Check the appropriate box below if the Form 8−K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
On April 26, 2007, the Company issued the following press release.
Puget Energy Reports First Quarter 2007 Financial Results
| · | First quarter 2007 income of 68 cents per diluted share |
| · | Puget Sound Energy first quarter income of 67 cents per diluted share |
| · | Calendar year 2007 guidance of $1.50 to $1.65 per diluted share re-affirmed |
BELLEVUE, Wash (April 26, 2007) — Puget Energy (NYSE: PSD) today reported net income of $79.1 million, or 68 cents per diluted share, for the first quarter 2007 compared to $73.7 million, or 63 cents per diluted share from continuing operations, in the first quarter 2006.
“Our first quarter results met our earnings and operational expectations,” said Stephen P. Reynolds, chairman, president and chief executive officer for Puget Energy. “We begin the balance of the year with excellent hydroelectric energy conditions and continuing customer growth. Our $120 million acquisition in February of the highly efficient Goldendale generating station complements our recent $580 million wind power generation investments, further narrowing the gap between our secured power supply and the growing energy requirements of our region."
Table 1: Puget Energy reported earnings
Net Income ($ millions) | | 2007 | | 2006 | |
| Continuing Operations | | $ | 79.1 | | $ | 73.7 | |
| Discontinued Operations (InfrastruX) | | | - | | | 18.9 | |
| Puget Energy | | $ | 79.1 | | $ | 92.6 | |
| | | | | | | | |
Earnings per Fully Diluted Share | | | | | | | |
| Continuing Operations | | $ | 0.68 | | $ | 0.63 | |
| Discontinued Operations (InfrastruX) | | | - | | | 0.16 | |
| Puget Energy | | $ | 0.68 | | $ | 0.79 | |
| Diluted common shares outstanding (millions) | | | 117.0 | | | 116.2 | |
Puget Energy First Quarter 2007 Continuing Operations summary:
Table 2 below summarizes the primary items that impacted first quarter 2007 results from continuing operations of Puget Energy:
Table 2: Puget Energy First Quarter 2007 vs. First Quarter 2006 EPS Reconciliation for Continuing Operations | | Cents per diluted share | |
| Puget Energy’s Q1 2006 earnings from continuing operations | | $ | 0.63 | |
Decrease in electric margin | | | (0.03 | ) |
Unrealized gain from gas supply contract | | | 0.03 | |
Increase in gas margin | | | 0.06 | |
Increase in utility operations and maintenance expense | | | (0.06 | ) |
Increase in depreciation and amortization expense | | | (0.03 | ) |
Increase in net income from real estate sales | | | 0.03 | |
Increase in interest expense | | | (0.04 | ) |
Favorable impact of a lower effective federal income tax rate | | | 0.05 | |
Other variances and rounding, net | | | 0.04 | |
| Puget Energy's Q1 2007 earnings from continuing operations | | $ | 0.68 | |
Higher retail energy sales volumes and rate recovery supported the increase in 2007 first quarter earnings from continuing operations compared to prior year levels. These results were partially offset by under-recovery of power costs as well as higher operations, maintenance and depreciation expense as a result of infrastructure investments. A one-time unrealized gain of 3 cents relating to the reversal of a gas supply contract loss reserve also contributed to higher 2007 first quarter earnings compared to 2006.
Puget Sound Energy (PSE) First Quarter 2007 Highlights:
Net income from Puget Energy’s regulated electric and gas utility subsidiary, Puget Sound Energy (PSE), was $78.8 million, or 67 cents per share, in the first quarter 2007, compared to $73.8 million, or 64 cents per share, in the first quarter 2006.
Key components of PSE’s first quarter 2007 financial performance are highlighted below. All amounts are pre-tax unless otherwise noted.
| · | As of March 31, 2007, PSE provided service to 1,043,300 electric customers and 718,000 natural gas customers, representing a 2.3 percent and 2.7 percent increase, respectively, in the last 12 months, reflecting favorable economic conditions in the Pacific Northwest. |
| · | Retail electric and natural gas sales volumes increased by 2.9 percent and 3.9 percent, respectively, reflecting customer growth and colder average temperatures during first quarter 2007 compared to 2006. First quarter 2007 heating degree days were near historic averages for the Pacific Northwest. |
| · | Electric margin declined by $5.2 million in the first quarter 2007 compared to 2006. Higher electric sales volumes and increased rate recovery were offset by under-recovery of power costs totaling $13.6 million. PSE is allowed to recover power costs through the Power Cost Adjustment (PCA) mechanism on a shared basis with customers if actual costs are higher than the normalized level established in rates once certain thresholds are met. Power cost recovery is seasonal, with under-recovery normally in the first and fourth quarters and over-recovery in the second and third quarters. Power cost under-recovery did not impact first quarter 2006 electric margin because PSE’s maximum exposure under the PCA mechanism was limited to a cap in effect during the period. |
First quarter 2007 electric margins were also reduced by $4.8 million due to federal income tax credits associated with wind-powered energy that were passed on to PSE's electric customers. These federal income tax credits lower PSE's electric margin, and do not impact net income or earnings because the company's federal income tax expense is reduced accordingly.
