Exhibit 10.1

STOCK PURCHASE AGREEMENT

        This Stock Purchase Agreement (the “Agreement”) is made as of October
31, 2003 by and between the undersigned purchasers (each, a “Purchaser” and
collectively, “Purchasers”) and Puget Energy, Inc., a Washington corporation
(the “Company”). The parties agree as follows:

1.     Purchase and Sale of Shares. Subject to the terms and conditions hereof,
Purchasers shall buy from the Company and the Company shall sell to Purchasers
an aggregate of 4,550,000 shares (the “Shares”) of the Company’s common stock,
par value $0.01 per share, at a price of $22.00 per share for an aggregate
purchase price of $100,100,000 (the “Purchase Price”). The closing of such
purchase and sale (the “Closing” shall take place at the offices of Perkins Coie
LLP, Seattle, Washington, at 7:00 a.m. Pacific Time on the later of (i) the
third (3rd) business day after the date hereof and (ii) the next business day
after the Shares have been approved for listing on The New York Stock Exchange
(“NYSE”), subject to notice of issuance, or at such other time or on such other
date as the parties shall have agreed (the “Closing Date”). Upon Closing, the
Company shall cause the Shares to be electronically delivered to The Depository
Trust Company on Purchasers’ behalf in the respective amounts set forth opposite
Purchasers’ names on the signature page hereof and registered in such names as
Purchasers shall, with reasonable notice, have designated, against payment of
the full Purchase Price in federal funds by wire transfer to a bank account
designated by the Company.

2.     Representations of the Company. In order to induce Purchasers to purchase
the Shares, the Company hereby represents and warrants to Purchasers as follows:

        2.1        The Company and each “significant subsidiary” (as such term
is defined in Rule 1-02 of Regulation S-X of the Securities Act of 1933, as
amended (the “Act”)) of the Company (each, a “Significant Subsidiary”) has been
duly incorporated and is an existing corporation in good standing under the laws
of the State of Washington or, in the case of any Significant Subsidiary, its
respective jurisdiction of incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described in the
Prospectus; and the Company and each Significant Subsidiary is duly qualified to
do business as a foreign corporation in good standing in all other jurisdictions
in which its ownership or lease of property or the conduct of its business
requires such qualification, except in any case where the failure to be so
qualified would not have a material adverse effect on the condition (financial
or other), business, properties or results of operations of the Company and its
subsidiaries taken as a whole (a “Material Adverse Effect”).

        2.2 The Company has full power and authority to enter into this
Agreement and to issue and sell the Shares as contemplated hereby. This
Agreement has been duly authorized and validly executed and delivered by the
Company and constitutes the legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution may be limited by state or federal securities laws
or the public policy underlying such laws, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The Shares, when issued and delivered in accordance with this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and conform in
all material respects to the description thereof contained in the prospectus
supplement regarding the sale of the Shares to be filed by the Company pursuant
to Rule 424(b) of the Act.

        2.3 Except for the approval of the Shares for listing on NYSE, no
consent, approval, authorization, or order of, or filing, registration or
qualification with, any governmental agency or body or any court is required for
the performance by the Company of its obligations hereunder or in connection
with the consummation of the issuance and sale of the Shares, except such as
have been obtained and made under the Act and such as may be required under
state securities laws.

        2.4 The execution, delivery and performance of this Agreement by the
Company and the issuance and sale of the Shares will not result in a breach or
violation by the Company or any Significant Subsidiary of any of the terms and
provisions of, or constitute a default under (a) any statute, rule, regulation
or order of any governmental agency or body or any court having jurisdiction
over the Company or any of its property or any Significant Subsidiary or any of
their respective properties, (b) any agreement or instrument to which the
Company or any Significant Subsidiary is a party or by which the Company or any
Significant Subsidiary is bound or to which any of the properties of the Company
or any Significant Subsidiary is subject, except for breaches, defaults or
violations that would not result in a Material Adverse Effect or (c) the charter
or by-laws of the Company or of any Significant Subsidiary.

        2.5 A registration statement (No. 333-82940) relating to the Shares has
been filed with the Securities and Exchange Commission (the “Commission”) and
has been declared effective. Such registration statement, as amended at the date
of this Agreement and including all material incorporated by reference therein,
meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act
of 1933, as amended (the “Act”), and is herein referred to as the “Registration
Statement,” and the prospectus included in the Registration Statement, as first
filed with the Commission pursuant to and in accordance with Rule 424(b) (“Rule
424(b)”) under the Act and as amended to reflect the terms of the offering of
the Shares, including all material incorporated by reference therein, is
hereinafter referred to as the “Prospectus.” On its effective date, the
Registration Statement conformed in all respects to the requirements of the Act
and the rules and regulations of the Commission (the “Rules and Regulations”)
and did not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and as of the date hereof, the Registration Statement
and the Prospectus conform in all respects to the requirements of the Act and
the Rules and Regulations, and neither of such documents includes any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
except that the foregoing does not apply to statements in or omissions from any
such documents based upon written information, if any, relating to any Purchaser
furnished to the Company by a Purchaser specifically for use therein. No stop
order suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.

