### UNITED STATES
                                             SECURITIES AND EXCHANGE COMMISSION
                                                   Washington, D.C. 20549

# FORM 10-Q

/X/     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF 
       THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

/ /      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

|            | Exact name of registrant as specified   | I.R.S.        
|----------- | --------------------------------------- | --------------
|            | in its charter, state of incorporation, | Employer      
|Commission  | address of principal executive offices, | Identification
|File Number | Telephone Number                        |               

|1-16305 | PUGET ENERGY, INC.              | 91-1969407
|------- | ------------------------------- | ----------
|        | A Washington Corporation.       |           
|        | 411 - 108th Avenue N.E.         |           
|        | Bellevue, Washington 98004-5515 |           
|        | (425) 454-6363                  |           

|1-4393 | PUGET SOUND ENERGY, INC.        | 91-0374630
|------ | ------------------------------- | ----------
|       | A Washington Corporation.       |           
|       | 411 - 108th Avenue N.E.         |           
|       | Bellevue, Washington 98004-5515 |           
|       | (425) 454-6363                  |           

Indicate by check mark whether the registrant  (1) has filed all reports  required to be filed by Section 13 or 15(d) of the Securities
Exchange  Act of 1934 during the  preceding  12 months (or for such shorter  period that the  registrant  was required to file for such
reports), and (2) has been subject to such filing requirements for the past 90 days.   
 Yes X       No ____

As of June 30, 2002, (i)
the number of shares of Puget Energy, Inc. (Puget Energy) common stock
outstanding was 87,543,312 ($.01 par value) and (ii) all of the outstanding
shares of Puget Sound Energy, Inc. (PSE) common stock were held by Puget Energy.

# Table of
Contents

|              | 
|------------- | 
|Filing Format | 

|Forward-Looking Statements | 
|-------------------------- | 

|Part I. |  | Financial Information | 
|------- |  | --------------------- | 
|Item I. |  | Financial Statements  | 

| | Puget Energy, Inc. | 
| | ------------------ | 

| | Consolidated Statements of Income  3 months ended June 30, 2002 and 2001               | 
| | --------------------------------------------------------------------------------------- | 
| | Consolidated Statements of Income  6 months ended June 30, 2002 and 2001               | 
| | Consolidated Statements of Comprehensive Income  3 months ended June
30, 2002 and 2001 | 
| | Consolidated Statements of Comprehensive Income  6 months ended June
30, 2002 and 2001 | 
| | Consolidated Balance Sheets  June 30, 2002 and
December 31, 2001                       | 
| | Consolidated Statements of Cash Flows  6 months ended
June 30, 2002 and 2001           | 

| | Puget Sound Energy, Inc. (PSE) | 
| | ------------------------------ | 

| | Consolidated Statements of Income  3 months ended June 30, 2002 and 2001               | 
| | --------------------------------------------------------------------------------------- | 
| | Consolidated Statements of Income  6 months ended June 30, 2002 and 2001               | 
| | Consolidated Statements of Comprehensive Income  3 months ended June
30, 2002 and 2001 | 
| | Consolidated Statements of Comprehensive Income  6 months ended June
30, 2002 and 2001 | 
| | Consolidated Balance Sheets  June 30, 2002 and
December 31, 2001                       | 
| | Consolidated Statements of Cash Flows  6 months ended
June 30, 2002 and 2001           | 

| | 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 | 
|------- |  | --------------------------------------------------------- | 

|Part II |  | Other Information                                   | 
|------- |  | --------------------------------------------------- | 
|Item 1. |  | Legal Proceedings                                   | 
|Item 4. |  | Submission of Matters to a Vote of Security Holders | 
|Item 6. |  | Exhibits and Reports on Form 8-K                    | 

|Signature     |  |  | 
|------------- |  |  | 
|Exhibit Index |  |  | 

FILING FORMAT
       This Quarterly  Report on Form 10-Q is a combined  quarterly report being filed  separately by two different  registrants  Puget
Energy and PSE. Any references in this report to the "Company" are to Puget Energy and PSE  collectively.  PSE makes no  representation
as to the  information  contained in this report  relating to Puget Energy and the  subsidiaries of Puget Energy other than PSE and its
subsidiaries.

FORWARD-LOOKING
STATEMENTS
       Puget  Energy and PSE are  including  the  following  cautionary  statement in this Form 10-Q to make  applicable  and to take
advantage of the safe harbor  provisions of the Private  Securities  Litigation Reform Act of 1995 for any  forward-looking  statements
made by or on behalf of Puget Energy or PSE. This report includes  forward-looking  statements,  which are statements of  expectations,
beliefs,  plans,  objectives,  assumptions  or future  events or  performance.  Words or  phrases  such as  "anticipates,"  "believes,"
"estimates,"  "expects,"  "intends,"  "plans,"  "predicts,"  "projects,"  "will likely result," "will continue" or similar  expressions
identify forward-looking statements.

       Forward-looking  statements involve risks and uncertainties  which could cause actual results or outcomes to differ materially
from those expressed.  Puget Energy's and PSE's  expectations,  beliefs and projections are expressed in good faith and are believed by
Puget Energy and PSE, as applicable,  to have a reasonable basis, including without limitation,  management's examination of historical
operating  trends,  data contained in records and other data  available  from third  parties,  but there can be no assurance that Puget
Energy's and PSE's expectations, beliefs or projections will be achieved or accomplished.
       In addition to other factors and matters  discussed  elsewhere in this report,  some important factors that could cause actual
results or outcomes for Puget Energy and PSE to differ materially from those discussed in forward-looking statements include:

- the outcome and timing of the gas general rate case filed by PSE with the Washington  Utilities and Transportation  Commission
     (Washington Commission) on November 26, 2001;
- governmental policies and regulatory actions, including those of the Federal
Energy Regulatory Commission (FERC) and the Washington Commission, with respect
to allowed rates of return, financings, industry and rate structures,
acquisition and disposal of assets and facilities, operation and construction of
hydro, distribution and transmission facilities, recovery of purchased energy
and other capital investments, and present or prospective wholesale and retail
competition;
- the recent bankruptcy filing by Enron Corporation, financial difficulties by
other energy companies and related events, which may affect the regulatory and
legislative process in unpredictable ways;
- weather, which can have a potentially serious impact on PSEs ability to
procure adequate supplies of gas, fuel or purchased power to serve its customers
and on the cost of procuring such supplies;
- hydroelectric  conditions,  which can have a  potentially  serious  impact on electric  capacity and PSE's ability to generate
     electricity;
- the stability and liquidity of wholesale energy markets generally, including the
effect of price controls promulgated in June 2001 by FERC on the availability
and price of wholesale energy purchases and sales in the western United States;
- the effect of wholesale and retail  competition  (including,  but not limited to, electric  retail  wheeling and  transmission
     costs);
- the amount of collection,
if any, of PSEs receivable from the California ISO;
- changes in, and
compliance with, environmental and endangered species laws and policies;
- industrial, commercial and residential growth and demographic patterns in the
service territories of PSE;
- the loss of any  significant  customer,  or changes in the business of a major  customer  that may result in changes in demand
     for services of PSE;
- the impact of significant events, such as the attack on September 11, 2001;
- the ability of Puget Energy and PSE to access the capital markets to support
requirements for working capital, construction costs and the repayment of
maturing debt;
- capital market
conditions, including changes in the availability of capital or interest rate
fluctuations;
- the impact of the bankruptcy filing by Enron and financial
difficulties of other energy industry companies on capital market
     conditions of the utility industry, including the availability and cost of capital;
- changes in Puget Energy's or PSE's credit ratings, which may have an adverse impact on the availability and cost of capital;
- legal and regulatory proceedings; and
- employee workforce factors, including strikes, work stoppages or the loss of a key executive.

