NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held April 16, 2008 at 10:00 a.m.
Puget Sound Energy Auditorium
10885 N.E. 4th Street
Bellevue, Washington 98004

Dear Shareholder:

        The Special Meeting of Shareholders of Puget Energy, Inc. will be held at the Puget Sound Energy Auditorium, located on the Puget Sound Energy Corporate Campus, 10885 N.E. 4th Street, Bellevue, Washington on April 16, 2008, beginning at 10:00 a.m. for the following purposes:

1.

To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of October 25, 2007, among Puget Energy, Inc., Puget Holdings LLC, a Delaware limited liability company, Puget Intermediate Holdings Inc., a Washington corporation and a wholly owned subsidiary of Puget Holdings LLC, and Puget Merger Sub Inc., a Washington corporation and a wholly owned subsidiary of Puget Intermediate Holdings Inc., whereby (a) Puget Merger Sub Inc. will merge with and into Puget Energy resulting in Puget Energy becoming a wholly owned indirect subsidiary of Puget Holdings LLC and (b) each outstanding share of Puget Energy common stock, par value $0.01 per share (other than those held by shareholders who properly exercise their dissenters' rights and those held by Puget Holdings and the wholly owned subsidiaries of the Company and Puget Holdings), will be converted into the right to receive $30.00 in cash, without interest and less any applicable withholding tax;



2.

To consider and vote upon any proposal to adjourn the special meeting to a later date, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the above proposal; and



3.

For the transaction of any other business properly brought before the special meeting or any reconvened meeting following any adjournment of the special meeting.

        Holders of Puget Energy common stock are or may be entitled to assert dissenters' rights with respect to the merger under Chapter 23B.13 of the Washington Business Corporation Act. A copy of Chapter 23B.13 is attached as Annex C to the enclosed proxy statement.

        Only common stock shareholders of record at the close of business on February 14, 2008 will be entitled to vote.

         Your vote is important. Regardless of the number of shares you own, please vote as soon as possible. You may vote your proxy by telephone, via the Internet, or by signing, dating and returning the enclosed proxy card in the envelope provided. You will find instructions on the enclosed proxy card. If your shares are registered in the name of a brokerage firm or trustee and you plan to attend the meeting in person, please bring a letter, account statement or other evidence of your beneficial ownership to the meeting.

By Order of the Board of Directors

Jennifer L. O'Connor
Corporate Secretary

February 16, 2008
Bellevue, Washington

TABLE OF CONTENTS

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

         The following questions and answers address briefly some commonly asked questions you may have regarding the special meeting of the shareholders of Puget Energy, Inc., which we refer to as the special meeting, and the proposed merger described in this proxy statement. They do not include all the information that may be important to you. Please refer to the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement which we have filed with the United States Securities and Exchange Commission. In this proxy statement, the terms "Puget Energy," "Company," "we," "our," "ours," and "us" refer to Puget Energy, Inc.

Q:    Why am I receiving this proxy statement?

A:

Our Board of Directors is furnishing this proxy statement in connection with the solicitation of proxies to be voted at a special meeting of shareholders, or at any adjournments, postponements or continuations of the special meeting.

The special meeting is being held to consider and vote on a proposal for the acquisition of the Company by Puget Holdings LLC (formerly named Padua Holdings LLC), which we refer to as the Parent, pursuant to an Agreement and Plan of Merger, dated as of October 25, 2007, which we refer to as the merger agreement, among the Parent, Puget Intermediate Holdings Inc. (formerly named Padua Intermediate Holdings Inc.), a wholly owned subsidiary of the Parent, which we refer to as Puget Intermediate, Puget Merger Sub Inc. (formerly named Padua Merger Sub Inc.), a wholly owned subsidiary of Puget Intermediate, which we refer to as Merger Sub, and us. Pursuant to the merger agreement, each outstanding share of Company common stock (other than those held by shareholders who properly exercise their dissenters' rights and those held by the Parent and the wholly owned subsidiaries of the Company and the Parent) will be converted into the right to receive $30.00 in cash, without interest and less any applicable withholding tax, and Merger Sub will merge with and into us, which transaction is referred to as the "merger." The Company will be the surviving corporation and will become an indirect wholly owned subsidiary of the Parent. The current direct and indirect owners of the Parent consist of a consortium of infrastructure funds and institutional investors led by Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board and British Columbia Investment Management Corporation, and also includes Alberta Investment Management, Macquarie-FSS Infrastructure Trust and Macquarie Capital Group Limited (we refer to the owners collectively as the Investor Consortium).

Q:    What do I need to do now?

A:

We urge you to read this proxy statement carefully and consider how the merger affects you. Then mail your completed, dated and signed proxy card in the enclosed return envelope as soon as possible, or vote via the Internet or by telephone, so that your shares can be voted at the special meeting of our shareholders. Please do not send your stock certificates with your proxy card.

Q:    Why is my vote important?

A:

If you do not submit your proxy via the Internet or by telephone, or return your signed proxy card(s) by mail or vote in person at the special meeting, it will be more difficult for us to obtain the necessary quorum to hold the special meeting and to obtain the shareholder approval necessary for the completion of the merger. For the special meeting, the holders of a majority of the issued and outstanding shares entitled to vote at the meeting constitutes a quorum for the transaction of business. If a quorum is not present at the special meeting, the shareholders will not be able to take action on the merger proposal at the meeting.

In addition, if you do not vote, it will have the same effect as a vote AGAINST the proposal to approve the merger agreement.

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Q:    How does the Company's Board of Directors recommend that I vote in the merger?

A:

Our Board of Directors unanimously recommends that our shareholders vote FOR the approval of the merger agreement. You should read "The Merger—Reasons for the Merger and Recommendation of our Board of Directors" beginning on page 38 for a discussion of the factors that our Board of Directors considered in deciding to recommend the approval of the merger agreement.

Q:    What factors did the Company's Board of Directors consider in making its recommendation?

