Citing $24 million in state regulatory disallowances for its utility, Bellevue, WA-based Puget Energy Thursday reported a net loss of $6.8 million, or 7 cents/share, for the second quarter, compared with profit of $20.6 million, or 22 cents/share, for the same period last year.

The utility, Puget Sound Energy (PSE), chalked up a bigger loss of $9.5 million, or 10 cents/share, for the quarter, compared with net income of $17.8 million, or 19 cents/diluted share in the second quarter of 2003.

At the heart of the problem, according to Puget Energy’s CEO Stephen Reynolds, was the $24.5 million, or 25 cents/diluted share, disallowance by the state of Washington Utilities and Transportation Commission.

“The disallowance caused us to hit a bump in the road in the past quarter,” said Reynolds, who heads both the parent company and utility. “Despite the disallowance, our utility business remains stable, and our passion to maintain quality service and improve our financial performance is unwavering.”

Puget Energy reaffirmed its earning estimates at $1.20/ to $1.30/diluted share for the full year in 2004.

At the utility, PSE reported that in the second quarter both electricity and natural gas margins declined while its service territory in western state of Washington was 24% warmer than the year before.

As a result, the electricity margin during the quarter dropped by $37.6 million, the company said. Natural gas margins dropped $4.6 million. Heating degree-days declined by 219 during the quarter, PSE said.

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