Puget Energy — Debt Investor Presentation (September 2023)
26 slides from Puget Energy's debt investor presentation, September 2023
Slide 1: Puget Energy 2023 September Fixed Income Investor Roadshow
Puget Energy 2023 September Fixed Income Investor Roadshow September 2023
Slide 2: Cautionary Statement
Cautionary Statement Information Current as of August 3, 2023 (except as expressly noted) Except as expressly noted, the information in this presentation is current as of August 3, 2023 – the date on which PUGET ENERGY, INC. (“PE”) and Puget Sound Energy, Inc. (“PSE” and, together with PE, “Puget”)
Slide 3: Puget Team Members
Puget Team Members Cara Peterman – Corporate Treasurer Kendall Cammermeyer – Assistant General Council & Chief Ethics and Compliance Officer 3
Slide 4: Table of Contents
Table of Contents 1. Business Updates & 2023 YTD Financial Results 5 2. Wildfire Risk 11 3. Appendix 23 4
Slide 5: Business Updates & 2023 YTD Financial Results
Business Updates & 2023 YTD Financial Results
Slide 6: Puget Energy 2023 YTD net income growth of 11% over 2022 YTD
Puget Energy 2023 YTD(1) net income growth of 11% over 2022 YTD(2) primarily driven by recent rate increase approvals Highlights Key Takeaways • New electric and gas rates took effect in January 2023 Financial • Higher rates in 2023, including power/gas • YTD revenue increased by 22% from $2,036M in
Slide 7: Impact of new rates and cost recovery seen in 2023 YTD financial metrics
Impact of new rates and cost recovery seen in 2023 YTD financial metrics PE - Capital Expenditures(1) • Higher rates from multi-year rate plan, including ($ in millions) power/gas cost recovery, and sales to other utilities led to an increase in revenue of 22% over the same period in 2022. Net Incom
Slide 8: PE/PSE has a manageable debt profile with strong capital markets access
PE/PSE has a manageable debt profile, with strong access to the capital markets and ample liquidity to properly finance the business PSE issued its inaugural green bond in May 2023 – a $400M 30-year senior secured note - to fund eligible projects Debt Maturity Profile (6/30/23) Liquidity Profile (6/
Slide 9: Improved cash flows have significantly improved credit metrics
Improved cash flows from the GRC/MYRP order and power/gas cost recovery have significantly improved credit metrics in the past 6 months PE PSE Outlook BBB- BBB Stable Baa3 Baa1 Stable BBB- BBB+ Stable (A) (B) (C) (D) PSE Benchmark 2022 Q2 2023 LTM 1 S&P FFO to Debt >=20% 17.8% 19.6% 2 Moody's CFO pr
Slide 10: Preparing for implementation of the Climate Commitment Act (CCA)
We have been preparing the business for implementation of the Climate Commitment Act (CCA) WA Legislature passed a law in 2021 to reduce greenhouse gas (GHG) emissions statewide. Program began January 1, 2023 • On February 28, 2023, the Washington Commission approved PSE’s accounting petitions to de
Slide 11: PSE Wildfire Risk
PSE Wildfire Risk
Slide 12: Washington Weather – Annual Rainfall (West vs. East)
Washington Weather – Annual Rainfall (West vs. East) • The Amazingly Diverse Climate and Geography of Washington State (choosewashingtonst ate.com) Source: www.choosewashingtonstate.com/research-resources/about-Washington/climate-geography (last accessed 08/23/23) 12
Slide 13: PSE's distribution footprint is primarily west of the Cascade Mountains
PSE’s distribution footprint is primarily west of the Cascade Mountains OH Line Miles: 10,476 UG Line Miles: 14,365 Total Distribution: 24,841 Transmission Line Miles: 2,543 13
Slide 14: Historically, large fires within PSE service territory have been infrequent
Historically, large fires within PSE service territory boundaries have been relatively infrequent Source: PSE’s 2023 Wildfire Mitigation and Response Plan: https://www.pse.com/en/pages/Wildfire-preparedness, last accessed September 18, 20223 14
Slide 15: NWCG updated wildfire-cause standard
