Rising to the Challenge 2001 brought with it a number of chal- lenges, and we responded to them by focusing on those things that are most important in our business—build- ing new relationships, maintaining financial strength, expanding our first-class infrastructure, and providing excellent service. In short, we responded by doing what we do best: we excelled in the fundamentals of our business while executing our carefully crafted, deliber- ate strategy for meeting challenges and turning them into opportunities. Building New Relationships Washington Water Service Company made great strides in 2001, growing its regulated cus- tomer base by 10%. In California, we were awarded a utility billing contract in Stockton and the opportunity to negotiate a 15-year water system operating agree- ment with the City of Commerce, which we currently operate under a short-term agreement. 2001 also saw us renew an old partnership, as we entered into a con- tract to provide water quality testing services to San Jose Water Company. Maintaining Financial Strength A tough regulatory climate, signifi- cantly higher electricity costs, and lower water usage due to cooler weather made maintaining our financial strength a challenge in 2001, but it was a challenge we tackled with determination. A company-wide cost con- Providing excellent service