Item 12. Results of
Operations and Financial Condition
On
August 5, 2004 the Company issued the following press release. In addition, the Company
is providing as Exhibit 99.1 the affects of the Tenaska Disallowance, under the
Washington Utilities and Transportation Commission's methodology, on the second quarter of
2004 and future periods.
Puget Energy reports
second-quarter 2004 earnings
Company’s financial
results on target excluding power-cost disallowance
BELLEVUE,
Wash. (Aug. 5, 2004) – Puget Energy (NYSE: PSD) today reported a second-quarter
2004 loss of $6.8 million, or 7 cents per diluted share of common stock, resulting
primarily from a regulatory disallowance of $24.5 million in after-tax power costs
incurred by the company’s utility subsidiary, Puget Sound Energy.
| • |
|
Loss
of $6.8 million, or 7 cents per diluted share, resulting primarily from an after-tax
regulatory disallowance of $24.5 million, or 25 cents per diluted share |
| • |
|
Normalized
earnings of 16 cents per diluted share from the company’s core regulated utility
business, Puget Sound Energy (PSE), comparable to 2003 levels |
| • |
|
Year-end
2004 earnings guidance of $1.20 to $1.30 per diluted share reaffirmed |
| • |
|
General
rate case filed with Washington Utilities and Transportation Commission (WUTC) to recover
increased costs of providing electric and natural gas service |
| |
Second Quarter ended June 30
|
(in millions except per share data)
|
2004
|
2003
|
| Revenues |
|
|
$ |
515.9 |
|
$ |
524.1 |
|
| Operating income | | |
| 35.2 |
|
| 66.4 |
|
| Net Income (or loss) for common stock | | |
$ | (6.8 |
) |
$ | 20.6 |
|
| Earnings per share (diluted) | | |
$ | (0.07 |
) |
$ | 0.22 |
|
Excluding
the regulatory disallowance and other atypical circumstances – mainly below-average
energy sales due to unseasonably warmer than normal Northwest temperatures – the
company’s quarterly earnings would have reflected normalized performance of its
utility operations of 16 cents per diluted share. A reconciliation of the differences
between the company’s reported earnings and its earnings as adjusted to reflect
normalized performance of its utility operations is presented below.
“The disallowance
caused us to hit a bump in the road in the past quarter,” said Stephen P. Reynolds, President and
CEO of both Puget Energy and Puget Sound Energy (PSE). “But we continue to be
committed to restoring the long-term financial health of Puget Energy.”
“Despite
the disallowance, our utility business remains stable, and our passion to maintain
quality service and improve our financial performance is unwavering.”
Reynolds
cited a variety of factors supporting his confidence. PSE remains one of the
country’s most efficient utilities, with operations and maintenance costs annually
ranked among the lowest in the nation. The quality of PSE’s energy service is
consistently high, according to state-reviewed performance standards, while customers
rates remain very competitive. And over the past two years the company has increased its
equity ratio to 40 percent from 30 percent in 2002.
Puget
Energy today reaffirmed its previously announced earnings guidance for year-end 2004 of
$1.20 to $1.30 per diluted share.
Second-quarter 2004
summary for Puget Sound Energy (PSE)
| • |
|
PSE
reported a second quarter 2004 loss of $9.5 million, or 10 cents per diluted share,
compared with income of $17.8 million, or 19 cents per diluted share, for the same period
in 2003. |
| • |
|
PSE’s
electric margin for the second quarter of 2004 declined by $37.6 million compared with
the second quarter of 2003. The decline resulted primarily from recording regulatory
disallowances related to gas supply costs for the Tenaska generating project, totaling
$37.8 million pretax ($24.5 million after-tax) or 25 cents per diluted share as described
in Puget Energy’s June 10, 2004 Form 8-K and June 30, 2004 Form 10-Q filed with the
Securities and Exchange Commission (SEC). In the second quarter of 2003 electric margin
was adversely impacted by an under-recovery of electric power costs totaling $7.3 million
pretax or 5 cents per diluted share under the company’s Power Cost Adjustment
Mechanism (PCA). The PCA mechanism is described below. |
| • |
|
PSE’s
gas margin in the second quarter of 2004 declined by $4.6 million pretax (3 cents per
diluted share), or 10 percent, from the same quarter of 2003 as a result of a reduction
in retail gas sales volumes due primarily to warmer temperatures in the Pacific Northwest
during the second quarter of 2004. |
| • |
|
Heating
degree-days declined by 219 during the second quarter of 2004 (24 percent warmer)
compared to prior year levels. |
| |
Heating Degree Days
