8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): February 14, 2006 (February 9, 2006)

	Exact name of registrant as specified	I.R.S.
	in its charter, state of incorporation,	Employer
Commission	address of principal executive offices,	Identification
File Number	Telephone	Number

1-16305	PUGET ENERGY, INC.	91-1969407
	A Washington Corporation
	10885 - N.E. 4th Street, Suite 1200
	Bellevue, Washington 98004-5591
	(425) 454-6363

1-4393	PUGET SOUND ENERGY, INC.	91-0374630
	A Washington Corporation
	10885 - N.E. 4th Street, Suite 1200
	Bellevue, Washington 98004-5591
	(425) 454-6363

______________

Check the appropriate box below if the Form 8−K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  

o   Soliciting material pursuant to Rule 14a−12 under the Exchange Act (17 CFR 240.14a−12)  

o   Pre−commencement communications pursuant to Rule 14d−2(b) under the Exchange Act (17 CFR 240.14d−2(b))  

o   Pre−commencement communications pursuant to Rule 13e−4(c) under the Exchange Act (17 CFR 240.13e−4(c))  

Item 1.01 Entry into a Material Definitive Agreement

On February 9, 2006, the Compensation and Leadership Development Committees of the Boards of Directors of Puget Energy, Inc. and Puget Sound Energy, Inc. approved an amendment to the Puget Energy 2005 Long-Term Incentive Plan. The amendment changes the definition of "Change of Control" so that a Change of Control is deemed to occur, in addition to other circumstances described in the 2005 LTIP Plan, upon consummation, rather than regulatory approval, of specified “Business Combinations.”

Puget Sound Energy also amended existing Change of Control Agreements with Bertrand A. Valdman, Senior Vice President Finance and Chief Financial Officer, Jennifer L. O'Connor, Senior Vice President General Counsel, Chief Ethics and Compliance Officer, Susan McLain, Senior Vice President Operations, and Eric M. Markell, Senior Vice President Energy Resources to conform the definition of Change of Control to the definition used in the 2005 LTIP Plan.  The amendments, which were effective on February 9, 2006, provide that a Change of Control is deemed to occur, in addition to other circumstances described in the agreements,

·   upon consummation, rather than regulatory approval, of specified Business Combinations and

·   upon specified acquisitions of 30%, rather than 20%, of the Puget Energy common stock or voting power.

 The form of the Amended and Restated Change of Control Agreement is attached as Exhibit 10.3.

On the same day, Puget Energy and Puget Sound Energy entered into a similar amendment to the Employment Agreement of Stephen P. Reynolds, the Chairman, President and Chief Executive Officer of Puget Energy and Puget Sound Energy. The amendment changes the definition of Change of Control in the same way that the Change of Control Agreements described above were amended. The definition of Change of Control in Mr. Reynolds' agreement was further amended to change the carve out for continuing ownership from specified Business Combinations from 66-2/3% to 60%, which is the same threshold used in the 2005 LTIP Plan and other executive Change of Control Agreements.

 The preceding description of the amendment to the 2005 LTIP Plan, the amendments to the Amended and Restated Change in Control Agreements and the amendments to the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to such documents, which are filed as exhibits to this report.

Item 9.01: Financial Statements and Exhibits

Exhibits 10.1	Amendment No. One to 2005 Long-Term Incentive Plan of Puget Energy, Inc.
10.2	Second Amendment dated February 9, 2006 to employment agreement with S. P. Reynolds, Chief Executive Officer and President, dated as of January 1, 2002 and amended as of May 10, 2005
10.3	Form of Amended and Restated Change of Control Agreement for Puget Sound Energy, Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

	PUGET ENERGY, INC.
	PUGET SOUND ENERGY, INC.
	By: /s/ Jennifer L. O'Connor
Dated: February 14, 2006	Jennifer L. O’Connor Senior Vice President General Counsel and Chief Ethics and Compliance Officer

EX-10.1

EX-10.2

EXHIBIT 10.2

PUGET ENERGY, INC.

