SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Exhibit 10.39

PUGET SOUND ENERGY, INC.

SUPPLEMENTAL EXECUTIVE

RETIREMENT PLAN

Amended and Restated

Effective January 1, 2009

Table of Contents

PUGET SOUND ENERGY, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

As Amended and Restated Effective January 1, 2009

1.1   Establishment.   This Supplemental Executive Retirement Plan (the "Plan") was originally effective as of June 1, 1997 (the "Effective Date").  The Plan was previously amended and restated effective October 5, 2004 and February 24, 1999.  The Plan is now amended and restated effective for all amounts earned or vested on or after January 1, 2009.  Any Retirement Benefit earned and vested prior to January 1, 2005 shall be paid in accordance with and subject to all of the terms and conditions of the Plan as in effect on December 31, 2004 and to the extent provided by this amendment and restatement.  Any Retirement Benefit earned or vested from January 1, 2005 through December 31, 2008 shall be governed by this amendment and restatement, as modified by the operations of the Plan during such period in accordance with Code Section 409A and then applicable IRS pronouncements (including transition relief).  No amendment to the Plan on and after January 1, 2009 is intended to, nor shall it be deemed to, apply to other than the applicable terms and conditions of the Plan in effect prior to January 1, 2005 unless expressly provided by such amendment.

1.2   Purpose.   The Plan is intended to be an unfunded plan for purposes of providing supplemental retirement income to a select group of management and highly compensated employees, and as such, it is intended that the Plan be exempt from Parts 2 through 4 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended.  The Plan is not intended to satisfy the qualification requirements of Code Section 401(a).

2.1   Definitions.   When used herein, the following terms shall have the meanings set forth below:

(a)   "Actuarial Equivalent" means a benefit payable at a particular time and in a particular form and manner and which has the same value as the benefit which it replaces.  For purposes of lump sum payment calculations, such determination shall be made using the mortality table and interest rate prescribed by the Commissioner of Internal Revenue for purposes of Code Section 417(e)(3)(A) in effect on the date as of which the present value is being determined (based on the applicable interest rate or rates for the September immediately preceding the first day of the Plan Year).  For purposes of annuity payment calculations, such determination shall be made using the following actuarial assumptions:  (i) interest rate at eight percent (8%) per annum compounded annually; and (ii) participant mortality rate pursuant to the 1984 Unisex Pensioners Mortality Table.

(b)   "Affiliate" means any corporation, employer, trade, business, or other entity that, together with the Company, is treated as a single employer under Code Section 414(b) or (c).

(c)   "Beneficiary" means the individual, trust or other entity designated by the Participant who, upon the Participant's death, may receive the payment of the Retirement Benefit to the extent provided in Section 4.2(f).  All Beneficiary designations shall be in writing and on a form prescribed by the Committee for such purpose, and any such designation shall only be effective if and when delivered to the Committee during the lifetime of the Participant.  The Participant may from time to time change a designated Beneficiary or Beneficiaries by filing a new beneficiary designation form with the Committee.  In the event the Participant shall fail to designate a Beneficiary or Beneficiaries, if such designation is ineffective, or if no designated Beneficiary survives the Participant, any payment then due to the Participant shall be paid to the Participant's estate.

(d)   "Board" means the Board of Directors of the Company and includes any individual or entity to which such Board has delegated authority to act with respect to the Plan.

(e)   "Change of Control" has the meaning set forth in the Company's Benefits Protection Trust with respect to the Plan.

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

(g)   "Committee" means the Compensation and Leadership Development Committee of the Board and includes any individual or entity to which such Committee has delegated authority to act with respect to the Plan.

(h)   "Company" means Puget Sound Energy, Inc. or any successor thereto.

(i)   "Date of Termination" means the date the Participant ceases to be employed by the Company or any of its Affiliates.  In no event shall the Date of Termination be earlier than the Participant's "separation from service" within the meaning of Code Section 409A.

