10K Document 2019
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 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 in its charter, I.R.S. state of incorporation, Employer Commission address of principal executive offices, zip code Identification File Number telephone number Number 1-16305 PUGET ENERGY, INC. 91-1969407 A Washington Corporation 355 110th Ave NE Bellevue, Washington 98004 (425) 454-6363 1-4393 PUGET SOUND ENERGY, INC. 91-0374630 A Washington Corporation 355 110th Ave NE Bellevue, Washington 98004 (425) 454-6363 Securities registered pursuant to Section 12(b) of the Act: None Title of Each Class Trading Symbol Name of Each Exchange on Which Registered N/A N/A N/A Securities registered pursuant to Section 12(g) of the Act: None Title of Each Class Trading Symbol Name of Each Exchange on Which Registered N/A N/A N/A Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Puget Energy, Inc. Yes / / No /X/ Puget Sound Energy, Inc. Yes / / No /X/ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Puget Energy, Inc. Yes / / No /X/ Puget Sound Energy, Inc. Yes / / No /X/ Indicate by check mark whether the registrants: (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Puget Energy, Inc. Yes /X/ No / / Puget Sound Energy, Inc. Yes /X/ No / / Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Puget Energy, Inc. Yes /X/ No / / Puget Sound Energy, Inc. Yes /X/ No / / Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Puget Energy, Large / / Accelerated / / Non-accelerated /X/ Smaller reporting / / Emerging growth / / Inc. accelerated filer filer filer company company Puget Sound Large / / Accelerated / / Non-accelerated /X/ Smaller reporting / / Emerging growth / / Energy, Inc. accelerated filer filer filer company company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. / / Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Puget Energy, Inc. Yes / / No /X/ Puget Sound Energy, Inc. Yes / / No /X/ As of February 6, 2009, all of the outstanding shares of voting stock of Puget Energy, Inc. are held by Puget Equico LLC, an indirect wholly-owned subsidiary of Puget Holdings LLC. All of the outstanding shares of voting stock of Puget Sound Energy, Inc. are held by Puget Energy, Inc. This Report on Form 10-K is a combined report being filed separately by: Puget Energy, Inc. and Puget Sound Energy, Inc. Puget Sound Energy, Inc. makes no representation as to the information contained in this report relating to Puget Energy, Inc. and the subsidiaries of Puget Energy, Inc. other than Puget Sound Energy, Inc. and its subsidiaries. INDEX Page Definitions 4 Forward-Looking Statements 5 Part I 1. Business 7 General 9 Regulation and Rates 9 Electric Utility Operating Statistics 13 Electric Supply 15 Natural Gas Utility Operating Statistics 19 Natural Gas Supply for Natural Gas Customers 21 Energy Efficiency 23 Environment 23 Recent and Future Environmental Law and Regulation 24 Executive Officers of the Registrants 27 1A. Risk Factors 27 1B. Unresolved Staff Comments 34 2. Properties 34 3. Legal Proceedings 34 4. Mine Safety Disclosures 34 Part II 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 34 6. Selected Financial Data 35 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 7A. Quantitative and Qualitative Disclosures about Market Risk 60 8. Financial Statements and Supplementary Data 63 Report of Management and Statement of Responsibility 64 Report of Independent Registered Public Accounting Firm – Puget Energy 65 Report of Independent Registered Public Accounting Firm – Puget Sound Energy 67 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 134 9A. Controls and Procedures 134 9B. Other Information 135 Part III 10. Directors, Executive Officers and Corporate Governance 136 11. Executive Compensation 139 12. Security Ownership of Certain Beneficial Owners and Management and Related 160 Shareholder Matters 13. Certain Relationships and Related Transactions, and Director Independence 161 14. Principal Accountant Fees and Services 162 Part IV 15. Exhibits and Financial Statement Schedules 163 16. Form 10-K Summary 163 Exhibit Index 164 Signatures 170 3 DEFINITIONS AFUDC Allowance for Funds Used During Construction AOCI Accumulated Other Comprehensive Income ARO Asset Retirement and Environmental Obligations aMW Average Megawatt ASC Accounting Standards Codification ASU Accounting Standards Update BPA Bonneville Power Administration Colstrip Colstrip, Montana coal-fired steam electric generation facility Dth Dekatherm (one Dth is equal to one MMBtu) EBITDA Earnings Before Interest, Tax, Depreciation and Amortization EPA Environmental Protection Agency ERF Expedited Rate Filing FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission GAAP Generally Accepted Accounting Principles GHG Greenhouse Gases GRC General Rate Case IRP Integrated Resource Plan IRS Internal Revenue Service ISDA International Swaps and Derivatives Association kW Kilowatt (one kW equals one thousand watts) kWh Kilowatt Hour (one kWh equals one thousand watt hours) LIBOR London Interbank Offered Rate LNG Liquefied Natural Gas LTI Plan Long-Term Incentive Plan MMBtus One Million British Thermal Units MW Megawatt (one MW equals one thousand kW) MWh Megawatt Hour (one MWh equals one thousand kWh) NAESB North American Energy Standards Board NOAA National Oceanic and Atmospheric Administration NPNS Normal Purchase Normal Sale NWP Northwest Pipeline, LLC NYSE New York Stock Exchange OCI Other Comprehensive Income PCA Power Cost Adjustment PCORC Power Cost Only Rate Case PGA Purchased Gas Adjustment PSE Puget Sound Energy, Inc. PTC Production Tax Credit PUDs Washington Public Utility Districts Puget Energy Puget Energy, Inc. Puget Equico Puget Equico, LLC Puget Holdings Puget Holdings, LLC REC Renewable Energy Credit REP Residential Exchange Program SEC United States Securities and Exchange Commission SERP Supplemental Executive Retirement Plan TCJA Tax Cuts and Jobs Act Washington Commission Washington Utilities and Transportation Commission WSPP WSPP, Inc. 4 FORWARD-LOOKING STATEMENTS Puget Energy and Puget Sound Energy, Inc. (PSE) include the following cautionary statements in this Form 10-K 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 (FERC) and the Washington Utilities and Transportation Commission (Washington Commission), that may affect our ability to recover