PUGET SOUND ENERGY, INC.

SECOND AMENDMENT TO AGREEMENT

SECOND AMENDMENT TO AGREEMENT (this "Amendment"), effective as of February 9, 2006, amends the agreement (the "Agreement"), dated as of January 1, 2002 and amended as of May 10, 2005, between Puget Sound Energy, Inc. ("PSE") and Puget Energy, Inc. ("Puget Energy"), both Washington corporations (PSE and Puget Energy, collectively, the "Company"), and Stephen P. Reynolds ("Executive").

WHEREAS, the Company and Executive wish to conform the definition of Change in Control in the Agreement to the definition on Change of Control in the PSE amended and restated form of Change of Control Agreement for PSE executive officers and in the PE amended 2005 Long-Term Incentive Plan by changing the definition of Change of Control in the Agreement to include (i) the acquisition of 30% rather than 20% of PE common stock or voting power and (ii) consummation rather than shareholder approval of a Business Combination, with a carve out for continuing ownership of 60% rather than 66-2/3%; and

WHEREAS, the Company and Executive also wish to amend the Agreement in certain respects to reflect the provisions of Section 409A of the Internal Revenue Code, as amended, and any regulations and other guidance issued thereunder;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the Company and Executive agree as follows:

1.   The second paragraph of Section 7, which begins "Executive may, by giving written notice to the Company..." shall be deleted in its entirety

2.   Section 7(e)(i) shall be replaced in its entirety by the following:

(i)The acquisition by any individual, entity or group of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of 30% or more of either (A) the outstanding Puget Energy common stock or (B) the outstanding Puget Energy voting securities; provided, however, that the following acquisitions shall not constitute a Change of Control: (x) any acquisition of securities by Puget Energy, (y) any acquisition of securities by any employee benefit plan (or related trust) sponsored or maintained by Puget Energy or any corporation controlled by Puget Energy, or (z) any acquisition by any corporation pursuant to a business combination, if, following such business combination, the conditions described in clauses (1), (2) and (3) of subsection (iii) of this Section 7(e) are satisfied; or

3.Section 7(e)(iii) of the Agreement shall be replaced in its entirety by the following:

(iii)Consummation of a Business Combination (which means (A) a reorganization, exchange of securities, merger, consolidation or other business combination involving Puget Energy or (B) the sale or other disposition of all or substantially all the assets of Puget Energy or PSE) unless after giving effect to such Business Combination and any equity financing completed or contemplated in connection with or as a result of such Business Combination, (1) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from or effecting such Business Combination and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all the individuals and entities who were the beneficial owners, respectively, of the outstanding Puget Energy common stock and outstanding Puget Energy voting securities immediately prior to such Business Combination in substantially the same proportion as their ownership, immediately prior to such Business Combination, of the outstanding Puget Energy common stock and outstanding Puget Energy voting securities, as the case may be, (2) no Person (excluding Puget Energy and any employee benefit plan (or related trust) of Puget Energy or its affiliates) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from or effecting such Business Combination or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors, and (3) at least a majority of the members of the board of directors of the corporation resulting from or effecting such Business Combination were Incumbent Directors at the time of the execution of the initial agreement or action of the Board providing for such Business Combination.

4.The first sentence of the first paragraph of Section 12, shall be replaced in its entirety by the following:

The amounts specified in this Agreement, other than any payments which Executive has elected to receive in the form of a monthly annuity or has elected to defer under a deferred compensation plan, shall be paid by the Company no more than 30 days after the date of termination or, in the case of payments due under Section 7(e)(A), Change in Control.

