NiSource Inc (NI) 2007 Q4 法說會逐字稿

Good day ladies and gentlemen and welcome to the fourth quarter 2007 NiSource earnings conference call. My name is Sequani and I will be your coordinator for today. At this time all participants are in the listen-only mode. We will facilitate a question-and-answer session towards the end of this conference. (OPERATOR INSTRUCTIONS)

I would now like to turn the call over to your host for today Mr. Glen Kettering, Senior Vice President of Corporate Affairs. Please proceed, sir.

Thank you and good morning to everyone. On behalf of NiSource I would like it to welcome you to our quarterly analyst call. We appreciate the opportunity to be with you today and thank you for taking the time to join us. Joining me this morning are Bob Skaggs, President and Chief Executive Officer. Mike O'Donnell, Executive Vice President and Chief Financial Officer and Randy Hullen , Director of Investor Relations. As you know, the focus of today's call is to review our fourth quarter and year end 2007 financial performance. Share key accomplishments our teams made during 2007 and provide you with some insight on our path forward in 2008. We will then open the call to your questions.

I would like to remind you that some of the statements made on this conference call will be forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Federal Securities Laws. These forward-looking statements are subject to risks and uncertainties that can cause actual results to differ materially from those expressed in the forward-looking statements. Information concerning factors that could cause actual results to differ materially is included in the management's discussion and analysis section of our Form 10-Q quarterly report for the third quarter of 2007 which was filed November 2, 2007 with the SEC. Our annual Form 10-K will be filed in late February. And now I would like to turn the call over to Bob

Thanks, Glen. Good morning and thank you for joining us today. My comments this morning will be relatively brief to allow as much time as possible for your questions. First and foremost. I want to provide you with an overview of our fourth quarter 2007 earnings outcome, along the way I highlight a few of the many key results and accomplishments our teams delivered during the year and finally I will wrap up with a discussion of our outlook for 2008 which we view as a pivotal year in our path forward business strategy. Now, a few reflections on 2007 which was in many ways a landmark year for NiSource. As those of you who follow NiSource know we took aggressive steps in 2007 to clear the decks of distractions, and position our company for long-term growth. We resolved the number of critical legacies issues. We solidified our commitment to managing and growing our core regulated business segments and we set the stage to deliver long-term sustainable growth for our share holders. With that foundational work largely complete, each of our business segments is know poised to do what they do best, execute on the path forward strategy to become North America's premier regulated company. In many ways our news release this morning is a testament to our team's many accomplishments during the year. Culminating in our reported net operating earnings per share of $1.37 non-GAAP for 2007. That result is slightly higher than the guidance we provided in May and we believe it's consistent with our balance and investment driven long-term earnings outlook. I will touch on that in more detail later.

Our consolidated operating earnings non-GAAP for 2007 were almost $998 million. About $4 million less than 2006. Focusing on the fourth quarter our net operating earnings of non-GAAP for the three months ended December 31, 2007, were $118.5 million, or $0.43 per share. That's about even with $116.9 million or again $0.43 per share for the fourth quarter of 2006. As I mentioned before we focus on net operating earnings and operating earnings both non-GAAP measures because we believe these measures better represent fundamental earnings strength and performance of the company. Schedules one and two in the news release reconciled net operating earnings and operating earnings to GAAP.

I now would like to briefly highlight the key results and accomplishments in each of our business segments. As I said before the news release catalogs many of these in more detail so here are just a few. First, our NiSource gas transmission and storage segment delivered operating earnings of $371.8 million in 2007 which constituted about a $14 million increase over 2006. Net revenues excluding trackers were up more than $13 million despite low revenues from optimization relayed services due to less volatility in the natural gas market. In fact, firm capacity and commodity revenues have been strong compared to last year. Key driver behind this improvement is that the Columbia Gulf main line and onshore capacity is almost fully subscribed. Pipeline through put has also increased as a result of higher storage injections, gas fire electric generation demands and increased marketing activities.