        2.6 Except as disclosed in the Prospectus, there are no pending actions,
suits or proceedings against or involving the Company or any of its property,
any of its subsidiaries or any of their respective properties that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, or that would materially and adversely affect the ability of the
Company to perform its obligations under this Agreement, or that are otherwise
material in the context of the sale of the Shares; and, to the Company’s
knowledge, no such actions, suits or proceedings are threatened or contemplated.

        2.7 The financial statements of the Company, together with the related
notes to such financial statements, included or incorporated by reference in the
Registration Statement and Prospectus present fairly in all material respects
the financial position of the Company and its consolidated subsidiaries as of
the dates shown and their results of operations, the statements of cash flows
and statements of stockholders’ equity for the periods shown and, except as
otherwise disclosed in the Prospectus, such financial statements have been
prepared in conformity with generally accepted accounting principles in the
United States applied on a consistent basis (except as stated therein); and any
schedules included or incorporated by reference in the Registration Statement
present fairly in all material respects the information required to be stated
therein.

        2.8 Except as disclosed in the Prospectus, since the date of the latest
audited financial statements included or incorporated by reference in the
Registration Statement, (i) the Company (including its Significant Subsidiaries)
has not incurred any liabilities or obligations, indirect, or contingent, or
entered into any verbal or written agreement or other transaction which is not
in the ordinary course of business or which could reasonably be expected to
result in a Material Adverse Effect; (ii) the Company (including its Significant
Subsidiaries) has not sustained any damage, destruction or loss, whether or not
covered by insurance, which could reasonably be expected to result in a Material
Adverse Effect; (iii) the Company has not paid or declared any dividends or
other distributions with respect to its capital stock other than regular
quarterly dividends and the Company (including its Significant Subsidiaries) is
not in default in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock of the
Company, other than the sale of the Shares under this Agreement and the sale of
100,600 shares of Common Stock on October 14, 2003 for aggregate consideration
of $2.3 million in an at the market offering under the Registration Statement
and shares or options issued pursuant to exercise of outstanding warrants or
employee and director stock option plans approved by the Company’s Board of
Directors; and (v) there has not been any other change or event that could
reasonably be expected to result in a Material Adverse Effect.

        2.9 The Company is not and, after giving effect to the sale of the
Shares and the application of the proceeds thereof as described in the
Prospectus, will not be an “investment company” as defined in the Investment
Company Act of 1940, as amended.

        2.10 The Company shall use its best efforts to comply in all material
respects with all requirements of the NYSE with respect to the issuance of the
Shares and the listing thereof on the NYSE.

3.     Representations of Purchasers. Each Purchaser hereby represents and
warrants, jointly and not severally, to the Company that (a) it has been duly
organized and is existing in good standing as the type of entity and under the
laws of the state set forth under its respective name on the signature page
hereof, (b) it has full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, and (c) this Agreement has been
duly authorized, executed and delivered by such Purchaser.

4.     Conditions to the Parties’ Obligation to Close.

        4.1 The obligation of the Company to issue and sell the Shares at the
Closing is subject to the satisfaction (or waiver by the Company), at or before
the Closing Date, of each of the following conditions:

          (a)     The Shares shall have been approved for listing on the NYSE,
subject to notice of issuance.

          (b)     No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceedings for that
purpose shall have been instituted.

          (c)     No action, suit or proceeding shall be pending against or
involve the Company or any of its property, any of its subsidiaries or any of
their respective properties that would materially and adversely affect the
ability of the Company to perform its obligations under this Agreement or that
is otherwise material in the context of the sale of the Shares and no such
action, suit or proceeding shall be threatened or contemplated.

          (d)     An aggregate of 4,550,000 Shares shall be purchased at the
Closing.

        4.2 The obligation of Purchasers to purchase the Shares from the Company
at the Closing is subject to the satisfaction (or waiver by Purchasers), at or
before the Closing Date, of each of the following conditions:

          (a)     The Closing shall occur not later than seven (7) business days
after the date of this Agreement.

          (b)     The Shares shall have been approved for listing on the NYSE,
subject to notice of issuance.

          (c)     The Company shall have filed with the Commission pursuant to
Rule 424(b) a prospectus supplement regarding the sale of the Shares.