|
% Change
|
Heating Degree Days
|
% Change
|
Month Ending
|
2004
|
Normal
|
2004 vs. Normal
|
2004
|
2003
|
2004 vs. 2003
|
| April |
|
344 |
|
447 |
|
23% Warmer |
|
344 |
|
478 |
|
28% Warmer |
|
| May | |
243 |
|
291 |
|
16% Warmer | |
243 |
|
308 |
|
21% Warmer | |
| June | |
97 |
|
150 |
|
35% Warmer | |
97 |
|
117 |
|
17% Warmer | |
|
| Second Quarter | |
684 |
|
888 |
|
23% Warmer | |
684 |
|
903 |
|
24% Warmer | |
|
| • |
|
During
the second quarter of 2004, the average number of natural gas customers in PSE’s
service territory grew by 3.5 percent to approximately 655,000 at June 30, 2004 compared
to prior year levels. Electric customers increased by 2.2 percent in the second quarter
of 2004 to approximately 988,600 customers compared to prior year levels. |
| • |
|
Unrealized gain on derivative instruments increased by $2.8 million in the second quarter of 2004 over the same period in
2003 primarily due to the valuation of a long-term contract for the physical purchases of gas related to the period July 1,
2004 through October 31, 2005. PSE expects the unrealized gain related to this contract of approximately $2.3 million
pretax or 2 cents per diluted share recorded in the second quarter of 2004 to reverse as transactions settle in 2004. |
| • |
|
Other
income declined by approximately $0.7 million after-tax or 1 cent per diluted share in
the second quarter of 2004 compared with the second quarter of 2003. The second quarter
of 2003 included a one-time sale of securities by a subsidiary of PSE amounting to
approximately $1.9 million after-tax or 2 cents per diluted share. |
| • |
|
PSE’s
income tax in the second quarter of 2004 was a benefit of $5.3 million as compared with
an expense of $2.3 million in the second quarter of 2003 primarily due to the loss
realized in the second quarter of 2004 compared to income in the second quarter in 2003.
Income tax expense in the second quarter of 2003 reflected a one-time $6.2 million, or 6
cents per diluted share, benefit related to a favorable resolution of a federal income
tax matter from years 1997 to 2002. |
| • |
|
PSE’s
interest expense and preferred stock dividends decreased in the second quarter of 2004 by
$3.7 million after-tax or 3 cents per diluted share compared to the same quarter of 2003,
reflecting redemption of high cost debt and preferred stock. |
| • |
|
PSE’s
common equity ratio was 40.5 percent at June 30, 2004 compared to 36.4 percent at June
30, 2003. |
Second-quarter
2004 summary for InfrastruX Group (InfrastruX)
| • |
|
InfrastruX,
the unregulated utility construction services subsidiary of Puget Energy, reported net
income of $2.9 million or 3 cents per diluted share in the second quarter of 2004, as
compared with net income of $2.8 million or 3 cents per diluted share for the second of
quarter 2003, net of minority interests. InfrastruX’s financial results in the
second quarter of 2004 reflect the adverse impact of very wet conditions in Texas where
the company has significant operations. Similar conditions existed in the East during the
second quarter of 2003. InfrastruX’s financial results in both periods reflect
generally weak utility infrastructure spending nationwide. |
Puget Energy and Puget Sound Energy:
Second Quarter 2004 vs. Second Quarter 2003 EPS Reconciliation
|
|
Cents per diluted share
|
| Puget Energy Q2 2003 Reported Earnings |
|
|
$ |
0 |
.22 |
| One-time regulatory disallowance in 2004 | | |
| (0 |
.25) |
| One-time federal tax benefit in 2003 | | |
| (0 |
.06) |
| Lower interest expense & preferred stock dividends in 2004 | | |
| 0 |
.03 |
| Less: All other variances, net | | |
| (0 |
.01) |
|
| Subtotal: Puget Energy Q2 2004 Reported Earnings | | |
| (0 |
.07) |
| Less: InfrastruX Q2 2004 Earnings | | |
| (0 |
.03) |
|
| Puget Sound Energy Q2 2004 Earnings | | |
$ | (0 |
.10) |
|
Reconciliation of
Normalized Earnings
The following tables reconcile the differences
between the company’s reported earnings for the second quarter of 2004 and 2003 and
its earnings for those periods as adjusted to reflect normalized performance of the
company’s utility operations, which is a non-GAAP financial measure. Management of
the company believes presentation of normalized earnings is useful to investors as
supplemental information to facilitate period-to-period comparison of the company’s
financial results and, when viewed together with GAAP financial measures, provides a more
complete understanding of the factors affecting the company’s business. Management
strongly encourages investors to review the company’s financial statements and
publicly-filed reports in their entirety and to not rely on any single financial measure.
