| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----|-----------------------------------------------------------------------------------------|

| [  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|----------------|------------------------------------------------------------------------------------------|

| Commission File Number | Exact name of registrant as specified in its charter, state of incorporation, address of principal executive offices, telephone number | I.R.S.EmployerIdentificationNumber |
|------------------------|----------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
|                   |                                                                                                                              |                               |
| 1-16305                | PUGET ENERGY, INC.A Washington Corporation10885 NE 4th Street, Suite 1200Bellevue, Washington 98004-5591(425) 454-6363                 | 91-1969407                         |
|                   |                                                                                                                              |                               |
| 1-4393                 | PUGET SOUND ENERGY, INC.A Washington Corporation10885 NE 4th Street, Suite 1200Bellevue, Washington 98004-5591(425) 454-6363           | 91-0374630                         |

| Puget Energy, Inc. | Yes | /  / | No | /X/ |   | Puget Sound Energy, Inc. | Yes | /X/ | No | /  / |
|--------------------|-----|----------------|----|-----|--------|--------------------------|-----|-----|----|----------------|

| Puget Energy, Inc. | Yes | /  / | No | /  / |   | Puget Sound Energy, Inc. | Yes | /  / | No | /  / |
|--------------------|-----|----------------|----|----------------|--------|--------------------------|-----|----------------|----|----------------|

| Puget Energy, Inc.       | Large accelerated filer | /  / | Accelerated filer | /  / | Non-accelerated filer | /X/ | Smaller reporting company | /  / |
|--------------------------|-------------------------|----------------|-------------------|----------------|-----------------------|-----|---------------------------|----------------|
| Puget Sound Energy, Inc. | Large accelerated filer | /  / | Accelerated filer | /  / | Non-accelerated filer | /X/ | Smaller reporting company | /  / |

| Puget Energy, Inc. | Yes | /  / | No | /X/ |   | Puget Sound Energy, Inc. | Yes | /  / | No | /X/ |
|--------------------|-----|----------------|----|-----|--------|--------------------------|-----|----------------|----|-----|

|                       |
|----------------------------|
| Definitions                |
| Filing Format              |
| Forward-Looking Statements |

| Part I.  | Financial Statements                                                                               |
|----------|----------------------------------------------------------------------------------------------------|
|     |                                                                                               |
|     | Puget Energy, Inc.                                                                                 |
|     | Consolidated Statements of Income – Three Months Ended March 31, 2011 and 2010               |
|     | Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2011 and 2010 |
|     | Consolidated Balance Sheets – March 31, 2011 and December 31, 2010                           |
|     | Consolidated Statements of Cash Flows – Three Months Ended March 31, 2011 and 2010           |
|     |                                                                                               |
|     | Puget Sound Energy, Inc.                                                                           |
|     | Consolidated Statements of Income – Three Months Ended March 31, 2011 and 2010               |
|     | Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2011 and 2010 |
|     | Consolidated Balance Sheets – March 31, 2011 and December 31, 2010                           |
|     | Consolidated Statements of Cash Flows – Three Months Ended March 31, 2011 and 2010           |
|     |                                                                                               |
|     | Notes                                                                                              |
|     | Combined Notes to Consolidated Financial Statements                                                |
|     |                                                                                               |
| Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations        |
|     |                                                                                               |
| Item 3.  | Quantitative and Qualitative Disclosure About Market Risk                                          |
|     |                                                                                               |
| Item 4.  | Controls and Procedures                                                                            |
|     |                                                                                               |
| Part II. | Other Information                                                                                  |
|     |                                                                                               |
| Item 1.  | Legal Proceedings                                                                                  |
|     |                                                                                               |
| Item 1A. | Risk Factors                                                                                       |
|     |                                                                                               |
| Item 6.  | Exhibits                                                                                           |

| Signatures    |
|---------------|
|          |
| Exhibit Index |

DEF

| AFUDC                 | Allowance for Funds Used During Construction                 |
|-----------------------|--------------------------------------------------------------|
| ASC                   | Accounting Standards Codification                            |
| BPA                   | Bonneville Power Administration                              |
| EBITDA                | Earnings Before Interest, Tax, Depreciation and Amortization |
| FERC                  | Federal Energy Regulatory Commission                         |
| GAAP                  | Generally Accepted Accounting Principles                     |
| IRP                   | Integrated Resource Plan                                     |
| IRS                   | Internal Revenue Service                                     |
| ISDA                  | International Swaps and Derivatives Association              |
| kW                    | Kilowatt                                                     |
| kWh                   | Kilowatt Hour                                                |
| LIBOR                 | London Interbank Offered Rate                                |
| MMBtus                | One Million British Thermal Units                            |
| MW                    | Megawatt (one MW equals one thousand kW)                     |
| MWh                   | Megawatt Hour (one MWh equals one thousand kWh)              |
| NAESB                 | North American Energy Standards Board                        |
| NPNS                  | Normal Purchase Normal Sale                                  |
| OCI                   | Other Comprehensive Income                                   |
| PCA                   | Power Cost Adjustment                                        |
| PGA                   | Purchased Gas Adjustment                                     |
| PSE                   | Puget Sound Energy, Inc.                                     |
| Puget Energy          | Puget Energy, Inc.                                           |
| Puget Equico          | Puget Equico LLC                                             |
| Puget Holdings        | Puget Holdings LLC                                           |
| PTC                   | Production Tax Credit                                        |
| PURPA                 | Public Utility Regulatory Policies Act                       |
| REC                   | Renewable Energy Credit                                      |
| REP                   | Residential Exchange Program                                 |
| SERP                  | Supplemental Executive Retirement Plan                       |
| VIE                   | Variable Interest Entity                                     |
| Washington Commission | Washington Utilities and Transportation Commission           |

FILING

FORWARD

| ·   | Governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission (FERC) and the Washington Utilities and Transportation Commission (Washington Commission), with respect to allowed rates of return, cost recovery, financing, industry and rate structures, transmission and generation business structures within PSE, acquisition and disposal of assets and facilities, operation, maintenance and construction of electric generating facilities, natural gas and electric distribution and transmission facilities, licensing of hydroelectric operations and natural gas storage facilities, recovery of other capital investments, recovery of power and natural gas costs, recovery of regulatory assets, implementation of energy efficiency programs and present or prospective wholesale and retail competition; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Failure of PSE to comply with the FERC or the Washington Commission standards and/or rules, which could result in penalties based on the discretion of either commission; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Findings of noncompliance with electric reliability standards developed by the North American Electric Reliability Corporation or the Western Electricity Coordinating Council for users, owners and operators of the power system, which could result in penalties; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Changes in, adoption of and compliance with laws and regulations, including decisions and policies concerning the environment, climate change, greenhouse gas or other emissions or byproducts of electric generation (including coal ash or other substances), natural resources, and fish and wildlife (including the Endangered Species Act) as well as the risk of litigation arising from such matters, whether involving public or private claimants or regulatory investigative or enforcement measures; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The ability to recover costs arising from changes in enacted federal, state or local tax laws in a timely manner; |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | Changes in tax law, related regulations or differing interpretation or enforcement of applicable law by the Internal Revenue Service (IRS) or other taxing jurisdiction; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Inability to realize deferred tax assets and use production tax credits (PTCs) due to insufficient future taxable income; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | Accidents or natural disasters, such as hurricanes, windstorms, earthquakes, floods, fires and landslides, which can interrupt service and lead to lost revenue, cause temporary supply disruptions and/or price spikes in the cost of fuel and raw materials and impose extraordinary costs; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Commodity price risks associated with procuring natural gas and power in wholesale markets or counterparties extending credit to PSE without collateral posting requirements; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Wholesale market disruption, which may result in a deterioration of market liquidity, increase the risk of counterparty default, affect the regulatory and legislative process in unpredictable ways, negatively affect wholesale energy prices and/or impede PSE’s ability to manage its energy portfolio risks and procure energy supply, affect the availability and access to capital and credit markets and/or impact delivery of energy to PSE from its suppliers; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Financial or operational difficulties of other energy companies and related events, which may affect the regulatory and legislative process in unpredictable ways, adversely affect the availability of and access to capital and credit markets and/or impact delivery of energy to PSE from its suppliers; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The effect of wholesale market structures (including, but not limited to, regional market designs or transmission organizations) or other related federal initiatives; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | PSE electric or natural gas distribution system failure, which may impact PSE’s ability to deliver energy supply to its customers; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Changes in climate or weather conditions in the Pacific Northwest, which could affect customer usage and PSE’s revenue and expenses; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Regional or national weather, which can have a potentially serious impact on PSE’s ability to procure adequate supplies of natural gas, fuel or purchased power to serve its customers and on the cost of procuring such supplies; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Variable hydrological conditions, which can impact streamflow and PSE’s ability to generate electricity from hydroelectric facilities; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Electric plant generation and transmission system outages, which can have an adverse impact on PSE’s expenses with respect to repair costs, added costs to replace energy or higher costs associated with dispatching a more expensive generation resource; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The ability of a natural gas or electric plant to operate as intended; |
|--------------------|------------------------------------------------------------------------|

| ·   | The ability to renew contracts for electric and natural gas supply and the price of renewal; |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | Blackouts or large curtailments of transmission systems, whether PSE’s or others’, which can affect PSE’s ability to deliver power or natural gas to its customers and generating facilities; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The ability to restart generation following a regional transmission disruption; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | The failure of the interstate natural gas pipeline delivering to PSE’s system, which may impact PSE’s ability to adequately deliver natural gas supply or electric power to its customers; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Industrial, commercial and residential growth and demographic patterns in the service territories of PSE; |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | General economic conditions in the Pacific Northwest, which may impact customer consumption or affect PSE’s accounts receivable; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The loss of significant customers, changes in the business of significant customers or the condemnation of PSE’s facilities, which may result in changes in demand for PSE’s services; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The failure of information systems or the failure to secure information system data, which may impact the operations and cost of PSE’s customer service, generation, distribution and transmission; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The impact of acts of God, terrorism, flu pandemic or similar significant events; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | Capital market conditions, including changes in the availability of capital and interest rate fluctuations; |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | Employee workforce factors, including strikes, work stoppages, availability of qualified employees or the loss of a key executive; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The ability to obtain insurance coverage and the cost of such insurance; |
|--------------------|--------------------------------------------------------------------------|

| ·   | The ability to maintain effective internal controls over financial reporting and operational processes; |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | Changes in Puget Energy’s or PSE’s credit ratings, which may have an adverse impact on the availability and cost of capital for Puget Energy or PSE generally, or the failure to comply with the covenants in Puget Energy’s or PSE’s credit facilities, which would limit the Companies’ ability to utilize such facilities for capital; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Deteriorating values of the equity, fixed income and other markets which could significantly impact the value of investments of PSE’s retirement plan, post-retirement medical benefit plan trusts and the funding of obligations thereunder. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

