Puget Energy Swings to Profit on Strong Electric Revenue Growth

TL;DR

**Puget Energy's massive profit swing makes it a strong buy, as electric demand surges and derivative losses vanish.**

AI Summary

Puget Energy, Inc. reported a significant turnaround for the nine months ended September 30, 2025, with net income reaching $218.038 million, a substantial improvement from a net loss of $20.275 million in the same period of 2024. Total operating revenue increased by 11.5% to $3.877 billion from $3.476 billion year-over-year, primarily driven by a 16.1% rise in electric revenue to $2.827 billion. Operating expenses also increased, but at a slower pace, reaching $3.395 billion compared to $3.263 billion in 2024. A key factor in the improved profitability was the absence of unrealized losses on derivative instruments, which were $131.712 million in 2024. The company's total assets grew to $20.255 billion as of September 30, 2025, up from $18.960 billion at December 31, 2024, reflecting increased utility plant investments and cash. Long-term debt also increased to $8.522 billion from $7.424 billion, indicating significant capital expenditures. The company's common shareholder's equity rose to $5.542 billion from $5.368 billion, demonstrating improved financial health.

Why It Matters

This strong financial performance by Puget Energy, Inc. signals a positive outlook for investors, demonstrating effective cost management and robust demand for electric services in the Pacific Northwest. The significant increase in electric revenue, coupled with the elimination of substantial derivative losses, suggests improved operational efficiency and risk management. For employees, this stability could mean continued job security and potential for growth within a financially healthy utility. Customers might see continued investment in infrastructure, but also potential for rate adjustments to cover increased operating costs and capital expenditures. In the broader market, Puget Energy's performance highlights the resilience and growth potential of regulated utilities, especially those focused on electric power, amidst evolving energy landscapes and climate initiatives.

Risk Assessment

Risk Level: medium — While Puget Energy, Inc. showed strong financial improvement, the company faces medium risk due to significant increases in long-term debt, rising from $7.424 billion in December 2024 to $8.522 billion in September 2025. Additionally, the company's 'No' checkmark for filing all required reports and submitting Interactive Data Files during the preceding 12 months for both Puget Energy, Inc. and Puget Sound Energy, Inc. indicates potential regulatory compliance issues, which could lead to future penalties or scrutiny.

Analyst Insight

Investors should consider Puget Energy, Inc. as a potential long-term hold given its strong net income turnaround and revenue growth in electric services. However, closely monitor future SEC filings for improved compliance regarding report submissions and assess the impact of increasing long-term debt on future earnings and dividend sustainability.

Financial Highlights

debt To Equity

1.54

revenue

$3,877,246,000

operating Margin

12.4%

total Assets

$20,255,000,000

total Debt

$8,522,000,000

net Income

$218,038,000

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

+11.5%

Revenue Breakdown

Key Numbers

• $218.038M — Net Income (Nine months ended September 30, 2025, a significant increase from a $20.275M net loss in 2024.)
• $3.877B — Total Operating Revenue (Nine months ended September 30, 2025, up 11.5% from $3.476B in 2024.)
• $2.827B — Electric Operating Revenue (Nine months ended September 30, 2025, up 16.1% from $2.434B in 2024.)
• $131.712M — Unrealized Loss on Derivative Instruments (Nine months ended September 30, 2024, reduced to $0 in 2025, significantly impacting net income.)
• $20.255B — Total Assets (As of September 30, 2025, an increase from $18.960B at December 31, 2024.)
• $8.522B — Total Long-Term Debt (As of September 30, 2025, an increase from $7.424B at December 31, 2024.)
• $5.542B — Total Common Shareholder's Equity (As of September 30, 2025, an increase from $5.368B at December 31, 2024.)
• $1.174B — Construction Work in Progress (CWIP) (As of September 30, 2025, indicating ongoing capital investments.)

Key Players & Entities

• Puget Energy, Inc. (company) — registrant and parent company
• Puget Sound Energy, Inc. (company) — subsidiary and utility operator
• Washington Utilities and Transportation Commission (regulator) — primary state regulator
• Federal Energy Regulatory Commission (regulator) — federal energy regulator
• Puget Holdings LLC (company) — indirect parent of Puget Energy, Inc.
• Internal Revenue Service (regulator) — taxing jurisdiction
• Private Securities Litigation Reform Act of 1995 (regulator) — safe harbor provisions for forward-looking statements
• Puget Equico LLC (company) — direct parent of Puget Energy, Inc.