Normalized Second Quarter 2004 Earnings
|
|
Cents per diluted share
|
| Puget Energy Q2 2004 Reported Earnings |
|
|
$ |
(0 |
.07) |
| Add: One-time PSE regulatory disallowance in 2004 | | |
| 0 |
.25 |
| Add: Decrease in gas margin due to warmer temperatures in 2004 | | |
| 0 |
.03 |
| Add: Interest and preferred dividend savings, net of equity dilution | | |
| 0 |
.02 |
|
| Less: FAS 133 unrealized gains | | |
| (0 |
.02) |
|
| Less: All other unusual items, net (including O&M, Other Income and | | |
| (0 |
.02) |
| lower income tax expense) | | |
|
| Subtotal: Normalized Puget Energy Q2 2004 Earnings | | |
| 0 |
.19 |
| Less: InfrastruX | | |
| (0 |
.03) |
|
| Normalized Puget Sound Energy Q2 2004 Earnings | | |
$ | 0 |
.16 |
|
Normalized Second Quarter 2003 Earnings
|
|
Cents per diluted share
|
| Puget Energy Q2 2003 Reported Earnings |
|
|
$ |
0 |
.22 |
| Add: Excess power costs not recovered through the PCA in 2003 | | |
| 0 |
.05 |
| Less: One-time income tax benefit in 2003 | | |
| (0 |
.06) |
| Less: Increase in other income due to sale of securities in 2003 | | |
| (0 |
.02) |
|
| Subtotal: Normalized Puget Energy Q2 2003 Earnings | | |
| 0 |
.19 |
| Less: InfrastruX | | |
| (0 |
.03) |
|
| Normalized Puget Sound Energy Q2 2003 Earnings | | |
$ | 0 |
.16 |
|
PSE Regulatory
Initiatives
| • |
|
Effective
May 24, 2004, PSE’s retail electric rates increased by approximately 3.2 percent, or
$44.1 million on an annualized basis, following approval by the WUTC in PSE’s power
cost only rate case. The increase allows PSE to recover higher power costs incurred to
serve its electric customers, including recovery of costs related to PSE’s purchase
of a 49.85 percent interest or approximately 124 megawatts in the Frederickson Power
generating facility located near Tacoma, Washington for approximately $81 million. The
Federal Energy Regulatory Commission (FERC) also approved the acquisition of the
Frederickson Power generating facility which was finalized on April 30, 2004. |
| • |
|
In
addition to approving the increased retail electric rates described above, the WUTC
issued separate orders on May 13, 2004 and June 7, 2004 which resolved the remaining
issues related to PSE’s power cost only rate case. These decisions included past and
potential future fuel cost disallowances related to the Tenaska generating facility, as
described in further detail in Puget Energy’s August 5, 2004 Form 8-K and June 30,
2004 Form 10-Q filed with the SEC. |
| • |
|
PSE
filed an electric and natural-gas rate-increase proposal with the WUTC on April 5, 2004
to financially strengthen the utility as well as to enhance customer service and
stabilize energy costs. The rate case proposes increases of 5.7 percent, or $81.6 million
annually, and 6.3 percent, or $47.2 million annually for electric and natural gas
customers, respectively. The WUTC has established a hearing schedule in the proceeding,
which calls for a decision on PSE’s request no later than the first quarter of 2005. |
2004 Outlook
| • |
|
Puget
Energy anticipates its 2004 financial results to be within the range of $1.20 to $1.30
per diluted share, which is unchanged from the earnings guidance provided in a June 10,
2004 Form 8-K disclosing the impact of Tenaska regulatory disallowances. The Company
reduced its earlier earnings guidance of $1.50 to $1.60 per diluted share for year-end
2004 by $0.30 to $1.20 to $1.30 per diluted share to reflect the impact of the Tenaska
disallowances. |
| • |
|
In
a year of normal stream-flows, PSE obtains approximately 38 percent of its energy supply
from low-cost hydroelectric facilities, primarily from dams below Grand Coulee on the
Columbia River. The July 8, 2004 Columbia Basin Runoff Forecast published by the
Northwest River Forecast Center indicated that the total forecasted runoff into the Grand
Coulee reservoir for the period January through July 2004 would be 83 percent of normal.
