)
Other comprehensive income (loss)Other comprehensive income (loss)— — — (2,399)(2,399)
Balance at March 31, 2024

The accompanying notes are an integral part of the consolidated financial statements.


8


PUGET ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
20232022
Three Months Ended
March 31,
Three Months Ended
March 31,
202420242023
Operating activities:Operating activities:
Net Income (loss)Net Income (loss)$(31)$278,295 
Net Income (loss)
Net Income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortizationDepreciation and amortization188,717 164,576 
Conservation amortizationConservation amortization38,219 30,141 
Deferred income taxes and tax credits, netDeferred income taxes and tax credits, net(70,916)(3,641)
Net unrealized (gain) loss on derivative instrumentsNet unrealized (gain) loss on derivative instruments192,123 (131,921)
AFUDC - equityAFUDC - equity(7,594)(6,971)
AFUDC - equity
AFUDC - equity
Other non-cash
Other non-cash
Other non-cashOther non-cash12,098 2,326 
Regulatory assets and liabilitiesRegulatory assets and liabilities38,162 4,470 
Regulatory assets and liabilities
Regulatory assets and liabilities
Purchased gas adjustmentPurchased gas adjustment123,594 13,915 
GHG emission allowances
Other long term assets and liabilitiesOther long term assets and liabilities(17,377)(7,891)
Change in certain current assets and liabilities:Change in certain current assets and liabilities:
Accounts receivable and unbilled revenue
Accounts receivable and unbilled revenue
Accounts receivable and unbilled revenueAccounts receivable and unbilled revenue61,325 35,847 
Materials and suppliesMaterials and supplies(4,573)(7,077)
Fuel and natural gas inventoryFuel and natural gas inventory37,513 12,033 
Prepayments and otherPrepayments and other(268)(4,733)
Accounts payableAccounts payable(270,077)(57,324)
Accounts payable
Accounts payable
Taxes payableTaxes payable83,952 41,726 
OtherOther2,758 18,615 
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities407,625 382,386 
Investing activities:Investing activities:
Construction expenditures - excluding equity AFUDCConstruction expenditures - excluding equity AFUDC(229,040)(233,131)
Construction expenditures - excluding equity AFUDC
Construction expenditures - excluding equity AFUDC
OtherOther9,113 (532)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities(219,927)(233,663)
Financing activities:Financing activities:
Change in short-term debt, netChange in short-term debt, net(203,600)(70,250)
Change in short-term debt, net
Change in short-term debt, net
Dividends paidDividends paid(28,133)(939)
Proceeds from long-term debt and bonds issued— 448,075 
Other
Other
OtherOther6,553 5,523 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(225,180)382,409 
Net increase (decrease) in cash, cash equivalents, and restricted cashNet increase (decrease) in cash, cash equivalents, and restricted cash(37,482)531,132 
Cash, cash equivalents, and restricted cash at beginning of periodCash, cash equivalents, and restricted cash at beginning of period168,785 103,150 
Cash, cash equivalents, and restricted cash at end of periodCash, cash equivalents, and restricted cash at end of period$131,303 $634,282 
Supplemental cash flow information:Supplemental cash flow information:
Cash payments for interest (net of capitalized interest)Cash payments for interest (net of capitalized interest)$65,479 $65,238 
Cash payments for interest (net of capitalized interest)
Cash payments for interest (net of capitalized interest)
Non-cash financing and investing activities:Non-cash financing and investing activities:
Non-cash financing and investing activities:
Non-cash financing and investing activities:
Accounts payable for capital expenditures eliminated from cash flows
Accounts payable for capital expenditures eliminated from cash flows
Accounts payable for capital expenditures eliminated from cash flowsAccounts payable for capital expenditures eliminated from cash flows$71,823 $61,133 

The accompanying notes are an integral part of the financial statements.

9



PUGET SOUND ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
(Unaudited)

Three Months Ended
March 31,
20232022
Three Months Ended
March 31,
Three Months Ended
March 31,
202420242023
Operating revenue:Operating revenue:
Electric
Electric
ElectricElectric$1,010,160 $756,377 
Natural gasNatural gas517,258 426,348 
OtherOther9,233 10,677 
Total operating revenueTotal operating revenue1,536,651 1,193,402 
Operating expenses:Operating expenses:
Energy costs:Energy costs:
Energy costs:
Energy costs:
Purchased electricity
Purchased electricity
Purchased electricityPurchased electricity339,816 238,203 
Electric generation fuelElectric generation fuel150,254 60,644 
Residential exchangeResidential exchange(23,531)(23,070)
Purchased natural gasPurchased natural gas235,482 177,333 
Unrealized (gain) loss on derivative instruments, netUnrealized (gain) loss on derivative instruments, net192,123 (131,921)
Utility operations and maintenanceUtility operations and maintenance194,991 170,300 
Non-utility expense and otherNon-utility expense and other8,014 12,814 
Depreciation & amortizationDepreciation & amortization187,043 163,704 
Conservation amortizationConservation amortization38,219 30,141 
Taxes other than income taxesTaxes other than income taxes133,264 121,116 
Total operating expensesTotal operating expenses1,455,675 819,264 
Operating income (loss)Operating income (loss)80,976 374,138 
Other income (expense):Other income (expense):
Other incomeOther income12,820 10,968 
Other income
Other income
Other expenseOther expense(2,477)(3,154)
Interest charges:Interest charges:
AFUDC
AFUDC
AFUDCAFUDC5,608 4,129 
Interest expenseInterest expense(66,983)(63,144)
Income (loss) before income taxesIncome (loss) before income taxes29,944 322,937 
Income tax (benefit) expenseIncome tax (benefit) expense2,409 34,856 
Net income (loss)Net income (loss)$27,535 $288,081 


The accompanying notes are an integral part of the financial statements.
10


PUGET SOUND ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in Thousands)
(Unaudited)

Three Months Ended
March 31,
Three Months Ended
March 31,
Three Months Ended
March 31,
20232022 20242023
Net income (loss)Net income (loss)$27,535 $288,081 
Other comprehensive income(loss):Other comprehensive income(loss):
Net unrealized gain (loss) from pension and postretirement plans, net of tax of $10 and $953, respectively36 3,588 
Net unrealized gain (loss) from pension and postretirement plans, net of tax of $1,832 and $10, respectively.
Net unrealized gain (loss) from pension and postretirement plans, net of tax of $1,832 and $10, respectively.
Net unrealized gain (loss) from pension and postretirement plans, net of tax of $1,832 and $10, respectively.
Amortization of treasury interest rate swaps to earnings, net of tax of $26 and $26,
respectively
97 97 
Amortization of treasury interest rate swaps to earnings, net of tax of $25 and $26, respectively.
Amortization of treasury interest rate swaps to earnings, net of tax of $25 and $26, respectively.
Amortization of treasury interest rate swaps to earnings, net of tax of $25 and $26, respectively.
Other comprehensive income (loss)Other comprehensive income (loss)133 3,685 
Other comprehensive income (loss)
Other comprehensive income (loss)
Comprehensive income (loss)Comprehensive income (loss)$27,668 $291,766 


The accompanying notes are an integral part of the financial statements.


11


PUGET SOUND ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)


ASSETS
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$13,257,470 $13,043,559 
Natural gas plant5,537,034 5,480,496 
Common plant1,037,926 1,024,319 
Less:  Accumulated depreciation and amortization(7,065,362)(6,954,968)
Net utility plant12,767,068 12,593,406 
Other property and investments:
Other property and investments69,705 69,808 
Total other property and investments69,705 69,808 
Current assets:
Cash and cash equivalents44,352 144,825 
Restricted cash45,117 66,027 
Accounts receivable, net of allowance for doubtful accounts of $43,263 and $38,211, respectively523,292 546,463 
Unbilled revenue268,064 243,342 
Materials and supplies, at average cost193,471 173,445 
Fuel and natural gas inventory, at average cost74,147 85,726 
Unrealized gain on derivative instruments64,279 74,225 
GHG emission allowances37,987 937 
Prepaid expense and other49,169 75,323 
Total current assets1,299,878 1,410,313 
Other long-term and regulatory assets:
Power cost adjustment mechanism106,279 48,427 
Other regulatory assets998,237 1,163,551 
Unrealized gain on derivative instruments24,108 35,324 
Operating lease right-of-use asset190,337 194,321 
Other258,698 256,617 
Total other long-term and regulatory assets1,577,659 1,698,240 
Total assets$15,714,310 $15,771,767 

ASSETS
March 31,
2023
December 31, 2022
Utility plant (at original cost, including construction work in progress of $943,177 and $861,801, respectively):
Electric plant$12,194,280 $12,071,531 
Natural gas plant5,332,181 5,276,156 
Common plant1,119,925 1,125,217 
Less:  Accumulated depreciation and amortization(6,785,725)(6,688,033)
Net utility plant11,860,661 11,784,871 
Other property and investments:
Other property and investments71,388 80,076 
Total other property and investments71,388 80,076 
Current assets:
Cash and cash equivalents108,117 102,840 
Restricted cash20,329 63,045 
Accounts receivable, net of allowance for doubtful accounts of $44,228 and $41,962, respectively602,300 671,071 
Unbilled revenue263,420 284,014 
Materials and supplies, at average cost136,745 132,172 
Fuel and natural gas inventory, at average cost54,433 91,783 
Unrealized gain on derivative instruments125,377 587,029 
Prepaid expense and other42,070 41,940 
Total current assets1,352,791 1,973,894 
Other long-term and regulatory assets:
Power cost adjustment mechanism101,577 112,207 
Other regulatory assets827,659 784,231 
Unrealized gain on derivative instruments64,498 94,621 
Operating lease right-of-use asset190,640 193,509 
Other193,267 176,833 
Total other long-term and regulatory assets1,377,641 1,361,401 
Total assets$14,662,481 $15,200,242 

The accompanying notes are an integral part of the financial statements.











PUGET SOUND ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)


CAPITALIZATION AND LIABILITIES
March 31,
2023
December 31, 2022
Capitalization:
Common shareholder’s equity:
Common stock $0.01 par value, 150,000,000 shares authorized, 85,903,791 shares outstanding$859 $859 
Additional paid-in capital3,535,105 3,535,105 
Retained earnings1,437,696 1,438,163 
Accumulated other comprehensive income (loss), net of tax(102,911)(103,044)
Total common shareholder’s equity4,870,749 4,871,083 
Long-term debt:
First mortgage bonds and senior notes4,662,000 4,662,000 
Pollution control bonds161,860 161,860 
Debt discount, issuance costs and other(36,619)(37,095)
Total long-term debt4,787,241 4,786,765 
Total capitalization9,657,990 9,657,848 
Current liabilities:
Accounts payable408,802 664,457 
Short-term debt137,000 357,000 
Accrued expenses:
Taxes206,507 116,472 
Salaries and wages47,616 60,537 
Interest58,702 52,170 
Unrealized loss on derivative instruments112,634 124,976 
Operating lease liabilities20,254 20,342 
Other83,088 70,685 
Total current liabilities1,074,603 1,466,639 
Other long-term and regulatory liabilities:
Deferred income taxes1,076,317 1,139,600 
Unrealized loss on derivative instruments14,476 18,366 
Purchased gas adjustment liability102,914 3,536 
Regulatory liabilities888,795 1,145,879 
Regulatory liabilities for deferred income tax798,257 811,724 
Operating lease liabilities177,516 181,265 
Finance lease liabilities101,717 102,518 
Compliance obligation94,626 — 
Other deferred credits675,270 672,867 
Total long-term and regulatory liabilities3,929,888 4,075,755 
Commitments and contingencies (Note 8)
Total capitalization and liabilities$14,662,481 $15,200,242 

March 31,
2024
December 31, 2023
Capitalization:
Common shareholder’s equity:
Common stock $0.01 par value, 150,000,000 shares authorized, 85,903,791 shares outstanding$859 $859 
Additional paid-in capital3,635,105 3,635,105 
Retained earnings1,566,118 1,473,218 
Accumulated other comprehensive income (loss), net of tax(60,168)(58,394)
Total common shareholder’s equity5,141,914 5,050,788 
Long-term debt:
First mortgage bonds and senior notes5,062,000 5,062,000 
Pollution control bonds161,860 161,860 
Debt discount, issuance costs and other(39,297)(39,813)
Total long-term debt5,184,563 5,184,047 
Total capitalization10,326,477 10,234,835 
Current liabilities:
Accounts payable375,582 457,965 
Short-term debt340,000 336,600 
Accrued expenses:
Taxes136,758 102,775 
Salaries and wages44,260 68,726 
Interest65,707 53,834 
Unrealized loss on derivative instruments144,416 185,788 
Operating lease liabilities21,490 21,629 
Compliance obligation37,987 937 
Other92,803 67,653 
Total current liabilities1,259,003 1,295,907 
Other long-term and regulatory liabilities:
Deferred income taxes1,080,488 1,078,847 
Unrealized loss on derivative instruments32,321 38,049 
Purchased gas adjustment liability91,272 132,082 
Regulatory liabilities1,043,981 1,021,193 
Regulatory liabilities for deferred income tax756,690 761,621 
Operating lease liabilities176,231 180,754 
Finance lease liabilities98,761 99,512 
Compliance obligation120,278 168,879 
Other deferred credits728,808 760,088 
Total long-term and regulatory liabilities4,128,830 4,241,025 
Commitments and contingencies (Note 8)
Total capitalization and liabilities$15,714,310 $15,771,767 

The accompanying notes are an integral part of the financial statements.
12


PUGET SOUND ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY
(Dollars in Thousands)
(Unaudited)
Common Stock
Shares
Shares
SharesAmountRetained EarningsTotal Equity
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)
SharesAmountRetained EarningsTotal Equity
Balance at December 31, 202185,903,791$859 $3,485,105 $982,607 $(113,141)$4,355,430 
Net income (loss)— — — 288,081 — 288,081 
Common stock dividend paid— — — (13,896)— (13,896)
Other comprehensive income (loss)— — — — 3,685 3,685 
Balance at March 31, 202285,903,791$859 $3,485,105 $1,256,792 $(109,456)$4,633,300 
Balance at December 31, 2022
Balance at December 31, 2022
Balance at December 31, 2022Balance at December 31, 202285,903,791 $859 $3,535,105 $1,438,163 $(103,044)$4,871,083 
Net income (loss)Net income (loss)— — — 27,535 — 27,535 
Common stock dividend paidCommon stock dividend paid— — — (28,002)— (28,002)
Other comprehensive income (loss)Other comprehensive income (loss)— — — — 133 133 
Balance at March 31, 2023Balance at March 31, 202385,903,791$859 $3,535,105 $1,437,696 $(102,911)$4,870,749 
Balance at December 31, 2023
Balance at December 31, 2023
Balance at December 31, 2023
Net income (loss)
Common stock dividend paid
Other comprehensive income (loss)
Balance at March 31, 2024

The accompanying notes are an integral part of the consolidated financial statements.