GT&S also benefited during 2007 from enhanced equity earnings in large part from our hardy storage partnership which began operations in April. As I discussed on previous calls important initiative for us during 2007 was the development of a master limited partnership which we view as a strong complement of our gas transmission and storage growth strategy. In December, NiSource energy partners LP filed a registration statement with the SEC. The following proposes and initial public offering of 12.5 million common units with the initial asset being the 3400 mile Columbia Gulf system. As I mentioned in the past, I somewhat limited as to what I can say at this point regarding the development of our MLP. Moving beyond the MLP, our GT&S team has also advanced a number of key growth projects such as, the $140 million eastern market expansion which the FERC approved just this month. The team also recently proposed a major expansion of capacity into the Florida Gas Transmission system. The team executed on several new low cost but high return connections to the Columbia Gulf system and in June Millennium launched construction on the first major new pipeline to metropolitan New York in decades. As you can see developing and executing on a steady stream of pipeline and storage growth projects remains a key plank in our long-term growth platform.

Another key component of our strategy is synchronizing commercial and regulatory initiatives with major infrastructure enhancement projects in our gas distribution segment. And here again we made significant strides during 2007. From a long-term growth standpoint, the latest breaking news in gas distribution segment is in Pennsylvania where on Monday Columbia Gas of Pennsylvania filed a base rate case seeking a $60 million per year increase in the company's base rates to be effective during the fourth quarter of 2008. The Pennsylvania rate case follows more than a year of advanced preparation including our 2007 launch of a 20 year $1.4 billion gas infrastructure enhancement program across Pennsylvania. Synchronizing infrastructure investments of this type with complimentary regulatory initiatives is a core central to our growth strategy. In Pennsylvania, for example, a number of key stake holders are now supporting legislation that would establish a timely cost recovery mechanism for natural gas infrastructure improvements. Meanwhile, in neighboring Ohio, Columbia Gas of Ohio and other stake holders reached a landmark agreement in December that provides Columbia of Ohio and its key stake holders with critically important certainty for the future. The agreement establishes the framework for operations under the company's choice program for the next several years. And provides for a wholesale gas supply auction by early 2010. With this agreement in place, the stage is now set for Columbia Gas of Ohio to proceed with its infrastructure oriented base rate case proceeding. In fact, our notice of intent to file that case will be submitted yet this week.

Also during 2007, Columbia Gas of Virginia received approval to implement an off system sales and capacity release incentive mechanism effective this month Bay State Gas received approval for $6 million increase in base rates effective last November 1. Northern Indiana Public Service Company received approval in May for a rate simplification program that benefits both the company and customers. And Columbia Gas of Kentucky received approval of a rate case settlement that increases revenues by $7.25 million. On an earnings basis, our gas distribution operations reported operating earnings of $350.2 million for 2007 compared with $373.8 million for 2006. Net revenues excluding trackers were up nearly $23 million for the segment due to customer growth, regulatory initiatives and other service programs. The increases were more than offset by increased operating expenses. In fact as our news release points out, significant portion of the increased cost in each of our business segments related to the pricing structure under our business services agreement with IBM. We successfully restructured that agreement in the fourth quarter and going forward we expect costs to be stabilized and quality to be improved. The accomplishments in our gas distribution segment speak to our continued commitment to take constructive collaborative approaches to address business and regulatory issues affecting our company and our customers. That same approach holds true in our electric business where we reported 2007 operating earnings of $288.8 million. Those earnings compared with $314.1 million for 2006.

Net revenues in our electric business were up by $15.2 million excluding trackers due to increased wholesale margins, residential and commercial deliveries. Lower unrecoverable MISO charges. Sales of emission allowances and overall customer growth. It's notable that revenues were up even after $16.2 million accrual in the third quarter related to a NIPSCO purchase power settlement reached in November. Overall, operating earnings were down for the electric business again because revenue increases were more than offset by higher operating expenses. The purchase power settlement that I just mentioned was one of several steps taken to set the stage with the company's upcoming rate case. First, NIPSCO reached a settlement with regulatory stake holders and large customers resolving matters related to the cost of purchasing electric power to meet growing market demand. Then NIPSCO filed an integrated resource plan or IRP with Indiana Commission outlining plans to meet increased customer demand for about 1000-megawatts of power by 2014. The IRP concluded that the best alternative to meeting that need would be the acquisition of gas fired combined cycled generating capacity. And finally in late November NIPSCO filed a request with the Commission to authorize the purchase of the Sugar Creek Power Plant, a 535-megawatt combined cycle gas co-generation facility owned by LS Power Group. And NiSource's Whiting Clean Energy Facility, a 525-megawatt combined cycle gas co-generation facility both facilities were successful bidders in the request for proposal process. The latest news on that front is that BP indicated a desire to exercise its contractual right of first refusal to purchase the Whiting facility for the same price offered by NIPSCO. For its part, NIPSCO is reviewing potential alternative should BP acquire the Whiting facility.

