CMS能源 (CMS) 0 Q0 法說會逐字稿

Good morning, everyone.

Welcome to the CMS Energy 2009 first quarter results and outlook call.

This call is being recorded.

Just a reminder, there will be a rebroadcast of this conference call today beginning at noon Eastern time running through May 7th.

This presentation is also being webcast and is available on CMS Energy's website in the investor relations section.

At this time, I would like to turn the call over to Ms.

Laura Mountcastle, Vice President and Treasurer.

Please go ahead.

Thank you.

Good morning and thank you for joining us for our 2009 first quarter earnings presentation.

With me are Dave Joos, President and Chief Executive Officer and Tom Webb, Executive Vice President and Chief Financial Officer.

Our earnings press release issued earlier today and the presentation used in this webcast are available on our website at cmsenergy.com.

This presentation contains forward-looking statements.

These statements are subject to risks and uncertainties and should be read in conjunction with our Form 10-K's and 10-Q's.

The forward-looking statements and information and risk factors sections discuss important factors that could cause results to differ materially from those anticipated in such statements.

This presentation also includes non-GAAP measures when describing the Company's results of operations and financial performance.

A reconciliation of each of these measures to the most directly comparable GAAP measure is included in the appendix and posted in the investor section of our website.

We expect 2009 reported earnings to be about the same as adjusted earnings.

Reported earnings could vary because of several factors.

We're not providing reported earnings guidance reconciliation because of the uncertainties associated with those factors.

Now, I will turn the call over to Dave.

Thanks, Laura and good morning.

As is our usual practice, I will start the presentation with a brief update on the business and then I will turn the call over to Tom for a more detailed discussion on the financial results and outlook and we'll close with questions and answers.

First quarter 2009 earnings were on plan at $0.30 a share.

This was down $0.13 from last year due in large part to the effective of a new seasonal rate design on electric sales and 2008 gain on the sale of sulphur dioxide allowances that were not repeated in 2009.

Tom will give you more detail on that in a few minutes.

For the full-year, we expect adjusted earnings of $1.25 a share unchanged from our previous guidance.

Although it's old news to most everyone now, we raised our dividend in the first quarter of 2009 to an annualized $0.50 a share and this reflects the progress we have made on our growing-forward strategy and the confidence the Board has in our business plan.

There are a number of important regulatory matters on the calendar over the next couple of months that will have a meaningful impact on earnings and cash flow.

In particular, the electric and gas rate case filings.

Last week, the Michigan Public Service Commission issued a procedural order in our electric rate case directing us to file the rates we intend to self-implement in midMay.

I will discuss the rates we filed yesterday and the staff's filing in our case on the next slide.

Before I do, I want to talk about the state of the business in Michigan.

Just about every company has felt the weak economy and we're not exception.

The financial flight of the big three automotive companies continues to be headline news across the country.

Last week, GM announced it was reducing inventories by extending the traditional two-week summer shutdown by up to an additional seven weeks in some locations.

Of the 13 assembly plants affected, only four were in Michigan and one of them, the Flint Assembly Plant s in our electric service territory.

We don't expect a direct material impact from this extended shutdown.

We will closely monitor all new developments related to the automotive sector that may effect our business.

As we said before, the auto sector, the big three and the tier one suppliers in particular represents only about 3% of our electric gross margin.

Tom will provide more color on this topic in a few minutes.

Over the past couple of months, we talked about our balanced energy initiative, which is our resource plan to meet the long-term demand growth through a combination of demand management programs, energy efficiency and new generation resources.

We believe it's in the best interest of our customers to maintain a balance portfolio of generating assets, including a mix of fuel types and renewables.

The Michigan department of environmental quality recently held public hearings on our air permit for our new proposed clean coal plant in Bay City.

There was tremendous support from the communities and labor for the plant and anticipated [option] from environmental groups.

The DEQ Chief says he expects to make a final decision on the air permit late this year.

If approved, this would put us one step closer to having the plant in service in 2017.