FINANCIAL

C

|                                                 |   | Three Months EndedMarch 31, |      |
|------------------------------------------------------|--------|-----------------------------|-----------|
|                                                 |   | 2011                        |      |   | 2010 |   |
| Operating revenue:                                   |   |                        |      |   |   |   |
| Electric                                             |   | $                           | 599,733   |   |   | $ | 554,635 |   |
| Gas                                                  |   |                        | 418,624   |   |   |   | 322,405 |   |
| Other                                                |   |                        | 1,236     |   |   |   | 1,166 |   |
| Total operating revenue                              |   |                        | 1,019,593 |   |   |   | 878,206 |   |
| Operating expenses:                                  |   |                        |      |   |   |   |   |   |
| Energy costs:                                        |   |                        |      |   |   |   |   |   |
| Purchased electricity                                |   |                        | 227,896   |   |   |   | 254,163 |   |
| Electric generation fuel                             |   |                        | 45,223    |   |   |   | 56,245 |   |
| Residential exchange                                 |   |                        | (21,682   | ) |   |   | (22,462 | ) |
| Purchased gas                                        |   |                        | 236,754   |   |   |   | 176,864 |   |
| Net unrealized (gain) loss on derivative instruments |   |                        | (33,119   | ) |   |   | 60,648 |   |
| Utility operations and maintenance                   |   |                        | 117,967   |   |   |   | 116,179 |   |
| Non-utility expense and other                        |   |                        | 2,922     |   |   |   | 3,602 |   |
| Depreciation                                         |   |                        | 74,781    |   |   |   | 70,528 |   |
| Amortization                                         |   |                        | 17,973    |   |   |   | 15,468 |   |
| Conservation amortization                            |   |                        | 32,213    |   |   |   | 18,153 |   |
| Taxes other than income taxes                        |   |                        | 100,520   |   |   |   | 83,415 |   |
| Total operating expenses                             |   |                        | 801,448   |   |   |   | 832,803 |   |
| Operating income                                     |   |                        | 218,145   |   |   |   | 45,403 |   |
| Other income (deductions):                           |   |                        |      |   |   |   |   |   |
| Other income                                         |   |                        | 12,538    |   |   |   | 12,000 |   |
| Other expense                                        |   |                        | (954      | ) |   |   | (989 | ) |
| Non-hedged interest rate derivative expense          |   |                        | (48       | ) |   |   | -- |   |
| Interest charges:                                    |   |                        |      |   |   |   |   |   |
| AFUDC                                                |   |                        | 4,404     |   |   |   | 2,750 |   |
| Interest expense                                     |   |                        | (81,048   | ) |   |   | (82,713 | ) |
| Income (loss) before income taxes                    |   |                        | 153,037   |   |   |   | (23,549 | ) |
| Income tax (benefit) expense                         |   |                        | 45,606    |   |   |   | (4,358 | ) |
| Net income (loss)                                    |   | $                           | 107,431   |   |   | $ | (19,191 | ) |

CO

|                                                                                                                                          |   | Three Months EndedMarch 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                                                                          |   | 2011                        |    |   | 2010 |   |
| Net income (loss)                                                                                                                             |   | $                           | 107,431 |   |   | $ | (19,191 | ) |
| Other comprehensive income (loss):                                                                                                            |   |                        |    |   |   |   |   |   |
| Net unrealized loss on interest rate swaps during the period, net of tax of $0 and $(9,394), respectively                                     |   |                        | --      |   |   |   | (17,446 | ) |
| Reclassification of net unrealized loss on interest rate swaps during the period, net of tax of $2,279 and $2,987, respectively               |   |                        | 4,233   |   |   |   | 5,547 |   |
| Net unrealized loss from pension and postretirement plans, net of tax of $(142) and $(453), respectively                                      |   |                        | (262    | ) |   |   | (841 | ) |
| Reclassification of net unrealized loss on energy derivative instruments settled during the period, net of tax of $101 and $531, respectively |   |                        | 187     |   |   |   | 987 |   |
| Other comprehensive income (loss)                                                                                                             |   |                        | 4,158   |   |   |   | (11,753 | ) |
| Comprehensive income (loss)                                                                                                                   |   | $                           | 111,589 |   |   | $ | (30,944 | ) |

CON

|                                                                                            |   | March 31,2011 |       |   | December 31, 2010 |   |
|-------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|-------------------|--------|
| Utility plant (including construction work in progress of $855,997 and $628,387, respectively): |   |          |       |   |              |   |
| Electric plant                                                                                  |   | $             | 5,513,482  |   |              | $      | 5,253,786 |   |
| Gas plant                                                                                       |   |          | 2,139,430  |   |              |   | 2,129,200 |   |
| Common plant                                                                                    |   |          | 335,826    |   |              |   | 318,615 |   |
| Less: Accumulated depreciation and amortization                                                 |   |          | (487,956   | )      |              |   | (429,038 | ) |
| Net utility plant                                                                               |   |          | 7,500,782  |   |              |   | 7,272,563 |   |
| Other property and investments:                                                                 |   |          |       |   |              |   |   |   |
| Goodwill                                                                                        |   |          | 1,656,513  |   |              |   | 1,656,513 |   |
| Investment in Bonneville Exchange Power contract                                                |   |          | 22,041     |   |              |   | 22,923 |   |
| Other property and investments                                                                  |   |          | 126,108    |   |              |   | 125,918 |   |
| Total other property and investments                                                            |   |          | 1,804,662  |   |              |   | 1,805,354 |   |
| Current assets:                                                                                 |   |          |       |   |              |   |   |   |
| Cash and cash equivalents                                                                       |   |          | 43,599     |   |              |   | 36,557 |   |
| Restricted cash                                                                                 |   |          | 4,925      |   |              |   | 5,470 |   |
| Accounts receivable, net of allowance for doubtful accounts of $9,534 and $9,784, respectively  |   |          | 359,995    |   |              |   | 327,615 |   |
| Unbilled revenue                                                                                |   |          | 135,292    |   |              |   | 194,088 |   |
| Purchased gas adjustment receivable                                                             |   |          | --         |   |              |   | 5,992 |   |
| Materials and supplies, at average cost                                                         |   |          | 89,896     |   |              |   | 85,413 |   |
| Fuel and gas inventory, at average cost                                                         |   |          | 61,498     |   |              |   | 96,633 |   |
| Unrealized gain on derivative instruments                                                       |   |          | 10,355     |   |              |   | 7,500 |   |
| Income taxes                                                                                    |   |          | 12,926     |   |              |   | 76,183 |   |
| Prepaid expense and other                                                                       |   |          | 16,175     |   |              |   | 14,835 |   |
| Power contract acquisition adjustment gain                                                      |   |          | 116,641    |   |              |   | 134,553 |   |
| Deferred income taxes                                                                           |   |          | 68,016     |   |              |   | 83,086 |   |
| Total current assets                                                                            |   |          | 919,318    |   |              |   | 1,067,925 |   |
| Other long-term and regulatory assets:                                                          |   |          |       |   |              |   |   |   |
| Regulatory assets for deferred income taxes                                                     |   |          | 68,786     |   |              |   | 73,337 |   |
| Regulatory asset for PURPA buyout costs                                                         |   |          | 30,472     |   |              |   | 40,629 |   |
| Power cost adjustment mechanism                                                                 |   |          | 14,675     |   |              |   | 15,618 |   |
| Regulatory assets related to power contracts                                                    |   |          | 95,126     |   |              |   | 116,116 |   |
| Other regulatory assets                                                                         |   |          | 690,906    |   |              |   | 773,974 |   |
| Unrealized gain on derivative instruments                                                       |   |          | 9,706      |   |              |   | 8,233 |   |
| Power contract acquisition adjustment gain                                                      |   |          | 598,405    |   |              |   | 624,667 |   |
| Other                                                                                           |   |          | 159,903    |   |              |   | 130,920 |   |
| Total other long-term and regulatory assets                                                     |   |          | 1,667,979  |   |              |   | 1,783,494 |   |
| Total assets                                                                                    |   | $             | 11,892,741 |   |              | $      | 11,929,336 |   |

|                                                                          |   | March 31,2011 |       |   | December 31,2010 |   |
|-------------------------------------------------------------------------------|--------|---------------|------------|--------|------------------|--------|
| Capitalization:                                                               |   |          |       |   |             |   |
| Common shareholder’s equity:                                            |   |          |       |   |             |   |
| Common stock $0.01 par value, 1,000 shares authorized, 200 shares outstanding |   | $             | --         |   |             | $      | -- |   |
| Additional paid-in capital                                                    |   |          | 3,308,957  |   |             |   | 3,308,957 |   |
| Earnings reinvested in the business                                           |   |          | 66,288     |   |             |   | 17,024 |   |
| Accumulated other comprehensive income (loss) – net of tax              |   |          | 1,089      |   |             |   | (3,069 | ) |
| Total common shareholder’s equity                                       |   |          | 3,376,334  |   |             |   | 3,322,912 |   |
| Long-term debt:                                                               |   |          |       |   |             |   |   |   |
| PSE first mortgage bonds and senior notes                                     |   |          | 3,092,000  |   |             |   | 3,052,000 |   |
| PSE pollution control revenue bonds:                                          |   |          |       |   |             |   |   |   |
| Revenue refunding 2003 series, due 2031                                       |   |          | 161,860    |   |             |   | 161,860 |   |
| PSE junior subordinated notes                                                 |   |          | 250,000    |   |             |   | 250,000 |   |
| Puget Energy long-term debt                                                   |   |          | 1,665,000  |   |             |   | 1,490,000 |   |
| PSE long-term debt due within one year                                        |   |          | --         |   |             |   | (260,000 | ) |
| Debt discount and other                                                       |   |          | (306,714   | )      |             |   | (311,147 | ) |
| Total long-term debt                                                          |   |          | 4,862,146  |   |             |   | 4,382,713 |   |
| Total capitalization                                                          |   |          | 8,238,480  |   |             |   | 7,705,625 |   |
| Current liabilities:                                                          |   |          |       |   |             |   |   |   |
| Accounts payable                                                              |   |          | 247,228    |   |             |   | 291,148 |   |
| Short-term debt                                                               |   |          | 126,600    |   |             |   | 247,000 |   |
| Current maturities of long-term debt                                          |   |          | --         |   |             |   | 260,000 |   |
| Accrued expenses:                                                             |   |          |       |   |             |   |   |   |
| Purchased gas adjustment liability                                            |   |          | 2,758      |   |             |   | -- |   |
| Taxes                                                                         |   |          | 97,055     |   |             |   | 81,505 |   |
| Salaries and wages                                                            |   |          | 24,169     |   |             |   | 34,453 |   |
| Interest                                                                      |   |          | 56,828     |   |             |   | 59,182 |   |
| Unrealized loss on derivative instruments                                     |   |          | 240,659    |   |             |   | 273,100 |   |
| Power contract acquisition adjustment loss                                    |   |          | 53,997     |   |             |   | 69,915 |   |
| Other                                                                         |   |          | 99,365     |   |             |   | 114,409 |   |
| Total current liabilities                                                     |   |          | 948,659    |   |             |   | 1,430,712 |   |
| Long-term and regulatory liabilities:                                         |   |          |       |   |             |   |   |   |
| Deferred income taxes                                                         |   |          | 1,155,938  |   |             |   | 1,127,611 |   |
| Unrealized loss on derivative instruments                                     |   |          | 129,483    |   |             |   | 183,135 |   |
| Regulatory liabilities                                                        |   |          | 296,833    |   |             |   | 305,936 |   |
| Regulatory liabilities related to power contracts                             |   |          | 715,046    |   |             |   | 759,220 |   |
| Power contract acquisition adjustment loss                                    |   |          | 41,562     |   |             |   | 46,779 |   |
| Other deferred credits                                                        |   |          | 366,740    |   |             |   | 370,318 |   |
| Total long-term and regulatory liabilities                                    |   |          | 2,705,602  |   |             |   | 2,792,999 |   |
| Commitments and contingencies                                                 |   |          |       |   |             |   |   |   |
| Total capitalization and liabilities                                          |   | $             | 11,892,741 |   |             | $      | 11,929,336 |   |

