CenterPoint Energy Inc (CNP) 2008 Q1 法說會逐字稿

Good morning and welcome to CenterPoint Energy's first quarter 2008 earnings conference call with senior management.

During the Company's prepared remarks all participants will be in a listen-only mode.

There will be a question-and-answer session after management's remarks.

(OPERATOR INSTRUCTIONS)

I will now turn the call over to Marianne Paulsen, Director of Investor Relations.

Ms.

Paulsen.

Thank you very much, Tina.

Good morning, everyone.

This is Marianne Paulsen, Director of Investor Relations for CenterPoint Energy.

I would like to welcome you to our first quarter 2008 earnings conference call.

Thank you for joining us today.

David McClanahan, President and CEO, and Gary Whitlock, Executive Vice President and Chief Financial Officer, will discuss our first quarter 2008 results, and will also provide highlights on other key activities.

In addition to Mr.

McClanahan and Mr.

Whitlock, we have other members of management with us, who may assist in answering questions following their prepared remarks.

Our earnings press release and Form 10-Q filed earlier today are posted on our website, which is www.CenterPointEnergy.com under the Investors section.

I would like to remind you that any projections or forward-looking statements made during this call are subject to the cautionary statements on forward-looking information in the Company's filings with the SEC.

Before Mr.

McClanahan begins, I would like to mention that a replay of this call will be available until 6:00 p.m.

Central Time through Wednesday, May 7th, 2008.

To access the replay, please call 1-800-642-1687, or 706-645-9291, and enter the conference ID number 41272578.

You can also listen to an on-line replay of the call through the website that I just mentioned.

We will archive the call on CenterPoint Energy's website for at least one year.

With that, I will now turn the call over to David McClanahan.

Thank you, Marianne.

Good morning, ladies and gentlemen.

Thank you for joining us today and thank you for your interest in CenterPoint Energy.

I am pleased to summarize our performance for the first quarter 2008.

This morning we reported net income of $123 million for the first quarter, or $0.36 per diluted share.

This compares to net income of $130 million, or $0.38 per diluted share for the same period last year.

As I will discuss in a few moments, operating income was impacted this quarter by approximately $22 million from mark to market charges in our competitive natural gas sales and services business.

These charges are principally timing related, and without them first quarter earnings would have been $138 million, or $0.41 per diluted share.

Operating income was $336 million for the first quarter of 2008, compared to $353 million for the first quarter of 2007.

Over the last few years, we have made strategic investments, particularly in our interstate pipeline and fuel services business units, which continue to contribute to our profitability.

These two segments performed well this quarter, helping offset the effects of higher natural gas prices on our other businesses.

Our financial results continue to demonstrate the benefits of our balanced portfolio of electric and natural gas assets.

Now let me review the performance of each of our business segments.

Houston Electric had operating income of $54 million, excluding income from the competitive transition charge and the transition bond companies.

The comparable income for 2007 was $62 million.

We continue to benefit from growth in our Houston service territory, in contrast to a slowdown in other parts of the country.

Our customer base grew by over 52,000 customers since last March, partially offsetting the impact of reduced usage, due to mild weather and customer conservation.

We also experienced some increase in operating expense in the first quarter.

Houston Electric continues to pursue an advanced metering system, and the implementation of an intelligent electric distribution grid.

We anticipate filing an initial advanced metering deployment plan in May, which calls for installing up to 250,000 meters and related infrastructure over the next three years, at an estimated cost of approximately $250 million.

The meters will be installed on homes and businesses as requested by area retail electric providers.

During this initial deployment period, CenterPoint will implement a load research program, to measure the impact on consumers' electricity usage, from the information and capabilities made available from the advanced metering system.

As part of our initial deployment plan, we will request recovery of our costs through a two-part charge.

One, an infrastructure charge to be paid over eight years by all customers, and the second, a meter charge to be paid over five years, by the customer once an advanced meter is installed.