          (d)     No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceedings for that
purpose shall have been instituted.

          (e)     The representations and warranties of the Company contained in
Section 2 hereof shall be true, correct and complete in all material respects as
of the date hereof and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date,
which shall be true, correct and complete as of such date), and the Company
shall have performed, satisfied and complied in all material respects with the
covenants and conditions required hereby to be performed, satisfied or complied
with by it at or before the Closing.

          (f)     Purchasers shall have received a certificate, dated the
Closing Date, of a duly authorized officer of the Company certifying on behalf
of the Company that each of the conditions set forth in subsections 4.2(a), (b),
(c) and (d) have been satisfied.

          (g)     Purchasers shall have received an opinion, dated the Closing
Date, of Perkins Coie LLP, counsel for the Company, reasonably satisfactory in
form and substance to Purchasers with respect to the matters described in
Exhibit A hereto.

5.     Standstill Agreement. In order to induce the Company to issue and sell
the Shares to Purchasers, each Purchaser agrees that:

        5.1 For so long as it (together with all investment companies and all
entities that would be investment companies but for the provisions of Section
3(c) of the Investment Company Act of 1940, as amended, having a common
investment adviser and/or investment adviser under common control with such
Purchaser (collectively, “Affiliates”)) Beneficially Owns (as such term is
defined in Rule 13d-3 under the Exchange Act) an aggregate of five (5) percent
or more of the outstanding securities of the Company entitled to vote (including
securities convertible into or exercisable or exchangeable or redeemable for
such securities, collectively, “Voting Securities”), provided that the
obligations under this Section 5 shall terminate as soon as it Beneficially Owns
less than three (3) percent of the Voting Securities, it will not, directly or
indirectly (unless in any such cases specifically invited in writing to do so by
the Company), do any of the following (except as required pursuant to or
otherwise contemplated by this Agreement or as a result of any stock split,
stock dividend, stock repurchase or similar recapitalization by the Company):

          (a)     acquire, offer to acquire, or agree to acquire by purchase or
otherwise, individually or by joining a partnership, limited partnership,
syndicate or other “group” (as such term is used in Section 13(d)(3) of the
Exchange Act) (any such act, to “acquire”), any Voting Securities or any
options, warrants or other rights to acquire Voting Securities if, after such
acquisition, Purchaser and its Affiliates would Beneficially Own in the
aggregate more than nine and nine-tenths (9.9) percent of the outstanding Voting
Securities;

          (b)     make, or in any way participate in, directly or indirectly,
any “solicitation” of “proxies” (as such terms are defined or used in Regulation
14A under the Exchange Act) or become a “participant” in any “election contest”
(as such terms are defined or used in Rule 14a-11 under the Exchange Act) with
respect to the Company (other than by way of Purchaser’s exercising its right to
vote his or her Voting Securities), or initiate, propose or otherwise solicit
shareholders of the Company for the approval of one or more shareholder
proposals with respect to the Company, or induce or attempt to induce any other
person to initiate any shareholder proposal;

          (c)     deposit any Voting Securities into a voting trust or subject
them to any voting agreement or other agreement or arrangement with respect to
the voting of such Voting Securities;

          (d)     form, join, participate in or encourage the formation of a
partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of Voting Securities; provided, however, for
purposes of this Section 5(d), Purchaser and its affiliates shall not be
considered to be a syndicate or other group;

          (e)     act, directly or indirectly, alone or in concert with others,
to seek to control the management, Board of Directors, policies or affairs of
the Company or any of its subsidiaries, or solicit, propose, seek to effect or
negotiate with any other person with respect to any form of business combination
transaction involving, directly or indirectly, the Company or any of its
subsidiaries, or any restructuring, recapitalization or similar transaction with
respect to the Company or any of its subsidiaries, or announce or disclose an
intent, purpose, plan or proposal with respect to the Company or any of its
subsidiaries or any Voting Securities inconsistent with the provisions of this
Section 5, including an intent, purpose, plan or proposal that is conditioned on
or would require the Company to waive the benefit of or amend any provision of
this Section 5, or assist, participate in, facilitate or encourage or solicit
any effort or attempt by any person to do or seek to do any of the foregoing;

          (f)     act, directly or indirectly, alone or in concert with others,
to nominate any person for election by the holders of Common Stock as a director
of the Company who is not nominated by the then-incumbent directors, or propose
any matter to be voted upon by the stockholders of the Company; or

          (g)     encourage or render advice to or make any recommendation or
proposal to any person, or directly or indirectly participate, aid and abet or
otherwise induce any person or engage in any of the actions prohibited by this
Section 5 or to engage in any actions inconsistent with the provisions of this
Section 5.

