Avista Corp (AVA) 2002 Q2 法說會逐字稿

[Gap in audio] If you're dialing into today's conference call. If you should become disconnected throughout the conference, please dial 773-756-4801. We appreciate your understanding in this circumstance and apologize for any inconvenience this may have caused. At this time your lines have been placed in a listen-only mode until the question and answer session. Today's conference is being recorded on behalf of Avista. If you should have any objections, please disconnect at this time. I'd like to now turn the conference over to Mr. Dave Burkhardt [ph], chief communication officer and vice president of corporate relations and strategic planning. Sir, you may begin.

Thank you and good morning to Avista's second quarter 2002 earnings conference call. Avista's earnings were released premarket this morning. With me here today in our offices in Spokane are Gary Ely, Avista corp. chairman, president and chief executive officer, and Jon Eliassen, our senior vice president and chief financial officer. As we begin this morning's conference call, I will caution you that during today's conversation we will be making forward-looking statements that involve risks and uncertainties which are subject to change. I would direct you to Avista's latest forms 10-K and 10-Q filed with the SEC for reference to the various factors which could cause actual results to differ materially from those contemplated to the extent these factors are not discussed on this call. This morning Gary and Jon will talk about the forward progress Avista has made during the quarter, despite the ups and downs in the industry, as Avista continues to align and focus its strategies on improving the company's core energy businesses. At this time I will turn the conference call over to Avista chairman, president and CEO, Gary Ely for his opening remarks.

Thanks, Dave. I'm pleased to report that we have made significant progress towards restoring our company's financial health. Two critical areas have made this possible. First, the successful and early resolution of our Washington electric rate case, and second we've renewed important lines of credit for both Avista Corp. And Avista Energy. Jon Eliassen will talk more about this in a moment. One of our key second quarter accomplishments was approval of an all party settlement agreement by the Washington utilities and transportation communication, including Avista's general rate case. This agreement was finalized four months ahead of schedule, going into effect July 1st, rather than in November, and strengthens our financial standing. Under the terms of the agreement, electric price increases previously authorized for Avista's Washington electric customers totalling 31.2 percent, or 74 million dollars annually, will remain in effect. Of that amount, 46 million will contribute to earnings. The remainder will continue to recover deferred power costs over a period currently projected to extend through 2006. Another important issue that's been resolved in this rate order is the establishment of an energy recovery mechanism in Washington. The energy recovery mechanism allows Avista to adjust electric rates up or down over time to reflect changes in power supply related costs and avoid uncertainty over deferred account balances. Under the ERM, Avista will absorb or benefit from the first nine million dollars of annual energy cost differences above or below the amount included in base retail rates. 90 percent of the energy costs differences exceeding the initial nine million dollars will be deferred for later rebate or surcharge to the customers. The conclusion of the rate case, combined with the 196 million dollars of deferred costs we will recover through the interim and prudency electric rate settlement, plus this year's more normal stream flow in hydro generation conditions, have improved the financial health of our utility business. In fact, we have generated more power in the first six months of 2002 than we did during the entire year with last year's record drought conditions. Regarding governmental inquiries, our employees worked diligently in many cases around the clock to answer questions from and provide documentation to both the federal energy regulatory commission and the commodities futures trading commission regarding our energy marketing and trading practices and allegations of participating in the Enron related trading strategies at the utility. Our detailed record reviews continue to show that Avista Utilities and Avista Energy engage in sound business practices that are in accordance with established market rules. Within the next couple of weeks FERC is expected to provide an interim report to congress and Avista Utilities may be mentioned in it. We remain committed to working with these agencies to answer any remaining questions. Now turning to our power supply outlook. We suffered one set back in our effort to achieve [inaudible] Independence. Because of the transformer fire at our 280 megawatt county springs gas 2 turbine project we're now projecting the plant will go on line late in the fourth quarter of this year. Crews were able to immediately contain the damages associated with the fire and we expect no impacts beyond the delayed start-up date for the plant. Due to the delay at [inaudible] Springs 2 [phonetic] We've secured replacement power contracts to meet our utility customers needs and expect any impacts to be minimal. We are also working hard to protect our Montana Hydro generation asset from any seizure that could be allowed under the Montana [phonetic] Act or Initiative 145. It would create an independent public commission that would be empowered to study the economic feasibility of condemning and purchasing privately owned hydroelectric power resources such as Avista's Knox Rapids Dam [inaudible] It's Avista's only Montana hydro facility. This facility is capable of producing 550 megawatts. We remain strongly and actively committed to opposing this initiative. In July Avista was one of several Montana groups that joined taxpayers against initiative 145. And filed a legal complaint stating the initiative violates the state constitution. On an unregulated side of our business we're reporting a ninth consecutive profitable quarter for energy trading and marketing business. Avista Energy has strengthened its position in the current marketplace and is now at a sustainable size. While volatility levels are lower than last year, Avista Energy continues to deliver positive earnings. Our experienced team has accomplished these results by focusing on the west and optimizing our asset based trading around gas storage and long-term electric supply and transmission contracts. At Avista Advantage we continue to focus on our four major business components, improving margins, reducing fixed and variable costs, growing top line revenue, and maintaining customer satisfaction. While making the necessary adjustments in these four key areas, we've been able to consistently grow our client base. La Quinta Hotels, Shell Oil and the 24-Hour Fitness represents some of our newest clients. We targeted these specific clients because they're consistent with our long-term business strategy and focus and they appreciate the complete solution we provide. We continue to remove fixed costs from the business through management restructuring and refocusing on our core competent sis. Implementing both electronic bill receipt and payment technologies and restructuring our operations group into cross functional teams have allowed us to drive down the variable costs in our business. We are pleased with the developments at Avista Advantage and are committed to supporting and growing this business going forward. For a long time now Avista Corp. Had advocated and developed technology for the utility industry. It is rewarding to see customers and the entire industry benefit from the processes developed and marketed by Avista Advantage. We believe that the progress made by Avista Advantage through the first six months will continue throughout the year. At Avista Labs we have reached a milestone by establishing a distribution channel through an agreement with automated railroad maintenance systems. They will distribute the independent fuel cell product line for back-up power to the railroad industry. Also at Avista Labs has just received its sixth patent which covers 57 claims and provides Avista Labs with the rights to any modular fuel cell design that also has a power conversion system. An additional 21 patents are pending that cover various technologies related to fuel cell design and operation. We believe both the new distribution channel and the new patent increase the value of aft labs products and the value of this business as we continue to search for a suitable strategic partner. There are reasons to be satisfied with what we've accomplished during the second quarter of 2002. Yet given the public scrutiny under which corporate America finds itself today, we certainly understand there is no room for complacency. We remain vigilant in adhering to the guiding principles that are deeply rooted in the history of our company that spans more than a century. Every aspect of what we do is aligned with these principles. First and foremost, trust and integrity. We're managing our businesses, holding the line on costs and focusing on making the tough decisions that will allow Avista to weather the difficult times. The path to restored financial stability is the primary result of such diligence. For more on that, I'll hand things over to our senior vice president, chief financial officer, Jon Eliassen. Jon.