Because of the recovery mechanism associated with this initial deployment, the increase in Houston Electric's rate base will not be significant.

Assuming the success of our initial deployment plan, we expect to seek subsequent approval by the Commission for full deployment across our system.

Now let me turn to our natural gas distribution business.

This unit reported operating income of $121 million, compared to $129 million for the same period of 2007.

We continue to benefit from solid customer growth, adding nearly 36,000 customers since March of 2007.

We also benefited from a rate increase implemented in Arkansas last November, higher natural gas prices however, led to a decline in customer usage, and an increase in bad debt expense.

Weather had very little impact on our earnings this quarter, since we had put weather hedges in place for the winter season.

We are continuing to pursue rate strategies that decouple our earnings from the volume of gas we sell.

This is particularly important in the volatile and high natural gas price environment we are experiencing.

Last year we were successful in implementing rate decoupling in Arkansas.

We were also successful in implementing a weather normalization mechanism in Louisiana.

Operationally, we are building on the momentum we gained last year from productivity improvements, and an enhanced business model.

Operating income for our competitive natural gas sales and services segment for the first quarter of 2008 was $6 million, compared to $56 million last year.

We had anticipated a significant part of this decline.

As you might recall, we realized about $28 million in gains from the sale of gas from inventory in the first quarter of last year.

Most of this gas had been purchased in 2006, when seasonal spreads were much more attractive.

And the value of this gas in storage had subsequently been written down as prices softened.

We did not have the same gas storage opportunities this year, as seasonal spreads have narrowed considerably.

Further, the significant run-up in the price of natural gas in the first quarter of 2008, resulted in mark to market losses for the derivatives we used, to lock in the economic gains from the sale of gas by this business.

While these derivatives are marked to market each quarter, the physical sales which are being hedged by the derivatives, are accounted for on an accrual basis.

This tends to create quarterly fluctuations in earnings.

Upon settlement of both the physical sales and the derivatives, the locked-in economic margin will be realized, and these losses will be offset.

Our core business of selling natural gas to commercial and industrial customers in the first quarter of 2008, was comparable to the first quarter of last year.

We experienced some decline in our ability to optimize our pipeline and storage assets, due to a decline in locational and seasonal price differentials.

Our primary focus is to profitably grow this business by expanding our commercial and industrial customer base, and secondly, to capture asset optimization opportunities when available in the marketplace.

Our interstate pipeline segment recorded strong earnings for the first quarter, with operating income of $71 million, compared to $44 million last year.

This increase was driven primarily by the completion of the first two phases of our new 172-mile pipeline between Carthage Texas, and our Perryville Hub in northeast Louisiana.

Phase 1 with almost 1 billion cubic feet per day capacity, went into service in May, and Phase 2, which brought the capacity to 1.25 billion cubic feet per day, went into service in August.

We placed Phase 3 in service earlier this month, bringing the total capacity to 1.5 billion cubic feet per day, by adding additional compression, and increasing operating pressure.

Phases 1 and 2 have been running at nearly 100% capacity since they went into service.

We have not yet awarded contracts for all of the Phase 3 capacity, but have received significant interest in the remaining capacity.

A second major project, The Southeast Supply Header, or SESH, a joint venture with Spectra, is currently under construction.

SESH will have capacity of 1 billion cubic feet per day, of which 95% is already under contract with a solid group of shippers.

There is also significant interest in the remaining capacity.

We expect this pipeline to be in service in the second half of this year.

Expansion of our core pipelines also remains a priority.

We have built a number of new laterals off our existing pipelines, to serve new customer facilities, such as a new power plant in Arkansas.

Producer drilling activity near our facilities remains high, particularly in the Woodford and Fayetteville Shale areas.

We continue to work with producers on getting this new natural gas production to market.

I am also very pleased that we have extended our agreement with Laclede Gas Company in St.

Louis.

for five years.