A:

In making its recommendation, the Board of Directors took into account the factors discussed under "The Merger—Reasons for the Merger and Recommendation of our Board of Directors" beginning on page 38, including, but not limited to:

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the opportunity for our shareholders to realize substantial value based on the receipt of $30.00 in cash per share of our common stock, representing a 25% premium over the closing price of our common stock on the New York Stock Exchange on the last trading day prior to the announcement of the merger and an 11% premium to the 52-week high trading price for the common stock;

•

the written opinion of Morgan Stanley dated October 25, 2007, to the effect that as of that date and based upon and subject to the assumptions, qualifications and limitations set forth in the opinion, the consideration to be received by the holders of our common stock pursuant to the merger agreement was fair from a financial point of view to such holders (see "The Merger—Opinion of Our Financial Advisor" beginning on page 42);

•

the fact that the merger consideration is all cash, which will provide liquidity and certainty of value to our shareholders;

•

our ability under the terms of the merger agreement to continue to pay regular dividends to shareholders prior to the consummation of the merger;

•

the fact that members of the Investor Consortium agreed to enter into the stock purchase agreement simultaneously with entering into the merger agreement, which satisfied our interim equity financing requirements, and purchase shares of our common stock at a price per share higher than the Board believed would be achievable in a public offering or private placement of the stock;

•

the right of the Company under the merger agreement to solicit superior acquisition proposals from third parties through December 10, 2007 and the right to receive and consider unsolicited proposals thereafter until approval of the merger agreement by our shareholders, including the right to terminate the merger agreement to accept a superior proposal subject to the payment to the Parent of a termination fee of $40 million (approximately 1.14% of the equity value of the merger) or, if the event giving rise to the termination is based on the submission of an acquisition proposal by a party from whom the Company has received a bona fide written acquisition proposal prior to the end of the "go shop" period running through December 10, 2007 that our Board of Directors determined in good faith constitutes, or could reasonably be expected to result in, a superior proposal (no such determination was made by our Board at the end of the "go shop" period), $30 million (approximately 0.85% of the equity value of the merger) (see "The Merger Agreement—Solicitation of Acquisition Proposals" beginning on page 75 and "The Merger Agreement—Termination Fees and Expenses" beginning on page 83);

•

the risk that the merger may not be completed in a timely manner or at all, including the risks of adverse regulatory or other governmental reactions or that the financing contemplated by the financing commitments is not obtained, along with the risk that the transaction could prompt

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regulatory or legislative actions that could prevent the merger and adversely affect the ongoing regulatory position of the Company;

•

the risks and costs to us if the merger does not close, including the diversion of management and employee attention, potential employee attrition and the potential effect on business and customer relationships;



•

the fact that an all cash transaction would be taxable to our shareholders for U.S. federal income tax purposes;



•

the fact that the Investor Consortium would be required to raise a substantial portion of the merger consideration in the bank capital markets and the risks related to those markets; and



•

the interests of our executive officers and directors in the merger (see "The Merger—Interests of the Company's Directors and Executive Officers in the Merger" beginning on page 48).

Q:    When do you expect the merger to be completed?

A:

We plan to complete the merger as soon as reasonably practicable, subject to receipt of necessary regulatory approvals and the approval of our shareholders. Although we cannot predict the exact time of the merger's completion, we expect to complete the merger in the second half of 2008. We cannot predict when regulatory review will be completed, whether regulatory or shareholder approval will be received or the potential terms and conditions of any regulatory approval that is received. In addition, other factors outside of our control could require us to complete the merger at a later time or cause us not to complete it at all.

Q:    What vote of our shareholders is required to approve the merger agreement?

A:

The merger agreement must be approved by the affirmative vote of the holders of two-thirds of the outstanding shares of Company common stock as of the close of business on the record date.

Q:    What constitutes a quorum at a special meeting?

A:

A majority of the votes entitled to be cast by the shareholders of record of shares of Company common stock as of the close of business on the record date, represented in person or by proxy, constitutes a quorum of shares at the special meeting of shareholders.

Q:    Who is entitled to vote at the special meeting?

A:

Only holders of Company common stock at the close of business on February 14, 2008 (the record date) are entitled to vote. As of the record date, 129,678,489 shares of common stock were outstanding. You are entitled to one vote for each share of common stock you held on the record date. We had approximately 34,000 shareholders of record as of the record date.

Q:    When and where is the special meeting?

A:

The special meeting will take place on April 16, 2008, at 10:00 a.m. at the Puget Sound Energy Corporate Campus, 10885 N.E. 4th Street, in Bellevue, Washington 98004.

Q:    May I vote in person?

A:

Yes. If you are a shareholder of record of our common stock as of February 14, 2008, you may attend the special meeting and vote your shares in person regardless of whether you submit your proxy via the Internet or by telephone or return your signed proxy card(s) by mail. If your shares are held in "street name," you must get a voting form from your broker or bank in order to attend the special meeting and vote in person. Even if you plan to attend the special meeting, we highly

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recommend that you vote in advance by submitting your proxy via the Internet, by telephone or by mail.

Q:    May I vote via the Internet or by telephone?

A:

Yes. If your shares are registered in your name, you may vote by returning a signed proxy card or voting in person at the special meeting. Additionally, you may submit a proxy authorizing the voting of your shares via the Internet or by telephone. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to submit a proxy via the Internet or by telephone. If your shares are held in "street name" through a broker or bank, you may vote by completing and returning the voting form provided by your broker or bank, or via the Internet or by telephone through your broker or bank if such a service is provided. To vote via the Internet or by telephone through your broker or bank, you should follow the instructions on the voting form provided by your broker or bank.

Q:    If I am a recordholder of my shares, what happens if I don't submit a proxy (whether by returning my proxy card or submitting my proxy by telephone or via the Internet) or attend the special meeting to vote in person?

A:

If you do not return your proxy card or submit your proxy via the Internet or by telephone or vote in person at the special meeting, this will have the same effect as a vote AGAINST the proposal to approve the merger agreement. In the case of a proposal to adjourn the special meeting, a failure to vote will have no effect on the outcome of the voting if a quorum is present.

Q:    What if my shares are held in "street name"?