(j)   "Deferred Compensation Plan" means the nonqualified "Puget Sound Energy Deferred Compensation Plan for Key Employees," as amended from time to time, or any successor thereto.

(k)   "Disability" means a physical or mental condition that entitles the Participant to benefits under the Company's group long-term disability plan.

(l)   "Early Commencement Date" means the date on which Retirement Benefits commence prior to the Normal Commencement Date and shall be the later of the date elected by the Participant in accordance with Section 4.2(c) and his or her Date of Termination.  In no event may the Early Commencement Date occur prior to the Participant attaining age 55.

(m)   "Earnings" means the base salary and annual bonus paid to the Participant by the Company and its Affiliates, before any deferrals or reductions under a Code Section 401(k) plan, a Code Section 125 cafeteria plan or a nonqualified deferred compensation plan, but excluding long-term incentive compensation.  A bonus will be included in Earnings in the year in which it is paid to the Participant, or in which it would have been paid had it not been deferred.  Amounts paid after the Participant ceases to be an active Participant in the Plan shall not be taken into account.

(n)   "Effective Date" has the meaning set forth in Section 1.1.  The effective date of this amendment and restatement is January 1, 2009.

(o)   "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

(p)   "Frozen Retirement Benefit" means the monthly "Retirement Benefit" to which the Participant would have been entitled as of the Normal Commencement Date (or, if applicable, the Early Commencement Date) if the Participant had voluntarily terminated services without cause on December 31, 2004 and received a payment of the benefits available from the Plan in such form with the maximum payment value (after taking into account the Participant's age as of the actual Date of Termination and the benefit offsets calculated under Sections 3.2(a)(i) through (iv) as of the applicable commencement date under the terms of the Plan as in effect on December 31, 2004).  Notwithstanding the foregoing, the Frozen Retirement Benefit may increase to equal the present value (using reasonable actuarial assumptions) of the Retirement Benefit to which the Participant actually becomes entitled, at the time and in the form actually paid, determined under the terms of the Plan in effect on October 3, 2004 without regard to any further services rendered by the participant after December 31, 2004 or to any other events affecting the amount of or the entitlement to benefits (other than the Participant's election with respect to the time or form of an available benefit).  The calculation of the Frozen Retirement Benefit shall be consistent in all respects with Treasury Regulation Section 1.409A-6(a)(3)(i).

(q)   "Highest Average Earnings" means the average of the Participant's highest three calendar years of Earnings.  The three calendar years do not have to be consecutive, but they must be among the last 10 complete calendar years completed by the Participant prior to the Date of Termination (with the calendar year in which the Date of Termination occurs counting as a complete calendar year) and on or after January 1, 2000.  If the Participant completes less than three complete calendar Years of Service prior to the Date of Termination, then the average shall be computed by adding together the Participant's monthly Earnings for all of the calendar months during which the Participant was employed by the Company or any of its Affiliates, dividing the result by the number of months in such period, and multiplying that result by 12.

(r)   "Specified Employee" means a "key employee" (as defined in Code Section 416(i) without regard to Code Section 416(i)(5)) of the Company.  For purposes of the Plan, a Participant is a key employee if he or she meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding Code Section 416(i)(5)) at any time during the 12-month period ending on an identification date.  If a Participant is a key employee as of an identification date, he or she is treated as a Specified Employee for the 12-month period beginning on the first day of the fourth month following the identification date.  The Committee may designate any date in a calendar year as the identification date provided that it uses the same identification date with respect to all arrangements, and any change to the identification date may not be effective for a period of 12 months.  If no identification date is designated, the identification date is December 31.  The Committee   may prospectively designate an identification date through a separately adopted document.

(s)   "Normal Commencement Date" means the first day of the month immediately following the Participant's Date of Termination or, if later, the first day of the month on or immediately following the date on which the Participant attains age 62.