Now turning to our regulatory agenda.

In February, we filed our renewable energy and energy optimization plans with the MPSC as required under the new law.

We estimate that we will need an additional 900 megawatts of renewable capacity, essentially all from wind to meet the 2015, 10% renewable portfolio standard.

Our plan is to build about half of this and purchase the other half.

This will require capital investments of over $1 billion.

Our energy optimization plan is designed to educate customers, provide economic incentives, encourage them to choose efficient products and take other steps to lower their usage.

Our goal is to reduce electricity demand by 5.5% and gas by 3.85% by the year 2015.

We expect to spend in excess of $500 million over the next six years to implement this plan.

Our plan also included a revenue decoupling mechanism to eliminate the disincentive associated with helping customers reduce their energy consumption.

We expect this to be approved but perhaps in the general rate case rather than in this case.

A final order for the renewable energy and energy optimization plans is expected in late May.

As part of the gas rate case settled last December, we agreed that we would not file a new gas general rate case prior to May 1, 2009.

We do plan to file in May, which would allow self-implementation before winter.

The filing will include a low-income rate proposal, revenue decoupling mechanism and a tractor for uncollectible.

On Monday, the staff filed their proposal in our electric rate case, recommending a revenue deficiency of $75 million.

There are some notable positives in the case, including support for an 11% return on common equity and a tracker for uncollectible.

There are, frankly, also some disappointments.

The staff sales assumptions did not reflect the economic downturn over the past six months and we also don't think the staff's recommendations for operating and maintenance and capital spending are sufficient or, frankly, consistent with the forward test year approach included in our new law.

So, for example, their case reflected historic capital spending, versus actuals for 2009, which is higher and, in our view, justifiable to meet our customer service goals and regulatory requirements.

So, we still have some work to do on the sales and spending issues.

Also, the staff did not support a full revenue decoupling but did support decoupling for energy efficiency and, as I mentioned earlier, a tracker for uncollectibles.

Overall, the staff's revenue recommendation is too low.

We'll file our rebuttal testimony on May 18.

Yesterday, we filed the tariffs we intend to self-implement subject to refund in midMay.

The MPSC has scheduled a May 5th hearing to considered a motion by one of the interveners in our case, abate, to prevent or delay self-implementation.

As you know, this is the first case under the new loss of these procedural steps are not surprising.

Our tariff filing reflects an increase of $179 million (company corrected after the call), which is the level we believe is appropriate to meet our customer service goals and allow us to earn the recommended rate of return for the balance of the year.

This is $35 million lower than our original $214 million filing reflecting reduced spending and other assumptions.

We're confident we can make a case for this level of relief; but, obviously, we can't predict the outcome of the hearing since all of this is new ground for the commission.

Stay tuned.

Now I'll turn the call over to Tom.

Thanks, Dave.

My thanks to everybody for joining our call today.

I know it's a busy day.

Earnings in the first quarter were $0.30 a share equal to our plan at $0.13 below last year.

This reflects lower sales, seasonality change, recognition of SO 2 allowance sales in 2008 that were not repeated this year, higher uncollectible accounts to reflect SAP-launch related collection delays and other offset partly by a rate relief approved last year.

For the rest of the year, we're planning on lower sales, more than offset by rate increases, a good portion of which are already approved.

As Dave mentioned, full-year adjusted EPS guidance is unchanged at $1.25 while sales and uncollectible accounts are adverse.

New cost reductions in demand rates provide offsets.

We underestimated the demand portion of our bills as some customers continued operations while shifts were cut or reduced.

The electric business represents the bulk of our earnings and with our electric rate case order last June, rates were redesigned to be higher in the summer and lower in the winter to encourage conservation during the high-demand season.

On this slide, we isolate only the impact of seasonality.

This redesign results in higher-than-historic revenue and profit in the summer and lower-than-historic revenue and profit in the first and fourth quarters.

This is just what we experienced in the earnings uptick last summer, as well as the expected decline in the fourth quarter of last year and this quarter.

