美國電力 (AEP) 2009 Q3 法說會逐字稿

Ladies and gentlemen, thank you very much for standing by, and welcome to the third quarter 2009 earnings conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given to you at that time.

(Operator Instructions)

Also as a reminder, today's conference is being recorded.

I would like to turn the conference over to your first speaker, Mr. Chuck Zebula. Please go ahead.

Thank you, Operator. Good morning, and thank you for joining us today to discuss AEP's 2009 third quarter earnings. If you have not seen the press release issued earlier today, it's available on our web page at AEP.com. In addition to the financial schedules included in the press release, the webcast of this call will include charts and graphics referred to by AEP management during the call. An investor information packet is also available at AEP.com, that includes the consolidated balance sheet as well as full income statements for each of our business segments.

The earnings release and other matters that may be discussed in the call today contain forward-looking statements, and estimates that are subject to various risks and uncertainties. Please refer to the SEC filings, including the most recent annual reports on Form 10-K and quarterly reports on Form 10-Q for a discussion of the factors that may cause results to differ from management's forecasts and expectations.

Also on the call we will discuss measures about the Company performance, that is ongoing earnings versus reported earnings, that differ from those recognized by GAAP. You can find the reconciliation of these non-GAAP measures on the investors page of our website at AEP.com.

I will now turn the call over to Mike Morris, Chairman, President, and CEO of the Company for opening remarks, followed by our CFO, Brian Tierney, who will discuss the financial results for the quarter. Then we'll have time for your questions.

Mike?

Thanks, Chuck, and thanks to all of you for being here.

I know this is a busy earnings day, as is frequently the case. I'm going to touch on the very first page of the slide presentation, then we'll have Brian do five pages. That seems fair to me, I do one, he do five, since he's our new CFO. I know some of you have met him, and this will be an opportunity for you to meet him telephonically for the first time for some of you. We look forward to seeing you all next week at the EEI get together down in Florida.

So I think as Chuck already mentioned and you've seen in the press release, the third quarter of 2009 was a very solid quarter for the American Electric Power Company of families. It took a tremendous amount of hard work and lot of discipline, and some pretty substantial regulatory treatment as the quarter unfolded. If you look at the 2009 year-to-date GAAP earnings and compare them to a year ago, we're still in awfully good shape. And I think it really is reflective of something that we've talked to you all about for a long, long time. 2006, 2007, 2008, and 2009, we continued to have very solid regulatory treatment.

And I really owe a dead of gratitude to the regulators, who continue to see the steps that AEP is taking through various operating companies, not only to the benefit of its customers, but also to the benefit of the communities and the air quality of those places where we do a great deal of business. All in all, that regulatory relationship, which you have heard me talk about now incessantly for a series of years, has proven to be what we've always thought that it could be. In fact, if I tally up the rate reviews and looked at what we asked for versus what was approved, we're in the almost 80% range. That has a lot to do with the honesty of filing a rate case that's predicated on facts and predicated on needs, rather than predicated on hopes and wishes. So you'll see us continue that process as we go forward. I'll talk a bit about 2010 at the bottom of this slide and share some thoughts and views about the regulatory needs along that line, as well.

I'm really pleased to be able to tighten our earnings range by cutting off the bottom half, and really focusing you in on the upper edge of what we think we can accomplish between $2.90 and $3.05. That, again, talks to the solidness of the performance of the men and women of American Electric Power, not only for the third quarter but for the entire year here in 2009. Some very interesting activities going on. I know you all know the Ohio Energy Security Plan has been a good undertaking. It was a reasonable and balanced order that was issued by the Commission, and it continues to be challenged by a number of players, particularly some of our industrial customers in the Office of Consumer Council in front of the Ohio Supreme Court. We have every reason to believe that the balance was that issued in that order by the PUCO will continue to carry the day. We had our actual first meeting of the SEET update, the substantial excess earnings test, and it went reasonably well. It was an open conversation of all the Ohio utilities and the Commission staff. I see no horizon, no cloud on the horizon, that would worry us about that test, as we explained that to many of you as Senate Bill 221 was being signed into law by the Governor.

If you look at the combined rates of return on equity of our AEP Ohio companies, they're in the low double-digit range. We think that's surely well within the definition that's included in Senate Bill 221, and we expect that the Commission will view some of these issues as generic, and some of them specific as to the four operating utilities here in the State of Ohio. So is I know it's on everyone's mind, and rightfully so, but its something that we're not overly concerned about.

