Filed pursuant to Rule 424(b)(2)
File Number: 333-47302
Pricing Supplement No. 2
Dated January 11, 2002
(To Prospectus dated October 30, 2000 and
Prospectus Supplement dated November 1, 2000)
PUGET SOUND ENERGY, INC.
Fixed Rate Notes
Senior Medium-Term Notes, Series C
Due Nine Months or More from Date of Issue
Principal Amount: $40,000,000
Issue Price: 100%
Original Issue Date: January 16, 2002
Stated Maturity Date: January 16, 2004
Interest Rate: 6.25%
Interest Payment Dates: May 15 and November 15, commencing May 15, 2002
Regular Record Dates: April 30 and October 31
Form of Notes: [X] Book Entry [_] Certificated
Redemption:
The Senior Medium-Term Notes, Series C, due January 16, 2004 will be
redeemable as a whole or in part, at our option at any time, at a redemption
price equal to the greater of the following:
. 100% of the principal amount of the senior notes; and
. the sum of the present values of the remaining scheduled payments of
principal and interest on the senior notes discounted to the
redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus 10 basis
points, plus in each case accrued interest on the senior notes to the
date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the senior notes to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the senior notes. "Independent Investment Banker" means one of
the Reference Treasury Dealers appointed by the senior note trustee after
consultation with Puget.
"Comparable Treasury Price" means, with respect to any redemption date, (a)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and
lowest such Reference Treasury Quotations, or (b) if the senior note trustee
obtains fewer than four such Reference Treasury Dealer Quotations, the average
of all such quotations. "Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any redemption date, the average,
as determined by the senior note trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the senior note trustee by such Reference
Treasury Dealer at 3:30 p.m. New York time on the third business day preceding
such redemption date.
"Reference Treasury Dealer" means each of CS First Boston Corporation,
Lehman Brothers, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc. and their
respective successors; provided, however, that if any of the foregoing or their
affiliates shall cease to be primary U.S. Government securities dealer in The
City of New York (a "Primary Treasury Dealer"), we will substitute another
primary Treasury Dealer.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of senior notes to be
redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the senior notes or portions
thereof called for redemption.
Underwriting:
Under the terms and subject to the conditions contained in a distribution
agreement dated November 1, 2000 and a terms agreement dated January 11, 2002,
the underwriter named below has agreed to purchase from us the following
principal amount of the Notes:
Principal
Underwriter Amount of the Notes
----------- -------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ......................... $40,000,000
The terms agreement provides that the underwriter will be obligated to take
and pay for all of the senior notes if any are taken. The following table
summarizes the discount to be received by the underwriter, and the proceeds we
will receive, in connection with the sale of the senior notes:
Per Note Total
-------- -----
Underwriting Discount .................... 0.25% $ 100,000
Proceeds to Puget Sound Energy ........... 99.75% $ 39,900,000
------ -------------
Total ............................... 100.00% $ 40,000,000
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Additional Terms: None
CUSIP: 74531E AH5
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