Laclede is our largest customer on the Mississippi River transmission pipeline.

and has been and continues to be a very valued customer.

Now let me turn to our Field Services segment.

We reported operating income of $45 million for the first quarter of 2008, compared to $22 million for 2007.

This unit continues to benefit from strong drilling activity in the Mid-Continent area.

In each of the last four years, we have added 400 wells to the system, and we are on that same pace this year.

In addition, results this quarter benefited from $11 million associated with the settlement of a contractual dispute, and $6 million from the sale of non-strategic assets.

Our Field Services business also has a 50% ownership in natural gas processing facilities that continue to expand.

The equity income that we recorded from this joint venture increased to $4 million, compared to $2 million in the first quarter of 2007.

We continue to pursue a number of projects to take advantage of natural gas development near our existing assets.

Now let me provide a brief update on our true-up appeal.

I am sure you are aware that the third Court of Appeals issued an extremely disappointing decision on our stranded costs true-up appeal last December.

The Court recently denied all motions for rehearing.

We will file our petition for review with the Texas Supreme Court, on or before the June 2nd deadline.

In closing, I would like to remind you of the $0.1825 per share quarterly dividend declared by our Board of Directors last week.

We believe our dividend actions continue to demonstrate a strong commitment to our shareholders, and the confidence the Board of Directors has in our ability to deliver sustainable earnings and cash flow.

Now I will turn the call over to Gary.

Thank you, David, and good morning to everyone.

I would like to discuss a few items with you this morning.

First, as I noted during our 2007 earnings call in February, in the first quarter of this year we closed on the sale of $488 million of non-recourse transmission bonds.

This was a very successful transaction, particularly in light of what has been going on in the financial market.

We monetized the amount that we had previously been recovering through a Competition Transition Charge, or CTC.

And electric customers in our service area will save over $100 million over the life of the bonds, versus what would have been the case had the CTC continued.

Now let me address a recent credit rating agency action.

We were informed by S&P that they have confirmed the ratings on CenterPoint Energy, Houston Electric, and CERC Securities, and changed the outlook to stable from positive.

We continue to adhere to the financial discipline necessary to maintain and improve our credit metrics, while remaining focused on improving and growing the profitability of our businesses.

There are a number of financing developments that I wanted to share with you this morning as well.

First, as David indicated, the SESH project is expected to be placed in service in the second half of the year, and we are working with our partner, Spectra Energy, to develop a permanent financing structure for the project.

Both partners have been funding their respective shares of the construction costs so far.

Second, on April 10th, we repurchased two series of high coupon tax-exempt debt totaling $175 million, at 102% of the principal amount.

One series had a coupon rate of 7.75%, and the other had a coupon rate of 8%.

We intend to remarket these tax-exempt bonds later in the year.

Temporary ownership of the bonds provides us with greater flexibility, with respect to the timing of remarketing, and we did not want to remarket the bonds at a time when a number of other issuers were refinancing large amounts of tax-exempt debt.

Incidentally, CenterPoint Energy has no exposure to auction rate tax-exempt debt.

All of our tax-exempt debt carries a fixed rate.

The third financing development involves the refinancing of the Company's convertible note.

In 2003 we issued $575 million of 3.75% convertible senior notes due in 2023.

These securities were callable by the company in May of this year, and we have given notice of a call for redemption.

As I mentioned in our last call, at the end of 2007, we began to see a number of holders convert these securities.

By the date we delivered our call notice, $184 million of principal amount of these notes had been submitted for conversion.

So there are approximately $391 million of principal amounted notes that are subject to the call.

Because the convertible securities are in the money, we expect holders of the notes to convert the securities prior to the redemption date.

For substantially all of the previous conversions, we paid the principal amount in cash, and elected to pay the excess value in common stock, which we will do with respect to the securities that are converted prior to the redemption date.

Settlement will take place in mid-June.

