Puget Energy (PSD) 8-K Puget Energy reports second-quarter 2002 results

Exhibit 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE Contacts:

July 18, 2002 Media: Grant Ringel

Dorothy Bracken

888-831-7250

Analysts: Don Gaines

(425)462-3870

Puget Energy reports second-quarter 2002 results

     Bellevue, Wash. (July 18, 2002) — Puget Energy (NYSE: PSD) today reported 2002 second-quarter income for common stock of $29.4 million, or 34 cents per share, exceeding analysts’ expectations of 20-to-23 cents per share for the quarter.

     “Higher utility energy margins coupled with our steadfast employee efforts to manage utility costs have contributed to Puget Energy performing beyond expectations in the second quarter,” said Puget Energy President and CEO Stephen P. Reynolds. “Energy margins were helped by cooler temperatures that increased utility-customer energy consumption and by a return to normal hydroelectric conditions.”

     The second quarter’s results are compared to $17.4 million, or 20 cents per share in the same period a year ago. Twelve-month income for common stock for the period ended June 30, 2002 was $64.8 million, or 74 cents per share, compared to income of $171.3 million, or $1.99 per share, in the year-ago period. Twelve-month results include a nine-month under-recovery of net power costs for the company’s Puget Sound Energy (PSE) utility subsidiary; and an interim increase in electric rates that recovered net power costs in second quarter 2002.

     “In the second quarter, a $25 million interim increase in electric revenues allowed our utility to recoup increased power-supply costs, which has been a very positive step towards improving the company’s financial integrity,” said Reynolds.

     “Going forward, on July 1, electric customer rates increased 4.6 percent, following state regulatory approval of a settlement agreement in PSE’s electric-rate case,” Reynolds added. “The agreement includes a power cost adjustment mechanism that would be applied when PSE’s costs to provide customers’ electricity exceed a certain threshold.

     “The successful conclusion of the electric-rate settlement, and the expected late-summer Reynolds added “In the second quarter, InfrastruX contributed 3 cents per share.”

     “We remain comfortable with the earnings guidance we’ve previously communicated for Puget Energy for calendar 2002 and 2003,” said Reynolds.

Highlights from the second quarter

• Improved energy margins for PSE resulted primarily from increased natural gas and electricity sales from cooler weather coupled with greater availability of low-cost hydroelectric generation. In second quarter 2001, margins were affected by a drought that adversely affected hydroelectric production, and by increased costs of purchased electricity and fuel for electric generation.
  
  
• Lower operating revenues of $555.0 million, compared to $935.4 million for the second quarter 2001, were primarily due to lower wholesale market prices for electricity and natural gas.
  
  
• Utility operations and maintenance expenses increased primarily because of higher operating costs for the company’s Colstrip generating plant.
  
  
• A reduction of $4.7 million in federal income tax expense was realized from an Internal Revenue Service refund for taxes in calendar years 1998 and 1999.
  
  
• Property sales by PSE’s real-estate subsidiary that initially were expected to be completed in third-quarter 2002 contributed 2 cents per share to second-quarter results.
  
  
• InfrastruX Group, which provides construction and maintenance services primarily to gas and electric utilities, acquired its 10th company, Flowers Construction Company, a Texas-based utility contractor. This acquisition brings InfrastruX’s combined annual revenues to more than $320 million.

      Puget Energy will provide more detail on second-quarter results on a conference call for analysts scheduled at 10 a.m. ET (7 a.m. PT) tomorrow, Fri., July 19. The call will be broadcast live through a Web cast at www.pse.com by accessing the Investors section of the Web site. The Web cast will be archived and available for replay following the live call. A tape-recorded replay of the call will be available two hours after completion of the conference on July 19 through midnight (ET) Tue., July 23, 2002 by dialing 1-800-428-6051 and entering the conference identification number at 250100.

Certain statements contained in this news release are “forward-looking statements” within the meaning of the federal securities laws. Although Puget Energy and Puget Sound Energy believe that the expectations reflected in such statements are reasonable, there can be no assurance that the expected results will be achieved. For additional information concerning certain assumptions, risks, and uncertainties involved in the forward-looking statements contained herein, please refer to Puget Energy’s reports on file with the SEC.

