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Through our experiences, we have come to the conclusion that competition is driven by two 

 forces that affect the ultimate price paid by energy customers. 



The first is the force of increased competition that has driven prices down and required 

 companies to become better managers and more efficient organizations. Almost all energy 

 producers are addressing these issues. 



The second force is the increased cost of doing business which has required ratepayer funds 

 to be applied to environmental compliance activities, fish and wildlife protection programs, 

 increased taxes, user fees, permits and other regulatory requirements. 



This situation has placed all energy providers on a collision course with a competitive 

 marketplace. On one side, we face higher costs mandated by social and environmental 

 expectations. And on the other side, we are squeezed by a reduced supply, a demand for 

 lower prices and more competition imposed by both market forces and the moves toward 

 deregulation contained in the 1992 National Energy Policy Act. 



While it is popular to talk about the forces of competition, energy customers must know that 

 what they will eventually pay for energy is the cumulative affects of competition and 

 increased regulation. Utilities are not going to make these costs go away, so our challenge is 

 to manage both sides of this difficult equation. 



The ability to make the tough decisions in this difficult environment will make the difference 

 between success and failure — for both public and private energy providers. 



At the same time, we must share on a broader scale in the competitive position of our region 

 and the resulting economic impact on employment and quality of life for the citizens of the 

 Northwest. In other words, both private and public utilities must increasingly share the 

 responsibilities for the energy needs and public policy issues of the region. 