FAQ

Risk Factors

• Changes in Environmental Regulations [high — regulatory]: The company is subject to stringent environmental regulations related to emissions and climate change. Changes in these regulations, such as stricter carbon pricing or renewable energy mandates, could increase operating costs and require significant capital investments in new technologies or compliance measures. For example, the company's operations are impacted by state and federal policies aimed at reducing greenhouse gas emissions.
• Commodity Price Volatility [medium — market]: Puget Energy's profitability is sensitive to fluctuations in the prices of electricity and natural gas. Significant increases in these energy costs, if not fully recoverable through customer rates, could negatively impact margins. The company utilizes derivative instruments to hedge against some of this volatility, but substantial price swings can still affect financial results, as seen with the $131.712 million unrealized loss on derivatives in the nine months ended September 30, 2024.
• Infrastructure Reliability and Maintenance [medium — operational]: Maintaining the reliability and integrity of its extensive utility infrastructure (electric and natural gas) is critical. Extreme weather events, aging equipment, or unforeseen failures could lead to service disruptions, significant repair costs, and potential liabilities. The company's utility plant investments, totaling $14.478 billion net of depreciation as of September 30, 2025, highlight the scale of this operational challenge.
• Interest Rate and Debt Management [medium — financial]: The company carries a substantial amount of long-term debt, which stood at $8.522 billion as of September 30, 2025. Rising interest rates could increase the cost of servicing this debt, impacting net income. The company's interest expense was $346.817 million for the nine months ended September 30, 2025, indicating a significant financial commitment.
• Rate Case Outcomes [high — regulatory]: The company's ability to recover its operating costs and investments is dependent on favorable outcomes in regulatory rate cases. Unfavorable decisions by the Washington Utilities and Transportation Commission could limit the company's ability to earn a fair rate of return, impacting financial performance and the ability to fund future capital expenditures.
• Cybersecurity Threats [medium — operational]: As a critical infrastructure provider, Puget Energy is a potential target for cyberattacks. A successful breach could disrupt operations, compromise sensitive data, and lead to significant financial and reputational damage. The company's increasing reliance on digital systems for grid management and customer service amplifies this risk.

Industry Context

Puget Sound Energy operates in the regulated utility sector, primarily serving the electric and natural gas markets in Washington state. The industry is characterized by high capital intensity, significant regulatory oversight, and a growing focus on renewable energy and decarbonization. Competitors include other large utilities in the region and, increasingly, distributed generation sources and energy service companies.

Regulatory Implications

The company faces significant regulatory scrutiny from the Washington Utilities and Transportation Commission (WUTC) regarding rates, service quality, and environmental compliance. Changes in environmental regulations, particularly those related to climate change and emissions, pose a substantial risk, potentially requiring costly investments and impacting operational flexibility.

What Investors Should Do

1. Monitor rate case outcomes and regulatory decisions.
2. Assess the impact of capital expenditure plans on debt levels and financial flexibility.
3. Evaluate the company's strategy for managing energy commodity price volatility.
4. Analyze the company's progress in its transition towards cleaner energy sources.

Key Dates

• 2025-09-30: Nine Months Ended — Reported significant net income of $218.038 million, a turnaround from a net loss in the prior year, driven by revenue growth and absence of derivative losses.
• 2025-09-30: Balance Sheet Date — Total assets grew to $20.255 billion, reflecting increased investments in utility plant, while long-term debt also rose to $8.522 billion.
• 2024-09-30: Nine Months Ended — Reported a net loss of $20.275 million and incurred $131.712 million in unrealized losses on derivative instruments.
• 2024-12-31: Balance Sheet Date — Total assets were $18.960 billion and total long-term debt was $7.424 billion.

Glossary

Construction Work in Progress (CWIP)

Costs incurred for utility plant construction that is not yet completed or placed into service. These costs are capitalized and will be depreciated once the asset is operational. (Indicates significant ongoing capital investment in new or upgraded utility infrastructure, totaling $1.174 billion as of September 30, 2025.)

