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The Empire District Electric Company (NYSE:EDE)

Q3 2009 Earnings Call

October 23, 2009 1:00 pm ET

Executives

Jan Watson – Secretary & Treasurer

William L. Gipson – President, Chief Executive Officer & Director

Gregory A. Knapp – Chief Financial Officer & Vice President Finance

Analysts

Anthony Crowdell - Jeffries & Company

Phyllis Gray - Dwight Asset Management

Billy Haggstrom - Catapult Capital

Julian Demulan Smith - UBS

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to The Empire District Electric third quarter earnings conference call. During today’s presentation all parties will be in a listen only mode. Following the presentation the conference will be opened for questions. (Operator Instructions) At this time, I would like to turn the conference over to Jan Watson. Please go ahead, Madam.

Jan Watson

Thank you. Good afternoon and thank you for joining us for The Empire District Electric Company’s teleconference to discuss the company’s operations and to review the financial results for the third quarter and 12 months ended September 30, 2009. A live webcast of this call is available on the Empire website at www.empiredistrict.com.

Giving our presentation this afternoon will be Bill Gipson, President and CEO; and Greg Knapp, Vice President of Finance and CFO. A Q&A session will follow the presentation.

Our press release announcing third quarter earnings was issued yesterday afternoon. The press release may be accessed on our website or a copy can be emailed or faxed to you by calling 417-625-6142. A telephonic replay of the call will be available for two weeks by dialing 800-406-7325 and entering passcode 4171947#. The webcast will also be available for replay on our website.

As always, certain matters discussed in this call are forward looking statements intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. Such statements address future plans, objectives, expectations and events or conditions concerning various matters. Actual results in each case can differ materially from those currently anticipated in such statements by reason of the factors noted in our filings with the SEC including our most recent Form 10K and Form 10Q.

The earnings per share impact of revenue and expense items are all discussed on an after tax basis and compare the period referred to with the same period as the prior year. The estimated earnings per share impact of individual items is a non-GAAP presentation. However, we believe this information is useful in understanding the change in the company’s earnings between periods.

Bill Gipson will now begin our presentation.

William L. Gipson

Thanks, Jan. Today we intend to discuss our financial results for the third quarter and 12 months ended September 30, 2009. We will also bring you up to date on a few other recent company activities.

At our meeting yesterday, the board of directors declared a quarterly dividend of $0.32 per share payable December 15th for shareholders of record as of December 1 and this represents a 6.9% annual yield at yesterday’s closing price of $18.50.

Yesterday we reported third quarter 2009 consolidated earnings of $14.8 million or $0.43 per share. This is down from the same period of 2008 when earnings were $20.2 million, or about $0.60 per share. And as I am sure you have read in our press release yesterday, extremely mild weather on our electric property was the driver.

For the 12 month period ending September 30, 2009, earnings were $41.1 million, or $1.20 per share, and this compares to September 30, 2008 12 month ended earnings of $31.6 million, or $0.95 per share.

I’ll now turn it over to Greg who will further cover the financial details.

Gregory A. Knapp

Thanks, Bill. As Bill stated, we reported third quarter earnings of $14.8 million, or earnings per share of $0.43 a share compared to 2008 third quarter earnings of $20.2 m, or earnings per share of $0.60 basic and $0.59 diluted. I’ll get into the details in a moment but as customary for us, I’d like to begin by providing a non-GAAP basic earnings per share reconciliation for the quarter on a consolidated basis. For those of you that have read our press release or have it in front of you, that will be the earnings per share reconciliation I’ll follow. I should remind you once again that these earnings per share figures throughout the call are provided on an after-tax estimated basis. The basic earnings per share September 30 of 2008 was $0.60. To adjust from that positive or negative going forward here, revenues in the electric segment would be a negative. They were down $0.19 per share approximately. Revenues in the gas segment down about $0.02. On the other segment would be no impact. On the expense side, fuel and purchased power costs actually were down or it would be an increase to the earnings per share calculation of $0.06. Cost of natural gas sold and transported would also be an increase of $0.03. Operating expenses on the electric segment would be a negative $0.01. Operating expenses on both the gas and the other segments would be flat with no impact. [inaudible] and repair costs would be a negative takeaway from this of $0.02. Depreciation and amortization and the change in effective income tax rates would each be a positive penny a piece. Other income and deductions would be a negative penny. Interest charge is a negative $0.02, and the [inaudible] effect of additional shares, approximately a negative penny, so if you go through the pluses and minuses, that should move you from the $0.60 down to the $0.43.