We have taken several significant strength to rebuild the company's financial strength improve our cash flow and continue to pay down debt. Before I get into specifics I would like to recap some of the important accomplishments so far this year. We have dramatically improved cash flow from operations which have supported the retirement of nearly 191 million dollars of debt securities through July. We've been able to access excess cash reserves from Avista Energy. Energy is actually declared dividends to its parent Avista capital of over 90 million dollars so far in 2002. We've successfully renegotiated all of our lines of credit and capital access facilities. As Gary mentioned the regulatory settlements we've reached are supporting the company's return to financial health while significantly reducing the risk of cost recovery going forward. Avista Utilities is completing additional generation and continues to move to generation independence, and the outlook for Avista's utilities continues to improve as we go forward and we have demonstrated improved earnings as well, a trend that will continue through this year. Compared to just a year ago, Avista has made substantial progress towards repositioning itself financially to continue to be a low cost, reliable supplier of energy to our wholesale and retail customers. Our banks recognize the steps we have taken when they renewed our 225 million dollars line of credit. In fact, the 225 million dollar credit facility represents an increase of five million from the previous credit line. Because of our improved financial position, we anticipate using this new credit facility only minimally for the balance of this year. We have also extended our accounts receivable program which provides us another forum of cost-effective short-term liquidity. We've made progress in reducing debt and restoring our debt to capital ratios to more comfortable levels. Since the beginning of this year, as I mentioned we retired nearly 190 million dollars of debt which significantly reduced interest costs going forward and eliminates a lot of the need to refinance much of the debt that would have matured in 2003. Avista Energy has also renewed its 110 million dollar uncommitted line of credit. This represents an increased level of funding and recognizes that Avista Energy has maintained and strengthened relationships with its banks. Avista Energy has effectively reduced its business risk to an appropriate level for a company of its size. With respect to our second quarter earnings, we reported consolidated revenues of 751 million dollars, a net income available for common stock of 12.1 million. Or 25 cents per diluted share which exceeds consensus estimates of 17 cents per diluted share for the quarter. As we noted in our preearnings release back in July, we have raised our consolidated corporate earnings estimate for 2002. We expect earnings to be in the range of 70 to 80 cents per diluted share, which compares to previous estimates of between 55 to 75 cents per diluted share. Looking ahead to 2003, based on current expectations, we are projecting consolidated corporate earnings to exceed a dollar ten per diluted share. We have made important progress this year and during the quarter and we will continue to build on these successes. And further strengthen and improve our financial platform. With that, I'll hand the call back to Gary.