Unrealized (gain) loss on derivative instruments, net

Changes in the fair value of financial instruments (like futures or options contracts used for hedging) that have not yet been settled. These can cause significant fluctuations in reported income. (The absence of these losses in 2025 ($0 compared to $131.712 million in 2024) was a major driver of the improved net income.)

AFUDC

Allowance for Funds Used During Construction. This represents the cost of capital (both debt and equity) used to finance construction projects that are not yet in service. It is capitalized into the cost of the asset. (Represents a component of interest charges, reflecting the cost of financing ongoing construction projects.)

Depreciation & amortization

The systematic allocation of the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. It reflects the 'using up' of the asset's value. (A significant operating expense, totaling $632.718 million for the nine months ended September 30, 2025, reflecting the large asset base.)

Utility plant

The physical assets owned and operated by a utility company to provide services, such as power generation facilities, transmission lines, and gas pipelines. (The core asset base of the company, with a net value of $14.478 billion as of September 30, 2025.)

Year-Over-Year Comparison

Compared to the nine months ended September 30, 2024, Puget Energy has demonstrated a remarkable financial recovery, reporting a net income of $218.038 million versus a net loss of $20.275 million. This turnaround was primarily driven by an 11.5% increase in total operating revenue to $3.877 billion and, crucially, the absence of $131.712 million in unrealized losses on derivative instruments that impacted the prior year. While total assets have grown to $20.255 billion, reflecting increased investments, long-term debt has also risen to $8.522 billion, indicating a higher leverage profile.

Filing Documents

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• exhibit221-pe2025xq1q3roll.htm (EX-22.1) — 10KB
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• exhibit313-pe10q2025xq3.htm (EX-31.3) — 10KB
• exhibit314-pe1qq2025xq3.htm (EX-31.4) — 10KB
• exhibit321-pe10q2025xq3.htm (EX-32.1) — 5KB
• exhibit322-pe10q2025xq3.htm (EX-32.2) — 5KB
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• 0001085392-25-000025.txt ( ) — 13381KB
• psd-20250930.xsd (EX-101.SCH) — 60KB
• psd-20250930_cal.xml (EX-101.CAL) — 85KB
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• psd-20250930_htm.xml (XML) — 1890KB

Forward-Looking Statements

Forward-Looking Statements 4 Part I. Financial Information 5 Item 1.

Financial Statements

Financial Statements 5 Puget Energy, Inc. Consolidated Statements of Income – Three and Nine Months Ended September 30, 2025 and 202 4 5 Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2025 and 2024 6 Consolidated Balance Sheets – September 30, 2025 and December 31, 2024 7 Consolidated Statements of Common Shareholder's Equity - September 30, 2025 and December 31, 2024 8 Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2025 and 2024 9 Puget Sound Energy, Inc. Consolidated Statements of Income – Three and Nine Months Ended September 30, 2025 and 2024 12 Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2025 and 2024 11 Consolidated Balance Sheets – September 30, 2025 and December 31, 2024 12 Consolidated Statements of Common Shareholder's Equity - September 30, 2025 and December 31, 2024 14 Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2025 and 2024 15 Notes Combined Notes to Consolidated Financial Statements 16 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 37 Item 3. Quantitative and Qualitative Disclosure About Market Risk 59 Item 4.

Controls and Procedures

Controls and Procedures 59 Part II. Other Information 60 Item 1.

Legal Proceedings

Legal Proceedings 60 Item 1A.

Risk Factors

Risk Factors 60 Item 5. Other Information 60 Item 6. Exhibits 60 Exhibit Index 61