A:

If some or all of your shares of the Company are held in "street name" by your broker, you must provide your broker with instructions on how to vote your shares; otherwise, your broker will not be able to vote your shares on any of the proposals before the special meeting and this will have the same effect as a vote AGAINST the proposal to approve the merger agreement. As a result of the foregoing, please be sure to provide your broker with instructions on how to vote your shares. Please check the voting form used by your broker to see if it offers telephone or Internet submission of proxies.

Q:    Who will count the votes?

A:

Wells Fargo Shareowner Services will tabulate the votes in a confidential manner and will act as inspector of election. No one will disclose the identity and vote of any shareholder unless legally required to do so.

Q:    What does it mean if I receive more than one set of materials?

A:

It means that your shares are either registered with different brokerage firms, under different names or with different addresses. Be sure to vote all your accounts to ensure that all your shares are voted. We encourage shareholders to have all their shares either registered with the Company or in one brokerage firm with the same address to reduce the duplication of materials.

Q:    How are shares of Company common stock held in the 401(k) Investment Plan for employees of Puget Sound Energy (PSE) voted?

A:

If you are a current or former employee who is a participant in the PSE 401(k) Investment Plan, you will receive a proxy card showing the number of shares of common stock held in your 401(k) Plan account under the Plan as of the record date. If you also own shares in a registered account or Employee Stock Purchase Plan account, you will receive a combined proxy card showing the

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number of shares in each account and the total number of shares in all such accounts. If you receive your material electronically, you will receive a proxy card showing the total number of shares in your accounts. To instruct the 401(k) Plan trustee on how to vote your shares, you may vote your shares by telephone, via the Internet or by signing, dating and returning the proxy card in the envelope provided. If you do not provide timely voting instructions for your plan shares, then you will be deemed to have instructed the plan trustee not to vote your shares.

Q:    How are shares of Company common stock held in the Employee Stock Purchase Plan accounts voted?

A:

You will receive a proxy card showing the number of shares of common stock held in your account under the plan as of the record date. If you also own shares in a registered account or 401(k) Plan account, you will receive a combined proxy card showing the number of shares in each account and the total number of shares in all such accounts. If you receive your material electronically you will receive a proxy card showing the total number of shares in your accounts. To instruct the trustee on how to vote your shares, you may vote your shares by telephone, via the Internet or by signing, dating and returning the proxy card in the envelope provided. Any proxies not returned by participants will not be voted.

Q:    Can I revoke my proxy and change my vote?

A:

Yes. You have the right to revoke your proxy at any time prior to the time your shares are voted at the special meeting. If you are a shareholder of record, your proxy can be revoked in several ways:

•

by delivering a written revocation to the Company's Corporate Secretary prior to the special meeting;

•

by submitting another valid proxy bearing a later date that is received prior to the special meeting; or

•

by attending the special meeting and voting your shares in person.

However, if your shares are held in "street name" through a bank, broker, custodian or other recordholder, you must check with your bank, broker, custodian or other recordholder to determine how to revoke your proxy.

Q:    Should I send in my stock certificates now?

A:

No. After the merger is completed, you will receive written instructions for exchanging your stock certificates, including shares you may hold in "street name" or represented by book entry, for the merger consideration of $30.00 in cash, without interest and less any applicable withholding tax, for each share of common stock you hold.

Q:    Will the merger be taxable to me?

A:

Generally, yes. A U.S. holder (as defined in "The Merger—Material U.S. Federal Income Tax Consequences" beginning on page 56) who receives cash in exchange for shares of our common stock pursuant to the merger generally will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received and the holder's adjusted tax basis in the shares of our common stock surrendered. A non-U.S. holder (as defined in "The Merger—Material U.S. Federal Income Tax Consequences" beginning on page 56) generally will not be subject to U.S. federal income tax on any gain realized in the merger unless the non-U.S. holder has certain connections to the United States or we are or have been a "United States real property holding corporation" for U.S. federal income tax purposes and the

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non-U.S. holder owns or has owned (actually or constructively) more than 5% of our common stock at any time during the five years preceding the merger.

You should read "The Merger—Material U.S. Federal Income Tax Consequences" beginning on page 56 for a more complete discussion of the material U.S. federal income tax consequences of the merger to U.S. and non-U.S. holders. Because individual circumstances may differ, holders of our common stock are urged to consult their own tax advisors as to the specific tax consequences to them of the merger.

Q:    Am I entitled to Dissenters' Rights?

A:

Yes. You may dissent from the merger and obtain payment of the "fair value" (as defined in Washington law) of your common stock instead of receiving $30.00 per share of Company common stock pursuant to the terms of the merger agreement. To do this, you must strictly follow the procedures prescribed by Washington law, which are summarized under "Dissenters' Rights" beginning on page 64. The "fair value" of your shares (as defined in Washington law) may be more or less than the merger consideration.

Q:    Who can answer any questions I may have about the special meeting or the merger?

A:

If you have more questions about this proxy statement or the merger, if you need assistance in submitting your proxy or voting your shares or if you need additional copies of the proxy statement or the enclosed proxy card, you should contact Innisfree M&A Incorporated at 501 Madison Avenue, New York, NY 10022, or by calling (888) 750-5884.

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SUMMARY

         This summary highlights selected information from this proxy statement and may not include all of the information that may be important to you. To fully understand the proposed merger, and for a more detailed description of the terms and conditions of the merger and certain other matters being considered at the special meeting, you should carefully read this entire proxy statement, its annexes and the documents referred to in this proxy statement that we have filed with the United States Securities and Exchange Commission. We have included page references parenthetically in this summary in order to direct you to a more detailed description of each topic represented in this summary.

Parties to the Merger (Page 24)

Puget Energy, Inc.
10885 NE 4th Street, Suite 1200
Bellevue, Washington 98004
(425) 462-3300

        Puget Energy is an energy services holding company incorporated in the State of Washington. All of its operations are conducted through its subsidiary, Puget Sound Energy, Inc., which we refer to as PSE, a utility company incorporated in the State of Washington. PSE furnishes electric and gas service in a territory covering approximately 6,000 square miles, principally in the Puget Sound region of the State of Washington.