Finally, I would like to discuss our earnings guidance.

This morning, in our earnings release, we reaffirmed our 2008 earnings to be in the range of $1.15 to $1.25 per diluted share.

In providing our earnings estimate for the year, we have assumed normal weather in both the gas and electric utilities.

In our guidance, we have not attempted to predict the timing effect of mark to market or inventory accounting, on the earnings of our competitive natural gas sales and services business.

As David indicated, these effects are timing related, and ultimately do not impact the economics of the underlying transaction.

Finally, we have made certain economic and operational assumptions, including the timing of asset in-service dates, as well as the timing and outcome of certain regulatory proceedings.

As the year unfolds, we will continue to update you on our earnings expectations.

Now let me thank you for your interest in the Company, and I will turn the call back to Marianne.

Thank you, Gary.

With that, we will now open the call to questions.

In the interest of time, I would ask to you please limit yourself to one question and a follow-up.

Tina, would you please give the instructions on how to ask a question.

Thank you.

At this time we will begin taking questions.

(OPERATOR INSTRUCTIONS) Thank you.

Our first question will come from the line of Lasan Johong with RBC Capital.

Good morning, I wanted to ask a couple questions.

First on the open season on the Friendship and CRC Pipelines, which I think are still ongoing in the results of the Bennington Oklahoma Pipeline.

Second question is are customers really responding to high prices in, I guess, your mostly Minnegasco service area?

It looks like customer growth was pretty decent, yet, and the heating degree days were pretty high relative to last year, yet consumption actually went down, especially at the residential level.

Could you address that as well?

Thank you.

You bet, Lasan.

Good morning.

Good morning.

The Bennington lateral open season ended, it has been six weeks ago or so.

The Friendship and CRC laterals open season are still ongoing.

Both of these open seasons are designed to test the market as to how we can get gas out of the Fayetteville and Woodford area on a competitive basis.

We believe that additional capacity is needed in order to get this gas out, and so we have a lot of interest around those pipes.

We continue to work with producers in creating additional capacity where we can move their gas.

So this is going to have to wait and see how all this turns out.

We are obviously not the only ones in that area trying to figure out a solution here.

But we have good interest in all of these facilities.

We will see which ones ultimately work out.

As to high prices, we have seen high prices impact consumption.

Weather was not an issue for us this year because, as I said, we had hedged it, but our estimate is that consumption cost us a little less than $10 million in margin across all our gas businesses in the first quarter.

So I think high prices are impacting consumers' behaviors, together with everything else that is happening.

High gasoline prices at the pumps, and other things.

I think people are starting to really watch their pocketbooks here, and I think we are seeing it in gas consumption.

I see.

And do you think that the rebate checks that the government is sending out, is that going to have a material benefit to CenterPoint in any way?

You know, Lasan, I really don't know.

I doubt it, but it is hard for me to judge whether that will have any impact or not.

Okay.

And just one quick question on the intelligent grid, are you still planning to use BPL technology that you used in the commercial pilot project, to use as a backbone for communication on the system?

The initial deployment, we are probably going to use cell relay technology for most of it, because this is going to be scattered around our systems, because it is going to be driven by where retail energy providers want to have these meters put in, and they won't be all clustered.

I think ultimately our ultimate deployment might very well use BPL, but as you know, this communication technology is advancing rapidly, and who knows what will be out there when we go to full deployment.

Based on the technology today, we would use BPL for the full deployment, but not for this initial deployment.

I see.

And did I hear correctly that you said, over an eight-year period you are going to recover the infrastructure charge from everybody in your service territory, but over a five-year period you would only recover the cost of the meters for those who get the installed meters?

Is that how it is going to work?

That is exactly right.

We have to build a fairly big office, lots of computer systems, lots of infrastructure, and we have a much smaller charge that we are going to be requesting, that would recover those dollars over an eight-year period.