Thanks, Jon. We have successfully addressed several challenges over the course of the past couple of years. We overcame each challenge with the same disciplined approach and by adhering to the strategy I outlined when I started in this role. To simplify our business, focus on what we do best, and deliver results. I believe that adversity we have faced has made us a better, stronger company, that is well-positioned to deal with the current market conditions. Overall, we've gone beyond turning the corner. We are well on the road to what we believe is a solid recovery, and we continue to focus on managing the business and executing our business objectives. With that, I'll turn the call back over to Dave Burkhardt.

We'll now open this call to your questions. And I would like to remind any members of the media who may have questions to contact Maureen Jew [ph] At 509-495-4174. 00:14:56 We're now ready to open up for the first question.

At this time if you would like to ask a question, press star followed by the 1 on your touchtone telephone. You will be announced by name prior to asking your question. Once again to ask a question press star followed by the 1 on your touchtone telephone. Your first question comes from Mark Reichman and please state your company name.

Good morning. Mark Reichman with AG Edwards. Could you provide the equity ratio at the utility and the parent at the end of the second quarter and also the dollar amount of equity at the utility? And then also, if you're still planning on dividending cash, up to the parent, where do you expect to be at the end of the fourth quarter and then also just elaborate a little bit on financing plans in terms of possible equity issuances.

I'll let Jon handle that.

I'm not sure I got them all written down. I might have you to ask again. The equity ratio at the end of the second quarter total company is 38.2 percent. That's up from 34.6 at the end of 2001. So it's a significant improvement. I don't have the percentage in front of me for just the utility. But we can get that for you and provide you with the dollars as well. The plan and a lot of it is going to depend on markets for the balance of this year, we've talked about this before, that we potentially would dividend another 30 million dollars from Avista Energy. The cash will be available. It's just a matter of market requirements for cash to remain in the business perhaps over the end of the year. But our plan originally we talked about earlier this spring was for an additional up to 30 million dollars for the balance of this year, or early in 2003 to be dividended from energy to the parent. The financing plans, Mark, we have no plans right now to do any external financing other than just using our bank lines and our available liquidity lines to fund the company operations for at least the next year. Originally we had talked about issuing, the possibility of issuing equity late this year. The only reason that that would still be nice to do is it would help us build or rebuild the equity ratio more rapidly. But it's not a requirement financially for the company. Did I miss one?

No, that answers those questions. Also, if you could just talk a little bit about addressing the FERC inquiries, specifically the show cause order? What's the your expectation in receiving a clean bill of health from the FERC. And also just looking at the press release, Avista Energy was not part of that inquiry, was it not?

You're right on that, Mark. Avista Energy was not part of that inquiry. It was only the utility. As we've stated before, there were only 17 trades that fell into a category that was being investigated by FERC. We have gone through and continue to take and look at even a broader range of information in our taped conversations. But thus far to date we have found nothing that would suggest that there was anything involved with those trades from our people.

Okay. Great. Thank you.

Your next question comes from Sam Brockwell and please state your company name.

Merrill Lynch. Good morning, everyone. Just to follow up on the FERC issue, Gary I think I heard you say something about possibly being mentioned in, it's going to be presented by congress. It went by very quickly. I was hoping you could elaborate on that. And secondly maybe give us a little bit more of a sense of the process in Montana. I mean certainly it sounds like these folks have an uphill battle. But how long could this thing drag on before it finally gets put to bed?