As aside, I should note that our Indiana segment is benefiting from energy and leadership of Eileen Otem who joined NiSource in December as Executive Vice-President and Group CEO of our Indiana companies. Eileen is charged with profit and loss responsibility for our Indiana businesses. Chris Helms has the same responsibility for our gas transmission and storage segment. And we plan to name a third Group CEO for the gas distribution segment during the first quarter of the year. We believe providing a single point of P&L responsibility for each of our business segments is key to driving execution.

Back to 2007 results, since I mentioned Whiting earlier, I'm also pleased to report significantly improved results in our so-called other operation segment. Primarily as a result of our first full year of Whiting's redefined agreement with BP. Other operations logged earnings of $9.2 million versus a loss of $24.3 million in 2006. The $33.5 million improvement is primarily driven by positive results from Whiting. Finally on the financial management front, I'd like to remind you that in late August, NiSource successfully issued $800 million of senior unsecured notes maturing in 2018. The fact that our finance team was able to successfully complete this plan placement despite choppy market conditions is evidence of NiSource's strong capital access and liquidity. Speaking of liquidity, net cash flows from operating activities for the year ended December 31, 2007, were about $771 million. A decrease of $385 million from the $1.2 billion of cash flow in the year ended December 31, 2006. You will recall that the 2006 cash flow amount was unusually high because of working capital changes beginning in late 2005 stemming from colder weather and higher natural gas prices. Beyond the short-term changes in working capital, increases in net income and changes in deferred taxes totaling $169 million improved net cash flow from operating activities relative to last year.

Before leaving the topic of capital access, I note that both the Moody's and Standard and Poor's confirmed investment great credit ratings for NiSource in late 2007. In the process we were encouraged by the agency's favorable view of our business profile by accomplishing key milestones and continuing to deliver solid financial performance we expect improvement in our ratings over time.

The impressive list of 2007 key accomplishments is proof positive of our team's ability to execute on our game plan to position the company to deliver on our four part business plan for long-term sustainable growth. We moved aggressively and thoughtfully to clear the decks of distractions. Engage our stake holders. Make discipline investments and position our team to execute on NiSource's growth strategy. We also recognized that some the actions taken during 2007 to establish a foundation for future growth will place pressure on NiSource's earnings in 2008. For example, our planned acquisition of new generating facilities will impact earnings prior to the resolution of our electric rate case. Having said that, with our regulatory and commercial initiatives now firmly in queue, we are excited about the prospects for long-term earnings growth for NiSource.

The bottom line is that we continue to believe that net operating earnings per share for the 2008, 2010 period will fall within a range of $1.25 to $1.35 per share on a non-GAAP basis. On a GAAP basis for 2008, the lower end of the range for basic earnings per share from continuing operations is $1.23 per share due to transition costs associated with the amendment -- amended -- IBM agreement that are projected to impact 2008 by approximately $0.02 per share. For 2009 and 2010, there are no forecasted differences between the ranges for the GAAP and non-GAAP measures.

We believe that our forecast range reasonably reflects NiSource's near-term earnings expectations as our path forward strategy unfolds over the course of the next few years. There after we expect our ongoing capital investment program and growth projects currently in the pipeline to begin producing meaningful and sustainable annual growth in our earnings per share. With that in mind, 2008 will indeed be a pivotal year in our strategy with three critical areas of execution. First, we were focused on achieving our key regulatory initiatives including gas base rate cases in Pennsylvania and Ohio as well as NIPSCO's electric rate case scheduled for filing on July 1, 2008.

Second, we are advancing our NGT&S growth strategy including securing approvals and timely construction announced projects, developing an array of potential new growth opportunities and continuing with the formation of NiSource Energy Partners. And finally, we are executing a major infrastructure enhancements to projects which will constitute a significant portion of NiSource's more than $1 billion annual capital investment program for the 2008 to 2010 period. And the cap stone is that our entire team is energized, engaged and committed to this plan. And quite frankly as a regulated energy company we welcome the priorities. This is absolutely what we do best. As always, we remain committed to communicating with our investors and all of our stake holders in the transparent and timely matter regarding these and all of our efforts. Ongoing updates will provided through our analyst calls and news releases posted on NiSource.com. Thanks again for participating today and for your ongoing interest and support in NiSource. With that, we will open the call to questions.

