Puget Energy — FY2022 Earnings Presentation
22 slides from Puget Energy's earnings presentation, February 2023
Slide 1: Puget Energy 2022 Financial Results Review
Puget Energy 2022 Financial Results Review February 2023
Slide 2: Cautionary Statement
Cautionary Statement Information Current as of December 31, 2022 (except as expressly noted) Except as expressly noted, the information in this presentation is current as of February 23, 2023 – the date on which PUGET ENERGY, INC. (“PE”) filed its Quarterly Report on Form 10-K for the quarter ended
Slide 3: PSE team members
PSE team members Kazi Hasan – Executive VP and CFO Cara Peterman – Director, Corporate Treasurer Sam Osborne – Director, Assistant General Counsel & Corporate Secretary Karissa Jonas – Assistant Treasurer Tsung-Hsing Shen – Debt Capital Markets Manager 3
Slide 4: Table of Contents
Table of Contents 1. 2022 Business Overview 5 2. Regulatory & WA Legislative 7 3. Decarbonization Efforts 10 4. 2022 Financials Results 13 5. Appendix 19 4
Slide 5: 2022 Business Overview
2022 Business Overview
Slide 6: In 2022, PSE achieved key milestones in the clean energy transition
In 2022, PSE achieved key milestones, paving the way for success in the clean energy transition WUTC commission approval of settlement on two-year multiyear rate plan Filed our first Clean Energy Implementation Plan, paving way for grid modernization and resource acquisition Tacoma LNG became
Slide 7: WUTC issued historic order in PSE's General Rate Case
On December 22nd, the WUTC issued an historic order in PSE’s General Rate Case, approving $646M in increased base-rates over two years Approved PSE’s Revenue Requirements, LNG and Green Direct Settlements with limited conditions • Approved additional updates to power costs for 2023 and 2024 • Agre
Slide 8: 2023 Washington legislative session underway from January to April
2023 Washington legislative session underway from January to April Priority policy issues impacting PSE • Reforms to expedite the permitting process for transmission and Permitting and siting CETA compliant technologies • Accelerate depreciation PSE’s gas decarbonization & • Combine electric and gas
Slide 9: Cap and invest program to reduce carbon emissions begins in 2023
Cap and invest program to reduce carbon emissions in Washington begins in 2023 • Program places limit on carbon pollution, which becomes more stringent over time • Enables purchases of allowances through auction and a secondary market • Utilities will receive no-cost allowances based on a historical
Slide 10: PSE is making strides towards a low-carbon future
PSE is making strides towards a low-carbon future by exiting coal, providing LNG as a marine fuel, and developing renewable generation and storage Item Current Status/Progress PSE signed an agreement in September 2022 to transfer PSE’s 25% ownership Colstrip in Units 3 & 4 of the Colstrip Generating
Slide 11: PSE's need for additional renewable energy and capacity is substantial
PSE’s need for additional renewable energy and capacity is substantial 30,000,000 • PSE’s Integrated Resource Plan Electric Progress Report (IRP EPR) issued in 2023 25,000,000 proposes a preferred portfolio comprised of CETA Target linear 6,700 MW of nameplate capacity resources to ramp to 80% by 20
Slide 12: PSE is deeply committed to sustainability goals
PSE is deeply committed to sustainability goals and striving to continuously improve our business by seeking best practice in ESG matters MSCI’s ESG rating has been upgraded to ‘AA’ from ESG Rating ‘BBB’ in May 2022: Neutral/ • Retirement of Colstrip 1 and 2 Moderately • Supportive legislative envir
Slide 13: 2022 Financials Results
2022 Financials Results
Slide 14: 2022 financial performance mostly in-line with recent performance
2022 financial performance was mostly in-line with recent performance, despite ongoing regulatory lag and an increase in capital expenditures ($ in millions) PSE - EBITDA (1) PSE - Authorized and Actual ROE 9.8% 9.5% 9.5% 9.4% 9.4% 9.4% 0.8% 2.1% 2.1% 2.5% 2.1% 3.3% $1,372 9.0% $1,318 7.4% 7.4% 6.9%
Slide 15: PE Consolidated Net Income Walk by Entity
PE Consolidated Net Income Walk by Entity ($ in millions) Primarily driven by $270 higher power costs $250 Primarily driven by lower interest expense $246 $(39) due to bond refinance Driven by delays at lower coupon rate $230 in TOTE fueling $210 $(16) $15 $206 $190 $170 $150 2021 PSE Consolidated P
Slide 16: PE/PSE has a manageable debt profile and ample liquidity
PE/PSE has a manageable debt profile, with strong access to the capital markets and ample liquidity to properly finance the business Debt Maturity Profile Liquidity Profile $M’s $M’s $1,600 -$119 -$357 $1,124 $1,144 $800 $17 $19 $650 $1,481 $681 $500 $450 $1,124 $1,144 $400 $300 $800 $162 $443 $100
Slide 17: 2022 GRC/MYRP result will improve credit metrics
2022 GRC/MYRP result will improve the under performed credit metrics driven by previous GRC and regulatory lag PE PSE Outlook BBB- BBB Stable Baa3 Baa1 Stable BBB- BBB+ Stable (A) (B) (C) (D) (E) PSE Benchmark 2022 2022 Plan 2023 Forecast 1 S&P FFO to Debt >=20% 17.3% 17.6% >19% 2 Moody's CFO pre WC
Slide 18: In 2023, PSE looks to focus on improving reliability and clean energy targets
In 2023, PSE looks to focus on improving reliability and making significant strides on our clean energy targets WUTC ruling on Clean Energy Implementation Plan by H2 2023 Already acquired 567MW renewable resources in 2022/2023: Clearwater, wind PPA, 300MW Golden Hills, wind PPA, 200MW SPI,
Slide 19: Appendix
Appendix
Slide 20: Company Overview: PSE Service Territory
Company 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 21: Company Overview: Customer Base
Company Overview 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 = $2.5B Total = $1.2B Industrial, Industrial, Other, Other, 2.6% 4.6% 2.1%
Slide 22: Company Overview: Diverse Power Generation Portfolio
Company Overview Diverse Power Generation Portfolio 2022 Peak Power Resource Capacity (MW) (1) PSE is committed to providing safe and reliable electric service to customers in its Wind, territory while being a steward of clean energy Purchased Resources: 16.4% Purchased Columbia River 14.5% Power,