We continue with successful construction of our John W. Turk plant; not that it matters to many of you, but it matters a great deal to us, the namesake of that plant unfortunately passed away two days ago, and some of our members will be going to his services today. But more importantly, the Turk plant continues to go forward. The significance of an ultra-supercritical coal plant being brought on line in the United States should not go unnoticed as we continue to look at carbon and carbon issues and global warming issues. This will be the first ultra-supercritical coal plant built in this country. It will be the highest energy factor of any coal production facility, and it is moving along swimmingly.

Two issues that you're very familiar with. One, those who would like not to see this plant come online are concerned about the air permit issued by the Arkansas authorities, and have appealed that. Interestingly enough, in their appeal they also sought a stay to the construction which is ongoing, notwithstanding the Court of Appeals on the certificate issued by the Arkansas Regulatory Commission; I'll touch on that in a moment. The Air Quality Board voted two weeks ago 10 to 3 to deny the stay, but to continue looking at the appeal. We take that as a very solid sign of what might be the ultimate vote on the appeal of the air permit, because uniquely enough in Arkansas, the appeal goes back to the issuing body. We don't want to read too much into that, as we know that the Air Evaluation Group will continue to do their work and do it diligently, but again we feel very comfortable about the way that that might turn out.

Equally important, I know you all remember that the Court of Appeals in Arkansas, I think inappropriately, decided that the Commission had not followed the Arkansas legislature, as they issued the permit, the certificate of need for both the plant and the transmission system that would take power to the grid, for the Turk station. That was appealed to the Arkansas Supreme Court, which is the court of first review after the appeal, and the issue is, like the Federal Supreme Court, a petition requesting them to consider. The Arkansas Public Service Commission was the [mover] and we joined them in that regard, and last week we were pleased to hear that the Arkansas Supreme Court decided to take the case up.

Again, that is no sign that we might prevail at the end of the day, but it is a sign that they find this being a meritorious endeavor, and if you remember the brief filed by the Commission, it spoke to the notion they have been doing certificates along those lines for an extended period of time in compliance with the Arkansas legislative process. So we feel pretty good about that, as well. Now all we have to do is win the case in front of the Supreme Court, which is no small task, but one we think we're prepared for.

As to our DC Cook Unit 1 activities, I'm proud to tell you that we continue with a fourth quarter online forecast. This has been a tremendous undertaking for the men and women of American Electric Power, and those who have been helping us from the outside. We're encouraged by all that we see, and see no roadblocks between now and bringing Unit 1 back online. Unit 2 continues to perform as we expected that it would, and we've been very pleased with the overall performance of our nuclear units out at the DC Cook station.

Lastly, and I guess most importantly because you, like we, are all beginning to focus forward, we need to talk a little about what we see in 2010. Brian will give you some granularity on what we think retail sales look like. You all know me to be an optimist, and I believe that we are beginning to see some uptick in industrial demand, and some balancing out of commercial residential. As you will remember, we are a pretty major export-oriented industrial customer load, and if the rest of the countries around the world continue to uptick as we think China and some others are, that may portend reasonable news for us in 2010.

2010 will also be a year, I expect, that Congress will finally wrestle to the ground the issue you of how the United States will address the global warming approach. We're encouraged by what we see out of the House on Waxman-Markey. We're a bit discouraged by part of what we see coming out of Boxer-Kerry, but we think when you hear and read comments like Max Baucus made a couple of days ago, that there's still a lot of work to do there.

We have always tried to focus you in on what we think is the upside potential of a carbon bill, particularly as it pertains to the American Electric Power generation fleet, and we have no reason to believe that won't work in a very positive way. There are significant incentives for deploying technology, and I know all of you know tomorrow we will have quite a media event, at least, as we share with the world the performance of the Mountaineer carbon capture and storage project. Very proud of that, and very happy about the way that all of that is working. We'll continue at EEI and early on in 2010 to to share with you more about the pluses that we see in carbon legislation, and the challenges that we'll see in carbon legislation as well.

You know, reflecting back to the earlier comments I made about the stack of rate relief, remember coming into this year needing in $732 million worth of rate adjustments, and I'll comfortable that we'll actually exceed that goal by the end of 2009, 2010 is the first year that we probably have a very reasonable number. It looks like the rate cases that we'll file will seek about $330 million of rate adjustments throughout the entire 11-state fleet, and we already have about a third of that in hand. So I don't want our rate makers to think life is easy, but the fact of the matter is our needs are substantially less than they have been.