13


PUGET SOUND ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Ended
March 31,
20232022
Three Months Ended
March 31,
Three Months Ended
March 31,
202420242023
Operating activities:Operating activities:
Net Income (loss)Net Income (loss)$27,535 $288,081 
Net Income (loss)
Net Income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortizationDepreciation and amortization187,043 163,704 
Conservation amortizationConservation amortization38,219 30,141 
Deferred income taxes and tax credits, netDeferred income taxes and tax credits, net(76,785)5,970 
Net unrealized (gain) loss on derivative instrumentsNet unrealized (gain) loss on derivative instruments192,123 (131,921)
AFUDC - equityAFUDC - equity(7,594)(6,971)
AFUDC - equity
AFUDC - equity
Other non-cash
Other non-cash
Other non-cashOther non-cash9,472 (328)
Regulatory assets and liabilitiesRegulatory assets and liabilities38,162 4,470 
Regulatory assets and liabilities
Regulatory assets and liabilities
Purchased gas adjustmentPurchased gas adjustment123,594 13,915 
GHG emission allowances
Other long term assets and liabilitiesOther long term assets and liabilities(16,498)(5,558)
Change in certain current assets and liabilities:Change in certain current assets and liabilities:
Accounts receivable and unbilled revenue
Accounts receivable and unbilled revenue
Accounts receivable and unbilled revenueAccounts receivable and unbilled revenue60,796 38,183 
Materials and suppliesMaterials and supplies(4,573)(7,077)
Fuel and natural gas inventoryFuel and natural gas inventory37,350 12,334 
Prepayments and otherPrepayments and other(130)(4,733)
Accounts payableAccounts payable(269,112)(61,531)
Accounts payable
Accounts payable
Taxes payableTaxes payable90,035 47,162 
OtherOther(5,765)11,300 
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities423,872 397,141 
Investing activities:Investing activities:
Construction expenditures - excluding equity AFUDCConstruction expenditures - excluding equity AFUDC(228,986)(232,868)
Construction expenditures - excluding equity AFUDC
Construction expenditures - excluding equity AFUDC
OtherOther9,113 (532)
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities(219,873)(233,400)
Financing activities:Financing activities:
Change in short-term debt, netChange in short-term debt, net(220,000)(70,250)
Change in short-term debt, net
Change in short-term debt, net
Dividends paidDividends paid(28,002)(13,896)
Other
Other
OtherOther6,564 5,576 
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(241,438)(78,570)
Net increase (decrease) in cash, cash equivalents, and restricted cashNet increase (decrease) in cash, cash equivalents, and restricted cash(37,439)85,171 
Cash, cash equivalents, and restricted cash at beginning of periodCash, cash equivalents, and restricted cash at beginning of period165,885 96,247 
Cash, cash equivalents, and restricted cash at end of periodCash, cash equivalents, and restricted cash at end of period$128,446 $181,418 
Supplemental cash flow information:Supplemental cash flow information:
Cash payments for interest (net of capitalized interest)Cash payments for interest (net of capitalized interest)$53,568 $51,357 
Cash payments for interest (net of capitalized interest)
Cash payments for interest (net of capitalized interest)
Non-cash financing and investing activities:Non-cash financing and investing activities:
Non-cash financing and investing activities:
Non-cash financing and investing activities:
Accounts payable for capital expenditures eliminated from cash flows
Accounts payable for capital expenditures eliminated from cash flows
Accounts payable for capital expenditures eliminated from cash flowsAccounts payable for capital expenditures eliminated from cash flows$71,823 $61,133 

The accompanying notes are an integral part of the financial statements.
14



COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1)Summary of Consolidation and Significant Accounting PolicyPolicies

Basis of Presentation
Puget Energy is an energy services holding company that owns PSE. PSE, which is a public utility incorporated in the state of Washington that furnishes electric and natural gas services in a territory covering approximately 6,000 square miles, primarily in the Puget Sound region. Puget Energy also has a wholly-owned non-regulated subsidiary, Puget LNG, LLC (Puget LNG), which has the sole purpose of owning developing and financingoperating the non-regulated activity of the Tacoma liquefied natural gas (LNG)LNG facility. PSE and Puget LNG are considered related parties with similar ownership by Puget Energy. Therefore, capital and operating costs that are incurred by PSE and allocated to Puget LNG are related party transactions by nature.
In 2009, Puget Holdings, LLC (Puget Holdings), owned by a consortium of long-term infrastructure investors, completed its merger with Puget Energy (the merger). As a result of the merger, all of Puget Energy’s common stock is indirectly owned by Puget Holdings. The acquisition of Puget Energy was accounted for in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)FASB ASC 805, “Business Combinations” (ASC 805), as of the date of the merger. ASC 805 requires the acquirer to recognize and measure identifiable assets acquired and liabilities assumed at fair value as of the merger date.
The consolidated financial statements of Puget Energy reflect the accounts of Puget Energy and its subsidiaries.  PSE’s consolidated financial statements include the accounts of PSE and its subsidiary.  Puget Energy and PSE are collectively referred to herein as “the Company”.  The consolidated financial statements are presented after elimination of all significant intercompany items and transactions.  PSE’s consolidated financial statements continue to be accounted for on a historical basis and do not include any ASC 805, “Business Combinations” (ASC 805) purchase accounting adjustments.  The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP)GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.

Emission Allowances
PSE is required to obtain emission allowances or offset credits for greenhouse gas (GHG) emissions associated with electricity it generates or imports into Washington State and natural gas supplied to customers in accordance with the cap-and- invest program included in the Climate Commitment Act (CCA). PSE records allocated and purchased emission allowances at cost, similar to an inventory method. PSE measures the compliance obligation at the weighted average cost of allowances held plus the fair value of additional allowances required to satisfy the obligation after adjustment for applicable no-cost allowances received. PSE includes the obligation in current liabilities and long-term liabilities on the Consolidated Balance Sheets based on the dates the allowances are to be surrendered. PSE balances costs and revenues associated with the cap-and-invest program through regulatory assets and liabilities.

Allowance for Credit Losses
The Company measures expected credit losses on trade receivables on a collective basis by receivable type, which include electric retail receivables, natural gas retail receivables, and electric wholesale receivables. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.
15


The following table presents the activity in the allowance for credit losses for accounts receivable for the three months ended March 31, 20232024 and 2022:2023:
Puget Energy and
Puget Sound Energy
Three Months
Ended March 31,
(Dollars in Thousands)20232022
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
Three Months
Ended March 31,
(Dollars in Thousands)20242023
Allowance for credit losses:
Beginning balance$38,211 $41,962 
Provision for credit loss expense13,680 9,482 
Receivables charged-off(8,628)(7,216)
Total ending allowance balance1
$43,263 $44,228 
_____________
1$11.121.9 million and $4.7$11.1 million of provision wererelated to balances of deferred as costcosts specific to COVID-19 for the three months endedas of March 31, 20232024 and 2022,2023, respectively.

15


Tacoma LNG Facility
OnIn February 1, 2022, the Tacoma LNG facility at the Port of Tacoma completed commissioning and commenced commercial operations. The Tacoma LNG facility provides peak-shaving services to PSE's natural gas customers, and provides LNG as fuel to transportation customers, mainly the marine market.
In December 2019, the Puget Sound Clean Air Agency (PSCAA) issued the air quality permit for the facility, and the Pollution Hearings Control Board of Washington State upheld the approval following extended litigation. This decision was appealed withThe Tacoma LNG facility provides peak-shaving services to PSE’s natural gas customers, and provides LNG as fuel to transportation customers, particularly in the Pierce County Superiormarine market at a lower cost due to the facility's scale. The State of Washington Division II Court of Appeals upheld the permit issuance and in February 2024 denied the Puyallup Tribe of Indians' motion to reconsider. On March 22, 2024, a coalition of environmental organizations lead by Advocates for a Cleaner Tacoma, petitioned the Washington Supreme Court to review portions of the Court of Appeals' decision. On March 25, 2024, the Puyallup Tribe of Indians and nonprofit law firm Earthjustice andalso petitioned the case was granted direct review by the Pierce CountyWashington Supreme Court of Appeals Division II where it is currently pending.for review.
Pursuant to an order by the Washington Commission, PSE will be allocated approximately 43.0% of common capital and operating costs, consistent with the regulated portion of the Tacoma LNG facility. The remaining 57.0% of common capital and operating costs of the Tacoma LNG facility will be allocated to Puget LNG. Per this allocation of costs, $244.9$239.1 million and $249.1$240.5 million of non-utility plant operating cost is reported in the Puget Energy "Other property and investments" line item as of March 31, 20232024 and December 31, 2022,2023, respectively. Additionally, $7.8$6.7 million and $2.2$7.8 million of operating costs are reported in the Puget Energy "Non-utility expense and other" financial statement line item for the three months ended March 31, 2023,2024, and March 31, 2022,2023, respectively. Further, $242.5$234.1 million and $245.7$235.6 million of natural gas plant operating cost related to PSE’s portion of the Tacoma LNG facility is reported in the PSE “Utility plant - Natural gas plant” financial statement line item as of March 31, 20232024 and December 31, 2022,2023, respectively, as PSE is a regulated entity.

Variable Interest Entities
In April 2017, PSE entered into a power purchase agreement (PPA) with Skookumchuck Wind Energy Project, LLC (Skookumchuck) pursuant to which Skookumchuck would develop a wind generation facility and sell bundled energy and associated attributes, namely renewable energy certificates (RECs), to PSE over a term of 20 years. Skookumchuck commenced commercial operation in November 2020. In May 2020, PSE entered into a PPA with Golden Hills Wind Farm, LLC (Golden Hills) pursuant to which Golden Hills would develop a wind generation facility and sell bundled energy and associated attributes, namely RECs, to PSE over a term of 20 years. On April 29, 2022, Golden Hills commenced commercial operations. In February 2021, PSE entered into a PPA with Clearwater Wind Project, LLC (Clearwater) in which Clearwater would develop a wind generation facility and sell energy and associated attributes to PSE over a term of 25 years. On November 8th,8, 2022, Clearwater commenced commercial operations. For each of the aforementioned PPAs, PSE has no equity investment in the generation facilities, but is the only customer of each facility. PSE has concluded that Skookumchuck, Golden Hills, and Clearwater represent variable interest entities (VIE) and that PSE is not the primary beneficiary of these VIEs since it does not control the commercial and operating activities of the facilities. Additionally, PSE does not have the obligation to absorb losses or receive benefits. As a result, PSE does not consolidate the VIEs.
Purchased energy of $29.7$26.3 million and $3.9$29.7 million were recognized in purchased electricity on the Company's consolidated statements of income for the three months ended March 31, 20232024 and March 31, 2022,2023, respectively. Additionally, $7.0$13.9 million and $3.9$14.6 million were included in accounts payable on the Company's balance sheet as of March 31, 20232024 and December 31, 2022,2023, respectively.

16For further information on the Company's accounting policies, see Part II, Item 8, Note 1, "Summary of Significant Accounting Policies" in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.


(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, itpractical expedients. The Company continues to assess othermonitor
16


whether any new agreements to determine ifare 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.

17


(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, 20232024 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:ElectricNatural Gas
Other1
Total
Retail
Residential$509,422 $293,297 $— $802,719 
Commercial310,585 125,887 — 436,472 
Industrial34,042 9,168 — 43,210 
Other6,618 — — 6,618 
Wholesale117,517 — — 117,517 
Transmission and transportation11,039 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:ElectricNatural Gas
Other1
Total
Retail
Residential$470,855 $350,024 $— $820,879 
Commercial291,489 152,237 — 443,726 
Industrial33,847 11,091 — 44,938 
Other5,501 — — 5,501 
Wholesale142,260 — — 142,260 
Transmission and transportation14,486 5,694 — 20,180 
Miscellaneous3,991 (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:ElectricNatural Gas
Other1
Total
Retail
Residential$416,260 $292,596 $— $708,856 
Commercial257,019 120,979 — 377,998 
Industrial30,073 8,085 — 38,158 
Other4,761 — — 4,761 
Wholesale13,147 — — 13,147 
Transmission and transportation11,222 5,446 — 16,668 
Miscellaneous1,150 309 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 
_____________
1Other includes $0.1 million of Puget LNG revenues recorded at Puget Energy.
2Total 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 Aprilno 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)20242025202620272028ThereafterTotal
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
18


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.
19


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, 2023December 31, 2022
March 31, 2024
March 31, 2024
March 31, 2024December 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 derivativesElectric portfolio derivatives*$135,643 $77,182 *$337,703 $87,120 
Natural gas derivatives (MMBtus)3
Natural gas derivatives (MMBtus)3
28554,232 49,928 322343,947 56,222 
Total derivative contractsTotal derivative contracts$189,875 $127,110 $681,650 $143,342 
CurrentCurrent$125,377 $112,634 $587,029 $124,976 
Long-termLong-term64,498 14,476 94,621 18,366 
Total derivative contractsTotal 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 227.9297.8 million British Thermal Units (MMBtu)MMBtu and purchased electricity of 3.95.5 million Megawatt hours (MWhs)MWhs at March 31, 2023,2024, and 234.9315.6 million MMBtus and 5.32.3 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.

