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options for how energy supplies are acquired and used. 



Utilities faced competition they had never seen before. Competitive 

 forces became even more important with last year's enactment of the 

 Energy Policy Act, which incudes provisions that revamp the Public Utility 

 Holding Company Act and the transmission access sections of the Federal 

 Power Act. 



In response to this newly competitive marketplace, we developed a 

 competitive strategy of being a low-cost energy provider. We reduced 

 costs, cut prices and adopted innovative approaches to acquiring and 

 managing our generating, transmission, and conservation resources. 



Our approach to resource acquisition became less institutional and 

 more market driven. We work with other utilities on operating 

 agreements that enable us to use existing resources more efficiently and 

 effectively as well as through our power exchange and resource 

 management agreements with utilities in Colorado and Arizona. We 

 develop new projects in partnership with other utilities, as we are doing 

 with wind projects in Washington and Wyoming; we are talking with 

 independent power producers, and we work with our own customers, on 

 both cogeneration and demand-side resource opportunities. 



Our merger with Utah Power is an excellent example of our response 

 to competitive pressures. Through our merger we have taken advantage of 

 seasonal diversity, economies of scale, expanded transmission and 

 administrative efficiencies to achieve over $350 million in savings. 



The beneficiaries in this approach are our customers because we are 

 seeking the lowest-cost options. We have a solid record of cost control. 

 In fact, we have been in a position to actually decrease prices to our 

 customers over the past six years. We think our strategy of being a low- 

 cost provider, cutting costs and streamlining our decision making process 

 to take advantage of marketplace opportunities is in sync with where 

 energy markets are headed. 



