Energy Resource Acquisition: 2008 All Source & Energy Efficiency Request For Proposals

Purpose of RFP Filing

Puget Sound Energy's ("PSE" or "the Company") recent Integrated Resource Plan ("IRP"), published in May of 2007, indicates that the Company has a significant need for electric resources, including energy efficiency, energy, and capacity resources. These resource needs grow substantially over time. To help ensure that PSE acquires the lowest reasonable cost resources for our customers, the Company filed a Request for Proposals from All Generation Sources ("All Source RFP") and a Request for Proposals for Electric and Gas Demand-Side Resources ("Energy Efficiency RFP") (collectively, "RFPs") with the Washington Utilities and Transportation Commission ("WUTC").

Energy and Capacity Need

PSE's need period for this RFP is defined as winter 2008 to 2015. In 2008, PSE's most energy deficit month is expected to be January, with a shortfall of 412 average megawatts. This shortfall is expected to grow to more than 1,300 average megawatts by winter 2014/15. PSE's capacity need during this period is also expected to be significant. As PSE acquires long-term resources, the characteristics of the resource will determine whether its contribution is to energy and/or to capacity. As a result, PSE's energy and capacity need may be met in part by a resource that has both an energy and capacity component, which would reduce not only energy need, but also capacity need.

Additionally, PSE's 2007 IRP calls for 438 average megawatts of electric demand-side resources from a combination of energy efficiency and fuel conversion by 2027, to displace electric loads. Most of these electric demand-side energy savings were accelerated into the first half of the IRP's 2008-2027 planning period, resulting in 329 average megawatts of savings by 2017 (299 average megawatts from energy efficiency and 30 average megawatts from fuel conversion and distributed generation).

PSE's need for energy and capacity resources is largely determined by load growth and the loss of generation resources due to net contract expirations.

Schedule

PSE's expected timeline for our 2008 RFP solicitation (including the date of our proposal conference and the due date for submitting proposals) is shown below. As depicted in the timeline, PSE will host a proposal conference for respondents and other interested parties at our Bellevue, Washington campus on January 23, 2008, from 10:00 a.m. to noon. To R.S.V.P. for this conference, email sheri.maynard@pse.com .

October 12, 2007	Draft RFP Filed with WUTC
October 29, 2007	PSE Hosts Public Meeting on Draft RFP
December 11, 2007	Public Comments Due
January 10, 2008	WUTC Comments Expected
January 11, 2008	PSE Releases Final RFP Solicitation
January 23, 2008	PSE Hosts Proposal Conference
February 29, 2008	Offers Due to PSE

Questions or comments regarding the Demand Side Resources RFP may be sent to EES@pse.com . Questions or comments regarding the All Generation Sources RFP may be sent to sheri.maynard@pse.com . If you are not on our email distribution list but would like to be, please email your contact information to sheri.maynard@pse.com .

Thank you for your interest in PSE's RFP process.

2008 RFP Filing Letter