公共服務電力與天然氣 (PEG) 2010 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. My name is Michelle and I will be your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group first-quarter earnings conference call and webcast.

At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session for members of the financial community. (Operator Instructions) As a reminder, this conference is being recorded Wednesday, May 5, 2010, and will be available for telephone replay beginning at 1 p.m. Eastern Time today until 11.30 p.m. Eastern Time on May 12, 2010. It will also be available as an audio webcast on PSEG's corporate website at www.PSEG.com.

I would now like to turn the conference over to Kathleen Lally. Please go ahead.

Thank you very much, Michelle. Appreciate that. Good morning, everyone. Thank you for participating in PSEG's call this morning.

We released our first-quarter 2010 earnings statements earlier today. The release and attachments are posted on our website, www.PSEG.com, under the investor section. We have also posted a series of slides that detail operating results by company for the quarter.

Our 10-Q for the period ended March 31, 2010, is expected to be filed shortly.

I am not going to read the full disclaimer statements or the comments we have on the difference between operating earnings and GAAP results. As you know, the earnings release and other matters that we will discuss in today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Although we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so even if our estimate changes, unless we are required to do so.

Our release also contains adjusted non-GAAP operating earnings. Please refer to today's 8-K or our other filings for a discussion of factors that may cause results to differ from management's projections, forecasts, and expectations, as well as for a reconciliation of operating earnings to GAAP results.

I would now like to turn the call over to Ralph Izzo, Chairman, President, and Chief Executive Officer of Public Service Enterprise Group. Joining Ralph on the call is Caroline Dorsa, Executive Vice President and Chief Financial Officer. At the conclusion of their remarks, there will be time for your questions. We ask that you limit yourself to one question and one follow-up. Thank you.

Thank you, Kathleen, and thank you to everyone for joining us today. Earlier this morning we reported operating earnings for the first quarter of 2010 of $0.84 a share, compared with operating earnings of $0.95 per share earned in 2009's first quarter. Our operating earnings for the quarter include a one-time tax charge associated with the new healthcare bill in Power's earnings, as well as higher than average storm-related expenses at PSE&G.

Our ongoing focus on operational excellence and maintaining financial strength continue to support operating earnings guidance for 2010 of $3.00 to $3.25 a share.

Now, it will come as no surprise to you that conditions in the quarter were very challenging. We realized a decline in market prices, abnormally warm weather in March, and a devastating rain and windstorm which struck New Jersey also in March, knocking out a record number of customers.

I want to publicly recognize the extraordinary effort of our employees in the face of all these challenges. Specifically, as it pertained to the worst storm in our history, their round-the-clock efforts resulted in the restoration of service for more than 600,000 customers within a week.

Equally important to their response in such special circumstances is how our employees perform day in and day out. In that regard at Power, our Nuclear facilities continue to perform at top decile levels as capacity factors remain in excess of 97%. Our Fossil units, both our coal units and combined cycle facilities, ran more in response to market demands.

PSEG Energy Holdings' investment in 27 megawatts of solar capacity in Ohio and Florida are coming online ahead of schedule.

In addition, at Holdings we continue to reduce financial risk on our lease portfolio. Another termination within our lease portfolio lowered our potential tax liability by $70 million and leaves us with four LILO/SILO leases remaining. We're also taking advantage of continued low interest rates to refinance debt at a lower cost and extend the maturities of debt at both PSE&G and PSEG Power.

The economy in our service area has shown signs of stabilizing, but I would not say we are seeing a rebound as yet. Weather normalized sales are flat year-over-year. Unemployment remains high, but has stopped increasing. And the age of our accounts receivable are below peak levels experienced in the fourth quarter of last year.

On the regulatory front, we have received important approvals from New Jersey for a major transmission project designed to improve reliability. PSE&G, however, is earning less than its authorized returns. The outcome of the pending electric and gas rate case before the New Jersey Board of Public Utilities will determine our ability to improve returns and maintain a strong investment program.

We are on track to complete construction of the back-end technology projects on our Hudson and Mercer generating units by the end of this year. The installation of this equipment on these coal facilities will conclude a major upgrade that places PSEG Power in a very good position to meet more restrictive environmental requirements.

PSEG Power is also getting ready to submit an early site permit with the Nuclear Regulatory Commission for a new nuclear unit. The permitting process is expected to take three years after submission of the early site permit.