First off on the FERC issue we don't know whether we'll be mentioned or not. We'll just anticipate, because we were one of those that was given a show cause order, that we may be mentioned in that report. But four companies were asked to show cause. We feel we have responded to that and given all the data that they have requested. We have not received any further requests. So it was just kind of a heads up that we would - I don't know that we expect to be mentioned. But we very well could be mentioned in that report. As far as Montana, you can think it would be an up hill battle, and it probably is for both sides of this issue. It appears on the ballot that this is keeping Montana power from Montanans. I think of a lot of Montanans that will vote for that. On the other hand we look at confiscation of property. We have challenged it from a constitutional basis. We hope that we will prevail in that. But at this point it's being set for hearings and we will have an answer out of that of whether it even gets on the ballot. If it gets on the ballot, then there are a lot of people in Montana, including a number of parties like the IDW and others that have signed on to fight this initiative, and we will join with them and hopefully defeating them.

Two quick follow-ups, if I may. When will you know if this is going to get on the ballot. And I'm sorry if you mentioned it on the call.

I didn't mention it. I believe the hearings are set in the next month or so. They move on them fairly quickly. It takes precedence over other things. And I don't have the date with me. We can get that for you I think if we have it.

This may be kind of hard to answer, but in the event that this type of ballot initiative - this got on the ballot and was successful, what would be the next step? Presumably you would then take it to the state Supreme Court, I would think.

Yeah, we'll use every effort to litigate this and keep any of this from happening. But it's one of those things where if it did get on the ballot, get passed, there are certainly legal challenges that can be expressed then. They do have to set a commission. They do have to, by taking you through the process and assuming we fail in all cases and they succeed in all cases, then they would have to come up with the money which is a fair market value for the Knox plant. And clearly in the initiative they're only authorized up to 500 million. So we believe there's a short coming even if their funding even if they were to successfully do the rest of it. But this is something that if it goes that far it will be litigated long after I'm dead.

Okay. Let's hope it doesn't get there. Thank you

Your next question comes from Bobbie Atamaka [ph] And please state your company name.

It's Bobbie Atamaka [ph] From Genesis [phonetic]. First of all, congratulations on another strong quarter. You guys have been doing a great job on all fronts, it looks like. I wanted to I guess kind of clarify guidance for next year, with EPS north of $1.10. I was hoping you could kind of break down what's assumed there in terms of business segment contributions. In particular I've noticed you guys have done a good job in terms of reducing the losses from the information and technology segment. I want to get some clarity as to what you're assuming going forward in terms of kind of I guess putting a stop to those losses completely through strategic partnerships or other sorts of carve outside. And also on the energy trading and marketing side, you guys have continued to do well in the midst of a market turmoil. I want to see what you're assuming going forward.

Thank you for the kind comments. We appreciate that. I'm going to let Jon handle most of those questions and I may pick up on some of the strategic issues.

Bobbie, the best way to look at this right now is we have always talked about energy being a business that should be able to generate around 25 million dollars of net income a year. That's basically still our target going forward. That equates, what, a little over 52 cents a year, at least, in terms of outlook.

I might interrupt there, Jon, and just say that the reason for that is because that business is not a trading business, per se. Although we do do trading. It really is around our asset base. As I've mentioned before I think we control something like 28 percent of all of the pipeline capacity and the storage capacity in the northwest. That's gas storage capacity. As well as having long-term contracts for transmission and other things as well as the Lancaster unit that came on line last year and a number of other things we do, for instance, with some of the public utilities and managing some of their units and things. So it's a little bit different than just a trading business. Jon.

With regard to the utility it's probably a little early to get really specific. One of the things as you know with the settlement in Washington, we do have the nine million dollar plus or minus band which we will either benefit from improved sales of wholesale energy and pricing, or we will have to, what I would call, eat excess costs. We do know that generating costs can continue to be a little bit above our normal level for the next year or two. So utility earnings could be relatively flat year to year because of that. Now, that's a shorter term impact on the company and longer term we have the utility positioned again to return to the right level of earnings. So I'm not - I don't want to suggest we're going to be pushing an increase on the earnings side from the utility right now. We'll probably know a lot better in four or five months when we actually complete our outlook for 2003. So the other thing I would tell you is that we do expect reduction in losses from both the technology companies, Advantage and Labs and that comes about through continued improved operations at Avista Advantage, probably a break even cash flow position by the end of this year, early next year and perhaps even break even on an earnings basis as we move through the year. We also would expect there would be a reduction in loss at Avista Labs. And that comes about primarily from the fact that we are continuing to look for the appropriate strategic partners to help fund at least a portion of that technology as it builds out going forward. Which allows us then to reduce our losses as well. A combination of those things gives us confidence that we can be above a dollar 10 this next year.