Thank you. (OPERATOR INSTRUCTIONS) . Your first question comes from the line of Josh Golden with JP Morgan. Please

Just briefly, you touched on your investment grade credit ratings. Standard and Poor's did downgrade you in the quarter. Couple questions. Can you give me some color on the conversations that you have had with the rating agencies? Also what metrics do you need to maintain to achieve investment grade ratings? Given the amount of Cap Ex plans that you have on deck, would you be willing to let the ratings fall below investment grade?

Let me start with the last comment in just make it abundantly clear that we are absolutely committed to the investment grade credit ratings and we have been working diligently at that position even as we go forward with this very ambitious investment program. With the credit rating agencies and the way of color, very candid straight revolving around five year plan that is very consistent with the earnings outlook that we have projected. The capital programs we were talking about, the regulatory and commercial activities that we tried to share with everybody. So the agencies were involved in thoroughly reviewing, talking with me personally about that five year plan, and we believe their investment grade maintaining the investment grade ratings both Standard and Poor's and Moody's reflects their understanding of what we are doing and I think their support that this plan makes sense and worthy of investment grade ratings foreseeable future.

You would -- it's fair to characterize there is significant cushion then at the low BBB ratings?

Well, let me start out with a macro statement and then I will turn it over to Mike. We understand we need to execute and prepared remarks reflect this plan particularly 2008 is focused on execution. And we think whether you are looking at earnings, cash, operating results very ambitious plan and we have to execute. So that's first and foremost. We don't think in terms of broad latitude. We think we need to hit squarely hit this plan.

I think that's the best way to put it, Bob. Is hitting the plan. We were candid with the agency showing the five year plan that has increased capital investments and corresponding increases in debt over that time period. And after reviewing that plan and considering the business position of the company, the results came back from both S&P and Moody's. And we should remember that Fitch is pending. They had the same presentation but haven't taken any action.

You have a range of debt to capital that you would like to stay in?

I think we would like to stay under 60%.

Okay.

And on the key ratio -- I don't think I have a number that is definitive, but the FFO to debt ratios are calculated a little different at S&P and Moody's. But same basic concept. They are the key ratios.

And maybe just to belabor the point, again, if you read those reports from Standard and Poor's and Moody's carefully, they understand that execution is the key and if we do execute they provided some reason to be optimism that the ratings have room for improvement over time.

Okay. Great. Thank you.

Your next question comes from the line of Carrie St. Lewis from Fidelity. Please proceed.

Hi, Bob.

How are you?

Thanks for the helpful comes on the balance sheet and credit outlook. I wanted to touch on a couple things. First, I was wondering, I know it's probably difficult to comment but with respect to BP, exercising its right of first refusal, what are the next steps there and when can we get them clearer resolution?

We are currently in discussions with BP around their proposal. As you would expect there are -- this is a very involved arrangement involving things such as environmental permits, consent and the like. We were engaged in intense conversations with them from our side and from BP's side. Both parties are working very, very hard to move this along with dispatch. And so from the corporate perspective we want to move this. BP wants to move this. Clearly from the operating company, NIPSCO, they need clarity on whether they have Whiting or don't have whiting. So all parties are moving with dispatch. Don't have a firm time line to give you on when this might be resolved. But clearly it needs to be done sooner rather than later. I would think in terms of weeks and months as opposed to many, many months.

Okay. And is the process such that you could solicit third party bids? Or how does it work to get -- there is an opportunity for there to be like some market value placed on it? How do we get there?

Currently BP has the exclusive right to match, if you will, the bid the NIPSCO put on this. It's not an open market process at this point. It really is in BP's court at this point.

Okay.

And again, I would just go back to the original process that NIPSCO went through. They went through a very, very robust comprehensive test of the market and we think the pricing is fair.

Okay. And so if this does go the way of BP, does that kind of bring into question the NIPSCO settlement on the purchase power situation? Or do you have to find an alternative?

It's more the latter. We were still bound by the so-called FAC settlement provisions. As yor recall there are benchmark pricing and the like that we have to abide by. We are pursuing in a fast forward way commission certification or approval to go on and acquire Sugar Creek.

Yes.

That certainly goes a long way to satisfying that benchmark. However, you will recall that our IPR indicated we were 1000 megawatts short of capacity. So under any scenario we need capacity, more capacity than just one unit to satisfy what we think is a long-term need. And either with Whiting or without Whiting, we will go on and satisfy that capacity need at NIPSCO.