Electric margin represents electric sales, net of revenue-based taxes, to retail and transportation customers less the cost of generating, purchasing and wheeling electricity.
| · | Natural gas margin increased in the first quarter 2007 by $10.2 million. The increase was primarily due to a 3.9 percent increase in natural gas sales volumes and the impact of a 2.8 percent rate increase that became effective Jan. 13, 2007. |
Natural gas margin represents natural gas sales to retail and transportation customers, net of revenue based taxes, less the cost of purchasing and transporting natural gas.
| · | Utility operations and maintenance expense in the first quarter 2007 increased by $10.8 million over prior year levels largely due to the addition of PSE's electric generating Wild Horse Wind Facility (Wild Horse) placed in-service in December 2006 and the higher expenses related to operating and maintaining PSE’s energy delivery system. Wild Horse operations and maintenance expense is fully recovered in rates. |
| · | Depreciation and amortization expense in the first quarter 2007 increased by $5.7 million compared to prior year levels due to additional utility plant placed in service over the last twelve months. |
| · | In February 2007, PSE acquired the Goldendale Generation Station (Goldendale) through a bankruptcy auction process from a subsidiary of the Calpine Corporation for $120 million. Placed in service on Feb. 21, 2007, Goldendale is a 277 megawatt (MW) combined cycle natural gas-fired facility located in Washington State. |
| · | First quarter 2007 financial results reflect net income of $5.7 million from PSE's non-utility real estate investment and development business compared to $2.2 million in the first quarter of 2006. |
| · | First quarter 2007 interest expense, net of the debt portion of Allowance for Funds During Construction (AFUDC), increased by $7.2 million compared to prior year levels due to higher debt outstanding. At March 31, 2007 debt outstanding totaled $3.2 billion compared to March 31, 2006 levels of $2.5 billion reflecting additional borrowings related to Wild Horse and Goldendale, a pre-payment associated with a long-term power purchase agreement, and system restoration expense incurred as a result of a severe December 2006 wind storm. |
| · | PSE recorded an unrealized pre-tax gain of $5.8 million or 3 cents per share resulting from the reversal of a loss reserve related to a natural gas fuel supply contract for one of PSE's electric generating facilities. This natural gas fuel supply contract will be marked-to-market on a quarterly basis until the contract terminates in June 2008. |
| · | Puget Energy's effective federal income tax rate in the first quarter 2007 was 30.0 percent compared to 35.3 percent in 2006. The company's 2007 federal income tax expense was reduced by higher tax credits associated with the production of wind-powered energy. These additional credits were made available due to the addition of Wild Horse, placed in service in December 2006. PSE's electric customers receive the benefit of these tax credits through lower rates. |
Discontinued Operations:
Puget Energy’s first quarter 2006 results reflect $18.9 million, or 16 cents per diluted share, from the discontinued operations of InfrastruX Group, a utility construction services subsidiary that was sold in the second quarter of 2006.
Puget Energy 2007 Outlook:
Puget Energy anticipates 2007 earnings from continuing operations to be within the previously disclosed range of $1.50 to $1.65 per diluted share.
Conference Call:
Puget Energy will provide additional information regarding its first quarter 2007 results during a conference call for analysts scheduled at 10 a.m. ET (7 a.m. PT) on Friday, April 27, 2007. The call will be broadcast live through a Web cast at www.pugetenergy.com. The Web cast will be archived and available for replay following the call. A tape-recorded replay of the call will be available two hours after completion of the conference call on April 27, 2007 through midnight (ET) on May 11, 2007 by dialing 1-888-286-8010 and entering the conference identification number at 75350805.
Form 10-Q Quarterly Report for the First Quarter of 2007:
Puget Energy will file its Form 10-Q for the first quarter 2007 with the Securities and Exchange Commission (SEC) by May, 4, 2007, a copy of which will be available through the SEC’s website at www.sec.gov or at www.pugetenergy.com. Investors are encouraged to read the financial statements and disclosures that will be contained in the Form 10-Q filing.
About Puget Energy
Puget Energy (NYSE:PSD) is the parent company of Puget Sound Energy (PSE), a regulated utility providing electric and natural gas service primarily to the growing Puget Sound region of western Washington.
About Puget Sound Energy
Washington state’s oldest and largest energy utility, with a 6,000-square-mile service area stretching across 11 counties, Puget Sound Energy (PSE) serves more than 1 million electric customers and 718,000 natural gas customers, primarily in western Washington. PSE meets the energy needs of its growing customer base through incremental, cost-effective energy efficiency, low-cost procurement of sustainable energy resources, and far-sighted investment in the energy-delivery infrastructure.
CAUTIONARY STATEMENT: Certain statements contained in this news release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, among which include PSE’s plans relating to utility plant additions and expenses, and factors that could impact Puget Energy’s earnings guidance for the year-end 2007. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect actual results include, among others, governmental policies and regulatory actions, including those of the Washington Utilities and Transportation Commission, and weather conditions. More information about these and other factors that potentially could affect the company’s financial results is included in Puget Energy's and PSE's most recent annual report on Form 10-K, quarterly report on Form 10-Q and in their other public filings filed with the Securities and Exchange Commission. Except as required by law, Puget Energy and PSE undertake no obligation to update any forward-looking statements.
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