The meter itself, and the installation cost of the meter, and the communication part, will be recovered only when we implement or install that meter, and it would be a much shorter timeframe.

I think the Commission rules calls for a five to seven-year amortization for the meter itself, and that is what we are following.

Excellent.

Gary, on the converts real quick, how many shares do you expect to issue once you convert everything?

If you assume a $15.50 share price, it will be about 10 million additional shares.

Thank you, thank you very much.

Our next question will come from the line of Annie Tsao with AllianceBernstein.

Can you comment in terms of your bad debt or uncollectible, by all of the utilities, in terms of each of the utilities geographically?

Well, gosh, Annie, I don't have that geographically, but bad debt expense is up in our gas LDCs a little bit.

I think we had like $18 million of bat debt expense this quarter, up from a little less than $16 million last year.

We have put in some procedures and collection activities, and really have been pretty aggressive on collections.

While we are seeing some increase, it is really fairly minor relative to where the commodity costs have gone.

So it is not a huge deal, but it clearly, it is affecting us some.

And my second question has to do with the subprime crisis.

Does it impact any way you do business?

And how do you monitor your counterparty list?

Well, it doesn't affect us that much.

We do some over the counter business in derivatives, but a lot of those are standard NYMEX contracts.

And we obviously do monitor to that pretty close, so I don't think that has impacted us at all.

The only impact I think we have seen, if any, is in the commercial paper market, because we were selling a fair amount of commercial paper before this happened.

We aren't now, because that market is not as robust for our credit, but generally the market has been open, as you know, for energy companies and utility companies, and I think we are not seeing a big impact there.

Thank you.

Our next question will come from the line of Faisel Khan with Citigroup.

On the deployment of the smart meter system, the 250,000 customer deployment, did you say you will actually get a return on capital while that $250 million is being depreciated over the various lifetimes?

We will.

We will get a return on the amount of dollars that we haven't recovered.

It because of the short amortization period, it doesn't stay unrecovered a long period of time.

But, yes, during interim periods, we clearly will get a return on that.

Okay.

In terms of reading into the full deployment costs of the system, this is for 250,000 customers, can we apply kind of a linear equation across to the 1.7 million or 1.8 million customers?

No, I don't think that is fair.

A lot of this is infrastructure cost up-front.

Our initial estimates, if we went across all our 2 million customers, with something on the order of $1 billion, just round numbers.

Now that includes a fair amount for BPL infrastructure, which I mentioned earlier may or may not happen.

For the meter itself and installation, I imagine you can count on about $200 per installation.

So that is $400 million, and the rest is for infrastructure and operating costs in the interim, and stuff like that.

But I think $1 billion is probably a good round number to be thinking about.

Then in terms of the first quarter, your earnings from the TDU, you talked about increases in transmission costs, and other operating expenses.

Can you just elaborate a little more what is going on over there?

We get charged from others for increased transmission, and we have seen a lot of our other utilities in the state investing in transmission, and we essentially have to pay for that, and there is a lag on when we can go in and recover it.

And so we are feeling part of that lag.

Second is the overall way transmission is allocated is on coincidental peaks in the summertime.

We are getting a little bit more allocated to us on that basis as well.

So we are talking probably 3 or $4 million of net increase in the first quarter over the previous quarter.

The cost increases, there are a myriad of them, as you would expect, but there is a fair number related to Information Technology, and the work we're doing in some of that area that have increased.

But there is just kind of onesies and twosies, and there is not any real big hitter.

On the interstate pipeline business with Mid-Continent Express signing up shippers on some of the Mid-Continent shale opportunities, like the Woodford, Fayetteville Shale, any impact on the opportunities going forward to your pipeline?

It doesn't affect Carthage to Perryville at all.

I think what is happening, Faisel, there is just so much gas that is expected to be produced out of the Woodford, the Fayetteville, the Barnett, and now the Haynesville Shale plays, our expectation is that we are going to need some more capacity besides all of the pipe that has already been built.