Part I. Financial InformationItem 1. Financial Statements

PUGET ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF INCOME
                                        For the Three Months Ended June 30
                                        (Thousands except per share amounts)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Operating Revenues:
   Electric
   Gas
   Other
      Total operating revenues
Operating Expenses:
Energy costs:
   Purchased electricity
   Purchased gas
   Electric generation fuel
   Residential Exchange
   Unrealized gain on derivative instruments
Utility operations and maintenance
Other operations and maintenance
Depreciation and amortization
Conservation amortization
Taxes other than federal income taxes
Federal income taxes
      Total operating expenses
Operating Income
Other income
Income Before Interest Charges and Minority Interest
Interest charges, net of AFUDC
Minority interest in earnings of consolidated subsidiary
Net Income
Less:  preferred stock dividends accrual
Income for Common Stock
Basic common shares outstanding - weighted average
Diluted common shares outstanding - weighted average
Basic and diluted earnings per share | $ 330,326 
144,384 
80,277 
554,987 
 
 
142,128 
88,520 
14,680 
(30,964)
(252)
73,630 
62,082 
57,307 
3,605 
54,584 
12,834 
478,154 
76,833 
3,441 
80,274 
48,682 
223 
31,369 
1,940 

$ 29,429 
87,448 
87,646 
$ 0.34 |  | $ 719,694 
163,013 
52,712 
935,419 
 
 
535,277 
104,184 
63,134 
(10,304)
(41,527)
65,414 
41,470 
52,935 
1,603 
45,306 
11,856 
869,348 
66,071 
1,568 
67,639 
48,174 
-- 
19,465 
2,085 

$ 17,380 
86,303 
86,576 
$ 0.20 | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

The accompanying notes are an integral part of the financial statements.

PUGET ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF INCOME
                                        For the Six Months Ended June 30
                                        (Thousands except per share amounts)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Operating Revenues:
   Electric
   Gas
   Other
      Total operating revenues
Operating Expenses:
Energy costs:
   Purchased electricity
   Purchased gas
   Electric generation fuel
   Residential Exchange
   Unrealized gain on derivative instruments
Utility operations and maintenance
Other operations and maintenance
Depreciation and amortization
Conservation amortization
Taxes other than federal income taxes
Federal income taxes
      Total operating expenses
Operating Income
Other income
Income Before Interest Charges and Minority Interest
Interest charges, net of AFUDC
Minority interest in earnings of consolidated subsidiary
Income Before Cumulative Effect of Accounting Change
Cumulative effect of implementation of FAS-133 derivative instruments and hedge activities, net of tax
Net Income
Less:  preferred stock dividends accrual
Income for Common Stock
Basic common shares outstanding - weighted average
Diluted common shares outstanding - weighted average
Basic earnings per share before cumulative effect of accounting change
Cumulative effect of accounting change
Basic earnings per share
Diluted earnings per share before cumulative effect of accounting change
Cumulative effect of accounting change
Diluted earnings per share | $ 711,860 
458,875 
141,597 
1,312,332 
342,400 
293,318 
79,860 
(73,711)
(11,748)
139,571 
116,703 
113,256 
5,769 
120,186 
33,324 
1,158,928 
153,404 
3,825 
157,229 
99,080 
302 
57,847 
-- 
57,847 
3,952 
$ 53,895 
87,309 
87,508 
$ 0.62 
-- 
$ 0.62 
$ 0.62 
-- 
$ 0.62 |  | $ 1,484,701 
467,283 
103,299 
2,055,283 
925,493 
320,793 
165,518 
(27,045)
(15,061)
126,593 
71,610 
106,063 
3,205 
115,386 
66,116 
1,858,671 
196,612 
3,509 
200,121 
93,609 
-- 
106,512 
14,749 
91,763 
4,243 
$ 87,520 
86,169 
86,443 
$ 1.19 
(0.17)
$1.02 
$ 1.18 
(0.17)
$ 1.01 | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

The accompanying notes are an integral part of the financial statements.

PUGET ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                        For the Three Months Ended June 30
                                        (Dollars in Thousands)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Net Income
Other comprehensive income, net of tax:
   Unrealized holding losses arising on marketable securities
      during the period
   Foreign currency translation adjustment
   Unrealized gains on derivative instruments during the period
   Reversal of unrealized (gains) on derivative instruments
     settled during the period
    Other comprehensive income (loss)
Comprehensive Income (Loss) | $ 31,369 
 
(377)
 
96 
(3,513)
1,347 
 
(2,447)
$ 28,922 |  | $ 19,465 
 
(612)
 
-- 
(278,117)
(37,267)
 
(315,996)
$ (296,531)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- |  | ------------------------------------------------------------------

PUGET ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                        For the Six Months Ended June 30
                                        (Dollars in Thousands)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Net Income
Other comprehensive income, net of tax:
   Unrealized holding losses arising on marketable securities
      during the period
   Reclassification adjustment for realized gains on marketable
     securities included in net income
   Foreign currency translation adjustment
   Transition adjustment for unrealized gain on derivative
     instruments at January 1, 2001
   Unrealized gains on derivative instruments during the period
   Reversal of unrealized gains (losses) on derivative instruments
     settled during the period
    Other comprehensive income (loss)
Comprehensive Income | $ 57,847 
 
(526)
 
(724)
 
(116)
-- 
 
(2,102)
32,834 
 
29,366 
$ 87,213 |  | $ 91,763 
 
(1,407) 
 
-- 
 
-- 
286,928 
 
(149,379)
(143,335)
 
(7,193) 
$ 84,570
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

PUGET ENERGY, INC.
                                        CONSOLIDATED BALANCE SHEETS
                                        (Dollars in Thousands)
                                                (Unaudited)ASSETS

| | June 30,2002 |  | December 31,2001
| | ------------ |  | ----------------

|Utility Plant: (at original cost, including construction work in
progress of $123,115 and $123,307 respectively)
   Electric
   Gas
   Common
   Less: Accumulated Depreciation and amortization
      Net utility plant
Other Property and Investments:
   Goodwill, net
   Intangibles, net
   Non-utility property and equipment, net
   Other
      Total other property and investments
Current Assets:
   Cash
   Restricted cash
   Accounts receivable, net
   Unbilled revenue
   Materials and supplies, at average cost
   Purchased gas receivable
   Current portion of unrealized gain on derivative instruments
   Prepayment and other
      Total current assets
Other Long-Term Assets:
   Regulatory asset for deferred income taxes
   Regulatory asset for PURPA buyout costs
   Unrealized gain on derivative instruments
   Other
      Total other long-term assets
Total Assets | $ 4,193,417 
1,589,701 
373,768 
(2,268,062)
3,888,824 
132,894 
16,755 
67,333 
153,319 
370,301
 