Once approved, however, the permit will remain in place for 20 years. The permit is a low-cost option on what we believe is among the most valuable sites for a new nuclear facility in the United States.

On a separate topic, but one I suspect you are all following, markets remain challenged in the near to intermediate term by low natural gas prices. We are responding by controlling the growth in our cost structure without sacrificing the reliability which is so important to our customers.

We are also organically growing our business by investing in areas that provide strong risk-adjusted returns in the near term and maintain long-term asset value. Over any time frame, PSEG's asset location, cost structure, and environmental position all represent critical variables that should support growth and shareholder value.

With that, I will turn the call over to Caroline, who will discuss our financials in greater detail.

Thank you, Ralph, and good morning, everyone. As Ralph said, PSEG reported operating earnings for the first quarter of 2010 of $0.84 per share versus operating earnings of $0.95 per share in last year's first quarter.

Just to remind you, our operating earnings exclude the impact of the change in value for our NDT investments and obligations as well as other charges related to future decommissioning and any changes in the value of any transactions related to our generating assets that don't qualify for hedge accounting -- that is, they are marked to market.

Including these items, we reported GAAP earnings for the first quarter of $0.97 per share versus $0.88 per share in 2009.

Slide 4 provides reconciliation of operating income to income from continuing operations and net income for the quarter. As you can see in slide 8, PSEG Power is the largest contributor to earnings. For the quarter, Power reported operating earnings of $0.59 per share compared with $0.69 per share in last year's first quarter.

PSE&G reported operating earnings of $0.23 per share compared to $0.24 per share last year. PSEG Energy Holdings reported operating earnings of $0.01 per share compared with $0.02 per share in the year ago quarter. And the Parent Company reported earnings of $0.01 per share compared with a marginal loss in the year-ago quarter.

We provided you with a waterfall chart on slide 9 that takes you through the net changes in quarter-over-quarter operating earnings by major business, and I'll now review each company in more detail, starting with Power.

As shown on slide 11, PSEG Power reported operating earnings for the first quarter of $0.59 per share compared with $0.69 per share a year ago. Please note to that Power's results for the quarter have been adjusted to reflect the impact of the October 2009 transfer of the Texas gas-fired assets from Holdings to Power. As we did last quarter, we have adjusted the prior-year quarter to include the results from Texas so you have meaningful year-on-year comparisons.

The operating environment in the quarter continued to be challenged by low power prices, warm weather, and a still weak economy. Weak power pricing and the related effect on customer migration more than offset a 7% increase in generation volume during the quarter. The reduction in prices reduced Power's quarter-over-quarter earnings by $0.05 per share.

The decline in pricing includes the impact of customer migration away from BGS, which amounted to approximately $0.01 per share of the total $0.05 per share pricing impact. We continue to see effects of migration on BGS volumes. Although the absolute level of migration is higher, the rate of growth is in fact slowing.

As we mentioned during the fourth quarter of 2009, we experienced a year-over-year impact from migration of 15%, resulting in an absolute level of migration of 18% at year-end. During the first quarter of 2010, we estimate a year-over-year increase of 14%, resulting in a total volume of migration of 19%.

The flattening of the trend in migration from 18% at the end of the fourth quarter of '09 to an estimated 19% at the end of the first quarter in 2010 is in keeping with our expectations. In last year's first quarter, we experienced only small levels of migration; so you would expect that a continuation of the similar levels of total migration on a sequential basis -- as that which we experienced in 2009's fourth quarter -- would in fact have an impact on current quarter-over-quarter earnings comparisons.

As we have said, we do not expect over the full year to experience incremental EPS erosion from migration versus 2009. Should the market dynamics continue as they have in the first quarter, the incremental earnings erosion in the first quarter of $0.01 per share may possibly be offset by a slight quarter-over-quarter positive in the summer quarter, given the expected smaller pricing differential between BGS and market prices this summer versus last year's unusually large spread.

Of course, this assumes normal weather and normal pricing for the summer, and we will have to see how that plays out as we go forward.

Power's quarterly earnings comparisons were also affected by a decline in gas prices and volumes associated with BGSS and other trading-related activity, which reduced Power's earnings in total during the quarter by $0.04 per share.

The decline in BGSS earnings was $0.01 per share. This reflects the impact of warm weather and low gas prices on volume and margin.