The other thing I'd add to that with labs is we're really focusing around some particular markets that have a market today and in fact is in the premium market or back-up power market, and we're moving forward on that. That's why the distribution channel is so important to us, and we will and are making sales under that.

Just a couple of follow-ups. So just to clarify on the last part, on the information and technology segment. The dollar 10 or north of a dollar ten guidance for next year would still incorporate some degree of loss in that segment or in other words it doesn't necessarily assume a break even result from information and technology?

Does not. It still includes a loss in that area.

Then I guess another follow-up, just to clarify an answer that Jon had previously given towards financing issues, I wasn't sure if I caught it correctly. You said basically there's no immediate plans for external financing. And I wasn't sure if you said within the next 12 months or within the calendar year 2002.

Basically the next 12 months. It may extend beyond that, Bobbie, but certainly for the next 12 months we have no plans for external financing.

And given that you did mention that no immediate plans to issue equity, although obviously issuing equity would give you a benefit to boosting your equity ratio in the near term, I was just wondering, would I assume that's given, that the decision not to press forward with anything in the near term is made with respect to where the group is trading, where your stock is trading, that these would be levels kind of below, which you'd feel comfortable issuing equity?

That's true. But more importantly, right now, while we'd certainly like to see the stock trading at book value or above book, and we think it should be, but we don't have a need for the cash right now or the financing right now, other than to just strengthen the balance sheet. We have the flexibility to move well into next year or through next year before we have to do any kind of external financing, debt or equity.

Congratulations on a great job.

Once again as a reminder if you do wish to ask a question press star followed by the 1 on your touchtone telephone. Your next question comes from James Blessa [ph] And please state your company name.

This is Jim Blessa [ph] At DA Davidson [ph] And company. Several of my questions have been asked and answered. But the remaining questions I have involve the second half of 2002, the breakdown of earnings. You're energy in your guidance that you'll have 23 cents, 33 cents in the second half. Do you like to characterize how that might fall and how much approximately in the third quarter and how much in the fourth quarter?

I'll let Jon answer those questions.

Jim, that is going to be difficult to give you any real specifics this morning. I guess historically the third quarter has always been our weak quarter. And that's just because of the, it's usually a low point in terms of gas sales, certainly. And it's also a reduced point in terms of margins from the electric business. So you would expect fourth quarter to be more profitable than third. Other than that, that's on the utility side. But other than that I don't have any specific breakdown by quarter or by business for the balance of the year, Jim.

The book value of your company at quarter end was what?

$15.34.

And Avista Communications, you're exiting that business, but there was a gain in the first half. What might result in the rest of the year as you exit completely the business?

I think it should be pretty flat for the balance of the year, Jim. There's just a few minor pieces that we're transferring title to here in the third quarter. We should be pretty well cleaned up on all the remaining fiber pieces that we owned. But there should not be any impact one way or another in the balance of the year.

You're at 38.2 percent equity ratio. That's common I'm assuming.

Yes.

And tell me, do you have a goal for the end of the year?

Don't have a specific goal. We obviously would like to get the total equity ratio back up to 40 percent as soon as we can. But don't have a specific goal that we have to hit, Jim.

Thank you very much.

Your next question comes from Mike Warner and please state your company name.

It's Kennedy Capital. Can you hear me okay?

Sure. Good morning.

I just wanted to clarify exactly, on your trading, this is more of a general question, on your trading operations, can you give me a sense of how those operations work? Can you give me a quick synopsis of how those work?

