138 



Now the transmission system monopolies for bulk power sales 

 that we just described that BPA has, and to some extent, some of 

 the private utilities are better positioned than others, like our- 

 selves. That is also disappearing. That comes as a result of the ag- 

 gressive legislation in the 1992 Energy Policy Act that is really 

 opening up wholesale power transactions and good action by BPA 

 and others to open up some of their utility monopoly-type positions 

 on interstate transmission through this Act and through the Third 

 AC participation that was described earlier. 



PGE has had a variety of experiences, both good and bad, with 

 the forces of competition. And through these experiences, we have 

 come to the conclusion that they are driven by two forces today and 

 that is what affects the ultimate price paid by energy consumers. 



The first is the fact there is increased competition. It is driving 

 prices down, requiring all of us to be better managers and make 

 our organizations most cost efficient. All organizations across the 

 country in this business are addressing these issues. 



The second force is the increased cost of doing business, which 

 has required ratepayer funds, public and private, to be applied to 

 environmental compliance activities, fish and wildlife protection 

 programs, increased taxes, user fees, permits and a variety of regu- 

 latory requirements. 



This situation places us energy providers on a collision course 

 with a competitive marketplace. On one side, we face higher costs 

 mandated by social and environmental expectations; on the other 

 side, we are squeezed by a reduced supply in the region and a de- 

 mand for lower prices and more competition as a result of federal 

 policy in that regard. 



Bonneville is caught in the same identical situation. Some of 

 their customers want access to lower-cost, independent power that 

 bears no social costs of fish and wildlife mitigation and a variety 

 of other things. It is lower but it does not have the same costs that 

 Bonneville had to undertake to do the programs that are both man- 

 dated by the regional council and federal policy and their own will 

 to provide the right kind of protection of our environment in the 

 Pacific Northwest. 



While these forces are at work, we, the managers of the energy 

 corporations, are trying to deal with it. And our costs are not going 

 to go away unless we make them go away. And we are going to 

 have to manage both sides of this difficult equation. It makes it 

 very tough. In other words, private and public utilities are sharing 

 the same issues today for the energy needs of our customers and 

 tr3dng to deal with the public policy issues of good stewardship of 

 our region and our rivers and our fish. 



I said a moment ago that we had good and bad experiences with 

 competition. You know, investor-owned utilities can share their 

 war stories. We have our own. It is not easy telling 51,000 stock- 

 holders they will not be paid their full dividends in 1989 and they 

 were reduced. It is not easy completing a year-long internal man- 

 agement review and releasing 10 percent of our employees, ap- 

 proximately 300, in 1990. It is not easy closing your largest gener- 

 ating plant and laying off 1,000 highly trained, educated employees 

 in January of this year. A nuclear plant that comprised 50 percent 

 of the tax base of a rural county and 60 percent of the funding for 