The remaining $0.03 per share represents the mark-to-market of an estimated decline in margin on non-BGS related full requirements contracts which we recognized during the quarter, given a decline in volumes assumed under the contracts. For the most part, we serve these contracts from the market; and our approach is to hedge the volume commitment with supply contracts when we enter into the full requirements transaction.

We adjust these hedges as volume shifts, as opposed to running the portfolio with any overhedged exposure. As power prices have declined, those hedges are out of the money, creating the negative impact on earnings this quarter.

The impact on earnings from lower pricing, including the impact of customer migration, was experienced primarily within PJM, which was also affected by an increase in fuel cost. Gross margin was also affected by an increase in fuel costs.

The New England assets also experienced a decline in margin as a result of lower prices. And our New York and Texas gas-fired assets experienced a slight improvement in margin on higher levels of generation.

Slide 15 provides a breakdown of Power's gross margin by operating region. As a result of these changes, Power's margin fell from $63 per megawatt hour in the first quarter of 2009 to $55 per megawatt hour in the first quarter of this year.

Earnings comparisons were also hurt by an increase in O&M associated with the timing of planned major maintenance programs in Texas and New York, which reduced earnings by $0.02 per share. Power's results were also affected by a one-time increase in taxes associated with the new healthcare legislation enacted in March of 2010; and this reduced earnings by $0.02 per share.

However, a decline in depreciation and a decline in financing cost improved Power's earnings comparisons by $0.03 per share.

Operationally, generation output increased 7% during the quarter. Power's Nuclear fleet continues its strong performance. The New Jersey fleet managed by PSEG Power operated at an average capacity factor of 97.2% during the quarter. Including Power's 50% interest in the Peach Bottom Nuclear units, the fleet operated at an average capacity factor during the quarter of 97.3%.

While the quarter was milder overall, Power was able to capture market opportunities when it was cold through the operation of its coal and combined-cycle fleets. Year-over-year the coal-fired fleet operated at an average capacity factor during the quarter of 57% versus 53% in the year-ago quarter. The combined-cycle fleet operated at an average capacity factor of 45% during the quarter versus 35% a year ago.

The results of PJM's capacity auction for 2013/2014 year are scheduled to be released after the close on May 14. We don't intend to violate our no-forecasting rule; but we have, however, provided you with a breakdown on slide 16 of RPM pricing by zone in prior auctions, for your reference.

Let's now turn to PSE&G. At PSE&G, the company reported operating earnings for the first quarter of 2010 of $0.23 per share compared with $0.24 per share for the first quarter of 2009, as shown on slide 19. The results for the quarter were affected by several factors.

Warmer than normal weather during the quarter in contrast to colder than normal weather experienced in 2009's first quarter reduced the demand for gas heating and lowered quarter-over-quarter earnings by $0.02 per share. Colder than normal weather in January and February was more than offset by the warmest March on record.

Heating degree days in the quarter were 3.8% below normal and 10.5% below 2009's first quarter. On a weather normalized basis, electric sales were flat during the quarter with a slight increase in residential sales offset by a decline in commercial and industrial sales. The decline in demand was partially offset by an increase in transmission revenues which added $0.01 a share.

An improvement in margin on electric sales associated with higher billed demand from our commercial customers also added $0.01 a share.

PSE&G's earnings were affected by several storms during the quarter including, as Ralph mentioned, the extreme weather in March. That resulted in an increase in O&M expense of $0.02 per share for the quarter. The decline in earnings has reduced PSE&G's return on equity for the 12 months ended March 31 to 7.6% from 8.3%, as we discussed at year-end 2009.

Our electric and gas distribution assets earned an average return on equity of 7.1%, as transmission earned a return on equity slightly in excess of 11%.

PSE&G continues to await a decision on its request to increase electric and gas rates. The company's request for an increase in revenue of $204 million, divided between an increase in electric service of $139.8 million and gas service of $64.4 million, is lower than our original request for an increase in revenue of $239 million.

The adjustment includes a slight decline in our requested return on equity from 11.5% to 11.25% as well as known changes in O&M. If a settlement is not reached, we expect the administrative law judge to issue a recommendation on our request by May 20, with a final decision from the New Jersey Board of Public Utilities by midyear.

PSE&G received the New Jersey BPU's written order in late April approving the Susquehanna to Roseland transmission line. Subject to obtaining certain other necessary approvals, the company plans to begin construction of the line this summer between Hopatcong Borough and Roseland Township.

