About 75% of operating profit derives from monopoly regulated distribution business. Regulated tariffs are set to 2007, and should provide stable cash flow over that period. Financial cash flow protection measures are strong. Retail operating margins are being squeezed owing to increasing competition. Energy purchases in the wholesale market expose operating cash flows to price volatility. The ratings on the Dutch energy distribution group, Eneco Holding N.V. and its subsidiary ENECO N.V. (collectively ENECO Energie), reflect its stable operating cash flows from its monopoly energy distribution businesses and conservative financial policy. These strengths are offset, however, by increasing competitive pressures and the potential exposure of cash flow to volatile wholesale electricity prices. ENECO Energie is the third-largest distribution company in