Okay. And just to go over questions about CapEx. I know you talked about a billion annually from '08 to '10. If I remember correctly this year it might be slightly higher due to Sugar Creek.

That's correct.

And then I was wondering if you could talk about '08 funding and just general thoughts on how you would be accessing capital markets.

Sure. We can give you the outline of an '08 financing plan. I will defer to Mike on that, Carrie.

Thanks.

Thanks, Bob. Carrie, it will probably be passed the mid point of the year, but early fall we probably will do some debt market financing. Don't know the exact amount yet, but it will depend in part on whether Sugar Creek is closed. If everything happens around that time frame it could be on the order of five to $700 million of NiSource financed debt.

Okay. And also I'm assuming the MLP will impact that amount as well?

That's correct, that's assuming MLP will have already happened.

Okay those are two critical things. Thanks for the update.

Thank you.

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

Good morning. We saw OGE pull their or delay their IPO. What's your thinking there? If you can discuss how we ought to be thinking about the cash flow implications with and without BP exercising the ROFR. And related to that, was there a door number three option on the IRP?

Good questions. Let me start with the MLP. Clearly, market conditions are choppy and we will be very vigilant about the market. I would make a couple of observations. Williams went out I guess it was about a week ago now, maybe ten days ago and their yield was 575, I believe, which is a good solid yield for that offering. I also go on and add we believed that the market will be receptive to quality and we believe that we do have a foundation for very quality MLP. But again we are going to have to watch market conditions. And you have to bear with me. That's about all I can say about the MLP and be consistent with the regs on the MLP and the S1 where we stand on that.

Secondly, cash flow implications, we believe that our outlook, our projections earnings cash, CapEx that matter are more or less still -- we think they are still very credible and reasonable and very reflective of the situation even if BP does pick up Whiting. I suggest in terms of cash earnings and not a material negative impact on where we stand today. And then third I believe you asked about other plans. Clearly, NIPSCO is looking at their alternative. Did mention that we had a too robust process. Number one, our integrated resource planning. And two, our RFP, we believe we have viable, feasible alternatives and that's what the NIPSCO team is focusing on.

If BP were to go through with acquiring Whiting, how much cash would you receive for that?

Paul, this is Mike, the purchase price would be the same as the NIPSCO RFP. It will be about $210 million. And we pretty much have a full tax basis in the property. So we would have after tax proceeds of close to that amount. That would be 200 in. We would be looking for the third door, as you call it, going the other way. I think what Bob was saying was the net difference wouldn't be a full $300 million for an additional plan. It would be whatever that is less the 210. That amount in and of itself wouldn't be material.

How much debt is associated with Whiting?

At the moment it's all intercompany debt. We refinanced that at the end of 2007. And the amount at that time was about 3 $300 million.

Thank you.

Your next question comes from the line Faisel Khan with NiSource Plead proceed.

Have I no idea what company that was but it's Faisel Khan from Citigroup.

Hi, Faisel. How are you? We had a a Puzzled look.

Yes. Quick follow upo on the Whiting facility. So the facility gets sold to BP, then the contract, the steam contract goes away. If you drop Whiting into NIPSCO, then the steam contract will still be there, is that correct?

That's correct. And you recall that contract terminates late in 2009. On its normal terms.

Okay. In terms of just how you reported your earnings this quarter, there was a line items in here, think you talked about this in the prepared remarks but I missed it. You have the tracking amounts. Op O&M trackers ow other taxes trackers, I take it those trackers actually mean that you recover any incremental amount in your revenues. Is that how it works?

That's correct.

The big ones tend to be uncollectible. Obviously we track fuel and purchase gas, taxes you mentioned.

Faisel, they are shown as separate line items on the income statements both consolidated and for the segments.

Okay. I got you. And then in terms of this year, your core OEM which you have reported, going up for the 12 months to 12.50, $1.25 billion from $1.17 billion, is that kind of normal inflation we are seeing in your O&M numbers? Is that sort of O&M increases we should see going forward.

I will put in several buckets. Number one we mention there had was contractual pricing adjustment related to the IBM service is a agreement. That was contractual step-up that ballpark approach $30 million. So it's significant amount of the O&M increase and we restructured that agreement and we believe we will flatten out that curve. We also then to your point normal payroll, pension, incentive compensation across the company and then we have an array of what I would call fixed catch-up items, be it increasing work on leakage, preparing for generation outages. You are aware we are spending a lot of money to handle generation outages on the CapEx side. We do have O&M elements that track that. We have other outages. So it's that fixed catch-up build component of it as well. Going forward, we think the O&M curve will be relatively flat.