91,273 
5,869 
272,096 
69,970 
60,766 
-- 
314 
10,279 
510,567 
 
183,721 
244,124 
8,479 
275,090 
711,414 
$ 5,481,106 |  | $ 4,167,920 
1,551,439 
362,670 
(2,194,048)
3,887,981 
102,151 
16,059 
48,369 
150,670 
317,249
 
92,356 
-- 
279,321 
147,008 
90,333 
37,228 
3,315 
11,277 
660,838 
 
193,016 
244,635 
3,317 
239,941 
680,909 
$ 5,546,977
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

PUGET ENERGY, INC.
                                        CONSOLIDATED BALANCE SHEETS
                                        (Dollars in Thousands)
                                                (Unaudited)CAPITALIZATION AND LIABILITIES

| | June 30,2002 |  | December 31,2001
| | ------------ |  | ----------------

|Capitalization:
  Common shareholders' investment:
    Common stock $0.01 par value, 250,000,000 shares
    authorized, 87,543,312 shares and 87,023,210 outstanding
    Additional paid-in capital
    Earnings reinvested in the business
    Accumulated other comprehensive income (loss)
  Preferred stock not subject to mandatory redemption
  Preferred stock subject to mandatory redemption
  Corporation obligated, mandatorily redeemable preferred
    securities of subsidiary trust holding solely junior
    subordinated debentures of the corporation
  Long-term debt
      Total capitalization
Minority interest in equity of a consolidated subsidiary
Current Liabilities:
  Accounts payable
  Short-term debt
  Current maturities of long-term debt
  Purchased gas liability
  Accrued expenses:
    Taxes
    Salaries and wages
    Interest
  Current portion of unrealized on derivative instruments
  Other
      Total current liabilities
Long-Term Liabilities:
  Deferred income taxes
  Other deferred credits
  Unrealized loss on derivative instruments
      Total long-term liabilities
Total Capitalization and Liabilities | $ 875 
1,362,327 
24,051 
45 
60,000 
43,162 
 
 
300,000 
2,197,457 
3,987,917 
 
9,947 
 
128,617 
125,107 
87,212 
91,385 
 
76,962 
12,068 
45,823 
4,821 
58,036 
630,031 
 
624,791 
228,378 
42 
853,211 
$ 5,481,106 |  | $   870 
1,358,946 
32,229 
(29,321)
60,000 
50,662 
 
 
300,000 
2,127,054 
3,900,440 
 
-- 
 
167,426 
348,577 
119,523 
-- 
 
70,708 
14,746 
42,505 
35,145 
46,178 
844,808 
 
605,315 
196,339 
75 
801,729 
$5,546,977
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

PUGET ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        For the Six Months Ended June 30
                                        (Dollars in Thousands)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Operating Activities:
Net Income
Adjustment to reconcile net income to net cash provided
  by operating activities:
   Depreciation and amortization
   Deferred federal and state income taxes and tax credits - net
   Net unrealized (gains) losses on derivative instruments
   Other
Change in certain current assets and current liabilities:
   Accounts receivable and unbilled revenue
   Materials and supplies
   Prepayments and other
   Purchases gas receivable/liability
   Accounts payable
   Accrued expenses and other
      Net Cash Provided by Operating ActivitiesInvesting Activities:
   Construction and capital expenditures-excluding equity AFUDC
   Additions to energy conservation program
   Acquisitions by InfrastruX, net of cash acquired
   Restricted cash
   Loans to Schlumberger (formerly Cellnet Data Services)
   Other
      Net Cash Used by Investing ActivitiesFinancing Activities
   Change in short-term debt - net
   Dividends paid
   Issuance of trust preferred stock
   Redemption of preferred stock
   Issuance of bonds and long term debt
   Redemption of bonds and notes
   Other
      Net Cash Provided (Used) by Financing Activities
Net Increase (Decrease) in Cash
Cash at Beginning of Year
Cash at End of PeriodSupplemental Cash Flow Information:
Cash payments for:
   Interest (net of capitalized interest)
   Income taxes | $ 57,847 
 
113,256 
28,771 
(11,748)
8,197 
 
95,630 
31,560 
1,161 
128,613 
(42,126)
24,864 
436,025 
 
(128,081)
(4,434)
(40,261)
(5,869)
-- 
(7,266)
(185,911)
 
(223,470)
(56,145)
-- 
(7,500)
95,980 
(60,000)
(62)
(251,197)
(1,083)
92,356 
$ 91,273 
 
 
$ 95,779 
$ (577) |  | $ 91,763 
 
106,063 
3,997 
7,630 
10,446 
 
184,594 
(639)
(1,168)
(35,577)
(251,235)
(3,005)
112,869
 
(135,869)
(3,713)
(54,247)
-- 
(12,158)
(5,903)

(211,890)
 
(38,008)
(70,675)
200,000 
(7,500)
55,165 
-- 
(6,685)
132,297 
33,276 
36,383 
$ 69,659 
 
 
$ 91,594 
$ 59,900
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

PUGET SOUND ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF INCOME
                                        For the Three Months Ended June 30
                                        (Dollars in Thousands)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Operating Revenues:
   Electric
   Gas
   Other
      Total operating revenues
Operating Expenses:
Energy costs:
   Purchased electricity
   Purchased gas
   Electric generation fuel
   Residential Exchange
   Unrealized gain on derivative instruments
Utility operations and maintenance
Other operations and maintenance
Depreciation and amortization
Conservation amortization
Taxes other than federal income taxes
Federal income taxes
      Total operating expenses
Operating Income
Other income
Interest Before Interest Charges
Interest charges, net of AFUDC
Net Income
Less:  preferred stock dividends accrual
Income for Common Stock | $ 330,326 
144,384 
4,155 
478,865 
 
 
142,128 
88,520 
14,680 
(30,964)
(252)
73,630 
356 
54,053 
3,605 
49,339 
11,046 
406,141 
72,724 
3,455 
76,179 
47,340 
28,839 
1,940 
$ 26,899 |  | $ 719,694 
163,013 
7,243 
889,950 
 
 
535,277 
104,184 
63,134 
(10,304)
(41,527)
65,414 
3,496 
51,517 
1,603 
45,306 
10,221 
828,321 
61,629 
2,485 
64,114 
46,839 
17,275 
2,085 
$ 15,190
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

PUGET SOUND ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF INCOME
                                        For the Six Months Ended June 30
                                        (Dollars in Thousands)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Operating Revenues:
   Electric
   Gas
   Other
      Total operating revenues
Operating Expenses:
Energy costs:
   Purchased electricity
   Purchased gas
   Electric generation fuel
   Residential Exchange
   Unrealized gain on derivative instruments
Utility operations and maintenance
Other operations and maintenance
Depreciation and amortization
Conservation amortization
Taxes other than federal income taxes
Federal income taxes
      Total operating expenses
Operating Income
Other income
Interest Before Interest Charges
Interest charges, net of AFUDC
Income Before Cumulative Effect of Accounting Change
Cumulative effect of implementation of FAS-133 derivative instruments
   and hedge activities, net of tax
Net Income
Less:  preferred stock dividends accrual
Income for Common Stock | $ 711,860 
458,875 
4,714 
1,175,449 
 