Now I’ll review the results by segment in more detail, starting with the electric side of our business. As we noted in yesterday’s press release, our electric segment revenues were lower for the 2009 third quarter by about $9.4 million over the 2008 third quarter, which decreased earnings an estimated $0.19. Extremely mild weather for the entire quarter reduced our kilowatt hour sales significantly compared to the 2008 quarter and we estimated it lowered electric revenues by about $10.8 million. The number of cooling degree days, which is one of the factors we use to estimate the impact of weather on sales, were down roughly 24% compared to last year and cooling degree days were lower by about 30% compared to our 30 year average. Data from the Springfield, Missouri weather station indicates 2009 was the coolest third quarter in over 30 years. We believe that the weather also had a significant impact on our off-system sales as those revenues were down approximately $5.2 million as well. However, as you know, the majority of our off-system sales margin flow through our Missouri fuel adjustment mechanism so the margin from off-system sales has little effect on our bottom line now.

Our customer growth continues at a very low rate and as a result, the change in non-weather related demand did not impact revenues in a significant way compared to last year. Our jurisdictional rate increases accounted for approximately $6.8 million of additional revenue and this is predominantly from our Missouri jurisdiction due to the completion of the rate case last August.

Overall the decrease in our electric segment revenues is equivalent to a 7.2% decrease from the third quarter of 2008.

Electric fuel and purchase power expenses for the 2009 third quarter decreased about $3.4 million, which helped earnings per share on a comparative basis by almost $0.07.

Primarily as a result of the weather, our net system input was reduced by about 7% compared to 2008. This lower input, coupled with the outage of one unit at our state line combined cycle plant, lowering coal and natural gas costs by an estimated $3 million. Slightly higher prices for natural gas and coal compared to the 2008 quarter increased our cost in total by about $2.5 million.

Coal price increase is due in part to higher rail costs we are experiencing. Conversely, with demand being generally lower throughout the region, for the price we paid for our purchased power dropped compared to the 2008 third quarter, reducing our costs an estimated $2.6 million.

The final element to consider is the effect of our fuel adjustment mechanisms. The recorded adjustments, which decreased fuel expense by about $0.4 million in the 2009 third quarter compared to the 2008 quarterly fuel adjustment.

Our electric operating costs increased only $0.7 million over the 2008 third quarter, reducing earnings per share by a little more than a penny. The largest increase related to outside service costs of about $0.7 million. As [inaudible] power supply costs increased $0.2 million due to increased chemical cost related to running the selective catalytic reduction units added in 2008. Other smaller cost increases were incurred for healthcare, stock compensation and banking fees. These were partially offset by lower injuries and damage claims and from bad debt expense.

Our maintenance expenses increased $1.1 million during the third quarter of 2009 compared to 2008, which reduced earnings per share by about $0.02. Part of the increase relates to amortization being recorded for the 2007 ice storms, which is approved in last year’s Missouri electric case. Compared to the 2008 third quarter, we have reported an additional $0.5 million of amortization in 2009. In addition, expense we have incurred to ensure system reliability increased $0.3 million. And finally, substation maintenance costs increased $0.2 million.

Depreciation and amortization decreased about $0.4 million, which helped earnings per share by about a penny. This depreciation increase from plant in service were more than offset by a reduction to the regulatory amortization being recorded for our Missouri jurisdiction of $0.8 million. Our other taxes category, such as property and franchise taxes, increased $0.3 million compared to the 2008 third quarter, which had a nominal effect on earnings per share.