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

Three months ended 06/30¹ Twelve months ended 06/30

2002 2001² 2002 2001²

Operating revenues

   Electric $ 330,326  $ 719,694  $ 1,579,817  $ 3,380,549 

   Gas 144,384  163,013  806,663  776,107 

   Other 80,277  52,712  244,561  154,274 

      Total operating revenues 554,987  935,419  2,631,041  4,310,930 

Operating expenses

   Purchased electricity 142,128  535,277  823,014  2,257,809 

   Purchased gas 88,520  104,184  509,955  499,333 

   Electric generation fuel 14,680  63,134  195,747  297,843 

   Residential exchange (30,964) (10,304) (122,530) (46,773)

   FAS-133 unrealized (gain)/loss (252) (41,527) (7,870) (15,061)

   Utility operations & maintenance 73,630  65,414  278,767  253,443 

   Other operations & maintenance 62,082  41,470  201,825  124,402 

   Depreciation & amortization 57,307  52,935  224,732  207,376 

   Conservation amortization 3,605  1,603  9,058  6,035 

   Other taxes 54,584  45,306  219,213  216,187 

   Federal income taxes 12,834  11,856  45,215  128,857 

      Total operating expenses 478,154  869,348  2,377,126  3,929,451 

Operating income 76,833  66,071  253,915  381,479 

Other income (net of tax) 3,441  1,568  14,840  (2,697)

Income before interest charges & minority interest 80,274  67,639  268,755  378,782 

Interest charges 48,682  48,174  195,530  184,000 

Minority interest 223  --  302  -- 

Net income before cumulative effect of accounting change 31,369  19,465  72,923  194,782 

FAS-133 transition adjustment loss (net of tax)	--	--	--	14,749
Net Income	31,369	19,465	72,923	180,033

Less preferred stock dividend accruals 1,940  2,085  8,122  8,703 

Income for common stock $ 29,429  $ 17,380  $ 64,801  $ 171,330 

Common shares outstanding 87,448  86,303  87,013  85,903 

Basic and diluted earnings per common share before cumulative effect of accounting change	$ 0.34	$ 0.20	$ 0.74	$ 2.16
Cumulative effect of accounting change	--	--	--	(0.17)

Basic and diluted earnings per common share³ $ 0.34  $ 0.20  $ 0.74  $ 1.99 

¹ Partial-year results may not accurately predict full-year performance, as earnings are significantly affected by weather.
² Certain amounts previously reported have been reclassified to conform with current year presentations with no effect on net income.
³ Diluted earnings per common share include the dilutive effect of securities related to employee compensation plans.

PUGET SOUND ENERGY¹ -- UTILITY OPERATING DATA

Three months ended 06/30 Twelve months ended 06/30

2002 2001⁴ 2002 2001⁴

Energy sales revenues
($ in thousands, Unaudited)

  Electricity

   Residential $ 148,341  $ 138,321  $ 610,805  $ 601,088 

   Commercial 127,151  128,373  511,553  524,646 

   Industrial 21,583  105,439  111,604  423,634 

   Other retail sales² (3,740) (24,019) 10,594  22,252 

     Subtotal, retail sales 293,335  348,114  1,244,556  1,571,620 

   Transportation 4,477  (15) 10,592  (15)

   Sales to other utilities 27,333  377,674  370,067  1,766,315 

   Other³ 5,181  (6,079) (45,398) 42,629 

     Total electricity sales 330,326  719,694  1,579,817  3,380,549 

  Gas

   Residential 82,174  92,808  487,995  469,997 

   Commercial 46,360  52,469  250,134  238,687 

   Industrial 10,066  12,602  45,654  45,575 

     Subtotal, retail sales 138,600  157,879  783,783  754,259 

   Transportation 3,025  2,597  12,315  11,422 

   Other 2,759  2,537  10,565  10,426 

     Total gas sales 144,384  163,013  806,663  776,107 

   Total gas sales revenue $ 474,710  $ 882,707  $ 2,386,480  $ 4,156,656 

Energy sales volumes
Electricity (in mWh)

