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.

PUGET ENERGY -- SUMMARY INCOME STATEMENT

(In thousands, except per-share amounts)
Unaudited
Three months ended 3/311
  2007      2006 
 
Operating revenues
Electric $ 527,619  $ 467,424 
Gas 467,009  406,588 
Non-utility operating revenue   9,276    4,136 
Total operating revenues   1,003,904    878,148 
Operating expenses
Purchased electricity 282,092  252,125 
Electric generation fuel 26,058  21,584 
Residential exchange (34,478) (56,633)
Purchased gas 310,647  266,679 
Unrealized net (gain) loss on derivative instruments (5,782) 975 
Utility operations & maintenance 98,171  87,368 
Non-utility expense and other 2,130  793 
Depreciation & amortization 69,609  63,884 
Conservation amortization 10,328  8,048 
Taxes other than income taxes   87,069    79,739 
Total operating expenses   845,844    724,562 
 
Operating income 158,060  153,586 
Other income (deductions):
Other income 4,764  3,340 
Other expense (1,031) (1,476)
Interest Charges:
AFUDC 2,416  2,022 
Interest expense   (51,261)   (43,712)
Income from continuing operations before income taxes 112,948  113,760 
Income tax expense   33,887    40,187 
Net income from continuing operations 79,061  73,573 
Income (loss) from discontinued operations, net of tax   ---    18,947 
Net income (loss) before cumulative effect of
accounting change 79,061  92,520 
Cumulative effect of accounting change   ---    89 
Net Income (loss) $ 79,061  $ 92,609 
Common shares outstanding 116,479  115,725 
Diluted shares outstanding   116,974    116,190 
Basic earnings per common share from
continuing operations $ 0.68  $ 0.64 
Basic earnings from discontinued operations ---  0.16 
Cumulative effect from accounting change   ---    --- 
Basic earnings per common share $ 0.68  $ 0.80 
 
Diluted earnings per common share from
continuing operations $ 0.68  $ 0.63 
Diluted earnings from discontinued operations ---  0.16 
Cumulative effect from accounting change   ---    --- 
Diluted earnings per common share2 $ 0.68  $ 0.79 
 
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.
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© Business Wire - 2007

Latest news about Puget Energy, Inc.

 

PUGET SOUND ENERGY -- UTILITY OPERATING DATA

Three months ended 3/31
  2007      2006 
Energy sales revenues ($ in thousands; unaudited)
Electricity
Residential $ 292,027  $ 241,934 
Commercial 199,493  182,763 
Industrial 27,125  26,278 
Other retail sales, including change in unbilled   (23,582)   (15,765)
Subtotal, retail sales 495,063  435,210 
Transportation, including change in unbilled 2,341  2,711 
Sales to other utilities & marketers 19,201  15,803 
Other1   11,014    13,700 
Total electricity sales   527,619    467,424 
Gas
Residential 300,866  265,092 
Commercial 135,533  116,808 
Industrial   22,265    16,814 
Subtotal, retail sales 458,664  398,714 
Transportation 3,587  3,614 
Other