This compares to 86 percent of normal for the same period in 2003. If the forecasted
stream-flow reductions occur, PSE will need to replace a portion of its low cost
hydropower with more expensive thermally generated and purchased power. However, these
excess power costs will have a minimal impact on PSE’s financial results for the
remainder of 2004 due to the PCA mechanism and a loss reserve established at June 30,
2004 in connection with the Tenaska regulatory disallowances, as described below. |
| • |
|
PSE
is continuing to implement its multi-stage plan to acquire approximately 400 megawatts
(MWs) of electric energy in the near-term to meet the growing energy requirements of the
Company and the region. PSE issued requests for proposals (RFP) for up to 355 average
megawatts (aMW) from any power supply resource, including 50 aMW of wind power and
additional electricity savings through 20 megawatts of conservation on an incremental
basis each year through 2013. Seven proposals have been chosen for in-depth analysis by
PSE. The proposals involve a mix of renewable and conventional power resources including
purchased power from thermal and hydropower sources, as well as direct PSE investment in
the development of wind-powered generating facilities. |
Excess Power Costs not
recovered in PCA Mechanism
| • |
|
The
PCA mechanism allows PSE to recover power-supply costs on a shared basis with its
customers if PSE’s costs to supply electricity increase from a normalized level
established in electric rates. All significant variable power-supply cost drivers are
included in the PCA mechanism (hydroelectric generation variability, market price
variability for purchased power and surplus power sales, natural gas and coal fuel price
variability, generation unit forced outage risk and wheeling cost variability). |
| • |
|
On
a July through June basis starting July 1, 2002, the PCA mechanism provides for a sharing
of costs and benefits that are graduated over four levels of power cost variances. PSE’s
cumulative maximum pretax earnings exposure due to power-supply cost variations over the
four year period ending June 30, 2006 is limited to $40 million plus 1 percent of the
excess pretax. |
| • |
|
PSE
exceeded the $40 million cumulative cap under the PCA at year-end 2003. Cumulative excess
power costs under the PCA from July 1, 2002 through June 30, 2004 were $64.3 million
pretax (customer portion was $24.2 million) before reflecting the $37.8 million pretax
Tenaska regulatory disallowance recorded in the second quarter of 2004. After the Tenaska
disallowance was reflected in the second quarter of 2004, cumulative excess power costs
under the PCA mechanism totaled $26.5 million (customer portion was $2.2 million). A loss
reserve of $13.6 million pretax was established in the second quarter of 2004. As a
result, and based on current market conditions, PSE does not expect excess power costs to
impact year-end 2004 earnings after July 1, 2004. PSE expects that its share of excess
power costs will be above the $40 million cumulative cap at year-end 2004. |
SECOND QUARTER 2004
EARNINGS ANALYST TELECONFERENCE
A
conference call for analysts to discuss with management the second-quarter results and the
outlook for future performance is scheduled at 10 a.m. EDT (7 a.m. PDT) on Friday, August
6, 2004. The conference 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 conference call. A recorded replay of the
conference call also will be available two hours after completion on Friday, August 6,
2004 through midnight (EDT) on Friday, August 20, 2004. To access the recording, dial
1-888-286-8010 and enter the conference I.D. number 45827055.
Puget Energy is an energy services
holding company that conducts all of its operations through its subsidiaries, PSE and