Although the implications of the global economic downturn are uneven across Michigan, generally they're more severe in the east than west and we now expect weakness to be more prolonged than originally assumed in our plan.

Sales in the first quarter were as budgeted.

We are, however, reflecting a steeper and more prolonged reduction in the industrial sector with full-year sales down 11% instead of 7% in our original budget.

Resulting in an overall decline of 3% instead of 2% for the year.

If the recovery begins in 2010, this recession may continue to look a lot like our experience in the back-to-back recession of the early 1980s.

Here's a more detailed look of our new forecast of industrial sales by quarter.

Although the 11% decline in the first quarter is just as we planned it, we deepen the year-to-year decline from 10% to 15% in the second quarter and from 6% to 11% in the third quarter.

Our forecasted decline of 5% for the fourth quarter is on top of the decline of 6% in the fourth quarter back in 2008.

Last month, we increased our uncollectible account write-off by $10 million to recognize receivables that aged more than we expected during the launch of our new SAP systems last summer.

While we transitioned to the new system, our collection activities were temporarily suspended to facilitate the launch.

Restoration was slower than we planned.

We have offset this higher exposure and the lower sales largely with demand and cost reduction.

The potential for a broad autowide bankruptcy remains.

Should it occur, and it's difficult to predict, should it occur, we expect to take a pretax write-off of between 15 and $30 million.

We show you here a range because the outcome, if it occurs, will depend on when in the collection cycle it happens and the breadth and the number of companies involved.

We're tracking 178 companies that could possibly be involved.

Each is an OEM, a Tier One supplier to the auto industry or secondary supplier to the OEM.

GM represents about 25% of the exposure and Delphi, who already is in bankruptcy, makes up another 15%.

Delphi likely would not require another write-down, but we have included that in our numbers for conservatism.

For many, the bulk of their business is non-automotive but it's hard to predict who will avail themselves of the bankruptcy process.

So, consequently, we may be somewhat conservative with the estimates that we're showing you.

Since our last call, our cash flow and liquidity have strengthened, in part, because we were able to reduce our planned pension contribution from $300 million to about $200 million.

This was made possible, in part, as IRS notices confirmed our ability to use more favorable interest rates to value our liability.

Successful completion of a new $500 million first mortgage bond last month and extension completed yesterday of our $250 million accounts receivable financing facility also helped.

In addition, we're now planning to avail ourselves of bonus depreciation this year, which should boost consumers' cash flow by about $50 million.

And that will push out the use of NOLs as a parent.

We also have been able to defer $30 million of parent tax payments through our audit review.

As of March 31, our liquidity position exceeded $2 billion, including $800 million of cash and $1.2 billion of bank and AR facilities available.

Financing plans for the utility this year are complete and we plan to refinance later this year our next CMS parent maturity due in August of 2010.

Profit and cash flow sensitivities are similar to the last review focussed primarily on the economy and future regulatory actions.

Sales, gas prices and ROE sensitivities are unchanged.

We added a plus to the plus-minus direction indicator for the accounts -- for the uncollectible accounts because when we took the SAP launch-related $10 million write-down, we didn't assume any recovery.

As we pursue recovery, this could provide some upside.

As in our last call, we estimated a potential impact of an autowide bankruptcy.

This is not reflected in our guidance of $1.25 a share.

If this occurs and the impact is small, we might be able to contain it.

As Dave described, we'll likely be self-implementing $179 million for our electric rate case in midMay.

If the ultimate order is lower by less than 25%, we would refund the excess, including interest at LIBOR plus 5%, for amounts greater than 25%, the interest would be at the authorized ROE.

Despite the tough economy, we met our plan for the first quarter and we're on target for all of our full-year report card measures.

Now Dave and I would be happy to take your questions.

Operator?

Thank you very much, Mr.

Webb.

(Operator Instructions).

Our first question comes from the line of Mr.

Brian Russo.

Please proceed.

Good morning.

