·	First quarter 2006 income of 79 cents per diluted share including 16 cents from the discontinued operations of InfrastruX Group

·	First quarter 2006 income from Puget Sound Energy (PSE) of 64 cents per diluted share

·	InfrastruX sold for $275 million

·	Reaffirm full-year 2006 guidance of $1.40 to $1.55 per share from continuing operations

·	As of March 31, 2006, PSE provided service to 1,019,600 electric customers and 699,100 natural gas customers, representing a 1.3 percent and 3.0 percent increase, respectively, in the last 12 months.

·

PSE's retail sales volumes of electricity and natural gas increased by 4.4 percent and 8.5 percent, respectively, despite an overall decline in heating degree days primarily due to warmer temperatures in the Pacific Northwest during the month of January. Heating degree days in the first quarter 2006 declined by 9 percent and 2 percent, respectively, compared to historic averages and the first quarter 2005.

·

PSE’s electric margin in the first quarter of 2006 increased by $4.4 million, primarily due to a 4.4 percent increase in retail sales volumes. PSE’s 2005 electric margin benefited from the partial recovery in power costs of $6.0 million or 4 cents per share related to a prior regulatory disallowance. PSE’s electric margin represents electric sales, net of revenue based taxes, to retail and transportation customers less the cost of generating, purchasing and wheeling electricity.

·

PSE’s natural gas margin increased by $12.7 million primarily as a result of an 8.5 percent increase in retail sales volumes and a 3.5 percent rate increase effective March 4, 2005. Gas margin is natural gas sales to retail and transportation customers, net of revenue based taxes, less the cost of purchasing and transporting natural gas.

·

PSE incurred a total of $15.2 million in electric distribution system restoration costs in the first quarter 2006. Of the $15.2 million, $7.0 million was deferred for future recovery in electric rates in accordance with the Washington Utilities and Transportation Commission's (WUTC) regulatory guidelines. PSE anticipates that the majority of additional costs related to severe storm events during the balance of 2006 will also be deferred.

·

PSE’s 2006 utility operations and maintenance expense, excluding electric storm damage expenses, increased by $4.7 million in the first quarter of 2006. The increase was primarily the result of higher operations and maintenance expenses of PSE’s electric generating facilities and maintenance of electric and gas distribution systems.

·	PSE’s depreciation and amortization expense increased by $5.8 million due to additional utility plant placed in service during the last twelve months, including $2.0 million related to the 150-megawatt Hopkins Ridge wind-powered electric generating facility that became operational in November 2005.

·

The average number of fully diluted common shares outstanding in the first quarter 2006 increased to 116.2 million compared to 100.4 million during the same period in 2005. The increase was primarily the result of a secondary offering of 15 million shares completed in October 2005. The impact of dilution as a result of the higher shares outstanding resulted in an earnings per share reduction of 10 cents in the first quarter 2006.

 

 

 

 

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

 

		Unaudited
		Three months ended 3/311
		2006			2005
Operating revenues
Electric		$	467,424		$	420,090
Gas			406,588			321,129
Other			3,723			434
Total operating revenues			877,735			741,653
Operating expenses
Purchased electricity			252,125			208,178
Electric generation fuel			21,584			20,448
Residential exchange			(56,633	)		(55,046	)
Purchased gas			266,679			201,744
Unrealized net loss on derivative instruments			975			509
Utility operations & maintenance			87,364			75,522
Other operations & maintenance			855			741
Depreciation & amortization			63,884			58,077
Conservation amortization			8,048			5,162
Taxes other than income taxes			79,732			69,700
Income taxes			40,345			46,084
Total operating expenses			764,958			631,119
Operating income			112,777			110,534
Other income (deductions):
Other income			2,339			1,164
Interest Charges:
AFUDC			2,022			1,462
Interest expense			(43,542	)		(41,044	)
Mandatorily redeemable securities interest expense			(23	)		(23	)
Net income from continuing operations			73,573			72,093
Income (loss) from discontinued operations, net of tax			18,947			(1,018	)
Net income before cumulative effect of
accounting change			92,520			71,075
Cumulative effect of accounting change			(89	)		---
Net Income		$	92,609		$	71,075
Common shares outstanding			115,725			99,953
Diluted shares outstanding			116,190			100,446
Basic earnings per common share from
continuing operations		$	0.64		$	0.72
Basic earnings from discontinued operations			0.16			(0.01	)
Cumulative effect from accounting change			----			---
Basic earnings per common share		$	0.80		$	0.71
Diluted earnings per common share from
continuing operations		$	0.63		$	0.72
Diluted earnings from discontinued operations			0.16			(0.01	)
Cumulative effect from accounting change			----			---
Diluted earnings per common share2		$	0.79		$	0.71
1 Partial-year results may not accurately predict full-year performance, as earnings are significantly affected by weather.
2 Diluted earnings per common share include the dilutive effect of securities related to employee compensation plans.