5.The following new Section 23 shall be added to the Agreement:

Section 409A

Notwithstanding anything to the contrary in this Agreement, any cash payments otherwise due to Executive under this Agreement on or within the six-month period following Executive’s termination will accrue during such six-month period and will become payable in a lump sum payment on the date six (6) months and one (1) day following the date of Executive’s termination, provided, however, that such cash severance payments will be paid earlier, at the times and on the terms set forth in the applicable provisions of this Agreement, if the Company reasonably determines that the imposition of additional tax under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), will not apply to an earlier payment of such cash severance payments. In addition, this Agreement (and any stock options granted pursuant hereto) will be deemed amended to the extent necessary to avoid the imposition of any additional tax on (or income recognition prior to payment to or, in the case of stock options, exercise by) Executive under Code Section 409A, including any temporary or final Treasury Regulations and guidance promulgated thereunder, and the parties agree to cooperate with each other and to take reasonably necessary steps in this regard.

6.COUNTERPARTS. This Amendment may be executed in counterparts, each of which shall be deemed to be an original.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.

PUGET SOUND ENERGY, INC.

By: /s/ Stephen E. Frank

  Stephen E. Frank

         Title: Chair, Compensation and Leadership

         Development Committee, Puget Sound Energy, Inc. Board of Directors

PUGET ENERGY, INC.

By: : /s/ Stephen E. Frank

Stephen E. Frank

   Title: Chair, Compensation and Leadership

   Development Committee, Puget Energy, Inc. Board of Directors

EXECUTIVE

   /s/ Stephen P. Reynolds

         Stephen P. Reynolds

EX-10.3

Exhibit 10.3

AMENDED AND RESTATED

CHANGE OF CONTROL AGREEMENT

This amended and restated AGREEMENT by and between Puget Sound Energy, Inc., a Washington corporation (the "Company"), and ___________________ (the "Executive"), is dated as of the ______ day of ______________________, 2006.

WHEREAS, the Company and the Executive are parties to a Change of Control Agreement dated as of ____________________ (the "Original Agreement");

WHEREAS, the Company and the Executive desire to amend and restate the Original Agreement so that the Original Agreement will be replaced in its entirety with this Agreement;

WHEREAS the Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to ensure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined in Section 2) of the Company, and the Board believes that it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied, which are competitive with those of other corporations and which align the Executive's interests with those of the Company's shareholders. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

1. Certain Definitions

(a)"Accrued Obligations" is defined in Section 6(a)(i).

(b)"Affiliated Company" means any company controlled by, controlling or under common control with the Company.

(c)"Annual Base Salary" means an annual base salary at least equal to 12 times the highest monthly base salary paid or payable to the Executive by the Company and its affiliated companies in respect to the 12-month period immediately preceding the month in which the Effective Date occurs.

(d)"Annual Bonus" is defined in Section 4(b)(ii).

(e)"Business Combination" means (i) a reorganization, exchange of securities, merger or consolidation of the Company or (ii) the sale or other disposition of all or substantially all the assets of the Company.

(f)"Change of Control" is defined in Section 2.

(g)The "Change of Control Period" means the period commencing on the date hereof and ending on the third anniversary of the date hereof; provided, however, that commencing on the first anniversary of the date hereof and on each successive anniversary (each a “Renewal Date”), the Change of Control Period shall be automatically extended so as to terminate three years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company gives notice to the Executive that the Change of Control Period shall not be so extended.

(h)"Code" means the Internal Revenue Code of 1986, as amended.

(i)"Date of Termination" is defined in Section 5(f).

(j)"Disability" is defined in Section 5(a).

(k)"Disability Effective Date" is defined in Section 5(a).

(l)"Effective Date" means the first date during the Change of Control Period on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control or (ii) otherwise arose in connection with or anticipation of the Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment.

(m)"Employment Period" is defined in Section 3.

(n)"Exchange Act" means the Securities Exchange Act of 1934, as amended.

(o)"Good Reason" is defined in Section 5(d).

(p)"Incentive Plan" means the Company's 2005 Long-Term Incentive Plan or any successor plan.

(q)"Incumbent Director" means a member of the Board who has been either (i) nominated by a majority of the directors of the Company then in office or (ii) appointed by directors so nominated, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

(r)"Notice of Termination" is defined in Section 5(e).