   Residential 2,302,267  2,224,645  9,718,567  9,734,832 

   Commercial 1,883,185  1,963,621  7,836,074  7,980,282 

   Industrial 349,139  713,987  1,782,708  3,553,456 

   Other² (150,211) (226,024) 129,833  (101,694)

     Subtotal, retail sales 4,384,380  4,676,229  19,467,182  21,166,876 

   Transportation 516,882  --  1,378,818  -- 

   Sales to other utilities 1,436,526  2,024,045  6,430,509  13,760,927 

     Total mWh 6,337,788  6,700,274  27,276,509  34,927,803 

  Gas (in 000's of therms)

   Residential 86,751  87,913  516,644  513,493 

   Commercial 58,533  58,856  302,063  298,865 

   Industrial 13,261  13,886  56,080  60,732 

   Transportation 49,013  44,181  198,802  189,121 

     Total gas volumes 207,558  204,836  1,073,589  1,062,211 

Customers served⁵
Electricity

   Residential 839,979  825,223  834,012  818,536 

   Commercial 102,801  99,576  101,093  99,400 

   Industrial 3,920  4,024  3,964  4,054 

   Other 1,908  1,754  1,849  1,632 

   Transportation 15  --  15  -- 

     Total electricity customer 948,623  930,577  940,933  923,622 

Gas

   Residential 563,909  548,247  556,411  540,869 

   Commercial 46,457  46,831  46,662  46,151 

   Industrial 2,774  2,836  2,804  2,903 

   Transportation 124  112  112  107 

     Total gas customer 613,264  598,026  605,989  590,030 

Weather

  Actual heating degree days 994  1,034  5,069  5,074 

  Normal 925  925  4,908  4,908 

¹ Puget Sound Energy is the electric and natural gas utility subsidiary of Puget Energy.
² Includes change in unbilled revenues.
³ Includes Conservation Trust collection and sales of non-core gas supply to generators.
⁴ Certain items previously reported have been reclassified to conform with current year presentations.
⁵ Quarterly data represents average served during June; 12-month data represents average for the 12 months ended.

PUGET ENERGY -- SEGMENT RESULTS
(In thousands, Unaudited)

Three months ended 06/30/02 Puget Sound Energy InfrastruX Other¹
Puget Energy Total

Revenues $ 474,710 $ 76,121 $ 4,156 $ 554,987

Depreciation and amortization 54,000 3,253 54 57,307

Federal income tax 9,538 1,824 1,472 12,834

Operating income 70,547 4,177 2,109 76,833

Interest charges, net of AFUDC 47,340 1,342 -- 48,682

Net income 26,662 2,598 2,109 31,369

Total assets 5,039,624 317,212 125,600 5,482,436

Total assets at 12/31/01 5,178,601 229,125 139,251 5,546,977

Three months ended 06/30/01

Revenues $ 882,707 $ 45,469 $ 7,243 $ 935,419

Depreciation and amortization 51,513 1,418 4 52,935

Federal income tax 8,954 1,654 1,248 11,856

Operating income 59,211 4,480 2,380 66,071

Interest charges, net of AFUDC 46,731 1,336 107 48,174

Net income 14,956 2,228 2,281 19,465

Twelve months ended 06/30/02

Revenues $ 2,386,480 $ 236,660 $ 7,901 $ 2,631,041

Depreciation and amortization 213,382 11,284 66 224,732

Federal income tax 38,879 3,595 2,741 45,215

Operating income 241,735 9,940 2,240 253,915

Interest charges, net of AFUDC 190,860 4,609 61 195,530

Net income 57,042 4,381 11,500 72,923

Twelve months ended 06/30/01

Revenues $ 4,156,656 $ 119,007 $ 35,267 $ 4,310,930

Depreciation and amortization 202,031 5,329 16 207,376

Federal income tax 120,721 1,527 6,609 128,857

Operating income 360,969 5,790 14,720 381,479

Interest charges, net of AFUDC 181,330 1,633 1,037 184,000

Net income 176,625 1,118 2,290 180,033

¹ Includes the non-regulated subsidiaries of Puget Sound Energy, principally Puget Western, Inc., a real estate company and miscellaneous holding company expenses.