 
342,400 
293,318 
79,860 
(73,711)
(11,748)
139,571 
810 
107,731 
5,769 
112,904 
31,089 
1,027,993 
147,456 
3,764 
151,220 
96,683 
54,537 
 
-- 
54,537 
3,952 
$ 50,585 |  | $ 1,484,701 
467,283 
29,290 
1,981,274 
 
 
925,493 
320,793 
165,518 
(27,045)
(15,061)
126,593 
6,619 
103,002 
3,205 
115,386 
65,032 
1,789,535 
191,739 
5,328 
197,067 
92,164 
104,903 
 
14,749 
90,154 
4,243 
$ 85,911
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

PUGET SOUND ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                        For the Three Months Ended June 30
                                        (Dollars in Thousands)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Net Income
Other comprehensive income, net of tax:
   Unrealized holding losses on marketable securities
       arising during the period
   Unrealized gains (losses) on derivative instruments during the
     period
   Reversal of unrealized gains on derivative instruments
     settled during the period
    Other comprehensive income (loss)
Comprehensive Income (Loss) | $ 28,839 
 
(377)
 
3,513 
 
(1,347)
 
1,789 
$ 30,628 |  | $ 17,275 
 
(612)
 
(278,117)
 
(37,267)
 
(315,996)
$ (298,721)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ |  | ----------------------------------------------------------------

PUGET SOUND ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                        For the Six Months Ended June 30
                                        (Dollars in Thousands)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Net Income
Other comprehensive income, net of tax:
   Unrealized holding losses on marketable securities
      arising during the period
   Reclassification adjustment for realized gains on marketable
     securities included in net income
   Transition adjustment for unrealized gain on derivative
     instruments at January 1, 2001
   Unrealized losses on derivative instruments during the period
   Reversal of unrealized (gains) losses on derivative instruments
     settled during the period
    Other comprehensive income (loss)
Comprehensive Income | $ 54,537 
 
(526)
 
(724)
 
-- 
 
(2,102)
32,834 
 
29,482 
$ 84,019 |  | $ 90,154 
 
(1,407) 
 
-- 
 
286,928 
 
(149,379)
(143,335)
 
(7,193) 
$  82,961
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- |  | --------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

PUGET SOUND ENERGY, INC.
                                                                 CONSOLIDATED BALANCE SHEETS
                                                                (Dollars in Thousands)
                                                                        (Unaudited)ASSETS

| | June 30,2002 |  | December 31,2001
| | ------------ |  | ----------------

|Utility Plant: (at original cost, including construction work in
progress of $123,115 and $123,307 respectively)
   Electric
   Gas
   Common
   Less: Accumulated depreciation and amortization
      Net utility plant
Other Property and Investments
Current Assets:
   Cash
   Restricted cash
   Accounts receivable, net
   Unbilled revenue
   Materials and supplies, at average cost
   Purchased gas receivable
   Current portion of unrealized gain on derivative instruments
   Prepayment and other
      Total current assets
Other Long-Term Assets:
   Regulatory asset for deferred income taxes
   Regulatory asset for PURPA buyout costs
   Unrealized gain on derivative instruments
   Other
      Total other long-term assets
Total Assets | $ 4,193,417 
1,589,701 
373,768 
(2,268,062)
3,888,824 
154,875 
 
68,159 
5,869 
205,104 
69,970 
55,625 
-- 
314 
4,977 
410,018 
 
183,721 
244,124 
8,479 
275,090 
711,414 
$ 5,165,131 |  | $ 4,167,920 
1,551,439 
362,670 
(2,194,048)
3,887,981 
150,530 
 
82,708 
-- 
235,348 
147,008 
85,318 
37,228 
3,315 
7,405 
598,330 
 
193,016 
244,635 
3,317 
239,941 
680,909 
$ 5,317,750
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

PUGET SOUND ENERGY, INC.
                                        CONSOLIDATED BALANCE SHEETS
                                        (Dollars in Thousands)
                                                (Unaudited)CAPITALIZATION AND LIABILITIES

| | June 30,2002 |  | December 31,2001
| | ------------ |  | ----------------

|Capitalization:
  Common shareholders' investment:
    Common stock $10 stated value, 150,000,000 shares
    authorized, 85,903,791 shares outstanding
    Additional paid-in capital
    Earnings reinvested in the business
    Accumulated other comprehensive income (loss)
  Preferred stock not subject to mandatory redemption
  Preferred stock subject to mandatory redemption
  Corporation obligated, mandatorily redeemable preferred
    securities of subsidiary trust holding solely junior
    subordinated debentures of the corporation
  Long-term debt
      Total capitalization
Current Liabilities:
  Accounts payable
  Short-term debt
  Current maturities of long-term debt
  Purchased gas liability
  Accrued expenses:
    Taxes
    Salaries and wages
    Interest
  Current portion of unrealized loss on derivative instruments
  Other
      Total current liabilities
Long-Term Liabilities:
  Deferred income taxes
  Other deferred credits
  Unrealized loss on derivative instruments
      Total long-term liabilities
Total Capitalization and Liabilities | $ 859,038 
382,600 
53,737 
161 
60,000 
43,162 
 
 
300,000 
2,063,824 
3,762,522 
 
118,087 
108,046 
87,000 
91,385 
 
76,303 
12,068 
45,823 
4,821 
25,966 
569,499 
 
617,377 
215,691 
42 
833,110 
$ 5,165,131 |  | $ 859,038 
382,592 
55,345 
(29,321)
60,000 
50,662 
 
 
300,000 
2,053,815 
3,732,131 
 
154,600 
338,168 
117,000 
-- 
 
70,210 
14,746 
42,505 
35,145 
25,178 
797,552 
 
601,001 
186,991 
75 
788,067 
$ 5,317,750
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

PUGET SOUND ENERGY, INC.
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        For the Six Months Ended June 30
                                        (Dollars in Thousands)
                                                (Unaudited)

| | 2002 |  | 2001
| | ---- |  | ----

|Operating Activities:
Net Income
Adjustment to reconcile net income to net cash provided
  by operating activities:
   Depreciation and amortization
   Deferred federal and state income taxes and tax credits - net
   Net unrealized (gains) losses on derivative instruments
   Other
Change in certain current assets and current liabilities:
   Accounts receivable and unbilled revenue
   Materials and supplies
   Prepayments and other
   Purchases gas receivable/liability
   Accounts payable
   Accrued expenses and other
      Net Cash Provided by Operating ActivitiesInvesting Activities:
   Construction and capital expenditures-excluding equity AFUDC
   Additions to energy conservation program
   Restricted cash
   Loans to Schlumberger (formerly Cellnet Data Services)
   Other
      Net Cash Used by Investing ActivitiesFinancing Activities
   Change in short-term debt - net
   Dividends paid
   Issuance of trust preferred stock
   Redemption of preferred stock
   Issuance of bonds
   Redemption of bonds and notes
   Other
      Net Cash Provided (Used) by Financing Activities
Net Increase (Decrease) in Cash
Cash at Beginning of Year
Cash at End of PeriodSupplemental Cash Flow Information:
Cash payments for:
   Interest (net of capitalized interest)
   Income taxes (net of refunds) | $ 54,537
 
 
 
107,731 
25,670 
(11,748)
5,231 
 
107,282 
29,693 
2,429 
128,613 
(36,650)
15,861 
428,649 
 
(113,133)
(4,434)
(5,869)
-- 
(5,888)
(129,324)
 
(230,122)
(56,145)
-- 
(7,500)
-- 
(20,000)
(107)
(313,874)
(14,549)
82,708 
$ 68,159 
 
 
$ 93,033 
$ (838) |  | $ 90,154 
 
 
 
103,002 
8,074 
7,630 
17,495 
 
189,784 
(3,417)
(416)
(35,577)
(244,140)
(11,876)
120,713 
 
(135,420)
(3,713)
-- 
(12,158)
(5,902)
(157,193)
 
(48,161)
(70,675)
200,000 
(7,500)
-- 
-- 
(6,346)
67,318  
30,838 
36,383 
$ 67,221 
 
 
$ 91,594 
$ 59,900
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of the financial statements.