And of course everybody is trying to do analysis of that, but we think there is lots of gas that needs to get to market, and that these pipes were absolutely needed.

As you know, our CPI I noted that it is been running at 100% since we put it in place.

And other pipes I am sure are experiencing very similar types of rates.

Great.

Thanks for the time.

(OPERATOR INSTRUCTIONS) Our next question will come from the line of Patrick Forkin with Tejas Securities.

Patrick?

Yes.

Hello?

You are up.

Good morning.

With respect to your comments on the advanced metering program, I know you said you were going to file in May.

When would you anticipate actually that deployment of the 250,000 meters to start?

Well, the Commission has 150 days to act on our deployment plan.

We are working with the parties to see if there is a way to accelerate the implementation of some of those meters, and get them in to this year, because if you waited to the end of the deployment plan, you would have to wait until next year.

So we are looking, and we have come one some ways, and we'll be asking the Commission to approve some ways to get meters in early.

But we will just have to wait and see how all of that plays out.

If you just go based on the regular deployment plan, it would be '09 before we really started deploying it, probably toward late spring before we would really get in full swing there.

Okay.

Then in your call at the end of February, I think with regards to this filing, you had talked about a total of 2 million meters, and 750 to $800 million.

Could you give us any background on sort of what has transpired between then and now?

Because it kind of looks like a pretty significant pull-back.

It is really not a pull-back, Patrick, although we have changed our deployment thoughts.

And the reason is, as mentioned earlier, $1 billion is a lot of money to spend on metering.

And you certainly can't deploy it just based on the benefits that CenterPoint will get out of it.

We will clearly get benefits from meter reading and automated cut-ins and cut-outs, and stuff like that, but it is really going to be driven by the benefits that consumers are going to realize, by changing their energy consumption behavior.

And so what we have decided is before we go to this full plan, is that we put out 250,000, which is enough to demonstrate the benefits of this system, and we expect that they will be demonstrated, then we will go to the full deployment.

If the consumers don't respond the way we expect, then you might very well do something different than spending the full amount.

So I think it is a recognition that this is a system that is really, the benefits have to be driven by the consumer.

And our load research program is designed to measure that, and to make sure everybody understands the benefits of this before we go through full deployment.

Sure.

Okay.

Thank you very much.

Okay.

Our next question will come from the line of Nathan Judge with Atlantic Equities.

I would like to ask about the possible demand decline from this meter reading, if there is indeed a decline in consumption following the deployment of this metering, do you think your costs will be able to fall enough to offset that revenue deficiency?

The meter rule says that you have to take into account, savings at the same time that you take into account cost increases.

So I don't think that the meter charge itself would take care of that, but my expectation is we are going to go to a decoupling tariff in the electric side the next time we go in.

Our rates are fixed until 2010.

We will file a rate case using a test year as of December 31 '09, file it by mid-year '10.

And my expectation is that we would decouple our cost recovery from the volume of electricity, so for the very reason you are talking about.

And then energy efficiency, energy conservation doesn't impact us.

Very much like what we are doing on the gas side.

We are helping and promoting energy conservation where we can with our gas customers, but we need decoupled rates there, in order to make sure that our shareholders and customers interests are aligned, and I expect that is the same thing we will do on the electric side.

With regard to the competitive natural gas sales and service business, how much does the implementation of the actual operation of SESH being put in place and operating, now affect that business?

It doesn't have a big impact.

Maybe some minor impacts, because you have seen a change in basis in some parts of the country as these new pipelines are put in place.

And that has some impact, but it is fairly minor, to be very honest, on our energy services business.

But clearly as other pipes are put in service, the way the price of gas at different locations is going to change, and we have to anticipate that, and make sure we have capacity on the right pipes, so we can sell the best priced gas to our customers.

So it is really a matter of anticipating where you get your gas, and what the cost of that gas is, and Carthage to Perryville has had some impact, but not as much impact as you would think.