CONS

|                                                                                     |   | Three Months EndedMarch 31, |     |
|------------------------------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                                                     |   | 2011                        |     |   | 2010 |   |
| Operating activities:                                                                    |   |                        |     |   |   |   |
| Net income (loss)                                                                        |   | $                           | 107,431  |   |   | $ | (19,191 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |   |                        |     |   |   |   |   |   |
| Depreciation                                                                             |   |                        | 74,781   |   |   |   | 70,528 |   |
| Amortization                                                                             |   |                        | 17,973   |   |   |   | 15,468 |   |
| Conservation amortization                                                                |   |                        | 32,213   |   |   |   | 18,153 |   |
| Deferred income taxes and tax credits, net                                               |   |                        | 45,710   |   |   |   | (2,758 | ) |
| Net unrealized (gain) loss on derivative instruments                                     |   |                        | (36,845  | ) |   |   | 60,648 |   |
| Transmission service prepayment                                                          |   |                        | (20,000  | ) |   |   | -- |   |
| Pension funding                                                                          |   |                        | (5,000   | ) |   |   | (6,500 | ) |
| Derivative contracts classified as financing activities due to merger                    |   |                        | 97,684   |   |   |   | 158,770 |   |
| Other                                                                                    |   |                        | (125     | )  |   |   | 4,665 |   |
| Change in certain current assets and liabilities:                                        |   |                        |     |   |   |   |   |   |
| Accounts receivable and unbilled revenue                                                 |   |                        | 26,416   |   |   |   | 98,391 |   |
| Materials and supplies                                                                   |   |                        | (4,483   | ) |   |   | (12,386 | ) |
| Fuel and gas inventory                                                                   |   |                        | 35,575   |   |   |   | 14,733 |   |
| Income taxes                                                                             |   |                        | 63,257   |   |   |   | 22,297 |   |
| Prepayments and other                                                                    |   |                        | (1,463   | ) |   |   | 26 |   |
| Purchased gas adjustment                                                                 |   |                        | 8,750    |   |   |   | (41,764 | ) |
| Accounts payable                                                                         |   |                        | (29,865  | ) |   |   | (33,780 | ) |
| Taxes payable                                                                            |   |                        | 15,550   |   |   |   | 5,941 |   |
| Accrued expenses and other                                                               |   |                        | (21,663  | ) |   |   | (1,548 | ) |
| Net cash provided by operating activities                                                |   |                        | 405,896  |   |   |   | 351,693 |   |
| Investing activities:                                                                    |   |                        |     |   |   |   |   |   |
| Construction expenditures – excluding equity AFUDC                                 |   |                        | (317,710 | ) |   |   | (184,424 | ) |
| Energy efficiency expenditures                                                           |   |                        | (18,794  | ) |   |   | (25,686 | ) |
| Treasury grant payment received                                                          |   |                        | --       |   |   |   | 28,675 |   |
| Restricted cash                                                                          |   |                        | 545      |   |   |   | 2,501 |   |
| Other                                                                                    |   |                        | 479      |   |   |   | 2,927 |   |
| Net cash used in investing activities                                                    |   |                        | (335,480 | ) |   |   | (176,007 | ) |
| Financing activities:                                                                    |   |                        |     |   |   |   |   |   |
| Change in short-term debt and leases, net                                                |   |                        | (120,400 | ) |   |   | (65,059 | ) |
| Dividends paid                                                                           |   |                        | (58,167  | ) |   |   | (54,230 | ) |
| Long-term notes and bonds issued                                                         |   |                        | 475,000  |   |   |   | 325,000 |   |
| Redemption of bonds and notes                                                            |   |                        | (260,000 | ) |   |   | (225,000 | ) |
| Derivative contracts classified as financing activities due to merger                    |   |                        | (97,684  | ) |   |   | (158,770 | ) |
| Issuance cost of bonds and other                                                         |   |                        | (2,123   | ) |   |   | 2,353 |   |
| Net cash used in financing activities                                                    |   |                        | (63,374  | ) |   |   | (175,706 | ) |
| Net increase (decrease) in cash and cash equivalents                                     |   |                        | 7,042    |   |   |   | (20 | ) |
| Cash and cash equivalents at beginning of period                                         |   |                        | 36,557   |   |   |   | 78,527 |   |
| Cash and cash equivalents at end of period                                               |   | $                           | 43,599   |   |   | $ | 78,507 |   |
| Supplemental cash flow information:                                                      |   |                        |     |   |   |   |   |   |
| Cash payments for interest (net of capitalized interest)                                 |   | $                           | 67,829   |   |   | $ | 66,345 |   |
| Cash payments (refunds) for income taxes                                                 |   |                        | (63,204  | ) |   |   | (22,513 | ) |

CONSO

|                                                 |   | Three Months EndedMarch 31, |      |
|------------------------------------------------------|--------|-----------------------------|-----------|
|                                                 |   | 2011                        |      |   | 2010 |   |
| Operating revenue:                                   |   |                        |      |   |   |   |
| Electric                                             |   | $                           | 599,733   |   |   | $ | 554,635 |   |
| Gas                                                  |   |                        | 418,624   |   |   |   | 322,405 |   |
| Other                                                |   |                        | 1,236     |   |   |   | 1,166 |   |
| Total operating revenue                              |   |                        | 1,019,593 |   |   |   | 878,206 |   |
| Operating expenses:                                  |   |                        |      |   |   |   |   |   |
| Energy costs:                                        |   |                        |      |   |   |   |   |   |
| Purchased electricity                                |   |                        | 228,041   |   |   |   | 254,307 |   |
| Electric generation fuel                             |   |                        | 45,223    |   |   |   | 56,245 |   |
| Residential exchange                                 |   |                        | (21,682   | ) |   |   | (22,462 | ) |
| Purchased gas                                        |   |                        | 236,754   |   |   |   | 176,864 |   |
| Net unrealized (gain) loss on derivative instruments |   |                        | (5,984    | ) |   |   | 113,017 |   |
| Utility operations and maintenance                   |   |                        | 117,967   |   |   |   | 116,179 |   |
| Non-utility expense and other                        |   |                        | 3,351     |   |   |   | 1,476 |   |
| Depreciation                                         |   |                        | 74,781    |   |   |   | 70,528 |   |
| Amortization                                         |   |                        | 17,973    |   |   |   | 15,468 |   |
| Conservation amortization                            |   |                        | 32,213    |   |   |   | 18,153 |   |
| Taxes other than income taxes                        |   |                        | 100,520   |   |   |   | 83,415 |   |
| Total operating expenses                             |   |                        | 829,157   |   |   |   | 883,190 |   |
| Operating income (loss)                              |   |                        | 190,436   |   |   |   | (4,984 | ) |
| Other income (deductions):                           |   |                        |      |   |   |   |   |   |
| Other income                                         |   |                        | 12,534    |   |   |   | 12,000 |   |
| Other expense                                        |   |                        | (954      | ) |   |   | (989 | ) |
| Interest charges:                                    |   |                        |      |   |   |   |   |   |
| AFUDC                                                |   |                        | 4,404     |   |   |   | 2,750 |   |
| Interest expense                                     |   |                        | (56,605   | ) |   |   | (61,622 | ) |
| Interest expense on Puget Energy note                |   |                        | (65       | ) |   |   | (62 | ) |
| Income (loss) before income taxes                    |   |                        | 149,750   |   |   |   | (52,907 | ) |
| Income tax (benefit) expense                         |   |                        | 46,311    |   |   |   | (14,633 | ) |
| Net income (loss)                                    |   | $                           | 103,439   |   |   | $ | (38,274 | ) |

CONSOL

|                                                                                                                                               |   | Three Months Ended March 31, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                                                                                               |   | 2011                         |    |   | 2010 |   |
| Net income (loss)                                                                                                                                  |   | $                            | 103,439 |   |   | $ | (38,274 | ) |
| Other comprehensive income:                                                                                                                        |   |                         |    |   |   |   |   |   |
| Net unrealized gain from pension and postretirement plans, net of tax of $1,265 and $291, respectively                                             |   |                         | 1,398   |   |   |   | 539 |   |
| Net unrealized gain on energy derivative instruments during the period, net of tax of $752 and $26, respectively                                   |   |                         | 1,397   |   |   |   | 49 |   |
| Reclassification of net unrealized loss on energy derivative instruments settled during the period, net of tax of $6,027 and $10,238, respectively |   |                         | 11,193  |   |   |   | 19,014 |   |
| Amortization of financing cash flow hedge contracts to earnings, net of tax of $43 and $43, respectively                                           |   |                         | 80      |   |   |   | 80 |   |
| Other comprehensive income                                                                                                                         |   |                         | 14,068  |   |   |   | 19,682 |   |
| Comprehensive income (loss)                                                                                                                        |   | $                            | 117,507 |   |   | $ | (18,592 | ) |

CONSOLI

|                                                                                                              |   | March 31,2011 |       |   | December 31, 2010 |   |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|-------------------|--------|
| Utility plant (at original cost, including construction work in progress of $855,997 and $628,387, respectively): |   |          |       |   |              |   |
| Electric plant                                                                                                    |   | $             | 7,842,583  |   |              | $      | 7,586,208 |   |
| Gas plant                                                                                                         |   |          | 2,759,883  |   |              |   | 2,752,962 |   |
| Common plant                                                                                                      |   |          | 442,060    |   |              |   | 427,227 |   |
| Less:  Accumulated depreciation and amortization                                                        |   |          | (3,555,327 | )      |              |   | (3,509,277 | ) |
| Net utility plant                                                                                                 |   |          | 7,489,199  |   |              |   | 7,257,120 |   |
| Other property and investments:                                                                                   |   |          |       |   |              |   |   |   |
| Investment in Bonneville Exchange Power contract                                                                  |   |          | 22,041     |   |              |   | 22,923 |   |
| Other property and investments                                                                                    |   |          | 115,248    |   |              |   | 115,056 |   |
| Total other property and investments                                                                              |   |          | 137,289    |   |              |   | 137,979 |   |
| Current assets:                                                                                                   |   |          |       |   |              |   |   |   |
| Cash and cash equivalents                                                                                         |   |          | 37,547     |   |              |   | 36,320 |   |
| Restricted cash                                                                                                   |   |          | 4,925      |   |              |   | 5,470 |   |
| Accounts receivable, net of allowance for doubtful accounts of $9,534 and $9,784, respectively                    |   |          | 359,719    |   |              |   | 327,341 |   |
| Unbilled revenue                                                                                                  |   |          | 135,292    |   |              |   | 194,088 |   |
| Purchased gas adjustment receivable                                                                               |   |          | --         |   |              |   | 5,992 |   |
| Materials and supplies, at average cost                                                                           |   |          | 88,705     |   |              |   | 84,222 |   |
| Fuel and gas inventory, at average cost                                                                           |   |          | 56,647     |   |              |   | 92,222 |   |
| Unrealized gain on derivative instruments                                                                         |   |          | 10,355     |   |              |   | 7,500 |   |
| Income taxes                                                                                                      |   |          | 12,404     |   |              |   | 62,114 |   |
| Prepaid expense and other                                                                                         |   |          | 15,875     |   |              |   | 14,412 |   |
| Deferred income taxes                                                                                             |   |          | 69,533     |   |              |   | 80,215 |   |
| Total current assets                                                                                              |   |          | 791,002    |   |              |   | 909,896 |   |
| Other long-term and regulatory assets:                                                                            |   |          |       |   |              |   |   |   |
| Regulatory assets for deferred income taxes                                                                       |   |          | 68,786     |   |              |   | 73,337 |   |
| Regulatory asset for PURPA buyout costs                                                                           |   |          | 30,472     |   |              |   | 40,629 |   |
| Power cost adjustment mechanism                                                                                   |   |          | 14,675     |   |              |   | 15,618 |   |
| Other regulatory assets                                                                                           |   |          | 656,817    |   |              |   | 729,115 |   |
| Unrealized gain on derivative instruments                                                                         |   |          | 9,706      |   |              |   | 8,233 |   |
| Other                                                                                                             |   |          | 167,816    |   |              |   | 138,857 |   |
| Total other long-term and regulatory assets                                                                       |   |          | 948,272    |   |              |   | 1,005,789 |   |
| Total assets                                                                                                      |   | $             | 9,365,762  |   |              | $      | 9,310,784 |   |