# COMBINED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

|(2) | Earnings per Common Share  (Puget Energy Only)
|--- | ----------------------------------------------

|(3) | Segment Information  (Puget Energy Only)
|--- | ----------------------------------------

Financial data for business segments are as follows:

|(Dollars in Thousands)
Three Months Ended June 30, 2002 | PSE         | InfrastruX | Other     | Total    
|------------------------------------------------------- | ----------- | ---------- | --------- | ---------
|Revenues                                                | $ 474,710   | $ 76,121   | $ 4,156   | $ 554,987
|Depreciation and amortization                           | 54,000      | 3,253      | 54        | 57,307   
|Federal income taxes                                    | 9,538       | 1,824      | 1,472     | 12,834   
|Operating income                                        | 70,547      | 4,177      | 2,109     | 76,833   
|Interest charges, net of AFUDC                          | 47,340      | 1,342      | --        | 48,682   
|Net income                                              | 26,662      | 2,598      | 2,109     | 31,369   
|Goodwill, net                                           | --          | 132,894    | --        | 132,894  
|Total assets                                            | 5,038,294   | 317,212    | 125,600   | 5,481,106
|Goodwill, net at December 31, 2001                      | --          | $ 102,151  | --        | $ 102,151
|Total asset at December 31, 2001                        | $ 5,178,601 | 229,125    | $ 139,251 | 5,546,977

|Three Months Ended June 30, 2001 | PSE       | InfrastruX | Other   | Total    
|-------------------------------- | --------- | ---------- | ------- | ---------
|Revenues                         | $ 882,707 | $ 45,469   | $ 7,243 | $ 935,419
|Depreciation and amortization    | 51,513    | 1,418      | 4       | 52,935   
|Federal income taxes             | 8,954     | 1,654      | 1,248   | 11,856   
|Operating income                 | 59,211    | 4,480      | 2,380   | 66,071   
|Interest charges, net of AFUDC   | 46,731    | 1,336      | 107     | 48,174   
|Net income                       | 14,956    | 2,228      | 2,281   | 19,465   

|Six Months Ended June 30, 2002 | PSE         | InfrastruX | Other   | Total      
|------------------------------ | ----------- | ---------- | ------- | -----------
|Revenues                       | $ 1,170,735 | $ 136,883  | $ 4,714 | $ 1,312,332
|Depreciation and amortization  | 107,673     | 5,525      | 58      | 113,256    
|Federal income taxes           | 29,291      | 2,350      | 1,683   | 33,324     
|Operating income               | 145,021     | 6,162      | 2,221   | 153,404    
|Interest charges, net of AFUDC | 96,683      | 2,397      | --      | 99,080     
|Net income                     | 52,280      | 3,524      | 2,043   | 57,847     

|Six Months Ended June 30, 2001 | PSE         | InfrastruX | Other    | Total      
|------------------------------ | ----------- | ---------- | -------- | -----------
|Revenues                       | $ 1,951,984 | $ 74,009   | $ 29,290 | $ 2,055,283
|Depreciation and amortization  | 102,995     | 3,061      | 7        | 106,063    
|Federal income taxes           | 57,187      | 1,111      | 7,818    | 66,116     
|Operating income               | 177,039     | 4,924      | 14,649   | 196,612    
|Interest charges, net of AFUDC | 91,951      | 1,445      | 213      | 93,609     
|Net income                     | 75,375      | 1,661      | 14,727   | 91,763     

|(4) | Accounting for Derivative Instruments and Hedging Activities
|--- | ------------------------------------------------------------

|(5) | Acquisitions (Puget Energy Only)
|--- | --------------------------------

| |  | Three Months Ended | Six Months Ended | 
| |  | ------------------ | ---------------- | 
| |  | June 30            | June 30          | 

| | (Dollars in Thousands) | 2002 | 2001 | 2002 | 2001 | 
| | ---------------------- | ---- | ---- | ---- | ---- | 

| | Reported net income for common | $ 29,429 | $ 17,380 | $ 53,895 | $ 87,520 | 
| | ------------------------------ | -------- | -------- | -------- | -------- | 

| | Add back goodwill amortization | -- | 676 | -- | 1,303 | 
| | ------------------------------ | -- | --- | -- | ----- | 

| | Adjusted net income for common | $ 29,429 | $ 18,056 | $ 53,895 | $ 88,823 | 
| | ------------------------------ | -------- | -------- | -------- | -------- | 

| | Basic earnings per share |  |  |  |  | 
| | ------------------------ |  |  |  |  | 

| | Reported net income for common | $ 0.34 | $ 0.20 | $ 0.62 | $ 1.02 | 
| | ------------------------------ | ------ | ------ | ------ | ------ | 

| | Add back goodwill amortization | -- | 0.01 | -- | 0.01 | 
| | ------------------------------ | -- | ---- | -- | ---- | 

| | Adjusted net income for common | $ 0.34 | $ 0.21 | $ 0.62 | $ 1.03 | 
| | ------------------------------ | ------ | ------ | ------ | ------ | 

| | Diluted earnings per share |  |  |  |  | 
| | -------------------------- |  |  |  |  | 

| | Reported net income for common | $ 0.34 | $ 0.20 | $ 0.62 | $ 1.01 | 
| | ------------------------------ | ------ | ------ | ------ | ------ | 

| | Add back goodwill amortization | -- | 0.01 | -- | 0.01 | 
| | ------------------------------ | -- | ---- | -- | ---- | 

| | Adjusted net income for common | $ 0.34 | $ 0.21 | $ 0.62 | $ 1.02 | 
| | ------------------------------ | ------ | ------ | ------ | ------ | 

| | June 30, 2002 |  | December 31, 2001
| | ------------- |  | -----------------

|(Dollars in Thousands) | GrossIntangibles | AccumulatedAmortization | NetIntangibles |  | GrossIntangibles | AccumulatedAmortization | NetIntangibles
|---------------------- | ---------------- | ----------------------- | -------------- |  | ---------------- | ----------------------- | --------------

|Covenant not to compete | $ 4,061 | $ 718 | $ 3,343 |  | $ 2,768 | $ 364 | $ 2,404
|----------------------- | ------- | ----- | ------- |  | ------- | ----- | -------

|Developed technology | 14,190 | 1,360 | 12,830 |  | 14,190 | 1,005 | 13,185
|-------------------- | ------ | ----- | ------ |  | ------ | ----- | ------