Good morning, Brian.

What gives you the confidence that the commission will approve a full decoupling mechanism?

Well, I don't think I said I had confidence the commission would approve a full decoupling mechanism, although it's something that they have talked about here in Michigan.

What I was referring to is the decoupling mechanism associated with the energy efficiency programs and the staff has recommended approval of that, although they recommended approval of it consistent with the commission's ultimate approval of our electric rate case and there has been strong support for that amongst the staff and others in the state.

Okay, and absent the decoupling mechanism, I mean how might your ROE be sensitive to that?

Well, obviously, that depends on sales.

The decoupling associated with energy efficiency, obviously, is a program where any sales reductions were able to achieve by implementing those programs, therefore, wouldn't affect our overall earnings.

Obviously without a full-blown decoupling mechanism, we continue to be exposed to things like weather like we always have been and the sales downturns that we are currently seeing, although as we said, those are largely industrial where our lower margins occur and are offset by some of the demand improvements.

So, we are going to continue to have to manage the business as we have to adjust spending and that sort of thing with the sales, if they not what we expect them to be.

So, Brian, I would turn you and everyone to the sensitivity slide that Dave was referring to and that will show you what happens in electric and gas in terms of every 1% change in sales.

And, remember, I think we have tried to be very realistic in our forecast for this year, particularly around the industrial situation.

Okay.

Has your capital expenditure outlook remained consistent from your last update?

Yes.

We really haven't changed anything there.

You recall that is down from what we originally filed in our rate case and what our forecast was last year, but we have not changed it this year.

Okay, you could just talk a little bit more about the staff recommendation.

Seems a lot lower than some of us were expecting and, as you mentioned earlier, they seem to be using more historical data than forward-looking.

You can give us a sense of what you might include in your rebuttal testimony to support your capital budget?

Well, I think what we have said in the way of our filing yesterday of our proposed tariff for self-implementation of $179 million is consistent with what we think we actually need to serve our customers appropriately and meet our service requirements and earn a reasonable return on investment at the 11% level staff has recommended.

And there are differences there.

Some of them are real differences and that is why that 179 million is less than the 214.

We did cut back on capital spending.

There has been some changes in our cost-to-capital assumptions because of when we make equity infusions into the utility and also our cost of short-term debt are lower than we originally assumed.

We have also taken out operating costs so our current budget is different than what was in our original filing and we reflected that and put in forward our 179 million.

It is true that what the staff recommended and you look at the methodology and, of course, we saw the numbers ourselves a couple of days ago, are really more historic-based.

They look at historic capital spending and prior years and averaged those numbers and, frankly, even the numbers they used are incorrect, partly we think, because of the numbers we gave them were partial years numbers and they interpret them as full-year numbers.

We'll be talking with them about that, our assessment is even a $300 million number they use, which is about $150 million lower than our actual numbers.

But the more important issue there is they have used, the average historic capital numbers for a couple of years procedure to the filing, vis-a-vis our actual capital spending program for 2009 and that may not be unreasonable for them just to take a shot at what we might be spending this year, but, frankly, we are at higher levels than that and we haven't seen any indication that anyone thinks the numbers and the capital spending that we're doing this year is in any way imprudent.

We'll be spending our time educating in our rebuttal what are the actual capital numbers for this year, what are we spending them on, why do we think they're appropriate and we'll be doing the same thing on the OEM side.

They basically took historic spending and actually applied a negative CPI to the numbers from 2008.

That is not what the actual experience is and, of course, we'll have to defend that actual experience.

But I would say generally speaking the staff used a more historic look.

And as I indicated in my comments, that is inconsistent with the new law which allows for our filing on a forward test year basis and we'll be making that case and going through the numbers in more specificity in our rebuttal.

Thank you very much.

You're welcome.

Your next question comes from the line of Mr.

Neil Stein of [Levin] Capital.

Please proceed.

Thank you, actually Brian asked my question.

Thank you.

Thanks, Neil.

