Utility Plant

12 Months Ended

Dec. 31, 2011

(6) Utility Plant

		Puget Energy						Puget Sound Energy
Utility Plant	Estimated Useful Life	At December 31,						At December 31,
(Dollars In Thousands)	(Years)	2011			2010			2011			2010
Electric, gas and common utility plant classified by prescribed accounts :
Distribution plant	10-50	$	4,552,087		$	4,313,447		$	6,279,340		$	6,054,961
Production plant	25-125		1,618,196			1,575,694			2,616,855			2,585,864
Transmission plant	45-65		391,080			337,163			516,461			463,546
General plant	5-35		442,216			390,732			499,559			449,980
Intangible plant (including capitalized software)	3-50		112,118			97,458			187,948			184,706
Plant acquisition adjustment	7-30		188,628			183,142			228,593			223,108
Underground storage	25-60		27,139			26,869			40,815			40,558
Liquefied natural gas storage	25-45		12,622			12,440			14,492			14,310
Plant held for future use	NA		18,381			53,945			18,534			54,098
Recoverable Cushion Gas	NA		8,514			8,058			8,514			8,057
Plant not classified	NA		38,998			58,822			38,998			58,822
Capital leases, net of accumulated amortization 1	1-5		32,207			15,444			32,207			--
Less: accumulated provision for depreciation			(674,782	)		(429,038	)		(3,714,912	)		(3,509,277	)
Subtotal		$	6,767,404		$	6,644,176		$	6,767,404		$	6,628,733
Construction work in progress	NA		1,282,463			628,387			1,282,463			628,387
Net utility plant		$	8,049,867		$	7,272,563		$	8,049,867		$	7,257,120

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1	Accumulated amortization of capital leases at Puget Energy was $5.7 million in 2011 and $29.6 million in 2010. Accumulated amortization of capital leases at PSE was $5.7 million in 2011. PSE did not have any capital leases in 2010.

Jointly owned generating plant service costs are included in utility plant service cost. The following table indicates the Company's percentage ownership and the extent of the Company's investment in jointly owned generating plants in service at December 31, 2011. These amounts are also included in the Utility Plant table above.

					Puget Energy's Share					Puget Sound Energy's Share
Jointly Owned Generating Plants (Dollars in Thousands)	Energy Source (Fuel)	Company's Ownership Share			Plant in Service at Cost		Accumulated Depreciation			Plant in Service at Cost		Accumulated Depreciation
Colstrip Units 1 & 2	Coal		50	%	$	135,623	$	(5,153	)	$	279,391	$	(148,922	)
Colstrip Units 3 & 4	Coal		25	%		217,813		(16,246	)		501,837		(300,269	)
Colstrip Units 1 - 4 Common Facilities 1	Coal	various				83		(10	)		252		(179	)
Frederickson 1	Gas		49.85	%		62,146		570			71,095		(8,379	)

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1	The Company's ownership is 50% for Colstrip Units 1 & 2 and 25% for Colstrip Units 3 & 4.

There were no valuation adjustments to asset retirement obligations (ARO) in conjunction with the merger in 2009. The Company recognized a new ARO in 2011 in the amount of $0.4 million. The Company did not recognize any new AROs in 2010.

The following table describes all changes to the Company's ARO liability:

	At December 31,
(Dollars in Thousands)	2011			2010
Asset retirement obligation at beginning of period	$	25,416		$	24,095
New asset retirement obligation recognized in the period		350			--
Liability settled in the period		(1,722	)		(2,341	)
Revisions in estimated cash flows		1,154			2,413
Accretion expense		1,342			1,249
Asset retirement obligation at end of period	$	26,540		$	25,416

The Company has identified the following obligations, as defined by ASC 410, "Asset Retirement and Environmental Obligations," which were not recognized at December 31, 2011 and 2010:

-	a legal obligation under Federal Dangerous Waste Regulations to dispose of asbestos-containing material in facilities that are not scheduled for remodeling, demolition or sales. The disposal cost related to these facilities could not be measured since the retirement date is indeterminable; therefore, the liability cannot be reasonably estimated;
-	an obligation under Washington state law to decommission the wells at the Jackson Prairie natural gas storage facility upon termination of the project. Since the project is expected to continue as long as the Northwest pipeline continues to operate, the liability cannot be reasonably estimated;
-	an obligation to pay its share of decommissioning costs at the end of the functional life of the major transmission lines. The major transmission lines are expected to be used indefinitely; therefore, the liability cannot be reasonably estimated;
-	a legal obligation under Washington state environmental laws to remove and properly dispose of certain under and above ground fuel storage tanks. The disposal costs related to under and above ground storage tanks could not be measured since the retirement date is indeterminable; therefore, the liability cannot be reasonably estimated;
-	a potential legal obligation may arise upon the expiration of an existing FERC hydropower license if FERC orders the project to be decommissioned, although PSE contends that FERC does not have such authority. Given the value of ongoing generation, flood control and other benefits provided by these projects, PSE believes that the potential for decommissioning is remote and cannot be reasonably estimated;