EXHIBIT 10.2

PUGET ENERGY, INC.
PUGET SOUND ENERGY, INC.

SECOND AMENDMENT TO AGREEMENT

SECOND AMENDMENT TO AGREEMENT (this "Amendment"), effective as of February 9,
2006, amends the agreement (the "Agreement"), dated as of January 1, 2002 and
amended as of May 10, 2005, between Puget Sound Energy, Inc. ("PSE") and Puget
Energy, Inc. ("Puget Energy"), both Washington corporations (PSE and Puget
Energy, collectively, the "Company"), and Stephen P. Reynolds ("Executive").
 
WHEREAS, the Company and Executive wish to conform the definition of Change in
Control in the Agreement to the definition on Change of Control in the PSE
amended and restated form of Change of Control Agreement for PSE executive
officers and in the PE amended 2005 Long-Term Incentive Plan by changing the
definition of Change of Control in the Agreement to include (i) the acquisition
of 30% rather than 20% of PE common stock or voting power and (ii) consummation
rather than shareholder approval of a Business Combination, with a carve out for
continuing ownership of 60% rather than 66-2/3%; and
 
WHEREAS, the Company and Executive also wish to amend the Agreement in certain
respects to reflect the provisions of Section 409A of the Internal Revenue Code,
as amended, and any regulations and other guidance issued thereunder;
 
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, and for other good and valuable consideration, the Company and Executive
agree as follows:
 

1.  
The second paragraph of Section 7, which begins "Executive may, by giving
written notice to the Company..." shall be deleted in its entirety

 

2.  
Section 7(e)(i) shall be replaced in its entirety by the following:

 
(i) The acquisition by any individual, entity or group of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act)
of 30% or more of either (A) the outstanding Puget Energy common stock or (B)
the outstanding Puget Energy voting securities; provided, however, that the
following acquisitions shall not constitute a Change of Control: (x) any
acquisition of securities by Puget Energy, (y) any acquisition of securities by
any employee benefit plan (or related trust) sponsored or maintained by Puget
Energy or any corporation controlled by Puget Energy, or (z) any acquisition by
any corporation pursuant to a business combination, if, following such business
combination, the conditions described in clauses (1), (2) and (3) of subsection
(iii) of this Section 7(e) are satisfied; or
 
3. Section 7(e)(iii) of the Agreement shall be replaced in its entirety by the
following:
 
(iii) Consummation of a Business Combination (which means (A) a reorganization,
exchange of securities, merger, consolidation or other business combination
involving Puget Energy or (B) the sale or other disposition of all or
substantially all the assets of Puget Energy or PSE) unless after giving effect
to such Business Combination and any equity financing completed or contemplated
in connection with or as a result of such Business Combination, (1) more than
60% of, respectively, the then outstanding shares of common stock of the
corporation resulting from or effecting such Business Combination and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all the
individuals and entities who were the beneficial owners, respectively, of the
outstanding Puget Energy common stock and outstanding Puget Energy voting
securities immediately prior to such Business Combination in substantially the
same proportion as their ownership, immediately prior to such Business
Combination, of the outstanding Puget Energy common stock and outstanding Puget
Energy voting securities, as the case may be, (2) no Person (excluding Puget
Energy and any employee benefit plan (or related trust) of Puget Energy or its
affiliates) beneficially owns, directly or indirectly, 30% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from or effecting such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors, and (3) at least a majority of the
members of the board of directors of the corporation resulting from or effecting
such Business Combination were Incumbent Directors at the time of the execution
of the initial agreement or action of the Board providing for such Business
Combination.
 
4. The first sentence of the first paragraph of Section 12, shall be replaced in
its entirety by the following:
 
The amounts specified in this Agreement, other than any payments which Executive
has elected to receive in the form of a monthly annuity or has elected to defer
under a deferred compensation plan, shall be paid by the Company no more than 30
days after the date of termination or, in the case of payments due under Section
7(e)(A), Change in Control.
 
5. The following new Section 23 shall be added to the Agreement:
 
Section 409A
 
Notwithstanding anything to the contrary in this Agreement, any cash payments
otherwise due to Executive under this Agreement on or within the six-month
period following Executive’s termination will accrue during such six-month
period and will become payable in a lump sum payment on the date six (6) months
and one (1) day following the date of Executive’s termination, provided,
however, that such cash severance payments will be paid earlier, at the times
and on the terms set forth in the applicable provisions of this Agreement, if
the Company reasonably determines that the imposition of additional tax under
Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), will
not apply to an earlier payment of such cash severance payments. In addition,
this Agreement (and any stock options granted pursuant hereto) will be deemed
amended to the extent necessary to avoid the imposition of any additional tax on
(or income recognition prior to payment to or, in the case of stock options,
exercise by) Executive under Code Section 409A, including any temporary or final
Treasury Regulations and guidance promulgated thereunder, and the parties agree
to cooperate with each other and to take reasonably necessary steps in this
regard.
 
6. COUNTERPARTS. This Amendment may be executed in counterparts, each of which
shall be deemed to be an original.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
 
PUGET SOUND ENERGY, INC.
 
By: /s/ Stephen E. Frank
                        Stephen E. Frank
                                    Title: Chair, Compensation and Leadership
                                    Development Committee, Puget Sound Energy,
Inc. Board of Directors
 

 
PUGET ENERGY, INC.
 
By: : /s/ Stephen E. Frank
   Stephen E. Frank
   Title: Chair, Compensation and Leadership
   Development Committee, Puget Energy, Inc. Board of Directors
 

 
EXECUTIVE
 
      /s/ Stephen P. Reynolds
            Stephen P. Reynolds