Let's now turn briefly to Energy Holdings. PSEG Energy Holdings reported operating earnings of $7 million or $0.01 per share versus operating earnings of $11 million or $0.02 per share during the first quarter of 2009. The results for 2009 have been adjusted to reflect the transfer of the Texas gas-fired generating assets to PSEG Power, as we just discussed, which happened in the fourth quarter of 2009.

The decline in operating earnings for the quarter reflects lower project earnings and lower gains on lease sales, which together reduced quarter-over-quarter earnings by $0.01 per share.

The lower gain is simply a recognition that last year in the first quarter we terminated four leases, and this quarter we terminated one lease. Of course, the good news here is that there are only four LILO/SILO leases left in the portfolio.

The lease termination that was executed in the first quarter of 2010 reduced our potential LILO/SILO tax liability by $70 million to approximately $600 million.

In financings, both PSE&G and PSEG Power completed a number of financings during the quarter which had the net effect of reducing the cost of financing for Power and extending the maturity schedule of both PSE&G and Power's long-term debt.

PSE&G's capital structure continues to be consistent with our filed rate case position of a 51% equity ratio. Power's debt-to-capitalization stands at 40% at the end of the first quarter.

The funds raised by these offerings enabled us to pay down short-term debt at the Parent, and we continue to run the Parent with no long-term debt.

As Ralph indicated, we are maintaining our forecast of 2010 operating earnings of $3.00 to $3.25 per share. We had a few unusual items this quarter affecting more than one line.

We had the impact of storms in the utility, well in excess of normal, which was a negative $0.02 per share, and we had the impact of the change in tax law brought about by the healthcare legislation on Power's operating earnings through the tax line of $0.02 per share as well. You may want to keep these in mind as you do your models since they are nonrecurring differences and distinct from the other timing items that may normally affect quarterly O&M and taxes.

We continue to have confidence in our ability to contain the growth in our O&M despite the near-term cost impacts related to storm recovery. We intend to provide you with a breakdown of operating earnings by subsidiary company upon completion of PSE&G's rate case.

We will now be happy to take any questions you may have. Kathleen?

Operator? Michelle?

(Operator Instructions) Paul Patterson, Glenrock Associates.

Good morning. Can you hear me?

Yes, Paul.

The depreciation at the Power, I think it was [stat] and financing costs were $0.03. I'm sorry, I missed what caused that.

Sure. On the financing costs, obviously had some optimization of financing that brought down our rates. On depreciation, we have at the beginning of the year updated some of our depreciable lives for some of our assets based on the expected completion of backend technology.

I'm sorry? What kind of technologies?

The back-end technology that we are putting in place at both Hudson and Mercer. We do a re-look at the depreciable life based on the application of that technology; and that changes the depreciation schedule.

Okay, so we should see how much of a depreciation benefit for the year?

I don't have exactly the number for depreciation benefit for the year, but we can follow up on precisely the number for you.

Okay. Then if I got you right, the O&M associated with the plant maintenance, which is $0.02, and the tax with healthcare, those two things won't be recurring. Correct?

Well, the tax on healthcare is clearly nonrecurring. It is a one-time non-cash charge related to the impact of the new tax law which basically makes the Medicare subsidy taxable.

Then the maintenance cost is a one-time cost if you think about -- we have sometimes costs that occur in one quarter and not another as we undertake scheduled maintenance. So that was just scheduled maintenance for this quarter that we call it out because it is not the ongoing O&M that you see on a quarter-over-quarter basis.

Okay. Then the trading -- the BGS and trading impact of $0.04. I know you described it, but I apologize; I wasn't completely sure as to what happened there and how we should think about that going forward.

Sure, so the trading costs that we talked about in terms of this quarter, that portfolio is a portfolio where we sell power, full requirements contracts. And we hedge those immediately upon the sale by purchase of power. Primarily these are purchases from the market for power, as opposed to from our assets.

By the nature of those transactions, they are marked to market on an ongoing basis. That is a small piece of our business, as we have talked about before. It is not the major part of our business, by any stretch. It is a single-digit percentage of Power's gross margin.

We mark these to market on an ongoing basis, based on changes in prices but also changes in expected volume. We had some changes in expected volume on some of the contracts this quarter; and on that basis we changed the volume expectation.

And we always keep this portfolio essentially as close to fully hedged as possible. Once we see a change in volume, we then change our hedge position in terms of the purchased power.