InfrastruX Group. PSE is a regulated utility company that generates, purchases and sells
electricity; and purchases, transports and sells natural gas. The service territory of PSE
covers approximately 6,000 square miles, principally in the Puget Sound region of
Washington state. InfrastruX specializes in contracting services to other gas and electric
utilities primarily in the Midwest, Texas, and the south-central and eastern United States
regions.
CAUTIONARY STATEMENT: Certain
statements contained in this press release are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995, among which
include earnings guidance for the year-end 2004. 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 WUTC, 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.
|
| PUGET ENERGY -- SUMMARY INCOME STATEMENT |
| (In thousands, except per-share amounts) |
| |
Unaudited
Three months ended 6/301
|
Unaudited
Six months ended 6/301
|
| |
2004
|
2003
|
2004
|
2003
|
| Operating revenues |
|
|
| |
|
| |
|
| |
|
| |
|
| Electric2 | | |
$ | 303,091 |
|
$ | 314,400 |
|
$ | 695,587 |
|
$ | 696,073 |
|
| Gas | | |
| 119,479 |
|
| 116,747 |
|
| 395,170 |
|
| 304,535 |
|
| Non-utility construction services | | |
| 92,816 |
|
| 92,343 |
|
| 167,571 |
|
| 163,020 |
|
| Other | | |
| 553 |
|
| 570 |
|
| 1,080 |
|
| 1,069 |
|
| |
|
| Total operating revenues | | |
| 515,939 |
|
| 524,060 |
|
| 1,259,408 |
|
| 1,164,697 |
|
| |
|
| Operating expenses | | |
| Purchased electricity2 | | |
| 173,847 |
|
| 157,804 |
|
| 370,214 |
|
| 362,915 |
|
| Residential exchange | | |
| (35,362 |
) |
| (36,977 |
) |
| (89,785 |
) |
| (89,656 |
) |
| Purchased gas | | |
| 63,703 |
|
| 57,372 |
|
| 226,109 |
|
| 144,326 |
|
| Electric generation fuel | | |
| 21,014 |
|
| 11,088 |
|
| 35,002 |
|
| 26,162 |
|
| Unrealized (gain) loss on derivative instruments | | |
| (2,849 |
) |
| (44 |
) |
| (2,936 |
) |
| (521 |
) |
| Utility operations & maintenance | | |
| 73,201 |
|
| 73,895 |
|
| 147,056 |
|
| 143,950 |
|
| Other operations & maintenance | | |
| 78,545 |
|
| 77,117 |
|
| 145,547 |
|
| 147,637 |
|
| Depreciation & amortization | | |
| 61,122 |
|
| 59,321 |
|
| 121,410 |
|
| 117,266 |
|
| Conservation amortization | | |
| 4,809 |
|
| 6,295 |
|
| 12,999 |
|
| 14,017 |
|
| Taxes other than income taxes | | |
| 45,622 |
|
| 46,950 |
|
| 113,114 |
|
| 104,611 |
|
| Income taxes | | |
| (2,929 |
) |
| 4,832 |
|
| 35,783 |
|
| 36,198 |
|
| |
|
| Total operating expenses | | |
| 480,723 |
|
| 457,653 |
|
| 1,114,513 |
|
| 1,006,905 |
|
| |
|
| Operating income | | |
| 35,216 |
|
| 66,407 |
|
| 144,895 |
|
| 157,792 |
|
| Other income (net of tax) | | |
| 1,586 |
|
| 2,247 |
|
| 1,650 |
|
| 2,952 |
|
| |
|
| Income before interest charges & minority interest | | |
| 36,802 |
|
| 68,654 |
|
| 146,545 |
|
| 160,744 |
|
| Interest charges | | |
| AFUDC | | |
| (1,079 |
) |
| (701 |
) |
| (2,157 |
) |
| (1,318 |
) |
| Interest expense | | |
| 44,349 |
|
| 46,681 |
|
| 88,826 |
|
| 94,963 |
|
| Mandatorily redeemable securities interest expense3 | | |
| 23 |
|
| -- |
|
| 45 |
|
| -- |
|
| |
|
| Total interest charges | | |
| 43,293 |
|
| 45,980 |
|
| 86,714 |
|
| 93,645 |
|
| |
|
| Minority interest | | |
| 289 |
|
| 282 |
|
| 246 |
|
| (50 |
) |
| |
|
| Net income before cumulative effect of | | |
| accounting change | | |
| (6,780 |
) |
| 22,392 |
|
| 59,585 |
|
| 67,149 |
|
| FAS-143 transition adjustment loss (net of tax) | | |
| -- |
|
| -- |
|
| -- |
|
| 169 |
|
| |
|
| Net Income | | |
| (6,780 |
) |
| 22,392 |
|
| 59,585 |
|
| 66,980 |
|
| Less preferred stock dividend accruals3 | | |
| -- |
|
| 1,794 |
|
| -- |
|
| 3,661 |
|
| |
|
| Income for common stock | | |
$ | (6,780 |
) |
$ | 20,598 |
|
$ | 59,585 |
|
$ | 63,319 |
|
| |
|
| Common shares outstanding | | |