19


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 PositionNet of Amounts Presented in the Statement of Financial PositionGross Amounts Not Offset in the Statement of Financial Position
At March 31, 2024At 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 PositionNet of Amounts Presented in the Statement of Financial PositionCommodity ContractsCash Collateral Received/PostedNet AmountCommodity ContractsCash Collateral Received/PostedNet Amount
Assets:Assets:
Energy derivative contractsEnergy derivative contracts$189,875 $— $189,875 $(78,345)$— $111,530 
Energy derivative contracts
Energy derivative contracts
Liabilities:Liabilities:
Energy derivative contractsEnergy 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 PositionNet of Amounts Presented in the Statement of Financial PositionGross Amounts Not Offset in the Statement of Financial Position
(Dollars in Thousands)Commodity ContractsCash Collateral Received/PostedNet 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 
20


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 PositionNet of Amounts Presented in the Statement of Financial PositionGross Amounts Not Offset in the Statement of Financial Position
(Dollars in Thousands)Commodity ContractsCash Collateral Received/PostedNet 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.    

20


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
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)(Dollars in Thousands)Classification20232022(Dollars in Thousands)Classification20242023
Gas for power derivatives:Gas for power derivatives:
UnrealizedUnrealizedUnrealized gain (loss) on derivative instruments, net$(104,646)$86,873 
Unrealized
Unrealized
RealizedRealizedElectric generation fuel88,267 27,091 
Power derivatives:Power derivatives:
UnrealizedUnrealizedUnrealized gain (loss) on derivative instruments, net(87,477)45,048 
Unrealized
Unrealized
RealizedRealizedPurchased electricity51,017 2,591 
Total gain (loss) recognized in income on derivativesTotal gain (loss) recognized in income on derivatives$(52,839)$161,603 

The Company is exposed to credit risk primarily through buying and selling electricity and natural gas to serve its customers. Credit risk is the potential loss resulting from a counterparty's non-performance under an agreement. The Company manages credit risk with policies and procedures for, among other things, counterparty credit analysis, exposure measurement, and exposure monitoring and mitigation.
The Company monitors counterparties for significant swings in credit default swap rates, credit rating changes by external rating agencies, ownership changes or financial distress. Where deemed appropriate, the Company may request collateral or other security from its counterparties to mitigate potential credit default losses. Criteria employed in this decision include, among other things, the perceived creditworthiness of the counterparty and the expected credit exposure.
It is possible that volatility in energy commodity prices could cause the Company to have material credit risk exposure with one or more counterparties. If such counterparties fail to perform their obligations under one or more agreements, the Company could suffer a material financial loss. However, as of March 31, 2023,2024, approximately 99.4%98.1% of the Company's energy portfolio exposure, excluding normal purchase normal sale (NPNS)NPNS transactions, is with counterparties that are rated investment grade by rating agencies and 0.6%1.9% are either rated below investment grade or not rated by rating agencies. The Company assesses credit risk internally for counterparties that are not rated by the major rating agencies.
The Company computes credit reserves at a master agreement level by counterparty. The Company considers external credit ratings and market factors in the determination of reserves, such as credit default swaps and bond spreads. The Company recognizes that external ratings may not always reflect how a market participant perceives a counterparty's risk of default. The Company uses both default factors published by Standard & Poor's and factors derived through analysis of market risk, which reflect the application of an industry standard recovery rate. The Company selects a default factor by counterparty at an aggregate master agreement level based on a weighted average default tenor for that counterparty's deals. The default tenor is
21


determined by weighting the fair value and contract tenors for all deals for each counterparty to derive an average value. The default factor used is dependent upon whether the counterparty is in a net asset or a net liability position after applying the master agreement levels.
The Company applies the counterparty's default factor to compute credit reserves for counterparties that are in a net asset position. The Company calculates a non-performance risk on its derivative liabilities by using its estimated incremental borrowing rate over the risk-free rate. Credit reserves are netted against the unrealized gain (loss) positions. The majority of the Company's derivative contracts are with financial institutions and other utilities operating within the Western Electricity Coordinating Council. PSE also transacts power futures contracts on the Intercontinental Exchange (ICE), and natural gas contracts on the ICE natural gas exchange (NGX) platform. Execution of contracts on ICE requires the daily posting of margin calls as collateral through a futures and clearing agent. As of March 31, 2023,2024, PSE had cash posted as collateral of $6.3$11.2 million related to contracts executed on the ICE platform. In August 2022,As a condition of transacting on the ICE NGX platform as well as participating in the Washington state carbon allowance auctions, PSE entered intomaintains a standby letter of credit agreement with TD Bank allowing standby letter of credit postings of up to $50.0 million as a condition of transacting on the ICE NGX platform.Bank. As of March 31, 2023,2024, PSE had no cash posted with ICE NGX, and $6.0$15.0 million was issued under the standby letter of credit agreement.agreement in support of natural gas and carbon allowance purchases. PSE did not trigger any collateral requirements with any of its counterparties nor were any of PSE's counterparties required to post collateral resulting from credit rating downgrades during the three months ended March 31, 2023.2024.
21


The following table presents the aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability position and the amount of additional collateral the Company could be required to post:
Puget Energy and
Puget Sound Energy
(Dollars in Thousands)At March 31, 2023At December 31, 2022
Fair Value1
PostedContingent
Fair Value1
PostedContingent
Contingent FeatureLiabilityCollateralCollateralLiabilityCollateralCollateral
Credit rating2
$1,878 $— $1,878 $3,157 $— $3,157 
Requested credit for adequate assurance28,717 — — 4,157 — — 
Forward value of contract3
976 6,284 N/A5,661 56,200 N/A
Total$31,571 $6,284 $1,878 $12,975 $56,200 $3,157 
Puget Energy and
Puget Sound Energy
(Dollars in Thousands)At March 31, 2024At December 31, 2023
Fair Value1
PostedContingent
Fair Value1
PostedContingent
Contingent FeatureLiabilityCollateralCollateralLiabilityCollateralCollateral
Credit rating2
$30,174 $— $30,174 $13,384 $— $13,384 
Requested credit for adequate assurance— — — 53,427 — — 
Forward value of contract3
8,231 11,232 N/A84 12,429 N/A
Total$38,405 $11,232 $30,174 $66,895 $12,429 $13,384 
_______________
1 Represents the derivative fair value of contracts with contingent features for counterparties in net derivative liability positions. Excludes NPNS, accounts
payable and accounts receivable.
2 Failure by PSE to maintain an investment grade credit rating from each of the major credit rating agencies provides counterparties a contractual right to
demand collateral.
3 Collateral requirements may vary based on changes in the forward value of underlying transactions relative to contractually defined collateral thresholds.


(5) Fair Value Measurements

ASC 820 established a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy categorizes the inputs into three levels with the highest priority given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority given to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Level 1 primarily consists of financial instruments such as exchange-traded derivatives and listed equities. Equity securities that are also classified as cash equivalents are considered Level 1 if there are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Instruments in this category include non-exchange-traded derivatives such as over-the-counter forwards and options.

Level 3 - Pricing inputs include significant inputs that have little or no observability as of the reporting date. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value.
22



Financial assets and liabilities measured at fair value are classified in their entirety in the appropriate fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy. The Company primarily determines fair value measurements classified as Level 2 or Level 3 using a combination of the income and market valuation approaches. The process of determining the fair values is the responsibility of the derivative accounting department, which reports to the Controller and Principal Accounting Officer. Inputs used to estimate the fair value of forwards, swaps and options include market-price curves, contract terms and prices, credit-risk adjustments, and discount factors. Additionally, for options, the Black-Scholes option valuation model and implied market volatility curves are used. Inputs used to estimate fair value in industry-standard models are categorized as Level 2 inputs as substantially all assumptions and inputs are observable in active markets throughout the full term of the instruments. On a daily basis, the Company obtains quoted forward prices for the electric and natural gas markets from an independent external pricing service.
The Company considers its electric and natural gas contracts as Level 2 derivative instruments as such contracts are commonly traded as over-the-counter forwards with indirectly observable price quotes. However, certain energy derivative instruments with maturity dates falling outside the range of observable price quotes or that are transacted at illiquid delivery
22


locations are classified as Level 3 in the fair value hierarchy. Management's assessment is based on the trading activity in real-time and forward electric and natural gas markets. Each quarter, the Company confirms the validity of pricing-service quoted prices used to value Level 2 commodity contracts with the actual prices of commodity contracts entered into during the most recent quarter. The Company’s environmental compliance obligation is categorized in Level 2 of the fair value hierarchy and is measured at fair value using a market approach based on quoted prices from an independent pricing service.

Assets and Liabilities with Estimated Fair Value
The carrying values of cash and cash equivalents, restricted cash, and short-term debt as reported on the balance sheet are reasonable estimates of their fair value due to the short-term nature of these instruments and are classified as Level 1 in the fair value hierarchy. The carrying value of other investments of $47.2$44.5 million and $55.0$44.6 million at March 31, 20232024 and December 31, 20222023 respectively, are included in "Other property and investments" on the balance sheet. These values are also reasonable estimates of their fair value and classified as Level 2 in the fair value hierarchy as they are valued based on market rates for similar transactions.
The fair value of the long-term notes was estimated using the discounted cash flow method with the U.S. Treasury yields and the Company's credit spreads as inputs, interpolating to the maturity date of each issue. The carrying values and estimated fair values were as follows:
Puget EnergyPuget EnergyMarch 31, 2023December 31, 2022Puget EnergyMarch 31, 2024December 31, 2023
(Dollars in Thousands)(Dollars in Thousands)LevelCarrying
Value
Fair
Value
Carrying
Value
Fair
Value
(Dollars in Thousands)LevelCarrying
Value
Fair
Value
Carrying
Value
Fair
Value
Liabilities:Liabilities:
Long-term debt (fixed-rate), net of discount1
Long-term debt (fixed-rate), net of discount1
2$6,632,116 $6,377,432 $6,629,073 $6,149,797 
Long-term debt (variable-rate)234,300 34,300 34,300 34,300 
Long-term debt (fixed-rate), net of discount1
Long-term debt (fixed-rate), net of discount1
Total liabilitiesTotal liabilities$6,666,416 $6,411,732 $6,663,373 $6,184,097 

Puget Sound EnergyMarch 31, 2023December 31, 2022
(Dollars in Thousands)LevelCarrying
Value
Fair
Value
Carrying
Value
Fair
Value
Liabilities:
Long-term debt (fixed-rate), net of discount2
2$4,787,241 $4,547,348 $4,786,765 $4,379,010 
Total liabilities$4,787,241 $4,547,348 $4,786,765 $4,379,010 

Puget Sound EnergyMarch 31, 2024December 31, 2023
(Dollars in Thousands)LevelCarrying
Value
Fair
Value
Carrying
Value
Fair
Value
Liabilities:
Long-term debt (fixed-rate), net of discount2
2$5,184,563 $4,852,243 $5,184,047 $5,007,483 
Total liabilities$5,184,563 $4,852,243 $5,184,047 $5,007,483 
_______________
1 The carrying value includes debt issuances costs of $21.1$20.5 million and $21.5$21.0 million for March 31, 20232024 and December 31, 2022,2023, respectively, which are not included in fair value.
2 The carrying value includes debt issuances costs of $21.0$20.9 million and $21.4$21.2 million for March 31, 20232024 and December 31, 2022,2023, respectively, which are not included in fair value.

23


Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents the Company's financial assets and liabilities by level, within the fair value hierarchy, that were accounted for at fair value on a recurring basis:
Puget Energy and
Puget Sound Energy
Puget Energy and
Puget Sound Energy
Puget Energy and
Puget Sound Energy
Puget Energy and
Puget Sound Energy
Fair Value
At March 31, 2023
Fair Value
At December 31, 2022
Fair Value
At March 31, 2024
Fair Value
At December 31, 2023
(Dollars in Thousands)(Dollars in Thousands)Level 2Level 3TotalLevel 2Level 3Total(Dollars in Thousands)Level 2Level 3TotalLevel 2Level 3Total
Assets:Assets:      Assets:  
Electric derivative instrumentsElectric derivative instruments$53,252 $82,391 $135,643 $218,610 $119,093 $337,703 
Natural gas derivative instrumentsNatural gas derivative instruments53,322 910 54,232 342,988 959 343,947 
Total assetsTotal assets$106,574 $83,301 $189,875 $561,598 $120,052 $681,650 
Liabilities:Liabilities:      Liabilities:  
Electric derivative instrumentsElectric derivative instruments$64,525 $12,657 $77,182 $84,105 $3,015 $87,120 
Natural gas derivative instrumentsNatural gas derivative instruments49,233 695 49,928 55,136 1,086 56,222 
Compliance obligationsCompliance obligations79,203 — 79,203 — — — 
Total liabilitiesTotal liabilities$192,961 $13,352 $206,313 $139,241 $4,101 $143,342 

The following tables presenttable presents the Company's reconciliation of the changes in the fair value of Level 3 derivatives in the fair
value hierarchy:
Puget Energy and
Puget Sound Energy
Three Months Ended March 31,
(Dollars in Thousands)20232022
Level 3 Roll-Forward Net Asset/(Liability)ElectricNatural GasTotalElectricNatural GasTotal
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 3217 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
Three Months Ended March 31,
(Dollars in Thousands)20242023
Level 3 Roll-Forward Net Asset/(Liability)ElectricNatural GasTotalElectricNatural GasTotal
Balance at beginning of period$27,262 $3,851 $31,113 $116,078 $(127)$115,951 
Changes during period:
Realized and unrealized energy derivatives:
Included in earnings1
(44,017)— (44,017)(18,766)— (18,766)
Included in regulatory assets / liabilities— 459 459 — (91)(91)
Settlements20,320 (913)19,407 (27,795)263 (27,532)
Transferred into Level 3— — — — — — 
Transferred out of Level 3— — — 217 170 387 
Balance at end of period$3,565 $3,397 $6,962 $69,734 $215 $69,949 
_______________
1 Income Statement locations: Unrealized gain (loss) on derivative instruments, net. Amounts include unrealized gains (losses) on derivatives still held in position as of the reporting date for electric derivatives of $(38.4) million and $(9.1) million and $38.6 million for the three months ended March 31, 2024 and 2023, and 2022, respectively.