Given the changes in power prices during the quarter, that created the slight negative that you saw roll through the quarterly results.

But really the strength of our process is to keep that portfolio fully hedged and then adjust our hedges as we need to, based on volumes. And these of course are estimates of what we expect to have.

Now if the volumes went up, would that also have a similar impact? I guess it would depend what your position was.

It would depend on what our position was, and it would depend on prices at the time.

Right. Obviously. Okay. Well, I will let someone else ask a question. Thanks a lot.

Paul Fremont, Jefferies.

Thank you very much. I think in the third quarter you guys had talked about the very small differential in power prices between New Jersey and Western Hub. But it looks like those very low price differences have continued at least through the beginning of this year.

Is it your expectation that that will ultimately go back to where it has been historically? What seems to be, in your view, causing it to continue at very low levels?

So, Paul, I think that there are two factors that continue to play an important role in this. First of all, gas prices are down. Gas typically sets the marginal price in the East.

Coal prices are slightly up. Coal sometimes sets the price in the West.

And overall demand is down. So therefore you have excess supply for the amount of demand; that reduces congestion. And the fuels of choice have had a narrowing in terms of their price differentiation.

I think the risk is that some folks are construing this to mean that location no longer matters. And I would suggest that asset location and close proximity to load is still an important factor in anyone's competitive position.

So is it reasonable to think of the two things that you mentioned -- that the likelihood is that gas prices will -- or the gas price differentials will continue to remain lower than they have been historically? But that at some point you will get a demand recovery, and that part will essentially benefit the differential?

I think that's exactly right. You know where you see this show up most frequently obviously is that any asset has at least two components to its margin. One is an energy component, which is really what you and I have been talking about here. The other is a capacity component. You still see the price difference in the capacity markets.

Then last question for me. For the quarter, can you actually just tell us the absolute dollar contribution of both BGSS and trading to the quarter?

No, you try that on every call. We don't break out the product specific nature of the portfolio, Paul. I'm sorry.

And on the trading, just keep in mind it moves around, right, as we do this mark to market. But as I mentioned earlier, it is a low single-digit percentage of Power's overall gross margin.

And that is the way I'd encourage you to think about it in any particular quarter.

Thank you very much.

Jonathan Arnold, Deutsche Bank.

Good morning. I have a question for Ralph. Ralph, there has been some talk around changes, or at least revisiting the Energy Master Plan coming out of the governor's office. We also heard that there were going to be some hearings on that kind of topic tomorrow.

Can you give us some sort of perspective on what we might expect? Is it more likely, in your view, to result in upside or downside to current investment plans at the utility?

It seems they are talking about more in-state activities. So -- which we at least thought sounded constructive. But any commentary on what is going on to date?

Sure, Jonathan. I do think it's a constructive environment for us. To the extent that there is a difference, there is a much greater emphasis -- understandably and justifiably so -- by the incoming administration on the economic development benefits associated with some of the renewables work. If you were participating in some of the early discussions in the existing E&P, there really were two sets of benefits that were promised.

One was the obvious environmental benefits; and the second were some job creation, both in terms of installer jobs as well as supply chain jobs.

While there is no doubt we have produced a lot in the former category in terms of the installer jobs, the supply chain jobs have also existed but not to the extent that we've expected, although they were promised over a much longer time frame, as you had a sustainable market pull for these kinds of products and services.

I think the incoming administration is saying we want to do more in that regard. But you have heard and seen very favorable comments from the governor on offshore wind. He has made very favorable comments on solar, particularly in underutilized land, such as landfills.

But I think it is completely sensible for them to say we want to take a look at this Energy Master Plan and put our own imprimatur on it.

Okay, thank you. One other topic. Can you give us some thoughts as you look forward into the summer around coal-gas switching this year versus say last year, and relative economics on what you anticipate in terms of your dispatch assumptions at this point?

So we have more favorable pricing on our coal supply this year than we did last year as a result of the renegotiation of our contract. Gas prices are about where they were last year at this time; maybe just a tiny bit higher compared to where they were.

So we have generally used a number of $4.00 when we would see some reason to switch on over. Rather than predict what the summer weather will look like -- as you recall, we had an abnormally cool summer last summer. That will factor in as well.

But the conditions are there for some fuel switching yet again to take place in 2010.

Is the number a little higher than $4.00 this year given what you just said around coal?

That would be correct.

Thank you.

Michael Lapides, Goldman Sachs.