Your next question comes from the line of Dan Eggers of Credit Suisse.

Please pro-- please proceed.

Good morning.

Good morning.

Have the volume, another reduction to the volume outlook, you can give more color on what you're seeing and which industrial customers are struggling more than others that caused you to dip more in the second and third quarters?

Yes.

What we're seeing, if you think about the first quarter, an 11% decline that we showed you, GM, Delphi probably make up about a third of that decline to give you a little bit of the texture.

And then it is a little bit of other automotive suppliers and then the general slowdown in the nationwide economy where weather it's furniture makers or food makers, whatever.

You see some of those folks slowing down a little bit.

We look at that and we said, well, you know what?

Particularly with this announcement by GM of a longer shutdown in the summer, nine weeks instead of perhaps two weeks, which could be followed by the other autos.

We started thinking that we better be more conservative for the second quarter and that is part of the drive of why we take the industrial side down from 10 to 15%.

Then our general planning is without really being specific at all about any of the industrial, we said we probably should see this thing continue in through the third quarter and watch a decline of around 11% instead of 6%.

And we have held where we were in terms of that 11% thinking in the fourth quarter by taking the 6% drop a year ago and adding that to another 5% drop this year.

So the back part of the year is us just trying to be a little conservative saying we don't see a big turnaround occurring until we get into 2010.

Near-term, it's really trying to take a look at specifics that we see is for-from-some of our customers.

Add all of that up and that took our 2% reduction for an entire electric business down to about 3%.

And that is still all included in our guidance .

Your next question comes from the line of Paul Ridzon of KeyBanc.

Talk about the offsets to the lower sales forecast, kind of where you see the opportunities to negate that.

Well, it's fairly straight forward.

A lot of that has to do with simply managing the minuscule and M items in every different area.

I can't give you major offsets.

We're looking at moving one of the outages at one of our smaller plants into next year.

Some minor reductions in our tree-trimming budget and our storm assumptions.

There is, you know, lots of small items in individual departments and as Tom mentioned, by the way, the impact on the revenue is much smaller than the sales volumes might suggest because the demand component of the industrial rates is significant.

In fact, we think under forecast the original impact of demand on our revenue and, furthermore, as people cut back shifts and continue to have shifts in the daytime, we don't lose that demand margin.

So when we look at the margin overall, the impact is less than what the sales impacts might suggest and we are making OEM changes to offset those.

Can you go through again the bands on if the final order differs from your self-implement.

What happens with the interest rates?

Oh.

Sure, sure.

The way the law is written if there is a difference of what we self-implemented and what the commission orders, the first 25% of that difference we pay an interest rate of LIBOR plus 500 basis points.

If it exceeds 25% that marginal amount over 25%, we have to refund and pay an interest at our return on equity level, roughly 11%.

And have you -- late last year, you borrowed against lines for potential tender or conversion.

Have you repaid that line?

Yes, we did.

And in fact, when we give you our liquidity position, you see that included.

At the end of the year we judged -- we just didn't need that at the parent level, so we returned that to the banks.

And lastly, how big is the August of 10 maturity that you plan to refund?

300 million.

Thank you very much.

Thank you.

All right.

Thank you.

( Operator Instructions).

Your next question comes from the line of Ted Hein of Catapult.

Please proceed.

Good morning.

Good morning.

I had a couple of quick questions.

First, is it right to assume the 179 million interim rate you proposed yesterday is what you have assumed in your guidance for the two, $1.25 level in.

What I -- in our last quarterly call that our philosophy around self-implementation is we would go for and look at the last six months of experience of the original filing and strengthened different on, uncollectibles a little bit different, O&M is down a bit, financing assumption changed a little bit, so we went through based on the six months and said what number do we need for the remainder of the year to serve our customers at the level they expect to be served and to maintain our equipment and the rate of return.

That is the number we self-implemented.

Okay, but I guess my question was more you talked about the amount you had to pay on refunds at the final order, if it came out different from what you self-implemented.