Going forward O&M should be relatively flat.

Relatively flat. We still have to deal as you suggest normal payroll increases, benefit increases and the like.

Got you. And then on Columbia of Ohio, looking at how the pipeline storage of firm transportation contracts are done on with Columbia of Ohio, would the stipulation ending this year those contracts actually are up for renewal, is that correct?

They are up for renewal and we believe with this resolution the capacity situation between Columbia of Ohio and Columbia pipeline is stabilized. So we see renewal.

Okay. Are there opportunities to renew at higher tariffs given maybe other demands from other potential customers?

No. Again we have perk regulated rates so these are full max tariff rates on Columbia Gas transmission, Columbia Gulf.

And trying to remember. Columbia of Ohio, you guys share in the capacity of release revenues from the what Columbia Ohio can sell on the open market, is that correct?

That's correct. And you point out one stipulation will lapse or expire October of this year. When we just negotiated we will replace that and extends it through most of 2010.

Okay. Got you. And then just on the Millennium construction, that started in June and you are saying the construction will end at the end of this year?

We expect to be in service during the fourth quarter of 2008.

Are you seeing any sort of installation and cost or labor and how is the construction contract for that pipeline -- is it a fixed turnkey contract or room for labor and cost escalation?

On that they are a combination of contractual arrangements and we have had pressure like everyone else on the construction side. We also have certain arrangements with customers in terms of increases in cost. So there is a sharing, if you will, between the partners and the customers. We feel like it's going to be delivered on time and we believe it's going to be within our financial parameters.

And the construction timetable takes 18 months. It's a 200-mile pipeline roughly. If I look at other pipelines in the Mid West that takes six months to construct a 500-mile pipeline. What are the logistic involved? Is that a mountainous -- is that all mountainous area.

Great observation. It's the southern tier of New York. There are many, many environmental local community issues that we had to deal with and in terms of permitting, you solve the involved process that that has taken. For me the sensitive areas you can enter only at certain times in the year. It's a two-season build because of those considerations. I would again say generally speaking east, northeast, mid-Atlantic, these are the sorts of things you encounter on large scale construction.

Okay. And any update on potentially other projects you are looking at open season and other systems that you are waiting on?

You would expect we are very, very active. We just secured approval eastern market expansion I mentioned in the prepared remarks. I would expect steady stream of additional projects that will be announcing in the not too distant future.

Great. Thanks, guys for your time.

As a reminder, if you would like to ask a question, press star followed by the number one. Your next question comes from the line of Jonathan Arnold with Merrill Lynch. Please proceed.

Good morning. My questions were answered. Thank you.

Thank you, Jonathan.

Again, as a reminder, if you would like to ask a question, press star-one. Your next question comes from the line Elvira Scotto with Banc of America. Please proceed.

Hi, I just had a quick follow-up on the Whiting Clean Energy and the BP. I think in the last call you had mentioned that the acquisition both Sugar Creek and Whiting were expected or targeted to be completed in the second quarter of 2008. I'm wondering, I know you gone through an RFP process, if BP were to acquire Whiting and you talked about timing in the call, could you run through that for me again.

Sure.

And then especially in terms of how it relates to your outlook for 2008. Your guidance.

Fine. Let me start with Sugar Creek. We are continuing pushing forward fast forwarding approval of Sugar Creek and the hearing slated for the end of March, Commission, Indiana Commission hearing on Sugar Creek. We were pushing forward on that track. In fact, we had originally made application for the approval above Sugar Creek and Whiting. We amended that once we became aware of the BP effort. And again we were pushing forward with Sugar Creek. Once we get clarification on BP or someone said the third door, we will push forward with that plan and current estimates forecast would be that we would have approval of that at some point during the fall of 2008. We are very cognizant of the need, number one. Number two, we have a rate case we will be following in July and we want these facilities to be addressed, handled and treated in the context of that rate case. Timing is very important but at this point I would think of it in two tracks. In terms of the outlook, we stand by the outlook that we provided on the earnings side. CapEx you have a sense of what that is. And I think applicable no matter how we proceed with Whiting.

Okay. Thank you.

At this time there are no further questions. I would like to turn the call over to Mr. Bob Skaggs for closing remarks.

Again we thank everybody for your participation, your ongoing support. Have a good day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a good day.