|Patents | 582 | -- | 582 |  | 470 | -- | 470
|------- | --- | -- | --- |  | --- | -- | ---

|Total | $ 18,833 | $ 2,078 | $ 16,755 |  | $ 17,428 | $ 1,369 | $ 16,059
|----- | -------- | ------- | -------- |  | -------- | ------- | --------

|(Dollars in Thousands) | 2002 | 2003 | 2004 | 2005 | 2006 | 2007
|---------------------- | ---- | ---- | ---- | ---- | ---- | ----

|Future Intangible Amortization | $ 761 | $ 1,528 | $ 1,528 | $ 1,512 | $ 1,181 | $ 766
|------------------------------ | ----- | ------- | ------- | ------- | ------- | -----

|(6) | Restricted Cash
|--- | ---------------

|(7) | New Accounting Pronouncements
|--- | -----------------------------

|(8) | Other
|--- | -----

| | Annual Power | 
| | ------------ | 

| | Cost Variability | Customers' Share | Company's Share (1) | 
| | ---------------- | ---------------- | ------------------- | 

| | +/- $20 million | 0% | 100% | 
| | --------------- | -- | ---- | 

| | +/- $20-$40 million | 50% | 50% | 
| | ------------------- | --- | --- | 

| | +/- $40-$120 million | 90% | 10% | 
| | -------------------- | --- | --- | 

| | +/- $120+ million | 95% | 5% | 
| | ----------------- | --- | -- | 

| | (1)
Over the four year period July 1, 2002 through June 30, 2006, the Companys
share of pre-tax power cost variances is capped at a cumulative $40 million plus
1% of the excess.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

## Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations

## Puget Energy
                                                            Results of Operations

Results of Operations of Puget Energy
                                                           Comparative Three and Six Months Ended
                                                        June 30, 2002 vs. June 30, 2001
                                                           Increase (Decrease)
                                                           (Dollars in Millions)

| | Three MonthPeriod |  | Six MonthPeriod
| | ----------------- |  | ---------------

|Operating revenue changes: |  |  | 
|-------------------------- |  |  | 

|Electric revenue sold at index rates | $(62.6) |  | $ (152.6)
|------------------------------------ | ------- |  | ---------

|Electric revenue sold to conservation trust | 5.6 |  | 11.7
|------------------------------------------- | --- |  | ----

|Residential exchange credit | (11.9) |  | (22.7)
|--------------------------- | ------ |  | ------

|Interim electric rate increase April - June 2002 | 25.0 |  | 25.0
|------------------------------------------------ | ---- |  | ----

|Electric load and other | 0.3 |  | 9.0
|----------------------- | --- |  | ---

|Electric transportation revenue | 4.5 |  | 8.1
|------------------------------- | --- |  | ---

|Electric sales to other utilities and marketers | (350.3) |  | (651.3)
|----------------------------------------------- | ------- |  | -------

|Total electric revenue change | (389.4) |  | (772.8)
|----------------------------- | ------- |  | -------

|Retail gas revenue | (19.3) |  | (9.3)
|------------------ | ------ |  | -----

|Gas transportation revenue and other | 0.7 |  | 0.9
|------------------------------------ | --- |  | ---

|Total gas revenue change | (18.6) |  | (8.4)
|------------------------ | ------ |  | -----

|InfrastruX revenue | 30.7 |  | 62.9
|------------------ | ---- |  | ----

|Other revenue | (3.1) |  | (24.6)
|------------- | ----- |  | ------

|Total operating revenue change | (380.4) |  | (742.9)
|------------------------------ | ------- |  | -------

|Operating expense changes: |  |  | 
|-------------------------- |  |  | 

|Energy costs: |  |  | 
|------------- |  |  | 

|Purchased electricity | (393.1) |  | (583.1)
|--------------------- | ------- |  | -------

|Residential exchange power cost credit | (20.7) |  | (46.7)
|-------------------------------------- | ------ |  | ------

|Purchased gas | (15.7) |  | (27.5)
|------------- | ------ |  | ------

|Electric generation fuel | (48.4) |  | (85.7)
|------------------------ | ------ |  | ------

|Unrealized (gain) loss on derivative instruments | 41.2 |  | 3.4
|------------------------------------------------ | ---- |  | ---

|Utility operations and maintenance: |  |  | 
|----------------------------------- |  |  | 

|Production operations and maintenance | 6.4 |  | 7.1
|------------------------------------- | --- |  | ---

|Personal energy management | (1.4) |  | (1.5)
|-------------------------- | ----- |  | -----

|Other utility operations and maintenance | 3.2 |  | 7.4
|---------------------------------------- | --- |  | ---

|Other operations and maintenance |  |  | 
|-------------------------------- |  |  | 

|InfrastruX operations and maintenance | 23.7 |  | 50.7
|------------------------------------- | ---- |  | ----

|Other operations and maintenance | (3.1) |  | (5.5)
|-------------------------------- | ----- |  | -----

|Depreciation and amortization | 4.4 |  | 7.1
|----------------------------- | --- |  | ---

|Conservation amortization | 2.0 |  | 2.6
|------------------------- | --- |  | ---

|Taxes other than federal income taxes | 9.3 |  | 4.8
|------------------------------------- | --- |  | ---

|Federal income taxes | 1.0 |  | (32.8)
|-------------------- | --- |  | ------

|Total operating expense change | (391.2) |  | (699.7)
|------------------------------ | ------- |  | -------

|Other income (net of tax) change | 1.8 |  | 0.3
|-------------------------------- | --- |  | ---

|Interest charges change | 0.5 |  | 5.4
|----------------------- | --- |  | ---

|Minority interest in earnings of consolidated subsidiary change | 0.2 |  | 0.3
|--------------------------------------------------------------- | --- |  | ---

|FAS-133 transition loss (net of tax) change | -- |  | (14.7)
|------------------------------------------- | -- |  | ------

|Net income change | $ 11.9 |  | $ (33.9)
|----------------- | ------ |  | --------

The following is additional information pertaining to the changes outlined in the previous table.

## Operating Revenues - Electric

## Operating Revenues - Gas

## Operating Revenues - Other

## Operating Expenses

## Interest Charges

| | Interest Charges Increase (Decrease) | Three Month |  | Six Month
| | ------------------------------------ | ----------- |  | ---------

| | (Dollars in Millions) | Period |  | Period
| | --------------------- | ------ |  | ------

| | PSE long-term debt interest | $ 2.2 |  | $ 6.4
| | --------------------------- | ----- |  | -----

| | PSE other interest | (1.7) |  | (1.9)
| | ------------------ | ----- |  | -----

| | PSE total interest charges change | 0.5 |  | 4.5
| | --------------------------------- | --- |  | ---

| | InfrastruX interest charges change | -- |  | 0.9
| | ---------------------------------- | -- |  | ---

| | PE interest charges change | $ 0.5 |  | $ 5.4
| | -------------------------- | ----- |  | -----