In summary, on an earnings per share basis, the electric segment contributed $0.45 per share during the third quarter of 2009 compared to $0.62 per share in 2008.

Now I will briefly go over the gas segment revenues and expenses. Third quarter gas revenues decreased about $1.3 million compared to 2008, while the cost of gas sold and transported decreased $1.4 million. This results in the margin having no significant impact on earnings per share when comparing the two quarters. The gas segment’s operating and maintenance expenses were down in total about $150,000 as well during the 2009 third quarter compared to 2008. Additionally, depreciation and other taxes for the gas segment showed no significant changes as well and had no impact on earnings per share. Overall the gas segment third quarter, which is normally a slow period for the gas company, decreased earnings by about $0.03 in 2009 compared to a $0.04 decrease in 2008.

From a consolidated perspective, total interest expense for the 2009 third quarter increased approximately $0.6 million compared to 2008, lowering earnings per share by about a penny. Long-term debt interest increased about $1.3 million, mostly due to the $75 million 7% first mortgage bonds we issued this past March. Slightly lower short-term debt cost and an increase in debt AFUDC lowered interest expense by $0.3 million on a combined basis.

Other interest costs were also lower by another $0.5 million. This reduction in other interest cost is mostly due to the deferral of certain carrying charges related to [inaudible], which I discussed last quarter.

I’ll briefly go over this again for those that might be new to our call. The regulatory plan had several components to it that affect our financial statements during the current construction cycle, and included regulatory amortization that we’ve mentioned several times and included reduction to our [Iatentu] AFUDC rate and in addition to other items, it also included the concept of construction accounting.

Construction accounting for purposes of the regulatory plan allows us to defer certain costs for [Iatentu] and the environmental expenditures of [Iaten-1] once these assets go into service and the deferral continues until new electric rates are effective that include these plan expenditures in our rate base.

A calculation prescribed by the Missouri Public Service Commission determines the costs which we were allowed to defer on to the balance sheet for future recovery and we’ve recorded a portion of those deferred costs as a reduction to other interest expense, which was about $0.3 million for the 2009 third quarter. The other portion offsets incremental [Iaten-1] costs and the regulated operating deduction line. Another piece of the construction accounting deferral mechanism allows us to defer the incremental depreciation on these assets as well.

We will likely talk about this over the next several quarters as the deferral continues.

And finally, our other income and deductions category decreased during the third quarter of 2009 compared to 2008 by about $0.4 million, or a penny a share.

I will briefly go over the 12 months results now. As Bill mentioned, we are reporting $41.1 million of income for the 2009 period ended September 30 or $1.20 a share. This compared to the 2008 period which was $31.6 million, or $0.95 a share.

Electric segment revenues for the 2009 12-month period increased over the 2008 period by a modest $2.2 million, which added approximately $0.05 per share.

Rate increases, mostly from our Missouri jurisdiction, contributed $25.4 million to the increase. Customer growth is approximately 0.2% year over year and the increased revenue approximately $1.2 million.

Offsetting these increases were the estimated impacts of weather and our off-system sales. Our data indicates that the number of cooling degree days in the 2009 period were lower by about 13% compared to the 2008 period which reduced revenues approximately $13.8 million.

Off-system sales and other sales further lowered revenues by $10.5 million.

Total electric fuel and purchased power expense has decreased $21.7 million for the 2009 12-month period, adding to earnings per share by about $0.45. Of course, the 2008 period includes our Asbury coal unit being shut down for roughly five months, which drove up our costs considerably in that period, as we’ve discussed in previous calls. The 2009 12-month period includes outages of [Iaten] Unit 1 and state line combined cycle and other regularly scheduled outages but our results continue to improve over 2008, primarily as a result of having fuel adjustment mechanisms in place in all of our jurisdictions.