National Wildfire Coordinating Group (NWCG) included an updated wildfire-cause standard (approved August 2020) According to US Dept of Agriculture data, utilities accounted for <2% of wildfires in Washington (1990-2020)* *Short, Karen C. 2022. Spatial wildfire occurrence data for the United States,
Slide 16: Wildfire Mitigation Planning
Wildfire Mitigation Planning • PSE is focused on mitigating the evolving risk of wildfires, working to ensure safety, while maintaining the reliable delivery of energy • PSE’s Wildfire Mitigation and Response Plan documents PSE’s strategies, programs, procedures, and specific actions to mitigate and
Slide 17: Overview of PSE's Wildfire Mitigation Plan
Overview of PSE’s Wildfire Mitigation Plan • Situational Awareness • Wildfire risk modeling • Real-time fire weather and risk monitoring, 24X7X365 • Ignition tracking tools to inform planning and future investments • Fault Reduction • Enhanced Vegetation Management • Targeted pre-season patrols in h
Slide 18: Identifying high fire risk in PSE territory
Identifying high fire risk in PSE territory The wildfire mitigation team has utilized several tools in identifying key fire risk areas, considering ignition risk (burn potential), propagation risk (weather data), and consequence (communities and structures at risk) PSE recently engaged Technosyl
Slide 19: Overview of Civil Wildfire Liability in Washington
Overview of Civil Wildfire Liability in Washington • Liability • Negligence standard is derived from common law and also codified in RCW 76.04.760(2)(a). Sandberg v. Cavanaugh Timber Co., 95 Wash. 556, 558-62 (1917) • The action or inaction was a proximate cause of damage. RCW 76.04.760(2)(b) • Pote
Slide 20: Differences in Liability between Washington, California, and Oregon
Differences in Liability between Washington, California, and Oregon California Claim Washington Oregon Claim Key Differences Notes Claim CA: applies to private utilities; strict liability; main vehicle for wildfire liability • WA: At least one trial court has denied a motion to dismiss an inverse-
Slide 21: Wildfire Litigation – PSE cases
Wildfire Litigation – PSE cases • In Pierce County, on September 8, 2020, a brush fire in PSE’s service territory caused by unusually high winds burned approximately 495 acres • This event has led to litigation with several insurance companies seeking subrogation for payments made to insureds as a r
Slide 22: Wildfire Legislation - Highlights
Wildfire Legislation - Highlights • In prior years, legislation was proposed, but did not pass, that would have established a presumption of liability against electrical utilities for damage caused by fires, but did not pass • In the last legislative session, the focus turned to partnership to addre
Slide 23: Appendix
Appendix
Slide 24: Puget Overview - PSE Service Territory
Puget Overview - PSE Service Territory • Washington state’s oldest local energy company • 100% regulated, engaged in business of electric generation, transmission, distribution and natural gas distribution • 6,000 square(1) mile service area in Puget Sound region of Western Washington - 1.2 million
Slide 25: Puget Overview - PSE Customer Base
Puget Overview - PSE Customer Base PSE primarily serves residential and commercial customers with limited industrial exposure 2022 Electric Retail Revenue by Customer Class(1) 2022 Gas Retail Revenue by Customer Class(1) Total = $3.0B Total = $1.2B (1) Puget Annual Report on Form 10-K filed for 2022
Slide 26: Puget Overview - Diverse Power Generation Portfolio
Puget Overview - Diverse Power Generation Portfolio • Puget is committed to providing safe and 2022 Peak Power Resource Capacity (MW) (1) reliable electric service to customers in its Wind, territory while being a steward of clean energy 11.8% Purchased Resources: Columbia River 13.0% • Puget has a
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