Puget Holdings LLC
Level 22, 125 West 55 ^th Street
New York, New York 10019
(212) 231-1000

        Puget Holdings LLC (formerly named Padua Holdings LLC), which we refer to as the Parent, is a Delaware limited liability company. The Parent was formed solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. It has not conducted any activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement.

Puget Intermediate Holdings Inc.
Level 22, 125 West 55 ^th Street
New York, New York 10019
(212) 231-1000

        Puget Intermediate Holdings Inc. (formerly named Padua Intermediate Holdings Inc.), which we refer to as Puget Intermediate, is a Washington corporation and a wholly owned subsidiary of the Parent. Puget Intermediate was organized solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. It has not conducted any activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement.

Puget Merger Sub Inc.
Level 22, 125 West 55 ^th Street
New York, New York 10019
(212) 231-1000

        Puget Merger Sub Inc. (formerly named Padua Merger Sub Inc.), which we refer to as Merger Sub, is a Washington corporation and a wholly owned subsidiary of Puget Intermediate. Merger Sub was organized solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. It has not conducted any activities to date other

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than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement.

        The current direct and indirect owners of the Parent, and through the Parent, Puget Intermediate and Merger Sub, consist of a consortium of infrastructure funds and institutional investors led by Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board and British Columbia Investment Management Corporation, and also includes Alberta Investment Management, Macquarie-FSS Infrastructure Trust and Macquarie Capital Group Limited (we refer to the owners collectively as the Investor Consortium).

Macquarie Infrastructure Partners

        Macquarie Infrastructure Partners A.L.P., a Delaware limited partnership, Macquarie Infrastructure Partners International, L.P., a Delaware limited partnership, and Macquarie Infrastructure Partners Canada, L.P., an Ontario limited partnership, which we refer to collectively as MIP, each headquartered in New York, are diversified unlisted funds focusing on infrastructure investments in the United States and Canada. The majority of MIP investors are U.S. and Canadian institutions such as public pension funds, corporate pension funds, endowments and foundations and Taft-Hartley (Union) funds. MIP has 11 investments which include its investment in the Company, a stake in Aquarion Company, a regulated New England water utility, a stake in Duquesne Light Company, a regulated electric utility in Pittsburgh, a stake in a U.S. wireless tower operator, two Canadian port terminals and interests in four toll roads in the United States and one in Canada.

Canada Pension Plan Investment Board

        Canada Pension Plan Investment Board, which we refer to as CPPIB, invests the funds not needed by the Canada Pension Plan, which we refer to as CPP, to pay current benefits on behalf of approximately 16 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of assets, CPPIB invests in publicly-traded stocks, private equities, real estate, inflation-linked bonds, infrastructure and fixed income securities. Based in Toronto, CPPIB is governed and managed independently of CPP and at arm's-length from governments. At December 31, 2007, the CPP Fund totaled Cdn $119.4 billion, including Cdn $2.6 billion in infrastructure investments.

        CPPIB's infrastructure interests include: (i) AWG Plc., whose key business is Anglian Water Services, a regulated water and sewage business in the South East of England; (ii) Transelec S.A., which is the leading electrical transmission company in Chile, serving more than 98% of the population; and (iii) Wales & West Utilities, a regulated gas utility in the U.K. (a Macquarie Group-led transaction).

British Columbia Investment Management Corporation

        British Columbia Investment Management Corporation, which we refer to as bcIMC, is based in Victoria, B.C. and was created by legislative act of the B.C. provincial government to invest funds on behalf of government bodies and designated institutions. bcIMC manages in excess of Cdn $83 billion across asset classes and invests on behalf of public sector pension plans, the Province of British Columbia, provincial government bodies including Crown corporations and institutions, and publicly administered trust funds.

        bcIMC's Strategic Investment and Infrastructure Program focuses on acquiring and holding tangible infrastructure assets seeking to generate strong returns and cash yields over the long term. The Strategic Investment and Infrastructure Program is globally focused, holds assets in North America, Latin America and Europe, and as of March 31, 2007 is valued at in excess of Cdn $2.3 billion. bcIMC, on behalf of public sector pension plans and a government insurance fund for whom it invests, has formed Padua Investment Trust for the purpose of acquiring securities of the Company for the

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Strategic Investment and Infrastructure Program. Padua Investment Trust acts through its trustee, 6860141 Canada Inc., a wholly owned subsidiary of bcIMC.

Alberta Investment Management

        Alberta Investment Management, which we refer to as AIM, based in Edmonton, Alberta, is one of the largest public sector asset managers in Canada, with $78 billion in assets under management as of October 31, 2007. AIM manages capital for public sector pension plan and government endowment fund clients across a wide variety of asset classes. Alternative investments include private equity, real estate, timberland, and infrastructure. AIM has made infrastructure investments and investment commitments of approximately $1.5 billion and has significant investment experience in the regulated energy and utility sectors. Infrastructure investments are made on a long-term basis, and the portfolio is diversified across sector and geography, including investments in North America, Europe, Asia, and Australia.

Macquarie-FSS Infrastructure Trust

        Macquarie-FSS Infrastructure Trust, which we refer to as MFIT, is an unlisted Australian infrastructure trust managed by Macquarie Specialised Asset Management Limited (Manager). The investment objective of MFIT is to make investments in a diversified range of infrastructure assets and related assets. MFIT currently holds interests in five assets (including its investment in the Company) across sectors including communications infrastructure, vehicle inspection, electricity, and water infrastructure in three countries: the United States, Spain, and the United Kingdom.

Macquarie Capital Group

        The Macquarie Capital Group is a diversified international provider of specialist investment, advisory, trading and financial services in select markets around the world with over $200 billion of total assets under management (as of September 30, 2007). The Macquarie Capital Group comprises Macquarie Capital Group Limited and its direct and indirect subsidiaries and the funds (and similar vehicles) managed by such subsidiaries. MIP and MFIT are managed by members of the Macquarie Capital Group.

        The Macquarie Capital Group is an operating group of Macquarie Group Limited, which we refer to as MGL. MGL is the holding company for a group of businesses (one of which is the Macquarie Capital Group) that we refer to herein as the Macquarie Group. MGL is listed on the Australian Securities Exchange.