Realized gains and losses on energy derivatives for Level 3 recurring items are included in energy costs in the Company's consolidated statements of income under purchased electricity, electric generation fuel or purchased natural gas when settled. Unrealized gains and losses on energy derivatives for Level 3 recurring items are included in net unrealized (gain) loss on derivative instruments in the Company's consolidated statements of income.
The Company does not use internally developed models to make adjustments to significant unobservable pricing inputs. The only significant unobservable input into the fair value measurement of the Company's Level 3 assets and liabilities is the forward price for electric and natural gas contracts. The weighted average price is calculated as the total market value divided by the total volume of the Company's Level 3 electric and natural gas commodity contracts, respectively, as of the reporting date.
24


The following table presents the forward price ranges for the Company's Level 3 commodity contracts as of March 31, 2023:2024:
Puget Energy and
Puget Sound Energy
Puget Energy and
Puget Sound Energy
Fair ValueRange
(Dollars in Thousands)(Dollars in Thousands)
Assets1
Liabilities1
Valuation TechniqueUnobservable InputLowHighWeighted Average
(Dollars in Thousands)
(Dollars in Thousands)
Assets1
Liabilities1
Valuation TechniqueUnobservable InputLowHighWeighted Average
ElectricElectric$82,391 $12,657 Discounted cash flowPower prices (per MWh)$50.46 $232.35 $118.08 
Natural gasNatural gas$910 $695 Discounted cash flowNatural gas prices (per MMBtu)$1.33 $7.58 $3.91 
_______________
1 The valuation techniques, unobservable inputs and ranges are the same for asset and liability positions.

The following table presents the forward price ranges for the Company's Level 3 commodity contracts as of December 31, 2022:2023:
Puget Energy and
Puget Sound Energy
Puget Energy and
Puget Sound Energy
Fair ValueRange
(Dollars in Thousands)(Dollars in Thousands)
Assets1
Liabilities1
Valuation TechniqueUnobservable InputLowHighWeighted Average
(Dollars in Thousands)
(Dollars in Thousands)
Assets1
Liabilities1
Valuation TechniqueUnobservable InputLowHighWeighted Average
ElectricElectric$119,093 $3,015 Discounted cash flowPower prices (per MWh)$55.79 $291.03 $131.51 
Natural gasNatural gas$959 $1,086 Discounted cash flowNatural gas prices (per MMBtu)$3.84 $7.00 $4.87 
__________________________
1 The valuation techniques, unobservable inputs and ranges are the same for asset and liability positions.

The significant unobservable inputs listed above would have a direct impact on the fair values of the above instruments if they were adjusted. Consequently, significant increases or decreases in the forward prices of electricity or natural gas in isolation would result in a significantly higher or lower fair value for Level 3 assets and liabilities. Generally, interrelationships exist between market prices of natural gas and power. As such, an increase in natural gas pricing would potentially have a similar impact on forward power markets. As of March 31, 2023,2024 and December 31, 2022,2023, a hypothetical 10% increase or decrease in market prices of natural gas and electricity would change the fair value of the Company's derivative portfolio, classified as Level 3 within the fair value hierarchy, by $29.0$29.9 million and $37.6$16.9 million, respectively.

Long-Lived Assets Measured at Fair Value on a Nonrecurring Basis
Puget Energy records the fair value of its intangible assets in accordance with ASC 360, “Property, Plant, and Equipment,” (ASC 360). The fair value assigned to the power contracts was determined using an income approach comparing the contract rate to the market rate for power over the remaining period of the contracts incorporating non-performance risk. Management also incorporated certain assumptions related to quantities and market presentation that it believes market participants would make in the valuation. The fair value of the power contracts is amortized as the contracts settle.
ASC 360 requires long-lived assets to be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. One such triggering event is a significant decrease in the forward market prices of power.
As of March 31, 2023,2024, Puget Energy completed valuation and impairment testing of its power purchase contracts classified as intangible assets and determined that no impairment was needed. These intangible assets exist as a result of the merger in 2009, at which time the consolidated assets and liabilities were revalued in accordance with ASC 805, "Business Combinations."

(6) Retirement Benefits

PSE has a defined benefit pension plan (Qualified Pension Benefits) covering a substantial majority of PSE employees. For employees hired prior to 2014, pension benefits earned are a function of age, salary, years of service and, in the case of
25


employees in the cash balance formula plan, the applicable annual interest crediting rates. Effective January 1, 2014, all new
25


UA represented employees hired or rehired receive annual pay credits of 4.0% of eligible pay each year in the cash balance formula of the defined pension plan. Effective January 1, 2014 for non-represented employees, and December 12, 2014 for employees represented by the IBEW, newly hired or rehired employees receive annual employer contributions of 4.0% of eligible pay each year into the cash balance formula of the defined benefit pension or 401k plan account. PSE also has a non-qualified Supplemental Executive Retirement Plan (SERP)SERP for certain key senior management employees that closed to new participants in 2019. Effective 2019, PSE has an officer restoration benefit for new officers who join PSE or are promoted, such that company contributions under PSE’s applicable tax-qualified plan, which otherwise would have been credited if not for the IRS limitations, are credited at 4.0% of earnings to an account with the Deferred Compensation Plan.
In addition to providing pension benefits, PSE provides legacy group health care and life insurance benefits (Plan)(Other Benefits) for certain retired employees. TheseThe group health care benefit is provided via a Retiree Health Reimbursement Account (HRA) Plan effective January 1, 2020. The life insurance benefits are provided principally through an insurance company. The insurance premiums, paid primarily by retirees, are based on the benefits provided during the prior year.
Puget Energy's retirement plans were remeasured as a result of the merger in 2009, which represents the difference between Puget Energy and PSE's retirement plans. The components of service cost are included within utility operations and maintenance for PSE and within non-utility expense and other for Puget Energy while all non-service cost components are included in other income.
For further information, see Note 13, "Retirement Benefits" in the Combined Notes to Consolidated Financial Statements included in Item 8 of the Company's Form 10-K for the period ended December 31, 2022.2023.
The following tables summarize the Company’s net periodic benefit cost for the three months ended March 31, 20232024 and 2022:2023:
Puget EnergyPuget EnergyQualified
Pension Benefits
SERP
Pension Benefits
Other
Benefits
Puget EnergyQualified
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)202320222023202220232022(Dollars in Thousands)202420232024202320242023
Components of net periodic benefit cost:Components of net periodic benefit cost:
Service cost
Service cost
Service costService cost$4,632 $6,797 $71 $139 $47 $55 
Interest costInterest cost7,929 6,087 424 313 115 81 
Expected return on plan assetsExpected return on plan assets(12,652)(12,777)— — (79)(99)
Amortization of prior service costAmortization of prior service cost— — 73 72 
Amortization of net loss (gain)Amortization of net loss (gain)(862)1,628 — 618 (51)(4)
Net periodic benefit costNet periodic benefit cost$(953)$1,735 $568 $1,142 $39 $39 

Puget Sound EnergyPuget Sound EnergyQualified
Pension Benefits
SERP
Pension Benefits
Other
Benefits
Puget Sound EnergyQualified
Pension Benefits
SERP
Pension Benefits
Other
Benefits
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(Dollars in Thousands)(Dollars in Thousands)202320222023202220232022(Dollars in Thousands)202420232024202320242023
Components of net periodic benefit cost:Components of net periodic benefit cost:
Service cost
Service cost
Service costService cost$4,632 $6,797 $71 $139 $47 $55 
Interest costInterest cost7,929 6,087 424 313 115 81 
Expected return on plan assetsExpected return on plan assets(12,652)(12,777)— — (79)(99)
Amortization of prior service costAmortization of prior service cost— — 73 72 
Amortization of net loss (gain)Amortization of net loss (gain)— 3,806 22 663 (54)(6)
Net periodic benefit costNet periodic benefit cost$(91)$3,913 $590 $1,187 $36 $37 


26


The following table summarizes the Company’s change in benefit obligation for the periods ended March 31, 20232024 and December 31, 2022:2023:
Puget Energy and
Puget Sound Energy
Puget Energy and
Puget Sound Energy
Qualified
Pension Benefits
SERP
Pension Benefits
Other
Benefits
Puget Energy and
Puget Sound Energy
Qualified
Pension Benefits
SERP
Pension Benefits
Other
Benefits
Three Months EndedYear EndedThree Months EndedYear EndedThree Months EndedYear Ended
Three Months EndedThree Months EndedYear EndedThree Months EndedYear EndedThree Months EndedYear Ended
(Dollars in Thousands)(Dollars in Thousands)March 31,
2023
December 31,
2022
March 31,
2023
December 31,
2022
March 31,
2023
December 31,
2022
(Dollars in Thousands)March 31,
2024
December 31,
2023
March 31,
2024
December 31,
2023
March 31,
2024
December 31,
2023
Change in benefit obligation:Change in benefit obligation:
Benefit obligation at beginning of period
Benefit obligation at beginning of period
Benefit obligation at beginning of periodBenefit obligation at beginning of period$589,278$834,960$32,046$43,155$9,015$11,654$609,103$589,278$26,824$32,046$8,597$9,015
AmendmentsAmendments38Amendments78
Service costService cost4,63226,3517155747217Service cost4,52418,53014350184
Interest costInterest cost7,92924,2634241,253115311Interest cost7,78632,3753421,589104439
Curtailment loss / (gain)Curtailment loss / (gain)(2,772)
Actuarial loss (gain)Actuarial loss (gain)(215,005)(5,260)(2,397)Actuarial loss (gain)8,469(661)(52)
Benefits paidBenefits paid(11,625)(80,226)(485)(7,659)(438)(808)Benefits paid(10,874)(38,258)(500)(3,521)(210)(1,067)
Administrative Expense(1,065)
Administrative expense
Administrative expense
Administrative expense(1,291)
Benefit obligation at end of periodBenefit obligation at end of period$590,214$589,278$32,056$32,046$8,739$9,015Benefit obligation at end of period$610,539$609,103$26,666$26,824$8,541$8,597

The aggregate expected contributions by the Company to fund the qualified pension plan, SERP and the other postretirement plans for the year ending December 31, 2023,2024, are expected to be at least $18.0 million, $3.5$2.0 million and $0.3$0.2 million, respectively. The Company contributed $0.5 million to fund the SERP during each ofboth the three months ended March 31, 20232024 and the three months ended March 31, 2022.2023. The Company contributed an immaterial amount to fund the other postretirement plans.

(7) Regulation and Rates

General Rate Case
PSE filed a GRC which includes a two year MYRP with the Washington Commission on February 15, 2024, requesting an overall increase in electric and natural gas rates of 6.7% and 19.0% respectively in rate year one (expected to approximate calendar year 2025) and 8.5% and 2.1%, respectively in rate year two (expected to approximate calendar year 2026). PSE requested a return on equity of 9.95% for the first rate year beginning in 2025 and 10.5% for the second rate year beginning in 2026. PSE requested an overall rate of return of 7.65% in rate year one and 7.99% in rate year two. The filing requests recovery of forecasted plant additions through 2024 as required by Revised Code of Washington (RCW) 80.28.425 as well as forecasted plant additions through 2026, the final year of the MYRP. The procedural calendar for the adjudication of the case is set, with evidentiary hearing occurring on November 4th and 5th of 2024. The Company estimates the approved rates from this proceeding will become effective by statute approximately 11 months after filings.
On December 22, 2022, the Washington Commission issued an order on PSE’s 2022 general rate case (GRC),GRC, which was filed on January 31, 2022 that approved a weighted cost of capital of 7.16%, or 6.62% after-tax, a capital structure of 49.0% in common equity in 2023 and 2024, and a return on equity of 9.4%. On January 6, 2023, the Washington Commission approved PSE’s natural gas rates in its compliance filing with an overall net revenue change of $70.8 million or 6.4% in 2023 and $19.5 million or 1.7% in 2024, with an effective date of January 7, 2023. On January 10, 2023, the Washington Commission approved PSE’s electric rates in its compliance filing with an overall net revenue change of $247.0 million or 10.8% in 2023 and $33.1 million or 1.3% in 2024 with an effective date of January 11, 2023. Per the 2022 GRC Final Order in Docket No. UE-220066, power cost only rate case (PCORC) rates were set to zero as of January 11, 2023 and PSE agreed not to file a PCORC during 2023 and 2024, the period covered by the two-year rate plan agreed to in the GRC settlement. Per the 2022 GRC Final Order in Docket No. UG-220067, PSE was authorized to seek recovery of the costs related to the Tacoma LNG Facility concurrent with its 2023 PGA filing.
PriorOn April 24, 2024, the Washington Commission issued Final Order 07 under Docket No. UG-230393. The order determined that PSE acted prudently in developing and constructing the Tacoma LNG Facility after the initial decision to build
27


on September 2016. Further, there were two main outcomes that resulted from the order. First, the Washington Commission did not authorize recovery of the portion of the Company’s deferred return on its investment in the Tacoma LNG Facility that was recorded between February 1, 2022, the date the facility was placed into service, and January 11, 2023, the date PSE’s 2022 GRC rates werewent into effect. Second, the Washington Commission directed PSE to increase the allocation of distribution pipeline investment to Puget LNG. The Washington Commission determined that the allocation should be tied to the relative flow of natural gas across these facilities, resulting in a higher allocation to Puget LNG than was originally filed. Neither the deferred return disallowed, nor the increased allocation of distribution pipeline, are expected to result in material impact on the Company’s results of operations or financial condition. However, PSE is required to submit a compliance filing, which is 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. Washington Commission's approval before the outcome is finalized.
For further information, see Note 4, "Regulation and Rates" in the Combined Notes to Consolidated Financial Statements included in Item 8 of the Company's Form 10-K for the period ended December 31, 2022.2023.