| 99,371 |
|
| 93,928 |
|
| 99,271 |
|
| 93,833 |
|
| Diluted shares outstanding | | |
| 99,371 |
|
| 94,440 |
|
| 99,786 |
|
| 94,346 |
|
| |
|
| Basic earnings per common share before | | |
| cumulative effect of accounting change | | |
$ | (0.07 |
) |
$ | 0.22 |
|
$ | 0.60 |
|
$ | 0.68 |
|
| Cumulative effect of accounting change | | |
| -- |
|
| -- |
|
| -- |
|
| -- |
|
| |
|
| Basic earnings per common share | | |
$ | (0.07 |
) |
$ | 0.22 |
|
$ | 0.60 |
|
$ | 0.68 |
|
| |
|
| Diluted earnings per common share before | | |
| cumulative effect of accounting change | | |
$ | (0.07 |
) |
$ | 0.22 |
|
$ | 0.60 |
|
$ | 0.67 |
|
| Cumulative effect of accounting change | | |
| -- |
|
| -- |
|
| -- |
|
| -- |
|
| |
|
| Diluted earnings per common share4 | | |
$ | (0.07 |
) |
$ | 0.22 |
|
$ | 0.60 |
|
$ | 0.67 |
|
| |
|
| 1 |
|
Partial-year
results may not accurately predict full-year performance, as earnings are significantly
affected by weather. |
| 2 |
|
Effective
January 1, 2004, non-trading derivative instruments meeting Emerging Issues Task Force
Issue No. 03-11 must be shown net in the income statement. Previous year amounts
have been reclassified to conform to the current presentation. |
| 3 |
|
Effective
July 1, 2003, SFAS 150, "Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity," requires companies with equity that
has characteristics of debt to classify their dividends as interest expense instead
of as preferred stock dividends. |
| 4 |
|
Diluted
earnings per common share include the dilutive effect of securities related to employee
compensation plans. |
| PUGET SOUND ENERGY -- UTILITY OPERATING DATA |
| |
Three months ended 6/30
|
Six months ended 6/30
|
| |
2004
|
2003
|
2004
|
2003
|
| Energy sales revenues ($ in thousands; unaudited) |
|
|
| |
|
| |
|
| |
|
| |
|
| Electricity | | |
| Residential | | |
$ | 132,263 |
|
$ | 137,059 |
|
$ | 336,661 |
|
$ | 327,731 |
|
| Commercial | | |
| 131,559 |
|
| 128,555 |
|
| 285,166 |
|
| 276,103 |
|
| Industrial | | |
| 20,780 |
|
| 21,706 |
|
| 43,154 |
|
| 44,841 |
|
| Other retail sales, including change in unbilled | | |
| (3,697 |
) |
| (1,645 |
) |
| (16,579 |
) |
| (15,264 |
) |
| |
|
| Subtotal, retail sales | | |
| 280,905 |
|
| 285,675 |
|
| 648,402 |
|
| 633,411 |
|
| Transportation, including change in unbilled | | |
| 2,361 |
|
| 3,436 |
|
| 4,614 |
|
| 6,611 |
|
| Sales to other utilities & marketers1 | | |
| 10,748 |
|
| 18,624 |
|
| 22,235 |
|
| 40,518 |
|
| Other2 | | |
| 9,077 |
|
| 6,665 |
|
| 20,336 |
|
| 15,533 |
|
| |
|
| Total electricity sales | | |
| 303,091 |
|
| 314,400 |
|
| 695,587 |
|
| 696,073 |
|
| Gas | | |
| Residential | | |
| 67,520 |
|
| 70,899 |
|
| 248,281 |
|
| 195,391 |
|
| Commercial | | |
| 37,646 |
|
| 33,904 |
|
| 115,108 |
|
| 83,535 |
|
| Industrial | | |
| 7,446 |
|
| 5,935 |
|
| 18,573 |
|
| 13,158 |
|
| |
|
| Subtotal, retail sales | | |
| 112,612 |
|
| 110,738 |
|
| 381,962 |
|
| 292,084 |
|
| Transportation | | |
| 3,115 |
|
| 3,349 |
|
| 6,546 |
|
| 6,860 |
|
| Other | | |
| 3,752 |
|
| 2,660 |
|
| 6,662 |
|
| 5,591 |
|
| |
|
| Total gas sales | | |
| 119,479 |
|
| 116,747 |
|
| 395,170 |
|
| 304,535 |
|
| |
|
| Total energy sales revenues | | |
$ | 422,570 |
|
$ | 431,147 |
|
$ | 1,090,757 |
|
$ | 1,000,608 |
|
|
| Energy sales volumes (Unaudited) | | |
| Electricity (in mWh) | | |
| Residential | | |
| 2,147,955 |
|
| 2,224,345 |
|
| 5,437,146 |
|
| 5,325,451 |
|
| Commercial | | |
| 1,973,204 |
|
| 1,928,289 |
|
| 4,169,491 |
|
| 4,042,246 |
|
| Industrial | | |
| 329,598 |
|
| 344,628 |
|
| 656,626 |
|
| 689,148 |
|
| Other, including change in unbilled | | |
| (92,868 |
) |
| (40,222 |
) |
| (303,378 |
) |
| (260,145 |
) |
| |
|
| Subtotal, retail sales | | |
| 4,357,889 |
|
| 4,457,040 |
|
| 9,959,885 |
|
| 9,796,700 |