        MGL and its worldwide affiliates manage more than $50 billion in equity invested in infrastructure and essential service assets around the world through a range of listed and unlisted vehicles. Infrastructure investments managed by the Macquarie Group include investments in the energy, utility, water, telecommunications and transportation sectors around the world.

Structure of the Merger (Page 68)

        At the effective time of the merger, Merger Sub will merge with and into the Company. As a result of the merger, the separate corporate existence of Merger Sub will cease, and the Company will continue as the surviving corporation and as an indirect wholly owned subsidiary of the Parent. Following completion of the merger, there will be no public market for shares of our common stock and our current shareholders (other than, indirectly, the members of the Investor Consortium) will cease to have any ownership interest in the Company or rights as Company shareholders. Therefore, the current shareholders of the Company (other than, indirectly, the members of the Investor Consortium) will not participate in any post-merger earnings or growth of the Company and will not benefit from any post-merger appreciation in value of the Company.

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Merger Consideration (Page 68)

        If the merger is completed, each shareholder (other than shareholders who properly exercise their dissenters' rights and Puget Holdings and the wholly owned subsidiaries of the Company and Puget Holdings) will receive $30.00 in cash, without interest and less any applicable withholding tax, in consideration for each share of Company common stock that such shareholder owns.

        After the merger is completed, you will have the right to receive the merger consideration, but you will no longer have any rights as a Company shareholder. The Company's shareholders (other than shareholders who properly exercise their dissenters' rights and the Parent and the wholly owned subsidiaries of the Company and the Parent) will receive the merger consideration after surrendering their stock certificates or shares represented by book entry in accordance with the instructions contained in the letter of transmittal to be sent to our shareholders shortly after the closing of the merger.

When the Merger Will Be Completed

        We plan to complete the merger as soon as reasonably practicable, subject to receipt of necessary regulatory approvals and the approval of our shareholders. Although we cannot predict the exact time of the merger's completion, we expect to complete the merger in the second half of 2008. We cannot predict when regulatory review will be completed, whether regulatory or shareholder approval will be received or the potential terms and conditions of any regulatory approval that is received. In addition, other factors outside of our control could require us to complete the merger at a later time or not to complete it at all.

Board of Directors' Recommendation (Page 38)

        Our Board of Directors has unanimously determined that the merger is advisable and in the best interests of the Company. The Board unanimously recommends that our shareholders vote FOR approval of the merger agreement.

Opinion of Our Financial Advisor (Page 42 and Annex B)

        Morgan Stanley & Co. Incorporated, which we refer to as Morgan Stanley, delivered its opinion to our Board of Directors that, as of the date of its opinion and based upon and subject to the assumptions, qualifications and limitations set forth therein, the merger consideration of $30.00 in cash per share to be received by holders of our common stock pursuant to the merger agreement was fair from a financial point of view to such holders.

        Morgan Stanley addressed its opinion to our Board of Directors and the opinion of Morgan Stanley does not constitute a recommendation as to how any of our shareholders should vote with respect to the merger agreement or as to any other action that a shareholder should take relating to the merger. The full text of the written opinion of Morgan Stanley, dated October 25, 2007, which sets forth the matters considered and assumptions made in connection with the opinion, is attached as Annex B to this proxy statement and incorporated herein by reference. We recommend that you read the opinion carefully.

        Morgan Stanley will receive a fee of $15 million from us for its services pursuant to an engagement letter. Of such amount, $5 million was payable upon public announcement of the merger agreement, $5 million will be payable upon approval of the merger agreement by our shareholders and $5 million will be payable upon closing of the merger.

        Morgan Stanley also received a fee from us for its services pursuant to an engagement letter we entered into in connection with the stock purchase agreement (described below). Pursuant to that engagement letter, upon the closing of the share issuance, we paid to Morgan Stanley approximately

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$2.6 million, which is 0.875% of the aggregate value of the consideration paid for the shares of Company common stock issued.

Interests of the Company's Directors and Executive Officers in the Merger (Page 48)

        The Parent has informed us of its intention to retain members of our existing management team with Puget Energy (as the surviving corporation in the merger) after the merger is completed. In addition, all performance shares, restricted stock, restricted stock units and stock options will become vested to the extent not already vested and will be paid out in cash upon completion of the merger. Mr. Reynolds will receive a benefit upon completion of the merger and other of our executive officers may receive severance benefits in the case of certain terminations of employment or constructive discharges following the merger, pursuant to the terms of their employment and change of control agreements that were in place prior to the execution of the merger agreement. Our directors and executive officers will be indemnified by Puget Energy as the surviving corporation in the merger and will be covered either by our existing directors' and officers' insurance policy (or similar substitute policy) for a period of six years following the merger or by a six-year extended reporting period endorsement under our existing directors' and officers' liability insurance. See "The Merger—Interests of the Company's Directors and Executive Officers in the Merger" beginning on page 48.

Stock Purchase Agreement (Page 53)

        At the same time that the Company entered into the merger agreement, the Company and nine of the Parent's direct or indirect members, Macquarie Infrastructure Partners A, L.P., Macquarie Infrastructure Partners International, L.P., Macquarie Infrastructure Partners Canada, L.P., Padua MG Holdings, Inc., Macquarie FSS Infrastructure Trust, CPP Investment Board (USRE II) Inc., 6860141 Canada Inc. in trust for Padua Investment Trust, PIP2PX (PAD) Ltd. and PIP2GV (PAD) Ltd. (which we refer to collectively as the Purchasers), entered into a Stock Purchase Agreement, dated as of October 25, 2007, which we refer to as the stock purchase agreement, pursuant to which the Company agreed to issue to the Purchasers 12.5 million shares of Company common stock and the Purchasers agreed to pay $23.67 per share. On December 3, 2007, the Company and the Purchasers completed the sale of 12.5 million shares of Company common stock for an aggregate purchase price of $295,875,000. The Purchasers may vote these shares at the special meeting and have advised the Company that they intend to vote these shares in favor of the merger.

        The Company intends to use the proceeds from this issuance to invest in PSE for capital expenditures, debt redemption and working capital.