So with that, I'll close by simply saying very, very happy with our third quarter results, and quite honestly with the headwinds that have come to the Midwest and the utilities and the states that we serve, extremely proud of the performance of the AEP team for the entire year-to-date.

Brian, good luck on your maiden voyage.

Thank you very much, Mike.

The drivers of our performance this quarter are simple, and we have revised our presentation to reflect that simplicity. Be assured that all of the data you're accustomed to seeing in our information packet is still there, and we haven't changed the amount of detail you're used to seeing there.

I'll start by providing an overview of the quarterly results as compared to the year prior, followed by a discussion of the major drivers in the results. For this quarter, the key drivers of our changes are straightforward. They are improved rate relief as a result of the success of our operating Company model, and reduced retail load and off-system sales as a result of weather and the economic downturn.

On slide four, let's go to the overview. You will remember that the third quarter 2008 earnings were $0.93 a share, as Mike stated earlier. This year, despite some significant challenges in the economy, we've made $443 million compared to last year's $374 million; a 69 million, or 18%, improvement. We equaled last year's earnings per share of $0.93, reflecting our increased average share count. Comparing favorably to last year's quarter was $0.49 per share, or $302 million, in rate relief. This quarter's rate relief demonstrates once again, as Mike talked about, the success of our operating Company model. More detail on this later.

Also comparing favorably to last year's quarter was a reduction in O&M expenses, making a favorable impact of $0.08 a share or $50 million. This was driven by two major categories. First, a reduction in storm-related O&M. Thankfully there was no Hurricane Ike, like last year. And two, a reduction in maintenance expenses.

The downturn in the economy hit us in two primary areas, load contraction and off-system sales. Load contraction accounted for a negative $0.08 a share, or $47 million, versus last year. We'll take a deeper look at these trends later. The reduction in off-system sales accounted for an unfavorable comparison to last year of $22 million. This number was derived from a $226 million reduction from prior year's quarter, adjusted to reflect a proportional reduction in sharing of margins with retail customers of $90 million.

As if the economy wasn't help enough, weather accounted for an unfavorable comparison to prior year of $0.07 a share, or $42 million. In the last 30 years, this was the coolest third quarter for our Eastern utilities, and the fourth coolest third quarter for our Southwest power utilities. The addition of 69 million shares those the share count resulted in $0.17 of dilution compared to prior year, and the remaining $0.10 is attributable to other, including higher depreciation and amortization expenses.

Moving on to slide five, we'll take a deeper dive into the key drivers, starting with rate relief. As you've heard many times from this management team, the Company is committed to investing in our utility operating companies, where we can earn a reasonable return on our invested capital and recovery our prudently-incurred costs. On the left side of the chart, you can see the major sources of rate relief for the third quarter. Rather than coming from just one jurisdiction, you can see that the $302 million in rate relief came from multiple jurisdictions across the footprint. The chart on the right shows similar results, and a similar jurisdictional diversity for the year-to-date period.

Turning to slide six, we'll take a look at load contraction associated with the economy. The numbers and comparisons on this chart are weather-normalized to account -- to take out the account of weather, so we can focus on the economic impact. Looking at the top left of the graph, you can see that normalized for weather, residential load actually improved quarter on quarter by 1.1%, after having been in negative territory for the prior two quarters. Whether or not this will -- whether or not this improvement will continue, it's too early for us to tell.

In the chart on the top right-hand side of the page, you will see the commercial load has been relatively flat for the year, in spite of the difficult economy. This is a relatively good sign for us. In the bottom left-hand side of the chart -- of the slide, you'll see that industrial load is an important indicator of the economy in our service territories for us. These loads hit their bottom in the second quarter, and rebounded somewhat from that level in the fourth quarter. While the comparisons to prior year are still negative for our industrial class of customers, we are watching to see if the improvement observed in the third quarter continues. Overall, we are encouraged by the improvement in all three customer classes in the third quarter.

Slide seven shows that our top five industries accounted for 59% of our industrial sales in the third quarter. As you can see, three of the five industries have been relatively stable over the course of the downturn, while the remaining two show recent upticks, the most dramatic of these being primary metals. We have heard from some of our large industrial customers that they were getting orders to replenish inventories during this period.

Turning to to slide eight, you will quickly see why the third quarter of 2009 was a no-show for us as far as off-system sales was concerned. Due to the economic conditions, there wasn't much of a market to sell into. Round-the-clock prices were down 50% at the AEP Dayton hub, and down higher percentages for nearby hubs. AEP's off-system sales volumes were down 53% on the quarter.