Hey, Ralph. I would love your long-term views, structural views, on the New Jersey power market in terms of just broader supply and demand trends over the next three to five years. When you think about not just the Roseland-Susquehanna line, but also your own Branchburg line coming into service over the next five years and what it does to the tightness or to the supply and demand dynamics in that area.

Sure, Michael. So what we have talked about in the past is that Roseland-Susquehanna, Branchburg, Roseland are all lines that come out of the PJM RTEP process, Regional Transmission Expansion Plan, which is a reliability centered plan. It is one of the two toolkits that PJM uses to assure reliability, the other being the reliability pricing model. So one has to look at the two of those in tandem with each other.

What you see right now is an oversupply condition that is tightening. Whether the tightening results from just the lack of, for example -- or the delay I should say in Roseland-Susquehanna of one year as a result of some regulatory delays at the National Park Service, or the natural growth in demand, or the continued growth in transmission projects going from New Jersey to the East.

But as I look at all of this in tandem with each other, it all seems to be working quite well. The RPM has been giving -- gave us a price signal last year to go ahead and build a peaker. The RTEP has gone ahead with adequate time to say it is now an appropriate time to begin the regulatory process for construction of transmission. Thus the BPU's approval for Roseland-Susquehanna.

Now, where we're not seeing those price signals are in energy markets. I think if you look at the forward price curve for energy markets it's very difficult to justify any type of baseload unit or for that matter a load following unit. You're going to have to see stronger pricing before that comes into play.

But I would say from a reliability perspective and from the point of view of keeping the lights on, the various tools at PJM's disposal through RTEP and through RPM are working quite well. You just need some more firming in energy markets to see major investment in that regard.

Got it. Thank you, Ralph.

Leslie Rich, Columbia Management.

Hi, I am sorry if you have already covered this, but going back to the BGSS and the trading and Paul Patterson's question, when you saw that the expected volumes changed lower, and so you adjusted your power supply contracts accordingly, was that just a non-cash mark-to-market adjustment? Or are you actually closed out some hedges?

I am just trying to understand your answer to Paul's question. If volumes came back perhaps greater than expected later in the year, can we recover some of that? Or is that a closed position, if you will?

Thanks, Leslie, that's a great question. So your characterization is accurate. As we see changes in forecast of volume, right, we mark both sides of the transaction to market on an ongoing basis. So the sell side and the purchase of the power.

When we see changes in volume we then adjust the hedges relative to the expected volume. So there is a non-cash nature to that, because this is for future supply and future delivery of power.

So think of this as a non-cash mark-to-market. But we are always looking at the mark from both sides on an ongoing basis. So if there is an expectation of higher needs as we go into these contracts then we would have to adjust the hedges and we would have to change the mark on that basis as well.

Of course these are all estimates of what ultimately will come out. Because these are full requirements contracts. So while we take this mark now, it is not a signal that the contract could not turn out to be more valuable in the future then we are marking it now. We just do it on a current basis and we keep ourselves fully hedged. We don't want to take any risk or open positions on either side of the contract.

Okay. So that is different from what some of the other companies have done and I think gives you more -- in my opinion -- gives you more room to benefit if demand improves.

Are these generally one-year contracts, or are there three-year contracts, or they are all different lengths?

They are different. I wouldn't say they go out as long as three years. I think of them as one- to two-year type contracts.

Okay, great. Thank you.

(Operator Instructions) There are no further questions at this time. Please continue with your presentation or closing remarks.

Thanks, everyone. Just in wrapping up, looking ahead I think ours is really a story of steady as you go. We're going to continue to focus with religious zeal on operational excellence. You see it paying dividends as we ran our assets 7% more of the time this quarter than we did last year. That is really just a question where we ended up in the dispatch queue.

We will continue to invest in those generating assets that are close to load. You see that in our BET efforts of Mercer and Hudson, and we're going to continue to position ourselves for environmental regulation that is going to get increasingly stringent.

We'll grow the utility organically. Emphasis there will be on reliability and renewables meeting the Energy Master Plan. We'll be able to fund that internally. We are committed to keeping that balance sheet strong and doing that with internally generated cash.

What that, I just want to thank you for your interest and your support, and we will be talking to you next quarter.

Thank you very much, Ralph. We appreciate all of you being on the call today.

Ladies and gentlemen, that does conclude your conference for today. You may disconnect and thank you for participating.

Thank you.

Thank you.