|                                                                                              |   | March 31,2011 |      |   | December 31, 2010 |   |
|---------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
| Capitalization:                                                                                   |   |          |      |   |              |   |
| Common shareholder’s equity:                                                                |   |          |      |   |              |   |
| Common stock $0.01 par value – 150,000,000 shares authorized, 85,903,791 shares outstanding |   | $             | 859       |   |              | $      | 859 |   |
| Additional paid-in capital                                                                        |   |          | 3,134,205 |   |              |   | 2,959,205 |   |
| Earnings reinvested in the business                                                               |   |          | 201,310   |   |              |   | 172,490 |   |
| Accumulated other comprehensive loss – net of tax                                           |   |          | (143,579  | )      |              |   | (157,647 | ) |
| Total common shareholder’s equity                                                           |   |          | 3,192,795 |   |              |   | 2,974,907 |   |
| Long-term debt:                                                                                   |   |          |      |   |              |   |   |   |
| First mortgage bonds and senior notes                                                             |   |          | 3,092,000 |   |              |   | 3,052,000 |   |
| Pollution control revenue bonds:                                                                  |   |          |      |   |              |   |   |   |
| Revenue refunding 2003 series, due 2031                                                           |   |          | 161,860   |   |              |   | 161,860 |   |
| Junior subordinated notes                                                                         |   |          | 250,000   |   |              |   | 250,000 |   |
| Long-term debt due within one year                                                                |   |          | --        |   |              |   | (260,000 | ) |
| Debt discount                                                                                     |   |          | (15       | )      |              |   | -- |   |
| Total long-term debt                                                                              |   |          | 3,503,845 |   |              |   | 3,203,860 |   |
| Total capitalization                                                                              |   |          | 6,696,640 |   |              |   | 6,178,767 |   |
| Current liabilities:                                                                              |   |          |      |   |              |   |   |   |
| Accounts payable                                                                                  |   |          | 247,729   |   |              |   | 291,765 |   |
| Short-term debt                                                                                   |   |          | 126,600   |   |              |   | 247,000 |   |
| Short-term note owed to Puget Energy                                                              |   |          | 29,998    |   |              |   | 22,598 |   |
| Current maturities of long-term debt                                                              |   |          | --        |   |              |   | 260,000 |   |
| Accrued expenses:                                                                                 |   |          |      |   |              |   |   |   |
| Purchased gas adjustment liability                                                                |   |          | 2,758     |   |              |   | -- |   |
| Taxes                                                                                             |   |          | 97,055    |   |              |   | 81,505 |   |
| Salaries and wages                                                                                |   |          | 24,169    |   |              |   | 34,453 |   |
| Interest                                                                                          |   |          | 44,683    |   |              |   | 54,723 |   |
| Unrealized loss on derivative instruments                                                         |   |          | 210,518   |   |              |   | 243,053 |   |
| Other                                                                                             |   |          | 52,783    |   |              |   | 49,661 |   |
| Total current liabilities                                                                         |   |          | 836,293   |   |              |   | 1,284,758 |   |
| Long-term and regulatory liabilities:                                                             |   |          |      |   |              |   |   |   |
| Deferred income taxes                                                                             |   |          | 1,073,786 |   |              |   | 1,034,517 |   |
| Unrealized loss on derivative instruments                                                         |   |          | 111,860   |   |              |   | 155,179 |   |
| Regulatory liabilities                                                                            |   |          | 288,142   |   |              |   | 296,884 |   |
| Other deferred credits                                                                            |   |          | 359,041   |   |              |   | 360,679 |   |
| Total long-term and regulatory liabilities                                                        |   |          | 1,832,829 |   |              |   | 1,847,259 |   |
| Commitments and contingencies                                                                     |   |          |      |   |              |   |   |   |
| Total capitalization and liabilities                                                              |   | $             | 9,365,762 |   |              | $      | 9,310,784 |   |

CONSOLID

|                                                                                     |   | Three Months EndedMarch 31, |     |
|------------------------------------------------------------------------------------------|--------|-----------------------------|----------|
|                                                                                     |   | 2011                        |     |   | 2010 |   |
| Operating activities:                                                                    |   |                        |     |   |   |   |
| Net income (loss)                                                                        |   | $                           | 103,439  |   |   | $ | (38,274 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |   |                        |     |   |   |   |   |   |
| Depreciation                                                                             |   |                        | 74,781   |   |   |   | 70,528 |   |
| Amortization                                                                             |   |                        | 17,973   |   |   |   | 15,468 |   |
| Conservation amortization                                                                |   |                        | 32,213   |   |   |   | 18,153 |   |
| Deferred income taxes and tax credits, net                                               |   |                        | 46,415   |   |   |   | (21,237 | ) |
| Net unrealized (gain) loss on derivative instruments                                     |   |                        | (5,984   | ) |   |   | 113,017 |   |
| Transmission service prepayment                                                          |   |                        | (20,000  | ) |   |   | -- |   |
| Pension funding                                                                          |   |                        | (5,000   | ) |   |   | (6,500 | ) |
| Other                                                                                    |   |                        | (16,888  | ) |   |   | 1,202 |   |
| Change in certain current assets and liabilities:                                        |   |                        |     |   |   |   |   |   |
| Accounts receivable and unbilled revenue                                                 |   |                        | 26,418   |   |   |   | 98,331 |   |
| Materials and supplies                                                                   |   |                        | (4,483   | ) |   |   | (13,744 | ) |
| Fuel and gas inventory                                                                   |   |                        | 35,575   |   |   |   | 17,742 |   |
| Income taxes                                                                             |   |                        | 49,710   |   |   |   | 30,391 |   |
| Prepayments and other                                                                    |   |                        | (1,463   | ) |   |   | 26 |   |
| Purchased gas adjustment                                                                 |   |                        | 8,750    |   |   |   | (41,764 | ) |
| Accounts payable                                                                         |   |                        | (29,979  | ) |   |   | (33,780 | ) |
| Taxes payable                                                                            |   |                        | 15,550   |   |   |   | 5,941 |   |
| Accrued expenses and other                                                               |   |                        | (17,201  | ) |   |   | (1,244 | ) |
| Net cash provided by operating activities                                                |   |                        | 309,826  |   |   |   | 214,256 |   |
| Investing activities:                                                                    |   |                        |     |   |   |   |   |   |
| Construction expenditures – excluding equity AFUDC                                 |   |                        | (317,710 | ) |   |   | (184,424 | ) |
| Energy efficiency expenditures                                                           |   |                        | (18,794  | ) |   |   | (25,686 | ) |
| Treasury grant payment received                                                          |   |                        | --       |   |   |   | 28,675 |   |
| Restricted cash                                                                          |   |                        | 545      |   |   |   | 2,501 |   |
| Other                                                                                    |   |                        | 1,943    |   |   |   | 2,927 |   |
| Net cash used in investing activities                                                    |   |                        | (334,016 | ) |   |   | (176,007 | ) |
| Financing activities:                                                                    |   |                        |     |   |   |   |   |   |
| Change in short-term debt and leases, net                                                |   |                        | (120,400 | ) |   |   | (65,059 | ) |
| Dividends paid                                                                           |   |                        | (74,619  | ) |   |   | (75,522 | ) |
| Long-term notes and bonds issued                                                         |   |                        | 300,000  |   |   |   | 325,000 |   |
| Loan payment to Puget Energy                                                             |   |                        | 7,400    |   |   |   | -- |   |
| Redemption of bonds and notes                                                            |   |                        | (260,000 | ) |   |   | (225,000 | ) |
| Investment from parent                                                                   |   |                        | 175,000  |   |   |   | -- |   |
| Issuance cost of bonds and other                                                         |   |                        | (1,964   | ) |   |   | 2,353 |   |
| Net cash provided by (used in) financing activities                                      |   |                        | 25,417   |   |   |   | (38,228 | ) |
| Net increase in cash and cash equivalents                                                |   |                        | 1,227    |   |   |   | 21 |   |
| Cash and cash equivalents at beginning of period                                         |   |                        | 36,320   |   |   |   | 78,407 |   |
| Cash and cash equivalents at end of period                                               |   | $                           | 37,547   |   |   | $ | 78,428 |   |
| Supplemental cash flow information:                                                      |   |                        |     |   |   |   |   |   |
| Cash payments for interest (net of capitalized interest)                                 |   | $                           | 59,799   |   |   | $ | 53,690 |   |
| Cash payments (refunds) for income taxes                                                 |   |                        | (49,657  | ) |   |   | (22,404 | ) |

COMBINED 

| (1)   | Summary of Consolidation Policy |
|-----------------|---------------------------------|

| Puget Energy(Dollars in Thousands)                          |   | March 31, 2011 |    |   | December 31,2010 |   |
|-------------------------------------------------------------|--------|----------------|---------|--------|------------------|--------|
| Net unrealized loss on energy derivative instruments        |   | $              | (2,471  | )      |             | $      | (2,658 | ) |
| Net unrealized loss on interest rate swaps                  |   |           | (35,808 | )      |             |   | (40,041 | ) |
| Net unrealized gain and prior service cost on pension plans |   |           | 39,368  |   |             |   | 39,630 |   |
| Total Puget Energy, net of tax                              |   | $              | 1,089   |   |             | $      | (3,069 | ) |

| Puget Sound Energy(Dollars in Thousands)                    |   | March 31,2011 |     |   | December 31,2010 |   |
|-------------------------------------------------------------|--------|---------------|----------|--------|------------------|--------|
| Net unrealized loss on energy derivative instruments        |   | $             | (22,022  | )      |             | $      | (34,612 | ) |
| Settlement of treasury rate cash flow hedge contracts       |   |          | (7,177   | )      |             |   | (7,257 | ) |
| Net unrealized loss and prior service cost on pension plans |   |          | (114,380 | )      |             |   | (115,778 | ) |
| Total PSE, net of tax                                       |   | $             | (143,579 | )      |             | $      | (157,647 | ) |

| (2)   | Accounting for Derivative Instruments and Hedging Activities |
|-----------------|--------------------------------------------------------------|

| Derivatives Not Designated as Hedging Instruments |   |
|---------------------------------------------------|--------|
| Puget Energy                                      |   | March 31, 2011 |   |   | December 31, 2010 |   |
| (Dollars in Thousands)                            |   | Assets 1 |   |   | Liabilities 1 |   |   | Assets 1 |   |   | Liabilities 1 |   |
| Interest rate swaps:                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                           |   | $ | -- |   |   | $ | 30,141 |   |   | $ | -- |   |   | $ | 30,047 |   |
| Long-term                                         |   |   | -- |   |   |   | 17,623 |   |   |   | -- |   |   |   | 27,956 |   |
| Electric portfolio:                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                           |   |   | 5,411 |   |   |   | 135,325 |   |   |   | 4,716 |   |   |   | 142,780 |   |
| Long-term                                         |   |   | 4,523 |   |   |   | 82,071 |   |   |   | 5,046 |   |   |   | 99,801 |   |
| Gas portfolio: 2                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                           |   |   | 4,944 |   |   |   | 75,193 |   |   |   | 2,784 |   |   |   | 100,273 |   |
| Long-term                                         |   |   | 5,183 |   |   |   | 29,789 |   |   |   | 3,187 |   |   |   | 55,378 |   |
| Total derivatives                                 |   | $ | 20,061 |   |   | $ | 370,142 |   |   | $ | 15,733 |   |   | $ | 456,235 |   |

