July 19, 2001 July 19, 2001
Washington 91-1969407 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.)
ITEM 5. Other Events
Bellevue, Wash. (July 17, 2001) Puget Energy (NYSE: PSD) today reported 2001 second-quarter income for common stock of $22.9 million, or 26 cents per diluted share compared to income for common stock for the second quarter of 2000 of $25.1 million, or 29 cents per diluted share.
Income for common stock for the twelve months ended June 30, 2001 was $176.8 million, or $2.05 per diluted share, compared to income f $180.6 million, or $2.12 per diluted share for the same period one year ago.
“Despite continuing poor hydro conditions in the Northwest and unscheduled outages at certain of our generating facilities, our company delivered expected financial results through the first half of 2001,” said William S. Weaver, chairman, president and CEO of Puget Energy. “Our focus on efficiency and service in the utility distribution business, coupled with success in energy supply initiatives, again served us well.”
Looking toward the remainder of the year, Weaver added, “The recent, hastily thought-out Federal Energy and Regulatory Commission implementation of price caps in 11 western states, including Washington, late in the second quarter, creates challenges for load-serving utilities like Puget Sound Energy. The extremely low level of the price caps, coupled with implementation discretion vested with the California Independent System Operator, produce an environment which is discouraging construction of new generation and working to the disadvantage of customers of the load-serving utilities that have planned adequately for their customers’ needs. We and others will be working to remedy the shortcomings of the FERC price-cap order.”
Operating revenues for the three-month period were $935.4 million, up from $538.8 million for the same period in 2000. Increased revenues reflect increased wholesale and other market-priced electric sales prices and increased natural gas revenues. Increased costs of purchased electricity, fuel for electric generation and purchased natural gas contributed to higher total operating expenses of $863.8 million, up from $475.7 million a year ago.
Earnings for the second quarter of 2001 were adversely impacted by a severe regional drought affecting hydropower and unscheduled outages at company-owned generating facilities, both of which contributed to increases in fuel and purchased power costs.Utility operations and maintenance expenses of $65.4 million, compared to $58.4 million in 2000, increased primarily due to costs related to the Personal Energy Management™ energy-efficiency program, expenses associated with maintenance and repairs for the company’s combustion turbines and budgeted increases in non-production operations and maintenance costs.
Operating revenues for the 12-month period were $4.3 billion, up from $2.2 billion for the same period in 2000. Twelve-month revenues and costs for 2001 were affected by the same factors as the quarter, as well as increased volumes of wholesale electric sales.
With the adoption of Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133), which became effective January 1, 2001, Puget Energy is required to mark to market certain of its electric and natural gas sales and purchase contracts (those contracts which have been determined to be derivative financial instruments because of their terms). Derivative contracts that have been classified as cash-flow hedges are marked to market through other comprehensive income (in terms of value, a substantial portion of the company’s contracts affected by SFAS No. 133 meets those criteria). Derivative contracts that do not qualify as cash-flow hedges are required to be marked to market though the income statement.
The financial statements for the twelve months ended 2001 reflect the charge (and related reserve) for adoption of SFAS No. 133 as of January 1, 2001. The second quarter and twelve months ended 2001 financial statements also reflect the impact of changes since January 1, 2001 in the market value of derivatives outstanding at June 30, 2001. Substantially all of the underlying contracts giving rise to the income statement charges will be fulfilled in 2001 and the reserves established under SFAS No. 133 reversed. In the second quarter, the company’s non-regulated utility-services subsidiary, InfrastruX Group, obtained a $150 million credit facility from a group of banks which will facilitate its business plan of acquiring construction and maintenance companies to serve the utility industry. During the second quarter, InfrastruX acquired three companies serving the Mid-Atlantic region, bringing the total number of acquisitions to six. With these acquisitions, InfrastruX expects annualized revenues of nearly $200 million.
A conference call for analysts to discuss the second- quarter results with management is scheduled at 7:00 a.m. PDT, (10 a.m. EDT) Thursday, July 19, 2001. The call will be broadcast live through a Web cast at www.pse.com in the Investors Web page. The Web cast will be archived and available for replay following the live call.