        You are not being asked to approve or take any other action in connection with the stock purchase agreement at the special meeting.

Material United States Federal Income Tax Consequences (Page 56)

        The receipt of cash by a U.S. holder (as defined in "The Merger—Material U.S. Federal Income Tax Consequences" beginning on page 56) in exchange for shares of our common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, a U.S. holder who receives cash in exchange for shares of our common stock pursuant to the merger will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received and the holder's adjusted tax basis in the shares of our common stock surrendered. A non-U.S. holder (as defined in "The Merger—Material U.S. Federal Income Tax Consequences" beginning on page 56) generally will not be subject to U.S. federal income tax on any gain realized in the merger unless the non-U.S. holder has certain connections to the United States or we are or have been a "United States real property holding corporation" for U.S. federal income tax purposes and the non-U.S. holder owns or has owned (actually or constructively) more than 5% of our

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common stock at any time during the five years preceding the merger. See the discussion under "The Merger—Material U.S. Federal Income Tax Consequences" beginning on page 56.

        The foregoing is not a complete analysis of the potential tax considerations relating to the merger and is not tax advice. Therefore, holders of our common stock are urged to consult their own tax advisors as to the specific tax consequences to them of the merger.

Regulatory Approvals and Filings (Page 59)

        As a condition to each party's obligation to consummate the merger, we and the Parent must obtain approvals, consents or waivers from, or make filings with a number of United States federal and state public utility, antitrust and other regulatory authorities including (i) the Department of Justice and the Federal Trade Commission pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976; (ii) the Federal Energy Regulatory Commission under the Federal Power Act; (iii) the Federal Communications Commission under the Communications Act of 1934, as amended by the Telecommunications Act of 1996, (iv) the Committee on Foreign Investment in the United States pursuant to the Exon-Florio Amendment to the Defense Production Act, and (v) the Washington Utilities and Transportation Commission, which we refer to as the WUTC. We intend to make all filings and submittals by the end of the first quarter of 2008. Although we believe that we will receive the required consents and approvals necessary to complete the merger, there can be no assurance as to the timing of these consents and approvals or as to our ultimate ability to obtain such consents or approvals (or any additional required consents or approvals which may otherwise become necessary) or that such consents or approvals will be obtained on terms and subject to conditions satisfactory to us and the Parent. If additional approvals, consents and filings are required to complete the merger, we contemplate that such consents, approvals and filings will be sought or made.

Treatment of Stock Options and Other Awards (Page 68)

        At the effective time of the merger, each outstanding option to acquire shares of Company common stock issued under our equity compensation plans and arrangements, all of which options are vested and exercisable, will be converted at the effective time of the merger into the right to receive, less any required withholding taxes, a payment in cash equal to the product of the excess of the merger consideration or, if higher, the average of the last sale prices of our common stock on the New York Stock Exchange over each of the 20 business days preceding the effective time, over the per share exercise price for such options, multiplied by the number of shares of our common stock previously subject to such option.

        Each award outstanding immediately before the effective time that was granted under any program maintained by the Company to provide for grants of equity-based awards (including each share of restricted stock, and each restricted stock unit, stock equivalent and performance share, but excluding stock options) will be converted at the effective time into the right to receive, less any required withholding taxes, a payment in cash equal to:

•

the merger consideration or, if higher, the average of the last sale prices of the Company common stock on the New York Stock Exchange over each of the 20 business days preceding the effective time, multiplied by



•

for awards other than performance shares, the total number of shares of Company common stock that would be issuable upon the lapse of restrictions or the full vesting of the awards and, for performance shares, the higher of the total number of shares of Company common stock that would be issuable upon the achievement, for each outstanding award cycle, of (i) the target performance level for the applicable cycle and (ii) the performance measures that the Company had achieved for the applicable cycle during the period commencing upon the starting year of such cycle and ending with the fiscal quarter immediately preceding the effective time, plus

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•

the amount of dividend equivalents associated with the number of shares determined as described above.

Procedure for Receiving Merger Consideration (Page 62)

        As soon as practicable after the effective time of the merger, a paying agent mutually designated by the Company and the Parent will mail a letter of transmittal and instructions to shareholders whose shares are in certificate form. The letter of transmittal and instructions will tell you how to surrender your common stock certificates in exchange for the merger consideration. Please do not return your stock certificates with the enclosed proxy card, and please do not forward your stock certificates to the paying agent without a letter of transmittal .

        No action is required by you if the shares you own are in book-entry form. The paying agent will automatically issue a check to you after the effective time of the merger.

Solicitation of Acquisition Proposals (Page 75)

        During the period through December 10, 2007, we conducted a "go shop" process, during which we initiated, solicited and encouraged acquisition proposals for the Company (including by way of providing information). During the "go shop" period, the merger agreement permitted us to enter into and maintain discussions or negotiate with respect to acquisition proposals for the Company, or otherwise cooperate with or assist or participate in or facilitate any inquiries, proposals, discussions or negotiations with respect to any such acquisition proposal with parties other than the Parent. Our Board of Directors determined that no proposal was received during the "go shop" period that could reasonably be expected to result in a proposal more favorable to our shareholders than the merger. The merger agreement provides that after December 10, 2007, we are generally not permitted to (i) solicit, initiate or knowingly encourage (including by way of furnishing information except information relating to the existence of these provisions), or take any other action designed to facilitate, directly or indirectly, any inquiries or the making of any proposal or offer with respect to a merger, reorganization, tender offer, share exchange, consolidation or other transaction (x) relating to the direct or indirect acquisition or purchase of 20% or more of the assets of the Company and our subsidiaries, on a consolidated basis, or to which 20% or more of our revenues or earnings on a consolidated basis are attributable, or (y) that would result in a person beneficially owning 20% or more of our equity securities, in each case, other than by the Parent or Merger Sub or (ii) participate in any discussions (except as to the existence of these provisions) or negotiations relating to any acquisition proposal or acquisition transaction.

        Notwithstanding these restrictions, under certain circumstances, our Board of Directors may, if required to comply with its fiduciary duties, before the merger agreement is approved by our shareholders, respond to an unsolicited bona fide written acquisition proposal, withdraw or modify its recommendation or terminate the merger agreement and enter into an acquisition agreement with respect to a superior proposal, so long as we comply with certain terms of the merger agreement, including, if required, paying a termination fee.