| Derivatives Not Designated as Hedging Instruments |   |
|---------------------------------------------------|--------|
| Puget Sound Energy                                |   | March 31, 2011 |   |   | December 31, 2010 |   |
| (Dollars in Thousands)                            |   | Assets 1 |   |   | Liabilities 1 |   |   | Assets 1 |   |   | Liabilities 1 |   |
| Electric portfolio:                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                           |   | $ | 5,411 |   |   | $ | 135,325 |   |   | $ | 4,716 |   |   | $ | 142,780 |   |
| Long-term                                         |   |   | 4,523 |   |   |   | 82,071 |   |   |   | 5,046 |   |   |   | 99,801 |   |
| Gas portfolio: 2                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                           |   |   | 4,944 |   |   |   | 75,193 |   |   |   | 2,784 |   |   |   | 100,273 |   |
| Long-term                                         |   |   | 5,183 |   |   |   | 29,789 |   |   |   | 3,187 |   |   |   | 55,378 |   |
| Total derivatives                                 |   | $ | 20,061 |   |   | $ | 322,378 |   |   | $ | 15,733 |   |   | $ | 398,232 |   |

| 1 | Balance sheet location: Unrealized (gain) loss on derivative instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | The Company had a derivative liability and an offsetting regulatory asset of $94.9 million and $149.7 million at March 31, 2011 and December 31, 2010, respectively, related to financial contracts used to economically hedge the cost of physical gas purchased to serve natural gas customers.  All fair value adjustments on derivatives relating to the natural gas business have been reclassified to a deferred account in accordance with Accounting Standards Codification 980, “Regulated Operations” (ASC 980), due to the Purchased Gas Adjustment (PGA) mechanism.  All increases and decreases in the cost of natural gas supply are passed on to customers with the PGA mechanism and the gains and losses on the hedges in future periods will be recorded as gas costs. |

| Puget Energy                                               |   | Three Months EndedMarch 31, |    |
|------------------------------------------------------------|--------|-----------------------------|---------|
| (Dollars in Thousands)                                     |   | 2011                        |    |   | 2010 |   |
| Gas / Power NPNS 1                                         |   | $                           | (8,050  | ) |   | $ | (25,599 | ) |
| Gas for power generation                                   |   |                        | (41,523 | ) |   |   | 48,990 |   |
| Power exchange                                             |   |                        | --      |   |   |   | (927 | ) |
| Power                                                      |   |                        | 16,454  |   |   |   | 38,184 |   |
| Total net unrealized (gain) loss on derivative instruments |   | $                           | (33,119 | ) |   | $ | 60,648 |   |
| Interest expense – interest rate swaps               |   | $                           | (1,926  | ) |   | $ | -- |   |
| Other deductions – interest rate swaps               |   | $                           | (1,800  | ) |   | $ | -- |   |

| 1 | Gains related to Normal Purchase Normal Sale (NPNS) contracts at the merger date are subsequently amortized over the remaining life. |
|---|--------------------------------------------------------------------------------------------------------------------------------------|

| Puget Sound Energy                                         |   | Three Months EndedMarch 31, |    |
|------------------------------------------------------------|--------|-----------------------------|---------|
| (Dollars in Thousands)                                     |   | 2011                        |    |   | 2010 |   |
| Gas for power generation                                   |   | $                           | (24,678 | ) |   | $ | 72,205 |   |
| Power exchange                                             |   |                        | --      |   |   |   | (927 | ) |
| Power                                                      |   |                        | 18,694  |   |   |   | 41,739 |   |
| Total net unrealized (gain) loss on derivative instruments |   | $                           | (5,984  | ) |   | $ | 113,017 |   |

| Puget Energy(Dollars in Thousands)             |   | Three Months Ended March 31,                                       |   |
|------------------------------------------------|--------|--------------------------------------------------------------------|--------|
| Derivatives in Cash Flow Hedging Relationships |   | Gain (Loss) Recognized in OCI on Derivatives (Effective Portion 1) |   | Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion 2) |   |
|                                           |   | 2011                                                               |   |   | 2010 |   | Location |   | 2011 |   |   | 2010 |   |
| Interest rate contracts:                       |   | $                                                                  | --     |   |   | $ | (17,446 | ) | Interest expense |   | $ | (6,512 | ) |   | $ | 8,534 |   |
| Commodity contracts:Electric derivatives       |   |                                                               | --     |   |   |   | -- |   | Electric generation fuel |   |   | (30 | ) |   |   | 122 |   |
|                                           |   |                                                               |   |   |   |   |   |   | Purchased electricity |   |   | (258 | ) |   |   | 1,396 |   |
| Total                                          |   | $                                                                  | --     |   |   | $ | (17,446 | ) |   |   | $ | (6,800 | ) |   | $ | 10,052 |   |

| Puget Sound Energy(Dollars in Thousands)       |   | Three Months Ended March 31,                                            |   |
|------------------------------------------------|--------|-------------------------------------------------------------------------|--------|
| Derivatives in Cash Flow Hedging Relationships |   | Gain (Loss) Recognized in OCI on Derivatives (Effective Portion 1) |   | Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion 2) |   |
|                                           |   | 2011                                                                    |   |   | 2010 |   | Location |   | 2011 |   |   | 2010 |   |
| Interest rate contracts:                       |   | $                                                                       | --     |   |   | $ | -- |   | Interest expense |   | $ | (123 | ) |   | $ | (123 | ) |
| Commodity contracts:Electric derivatives       |   |                                                                    | 1,397  |   |   |   | 49 |   | Electric generation fuel |   |   | (14,724 | ) |   |   | 23,262 |   |
|                                           |   |                                                                    |   |   |   |   |   |   | Purchased electricity |   |   | (2,496 | ) |   |   | 5,990 |   |
| Total                                          |   | $                                                                       | 1,397  |   |   | $ | 49 |   |   |   | $ | (17,343 | ) |   | $ | 29,129 |   |

| 1 | Changes in OCI are reported in after-tax dollars.                                                                                         |
|---|-------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | A reclassification of a loss in OCI increases accumulated OCI and decreases earnings.  Amounts reported are in pre-tax dollars. |

| Puget Energy                                          |                                                   | Three Months EndedMarch 31,                                       |
|-------------------------------------------------------|--------------------------------------------------------|-------------------------------------------------------------------|
| (Dollars in Thousands)                                | Location                                               | 2011                                                              | 2010 |
| Interest Rate Contracts:                              | Other deductions                                       | $          (48) | $              -- |
|                                                  | Interest expense                                       | (4,577)                                                           | -- |
| Commodity contracts:                                  |                                                   |                                                              |   |
| Electric derivatives                                  | Net unrealized gain (loss) on derivative instruments 1 | $    25,069                         | $    (86,247)    |
|                                                  | Electric generation fuel                               | (40,814)                                                          | (24,656) |
|                                                  | Purchased electricity                                  | (14,672)                                                          | (6,723) |
| Total gain (loss) recognized in income on derivatives |                                                   | $   (35,042)                                       | $  (117,626) |

| 1 | Differs from the amounts stated in the statements of income as it does not include amortization expense related to contracts that were recorded at fair value at the time of the February 2009 merger and subsequently designated as NPNS of $8.1 million and $25.6 million for the three months ended March 31, 2011 and 2010, respectively. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Puget Sound Energy                                    |                                                 | Three Months EndedMarch 31,                |
|-------------------------------------------------------|------------------------------------------------------|--------------------------------------------|
|  (Dollars in Thousands)                          | Location                                             | 2011                                       | 2010 |
| Commodity contracts:                                  |                                                 |                                       |   |
| Electric derivatives                                  | Net unrealized gain (loss) on derivative instruments | $      5,984 | $   (113,017) |
|                                                  | Electric generation fuel                             | (40,814)                                   | (24,656) |
|                                                  | Purchased electricity                                | (14,672)                                   | (6,723) |
| Total gain (loss) recognized in income on derivatives |                                                 | $   (49,502)                | $   (144,396) |

| Derivatives not designated as hedging instruments: | Number of Units    |
|----------------------------------------------------|--------------------|
| Puget Energy:                                      |               |
| Interest rate swaps                                | $1.483 billion     |
| Puget Energy and Puget Sound Energy:               |               |
| Gas derivatives 1                                  | 365,971,909 MMBtus |
| Electric generation fuel                           | 94,114,160 MMBtus  |
| Purchased electricity                              | 10,227,525 MWhs    |

| 1 | Unrealized gains (losses) on gas derivatives are offset by a regulatory asset or liability in accordance with ASC 980 due to the PGA mechanism. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------|

| Puget Energy and Puget Sound EnergyContingent Feature(Dollars in Thousands) |   | Fair Value 1Liability |     |   | PostedCollateral |   |   | ContingentCollateral |   |
|-----------------------------------------------------------------------------|--------|-----------------------|----------|--------|------------------|--------|--------|----------------------|--------|
| Credit rating 2                                                             |   | $                     | (49,531  | )      |             | $      | --     |                 |   | $ | 49,531 |   |
| Requested credit for adequate assurance                                     |   |                  | (98,275  | )      |             |   | --     |                 |   |   | -- |   |
| Forward value of contract 3                                                 |   |                  | (11,917  | )      |             |   | --     |                 |   |   | -- |   |
| Total                                                                       |   | $                     | (159,723 | )      |             | $      | --     |                 |   | $ | 49,531 |   |

| 1 | Represents the fair value of derivative contracts with contingent features for counterparties in net derivative liability positions at March 31, 2011.  Excludes NPNS, accounts payable and accounts receivable. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | Failure by PSE to maintain an investment grade credit rating from each of the major credit rating’s agencies provides counterparties a contractual right to demand collateral.                                       |
| 3 | Collateral requirements may vary, based on changes in forward value of underlying transactions relative to contractually defined collateral thresholds.                                                                    |

| (3)   | Fair Value Measurements |
|-----------------|-------------------------|

| Puget Energy                         |   | Fair Value Measurementat March 31, 2011 |   |   | Fair Value Measurementat December 31, 2010 |   |
|--------------------------------------|--------|-----------------------------------------|--------|--------|--------------------------------------------|--------|
| (Dollars in Thousands)               |   | Level 1                                 |   |   | Level 2                                    |   |   | Level 3 |   |   | Total |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Assets:                              |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric derivative instruments      |   | $                                       | --     |   |                                       | $      | 2,605 |   |   | $ | 7,329 |   |   | $ | 9,934 |   |   | $ | -- |   |   | $ | 1,874 |   |   | $ | 7,888 |   |   | $ | 9,762 |   |
| Gas derivative instruments           |   |                                    | --     |   |                                       |   | 4,947 |   |   |   | 5,180 |   |   |   | 10,127 |   |   |   | -- |   |   |   | 1,487 |   |   |   | 4,484 |   |   |   | 5,971 |   |
| Cash equivalents                     |   |                                    | 11,000 |   |                                       |   | 5,253 |   |   |   | -- |   |   |   | 16,253 |   |   |   | 15,184 |   |   |   | 5,450 |   |   |   | -- |   |   |   | 20,634 |   |
| Restricted cash                      |   |                                    | 2,849  |   |                                       |   | -- |   |   |   | -- |   |   |   | 2,849 |   |   |   | 3,246 |   |   |   | -- |   |   |   | -- |   |   |   | 3,246 |   |
| Total assets                         |   | $                                       | 13,849 |   |                                       | $      | 12,805 |   |   | $ | 12,509 |   |   | $ | 39,163 |   |   | $ | 18,430 |   |   | $ | 8,811 |   |   | $ | 12,372 |   |   | $ | 39,613 |   |
| Liabilities:                         |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric derivative instruments      |   | $                                       | --     |   |                                       | $      | 120,310 |   |   | $ | 97,086 |   |   | $ | 217,396 |   |   | $ | -- |   |   | $ | 147,257 |   |   | $ | 95,324 |   |   | $ | 242,581 |   |
| Gas derivative instruments           |   |                                    | --     |   |                                       |   | 98,016 |   |   |   | 6,966 |   |   |   | 104,982 |   |   |   | -- |   |   |   | 147,308 |   |   |   | 8,343 |   |   |   | 155,651 |   |
| Interest rate derivative instruments |   |                                    | --     |   |                                       |   | 47,764 |   |   |   | -- |   |   |   | 47,764 |   |   |   | -- |   |   |   | 58,003 |   |   |   | -- |   |   |   | 58,003 |   |
| Total liabilities                    |   | $                                       | --     |   |                                       | $      | 266,090 |   |   | $ | 104,052 |   |   | $ | 370,142 |   |   | $ | -- |   |   | $ | 352,568 |   |   | $ | 103,667 |   |   | $ | 456,235 |   |