When comparing the 2009 12-month period to 2008, natural gas and purchased power prices are down but coal is slightly higher in part due to increased rail costs, which I mentioned previously.

When it comes to volumes, coal is flat when comparing the two 12-month periods but natural gas and purchase power are down slightly in large part due to milder weather.

Total electric fuel costs for the 2009 period were lower by about $8.1 million and purchased power was down about $12 million.

When we compare the fuel adjustments made in the 12-month period, the adjustments for 2009 lowered overall fuel and purchased power expenses by about $1.6 million compared to the 2008 fuel adjustments.

Other operating expenses increased a modest $0.2 million and maintenance expenses were higher by $6.1 million. These two areas reduced earnings per share by about $0.13 in total. Small increases in other operating expenses included increased outside service costs of approximately $1.6 million and increased power supply costs related to the environmental improvements at Asbury of approximately $0.7 million.

Lower healthcare and pension costs partially offset these operating costs by $1.4 million and $0.8 million respectively. The increase in maintenance costs is again mostly related to the amortization of the ice storm I mentioned in the quarterly information. This alone added $3.4 million of maintenance costs to the 2009 period over 2008. Production maintenance also increased about $1.9 million and was mostly due to maintenance of our steam generating units and the planned maintenance at state line during the second quarter of 2009.

Depreciation and amortization expense was lower by $3.4 million adding to earnings per share by about $0.07. We recorded $5.2 million less in regulatory amortization in the 2009 period compared to 2008. Also, franchise, property, and other local taxes show a slight increase of $0.5 million, or a $0.01 reduction per share.

We also had one other item that affects that 12-month comparison. The sale of a unit train in the 2008 period resulted in a gain of $1.2 million, which reduces the 2009 earnings per share comparison by about $0.03.

In total, the electric segment income for the 2009 12-month period was $39.2 million, or approximately $1.14 per share compared to the 2008 period income of $29 million, or $0.88 per share.

Switching over to the gas operations again, revenues increased approximately $3.1 million for the 2009 12-month period compared to 2008, and the cost of natural gas sold and transported was also higher by about $3.8 million.

This decrease in margin reduced earnings per share by an estimated $0.015. Other operating costs for the gas segment during 2009 12-month period were lower by about $0.2 million and maintenance costs were flat compared to 2008, which on a combined basis had almost no impact on earnings per share. Depreciation and other taxes combined for a slight increase of $0.2 million for the comparative periods. The gas segment net income for the 2009 12-month period was $1.1 million versus $1.5 million for 2008, which results in $0.03 and $0.05 of earnings for respective periods.

On a consolidated basis, our total interest costs have increased for the 2009 12-month period by about $2.9 million, reducing earnings per share by about $0.06. Long-term debt interest increased by about $6.5 million, but it’s partially offset by an increase in debt, AFUDC income of $2.2 million.

Other interest costs were lower as we deferred approximately $0.9 million related to the [Iaten] carrying charges I discussed earlier. Also, our other income and expense category added approximately $0.7 million to earnings when comparing the two periods.

That concludes the earnings information I wanted to provide but I will now update you on a few things, including our recent hedge position.

About 81% of our remaining 2009 anticipated volume of natural gas usage for our electric operation is hedged at an average price of $6.75 per decatherm. For the year 2010, we have about 81% of our usage hedged, or 7.2 million decatherms at an average price of $6.32. For 2011, we have about 71% of our needs hedged, or about 5.1 million decatherms, at an average price of $5.84. 2012, we are hedged at 40%, or about 3 million decatherms at a price of $7.02, and for 2013, we are hedged at about the 17% level, or 1.2 million decatherms at a price of about $7.30.

And for our gas operation, we have taken a few hedged positions and purchased stored gas in regard to the 2009/2010 heating season which puts us at approximately 64% price protected based on our estimated winter needs at an average price of about $3.83 a decatherm, and our storage is approximately 91% full. We will have 85% of the winter gas supply price protected and storage filled to 95% of capacity by November 1.