On a positive note, the commercial operations group made significant contributions through their trading and marketing activities. There is some cause for optimism here. Looking at the around-the-clock forward pricing for next year, one could reasonably anticipate some measure of improvement.

In conclusion, we've had remarkable success in the third quarter in spite of a very, very challenging economy. It's within this framework that we are confident in adjusting our earnings forecast to the top half of our previously-stated range for 2009.

Thank you all for your time, and I'll turn it back to the Operator now for questions.

(Operator Instructions)

And our first question comes from Paul Patterson with Glenrock Associates. Please go ahead.

Good morning, guys.

Good morning, Paul.

Good morning. Just to summarize, weather versus normal, what was the impact on that again, would you say, year-to-date?

It was $0.07 for the quarter. The year-to-date is $0.05.

Versus normal?

Yes.

Okay. And then with respect to the industrial sales and just the economy, I mean you mentioned I guess that you're seeing a bit of improvement in the third quarter. What's your sense, I guess, when you're speaking to your customers and what have you as to what the outlook is, you know, for in next year or so? Can you give us any flavor for that, versus what you guys saw last quarter? You know, is this sort of an inventory replenishment situation, or is this something more long-lasting? What are your are senses for that?

And you would you also describe the impact of ratcheting, in terms of the fact that revenues sometimes lag these sales decreases because of the way the rate design is sort of set up with some of these industrial customers?

Yes, a couple of issues there, Paul. Obviously, we've spent a lot of time with and of our larger customers. The metal melders and some others are worried that they really were reacting to the Cash for Clunkers, and they weren't seeing an order book that kept them comfortable that they would have a very robust 2010. But they, in fact, are convinced that there is a growing need in the world market place for their products, so we're beginning to see some comfort in that.

When you talk to folks like Whirlpool and others, they clearly are building inventory, but believe that sales numbers have actually held relatively strong for white goods, which is a bit surprising, but most of it was inventory liquidation. Now they're building facilities to satisfy not only the inventory, but they're seeing a bit of light at the end of that tunnel as well. So, you know, it's so hard to forecast what 2010 industrial load will look like, but we do expect it will be better than what we experienced throughout 2009, and as you know, that's not not only important for us retail-wise, that's important for us for off-system sales, as we continue to see a bit stronger gas pricing as well as demand throughout the entire Eastern half of the United States will add some pull on our off-system sales in a positive direction.

As to the rate design, it really is kind of intriguing. I know that we have shared with all of you that notwithstanding some of the industrial energy reductions, the demand payments have stayed very strong. As it turns out, and we look at our 2010 numbers, we don't see a great decrease in that, because it's a rolling adjustment to the peak demands that people hit. And oddly enough, as we saw some of this third quarter activity, new peaks were established, demand very close to historic peak levels, so there shouldn't be much of a fall-off for that throughout calendar year 2010 as well, and we're somewhat encouraged by that.

Okay. Thank you.

Yes, you bet.

Thank you. Our next question comes from Paul Ridzon with Keybanc.

Hi, Paul.

Paul Patterson really asked my demand question, by you kind of restricted your comments to '10; are you implying that some of it could actually hit '11?

No, not at all. If we make it through '10 without a great dip, then we'll be in every bit as good shape by 20 -- I would like to think that by 2011, the world economy will be not roaring along, but moving along swiftly, and the U.S. economy following that in step.

And O&M for the year, we're now looking slight decrease versus flattish?

Yes, yes. We're still feeling comfortable about that. I think you all know that the mantra in utilities over a century has been if you don't spend it, you'll never get it again, but our team has learned a great deal of discipline, and we typically come in at the end of the year underspent on O&M, and I expect that's exactly what we'll see here for 2009.

Any update in Ohio on your proposals to not put in off-system sales into the SEET, and combining the two Ohio utilities?

Both issues that were discussed and will be discussed at the continuation of the SEET meetings. We still feel very comfortable about the approach that we're taking. We think it's fair and balanced and, again, as I said at the outset, the regulatory relationships that we have been able to establish over a period of years are a real treasure to us and for us, our customers and our shareholders. We're blessed with regulators that see tomorrow relatively clearly, and I think that's true of Ohio and many, many other jurisdictions where we do business. So worried, but surely not frightened by the meetings or the discussions.

Thank you very much.

You bet, Paul.

Thank you. And our next question comes from Dan Eggers with Credit Suisse.