Conditions to the Merger (Page 80)

        The Company and the Parent are obligated to effect the merger only if the following conditions are satisfied or waived:

•

our shareholders have approved the merger agreement;



•

no injunction or other governmental order restraining or prohibiting the merger is in effect; and



•

the Company and the Parent have received the required statutory approvals, which have become final orders.

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        In addition, the Parent will not be obligated to effect the merger unless the following conditions are satisfied or waived:

•

we have performed in all material respects our agreements and covenants under the merger agreement;



•

our representations and warranties are true and correct, except to the extent certain inaccuracies would not constitute a material adverse effect, as of October 25, 2007 and the closing date in the manner described under "The Merger Agreement—Conditions to the Merger" beginning on page 80;



•

we have delivered a certificate signed by one of our executive officers with respect to the satisfaction of the conditions relating to our representations, warranties, covenants and agreements;



•

no Company material adverse effect has occurred and is continuing;



•

we have received the consents of third parties required by the merger agreement;



•

the review and investigation of the merger under the Exon-Florio Amendment to the Defense Production Act of 1950, which we refer to as the Exon-Florio Amendment, has been terminated and either the President of the United States or the Committee on Foreign Investment in the United States (or other authority that may become authorized to so act), as the case may be, shall have determined to take no action authorized thereunder;



•

we have received the required company statutory approvals, which have become final orders that do not, individually or in the aggregate, (i) impose terms, conditions, liabilities, obligations, commitments or sanctions upon us, the Parent or members of the Investor Consortium or any of their respective affiliates, taken individually or as a whole, that would reasonably be expected to have a material adverse effect on an entity otherwise identical to the Company and its subsidiaries, taken as a whole, but having only 50% of the business, assets, liabilities, properties, financial condition and operations of the Company and its subsidiaries (with the adverse effect of any such terms, conditions, liabilities, obligations, commitments or sanctions on the Parent, the members of the Investor Consortium or any of their respective affiliates imposed by the final order considered in the determination of a material adverse effect as if such adverse effect had been imposed on the Company), or (ii) impose any term, condition, liability, obligation, commitment or sanction on any member of the Investor Consortium or any of their respective affiliates that would require the divestiture of any asset, property or company that is not regulated by the WUTC, and that would be material for a company the size of the Company or that would restrict the Parent or such member's or affiliate's ability to exercise its rights of ownership with respect to its investment in the Parent or the Company following the merger;



•

we have delivered an opinion from outside counsel with respect to certain matters;



•

shareholders of no more than 10% of the outstanding Company shares have exercised their right to dissent; and



•

the administrative agents under certain of our credit facilities have provided us with a "payoff" letter regarding the repayment of such credit facilities.

        We will not be obligated to effect the merger unless the following conditions are satisfied or waived:

•

the Parent and Merger Sub have performed in all material respects their agreements and covenants under the merger agreement;

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•

the Parent's and Merger Sub's representations and warranties are true and correct, except to the extent certain inaccuracies would not constitute a material adverse effect, as of October 25, 2007 and the closing date in the manner described under "The Merger Agreement—Conditions to the Merger" beginning on page 80;



•

we have received a certificate signed by an executive officer of the Parent with respect to the satisfaction of the conditions relating to their representations, warranties, covenants and agreements; and



•

we have received an opinion from outside counsel of the Parent with respect to certain matters.

Termination (Page 82)

        The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time, whether before or after the special meeting, as follows:

•

by mutual written consent of the Company, the Parent and Merger Sub;



•

by either us or the Parent if:



•

there is a state or federal law or regulation adopted that has the effect of prohibiting the merger, or a final and non-appealable order, judgment or decree enjoining or otherwise prohibiting the merger;



•

the merger has not been consummated by October 25, 2008, or, if certain regulatory approvals have not been received but all other conditions to closing are fulfilled or capable of being fulfilled, April 30, 2009; or



•

our shareholders do not approve the merger agreement at the special meeting (including any adjournment thereof);



•

by the Parent if:



•

we breach any of our representations and warranties or if any representation or warranty becomes untrue and incapable of being cured prior to the effective time of the merger, or any breach of any covenant or agreement, such that a condition to the Parent's obligation to consummate the merger would not be satisfied, and such breach or condition is not curable or, if curable, has not been cured within 30 days after our receipt of notice of such breach; or



•

our Board of Directors (or any committee thereof) (i) withdraws or modifies in any adverse manner its approval or recommendation of the merger agreement or the merger, (ii) approves or recommends or enters into an agreement for any acquisition of the Company or any material portion of its assets or any tender offer by a party other than the Parent or an affiliate of the Parent, or (iii) resolves to take either of the aforementioned actions, or if we breach in any material respect any of our obligations with respect to the solicitation of acquisition proposals and such breach has not been remedied within ten business days after our receipt of notice of such breach; and



•

by us if:



•

the Parent or Merger Sub breaches any of their representations and warranties or if any representation or warranty becomes untrue and incapable of being cured prior to the effective time, or any breach of any covenant or agreement, such that a condition to our obligation to consummate the merger would not be satisfied, and such breach or condition is not curable or, if curable, has not been cured (i) within ten business days after receipt by the Parent of notice of such breach relating to the Parent, Merger Sub or, subject to certain

15

exceptions, members of the Investor Consortium seeking to acquire any regulated electric or gas distribution utility in the State of Washington that would present a significant risk of materially delaying or making it materially more difficult to obtain, the approval of the WUTC, or (ii) within 30 days after receipt by the Parent of notice of any other such breach;

•

we choose to terminate the merger agreement in connection with an acquisition proposal from a third party; or



•

the stock purchase agreement is terminated or the parties to the stock purchase agreement otherwise fail to consummate the transactions contemplated thereby upon the satisfaction or waiver of all conditions to consummate the transactions contemplated thereby and the Company exercises this right to terminate within five business days of the termination of the stock purchase agreement or the failure to so consummate (however, the transactions contemplated by the stock purchase agreement were consummated on December 3, 2007).