Well, yes, Mike. Probably easiest way to do that is to say we manage a lot of assets in the northwest. Some of them were public utilities. And certainly we have some of our own assets that we manage. The Avista Energy manages the utilities gas purchasing, transportation and commodity storage for the utility. That's through the benchmarking mechanism we've had approved in all three states. In addition, they have the Lancaster plant, the 100 percent input output of that [inaudible] For sale into the wholesale market. We've had a long standing relationship with the Shalan [ph] County PUD and manage their hour-to-hour operations on their 2000 megawatts of hydrogeneration on the mid Columbias. In addition, we manage gas storage for a number of different customers here on the west coast, as well as Avista Energy does have gas storage of their own that they manage. And in addition we have long-term contracts, excess of twenty-year contracts, for transmission that takes power up and down the west coast that they have under contract. So they continue to take and I guess work almost as a virtual utility, as we have for the last 40 or 50 years inside the utility. We quit doing that inside the utility and moved it out into Avista Energy and they continue to manage that very well. They have long-term contracts with some of the larger generators here in the northwest, both public and private. And so it really looks like an asset based company that is primarily focused around marketing and then trading. They do hourly, next day, balance of the month, and then of course long-term deals and then of course the management of facilities for people.

Does the trading - how much of it is dependent upon price volatility? Is it all dependent upon what you can make on a spread or how does that come into play?

No, it's - that's a part of it. But the fact of the matter is we have again assets or management fees, for instance, I think we've publicly announced we're managing Clark's turbine and the gas for that turbine. So a lot of this is done under fee-based or sharing of fees in order to take and manage those types of projects. So it's not what you would typically think of trading where you look at the screen and take a position and bet that it's going to change. We have some of the longest - I guess Mike if you're not familiar with those folks, we probably have the longest tenured employees in that area, a lot of them have 15, 20 years in the business. They understand the stream flows in the northwest, the congestion around the gas pipelines, the storage. And they have taken and worked that very well. We have all of our folks on one floor where the gas and electric can work together to understand what's going on up and down the west coast.

That helps clear it up a little bit. Thank you very much.

Thank you and once again as a reminder if you do wish to ask a question, please press star followed by 1 on your touchtone telephone. Your next question comes from Paul Daboss [ph] And please state your company name.

ValueLine. What is your plan for Avista Labs if you can't find a partner?

Well, Paul, we have had several people that have expressed a very strong interest. Several of them have been out and doing due diligence. We have focused that business and if we kind of watched, we've cut back and focused around that business I guess - let me phrase it differently. We started out that business as a stand-alone business because everybody thought we were going to spin it off or whatever. We've eliminated a lot of the overhead and other things in that business and focus now on getting the products to market. And there are two particular products that we're pretty excited about and in fact are selling into the market. And we will be moving forward with that. So whether or not we have a partner, we will have the reduction in cost down to a point where, as we indicated with next year's earnings, that's without a partner. If we have a partner it will only be better than that.

Any best guesses to the time frame that you might be able to announce an sort of an agreement?

It depends, we have people still going through due diligence I'm not in a rush to have this done but I would hope to have something done probably by year-end

Our final question comes from Mike Damosso [ph]. Please state your company name.

Duggenheim [ph] Partners. What was your cash balance at the end of the quarter, and what's your current status in terms of any drawings on your two lines of credit?

At the end of the quarter we had something in excess of 70 million dollars drawn on the line of credit. Roughly 70 million dollars drawn on the line of credit, and total cash position was 142 million at the end of the quarter.

How is that materially changed since you renegotiated the two lines? Do you have anything drawn on the lines right now?

Normally we do. Again it's an operating characteristic of the company. We would normally be drawing down lines during third and fourth quarter and then our strongest cash flow from utility is really end of fourth quarter and through quarter one. So we're pretty much on track right now between 70 and 80 million drawn on the line. We have taken advantage through the month of July as well to purchase in advance roughly another 10 million dollars or so of debt that would have matured next year. So what we're trying to do is take advantage of the opportunity when it comes from time to time to buy small blocks of debt that would mature anyway.

In terms of capital spending for the remainder of the year.

We're on track to have total cap ex for the year at right at 80 million dollars, which includes almost 20 million dollars for generating facilities that are being completed and we're pretty much on track for that. The balance of the year is going to be roughly half of that.

Thank you.

Thank you. This does conclude our question and answer session. I will now turn the call back to Mr. Dave Burkhardt for any closing comments.

Thank you. Ladies and gentlemen, we appreciate that you took the time to join us today. An instant replay of the call will be available soon and remain accessible through midnight New York time on Thursday, August 8th. You can call 402-530-7699 to listen to that instant replay. The web cast of today's call also will be archived through 8:00 p.m. eastern time on August 13th. To access the web cast archive please go to our web site. Again, thank you for joining us today and have a nice afternoon

Thank you, this concludes the Avista conference call. We appreciate your participation.