Hey, Mike, just a follow up on the excess earnings test issue. You know, the hearings -- in the first round seem pretty quiet, as far as the people involved. What are the major push points you guys are hearing, and please remind us all on the timetable for the next wave of meetings, and any kind of timing for resolution on this?

Well, think if you will talk to Chairman Shriver, he would like to have resolution of this sometime in the first half of 2010 so that we all know what we're looking at. The push points are that, you know, the Office of Consumer Council and others here are arguing that they ought to be separated, and they ought to be much more restrictive in the calculations of what excess earnings are, but the law is relatively clear as to what the words are; as to what they mean, of course, will come out of this process.

It's been a very warm discussion, I would say, no animosity, everyone is trying to make their points. We will continue to meet with staff, and then ultimately with the Commission, and I expect they'll end up -- as I said, I expect they'll take some of this in a generic sense and then they'll look at FE separately, they'll look at AP separately, and Duke and Dayton as well, because we all have some nuances. I guess Dayton is a little out of the loop right now, but we all have some nuances.

So there aren't really any ugly pressure points that have been brought to bear, it's just so far a very constructive conversation about this is there, we need to find a resolution of it, so that we'll know how it affects utility investment and customer profiles going forward.

Okay. And I guess on the O&M cost savings you guys had in the quarter, on a run rate year-to-date, where are you guys from a sustainable O&M cost reduction, and how should we think about next year as far as what lingers on and what kind of inflation we should expect?

I would tell you next year will be a flat O&M kind of budget, and my team dies every time I say that. But as we have told you before, what we'll do and what we've done is continue to manage the O&M account in keeping with what revenues look like, and what happens in the marketplace, reacting as we must to things like Ike or others, which will probably come our way, and then adjusting to it as we go. Fortunately in almost all of our jurisdictions now, we have a very reasonable treatment for out of the ordinary storm accounts. We have a filing in Kentucky right now to defer and delay storm accounts that were pretty high in the first quarter this year. So I feel pretty comfortable about the way that we'll be able to manage that.

We're getting healthcare pressure and and a couple of other things, but we're reacting to it in what we think is a relatively favorable way. And inside of the regulatory envelope for 2010, we actually expect our coal costs to come down some. So when you think of overall rate treatment for regulators, you know, you may see a little uptick in some kind of an out of the ordinary O&M occurrence, while at the same time see that balanced by some dip in the cost of fuel. If you think of Oklahoma this year as a prime example, really very, very solid rate treatment here in the third quarter for PSO.

So rates go up for what we think is our basic core business, yet the customer saw a decrease because of the drop in natural gas prices. So we always try to balance those things out if we can. We'll be disciplined about O&M in 2010, you can rest assured of that.

And Mike, just to make sure I heard that right, you said earlier that a third of what you guys need for rate relief for 2010 is already in hand?

Yes, just about that number, Dan.

Okay. And the rate cases for the other two-thirds, how many of those have been filed at this point?

Two or three of them are in, and a couple more will be filed early on in 2010.

Okay. Thank you.

Yes, you bet. Thank you.

Thank you. And our next question comes from David Frank with Catapult Capital.

Good morning, Mike.

Good morning, David.

I had a question on the rate relief in Ohio on the quarter and the year. It's 320 year-to-date, it was 219 in the quarter. Is that usual? What are we looking for total rate relief in Ohio, and then what do we expect for the fourth quarter? It seems like it was a little chunky this quarter?

A lot of that has to do with the fuel accounts and the build-up off the deferred fuel as we go forward. The chunkiness will probably level out as we go forward. That is part of the intent, obviously, of the ESP. So I wouldn't build any [buy wave] thinking the fourth quarter is going to be a massive number. I expect it will level out some because we're really begins to see some flattening in the volume of coal, as the burns -- some of the industrial customers are coming back, so that's working to our advantage.

Okay. And do you have some kind of break-out between what portion of the 219 is fuel, and what is related to the base rate hike set under the ESP?

Well, we do in that -- but give a call into Betty Joe and her team. She can give you that granularity.

Okay, great. Thank you.

Our next question come from Hugh Wynne Sanford Bernstein.

Hi, Mike. I know you guys are very plugged into Washington, and I was wondering if we could have your views on what you expect to come out of Washington in the coming year from the EPA on the one hand around a replacement rule for the clean air interstate rule and the clean air mercury rule, and possibly regulation of CO2 as well? And then on the other, what if anything you see happening in the Congress?