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)CCA codified in law within Revised Code of Washington (RCW)RCW 70A.65. On February 28, 2023, in Order 01 underin Docket No. UE-220974 and UG-220975, the Washington Commission granted PSE approval to defer the cost of carbonemission allowances to comply with the CCA and the proceeds from no-cost allowances consigned to auction beginning January 1, 2023. This accounting treatment is necessaryOn August 3, 2023, the Washington Commission approved PSE's request for CCA rates in orderDocket No. UG-230470, subject to refund, effective October 1, 2023, to recover the estimated ongoing allowance costs and proportionate pass back of credits to customers from estimated auction proceeds during the period of August 2023 through December 2023. On October 26, 2023, the Washington Commission approved PSE's request for CCA rates in Docket No. UG-230756, subject to refund, effective November 1, 2023, to recover the estimated ongoing allowance costs and proportionate pass back of credit to customers from estimated auction proceeds during the period of January 2023 through September 2023. On November 22, 2023, PSE filed proposed revisions to its natural gas rates to incorporate allowance costs and auction proceeds in Docket UG-230968. In the filing PSE sought to update rates pertaining to amounts deferred from January 2023 through September 2023 and to add new language to the tariff that would enable PSE to defer and seekfund decarbonization projects using a portion of the projected no cost allowances revenues. The request, as revised by PSE on December 19, 2023, represented a revenue increase of $29.1 million. The Washington Commission suspended the tariff sheets but allowed the rates to go into effect on an interim basis, subject to refund, on January 1, 2024. The Washington Commission set for hearing the issue of risk sharing of CCA compliance costs. A hearing is set for October 9, 2024. The recovery of CCAongoing allowance costs that are not currently includedand pass back of credits is consistent with the approved accounting petitions in rates.Dockets No. UG-220975 and UG-230471. As of March 31,
27


2023, 2024, PSE deferred $83.3 million and $11.3$25.9 million of CCA compliance costs for natural gas and electric liabilities, respectively.liabilities. Additionally, PSE will consign for auction at least the minimum amount of no-cost emission allowances allocated for natural gas operations in compliance with the CCA, the proceeds of which will be used for the benefit of natural gas customers, as determined by the Washington Commission. PSE will not record a regulatory liability to defer the proceeds until consigned allowances are sold at auction. As of March 31, 2024, PSE recorded a regulatory liability of $25.9 million related to the proceeds from the sale of consigned GHG emission allowances to be refunded to customers.
WDOE provided an initial allocation of no-cost allowances to electric utilities on April 24, 2023. However, qualifying electric utilities were allowed to submit revised emissions forecasts approved by the Washington Commission to WDOE. PSE filed its revised forecast of 2023 emission in Docket No. UE 220797, which was approved by the Washington Commission on July 27, 2023, and approved by the WDOE on September 27, 2023. Accordingly, the Company's compliance obligation as of March 31, 2024 reflects the revised allowance allocation in addition to allowances received based on PSE's forecast of 2024 emissions.
Following the September 27, 2023 WDOE decision, PSE's no-cost allowance allocation will be set until the fourth quarter of 2024 when there is an opportunity to request a "true-up" of no-cost allowances under the aforementioned adjustment mechanism. However, as of March 31, 2024, due to the uncertainty around implementation of the adjustment mechanism PSE did not adjust the CCA electric compliance obligation anticipating an adjustment to no cost allowances to reported 2024 electric GHG emissions and does not plan to make such adjustment until a formal true-up allocation has been granted by the WDOE.

Revenue Decoupling Adjustment Mechanism
On June 1, 2021, the Washington Commission approved the multi-party settlement agreement which was filed within PSE’s PCORC filing. As part of this settlement agreement, the electric annual fixed power cost allowed revenue was updated to reflect changes in the approved revenue requirement and took effect on July 1, 2021.
On September 28, 2021, the Washington Commission approved the 2019 GRC filing. As part of this filing, the annual electric and gas delivery cost allowed revenue was updated to reflect changes in the approved revenue requirement. The changes took effect on October 1, 2021.
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 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. Based on the analyses, no reserve adjustment was recorded as of March 31, 2023 and 2022.2024 or 2023.

28


Power Cost Adjustment Mechanism
PSE currently has a power cost adjustment (PCA)PCA mechanism that provides for 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, theThe following graduated scale is used in the PCA mechanism:

Company’s ShareCustomers' Share
Annual Power Cost VariabilityOverUnderOverUnder
Over or under collected by up to $17 million100 %100 %— %— %
Over or under collected by between $17 million - $40 million35 50 

65 50 
Over or under collected beyond $40 + million10 10 

90 90 

Company’s ShareCustomers' Share
Annual Power Cost VariabilityOverUnderOverUnder
Over or under collected up to $17 million100 %100 %— %— %
Over or under collected between $17 million - $40 million35 50 

65 50 
Over or under collected beyond $40 million10 10 

90 90 

For the three months ended March 31, 2023,2024, in its PCA mechanism, PSE overunder recovered its allowable costs by $12.9$110.7 million of which zero$75.2 million was apportioned to customers and $1.1$0.4 million of interest was accrued on the deferred customer balance. This compares to an underover recovery of allowable costs of $10.6$12.9 million for the three months ended March 31, 2022,2023, of which zero was apportioned to customers and accrued $0.3$1.1 million of interest on the total deferred customer balance.

Power Cost Adjustment Clause
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$39.0 million of the under-recovered amount, and customers were responsible for the remaining $74.6$71.1 million, or $76.1$76.4 million including interest.interest and adjusted for revenue sensitive items. On April 28, 2023, PSE filed the 2022 PCA report in Docket No. UE-230313 that proposed a recovery of the deferred balance, which included a revenue requirement increase of 0.9% in overall bill for all customers, with the Washington Commission andrates proposed to recover the 2022 deferred balancego into effect from December 1, 2023 through December 31, 2024.
On September 29, 2023, PSE filed its variable power cost rates update as part of the 2022 GRC Order requirement in Docket No. UE-220066. The filing was approved in part on December 22, 2023, with updated rates effective January 1, 2024.
PSE exceeded the $20.0 million cumulative deferral balance in its PCA mechanism in 2021.2023. During 2021,2023, actual power costs were higherlower than baseline power costs, thereby creating an under-recoveryover-recovery of $68.0$51.1 million. Under the terms of the PCA’s sharing mechanism for under-recovered powerover-recovered costs, PSE absorbed $31.3 millionPSE’s share of the under-recovered amount,over-recovery was $26.2 million and
28


customers were responsible fordue the remaining $36.7$24.9 million, or $38.4$22.2 million including interest. interest and adjusted for revenue sensitive items.
On October 27, 2022,April 30, 2024, PSE filed the Washington Commission approved PSE's 20212023 PCA compliance report, in Docket No. 240288, that proposed to pass back 2023 deferred balances from October 1, 2024 to December 31, 2025, resulting in credits to customers of $22.2 million. Additionally, PSE requested to recover the forecasted 2024 deferred balance for the 2021 PCA period by keeping the current rates and allowing recoveryof $98.2 million from JanuaryOctober 1, 2023 through November 30, 2023.2024 to December 31, 2025.

Purchased Gas Adjustment Mechanism
OnIn October 28, 2021, the Washington Commission approved PSE's request for PGA rates in Docket 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. Those annual 2021 PGA rate increases will be set 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.
OnIn November 15, 2022, the 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 below. The 2022 GRC order requiresrequired 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.
On October 26, 2023, the Washington Commission approved PSE's request for PGA rates in Docket No. UG-230769, effective November 1, 2023. As part of that filing, PSE requested an annual revenue decrease of $309.4 million, where PGA rates, under Schedule 101, decrease annual revenue by $93.9 million, and the tracker rates under Schedule 106, decrease annual revenue by $215.5 million. The annual 2023 PGA rate decreases include the aforementioned counterparty settlement pass back of $28.1 million under Supplemental Schedule 106B.
29


The following table presents the PGA mechanism balances and activity atfor the three months ended March 31, 20232024 and the twelve months ended December 31, 2022:
Puget Energy and
Puget Sound Energy
(Dollars in Thousands)At March 31,At December 31,
PGA (liability)/receivable balance and activity20232022
PGA (liability)/receivable beginning balance$(3,536)$57,935 
Actual natural gas costs138,178 457,950 
Allowed PGA recovery(234,372)(496,879)
Interest(348)1,674 
Refund/interest from counterparty settlement(2,836)(24,216)
PGA (liability)/receivable ending balance$(102,914)$(3,536)
2023:
Puget Energy and
Puget Sound Energy
(Dollars in Thousands)At March 31,At December 31,
20242023
PGA (liability)/receivable beginning balance$(132,082)$(3,536)
Actual natural gas costs165,419 404,897 
Allowed PGA recovery(122,429)(521,882)
Interest(2,180)(7,639)
Refund/interest from counterparty settlement— (3,922)
PGA (liability)/receivable ending balance$(91,272)$(132,082)

Storm Loss Deferral Mechanism
The Washington Commission has defined deferrable weather-related events and provided that costs in excess of the annual cost threshold may be deferred for qualifying damage costs that meet the modified Institute of Electrical and Electronics Engineers outage criteria for system average interruption duration index. For the three months ended March 31, 2023,2024, PSE incurred $6.1$9.7 million in weather-related electric transmission and distribution system restoration costs, related to 2023 and 2022 storms,none of which the companyCompany deferred zero and $2.3 million as regulatory assets related to storms that occurred in 20232024 and 2022, respectively.2023. This compares to $2.2$6.1 million incurred in weather-related electric transmission and distribution system restoration costs for the three months ended March 31, 2022,2023, of which the Company deferred zero and $0.1$2.3 million as regulatory assets related to storms that occurred in 20222023 and 2021,2022, respectively. Under the 2017 GRC Order, the storm loss deferral mechanism approved the following: (i) the cumulative annual cost threshold for deferral of storms under the mechanism at $10.0 million; and (ii) qualifying events where the total qualifying cost is less than $0.5 million will not qualify for deferral and these costs will also not count toward the $10.0 million annual cost threshold.

(8) Commitments and Contingencies

Legal Matters
Washington Climate Commitment Act
In 2021, the Washington Legislature adopted the CCA, which establishes a GHG emissions cap-and-invest program that capsrequires covered entities, including electric and natural 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 capthat declines annually through 2050. The Washington Department of Ecology (WDOE)WDOE published final regulations to implement the program on September 29, 2022,
29


which became effective on October 30, 2022. WDOE also indicated that theythere will havebe subsequent rulemakings that will buildbuilding off initial rulemaking as program implementation gets underwayproceeds and Washington carbon goal progress with Washington State carbon goals areis evaluated. One
Given the lack of explicit rulemaking or precedent around the program, there is wide estimation uncertainty surrounding the Company's ability to estimate its compliance obligation. For instance, one component of the CCA rules stipulates that GHG emissions associated with exported electricity are covered emissions and require an allowance offset to the WDOE shall provide electric utilities, such as PSE, with no-cost allowances based on the cost burdenextent these exports are not sourced from a non-emitting resource. Another component of the CCA rules stipulates GHG emissions associated with imported electricity are covered emissions and require an allowance offset for the first jurisdictional deliverer serving as the electricity importer for that electricity. Per RCW 70A.65.010(42)(d), imported electricity does not include electricity imports of unspecified electricity that are netted by exports of unspecified electricity to any jurisdiction not covered by a linked program by the same entity within the same hour. Under this definition, hourly power transmission data is required to electric customers. As of the date of this report, Management’s interpretation of the methodology in determining the no-cost allowance amount provided to electric utilities differs from the WDOE’s.determine PSE’s net imported electricity compliance obligation. Although the Company is actively engaged in discussions withdetermining the hourly net generation, imports and exports, the methodology for netting these components by hour that will be required by the WDOE to calculate the compliance obligation is uncertain, and other stakeholders with respectPSE expects further rulemaking and agency interpretations to clarify this uncertainty in future periods. Due to the rulemaking process and believes that further changes in the interpretation of methodologies could be forthcoming,estimation uncertainty as of the date of this disclosure, it is reasonably possible that the Company did not accrue sufficient compliance obligationcompany considered a range of outcomes and recorded its best estimate based upon receiving less no-cost allowances from the WDOE due to the difference inon its interpretation of the methodology. Theproportion of exported electricity that is sourced from non-emitting resources and the netting of unspecified electricity imports and exports on an hourly basis.
As of March 31, 2024, the Company estimatesestimated the reasonablyrange of possible loss is upoutcomes to $45.7be between $38.1 million dependingand $130.9 million, and recorded its best estimate of $55.0 million based on whether additional no-cost allowancesthe Company's interpretation of the current rulemaking. As existing uncertainties are received. Anyresolved in future periods, any change in compliance costs as a result of such estimated lossesadditional
30


liabilities would increase the electricbe deferred CCA compliance costsunder ASC 980 as a regulatory asset consistent with Docket No. UE-220974.
On February 28, 2023,UE-220974, as these amounts will be recoverable from customers 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 treatmentfuture utility rates. As a result, there is necessary in order for PSE to defer and seek recovery of CCA costs that are not currently included in rates.
Additional risks associated with CCA compliance include: the evolving nature of the CCA rulemaking as indicated by WDOE, market uncertainty based on rule interpretation during implementation, unresolved recovery methodology for CCA’sno current impact on energy costs, company costs, customer rate impacts, and cash, liquidity and credit volatility. Such risks associated with the CCA are evaluated by Management for potential impacts to the estimated liability to comply with the program as well as the likelihood that may make a loss contingency both probable and reasonably estimable. Management’s assessment to determine whether a loss is probable or reasonably possible and to whether a loss or rangeCompany's consolidated statements of losses is estimable often involves judgement.income.

