Washington Energy and Puget Power announce merger proposal filed with state utilities commission.

SEATTLE--(BUSINESS WIRE)--Feb. 20, 1996--Puget Sound Power & Light Co. today joined Washington Natural Gas and its parent company, Washington Energy Co., in formally asking the Washington Utilities & Transportation Commission to approve the companies' proposed merger.

Approval by the commission, which regulates the utility operations of the companies, is a requirement before the merger can be completed.

Puget Power and Washington Energy Co. announced merger plans on Oct. 18, 1995, following unanimous approval by their boards of directors.

The new company formed by this strategic merger of equals would serve 840,000 electric and 475,000 natural gas customers (including an overlap of 250,000 customers for both types of energy), within a service territory covering approximately 6,000 square miles in western Washington state. The merger also has been submitted for approval to the companies' shareholders, who will vote in separate meetings on March 20, 1996.

In today's filing, the companies outlined a number of potential benefits from the commission's approval of the companies' merger plan, including:

-- lower costs and therefore lower prices over the long term than could be achieved if the companies operated independently. For example, the companies are proposing a five-year period of rate stability (Jan. 1, 1997, to Dec. 31, 2001). General rates for natural gas would remain unchanged over the five years, while those for electricity would increase by 1 percent in the first four years and remain unchanged in 2001.

These increases would be more than offset by an anticipated electric rate decrease of about 5.6 percent in 1997 due to elimination of Puget Power's periodic rate adjustment mechanism (PRAM).

-- expanded choice for customers. As a combined company without bias toward either electricity or natural gas, the new company will be able to increase efforts to build customer awareness of both gas and electricity and enable informed choices that can help consumers reduce their energy costs by using resources efficiently.

-- high quality of service. The overlapping service territories provide a unique opportunity to coordinate and integrate many operations of two energy distribution businesses, which should result in enhanced customer service. The companies are backing up their commitment to high-quality service by proposing to create a quality service guarantee, to be designed over the next two months in cooperation with customers, the commission staff and the Attorney General's Office of Public Counsel.

-- environmental benefits, achieved by facilitating fuel- switching where appropriate; designing and sizing distribution systems in an integrated manner, thereby eliminating some electric system upgrades that would otherwise be necessary; and allowing service facilities to be combined.

-- a financially stronger company than either Puget Power or Washington Energy Co. would be on a stand-alone basis.

The companies asked the commission to expedite the review process and approve the merger during the second half of 1996. Puget Power serves customers in Island, Jefferson, King, Kitsap, Kittitas, Pierce, Skagit, Thurston and Whatcom counties. Washington Natural Gas serves customers in King, Snohomish, Pierce, Thurston and Lewis counties.

CONTACT: MEDIA:

Puget Power

Kristen Wappler, 206/462-3744

or

Washington Energy

Bob Adams, 206/521-5100

or

INVESTORS:

Puget Power

Earl Dunn, 206/462-3808

or

Washington Energy

Lori Wile, 206/224-2193