Hugh, thanks for the question. That's really kind of interesting. We were encouraged by what we saw or heard at a pretty important meeting in Washington this week, where the principal people responsible inside of the EPA for the successor to the CARE mercury rule said something about they thought they would finally get their pieces in place for actual compliance by 2015, and then added that they thought the CO2 process, if the EPA becomes a determinant under the Clean Air Act, it would come about five years later. That gives Congress plenty of time get this stuff sorted out, and we're encouraged by that. We really are. I think Administrator Jackson has continually said, in fact testified this week, that she would much rather see, as most Washingtonians, including the White House admit, is a legislative reaction to this rather than a regulatory reaction to it.

Look, these are all technological issues. They are all solvable. They are not inexpensive, yet. It will still keep the existing coal [state] well in line in a price curve that you look at compared to new nuclear, compared to -- surely compared to renewables and many of the other options that our customers will have. As you know, the wildcard here is shale natural gas and what it price points are, combined cycle, natural gas at $5.00 or $6.00 an M is a very stiff competitor to our retrofitted coal fleet, so it will be interesting to see how that unfolds.

I think if you look at some of the work that Tony Haywood talked about this week with British Petroleum and their success with shale developments, it's interesting, but you hear Aubrey McClendon from Chesapeake saying, "My price points are north of some of the ones that the majors can demonstrate." So all of that will come into play as we go forward, and American Electric Power will react to that as it must. If retrofitting ultimately becomes more expensive, the new combined cycle gas plants, we'll approach our commissions for the appropriate retirement schedule for the existing fleet and replace it with what we think is a carbon-captured natural gas fleet going forward. So a lot of flexibility there.

As to Congress, I -- Senator Boxer has a way about her to aggravate a lot of her colleagues in her own party, in her own committee, and she's hard at doing that. I think Max Baucus made it clear he couldn't go on the 20%, that he absolutely couldn't go on a clean air bill not exterminating EPA's clean air law oversight. So there's a lot of work yet to go on in the Senate, and then of course you have to reconcile with the House. The testimony by the Chair of the South Dakota Commission was absolutely accurate. The allocations are reduced by Boxer-Kerry's bill; that cuts the wrong way for the Midwest. We had an opportunity to be with Senator Brown and other earlier this week. If they don't take care of those issue, they'll never get a bill out of the Senate.

Great, thanks Mike.

Yes, you bet, Hugh, thanks.

Thank you.

(Operator Instructions)

And our next question comes from Eric Beaumont with Copia Capital. Your line is open.

Mike, just warranted to touch real quick, you were talking about the demand payment, and obviously with the rolling average I understand how that works, and it's holding up. I was just curious, expectations for plant consolidations or closings, and do you see that having an impact going into '10?

Eric, I'm glad you asked that, because it's something I probably should have said. We haven't seen a great deal of plant closings, shut her down, walk away, and let the grass grow. As you know, we've seen a lot of cutbacks in how many hours plants run. You look at [Orem], the cutback in the number of pot lines they run, but we aren't seeing a great deal of our major electric customers just shutting facilities down.

So we take that as a reasonable sign that, again, if the world economy begins coming back, and we are clearly export-oriented, things might move in the right direction. I know that's very different from some of our colleagues in some other places. As you know, we're not as car dependent as some, and fortunately and of our car dependence are on the foreign national manufacturers, who have weathered this storm reasonably well.

And again, just to clarify, because it's generally a peak value, even if someone is running one shift, they're setting the peak, and if they went to three shifts really there's no impact with regards to demand payments?

As to demand payments, no, but as to energy payments, of course, and there's a margin on the energy as well.

Okay, great. Thank you.

Yes, you bet. Thanks.

And there are no further questions in queue. If you have any closing comments?

We do. Thanks to all of you for being here. I know you have a very busy day with all kinds of reports.

I think it's clear that AEP has distinguished itself among its colleagues. We continue to be optimistic about some of the things that we see, and we look forward to seeing you all next week when we put more granularity around what we hope 2010 might look like. Have a great day.

And thank you, ladies and gentlemen. This conference will be available for replay starting today at 11:00 a.m., and will run until November 5th at midnight. You may access the replay service by dialing 1(800) 475-6701, and entering the access code of 118042. You may also dial (320) 365-3844, and enter the access code of 118042. Those numbers again are 1(800) 475-6701 and (320) 365-3844, and enter the access code of 118042.

That does conclude your conference for today. Thank you very much for your participation, and for using the AT&T executive teleconference. You may now disconnect.