And lastly, yesterday we announced an increase in the offering amount of common stock from $60 million to $120 million under our existing equity distribution program.

At the end of the third quarter, we had sold almost 17 million shares totaling about $30.6 million under this program.

I will now turn the presentation back to Bill.

William L. Gipson

It’s 1.7 million.

Gregory A. Knapp

I’m sorry?

William L. Gipson

You said 17.

Gregory A. Knapp

Oh, I’m sorry -- let me correct that. Under the program, at the end of the third quarter, we had sold almost 1.7 million shares totaling about $30.6 million.

William L. Gipson

Thanks, Greg. I have just a few items to cover before we get to your questions. At the Plumpoint generating station, the EPC vendors current schedule has shifted. The planned substantial completion date to July 28, 2010 and as most of you know, we had originally planned for substantial completion on June 1. The original guaranteed completion date remains August 14, 2010. We have arranged for sufficient alternative transmission generating capacity to meet our expected needs through July 2010 and the costs associated with this alternative will not have a material impact on our earnings.

We’ve been working with both the Missouri and Kansas commission staff, consumer advocates, and others and plan to file rate cases reflecting the rate base additions for [Iatan-1] environmental upgrades and the new generation resources represented by [Iatan-2] and Plumpoint. And with respect to Kansas, the case will include the Riverton 12 unit that came online at 2007 and the Asbury environmental upgrades completed in 2008.

In Kansas, we filed notice on September 30 with the commission indicating we are preparing an application to increase our rates, reflecting the additions I mentioned moments ago and that we expect to make that filing as early as the first week of November.

In Missouri, we are currently working out the details and a filing is imminent. As a matter of practice, we have discussion with the parties to our regulatory plan in advance of any filing. These discussions are in progress to work out the details and the timing.

I will now turn the call back over to the operator to facilitate your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Anthony Crowdell with Jeffries & Company.

Anthony Crowdell - Jeffries & Company

I was just wondering what is a reasonable assumption you think for the completion of the [Dribble] program? I guess you have $90 million more of stock to issue. Should we reasonably assume this could be completed in the first quarter of ’10 or later? I’m just looking for some clarity on when you think the program closes up.

Gregory A. Knapp

You know, when we announced this equity distribution program initially back in March, I think we explained it as a program to take us through the early part of 2010 and at that time, we were thinking in terms of a secondary offering in late 09 or early 10 on top of that to get us into the $100 million, $110 million range for equity to fund our construction program, partially fund our construction program.

As we’ve looked at the performance of the equity shelf in this last marketing period, mostly in the third quarter, and that’s where most of this $30 million was sold, you know, we’ve seen good response for that program. It’s worked well for us.

So we’ve extended the dollar amount, as you said and as we’ve said, from the 60 up to the 120. But the timeframe, that stock still goes up kind of at the same rate. So the timeframe is going to be expanded well into 2010 to accomplish the needs, if we are able to sell all of it under this plan. We’re not ruling out that we wouldn’t go back at some point based on the market, whatever might happen, and decide to do a follow-on offering. But we are kind of telegraphing here that that’s the total amount of equity that we are going to be looking for in this cycle.

Anthony Crowdell - Jeffries & Company

I guess two things -- do you see yourself coming in for another site? Like I assume if you did $30 million third quarter, you have 90 left, looking at like half mid-10 of completion if you are able to keep the same success rate of getting it done. Do you have like a -- if not completed at that time, do you guys just do a secondary of it or you will still dribble it out until it’s complete? I mean, does [inaudible] have an internal drop-dead date, if we haven’t done it, we’ll just do a secondary at this point?

And the other thing is, you have a bond I think due in November, $20 million bond. Will you guys just take out another bond to refinance it or will you use some of the equity up in the dribble to pay that down?