(t)   "Participant" means one of a select group of management personnel or highly compensated employees designated by the Committee to participate in the Plan.  A Participant shall automatically cease to accrue additional benefits under the Plan at the time the Participant ceases to be a member of management or a highly compensated employee, as determined by the Committee.  In addition, the Committee may revoke the active participation (and discontinue the benefit accruals) of any Participant at any time and for any reason.  Notwithstanding the foregoing, in no event shall the revocation of a Participant's active participation in the Plan (or the cessation of additional benefit accruals under the Plan) reduce the Retirement Benefit previously accrued by such Participant prior to such revocation or cessation.

(u)   "Participant Year of Service" means a Year of Service performed while a Participant under the Plan or under such other predecessor plans or agreements that the Committee shall designate.

(v)   "Plan" means this "Puget Sound Energy, Inc. Supplemental Executive Retirement Plan," together with any amendments hereto.

(w)   "Plan Year" means the consecutive 12-month period beginning each January 1 (or in the case of the first Plan Year, beginning on the Effective Date) and ending the following December 31.

(x)   "Retirement Benefit" means the benefit to which the Participant is entitled under Article III at the Normal Commencement Date.

(y)   "Retirement Plan" means the "Retirement Plan for Employees of Puget Sound Energy, Inc."

(z)   "Section 409A" means Code Section 409A, as clarified or modified by regulations and pronouncements from the U.S. Department of Treasury or the Internal Revenue Service.

(aa)   "WNG Nonqualified Retirement Benefits" means the nonqualified pension benefits provided under an employment agreement between the Participant and Washington Energy Company or Washington Natural Gas Company.

(bb)   "Year of Service" means 12 consecutive months of employment with the Company or its Affiliates, or with Washington Energy Company or Washington Natural Gas Company.  No month of employment shall be counted in more than one Year of Service.

2.2   Number; Headings.   Except when otherwise indicated by the context, the definition of any term in the singular shall also include the plural.  Headings of Articles and Sections herein are included solely for convenience, and if there is any conflict between such headings and the text of the Plan, such text shall control.

3.1   General.   A Participant whose employment with the Company and its Affiliates terminates (or is terminated) for any reason other than death after completing five Participant Years of Service shall be entitled to receive a Retirement Benefit as of the Normal Commencement Date.  A Participant whose employment terminates or is terminated (voluntarily or involuntarily) by the Company and its Affiliates prior to completing five Participant Years of Service shall not be entitled to any Retirement Benefit or other payment or benefit under the Plan.

3.2   Change of Control.   Notwithstanding Section 3.1, a Participant whose employment with the Company and its Affiliates terminates (or is terminated) after a Change of Control shall be treated as completing five Participant Years of Service as of the Date of Termination regardless of the Participant's actual Participant Years of Service.

3.3   Disability.   If a Participant suffers a Disability while employed by the Company or its Affiliates, then for purposes of Section 3.1, the Participant Years of Service shall be determined as if the Participant remained employed until the Normal Commencement Date (or Early Commencement Date if the Participant elects to commence Retirement Benefit as of such date) or the end of the Participant's Disability, whichever is earlier.  If the Participant is reemployed after the Participant's Disability ends, then for purposes of Section 3.1, the Participant Years of Service shall be determined by adding the Participant's period of employment following rehire to the period determined in accordance with the preceding sentence.

4.1   Amount.

(a)   General .  The benefit payable under the Plan is the Retirement Benefit.  The "Retirement Benefit" equals the umbrella benefit calculated in accordance with subsection (b) below.  The portion of the Retirement Benefit that consists of the Frozen Retirement Benefit is subject to all of the terms and conditions of the Plan as in effect on December 31, 2004 or any earlier date as applicable, including those regarding the time and form of distributions, without regard to any changes in this amended and restated Plan.  The remainder of the Retirement Benefit is subject to the terms and conditions of this amended and restated Plan.

(b)   Umbrella Benefit .  The umbrella benefit for purposes of subsection (a) above is the monthly amount payable for the life of the Participant commencing as of the Normal Commencement Date equal to the amount described in clause (i) below minus the sum of clauses (ii), (iii), and (iv) below.