(In thousands, except per-share amounts)
3 months ended 6/30 (1) 12 months ended 6/30
2001 2000 2001 2000 (2)
Operating revenues
Electric $ 719,694 $ 437,491 $ $ 1,696,150
3,380,549
Gas 163,013 98,017 776,107 523,958
Other 52,712 3,293 154,274 22,411
Total operating revenues 935,419 538,801 2,242,519
4,310,930
Operating expenses
Purchased electricity 535,277 238,105 853,198
2,257,809
Purchased gas 104,184 46,184 499,333 257,319
Electric generation fuel 63,134 29,904 297,843 89,037
Residential exchange (10,304) (9,073)
(46,773) (39,957)
Utility operations & maintenance 65,414 58,395 253,443 234,718
Other operations & maintenance 41,470 4,045 124,402 17,628
Depreciation & amortization 52,935 49,316 207,376 185,390
Conservation amortization 1,603 1,380 6,035 8,185
FAS-133 unrealized (gain)/loss --- ---
(50,000) (23,534)
Other taxes 45,306 43,914 216,187 189,950
Federal income taxes 14,822 13,512 131,822 112,565
Total operating expenses 863,841 475,682 1,908,033
3,923,943
Operating income 71,578 63,119 386,987 334,486
Other income 1,568 6,878 (2,697) 18,061
18,061
Income before interest charges 73,146 69,997 384,290 352,547
Interest charges 48,174 42,628 184,000 162,239
Net income before cumulative effect of
accounting change 24,972 27,369 200,290 190,308
FAS-133 transition adjustment loss (net of tax) --- --- 14,749 ---
Net Income 24,972 27,369 185,541 190,308
Less preferred stock dividend accruals 2,085 2,229 8,703 9,708
Income for common stock $ 22,887 $ 25,140 $ 176,838 $ 180,600
Common shares outstanding 86,303 85,295 85,903 84,918
Basic earnings per common share before
cumulative effect of accounting change $ 0.27 $ 0.29 $ 2.23 $ 2.13
Cumulative effect of accounting change --- --- ---
(0.17)
Basic earnings per common share $ 0.27 $ 0.29 $ 2.13
$ 2.06
Diluted earnings per common share before cumulative effect of accounting change
cumulative effect of accounting change $ 0.26 $ 0.29 $ 2.22 $ 2.12
Cumulative effect of accounting change --- --- ---
(0.17)
Diluted earnings per common share (3) $ 0.26 $ 0.29 $ 2.05 $ 2.12
(1) Partial-year results may not accurately predict full-year performance, as earnings are significantly affected by weather.
(2) Certain amounts previously reported have been reclassified to conform with current year presentations with no effect on net income.
(3) Diluted earning per common share include the dilutive effect of securities related to employee compensation plans.
3 months ended 6/30 12 months ended 6/30
2001 2000 2001 2000
Energy sales revenues
($ in thousands)
Electricity
Residential $ 138,321 $ 138,225 $ 601,088 $ 607,116
Commercial 128,373 106,645 524,646 477,913
Industrial 105,439 45,710 458,399 181,955
Other (2) (30,113) 11,275 30,101
24,045
Subtotal, retail sales 342,020 301,855 1,614,234 1,291,029
Sales to other utilities 377,674 135,636 1,766,315 405,121
Total electricity sales 719,694 437,491 3,380,549 1,696,150
Gas
Residential 92,808 54,833 469,997 315,383
Commercial 52,469 30,592 238,687 153,444
Industrial 12,602 6,885 45,575 31,599
Transportation 2,597 2,838 11,422 12,280
Other 2,537 2,869 10,426 11,252
Total gas sales 163,013 98,017 776,107 523,958
Total energy sales revenues $ 882,707 $ 535,508 $ 4,156,656 $ 2,220,108
Energy sales volumes
Electricity (in mWh)
Residential 2,224,645 2,217,910 9,734,832 9,714,499
Commercial 1,963,621 1,744,088 7,980,282 7,521,874
Industrial 713,987 942,744 3,553,456 3,960,782
Other (2) (226,024) (35,278) (101,694) 320,824
Subtotal, retail sales 4,676,229 4,869,464 21,166,876 21,517,979
Sales to other utilities 2,024,045 2,820,296 13,760,927 11,549,139
Total mWh 6,700,274 7,689,760 34,927,803 33,067,118
Gas (in 000's of therms)
Residential 87,913 80,125 513,493 496,785
Commercial 58,856 59,680 298,865 308,799
Industrial 13,886 14,782 60,732 71,040
Transportation 44,181 49,475 189,121 218,237
Total gas volumes 204,836 204,062 1,062,211 1,094,861
Customers served (3)
Electricity
Residential 825,223 810,243 818,536 804,246
Commercial 99,576 99,198 99,400 97,938
Industrial 4,024 4,112 4,054 4,174
Other 1,754 1,531 1,632 1,515
Total electricity 930,577 915,084 923,622 907,873
customers
Gas
Residential 548,247 531,614 540,869 521,568
Commercial 46,831 45,535 46,151 44,943
Industrial 2,836 3,015 2,903 3,019
Transportation 112 95 107 96
Total gas customers 598,026 580,259 590,030 569,626
Weather
Actual heating degree days 1,034 910 5,074 4,796
Normal heating degree days 925 925 4,908 4,928
(1) Puget Sound Energy is the electric and gas utility subsidiary of Puget Energy.
(2) Includes change in unbilled revenues, Conservation Trust collection, Encogen non-energy sales, sales of no-core gas supply to generators and the customers’ refunded portion of Centralia gain.
(3) Quarterly data represents average served during June; 12-month data represents average for the 12 months ended.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PUGET ENERGY, INC.
Date: July 19, 2001
James W. Eldredge
James W. Eldredge
Corporate Secretary and
Chief Accounting Officer