## Capital Expenditures, Capital Resources and Liquidity

## Capital Requirements

| | Payments Due Per Period
| | -----------------------

|PUGET ENERGYContractual Obligations(in millions) | Total | 2002 | 2003-2004 | 2005-2006 | 2007 andThereafter
|------------------------------------------------ | ----- | ---- | --------- | --------- | ------------------

|Long-term debt | $ 2,305.4 | $ 58.9 | $ 360.0 | $ 115.0 | $ 1,771.5
|-------------- | --------- | ------ | ------- | ------- | ---------

|Short-term debt | 125.1 | 125.1 | -- | -- | --
|--------------- | ----- | ----- | -- | -- | --

|Trust preferred securities (1) | 300.0 | -- | -- | -- | 300.0
|------------------------------ | ----- | -- | -- | -- | -----

|Preferred dividends (2) | 1.1 | 1.1 | -- | -- | --
|----------------------- | --- | --- | -- | -- | --

|Service contract obligations | 205.5 | 9.5 | 40.5 | 43.2 | 112.3
|---------------------------- | ----- | --- | ---- | ---- | -----

|Capital lease obligations | 8.2 | 0.9 | 4.4 | 2.9 | --
|------------------------- | --- | --- | --- | --- | --

|Non-cancelable operating leases | 64.6 | 13.0 | 34.9 | 11.2 | 5.5
|------------------------------- | ---- | ---- | ---- | ---- | ---

|Fredonia combustion turbines lease (3) | 78.1 | 2.5 | 9.8 | 9.5 | 56.3
|-------------------------------------- | ---- | --- | --- | --- | ----

|Energy purchase obligations | 4,818.5 | 407.0 | 1,211.7 | 832.5 | 2,367.3
|--------------------------- | ------- | ----- | ------- | ----- | -------

|Financial hedge obligations | 8.8 | (5.6) | 6.1 | 5.3 | 3.0
|--------------------------- | --- | ----- | --- | --- | ---

|Total contractual cash obligations | $ 7,915.3 | $ 612.4 | $ 1,667.4 | $ 1,019.6 | $ 4,615.9
|---------------------------------- | --------- | ------- | --------- | --------- | ---------

| | Amount of Commitment
                              Expiration Per Period
| | ------------------------------------------------------------------------

|Commercial Commitments(in millions) | Total | 2002 | 2003-2004 | 2005-2006 | 2007 andThereafter
|----------------------------------- | ----- | ---- | --------- | --------- | ------------------

|Guarantees (4) | $ 131.0 | -- | $ 131.0 | -- | --
|-------------- | ------- | -- | ------- | -- | --

|Lines of credit available(5) | 298.4 | 2.1 | 296.3 | -- | --
|---------------------------- | ----- | --- | ----- | -- | --

|Total commercial commitments | $ 429.4 | $ 2.1 | $ 427.3 | -- | --
|---------------------------- | ------- | ----- | ------- | -- | --

---

|(1) | In 1997 and 2001, PSE formed Puget Sound Energy Capital Trust I and Puget Sound
Energy Capital Trust II, respectively, for the sole purpose of issuing and
selling preferred securities (Trust Securities) and issuing common securities to
PSE. The proceeds from the sale of Trust Securities were used by the Trusts to
purchase Junior Subordinated Debentures (Debentures) from PSE. The Debentures
are the sole assets of the Trusts and PSE owns all common securities of the
Trusts.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | On April 3, 2002, the Board of Directors of PSE declared a dividend payable on
July 1, 2002 for preferred stock outstanding on June 13, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(3) | In April 2001, PSE entered into a lease line of up to $70 million with a
financial institution, under which PSE leases two combustion turbines for its
Fredonia 3 and 4 electric generation facility. The lease has a term expiring in
2011, but can be cancelled by PSE after three years. Lease payments and
amortization under the lease include interest equal to 1.20% above the London
inter-bank offered rate (LIBOR). At June 30, 2002, PSEs outstanding
balance under the lease was $62.1 million. For purposes of the table, lease
payments assume a LIBOR of 1.85%. The expected residual value under the lease is
the lesser of $36 million or 60% of the cost of the equipment. In the event the
equipment is sold to a third party upon termination of the lease and the
aggregate sales proceeds are less than 87% of the unamortized value of the
equipment, PSE would be required to pay the lessor an amount equal to the
deficiency.
|(4) | In June 2001, InfrastruX signed a three-year credit agreement with several banks
to provide up to $150 million in financing. Under the credit agreement, Puget
Energy is the guarantor of the line of credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(5) | At June 30, 2002, PSE had $375 million in lines of credit with various banks,
which provide credit support for the outstanding bank loans and commercial paper
of $108.0 million, effectively reducing the available borrowing capacity under
these lines of credit to $267.0 million. The line of credit will expire on
February 13, 2003. InfrastruX had $179.5 million in lines of credits with
various banks, which fund capital requirements of InfrastruX and its
subsidiaries. InfrastruX and its subsidiaries had outstanding loans of $148.1
million, effectively reducing the available borrowing capacity under these lines
of credit to $31.4 million.                                                                                                                                                                                                                                                                                      

| | Payments Due Per Period
| | -----------------------

|PUGET SOUND ENERGYContractual Obligations(in millions) | Total | 2002 | 2003-2004 | 2005-2006 | 2007 andThereafter
|------------------------------------------------------ | ----- | ---- | --------- | --------- | ------------------

|Long-term debt | $ 2,150.8 | $ 57.0 | $ 210.5 | $ 112.0 | $ 1,771.3
|-------------- | --------- | ------ | ------- | ------- | ---------

|Short-term debt | 108.0 | 108.0 | -- | -- | --
|--------------- | ----- | ----- | -- | -- | --

|Trust preferred securities (1) | 300.0 | -- | -- | -- | 300.0
|------------------------------ | ----- | -- | -- | -- | -----

|Preferred dividends (2) | 1.1 | 1.1 | -- | -- | --
|----------------------- | --- | --- | -- | -- | --

|Service contract obligations | 205.5 | 9.5 | 40.5 | 43.2 | 112.3
|---------------------------- | ----- | --- | ---- | ---- | -----

|Non-cancelable operating leases | 41.0 | 7.5 | 20.2 | 8.2 | 5.1
|------------------------------- | ---- | --- | ---- | --- | ---

|Fredonia combustion turbines lease (3) | 78.1 | 2.5 | 9.8 | 9.5 | 56.3
|-------------------------------------- | ---- | --- | --- | --- | ----

|Energy purchase obligations | 4,818.5 | 407.0 | 1,211.7 | 832.5 | 2,367.3
|--------------------------- | ------- | ----- | ------- | ----- | -------

|Financial hedge obligations | 8.8 | (5.6) | 6.1 | 5.3 | 3.0
|--------------------------- | --- | ----- | --- | --- | ---

|Total contractual cash obligations | $ 7,711.8 | $ 587.0 | $ 1,498.8 | $ 1,010.7 | $ 4,615.3
|---------------------------------- | --------- | ------- | --------- | --------- | ---------

| | Amount of Commitment
                              Expiration Per Period
| | ------------------------------------------------------------------------

|Commercial Commitments(in millions) | Total | 2002 | 2003-2004 | 2005-2006 | 2007 andThereafter
|----------------------------------- | ----- | ---- | --------- | --------- | ------------------

|Lines of credit - available (4) | $ 267.0 | -- | $ 267.0 | -- | --
|------------------------------- | ------- | -- | ------- | -- | --

---

|(1) | See note (1) above.                    
|--- | ---------------------------------------
|(2) | See note (2) above.                    
|(3) | See note (3) above.                    
|(4) | See note (5) above with respect to PSE.