I would call it fairly minor.

With regard to just generally though, given that new pipelines are coming on, and potentially could reduce the basis differentials between hubs, would it be reasonable to think there is going to be increasing pressure on that business?

I would say that our core business of selling gas to commercial and industrial customers will not be impacted very much.

Probably none.

But we make a fair amount of money by optimizing around all of the assets that we have pipeline capacity and storage capacity, and, yes that could be impacted.

We have seen lots of opportunities the last few years, but the majority of those were a result of Rita and Katrina just a few years ago, that disrupted the market, had a lot of dislocations, and we clearly were able, because of the assets we held, were able to make a fair amount of money.

I think that business could be impacted more than our core retail business, as a result of all of these pipes coming in place.

That is very helpful.

Thank you.

Okay.

Our next question will come from the line of Anthony Crowdell with Jefferies.

My question is have you guys quantified the impact from conservation, I think for the natural gas distribution, the decrease is mainly attributable to conservation, and also the outlook for the year, if this level of conservation keeps up, do you guys see a problem with guidance, or anything like that?

We have tried to factor that into our guidance.

Certainly the first quarter is the biggest impact.

Second and third quarters, we don't expect because those are very low consumptions months, and we don't expect it to the impact that, so it is really the fourth quarter, which is our second largest quarter, where there could be some impact, and I mentioned at our last call, we have built into our forecast $7 to $8 gas.

Today it is more like $10.50.

So we will see where gas is at the end of the year, to really understand how much conservation may be driven based on price.

But at this stage, we are fairly comfortable with our forecasts.

We clearly are watching customer conservation closely.

Not only on the gas side, but on the electric side as well.

Have you quantified the impact of conservation for the quarter, or you haven't broken it out?

Well, for the gas side, it was a little less than $10 million.

That is our estimate.

I will also say that is a little bit of art and not all science, in estimating how much weather impacts customer's usage, but we model it around heating degree days and things of that nature.

But I think that we are fairly comfortable.

We saw some conservation in the first quarter on the order of $10 million, plus or minus a few million.

Our next question is a follow-up question from Lasan Johong with RBC Capital Markets.

Hi, Lasan.

Lasan, your line is open.

Hello.

Sorry about that.

Longer term, David, as you start rolling out the meters, and your end objective is to help consumers conserve energy, are you looking to perhaps get the Commission to kind of give you a decoupling revenue mechanism, where conservation is rewarded at the utility level as well?

Lasan, that is right.

I mentioned that earlier.

We expect some type of decoupling tariff to be requested the next time we go into the Commission, which would be, the earliest we could go in would be 2010.

You got a rate freeze until that point, right?

That is right.

Other than transmission, we can go in for a transmission increase by the end of September of this year.

And I expect that we are going to be doing that.

Did you study the impact of what kind of, or how you might, what the mechanism of the decoupling would look like, and how much this all would, how much ultimately you would look to save, in terms of costs for the consumers and what that would mean, in terms of return to shareholders?

Have you done any preliminary studies, or looked at that?

No, we really haven't.

I think we will, as we roll out these meters and we understand customer response, we will be doing a lot more around that, and really identifying what opportunities there are for CenterPoint Energy to be involved in energy conservation and energy efficiency initiatives, and other initiatives in this whole environment that we find ourselves in.

High energy prices, climate change concerns, carbon concerns.

All these are things that we clearly are studying, trying to understand what is our role in all of this.

That is great.

I appreciate your help.

Thank you.

And we have no further questions at this time.

Ms.

Paulsen, do you have any closing remarks?

Thank you very much, Tina.

I would like to thank everyone for participating in our call today.

We appreciate your support very much.

Have a great day.

Ladies and gentlemen, this concludes CenterPoint Energy's first quarter 2008 earnings call.

Thank you for your participation.

You may all disconnect.