Colstrip
PSE has a 50% ownership interest in Colstrip Units 1 and 2 and a 25% interest in each of Colstrip Units 3 and 4, which are coal-fired generating units located in Colstrip, Montana. PSE has accelerated the depreciation of Colstrip Units 3 and 4 to December 31, 2025 as part of the 2019 GRC. The 2017 GRC repurposed PTCs and hydro-related treasury grants to recover unrecovered plant costs and to fund and recover decommissioning and remediation costs for Colstrip Units 1 through 4. On September 2,Additional costs beyond those covered by PTCs and hydro-related treasury grants are being recovered through a separate Colstrip tariff as part of the 2022 GRC. In 2022, PSE and Talen Energy reachedsigned an agreement to transfer PSE's ownership interest in Colstrip Units 3 and 4 to Talen Energy on December 31, 2025. However, Talen emerged from a Chapter 11 bankruptcy in May 2023 without approval of the 2022 transfer agreement, which the parties agree makes the transfer agreement unenforceable. PSE and Talen have agreed to continue discussions about the status of PSE’s ownership stake. Management evaluated Colstrip Units 3 and 4 and determined that the applicable held for sale and abandonment accounting criteria were not met as of March 31, 2023 and December 31, 2022.2023. As such, Colstrip Units 3 and 4 are classified as electric utility plant on the Company's balance sheet as of March 31, 20232024 and December 31, 2022.
Consistent with a June 2019 announcement, Talen permanently shut down Units 1 and 2 at the end of 2019 due to operational losses associated with the Units. Colstrip Units 1 and 2 were retired effective December 31, 2019. The Washington Clean Energy Transformation Act requires the Washington Commission to provide recovery of the investment, decommissioning, and remediation costs associated with the facilities that are not recovered through the repurposed PTCs and hydro-related treasury grants. The full scope of decommissioning activities and costs may vary from the estimates that are available at this time.
On May 19, 2021, PSE along with the Colstrip owners, Avista Corporation, PacifiCorp and Portland General Electric Company, filed a lawsuit against the Montana Attorney General challenging the constitutionality of Montana Senate Bill 266. On September 28, 2022, the magistrate judge in the District Court proceeding issued a recommendation to the presiding U.S. District Court Judge that a permanent injunction against enforcement of Senate Bill 266 be granted. In October 2022, the U.S. District Court Judge accepted in full the magistrate judge's recommendation for a permanent injunction against enforcement of Senate Bill 266. The Court entered judgment and a permanent injunction in favor of PSE and the Colstrip owners on November 15, 2022. No party filed a notice of appeal.2023.

Other Commitments and Contingencies
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, 2022.2023.

30


(9)  Leases

As of March 31, 2023,2024, there have been no material changes regarding the Company's leases. For further information, see Part II, Item 8, Note 9, "Leases" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.2023.

Leases Not Yet Commenced
On September 20, 2023, PSE entered into a tolling agreement to purchase the energy and capacity associated with a 132.5 MW facility. The tolling agreement represents a lease to PSE, and is expected to commence in October 2025. PSE expects the future minimum lease payments to be $91.0 million over the five year period beginning in October 2025.
On December 12, 2023, PSE entered into a lease for an operations training facility located in Puyallup, Washington. The lease is expected to commence in 2025 and PSE expects the future minimum lease payments to be $116.0 million over the 20 year term. Construction of the facility will be managed and contracted by the lessor, however, PSE will have involvement in the design of the facility.

(10) Other

Long-Term Debt
On March 17, 2022, Puget Energy issued $450.0 millionDuring first quarter 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 from2024, 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 in July 2022.
On April 28, 2022, Puget Energy redeemed the $450.0 million 5.625% senior secured notes due July 2022 and paidCompany did not have any new long term debt 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.activities.

Short-Term Debt and Credit Facilities
As of March 31, 2023, $137.02024, $302.0 million was drawn and outstanding under Puget Energy's facility, which was classified as short-term debt on Puget Energy's consolidated balance sheet.
As of March 31, 2024, there was $340.0 million outstanding under the commercial paper program at PSE. For further information, see Part II, Item 8, Note 8, "Liquidity FacilitiesPSE and Other Financing Arrangements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Credit Facilities
On May 16, 2022, Puget Energy entered into an $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 Secured Overnight Financing Rate (SOFR), as the LIBOR is being discontinued in 2023. The proceeds of the Puget Energy credit facility are to be used for general corporate purposes. The maturity date of the credit facility is May 14, 2027. As of March 31, 2023, $135.0 million was drawn and outstanding under the facility, of which $34.3 million was classified as long-term debt and $100.7 million was classified as short-term debt.
On May 16, 2022, PSE entered into an $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 PSE credit facility are to be used for general corporate purposes. The maturity date of the credit facility is May 14, 2027. As of March 31, 2023, no amount was drawn under PSE's credit facility.
On September 26, 2022, Puget Energy borrowed $50.0 million on Outside of the credit facility, and contributedPSE maintains a standby letter of credit with TD Bank allowing for standby letter of credit postings of up to $150.0 million as a condition of transacting on the proceeds toICE NGX platform as well as participating in the Washington state carbon allowance auctions. As of March 31, 2024, $15.0 million was issued under
31


a standby letter of credit with TD Bank in support of natural gas purchases on the NGX in Canada. Additionally, PSE as an equity contribution. The equity proceeds will be used for general corporate purposes.had a $2.1 million letter of credit in support of a long-term transmission contract.
For further information on the Company's long-term and short-term debt, credit facilities and other financing arrangements, 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.

31
Beaver Creek Wind Project
Beaver Creek is a utility-scale wind project located in Stillwater County, Montana, with an expected nameplate capacity of 248 MW that is expected to commence commercial operations in 2025. On September 15, 2023, PSE executed a membership interest purchase agreement with Caithness Beaver Creek, LLC for a 100% ownership interest in Caithness Montana Wind, LLC, which closed on December 1, 2023. Total consideration is expected to be $44.6 million of which $23.8 million has been paid as of March 31, 2024 and the remaining balance is expected to be paid in the first quarter of 2025. On December 1, 2023, PSE entered into a turbine supply agreement with GE Renewables North America, LLC to purchase 88 wind turbines. Total consideration is expected to be $266.9 million of which $218.8 million has been paid as of March 31, 2024 and the remaining balance is expected to paid throughout 2024 and the first quarter of 2025 as turbines are delivered and the project is completed. On January 26, 2024, PSE entered into a balance of plant agreement to complete the design and construction of the project. Total consideration is expected to be approximately $129.4 million. As of March 31, 2024, $337.1 million was recorded to construction work in progress in conjunction with the Beaver Creek wind project.


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, 20232024 compared to 2022.2023. For discussion related to the results of operations and changes in financial condition for the period ended March 31, 20222023 compared to 20212022 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 financingoperating 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
32


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.

32


Factors and Trends Affecting PSE's Performance
PSE’s ongoing regulatory requirements and operational needs necessitatednecessitate the investment of substantial capital in 20232024 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 serviceoperational 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 securityCybersecurity 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,
33


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 20232024 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). TheCommission. Prior to 2023, the Washington Commission has traditionally required thesethat 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 havedid not providedprovide sufficient revenue to cover general cost increases over time due to the combined effects of
33


regulatory lag and attrition. Absent a resolution for the impact of lag and attrition,Therefore, the Company will need towould seek rate relief through a rate casecases with the Washington Commission. The Washington Commission, determineswhich would determine whether the Company's expenses and capital investments arewere reasonable and prudent for the provision of cost-effective, reliable and safe electric and natural gas service. If the Washington Commission determinesdetermined that a capital investment iswas not reasonable or prudent, the costs (including return on any resulting rate base) related to such capital investment maywould 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 requirerequires investor-owned utilities to file a multiyear rate planforward 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 beUnder 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 canthe 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 thethat level must be deferred for fundsrefunds 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 filedto 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 includedhigher 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 andthat is intended to depreciate all natural gas ratesplants 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 yearpassage of the multiyearlaw, 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 toproceedings 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 agreementdepreciation 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.
34


Natural gas rates became effectiveits 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 increaseincludes a request to shorten the depreciable lives of 10.75% and 1.33%, respectively. Perits gas assets by roughly ten years in most cases which is intended to start the 2022process 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.

34


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.
ElectricScheduleDocketEffective DateAverage
Percentage
Increase (Decrease)
in Rates
Increase (Decrease)
in Revenue
(Dollars in Millions)
Bill discount rate rider129D230692October 1, 20230.5%$11.9
Clean energy implementation141CEI230591September 1, 20230.931.4
Colstrip adjustment rider141COL230808January 1, 20240.030.9
220066January 11, 20232.250.3
Conservation service rider120240138May 1, 20240.720.7
230139May 1, 2023(0.2)(6.3)
220137May 1, 20221.021.6
Revenue Decoupling Adjustment Mechanism142240221May 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 recovery141A230825January 1, 2024(0.1)(2.0)
220066January 11, 20231.535.3
Federal incentive tracker95A220794
January 1, 20233
1.31.0
210821January 1, 20220.1(28.2)
Low income program129240194May 1, 20242.729.2
230694October 1, 2023(1.0)(25.9)
220656October 1, 20221.125.8
Power adjustment clause - Schedule 95Supplemental230318
December 1, 20234
1.027.4
2024 variable power cost update230805January 1, 20246.1160.9
2020 PCORC5
200980October 1, 20213.370.9
Property tax tracker140240200May 1, 2024(0.7)(18.7)
230219May 1, 2023(0.2)(4.4)
220234May 1, 2022(0.3)(5.8)
Rates not subject to refund141N230320January 1, 2024(3.1)(76.2)
220066January 11, 20237.9182.5
Rates subject to refund141R230320January 1, 20244.2105.6
220066January 11, 20234.091.7
Residential and exchange benefit6
194230792November 1, 2023(0.4)(9.9)
Transportation electrification plan141TEP240067March 1, 20240.041.2
230040March 1, 20230.26.0
Voluntary long term renewable energy charge and credit139220066January 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.
35


The Washington Commission approved the following PSE requests to change rates for prior deferrals under its electric and natural gas decoupling mechanisms:
Effective DateAverage
Percentage
Increase (Decrease)
in Rates
Increase (Decrease)
in Revenue
(Dollars in Millions)1
Electric:
May 1, 2023(1.5)%$(37.6)
May 1, 20222
(1.0)(23.5)
May 1, 20213
1.021.4
January 1, 2021(1.0)(20.6)
October 15, 20204
(0.5)(10.2)
Natural Gas:
May 1, 2023(1.3)%$(16.4)
May 1, 2022(0.7)(7.4)
May 1, 20211.515.0
__________________
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. ForThe 2022 rate period represented the electric rates effective May 1, 2021, there was $24.1 millionfinal year of excess deferred revenues for delivery and fixed power costs which could notthe 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 periodSchedule 95 Supplemental PCA mechanism rates from the original one-year recoveryprior 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 recoveryzero as of April 2022. The remaining decoupling amortization balancesJanuary 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.