I guess the question was would your $1.25 guidance give risk if in November the ultimate decision came out below 175 million?

Yes, I'm sorry, I didn't really answer your question and, right away, if I said self-implemented, I should say that is what we proposed to self-implement.

Yes.

It depends on what comes out, obviously.

For example, the staff made a proposal that we are to cut our tree trimming back fairly dramatically from the levels of about 45 million where we are today as part of reducing the impact on customer rates and we can certainly do that, that hurts our reliability over the longer-term somewhat and as of right now, at least, we have an active tree-trimming tracker in place, so we would have to get relief from that if we're going to do that, but that is one way in which, obviously, we could have lower-rate relief and still get to the same place.

We can look harder at squeezing O&M costs and other ways and there are limits to how much we can do and if the number was way too low and we didn't have appropriate trackers, obviously, it could effect our guidance that we haven't seen that yet and, you know, as they said before, I think we're confident we can make a strong case as to what is required.

Got you.

Let me just be a little more direct.

On the 179 if that is what we implement.

It would not revise our guidance down.

Okay and I guess the other question I had, Tom, was just on the accounting of this.

I think we have talked about this before, but given that, given that the staff rec is much lower than what you have asked for, is that their is any problem with actually having a certainty about booking those rates from an accounting perspectives since they're subject to refund?

No, this is a lot like where we are when we have a staff u in any rate case.

That doesn't give you a final strong enough information to say that that is your new best estimate.

As you know in accounting lingo, that is the key words, our best estimate and our best estimate is exactly what we intend to self-implement.

Therefore, there are no issues for that.

Okay, great.

Thanks a lot.

Your next question comes from the line of Greg Gordon of City Investment Research.

Please proceed.

Thanks, good morning.

Good morning, Greg.

Morning.

If we look up the rate case timeline and we make, choose to make the presumption, I don't see a reason not to make but that their is a methodology issue and an education issue, in the case not a prudence issue, at what point in the cased time horizon with will the staff have an opportunity to, if it decides to, revise its position?

So, in other words, in terms of milestones, vis-a-vis the point where you're done communicating with them and they make a decision to agree or disagree with you, when would we see them update their position?

Well, whether they update their position ought to be a question, but normally that would happen in the briefing process.

Or possibly in cross-examination.

The staff has made their filing, we'll make our rebuttal later on this month.

I'm sorry, later on in May and then there will be cross-examination occurring in June and sometimes the staff through cross-examination and off times because we have had discussions with them and said, hey, this calculation doesn't look right or maybe you misinterpreted data we gave you, sometimes they will correct that during cross-examination and then there is always an opportunity during the filing of their briefs.

Okay.

And that could occur in -- sort of the August-September timeframes.

Okay.

So we're talking about mid- to late summer then is when we should be focussed on cross-examination and briefs.

The second question is, I think you inferred that you the interim rate increase that you have requested takes into account modifications to your business plan subsequent to the filing including, perhaps, lower cap spending and you mentioned $150 million number.

So should we presume the rate-base number now is more they could 6.15 billion pro forma for you having to adjust to economic conditions?

No, I probably confused you.

As I said earlier, we have not reduced our capital spending since we gave you guidance earlier on this year.

We did reduce our capital spending from what we originally foiled in the electric rate -- filed in the electric rate rate case.

We talked about that in the first quarter call.

When I talked about a reduction, I was simply talking about a reduction from what we had originally filed, vis-a-vis what is in our plan right now and what is in our plan right now has not changed.

The 150 million is probably where I created some confusion because what the staff did is look at the average capital spending over a couple of prior years.

And came up with a number of $300 million less than And came up with a number of $300 million less than what we had in our filing.

And partly that was, we think, and we haven't been able to completely resolve this yet, but partly we think we gave them partial year data that they interpreted as full-year data and that 300 million, if you use their calculation, would have been more like 150 million if we closed the gap on that data discrepancy.

Okay.

Just -- .

That doesn't mean that is the right number.