(s)"Other Benefits" is defined in Section 6(a)(iii).

(t)"Outstanding Company Common Stock" means the shares of Common Stock of the Company ("Common Stock") outstanding at the time of the determination.

(u)"Outstanding Company Voting Securities" means the combined voting power of the outstanding voting securities of the Company entitled to vote generally in the election of directors at the time of the determination.

(v)"Person" means any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d) of the Exchange Act).

(w)"Retirement Plan" means the Company's qualified pension plan or any successor plan thereto.

(x)"SERP" means the Company's Supplemental Executive Retirement Plan or any other supplemental and/or excess retirement plan or agreement of the Company and its affiliated companies providing benefits for the Executive.

(y)"Welfare Benefit Continuation" is defined in Section 6(a)(ii).

2. Change of Control

For the purpose of this Agreement, a "Change of Control" means:

(a)The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of (i) 30% or more of either (A) the Outstanding Company Common Stock or (B) the Outstanding Company Voting Securities; provided, however, that the following acquisitions of beneficial ownership shall not constitute a Change of Control: (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (z) any acquisition by any corporation pursuant to a Business Combination, if, following such Business Combination, the conditions described in clauses (i), (ii) and (iii) of subsection (c) of this Section 2 are satisfied; or

(b)A "Board Change" which, for purposes of this Agreement, shall have occurred if a majority of the seats (other than vacant seats) on the Board are occupied by individuals who were neither (i) nominated by a majority of the Incumbent Directors nor (ii) appointed by directors so nominated; or

(c)Consummation of a Business Combination unless immediately following such Business Combination, (i) more than 60% of the then outstanding shares of common stock of the corporation resulting from or effecting such Business Combination and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination in substantially the same proportion as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company or the corporation resulting from or effecting such Business Combination and any Person beneficially owning, immediately prior to such Business Combination, directly or indirectly, 30% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from or effecting such Business Combination or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors, and (iii) at least a majority of the members of the board of directors of the corporation resulting from or effecting such Business Combination were Incumbent Directors at the time of the execution of the initial agreement or action of the Board providing for such Business Combination.

3. Employment Period

The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company, in accordance with the terms and provisions of this Agreement, for the period commencing on the Effective Date and ending on the second anniversary of such date (the "Employment Period"), in the executive capacity of _______________________________________ or a substantially comparable position of the Company and, subject to the general supervision of the Board as required by the Washington Business Corporation Act, such other duties and responsibilities as are not inconsistent with the express terms of this Agreement. The Company agrees that it will not take any action, or make any demands on the Executive, that may be deemed to arbitrarily, unreasonably or unnecessarily interfere with the performance of the services to be rendered by the Executive hereunder.

4. Terms of Employment

(a)Position and Duties.

 (i)During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be in accordance with Section 3 and (B) the Executive's services shall be performed within the Seattle/Bellevue metropolitan area, except for required travel in the Company's business to the extent consistent with the Executive's duties in Section 3.

  (ii)During the Employment Period, and excluding any periods of paid time off to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company.

(b)Compensation.

(i)Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid in equal installments on a monthly basis, at least equal to 12 times the highest monthly base salary paid or payable to the Executive by the Company and its affiliated companies in respect of the 12-month period immediately preceding the month in which the Effective Date occurs. For purposes of this Agreement, Annual Base Salary shall not include any payments by the Company on the Executive's behalf pursuant to any incentive, savings or retirement plans, any welfare benefit plans or any fringe benefit plans, in each case, of the Company or any affiliated company, of the type identified in paragraphs (iii) through (vii) of this Section 4(b), or any reimbursement of expenses by the Company or any affiliated company in accordance with paragraph (v) of this Section 4(b). During the Employment Period, the Annual Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be substantially consistent with increases in base salary generally awarded in the ordinary course of business to other peer executives of the Company and its affiliated companies. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase, and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased.