Puget Energy: Price Drop On No News

Lately the price of PSD has dropped as much as 10%. If this was a regular market, that could mean something, but we are not in a regular market – it’s still driven by fear and emotions.

The status of the merger has not changed one bit from my last post. There have been no new publicly announced press releases, but some interesting filings with the Washington Utility and Transportation Commission (WUTC) may be of interest.

Recall that I wrote about how the final reply briefs had to be submitted by October 23,2008. Well, there were plenty of submissions and responses. I’ll provide a brief look at what’s been going on.

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Filings On October 23, 2008

Conclusion of the reply briefs submitted by PSD

  • The members of Puget Holdings have demonstrated a long-term commitment to
    PSE and its customers.
  • Puget Holdings’ commitment to PSE goes beyond financial support.
  • Puget Holdings has worked closely with other stakeholders in this process and has earned the support of almost all parties to this proceeding.
  • Only Public Counsel fails to recognize the benefits of the Proposed Transaction.
  • The supporting parties have divergent interests and goals, yet they have acknowledged that the Proposed
    Transaction is in the public interest, and they have supported the Multiparty Settlement Stipulation.

Conclusion of the reply briefs submitted on behalf of Commission Staff from Donald T. Trotter

  • Proposed transaction meets the Commission’s “no harm” standard
  • Commission should grant the Application according to the terms and conditions int he Settlement Stipulation
  • Commission should reject Public Counsel’s opposition to the transaction

Filings On October 24, 2008

Conclusion of the reply briefs submitted by the Public Counsel

  • Requests the Commission find the proposed transaction as described in the Settlement Stipulation is not in the public interest

Filings On October 28, 2008

Conclusion of Commission Staff Motion to Strike Portions of Public Counsel Reply Brief from Donald T. Trotter

  • The Commission Staff requests that several paragraphs from the Public Counsel’s reply brief be striked out
  • Public Counsel reply brief seeks to include additional information which should not be considered as it does not comply with the proceedings

Conclusion of Puget Holdings Motion to Strike Portions of Public Counsel Reply Brief

  • Much the same as the Commission Staff’s motion to strike. The Public Counsel only seeks to delay the proceedings

Filings On October 31, 2008

Conclusion of response from Public Counsel Opposition to Motions to Strike Portions

  • Citing late-breaking news in a brief is not ordinary procedure, for good reason. This is not an ordinary situation, however, and the rules provide the Commission the discretion and flexibility to address it.
  • Joint Applicants and Staff unreasonably ask the Commission to disregard developments that have occurred since the filing of the initial briefs, as they initially sought to do with events between the hearing and the initial briefs. Their position has been that the record should remain as it was at the end of August. Public Counsel does not agree that the Commission should operate in such a vacuum.

Filings On November 5, 2008

Conclusion of Granting Motions to Strike by the Commission

  • The Commission already has reopened the record once at Public Counsel’s request to allow him to introduce materials similar for the most part to what he seeks to introduce here.
  • The material he introduced then was of marginal relevance and cumulative to evidence already in the record which illustrates that financial markets in the U.S. and worldwide currently are volatile.
  • There is nothing compelling about what Public Counsel seeks to introduce.
  • Contrary to Public Counsel’s suggestion, the Commission is not “operating in a vacuum” in this regard, but is fully aware of current events.
  • The Commission grants Staff’s and Joints Applicants’ respective motions to strike.

Filings On November 11, 2008

Denying Public Counsel’s Motion Challenging Confidentiality

This filing is in response to the Public Counsel’s challenge to the Commission that it did not abide by the confidentiality codes.

  • Considering this, and the fact that Public Counsel challenges the confidential designation of all of the information highlighted in Mr. Hill’s testimony, we find Public Counsel’s motion deficient on its face.
  • THE COMMISSION DENIES the “(Corrected) Public Counsel Motion Challenging the Confidentiality of Certain Materials Provided in Discovery by Joint Applicants.”


It’s evident that the Public Counsel’s purpose is to delay the merger. They have been unable to provide any real argument and all their challenges have been met with denials.

All parties affected by the merger have agreed that the merger is in the best interest of the public except the Public Counsel. Even the commission staff has expressed that the merger meets all standards and it should be approved.

The only conclusion I can come up with is that hedge funds are selling their positions as they try to deleverage. Don’t be fooled that the market is efficient in the short term.

My estimated holding period of 1 week was way off. I’ve held PSD shares for 1 month now, but considering a nice gain is still available and the stability it is providing for my portfolio, I don’t mind holding for 1 more month.


I hold shares of PSD at the time of this writing.

The current price looks pretty good to me but I won’t be adding as I’ve already doubled down and am pretty overweight with this one.

[tags]PSD, merger, UTC, arbitrage, Special Situations[/tags]

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