Termination Fees and Expenses (Page 83)

        We have agreed to pay to the Parent (i) a termination fee of $30 million if the event giving rise to the termination is based on the submission of an acquisition proposal by a party from whom the Company has received a bona fide written acquisition proposal prior to the end of the "go shop" period that our Board of Directors determines in good faith constitutes, or could reasonably be expected to result in, a superior proposal (which determination was not made by our Board at the end of the "go shop" period), or (ii) a termination fee of $40 million in all other instances, if the merger agreement is terminated under the following circumstances:

•

by the Parent (a) because our Board of Directors has withdrawn or modified its approval or recommendation of the merger or the merger agreement, or has approved or recommended an agreement for an alternative acquisition of the Company or a material portion of its assets, or (b) because we have breached any of our obligations with respect to the solicitation of acquisition proposals and such breach has not been remedied within ten business days;



•

by us in connection with our decision to pursue an acquisition proposal from a third party;



•

by the Parent or by us because either (i) the Company's shareholder approval has not been obtained at the special meeting or (ii) the merger has not been consummated by October 25, 2008 (which date will be extended until April 30, 2009 if certain regulatory approvals are not received but all other conditions to closing have been fulfilled or are capable of being fulfilled), if at the time the merger agreement is so terminated an acquisition proposal for the Company has been made by a third party and not withdrawn at least ten business days prior to the date the merger agreement became terminable in the case of clause (i) or at least 30 calendar days before the date the merger agreement became terminable in the case of clause (ii) and we subsequently enter into a definitive agreement regarding the acquisition proposal, become a subsidiary of the person making an acquisition proposal or consummate a transaction relating to such acquisition proposal within twelve months, in the case of an acquisition proposal made by any party that executed a confidentiality agreement and received information regarding the Company during the term of the merger agreement, or within three months in the case of any other party; or



•

by the Parent because there has been a breach of the merger agreement by the Company that is not cured within 30 days, if at the time the merger agreement is so terminated an acquisition proposal for the Company has been made by a third party and not withdrawn at least ten business days prior to the date the merger agreement became terminable and we subsequently enter into a definitive agreement regarding the acquisition proposal, become a subsidiary of the person making an acquisition proposal or consummate a transaction relating to such acquisition

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proposal within twelve months, in the case of an acquisition proposal made by any party that executed a confidentiality agreement and received information regarding the Company during the term of the merger agreement, or within three months in the case of any other party.

        In addition, if the merger agreement is terminated because of our breach, we have agreed to pay the Parent an amount equal to all documented out-of-pocket expenses and fees incurred by the Parent and its members, not in excess of $15 million. In the event that a fee is paid in connection with such termination, the fee will be reduced by the amount of the expenses payment. In addition, if the merger agreement has been terminated and a fee is payable by us, we have agreed to pay the Parent an amount equal to all documented out-of-pocket expenses and fees incurred by the Parent and its members, not in excess of $10 million.

        The Parent has agreed to pay us a business interruption fee of $130 million if we terminate the merger agreement due to a breach by the Parent or Merger Sub of any of their representations and warranties or if any of their representations or warranties becomes untrue and incapable of being cured prior to the effective time, or if they breach any of their covenants or agreements, in each case such that a condition to our obligation to consummate the merger would not be satisfied, and such breach or condition is not curable or, if curable, has not been cured within a specified time. Contemporaneously with such termination, in satisfaction of the business interruption fee, we will be entitled to immediately withdraw from an escrow account funded by the members of the Parent at the time we entered into the merger agreement (established pursuant to the Escrow Agreement dated as of October 25, 2007 by and among the Company, the Parent and The Bank of New York, as Escrow Agent, and which we refer to as the Escrow Agreement) an amount equal to the business interruption fee. The business interruption fee will only be payable if at the time of such termination there is no state of facts or circumstances (other than a state of facts or circumstances caused by a breach of the Parent's or Merger Sub's representations and warranties or covenants or agreements under the merger agreement) that would cause the conditions to the Parent's and Merger Sub's obligation to consummate the merger not to be satisfied or capable of satisfaction (and a condition shall be deemed to be not capable of satisfaction, to the extent such condition has not been or could not be satisfied on or prior to the date of termination of the merger agreement due to a breach of a representation, warranty, covenant or agreement thereof, if such breach is either (x) not curable or (y) if curable, is not cured within 30 days after the earlier of (1) receipt by the Company of notice of such breach in writing from the Parent and (2) the date of termination of the merger agreement).

        If the Parent pays the business interruption fee, the payment of the fee is our sole and exclusive remedy against the Parent, Puget Intermediate or Merger Sub with respect to the facts and circumstances giving rise to such payment obligation. In addition, none of us, the Parent or Merger Sub, other than pursuant to any agreement to which it is a party, has a right of recovery against, and no liability shall attach to, any former, current or future shareholder, director, officer, employee, general or limited partner, member, manager, affiliate, agent or assignee of us, the Parent or Merger Sub.

Specific Performance and Damages (Page 84)

        The Parent and Merger Sub are entitled to specific performance of the terms of the merger agreement. The Company, on the other hand, is only entitled to limited rights to seek an injunction or injunctions to prevent breaches of the merger agreement by the Parent or Merger Sub that would cause irreparable harm or to enforce specifically certain terms and provisions of the merger agreement. However, in no event shall the Company be entitled to any injunction or specific enforcement of the terms of the merger agreement requiring the Parent or Merger Sub to consummate the merger or prohibiting the Parent or Merger Sub from failing to consummate the merger.

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        The liability of the Parent and Merger Sub arising out of or relating to any breaches of the merger agreement is limited to an amount equal to the amount of the business interruption fee.

Market Price of Our Stock (Page 86)

        Our common stock is listed on the New York Stock Exchange under the symbol "PSD." On October 25, 2007, which was the last trading day before we announced the merger agreement, the closing price of our common stock was $23.95 per share. On February 14, 2008, which was the latest practicable trading day before the printing of this proxy statement, the closing price of our common stock on the New York Stock Exchange was $26.82 per share.

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