        5.2 For so long as it Beneficially Owns any Voting Securities, it will
not, directly or indirectly (unless in any such cases specifically invited in
writing to do so by the Company), do either of the following:

          (a)     sell, contract to sell or grant any option or right to
purchase any Common Stock or make any short sale of, or establish a “put
equivalent position” (as such term is defined in Rule 16a-1(h) under the
Exchange Act) with respect to, the Common Stock, at a time when Purchaser has no
equivalent offsetting long position in Common Stock; or

          (b)             sell or contract to sell more than one (1) percent of
the outstanding Voting Securities to any single person or group of related
persons; provided, however, that this subsection shall not apply to any
transaction effected in good faith on the NYSE.

6.     Filing of Form 8-K. By 9:30 a.m., New York time, on the first business
day following the Closing Date, the Company shall issue a press release and file
a Current Report on Form 8-K with the Commission, each describing the material
terms of the transactions contemplated hereby.

7.     Notices. All communications hereunder will be in writing and, if sent to
any Purchaser, shall be mailed or delivered to it c/o Franklin Templeton
Investments, One Franklin Parkway, San Mateo, CA 94403, Attention: David P. Goss
or, if sent to the Company, shall be mailed or delivered to it at 10885 N.E. 4th
Street, Bellevue, Washington 98004-5591, Attention: Treasurer.

8.     Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
this Agreement. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and each Purchaser.

9.     Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns, and no
other person will have any right or obligation hereunder. No purchaser of Shares
from a Purchaser shall be deemed to be a successor by reason merely of such
purchase.

10.     Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same agreement.

11.     Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Washington, without regard to its
principles of conflicts of laws.

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        IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be executed by their respective representatives, hereunto duly
authorized, as of the date first written above.

  PUGET ENERGY, INC.       By: /s/ Donald E. Gaines  

--------------------------------------------------------------------------------

  Name: Donald E. Gaines   Title: Vice President Finance & Treasurer

    PURCHASERS: NUMBER OF SHARES PURCHASED:

    FRANKLIN CUSTODIAN FUNDS - INCOME FUND,
a Maryland coporation 3,800,000

    By:     /s/ Edward Perks           Name: Edward Perks   Title: V.P.,
Franklin Advisers

    FRANKLIN CUSTODIAN FUNDS - UTILITIES FUND,
a Maryland coporation 450,000

    By:     /s/ John C. Kohli           Name: John C. Kohli   Title: V.P.,
Franklin Advisers

    FTVIPT - INCOME SECURITIES FUND,
a Massachusetts Business Trust 250,000

    By:     /s/ Edward Perks           Name: Edward Perks   Title: V.P.,
Franklin Advisers

    FTIF - INCOME FUND,
a Luxembourg corporation 50,000

    By:     /s/ Edward Perks           Name: Edward Perks   Title: V.P.,
Franklin Advisers

EXHIBIT A

Matters to be Addressed in Opinion of Perkins Coie LLP

1. The Company is a validly existing corporation in good standing under the laws
of the State of Washington, with corporate power and authority to own, lease and
operate its properties and conduct its business as described in the Prospectus,
and to enter into and perform its obligations under the Agreement.

2. The Agreement has been duly authorized, executed and delivered by the
Company. The Shares have been duly authorized and, when issued and delivered in
accordance with the Agreement, will be validly issued, fully paid and
nonassessable.

3. No consent, approval, authorization or order of, or filing, registration or
qualification with, any governmental agency or body or any court is required for
the issuance or sale of the Shares by the Company, except such as have been
obtained and made under the Act, or as may be required under state securities
laws as to which no opinion is expressed.

4. The execution, delivery and performance of the Agreement by the Company
(including the issuance and sale of the Shares) will not result in a breach or
violation by the Company of any of the terms and provisions of, or constitute a
default under, any statute, any rule or regulation, or any order known to such
counsel, of any governmental agency or body or any court having jurisdiction
over the Company or any of its properties, or any agreement or instrument that
is listed as an exhibit to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2002 or the Company’s Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed thereafter, or the charter or by-laws of the
Company.

5. The Registration Statement has become effective under the Act.

6. The Registration Statement and the Prospectus, excluding the documents
incorporated by reference therein, and any amendment or supplement thereto, as
of their respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; it being understood that such counsel need express no opinion as to
the financial statements, including the notes thereto, schedules or other
financial or statistical data contained or incorporated by reference therein or
excluded therefrom.

7. The Company is not and, after giving effect to the offering and sale of the
Shares and the application of the proceeds thereof as described in the
Prospectus, will not be an “investment company” as defined in the Investment
Company Act of 1940.