| Puget Sound Energy              |   | Fair Value Measurementat March 31, 2011 |   |   | Fair Value Measurementat December 31, 2010 |   |
|---------------------------------|--------|-----------------------------------------|--------|--------|--------------------------------------------|--------|
| (Dollars in Thousands)          |   | Level 1                                 |   |   | Level 2                                    |   |   | Level 3 |   |   | Total |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Assets:                         |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric derivative instruments |   | $                                       | --     |   |                                       | $      | 2,605 |   |   | $ | 7,329 |   |   | $ | 9,934 |   |   | $ | -- |   |   | $ | 1,874 |   |   | $ | 7,888 |   |   | $ | 9,762 |   |
| Gas derivative instruments      |   |                                    | --     |   |                                       |   | 4,947 |   |   |   | 5,180 |   |   |   | 10,127 |   |   |   | -- |   |   |   | 1,487 |   |   |   | 4,484 |   |   |   | 5,971 |   |
| Cash equivalents                |   |                                    | 11,000 |   |                                       |   | 5,253 |   |   |   | -- |   |   |   | 16,253 |   |   |   | 15,184 |   |   |   | 5,450 |   |   |   | -- |   |   |   | 20,634 |   |
| Restricted cash                 |   |                                    | 2,849  |   |                                       |   | -- |   |   |   | -- |   |   |   | 2,849 |   |   |   | 3,246 |   |   |   | -- |   |   |   | -- |   |   |   | 3,246 |   |
| Total assets                    |   | $                                       | 13,849 |   |                                       | $      | 12,805 |   |   | $ | 12,509 |   |   | $ | 39,163 |   |   | $ | 18,430 |   |   | $ | 8,811 |   |   | $ | 12,372 |   |   | $ | 39,613 |   |
| Liabilities:                    |   |                                    |   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric derivative instruments |   | $                                       | --     |   |                                       | $      | 120,310 |   |   | $ | 97,086 |   |   | $ | 217,396 |   |   | $ | -- |   |   | $ | 147,257 |   |   | $ | 95,324 |   |   | $ | 242,581 |   |
| Gas derivative instruments      |   |                                    | --     |   |                                       |   | 98,016 |   |   |   | 6,966 |   |   |   | 104,982 |   |   |   | -- |   |   |   | 147,308 |   |   |   | 8,343 |   |   |   | 155,651 |   |
| Total liabilities               |   | $                                       | --     |   |                                       | $      | 218,326 |   |   | $ | 104,052 |   |   | $ | 322,378 |   |   | $ | -- |   |   | $ | 294,565 |   |   | $ | 103,667 |   |   | $ | 398,232 |   |

| Puget Energy andPuget Sound EnergyLevel 3 Roll-Forward Net (Liability) |   | Three Months EndedMarch 31, |    |
|------------------------------------------------------------------------|--------|-----------------------------|---------|
| (Dollars in Thousands)                                                 |   | 2011                        |    |   | 2010 |   |
| Balance at beginning of period                                         |   | $                           | (91,295 | ) |   | $ | (100,333 | ) |
| Changes during period:                                                 |   |                        |    |   |   |   |   |   |
| Realized and unrealized energy derivatives                             |   |                        |    |   |   |   |   |   |
| - included in earnings                                                 |   |                        | (15,707 | ) 1 |   |   | (69,598 | ) 2 |
| - included in regulatory assets / liabilities                          |   |                        | 1,119   |   |   |   | (196 | ) |
| Settlements 3                                                          |   |                        | 10,440  |   |   |   | 7,828 |   |
| Transferred out of Level 3                                             |   |                        | 3,900   |   |   |   | 33,464 |   |
| Balance at end of period                                               |   | $                           | (91,543 | ) |   | $ | (128,835 | ) |

| 1 | Includes unrealized gains (losses) on derivatives still held in position as of the reporting date for electric and gas derivatives of $(14.4) million and $1.1 million, respectively.    |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2 | Includes unrealized gains (losses) on derivatives still held in position as of the reporting date for electric and gas derivatives of $(35.4) million and $(21.8) million, respectively. |
| 3 | The Company had no purchases or issuances during the reported periods.                                                                                                                   |

| (4)   | Estimated Fair Value of Financial Instruments |
|-----------------|-----------------------------------------------|

|                                              |   | March 31, 2011 |      |   | December 31, 2010 |   |
|---------------------------------------------------|--------|----------------|-----------|--------|-------------------|--------|
| Puget Energy(Dollars in Thousands)                |   | CarryingAmount |      |   | FairValue         |   |   | CarryingAmount |   |   | FairValue |   |
| Financial assets:                                 |   |           |      |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                         |   | $              | 43,599    |   |              | $      | 43,599 |   |   | $ | 36,557 |   |   | $ | 36,557 |   |
| Restricted cash                                   |   |           | 4,925     |   |              |   | 4,925 |   |   |   | 5,470 |   |   |   | 5,470 |   |
| Notes receivable and other                        |   |           | 72,906    |   |              |   | 72,906 |   |   |   | 72,419 |   |   |   | 72,419 |   |
| Electric derivatives                              |   |           | 9,934     |   |              |   | 9,934 |   |   |   | 9,762 |   |   |   | 9,762 |   |
| Gas derivatives                                   |   |           | 10,127    |   |              |   | 10,127 |   |   |   | 5,971 |   |   |   | 5,971 |   |
| Financial liabilities:                            |   |           |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Short-term debt                                   |   | $              | 126,600   |   |              | $      | 126,600 |   |   | $ | 247,000 |   |   | $ | 247,000 |   |
| Junior subordinated notes                         |   |           | 250,000   |   |              |   | 242,610 |   |   |   | 250,000 |   |   |   | 246,864 |   |
| Current maturities of long-term debt (fixed-rate) |   |           | --        |   |              |   | -- |   |   |   | 260,000 |   |   |   | 261,472 |   |
| Long-term debt (fixed-rate), net of discount      |   |           | 3,421,924 |   |              |   | 4,011,965 |   |   |   | 3,119,660 |   |   |   | 3,718,303 |   |
| Long-term debt (variable-rate), net of discount   |   |           | 1,190,222 |   |              |   | 1,281,030 |   |   |   | 1,013,053 |   |   |   | 1,083,117 |   |
| Electric derivatives                              |   |           | 217,396   |   |              |   | 217,396 |   |   |   | 242,581 |   |   |   | 242,581 |   |
| Gas derivatives                                   |   |           | 104,982   |   |              |   | 104,982 |   |   |   | 155,651 |   |   |   | 155,651 |   |
| Interest rate derivatives                         |   |           | 47,764    |   |              |   | 47,764 |   |   |   | 58,003 |   |   |   | 58,003 |   |

|                                                  |   | March 31, 2011 |      |   | December 31, 2010 |   |
|-------------------------------------------------------|--------|----------------|-----------|--------|-------------------|--------|
| Puget Sound Energy(Dollars in Thousands)              |   | CarryingAmount |      |   | FairValue         |   |   | CarryingAmount |   |   | FairValue |   |
| Financial assets:                                     |   |           |      |   |              |   |   |   |   |   |   |   |
| Cash and cash equivalents                             |   | $              | 37,547    |   |              | $      | 37,547 |   |   | $ | 36,320 |   |   | $ | 36,320 |   |
| Restricted cash                                       |   |           | 4,925     |   |              |   | 4,925 |   |   |   | 5,470 |   |   |   | 5,470 |   |
| Notes receivable and other                            |   |           | 72,906    |   |              |   | 72,906 |   |   |   | 72,419 |   |   |   | 72,419 |   |
| Electric derivatives                                  |   |           | 9,934     |   |              |   | 9,934 |   |   |   | 9,762 |   |   |   | 9,762 |   |
| Gas derivatives                                       |   |           | 10,127    |   |              |   | 10,127 |   |   |   | 5,971 |   |   |   | 5,971 |   |
| Financial liabilities:                                |   |           |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Short-term debt                                       |   | $              | 126,600   |   |              | $      | 126,600 |   |   | $ | 247,000 |   |   | $ | 247,000 |   |
| Short-term debt owed by PSE to Puget Energy 1         |   |           | 29,998    |   |              |   | 29,998 |   |   |   | 22,598 |   |   |   | 22,598 |   |
| Junior subordinated notes                             |   |           | 250,000   |   |              |   | 242,610 |   |   |   | 250,000 |   |   |   | 246,864 |   |
| Current maturities of long-term debt (fixed-rate)     |   |           | --        |   |              |   | -- |   |   |   | 260,000 |   |   |   | 261,472 |   |
| Non-current maturities of long-term debt (fixed-rate) |   |           | 3,253,845 |   |              |   | 3,551,435 |   |   |   | 2,953,860 |   |   |   | 3,267,994 |   |
| Electric derivatives                                  |   |           | 217,396   |   |              |   | 217,396 |   |   |   | 242,581 |   |   |   | 242,581 |   |
| Gas derivatives                                       |   |           | 104,982   |   |              |   | 104,982 |   |   |   | 155,651 |   |   |   | 155,651 |   |

| 1 | Short-term debt owed by PSE to Puget Energy is eliminated upon consolidation of Puget Energy. |
|---|-----------------------------------------------------------------------------------------------|

| (5)   | Retirement Benefits |
|-----------------|---------------------|

| Puget Energy                             |   | QualifiedPension Benefits   |   |   | SERPPension Benefits        |   |   | OtherBenefits               |   |
|------------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|--------|-----------------------------|--------|
|                                     |   | Three Months EndedMarch 31, |   |   | Three Months EndedMarch 31, |   |   | Three Months EndedMarch 31, |   |
| (Dollars in Thousands)                   |   | 2011                        |   |   | 2010                        |   |   | 2011                        |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Components of net periodic benefit cost: |   |                        |   |   |                        |   |   |                        |   |   |   |   |   |   |   |   |   |   |
| Service cost                             |   | $                           | 4,059  |   |                        | $      | 4,037  |                        |   | $ | 310 |   |   | $ | 256 |   |   | $ | 31 |   |   | $ | 30 |   |
| Interest cost                            |   |                        | 6,630  |   |                        |   | 7,032  |                        |   |   | 548 |   |   |   | 541 |   |   |   | 204 |   |   |   | 218 |   |
| Expected return on plan assets           |   |                        | (8,860 | )      |                        |   | (8,206 | )                           |   |   | -- |   |   |   | -- |   |   |   | (125 | ) |   |   | (124 | ) |
| Amortization of prior service cost       |   |                        | (495   | )      |                        |   | --     |                        |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Amortization of net loss (gain)          |   |                        | --     |   |                        |   | --     |                        |   |   | 90 |   |   |   | -- |   |   |   | 1 |   |   |   | (2 | ) |
| Net periodic benefit cost                |   | $                           | 1,334  |   |                        | $      | 2,863  |                        |   | $ | 948 |   |   | $ | 797 |   |   | $ | 111 |   |   | $ | 122 |   |