35


ElectricNatural Gas Rates
The following electrictable sets forth natural gas rate schedules were filed with the Washington Commission oradjustments approved by the Washington Commission afterand the Form 10-K forcorresponding 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 gasScheduleDocketEffective DateAverage
Percentage
Increase (Decrease)
in Rates
Increase (Decrease)
in Revenue
(Dollars in Millions)
Bill discount rate rider129D230693October 1, 20231.1%$13.1
CCA - greenhouse gas emissions cap & invest111230968January 1, 20243.029.1
230756November 1, 20232.127.2
230470
October 1, 20231
3.216.8
Conservation service rider120240139May 1, 20240.76.8
230140May 1, 20230.44.7
220138May 1, 20220.33.2
Cost recovery mechanism for pipeline replacement149220067January 7, 2023(2.0)(22.6)
220590November 1, 20220.44.6
Revenue Decoupling Adjustment Mechanism142240222May 1, 20242.728.0
230207
May 1, 20232
(1.3)(16.4)
220228
May 1, 20222
(0.7)(7.4)
Distribution pipeline provisional recovery141D220067January 1, 2024(0.01)(0.1)
January 7, 20230.33.0
Low income program129240195May 1, 20244.610.2
230695October 1, 20230.21.9
220657October 1, 2022(0.04)(0.4)
Property tax tracker140240201May 1, 2024(0.5)(5.6)
230220May 1, 2023(0.02)(0.2)
220235May 1, 20220.020.2
Purchased gas adjustment101, 106230769November 1, 2023(24.2)(309.4)
220715November 1, 202214.9155.3
Rates not subject to refund141N230889January 1, 2024(2.3)(27.6)
220067January 7, 2023(0.1)(1.6)
Rates subject to refund141R230889January 1, 20244.047.2
230323November 1, 2023(0.1)(1.4)
220067January 7, 20234.145.5
The electric conservation rider collects revenue to cover the costs incurred in providing services and programs for conservation. Rates change annually on May 1 to collect the annual budget that started the prior January and to true-up for actual compared to forecast conservation expenditures from the prior year, as well as actual compared to the forecasted load set in rates.
The following table sets forth conservation rider rate adjustments approved by the Washington Commission and the corresponding expected annual impact on PSE’s revenue based on the effective dates:
Effective DateAverage
Percentage
Increase (Decrease)
in Rates
Increase
(Decrease)
in Revenue
(Dollars in Millions)
May 1, 2023(0.2)%$(6.3)
May 1, 20221.021.6
__________________________

1.
Power Cost Adjustment Clause
PSE updated its Schedule 95 rates inPer 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
36


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 throughuntil December 31, 2024.
PSE exceeded the $20.0 million cumulative deferral balance in its PCA mechanism in 2021. During 2021, actual power2023 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 DateAverage
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.

2.
Power Cost Adjustment Mechanism
PSE currently has a PCA mechanismFor rates effective May 1, 2023 and May 1, 2022, there were no excess earnings that provides forimpacted 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 ShareCustomers’ Share
Annual Power Cost VariabilityOverUnderOverUnder
Over or under collected by up to $17 million100%100%—%—%
Over or under collected by between $17 million - $40 million35506550
Over or under collected beyond $40 + million10109090
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.
37


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 DateAverage
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 DateAverage
Percentage
Increase (Decrease)
in Rates
Increase (Decrease)
in Revenue
(Dollars in Millions)
May 1, 20230.4%$4.7
May 1, 20220.33.2

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 DateAverage Percentage Increase (Decrease) in RatesIncrease (Decrease) in Revenue (Dollars in Millions)
May 1, 2023(0.02)%$(0.2)
May 1, 20220.020.2

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 activity20232022
PGA receivable beginning balance$(3,536)$57,935 
Actual natural gas costs138,178 457,950 
Allowed PGA recovery(234,372)(496,879)
Interest(348)1,674 
Refund/interest from counterparty settlement(2,836)(24,216)
PGA (liability)/ receivable ending balance$(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, andcould 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
39


and disposal (including generation by-products such as coal ash), remediation of contaminationcontaminated 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 capsrequires 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 capthat 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 buildbuilding off initial rulemaking aswhile program implementation getsis 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 thatit has indicated these revenues are subject-to-refund, and there is a risk PSE may ultimately not be able to recover through electricall costs. Electric CCA-related costs have not yet been approved for recovery at this time and natural gas rates. Potentialit 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 ruleand 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, 20232024 and March 31, 2022.2023.
37


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.
40


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,
20232022
Operating income (loss)$80,976 $374,138 
Electric operating revenue1,010,160 756,377 
Purchased electricity(339,816)(238,203)
Electric generation fuel(150,254)(60,644)
Residential exchange23,531 23,070 
Electric margin (non-GAAP)$543,621 $480,600 
Natural gas operating revenue517,258 426,348 
Purchased natural gas(235,482)(177,333)
Natural gas margin (non-GAAP)$281,776 $249,015 
Other operating revenue9,233 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,
20242023
Operating income (loss)$221,429 $80,976 
Electric operating revenue988,516 1,010,160 
Purchased electricity(385,765)(339,816)
Electric generation fuel(117,557)(150,254)
Residential exchange26,298 23,531 
Electric margin (non-GAAP)$511,492 $543,621 
Natural gas operating revenue557,820 517,258 
Purchased natural gas(271,353)(235,482)
Natural gas margin (non-GAAP)$286,467 $281,776 
Other operating revenue101 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, 20222024 and 2023:
360360
______________
*    Includes decoupling cash collections, ROR excess earnings, and decoupling 24-month revenue reserve.

Three Months Ended March 31, 20232024 Compared to 20222023
Electric Operating Revenue
Electric operating revenues increased $253.8decreased $21.6 million from the prior year primarily due to an increasea 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 decreaseand 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 $13.3partially offset by $4.4 million from an increasea 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 GRC2024 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, 20222023 for electric rate changes. The increasedecrease in retail usage was primarily due to an increasea decrease in residential and commercialindustrial usage of 2.1%0.6% and 1.1%4.7%, respectively. CustomerThe slight decrease in customer usage increased due to an increase in retail customers of 1.1% andwas partially driven by a slight increase4.6% decrease in heating degree days of 1.0% due to lower than normal temperatures in the three months ended March 31, 20232024 as compared to 2022.2023.
Sales to other utilities increased $127.9decreased $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 valuevolume 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 in2024 compared to 2023. Lower natural gas fuel prices that fuelmade natural gas-fired electric generation following constrained supply along with increased demand.more economic to dispatch in 2024 compared to 2023.
Decoupling revenue decreased $18.8increased $4.0 million primarily attributable todriven by a $16.1$3.9 million and $2.7 million decreaseincrease in delivery and fixed production cost deferral revenues, respectively.revenues. This was driven primarily by higher rates andlower usage in the current periodthree 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 greaterlower margin in the current year2024 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, there2024 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 $46.2decreased $63.2 million primarily due to a $39.8$59.1 million increasedecrease in net wholesale non-core natural gas financial hedging gainssales. 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% higher66.4% 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 increasecosts; 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 afterthe three months ended March 31, 2022. The increase from2024 compared to 2023. Additionally, wholesale electricity purchase volumes increased slightly by 0.6%. Higher average wholesale purchase prices and purchase volumes were partially offsetthe 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 $89.6decreased $32.7 million primarily due to a $89.0$31.4 million increasedecrease in natural gas-fired generationgas fuel costs resulting from lower wholesale market natural gas prices.
Residential exchange credits increased by $2.8 million due to increaseda 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 utilitieselectric 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- recoveriesunder-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, 20222024 and 2023:
860860
______________
*    Includes decoupling cash collections, ROR excess earnings, and decoupling 24-month revenue reserve.
Three Months Ended March 31, 20232024 Compared to 20222023
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 revenueretail sales of $5.4$85.1 million. These items are discussed in detail below.
Natural gas retail sales revenue increased $91.7decreased $85.1 million primarily due to an increasea decrease in rates of $78.3$57.7 million and an increase of $13.3 million due to an increasea decrease in natural gas load of 2.5%.6.2%, or $27.4 million. The increasedecrease in rates is primarily due to the tariffs filed pursuant toa decrease in the Company's most recent PGA and GRCrates 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 increasedecrease in load is primarily driven by a 1.9%decreased usage of 5.9%, 5.8% and 2.8% increase18.5% in residential, commercial and commercial usage,industrial customers, respectively. Customer usage increaseddecreased due to an increase in retail customers of 0.7% and an increasea decrease in heating degree days of 1.0% due to lower than normal4.6% from warmer temperatures in the three months ended March 31, 20232024 as compared to 2022.2023.
4441


Decoupling revenue decreased $5.4increased $11.2 million primarily attributable to higher delivery rates and lower usage in the current periodthree months ended March 31, 2024 as compared to the same period in 2022.2023. This resulted in actual natural gas revenues being higherlower 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 lowerhigher than allowed revenues.
Other decoupling revenue increased $2.7$6.4 million primarily due to a decrease in current period amortizationincreased refunds of prior year decoupling revenuesovercollections 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 areregulatory 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 20222023 and an increasea 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.
















45
42


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, 20222024 and 2023:
177177

Three Months Ended March 31, 20232024 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 changenet 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 $84.1a $28.5 million loss for electric. Naturalelectric and the weighted average forward price for natural gas prices decreased 63.3%increased 4.9% resulting in a $130.3$16.7 million lossgain 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) $1.3expenses driven by a cold weather event in January 2024, (ii) $2.7 million of other generationrelated 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 maintenancecollections 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 todriven by a decrease of $2.3$4.2 million in biogas purchase expense anddue to a decrease of $3.1 millionin biogas purchased in the long-term incentive plan, asthree 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 $278.1driven 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 productiontransmission depreciation from 2023 primarily due to $27.8driven by a $301.7 million in net additions of electric productiontransmission assets, and due to the(iii) $1.3 million increase in natural gas distribution depreciation rates per the 2022 GRC. Thefrom 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 millionamortization 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 $12.1decreased $6.6 million primarily due to a $7.3to: (i) $3.2 million increasedecrease in state excise tax and an increase of $6.3taxes, (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 aand (iii) $1.7 million decrease of $1.4 million in property taxes.

Other Income, Interest Expense and Income Tax Expense
Other income/expense changed$2.5increased $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 and2023 to net other income increased $1.9of $14.2 million which was primarilyin 2024, due to (i) $2.2an increase of $3.5 million in taxable interestother income and dividend income, (ii) $1.8a 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 inthe May 2023 compared to 2022,PSE bond issuance and an increase of $1.2$1.9 million related toin interest expense recognizeddue to a higher issuance of commercial paper debt in conjunction with PSE's deferred compensation liability.2024 compared to 2023.
Income tax expense decreased $32.4increased $17.8 million primarily driven by a decreasean increase in pre-tax book income.


44






















47



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, 20222024 and 2023 is as follows:

154154


Three Months Ended March 31, 20232024 compared to 20222023
Summary Results of Operation
Puget Energy’s net income decreasedincreased by $278.3 million, which$129.9 million. This is primarily attributable to (i) a decreasean 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 increasea 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.
48


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)TotalLess than 1 Year1-3 Years3-5 YearsThereafter
Commercial commitments:
PSE revolving credit facility1
$800,000 $— $— $800,000 $— 
Inter-company short-term debt2
30,000 — — — 30,000 
Total PSE commercial commitments830,000 — — 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
45


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 substationstrategic 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 ProjectionsCapital Expenditure Projections
(Dollars in Millions)(Dollars in Millions)202320242025
(Dollars in Millions)
(Dollars in Millions)202420252026
Total energy delivery, technology and facilities expendituresTotal energy delivery, technology and facilities expenditures$1,146.7$1,311.9$1,304.2Total energy delivery, technology and facilities expenditures$1,716.0$1,936.4$2,231.7

The program is subject to change based upon general business, economic and regulatory conditions.  Utility construction expenditures and any new generation resource expenditures may be funded from a combination of sources, which may include cash from operations, short-term debt, long-term debt and/or equity.  PSE’s planned capital expenditures may result in a level of spending that will exceed its cash flow from operations.  As a result, execution of PSE’s strategy is dependent in part on continued access to capital markets.  
49


Capital Resources
Cash from Operations
Puget Sound EnergyPuget Sound EnergyThree Months Ended
March 31,
Puget Sound EnergyThree Months Ended
March 31,
(Dollars in Thousands)(Dollars in Thousands)20232022Change(Dollars in Thousands)20242023Change
Net incomeNet income$27,535 $288,081 $(260,546)
Non-cash items1
Non-cash items1
342,478 60,595 281,883 
Changes in cash flow resulting from working capital2
Changes in cash flow resulting from working capital2
(91,399)35,638 (127,037)
Regulatory assets and liabilitiesRegulatory assets and liabilities38,162 4,470 33,692 
Regulatory assets and liabilities
Regulatory assets and liabilities
Purchased gas adjustmentPurchased gas adjustment123,594 13,915 109,679 
GHG emission allowances
Other non-current assets and liabilities3
Other non-current assets and liabilities3
(16,498)(5,558)(10,940)
Net cash provided by operating activitiesNet cash provided by operating activities$423,872 $397,141 $26,731 
_______________
1 Non-cash items include depreciation, amortization, deferred income taxes, net unrealized (gain) loss on derivative instruments, AFUDC-equity, production tax credits (PTCs) and other miscellaneous non-cash items.
2 Changes in working capital include receivables, unbilled revenue, materials/supplies, fuel/gas inventory, income taxes, prepayment, PGA, accounts payable and accrued expenses.
3 Other non-current assets and liabilities include funding of pension liability.