## Capital Resources

- no additional  first  mortgage bonds due to the interest  coverage ratio being below the 2.0 times net earnings  available for
     interest  limit (1.95 at June 30,2002). The shortfall of interest  coverage is due to under  recovery of power costs prior to receiving the electric  interim
     rate relief in the second  quarter of 2002.  With the interim and general  rate relief,  the Company  expects to be in position to
     meet the interest coverage ratio and issue first mortgage bonds by the end of 2002. The Company has  approximately  $953.8 million
     of electric and gas bondable property available to use for issuance of up to $572.3 million of first mortgage bonds, subject to the
     interest coverage ratio limitation;
- no additional preferred stock; and
- approximately $232.4 million of unsecured long-term debt.

| |                                | Standard & Poor's Ratings |  | Moody's Ratings
| | ------------------------------ | ------------------------- |  | ---------------
| | Puget Energy                   |                           |  |                
| | Corporate credit/issuer rating | BBB-                      |  | Bal            
| | Puget Sound Energy             |                           |  |                

| | Corporate credit/issuer rating | BBB- |  | Baa3
| | ------------------------------ | ---- |  | ----

| | Senior secured debt | BBB |  | Baa2
| | ------------------- | --- |  | ----

| | Shelf debt senior secured | BBB |  | Baa2
| | ------------------------- | --- |  | ----

| | Senior unsecured | BB+ |  | Baa3
| | ---------------- | --- |  | ----

| | Preferred stock | BB |  | Ba2
| | --------------- | -- |  | ---

| | Commercial paper | A-3 |  | P-2
| | ---------------- | --- |  | ---

| | Subordinate | * |  | Ba1
| | ----------- | - |  | ---

| | Revolving Credit Facility | * |  | Baa3
| | ------------------------- | - |  | ----

| | Ratings Outlook | Negative |  | Negative
| | --------------- | -------- |  | --------

---

* No rating provided.

- common stock of Puget Energy,
- senior notes of PSE, secured by a pledge of PSE's first mortgage bonds,
- unsecured debentures of PSE, and
- trust preferred securities of Puget Sound Energy Capital Trust III.

| | Annual Power | 
| | ------------ | 

| | Cost Variability | Customers' Share | Company's Share(1) | 
| | ---------------- | ---------------- | ------------------ | 

| | +/- $20 million | 0% | 100% | 
| | --------------- | -- | ---- | 

| | +/- $20-$40 million | 50% | 50% | 
| | ------------------- | --- | --- | 

| | +/- $40-$120 million | 90% | 10% | 
| | -------------------- | --- | --- | 

| | +/- $120+ million | 95% | 5% | 
| | ----------------- | --- | -- | 

| | (1) Over the four year period July 1, 2002 through June 30, 2006, the
Companys share of pre-tax power cost variances is capped at a cumulative
$40 million plus 1% of the excess.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

### Item 3.
Quantitative and Qualitative Disclosure About Market Risk

1. Ensure that physical energy supplies are available to serve retail customer requirements;
2. Manage portfolio risks to limit undesired impacts on the Company's financial results; and
3. Optimize the value of the Company's energy supply assets.

|PART II | OTHER INFORMATION
|------- | -----------------
|Item 1. | Legal Proceedings

|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

| |  | Number of Shares | 
| |  | ---------------- | 

| |  | For | Withheld | 
| |  | --- | -------- | 

| | Term Expiring 2004 |  |  | 
| | ------------------ |  |  | 

| | Stephen P. Reynolds | 70,903,403 | 2,077,924 | 
| | ------------------- | ---------- | --------- | 

| | Dr. Kenneth P. Mortimer | 70,196,685 | 2,784,642 | 
| | ----------------------- | ---------- | --------- | 

| | Term Expiring 2005 |  |  | 
| | ------------------ |  |  | 

| | Charles W. Bingham | 70,391,700 | 2,859,627 | 
| | ------------------ | ---------- | --------- | 

| | Robert L. Dryden | 70,859,974 | 2,121,353 | 
| | ---------------- | ---------- | --------- | 

| | Sally G. Narodick | 70,717,332 | 2,263,995 | 
| | ----------------- | ---------- | --------- | 

|Item 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------

|(a) |  | See Exhibit Index for list of exhibits.
|--- |  | ---------------------------------------

|(b) |  | Reports on Form 8-K
|--- |  | -------------------

| |  | Filed by Puget Energy
| |  | ---------------------

| |  | Form 8-K dated April 17, 2002, Item 5 -  Other Events, related to first quarter earnings.
| |  | -----------------------------------------------------------------------------------------

| |  | Filed by Puget Energy & Puget Sound Energy
| |  | ------------------------------------------

| |  | Form 8-K dated May 23, 2002, Item 5 -  Other Events,related to the comprehensive settlement on PSE's electric
general rate case.
| |  | --------------------------------------------------------------------------------------------------------------------------------

| |  | Form 8-K dated June 6, 2002, Item 5 -  Other Events, PSE's comprehensive settlement on electric
general rate case.
| |  | ------------------------------------------------------------------------------------------------------------------

| |  | Form 8-K dated June 21, 2002, Item 5 -  Other Events, related to the Washington Commission approval of the
comprehensive settlement of PSE's electric general rate case.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant
has duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

| | PUGET ENERGY, INC.
| | ------------------

| | PUGET SOUND ENERGY, INC.
| | ------------------------

| | /s/ James W. Eldredge
| | ---------------------

| | James W. Eldredge
| | -----------------

| | Corporate Secretary and Chief Accounting Officer
| | ------------------------------------------------

|Date: August 12, 2002 | Chief accounting officer and officer duly authorized to sign this report on behalf of each registrant
|--------------------- | -----------------------------------------------------------------------------------------------------

EXHIBIT INDEX

The following exhibits are filed herewith:

|10-1 |  | Power Sales Contract dated April 15, 2002 between Public Utility District No. 2 of Grant County, Washington
and PSE, relating to the Priest Rapids Project.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|10-2 |  | Reasonable Portion Power Sales Contract dated April 15, 2002 between Public Utility District No. 2 of Grant County,
 Washington and PSE, relating to the Priest Rapids Project.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10-3 |  | Additional Power Sales Contract dated April 15, 2002 between Public Utility District No. 2 of Grant County,
 Washington and PSE, relating to the Priest Rapids Project.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10-4 |  | Change-in-control agreement with G.B. Swofford, Senior Vice President and Chief Operating Officer dated March 12, 1999.
|---- |  | -----------------------------------------------------------------------------------------------------------------------

|10-5 |  | Change-in-control agreement with T. J. Hogan, Senior Vice President, External Affairs dated March 12, 1999.
|---- |  | -----------------------------------------------------------------------------------------------------------

|12-1 |  | Statement setting forth computation of ratios of earnings to fixed charges (1997 through 2001 and 12 months
ended June 30, 2002) for Puget Energy.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

|12-2 |  | Statement setting forth computation of ratios of earnings to fixed charges (1997 through 2001 and 12 months
ended June 30, 2002) for PSE.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------

|99-1 |  | 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.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------

|99-2 |  | Chief Financial Officer certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------