That's simple was the staff's number would have generated and what our actual number is for this year is higher and we haven't changed that.

Okay, so you still think that the right rate-base or task is 6.3 billion.

Yes.

Okay, thank you.

Your next question comes from the line of Mr.

Neil Stein of Levin Capital.

Please proceed.

Hi, I did have a couple of questions.

The first on the 179 million, I assume that is an annualized number.

Could you say how much you will actually recognize of that in 2009?

Well, it's basically from the time of self-implementation you did that portion of it.

About -- .

I imagine there are seasonal factors.

Because the seasonality issue works out, about 2/3.

2/3.

Okay.

Then specifically, on this CapEx issue with respect to the staff recommendation, the way I interpret their filing, they seem to be saying that your '08 CapEx $250 million lower than what you guys said it was, which seems strange to the extent, I think it's the question of fact not opinion as far as what your 2008 CapEx actually was.

It happened in the past.

That is what I was referring to earlier.

I think we gave them some data that either we conveyed improperly or they misinterpreted.

The date is not quite right and the actual spending for that year was higher.

Okay.

And, Dave, would you say that, really, we not had a scenario where we had something disallowed when they see the real spending.

We don't see, I mean, what I see in the filing and I guess we're talking about what we're seeing since this came out and haven't had a chance to have a full dialogue with the staff on, this but what we think they did was simply take some average of prior years and say what is in our case for this year appears to be inconsistent to what we spent in the past and, therefore, at least in their recommendation, they simply Incorporated a number that is more consistent with the past numbers.

They haven't suggested to my knowledge that anything we're doing this year is imprudent or shouldn't be included in the rate base and we'll work on that.

Our history has been that we have not had difficulty getting prudent capital expenditures in the rate base and we feel that everything in our plan is prudent.

And then with respect to going back to the statute and that authorizes you to do file and self-implementation, the commission does have authority there to delay it or issue an order, a temporary order to delay it?

Well, I said before, this is all new.

But let me tell you what the law said.

There was concern when the law was passed that utilities could file ridiculous thing and that could self-implement it and the commission could do nothing about it.

So, they put something in the law that basically said for good cause the commission could intercede and prevent self-implementation..

We don't think there is a good cause in this case it certainly in our view isn't the intent we would go through and try to accelerate and do a full-blown rate case analysis in this six-month period, but the six months is sufficient for somebody to judge whether or not what file is totally ridiculous.

We don't think our case falls under that at all and it's true that the commission under the law for, quote, a good cause, has the ability to intercede in the process and this is new for the commission and for us.

I think the commission is taking this cautiously and making sure they appropriately consider a motion one of the parties made for them to do that, and I don't necessarily pretend that that means anything other than they cog-- doing their job.

Is there any definition, anywhere else in Michigan laws for what could cause means or how they -- what kind of standards they going to use here in this case.

Well, I'm not a lawyer and so I won't opine as to what that means.

I will sort of take it at face all -- value, but, I am sure the lawyers will argue about what all that mean when is this stuff is said and done.

I think the commission is likely to look at this in the same way I do at face value and I certainly don't believe there is any good cause based on what we have given them.

Thanks a lot.

As I said, wait and see what happens because it's all new for all of us.

Thank you.

You're welcome.

There are no further questions in the queue at this time.

Well, we didn't have that many questions.

We had some good question and appreciate the opportunity to clarify some of those issues.

I will take the fact that we didn't have that many questions to say that we didn't surprise anybody.

We were indeed, on track and I think we have kind of lady out what is going on the rest of the year, and of course, we haven't changed our guidance.

That is not to say we don't have continuing challenges to management.

We do, that the economy is still challenging for us.

We have some rate-case issues and we'll continue to manage those as we have in the past but we feel good about where we are at this stage of the process and we'll continue to keep you informed as things develop.

So, we appreciate your interest and appreciate your participation on the call today.

Thanks.

This concludes today's conference.

We thank everyone for your participation.

Good day.