| Puget Sound Energy                       |   | QualifiedPension Benefits    |    |   | SERPPension Benefits         |   |    | OtherBenefits                |   |
|------------------------------------------|--------|------------------------------|---------|--------|------------------------------|--------|---------|------------------------------|--------|
|                                     |   | Three Months Ended March 31, |    |   | Three Months Ended March 31, |   |    | Three Months Ended March 31, |   |
| (Dollars in Thousands)                   |   | 2011                         |    |   | 2010                         |   |    | 2011                         |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Components of net periodic benefit cost: |   |                         |    |   |                         |   |    |                         |   |   |   |   |   |   |   |   |   |   |
| Service cost                             |   | $                            | 4,059   |   |                         | $      | 4,037   |                         |   | $ | 310 |   |   | $ | 256 |   |   | $ | 31 |   |   | $ | 30 |   |
| Interest cost                            |   |                         | 6,630   |   |                         |   | 7,032   |                         |   |   | 548 |   |   |   | 541 |   |   |   | 204 |   |   |   | 218 |   |
| Expected return on plan assets           |   |                         | (11,056 | )      |                         |   | (10,994 | )                            |   |   | -- |   |   |   | -- |   |   |   | (125 | ) |   |   | (124 | ) |
| Amortization of prior service cost       |   |                         | (393    | )      |                         |   | 185     |                         |   |   | 141 |   |   |   | 141 |   |   |   | 16 |   |   |   | 33 |   |
| Amortization of net loss (gain)          |   |                         | 2,694   |   |                         |   | 1,706   |                         |   |   | 298 |   |   |   | 192 |   |   |   | (109 | ) |   |   | (119 | ) |
| Amortization of transition obligation    |   |                         | --      |   |                         |   | --      |                         |   |   | -- |   |   |   | -- |   |   |   | 13 |   |   |   | 12 |   |
| Net periodic benefit cost                |   | $                            | 1,934   |   |                         | $      | 1,966   |                         |   | $ | 1,297 |   |   | $ | 1,130 |   |   | $ | 30 |   |   | $ | 50 |   |

| Puget Energy andPuget Sound Energy        |   | QualifiedPension Benefits |    |   | SERPPension Benefits |   |    | OtherBenefits  |   |
|-------------------------------------------|--------|---------------------------|---------|--------|----------------------|--------|---------|----------------|--------|
| (Dollars in Thousands)                    |   | March 31, 2011            |    |   | December 31, 2010    |   |    | March 31, 2011 |   |   | December 31, 2010 |   |   | March 31, 2011 |   |   | December 31, 2010 |   |
| Change in benefit obligation:             |   |                      |    |   |                 |   |    |           |   |   |   |   |   |   |   |   |   |   |
| Benefit obligation at beginning of period |   | $                         | 532,615 |   |                 | $      | 504,786 |           |   | $ | 44,322 |   |   | $ | 39,152 |   |   | $ | 16,579 |   |   | $ | 15,953 |   |
| Service cost                              |   |                      | 4,059   |   |                 |   | 16,089  |           |   |   | 310 |   |   |   | 1,024 |   |   |   | 31 |   |   |   | 106 |   |
| Interest cost                             |   |                      | 6,630   |   |                 |   | 27,975  |           |   |   | 548 |   |   |   | 2,165 |   |   |   | 204 |   |   |   | 880 |   |
| Amendment                                 |   |                      | --      |   |                 |   | (21,866 | )              |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Actuarial loss                            |   |                      | --      |   |                 |   | 32,163  |           |   |   | -- |   |   |   | 3,663 |   |   |   | -- |   |   |   | 867 |   |
| Benefits paid                             |   |                      | (8,851  | )      |                 |   | (26,532 | )              |   |   | (423 | ) |   |   | (1,682 | ) |   |   | (458 | ) |   |   | (2,030 | ) |
| Medicare part D subsidiary received       |   |                      | --      |   |                 |   | --      |           |   |   | -- |   |   |   | -- |   |   |   | 2 |   |   |   | 803 |   |
| Benefit obligation at end of period       |   | $                         | 534,453 |   |                 | $      | 532,615 |           |   | $ | 44,757 |   |   | $ | 44,322 |   |   | $ | 16,358 |   |   | $ | 16,579 |   |

| (6)   | Regulation and Rates |
|-----------------|----------------------|

| (7)   | Litigation |
|-----------------|------------|

| (8)   | Variable Interest Entities |
|-----------------|----------------------------|

| (9)   | Other |
|-----------------|-------|

| Effective Date                   | Washington Commission AFUDCRates |
|----------------------------------|----------------------------------|
| April 8, 2010 - present          | 8.10%                            |
| November 1, 2008 - April 7, 2010 | 8.25                             |

|                        |   | Three Months Ended March 31, |   |
|-----------------------------|--------|------------------------------|--------|
| (Dollars in Thousands)      |   | 2011                         |   |   | 2010 |   |
| Equity AFUDC                |   | $                            | 3,734  |   |   | $ | 1,919 |   |
| Washington Commission AFUDC |   |                         | 3,905  |   |   |   | 1,272 |   |
| Total in other income       |   |                         | 7,639  |   |   |   | 3,191 |   |
| Debt AFUDC                  |   |                         | 4,404  |   |   |   | 2,750 |   |
| Total AFUDC                 |   | $                            | 12,043 |   |   | $ | 5,941 |   |

Manage

| ·   | The rates PSE is allowed to charge for its services; |
|--------------------|------------------------------------------------------|

| ·   | PSE’s ability to recover fixed costs that are included in rates which are based on volume; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | Weather conditions, including snow-pack affecting hydrological conditions; |
|--------------------|----------------------------------------------------------------------------|

| ·   | Demand for electricity and natural gas among customers in PSE’s service territory; |
|--------------------|------------------------------------------------------------------------------------------|

| ·   | Regulatory decisions allowing PSE to recover costs, including purchased power and fuel costs, on a timely basis; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | PSE’s ability to supply electricity and natural gas, either through company-owned generation, purchase power contracts or by procuring natural gas or electricity in wholesale markets; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Availability and access to capital and the cost of capital; |
|--------------------|-------------------------------------------------------------|

| ·   | Regulatory compliance costs, including those related to new and developing federal regulations of electric system reliability, state regulations of natural gas pipelines and federal, state and local environmental laws and regulations; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The impact of energy efficiency programs on sales and margins; |
|--------------------|----------------------------------------------------------------|

| ·   | Wholesale commodity prices of electricity and natural gas; and |
|--------------------|----------------------------------------------------------------|

| ·   | Increasing depreciation and related property taxes. |
|--------------------|-----------------------------------------------------|

| Annual Power Cost Variability  | Customers’Share | Company’sShare |
|--------------------------------|-----------------------|----------------------|
| +/- $20 million                | 0%                    | 100%                 |
| +/- $20 million - $40 million  | 50%                   | 50%                  |
| +/- $40 million - $120 million | 90%                   | 10%                  |
| +/- $120 + million             | 95%                   | 5%                   |

| Type of RateAdjustment     | EffectiveDate | Average Percentage Increasein Rates | Annual Increase in Revenue (Dollars in Millions) |
|----------------------------|---------------|-------------------------------------|--------------------------------------------------|
| Electric General Rate Case | April 8, 2010 | 3.7%                                | $  74.1                                |

| Type of RateAdjustment               | EffectiveDate                            | Average Percentage Increase (Decrease)in Rates | Annual Increase (Decrease) in Revenue (Dollars in Millions) |
|--------------------------------------|------------------------------------------|------------------------------------------------|-------------------------------------------------------------|
| Natural Gas General Tariff Rate Case | April 1, 2011                            | 1.8%                                           | $     19.0                         |
| Purchased Gas Adjustment             | November 1, 2010                         | 1.9                                            | 18.3                                                        |
| Natural Gas General Rate Case        | April 8, 2010                            | 0.8                                            |    10.1                                      |
| Purchased Gas Adjustment             | October 1, 2009 – October 31, 2010 | (17.1)                                         | (198.1)                                                     |
| Purchased Gas Adjustment             | June 1, 2009 – May 31, 2010   | (1.8)                                          | (21.2)                                                      |

|                                                 |   | Three Months EndedMarch 31, |      |   |   |   |
|------------------------------------------------------|--------|-----------------------------|-----------|--------|--------|--------|
| Puget Sound Energy(Dollars in Thousands)             |   | 2011                        |      |   | 2010   |   |   | PercentChange |   |
| Operating revenue:                                   |   |                        |      |   |   |   |   |   |   |
| Electric                                             |   |                        |      |   |   |   |   |   |   |
| Residential sales                                    |   | $                           | 369,316   |   |   | $      | 322,242 |   |   |   | 14.6 | % |
| Commercial sales                                     |   |                        | 230,484   |   |   |   | 216,202 |   |   |   | 6.6 |   |
| Industrial sales                                     |   |                        | 27,494    |   |   |   | 25,443 |   |   |   | 8.1 |   |
| Other retail sales, including unbilled revenue       |   |                        | (22,813   | )      |   |   | (29,047 | ) |   |   | (21.5 | ) |
| Total retail sales                                   |   |                        | 604,481   |   |   |   | 534,840 |   |   |   | 13.0 |   |
| Transportation sales                                 |   |                        | 2,541     |   |   |   | 3,127 |   |   |   | (18.7 | ) |
| Sales to other utilities and marketers               |   |                        | 8,948     |   |   |   | 17,208 |   |   |   | (48.0 | ) |
| Other                                                |   |                        | (16,237   | )      |   |   | (540 | ) |   |   | * |   |
| Total electric operating revenue                     |   |                        | 599,733   |   |   |   | 554,635 |   |   |   | 8.1 |   |
| Gas                                                  |   |                        |      |   |   |   |   |   |   |   |   |   |
| Residential sales                                    |   |                        | 281,615   |   |   |   | 214,165 |   |   |   | 31.5 |   |
| Commercial sales                                     |   |                        | 118,569   |   |   |   | 91,590 |   |   |   | 29.5 |   |
| Industrial sales                                     |   |                        | 11,075    |   |   |   | 9,219 |   |   |   | 20.1 |   |
| Total retail sales                                   |   |                        | 411,259   |   |   |   | 314,974 |   |   |   | 30.6 |   |
| Transportation sales                                 |   |                        | 3,726     |   |   |   | 3,375 |   |   |   | 10.4 |   |
| Other                                                |   |                        | 3,639     |   |   |   | 4,056 |   |   |   | (10.3 | ) |
| Total gas operating revenue                          |   |                        | 418,624   |   |   |   | 322,405 |   |   |   | 29.8 |   |
| Non-utility operating revenue                        |   |                        | 1,236     |   |   |   | 1,166 |   |   |   | 6.0 |   |
| Total operating revenue                              |   |                        | 1,019,593 |   |   |   | 878,206 |   |   |   | 16.1 |   |
| Operating expenses:                                  |   |                        |      |   |   |   |   |   |   |   |   |   |
| Energy costs:                                        |   |                        |      |   |   |   |   |   |   |   |   |   |
| Purchased electricity                                |   |                        | 228,041   |   |   |   | 254,307 |   |   |   | 10.3 |   |
| Electric generation fuel                             |   |                        | 45,223    |   |   |   | 56,245 |   |   |   | 19.6 |   |
| Residential exchange                                 |   |                        | (21,682   | )      |   |   | (22,462 | ) |   |   | 3.5 |   |
| Purchased gas                                        |   |                        | 236,754   |   |   |   | 176,864 |   |   |   | (33.9 | ) |
| Net unrealized (gain) loss on derivative instruments |   |                        | (5,984    | )      |   |   | 113,017 |   |   |   | 105.3 |   |
| Utility operations and maintenance                   |   |                        | 117,967   |   |   |   | 116,179 |   |   |   | (1.5 | ) |
| Non-utility expense and other                        |   |                        | 3,351     |   |   |   | 1,476 |   |   |   | (127.0 | ) |
| Depreciation                                         |   |                        | 74,781    |   |   |   | 70,528 |   |   |   | (6.0 | ) |
| Amortization                                         |   |                        | 17,973    |   |   |   | 15,468 |   |   |   | (16.2 | ) |
| Conservation amortization                            |   |                        | 32,213    |   |   |   | 18,153 |   |   |   | (77.5 | ) |
| Taxes other than income taxes                        |   |                        | 100,520   |   |   |   | 83,415 |   |   |   | (20.5 | ) |
| Total operating expenses                             |   |                        | 829,157   |   |   |   | 883,190 |   |   |   | 6.1 |   |
| Operating income (loss)                              |   |                        | 190,436   |   |   |   | (4,984 | ) |   |   | * |   |
| Other income                                         |   |                        | 12,534    |   |   |   | 12,000 |   |   |   | 4.5 |   |
| Other expense                                        |   |                        | (954      | )      |   |   | (989 | ) |   |   | (3.5 | ) |
| Interest expense                                     |   |                        | (52,266   | )      |   |   | (58,934 | ) |   |   | (11.3 | ) |
| Income (loss) before income taxes                    |   |                        | 149,750   |   |   |   | (52,907 | ) |   |   | * |   |
| Income tax (benefit) expense                         |   |                        | 46,311    |   |   |   | (14,633 | ) |   |   | * |   |
| Net income (loss)                                    |   | $                           | 103,439   |   |   | $      | (38,274 | ) |   |   | * | % |