Three Months Ended March 31, 20232024 compared to 20222023
Cash generated from operations for the three months ended March 31, 2023 increased2024 decreased by $26.7$123.5 million including a net income decreaseincrease of $260.5$120.4 million. The following are significant factors that impacted PSE's cash flows from operations:
Cash flow adjustments resulting from non-cash items increased $281.9decreased $110.4 million primarily due to: (i) a $324.0$176.5 million change from a net unrealized gain on derivative instruments of $131.9 million to ain net unrealized loss on derivative instruments offrom $192.1 million in 2023 to $15.7 million in 2024, (ii) a $6.6 million decrease due to deferral of energy exchange cost, (iii) equity AFUDC of $3.0 million and (iv) a decrease of $0.4 million in conservation amortization. The decreases were partially offset by: (i) an increase in
46


deferred income taxes of $71.6 million and (ii) an increase in depreciation and amortization of $23.3 million, (iii) a $10.8 million increase due to deferral of energy exchange cost and (iv) an increase of $8.1 million in conservation amortization. The increases were partially offset by a decrease in deferred income taxes of $82.8$3.1 million. For further details, see "Other Operating Expenses"Expenses and Other Income (Deductions)" in this Item 2 of this report.
Cash flows resulting from changes in working capital decreased $127.0increased $99.6 million primarily due toto: (i) accounts payable decreased faster in 2023 than the same period last year thatcompared to 2024, which led to increased cash outflowsinflow of $207.6$239.3 million and an increased(ii) reduction in prepayment for purchased electricity led to $26.3 million of cash outflow of $8.5 million related to higher incentive payments.inflow. The cash outflowsincreases were partially offset by: (i) an increasecash outflow of $42.9 million due to higher tax payable balance, (ii) higher balances in fuel inventory added cash inflows of $25.0 million, and (iii) a cash inflow of $22.6$62.3 million due to the timing of accounts receivable collections, as the balance of accountaccounts receivable decreased $60.8increased $1.6 million in the three months ended March 31, 20232024 compared to a decrease of $38.2$60.8 million in 2023, (ii) cash outflow of $56.1 million due to the change in tax payable balance, (iii) cash outflow of $25.8 million related to fuel and natural gas inventory, which decreased $11.6 million in 2024 compared to a $37.4 million decrease during the same period in 2023 due to a continued decrease in natural gas prices, (iv) cash outflow of 2022.$15.5 million due to higher balances in materials and supplies and (v) cash outflow of $7.4 million driven by higher incentive payments.
Cash flows resulting from regulatory assets and liabilities increased $33.7decreased $30.1 million, which was primarily due to: (i) lowerrelated to higher decoupling deferrals and higherlower decoupling cash collection in the first three months of 20232024 compared to the same period in 2022,2023, which resulted in $11.1$25.1 million cash inflow together, (ii)inflow. In addition, a decrease of $7.8 million was due to rate collection for recovery of prior distribution in COVID-19 bill assistance program brought in $10.3 million cash inflow, and (iii) lower expenses and higher amortization led to an increase of $11.1 million cash inflow in property tax tracker.2023.
Cash flow resulting from purchased gas adjustment increased $109.7decreased $164.4 million, which was mainly driven by a decreasean increase in actual natural gas cost and increasea decrease in allowed PGA recovery in 20232024 compared to 2022. Decreased2023. Actual natural gas pricescosts led to a $24.2$25.4 million or 14.9%, decreaseincrease in actual natural gas costs in 20232024 compared to 2022.2023. Meanwhile, the total amount of allowed PGA recovery in 2023 increased $58.42024 decreased $111.9 million or 33.2%, compared to 2022.2023. In addition, there was a $27.2$27.1 million refund, andincluding interest, from a counterparty settlement received in January 2023.
Cash flow resulting from other non-current assets and liabilitiesGHG emission allowances increased $10.9decreased $37.0 million which was driven by cash inflowsobtaining Washington emission allowances for GHG emissions associated with the company's electric and natural gas business activities in compliance with the CCA. For further details, see "Other" in this Item 2 of $2.6 million due a Puget Western, Inc. land sale in 2023. Further increases were due to changes in accrual of other long-term expenses.this report.

50


Puget EnergyPuget EnergyThree Months Ended
March 31,
Puget EnergyThree Months Ended
March 31,
(Dollars in Thousands)(Dollars in Thousands)20232022Change(Dollars in Thousands)20242023Change
Net incomeNet income$(27,566)$(9,786)$(17,780)
Non-cash items1
Non-cash items1
10,169 (6,085)16,254 
Changes in cash flow resulting from working capital2
Changes in cash flow resulting from working capital2
2,029 3,449 (1,420)
Other non-current assets and liabilities3
Other non-current assets and liabilities3
(879)(2,333)1,454 
Other non-current assets and liabilities3
Other non-current assets and liabilities3
Net cash provided by operating activitiesNet cash provided by operating activities$(16,247)$(14,755)$(1,492)
_______________
1 Non-cash items include depreciation, amortization, deferred income taxes, net unrealized (gain) loss on derivative instruments, AFUDC-equity, PTCs and
other miscellaneous non-cash items.
2 Changes in working capital include receivables, unbilled revenue, materials/supplies, fuel/gas inventory, income taxes, prepayments, PGA, accounts payable and accrued expenses.
3 Other noncurrent assets and liabilities include funding of pension liability.
Three Months Ended March 31, 20232024 compared to 20222023
Cash generated from operations for the three months ended March 31, 2023,2024, in addition to the changes discussed at PSE above, decreasedincreased by $1.5$4.3 million compared to the same period in 2022,2023, which includes a net income decreaseincrease of $17.8$9.6 million.  The remaining change was primarily impacted by the factors explained below:
Non-cash items increased $16.3decreased $8.3 million primarily due to higher non-cash inflows of $15.5the change in deferred taxes.
Changes in cash flow resulting from working capital increased $2.7 million primarily due to a $2.3 million increase related to changesthe change in deferred taxesPSE's intercompany account receivable and an increase in amortizationaccount payable balances with Puget LNG and depreciationPuget Energy, which are eliminated upon consolidation of $0.8 million.Puget Energy.

Financing Program
The Company’s external financing requirements principally reflect the cash needs of its construction program, its schedule of maturing debt and certain operational needs.  The Company anticipates refinancing the redemption of bonds or other long-term borrowings with its credit facilities and/or the issuance of new long-term debt.  Access to funds depends upon factors such as Puget Energy’s and PSE’s credit ratings, prevailing interest rates and investor receptivity to investing in the utility industry,
47


Puget Energy and PSE. The Company believes it has sufficient liquidity through its credit facilities and access to capital markets to fund its needs over the next twelve months.
Proceeds from PSE’s short-term borrowings and sales of commercial paper are used to provide working capital and the interim funding of utility construction programs.  Puget Energy and PSE continue to have reasonable access to the capital and credit markets.
As of March 31, 20232024, both Puget Energy and PSE have stable outlooks from Moody’s, Fitch, and S&P. Although neither Puget Energy nor PSE have any debt whose maturity would be accelerated upon a ratings downgrade, Management continually monitors the credit rating environment for both Puget Energy and PSE as a credit rating downgrade may increase the cost of borrowing for Puget Energy and PSE in future long-term financings or under their existing credit facilities. Any increase in the cost of borrowing could negatively impact Puget Energy and PSE's future results of operations as well as future liquidity, access to debt capital resources and financial condition. Additionally, a ratings downgrade could impact the Company's ability to issue dividends. A downgrade to Puget Energy and PSE's credit ratings would not impact debt covenants under our existing credit facilities nor would it impact other contracts, as neither include credit rating triggering event clauses. A credit rating decrease for PSE could result in increased cash collateral required for commodity contracts, which would adversely affect PSE's liquidity. Management cannot predict with certainty the actions credit agencies may take, if any, in response to weaker near term credit metrics, regulatory and rate recovery uncertainties, and management's efforts to contain the growth of capital and operating expenditures. Containing the growth of capital and operating expenditures will be limited, over the near term, due to continuing strategic and risk mitigation imperatives and the necessity of providing safe, reliable and resilient service levels to customers.

Puget Sound Energy
Credit Facility
On May 16, 2022, PSE 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 Secured Overnight Financing Rate (SOFR), as the London Interbank Offered Rate (LIBOR) is being discontinued in 2023. The proceeds of the PSE credit facility are to be used for general corporate purposes. The maturity date of the credit facility is May 14, 2027. The credit facility includes a swingline feature allowing same day
51


availability on borrowings up to $75.0 million and has an expansion feature which, upon receipt of commitments from one or more lenders, could increase the total size of the facility up to $1.4 billion.
The credit agreement is syndicated among numerous lenders and contains usual and customary affirmative and negative covenants that, among other things, place limitations on PSE's ability to transact with affiliates, make asset dispositions and investments or permit liens to exist. 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. PSE certifies its compliance with such covenants to participating banks each quarter. As of March 31, 2023, PSE was in compliance with all applicable covenant ratios.
The credit agreement allows PSE to borrow at a prime based rate or to make floating rate advances at the SOFR, in either case, plus a spread that is based upon PSE's credit rating. PSE must pay a commitment fee on the unused portion of the credit facility. The spreads and the commitment fee depend on PSE's credit ratings. As of the date of this report, interest was calculated as SOFR plus 0.10% SOFR adjustment plus 1.25% spread over the adjusted SOFR rate and the commitment fee was 0.175%.
As of March 31, 2023, no amount was drawn under PSE's credit facility and $137.0 million was outstanding under the commercial paper program. Outside of the credit agreement, PSE had 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 gas purchases on the natural gas exchange (NGX) in Canada.

Demand Promissory Note
In 2006, PSE entered into a revolving credit facility with Puget Energy, in the form of a credit agreement and a demand promissory note (Note) pursuant to which PSE may borrow up to $30.0 million from Puget Energy subject to approval by Puget Energy.  Under the terms of the Note, PSE pays interest on the outstanding borrowings based on the lower of the weighted-average interest rates of PSE’s outstanding commercial paper interest rate or PSE’s senior unsecured revolving credit facility.  Absent such borrowings, interest is charged at one-month LIBOR plus 0.25%. As of March 31, 2023, PSE had no outstanding balance under the Note.

Debt Restrictive Covenants
The type and amount of future long-term financings for PSE may be limited by provisions in PSE's electric and natural gas mortgage indentures.
PSE’s ability to issue additional secured debt may also be limited by certain restrictions contained in its electric and natural gas mortgage indentures.  Under the most restrictive tests at March 31, 2023,2024, PSE could issue:
Approximately $1.9$1.5 billion of additional first mortgage bonds under PSE’s electric mortgage indenture based on approximately $3.1$2.6 billion of electric bondable property available for issuance, subject to an interest coverage ratio limitation of 2.0 times net earnings available for interest (as defined in the electric utility mortgage), which PSE exceeded at March 31, 2023;2024; and
Approximately $1.0$1.1 billion of additional first mortgage bonds under PSE’s natural gas mortgage indenture based on approximately $1.7$1.8 billion of natural gas bondable property available for issuance, subject to a combined natural gas and electric interest coverage test of 1.75 times net earnings available for interest and a natural gas interest coverage test of 2.0 times net earnings available for interest (as defined in the natural gas utility mortgage), both of which PSE exceeded at March 31, 2023.2024.
At March 31, 2023,2024, PSE had approximately $8.7$9.3 billion in electric and natural gas rate base to support the interest coverage ratio limitation test for net earnings available for interest.

Shelf Registrations
In August 2022, PSE filed an S-3 shelf registration statement under which it may issue up to $1.4 billion aggregate principal amount of senior notes secured by first mortgage bonds. As of the date of this report, $1.4 billion was available to be issued. The shelf registration will expire in August 2025.

Dividend Payment Restrictions
The payment of dividends by PSE to Puget Energy is restricted by provisions of certain covenants applicable to long-term debt contained in PSE’s electric and natural gas mortgage indentures.  At March 31, 2023,2024, approximately $1.6$1.8 billion of unrestricted retained earnings was available for the payment of dividends under the most restrictive mortgage indenture covenant.
Beginning February 6, 2009, pursuant to the terms of the merger order by the Washington Commission, PSE may not declare or pay dividends if PSE’s common equity ratio, calculated on a regulatory basis, is 44.0% or below except to the extent
52


a lower equity ratio is ordered by the Washington Commission.  Also, pursuant to the merger order, PSE may not declare or make any distribution unless on the date of distribution PSE’s corporate credit/issuer rating is investment grade, or, if its credit ratings are below investment grade, PSE’s ratio of earnings before interest, tax, depreciation and amortization (EBITDA) to interest expense for the most recently ended four fiscal quarter period prior to such date is equal to or greater than 3.0 to 1.0.  The common equity ratio, calculated on a regulatory basis, was 49.9%48.6% at March 31, 2023,2024, and the EBITDA to interest expense ratio was 5.24.9 to 1.0 for the twelve months ended March 31, 2023.2024.
PSE’s ability to pay dividends is also limited by the terms of its credit facilities, pursuant to which PSE is not permitted to pay dividends during any Event of Default (as defined in the facilities), or if the payment of dividends would result in an Event of Default, such as failure to comply with certain financial covenants. At March 31, 2023,2024, the Company was in compliance with all applicable covenants, including those pertaining to the payment of dividends.
48


Long Term Debt
For more information on the Company'sPSE'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.

53


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 3.93.7 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 electricityelectric 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 plansCEIPs 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 Finalfinal CEIP, which proposesproposed 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 byproject costs. On June 6, 2023, the Washington Commission approved costs will be recovered throughPSE’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 capsrequires 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 capthat 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 asAs 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 receivereceives emission allowances from WDOE at no cost through 2050 for direct emissions associated with electricity used to serve Washington State load to mitigate impacts toeliminate the cost burden of the program on electric ratepayers.
As a gas utility, PSE will also beis 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 receivereceives some no-cost emission allowances to cover its natural gas obligation at no costfrom WDOE to mitigate impacts to customers; the amount will benatural 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 - 20192015-2019 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.
49


Offset credit use is limited and is not additive to allowances; the WDOE will reduce the cap proportionally forsubtracts 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 with2023, the Washington CommissionWDOE 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
54


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 issuedpursue 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 customerCalifornia 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 releasethe 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 isIt’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.
55



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 fluctuationsadverse 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 helpdiscourage 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
50


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.

56


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, 20232024 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, 20232024 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 reportreport.
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.
Givengiven the size of the Company's operations, we havethe Company elected to adopt a
51


threshold of $1.0 million in expected sanctions related to required disclosuresfor purposes of environmentaldetermining 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.

57
52



EXHIBIT INDEX
101Financial statements from the Quarterly Report on Form 10-Q of Puget Energy, Inc. and Puget Sound Energy, Inc. for the quarter ended March 31, 20232024 filed on May 10, 20231, 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
104Cover Page Interactive Data File (embedded within the Inline XBRL document).
__________________
* Filed herewith.


58
53



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, 20231, 2024
5954