|
| Transportation, including change in unbilled | | |
| 459,713 |
|
| 508,536 |
|
| 943,415 |
|
| 1,000,113 |
|
| Sales to other utilities & marketers | | |
| 281,680 |
|
| 629,627 |
|
| 551,290 |
|
| 1,117,261 |
|
| |
|
| Total mWh | | |
| 5,099,282 |
|
| 5,595,203 |
|
| 11,454,590 |
|
| 11,914,074 |
|
| Gas (in 000's of therms) | | |
| Residential | | |
| 67,976 |
|
| 85,112 |
|
| 271,725 |
|
| 272,680 |
|
| Commercial | | |
| 47,941 |
|
| 52,079 |
|
| 147,682 |
|
| 143,776 |
|
| Industrial | | |
| 10,087 |
|
| 9,648 |
|
| 24,936 |
|
| 23,510 |
|
| Transportation | | |
| 47,415 |
|
| 51,851 |
|
| 103,596 |
|
| 109,132 |
|
| |
|
| Total gas volumes | | |
| 173,419 |
|
| 198,690 |
|
| 547,939 |
|
| 549,098 |
|
|
| Margins3 ($ in thousands; unaudited) | | |
| Electric | | |
$ | 108,593 |
|
$ | 146,155 |
|
$ | 302,728 |
|
$ | 318,692 |
|
| Gas | | |
| 41,562 |
|
| 46,212 |
|
| 128,686 |
|
| 127,794 |
|
|
| Customers served4 (Unaudited) | | |
| Electricity | | |
| Residential | | |
| 873,583 |
|
| 853,340 |
|
| 868,962 |
|
| 850,366 |
|
| Commercial | | |
| 108,903 |
|
| 108,415 |
|
| 109,370 |
|
| 107,570 |
|
| Industrial | | |
| 3,941 |
|
| 3,948 |
|
| 3,968 |
|
| 3,946 |
|
| Other | | |
| 2,164 |
|
| 2,056 |
|
| 2,142 |
|
| 2,033 |
|
| Transportation | | |
| 17 |
|
| 16 |
|
| 17 |
|
| 16 |
|
| |
|
| Total electricity customers | | |
| 988,608 |
|
| 967,775 |
|
| 984,459 |
|
| 963,931 |
|
| Gas | | |
| Residential | | |
| 603,412 |
|
| 582,516 |
|
| 599,894 |
|
| 579,049 |
|
| Commercial | | |
| 48,775 |
|
| 47,391 |
|
| 48,562 |
|
| 47,149 |
|
| Industrial | | |
| 2,704 |
|
| 2,716 |
|
| 2,722 |
|
| 2,727 |
|
| Transportation | | |
| 130 |
|
| 135 |
|
| 130 |
|
| 136 |
|
| |
|
| Total gas customers | | |
| 655,021 |
|
| 632,758 |
|
| 651,308 |
|
| 629,061 |
|
|
| Weather (Unaudited) | | |
| Actual heating degree days | | |
| 684 |
|
| 903 |
|
| 2,560 |
|
| 2,697 |
|
| Normal heating degree days5 | | |
| 888 |
|
| 888 |
|
| 2,851 |
|
| 2,830 |
|
| 1 |
|
Effective
January 1, 2004, non-trading derivative instruments meeting Emerging Issues Task Force
Issue No. 03-11 must be shown net in the income statement. Previous year amounts
have been reclassified to conform to the current presentation. |
| 2 |
|
Includes
Conservation Trust collection and sales of non-core gas supplies. As of the third
quarter 2003 the Conservation Trust payments to bondholders are no longer shown as a
reduction in revenue but as an expense due to the consolidation of the Conservation
Trust onto PSE's books beginning July 1, 2003. There is no impact on net income. |
| 3 |
|
Electric
margin is 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. Gas margin is gas sales
to retail and transportation customers less the cost of gas purchased, including gas
transportation costs, to bring gas to PSE's service territory. |
| 4 |
|
Quarterly
data represents average served during June. |
| 5 |
|
Seattle-Tacoma
Airport statistics reported by NOAA which are based on a 30-year average, 1971-2000.
Heating degree days measure how far the daily average temperature falls below 65
degrees. Heating degree days in 2004 are adjusted for leap year by adding the
February 28th heating degree day amount. |
| PUGET ENERGY -- SEGMENT RESULTS |
| (In thousands) |
Three months ended 6/30/04 (Unaudited)
|
Regulated Utility
Operations
|
InfrastruX
|
Other1
|
Puget Energy
Total
|
| Revenues |
|
|
$ | 422,570 |
|
$ | 92,816 |
|
$ | 553 |
|
$ | 515,939 |
|
| Depreciation and amortization | | |
| 56,505 |
|
| 4,553 |
|
| 64 |
|
| 61,122 |
|
| Income taxes | | |
| (5,322 |
) |
| 2,504 |
|
| (111 |
) |
| (2,929 |
) |
| Operating income | | |
| 30,610 |
|
| 4,641 |
|
| (35 |
) |
| 35,216 |
|
| Interest charges | | |
| 41,814 |
|
| 1,428 |
|
| 51 |
|
| 43,293 |
|
| Minority interest | | |