| * | Not meaningful |
|---|----------------|

| ·   | Increase in electric operating revenue of $45.1 million primarily due to an 8.1% increase in retail electric usage as a result of cooler temperatures and an electric rate increase effective April 8, 2010. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increase in gas operating revenue of $96.2 million primarily due to a 22.8% increase in natural gas therm sales as a result of cooler temperatures and a PGA increase effective November 1, 2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increase in net unrealized gain on derivative instruments of $119.0 million primarily due to rising gas prices and the reversal of prior period losses on settled gas and power contracts. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Decrease in purchased electricity and electric generation fuel of $37.3 million primarily resulting from lower wholesale costs due to available hydroelectric generation in the region and higher hydroelectric and wind generation in PSE’s portfolio. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Decrease in interest expense of $6.7 million due to a $6.9 million write off in the prior year of a regulatory asset of deferred interest paid to the Internal Revenue Service (IRS) related to the Simplified Service Cost Method deduction from prior years which was disallowed in the general rate case order of April 2, 2010. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Increase in income tax expense of $60.9 million primarily due to higher taxable income. |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | Increase in depreciation and amortization expense of $6.8 million primarily due to additional capital expenditures on utility plant placed in service and the inclusion of Mint Farm and Wild Horse expansion operating and ownership costs in general rates effective April 8, 2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | Three Months EndedMarch 31, |    |   |   |   |
|-----------------------------------------------|--------|-----------------------------|---------|--------|--------|--------|
| Benefit/(Expense)(Dollars in Thousands)       |   | 2011                        |    |   | 2010   |   |   | PercentChange |   |
| PSE net income (loss)                         |   | $                           | 103,439 |   |   | $      | (38,274 | ) |   |   | * | % |
| Purchased electricity                         |   |                        | 145     |   |   |   | 144 |   |   |   | (0.7 | ) |
| Net unrealized gain on derivative instruments |   |                        | 27,135  |   |   |   | 52,369 |   |   |   | (48.2 | ) |
| Non-utility expense and other                 |   |                        | 429     |   |   |   | (2,126 | ) |   |   | (120.2 | ) |
| Other income                                  |   |                        | 4       |   |   |   | -- |   |   |   | * |   |
| Non-hedged interest rate derivative expense   |   |                        | (48     | )      |   |   | -- |   |   |   | * |   |
| Interest expense 1                            |   |                        | (24,378 | )      |   |   | (21,029 | ) |   |   | (15.9 | ) |
| Income tax benefit (expense)                  |   |                        | 705     |   |   |   | (10,275 | ) |   |   | 106.9 |   |
| Puget Energy net income (loss)                |   | $                           | 107,431 |   |   | $      | (19,191 | ) |   |   | * | % |

| * | Not meaningful                                                                                                      |
|---|---------------------------------------------------------------------------------------------------------------------|
| 1 | Puget Energy’s interest expense includes elimination adjustments of intercompany interest on short-term debt. |

| Capital Expenditure Projections(Dollars in Thousands) |   | 2011   |      |   | 2012   |   |    | 2013   |   |
|-------------------------------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|
| Energy delivery, technology and facilities            |   | $      | 636,728   |   |   | $      | 672,417 |   |   | $ | 621,310 |   |
| New generating resources                              |   |   | 386,446   |   |   |   | 45,877  |   |   |   | 119,622 |   |
| Total expenditures                                    |   | $      | 1,023,174 |   |   | $      | 718,294 |   |   | $ | 740,932 |   |

| ·   | PSE’s deferred taxes decreased $46.4 million during the three months ended March 31, 2011, as compared to an increase of $21.2 million during the same period in 2010 due to bonus depreciation allowed in 2011, which increased cash flow from operating activities $67.6 million. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | PSE’s PGA mechanism had an $8.8 million over recovery from customers during the three months ended March 31, 2011, as compared to $41.7 million of under recovery to customers during the same period in 2010, which increased cash flow from operating activities $50.5 million. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Income taxes decreased $49.7 million during the three months ended March 31, 2011, as compared to a decrease of $30.4 million during the same period in 2010 due primarily to an IRS refund received in 2011, which increased cash flow from operating activities $19.3 million. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Fuel and gas inventory decreased $35.6 million during the three months ended March 31, 2011, as compared to a decrease of $17.8 million during the same period in 2010, which increased cash flows from operating activities $17.8 million. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Accounts receivable and unbilled revenue decreased $26.4 million during the three months ended March 31, 2011, as compared to a decrease of $98.3 million during the same period in 2010, which decreased cash flow from operating activities $71.9 million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A prepayment of $20.0 million was made to the Bonneville Power Administration (BPA) for transmission service at the Lower Snake River Project during the three months ended March 31, 2011, whereas no payment was made during the same period in 2010, which decreased cash flow from operating activities. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Renewable energy credit refunds provided to customers was recorded for $15.9 million during the three months ended March 31, 2011, whereas no payments were made during the same period in 2010, which decreased cash flow from operating activities. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Accrued expenses increased $17.2 million during the three months ended March 31, 2011, as compared to an increase of $1.2 million during the same period in 2010, which decreased cash flow from operating activities $16.0 million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Puget Energy received an IRS cash refund in 2011 which increased cash flow by $21.6 million related to income taxes during the three months ended March 31, 2011, as compared to the same period in 2010. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Derivative settlement payments of $97.7 million were reclassified to financing activities during the three months ended March 31, 2011 as compared to $158.8 million during the same period in 2010, resulting in a decrease in operating cash flows of $61.1 million.  This decrease was due to a decline in the number of contracts settled during 2011 as compared to the prior period.  Due to the merger, the purchase price paid for Puget Energy common stock included the valued of derivative contracts and is considered an upfront payment for derivatives which is a financing element. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | approximately $1.3 billion of additional first mortgage bonds under PSE’s electric mortgage indenture based on approximately $2.2 billion of electric bondable property available for issuance, subject to an interest coverage ratio limitation of 2.0 times net earnings available for interest (as defined in the electric utility mortgage), which PSE exceeded at March 31, 2011; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | approximately $160.0 million of additional first mortgage bonds under PSE’s natural gas mortgage indenture based on approximately $267.0 million of gas bondable property available for issuance, subject to a combined gas and electric interest coverage test of 1.75 times net earnings available for interest and a gas interest coverage test of 2.0 times net earnings available for interest (as defined in the natural gas utility mortgage), both of which PSE exceeded at March 31, 2011. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Quanti

| ·   | Ensure physical energy supplies are available to reliably and cost-effectively serve retail load; |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | Manage the energy portfolio prudently to serve retail load at overall least cost and limit undesired impacts on PSE’s customers and shareholders; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Reduce power costs by extracting the value of PSE’s assets; and |
|--------------------|-----------------------------------------------------------------------|

| ·   | Meet the credit, liquidity, financing, tax and accounting requirements of PSE. |
|--------------------|--------------------------------------------------------------------------------|

|                                                                          |   | Energy Derivatives |   |
|-------------------------------------------------------------------------------|--------|--------------------|--------|
| Puget Energy and Puget Sound EnergyDerivative Portfolio(Dollars in thousands) |   | March 31, 2011     |   |   | December 31, 2010 |   |
|                                                                          |   | Assets             |   |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
| Electric portfolio:                                                           |   |               |   |   |   |   |   |   |   |   |   |   |
| Current                                                                       |   | $                  | 5,411  |   |   | $ | 135,325 |   |   | $ | 4,716 |   |   | $ | 142,780 |   |
| Long-term                                                                     |   |               | 4,523  |   |   |   | 82,071 |   |   |   | 5,046 |   |   |   | 99,801 |   |
| Total electric derivatives                                                    |   | $                  | 9,934  |   |   | $ | 217,396 |   |   | $ | 9,762 |   |   | $ | 242,581 |   |
| Gas portfolio:                                                                |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                                                                       |   | $                  | 4,944  |   |   | $ | 75,193 |   |   | $ | 2,784 |   |   | $ | 100,273 |   |
| Long-term                                                                     |   |               | 5,183  |   |   |   | 29,789 |   |   |   | 3,187 |   |   |   | 55,378 |   |
| Total gas derivatives                                                         |   |               | 10,127 |   |   | $ | 104,982 |   |   | $ | 5,971 |   |   | $ | 155,651 |   |
| Total derivatives                                                             |   | $                  | 20,061 |   |   | $ | 322,378 |   |   | $ | 15,733 |   |   | $ | 398,232 |   |

| Puget EnergyDerivative Portfolio(Dollars in Thousands) |   | March 31, 2011 |   |   | December 31, 2010 |   |
|--------------------------------------------------------|--------|----------------|--------|--------|-------------------|--------|
|                                                   |   | Assets         |   |   | Liabilities       |   |   | Assets |   |   | Liabilities |   |
| Interest rate swaps:                                   |   |           |   |   |              |   |   |   |   |   |   |   |
| Current                                                |   | $              | --     |   |              | $      | 30,141 |   |   | $ | -- |   |   | $ | 30,047 |   |
| Long-term                                              |   |           | --     |   |              |   | 17,623 |   |   |   | -- |   |   |   | 27,956 |   |
| Total                                                  |   | $              | --     |   |              | $      | 47,764 |   |   | $ | -- |   |   | $ | 58,003 |   |

ontrol

Other

Legal 

Risk 

Exhibit

IGNATU

|                          | PUGET ENERGY, INC.PUGET SOUND ENERGY, INC.                                                            |
|-------------------------------|-------------------------------------------------------------------------------------------------------|
|                          |  /s/ James W. Eldredge                                                                           |
|                          | James W. EldredgeVice President, Controller and Chief Accounting Officer                              |
| Date:  May 10, 2011 | Chief Accounting Officer and Officer duly authorized to sign this report on behalf of each registrant |
|                          |                                                                                                  |

EXHIBI

| 12.1 | Statement setting forth computation of ratios of earnings to fixed charges of Puget Energy, Inc. (2006 through 2010, and 12 months ended March 31, 2011).                 |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 12.2 | Statement setting forth computation of ratios of earnings to fixed charges of Puget Sound Energy, Inc. (2006 through 2010 and 12 months ended March 31, 2011).            |
| 31.1 | Chief Executive Officer certification of Puget Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.           |
| 31.2 | Principal Financial Officer certification of Puget Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       |
| 31.3 | Chief Executive Officer certification of Puget Sound Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.     |
| 31.4 | Principal Financial Officer certification of Puget Sound Energy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                           |
| 32.2 | Principal Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                       |