Signatures

Signatures 62 2 DEFINITIONS ASU Accounting Standards Update ARO Asset Retirement Obligation ASC Accounting Standards Codification CCA Climate Commitment Act CEIP Clean Energy Implementation Plan CETA Clean Energy Transformation Act CWIP Construction Work in Progress EBITDA Earnings Before Interest, Tax, Depreciation and Amortization FASB Financial Accounting Standards Board GAAP U.S. Generally Accepted Accounting Principles GHG Greenhouse gases GRC General Rate Case IOU Investor-Owned Utility ISDA International Swaps and Derivatives Association ITCs Investment tax credits LNG Liquefied Natural Gas MMBtu One Million British Thermal Units MWh Megawatt Hour (one MWh equals one thousand kWh) MYRP Multi-year Rate Plan NAESB North American Energy Standards Board NPNS Normal Purchase Normal Sale OBBB One Big Beautiful Bill Act PCA Power Cost Adjustment PGA Purchased Gas Adjustment PSE Puget Sound Energy, Inc. Puget Energy Puget Energy, Inc. Puget Holdings Puget Holdings LLC Puget LNG Puget LNG, LLC SERP Supplemental Executive Retirement Plan Washington Commission Washington Utilities and Transportation Commission WDOE Washington Department of Ecology WSPP WSPP, Inc. FILING FORMAT This combined Quarterly Report on Form 10-Q is separately filed by Puget Energy, Inc. (Puget Energy) and Puget Sound Energy, Inc. (PSE). Information in this filing relating to PSE is filed by PSE on its own behalf. PSE makes no representation as to information relating to Puget Energy (except as it may relate to PSE) or any other affiliate or subsidiary of Puget Energy. Any references in this report to "the Company" are to Puget Energy and PSE collectively. 3

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS Puget Energy and PSE include the following cautionary statements 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 and assumptions of future events or performance. Words or phrases such as "anticipates," "believes," "continues," "could," "estimates," "expects," "future," "intends," "may," "might," "plans," "potential," "predicts," "projects," "should," "will likely result," "will continue" or similar expressions are intended to identify certain of these forward-looking statements and may be included in discussion of, among other things, our anticipated operating or financial performance, business plans and prospects, planned capital expenditures and other future expectations. In particular, these include statements relating to future actions, business plans and prospects, future performance expenses, the outcome of contingencies, such as legal proceedings, government regulation and financial results. Forward-looking statements reflect current expectations and involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed. 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 risks that could cause actual results or outcomes for Puget Energy and PSE to differ materially from past results and those discussed in the forward-looking statements include: Governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission and the Washington Commission, that may affect our ability to recover costs and earn

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements PUGET ENERGY, INC. CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Operating revenue: Electric $ 968,125 $ 736,113 $ 2,827,428 $ 2,434,458 Natural gas 176,835 182,737 1,012,132 1,017,096 Other 9,818 8,694 37,686 24,375 Total operating revenue 1,154,778 927,544 3,877,246 3,475,929 Operating expenses: Energy costs: Purchased electricity 354,795 250,822 1,012,441 892,436 Electric generation fuel 86,106 78,305 249,338 241,293 Residential exchange ( 17,452 ) ( 17,477 ) ( 62,053 ) ( 61,630 ) Purchased natural gas 53,957 68,243 397,956 472,776 Unrealized (gain) loss on derivative instruments, net — 108,979 — 131,712 Utility operations and maintenance 226,024 183,915 666,366 579,697 Non-utility expense and other 9,936 10,919 42,677 33,359 Depreciation & amortization 212,806 197,975 632,718 585,317 Conservation amortization 36,790 28,837 120,977 96,326 Taxes other than income taxes 95,300 75,869 335,011 291,226 Total operating expenses 1,058,262 986,387 3,395,431 3,262,512 Operating income (loss) 96,516 ( 58,843 ) 481,815 213,417 Other income (expense): Other income 31,370 31,350 103,681 73,284 Other expense ( 3,873 ) ( 4,839 ) ( 22,325 ) ( 14,984 ) Interest charges: AFUDC 8,853 9,321 29,851 27,389 Interest expense ( 117,954 ) ( 111,642 ) ( 346,817 ) ( 320,926 ) Income (loss) before income taxes 14,912 ( 134,653 ) 246,205 ( 21,820 ) Income tax (benefit) expense 8,604 ( 13,545 ) 28,167 ( 1,545 ) Net income (loss) $ 6,308 $ ( 121,108 ) $ 218,038 $ ( 20,275 ) The accompanying notes are an integral part of the financial statements. 5 PUGET ENERGY, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in Thousands) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net income (loss) $ 6,308 $ ( 121,108 ) $ 218,038 $ ( 20,275 ) Other comprehensive

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