| -- |
|
| 289 |
|
| -- |
|
| 289 |
|
| Net income | | |
| (9,634 |
) |
| 2,940 |
|
| (86 |
) |
| (6,780 |
) |
|
| Goodwill, net at 6/30/04 | | |
$ | -- |
|
$ | 133,069 |
|
$ | -- |
|
$ | 133,069 |
|
| Total assets at 6/30/04 | | |
| 5,247,686 |
|
| 358,700 |
|
| 71,132 |
|
| 5,677,518 |
|
|
| |
| Three months ended 6/30/03 (Unaudited) | | |
|
| Revenues | | |
$ | 431,147 |
|
$ | 92,343 |
|
$ | 570 |
|
$ | 524,060 |
|
| Depreciation and amortization | | |
| 54,661 |
|
| 4,601 |
|
| 59 |
|
| 59,321 |
|
| Income taxes | | |
| 2,290 |
|
| 2,568 |
|
| (26 |
) |
| 4,832 |
|
| Operating income | | |
| 61,958 |
|
| 4,325 |
|
| 124 |
|
| 66,407 |
|
| Interest charges | | |
| 44,814 |
|
| 1,148 |
|
| 18 |
|
| 45,980 |
|
| Minority interest | | |
| -- |
|
| 282 |
|
| -- |
|
| 282 |
|
| Net income | | |
| 17,562 |
|
| 2,833 |
|
| 1,997 |
|
| 22,392 |
|
|
| |
| Six months ended 6/30/04 (Unaudited) | | |
|
| Revenues | | |
$ | 1,090,757 |
|
$ | 167,571 |
|
$ | 1,080 |
|
$ | 1,259,408 |
|
| Depreciation and amortization | | |
| 112,312 |
|
| 8,971 |
|
| 127 |
|
| 121,410 |
|
| Income taxes | | |
| 33,899 |
|
| 2,118 |
|
| (234 |
) |
| 35,783 |
|
| Operating income | | |
| 139,410 |
|
| 5,578 |
|
| (93 |
) |
| 144,895 |
|
| Interest charges | | |
| 83,828 |
|
| 2,784 |
|
| 102 |
|
| 86,714 |
|
| Minority interest | | |
| -- |
|
| 246 |
|
| -- |
|
| 246 |
|
| Net income | | |
| 57,220 |
|
| 2,560 |
|
| (195 |
) |
| 59,585 |
|
|
| |
| Six months ended 6/30/03 (Unaudited) | | |
|
| Revenues | | |
$ | 1,000,608 |
|
$ | 163,020 |
|
$ | 1,069 |
|
$ | 1,164,697 |
|
| Depreciation and amortization | | |
| 109,194 |
|
| 7,960 |
|
| 112 |
|
| 117,266 |
|
| Income taxes | | |
| 36,787 |
|
| (528 |
) |
| (61 |
) |
| 36,198 |
|
| Operating income | | |
| 155,773 |
|
| 1,846 |
|
| 173 |
|
| 157,792 |
|
| Interest charges | | |
| 91,170 |
|
| 2,457 |
|
| 18 |
|
| 93,645 |
|
| Minority interest | | |
| -- |
|
| (50 |
) |
| -- |
|
| (50 |
) |
| Net income | | |
| 65,543 |
|
| (609 |
) |
| 2,046 |
|
| 66,980 |
|
|
| Goodwill, net at 12/31/03 | | |
$ | -- |
|
$ | 133,302 |
|
$ | -- |
|
$ | 133,302 |
|
| Total assets at 12/31/03 | | |
| 5,257,157 |
|
| 342,332 |
|
| 75,196 |
|
| 5,674,685 |
|
|
| PUGET SOUND ENERGY - CAPITALIZATION |
(In thousands)
|
(Unaudited)
At June 30,
2004
|
At December 31,
2003
|
|
Amount
|
%
|
Amount
|
%
|
| Short-term debt2 |
|
|
$ |
28,100 |
|
|
0 |
.7% |
$ |
-- |
|
|
0 |
.0% |
| Junior subordinated debentures of the corporation | | |
| payable to a subsidiary trust holding mandatorily | | |
| redeemable preferred securities | | |
| 280,250 |
|
| 7 |
.3% |
| 280,250 |
|
| 7 |
.2% |
| Mandatorily redeemable preferred stock and | | |
| long-term debt, including current maturities | | |
| 2,004,704 |
|
| 51 |
.5% |
| 2,054,894 |
|
| 52 |
.8% |
| Common equity | | |
| 1,576,108 |
|
| 40 |
.5% |
| 1,555,469 |
|
| 40 |
.0% |
|
| Total capitalization including short-term debt | | |
$ | 3,889,162 |
|
| 100 |
.0% |
$ | 3,890,613 |
|
| 100 |
.0% |
|
| 1 |
|
Includes
the non-regulated subsidiaries of Puget Sound Energy and miscellaneous holding company
expenses. The principal non-regulated subsidiary of PSE is a real estate development
company. |
| 2 |
|
At
June 30, 2004 and December 31, 2003, Rainier Receivables, a wholly owned subsidiary of
PSE, had sold $145 million and $111 million, respectively, in accounts receivable
under the accounts receivable securization program. |
ITEM 7 EXHIBIT:
The following exhibit is filed
herewith:
| |
99.1 |
|
Affects of the Tenaska
Disallowance under the Washinton Utilities and Transportation Commission methodology. |
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused
this report to be signed on their behalf by the undersigned hereunto duly authorized.
| |
Corporate Secretary and
Chief Accounting Officer |