Gregory A. Knapp

On the first question, the timing of that equity, what we are really doing here is banking on the short-term debt we incur to fund the construction program and the plants are going to be going online next summer. The construction tails off about then but that means that the money we are spending and the money that we need to raise to fund that construction pretty much is a first half of the year item. So that kind of tells you what we are looking at from the timing of that equity raise.

As far as the debt, that $20 million bond that is due in November, at this point we don’t anticipate trying to place a $20 million bond to refinance that. We’d probably just take that out with short-term. We do have a refinancing or a bond maturing next spring of $50 million and there’s the option of maybe up-sizing that slightly and doing something then but we don’t anticipate doing a debt issuance just for that $20 million refinancing.

Anthony Crowdell - Jeffries & Company

Thank you.

Operator

Your next question comes from the line of Phyllis Gray with Dwight Asset Management.

Phyllis Gray - Dwight Asset Management

Could you provide a liquidity update as of the end of the quarter?

Gregory A. Knapp

A liquidity update -- Phyllis, we have -- let me think -- I think about $44 million in short-term debt outstanding at the end of the quarter, something like that. And it’s -- hold on a second, I’m being handed a piece of paper. Yeah, short-term debt was $44 million at the end of the quarter and actually I don’t think it’s very far off of that right now as well, under our line.

Phyllis Gray - Dwight Asset Management

Okay.

Gregory A. Knapp

I’m not sure what else you --

Phyllis Gray - Dwight Asset Management

Cash and cash equivalents at the end of the quarter.

Gregory A. Knapp

The cash equivalents at the end of the quarter was a few million dollars. I mean, we are keeping sometimes a little more cash on hand now than we used to just because under our short-term programs, sometimes as we place commercial paper bank lines, it’s going after longer periods than maybe it used to so sometimes we might have $3 million, $6 million, $9 million in the bank but generally speaking, we’re trying to keep that pretty low. That’s what it is at the end of the quarter.

Phyllis Gray - Dwight Asset Management

Okay, and then your total debt balance and total equity balance at the end of the quarter?

Gregory A. Knapp

The total debt balance would be -- long-term debt balance, this would be right off the balance sheet, would be $637 million, plus the short-term debt of $44 million, and the equity is $564 million.

Phyllis Gray - Dwight Asset Management

Okay, great. And is there any update on the cost or completion, expected completion date for [Iatan-2]?

William L. Gipson

There’s no change on cost for [Iatan-2]. Our shares remain in that $220 million, $230 million range and there’s been no change to the in-service, the expected in-service or substantial completion date, which is I believe August 1, 2010.

Phyllis Gray - Dwight Asset Management

Okay, and the environmental retrofits of [Iatan-1], when are those -- can you remind me when those are supposed to complete or --

William L. Gipson

Those were completed in the second quarter of 2009.

Phyllis Gray - Dwight Asset Management

Okay, so that’s all -- and what was the total cost of that?

William L. Gipson

Our share of that was about $55 million -- $55 million, $60 million. They are still working to close out all of the invoices on that so I think what we have spent to date is right about $55 million.

Phyllis Gray - Dwight Asset Management

Okay, and then can you remind me for Kansas and Missouri, once you file the rate case, what the timeline looks like for each of those?

William L. Gipson

The standard timeline in Kansas is eight months and the standard timeline in Missouri is 11 months.

Phyllis Gray - Dwight Asset Management

Okay. Very good. Thanks.

Operator

Your next question comes from the line of Billy Haggstrom with Catapult Capital.

Billy Haggstrom - Catapult Capital

Two clarifying questions, first on the equity -- if you do decide to do a secondary issuance, which it sounds like you haven’t ruled out, does that just effectively reduce the amount of the dribble program that you just increased?

William L. Gipson

Exactly.

Billy Haggstrom - Catapult Capital

Okay, and then my second question was on [Iatan-2], it sounds like August 1, 2010 is in the in-service date. Can you remind us what your timing for a new rate filing in Missouri would look like then?

William L. Gipson

Yeah, as I said a few minutes ago, we’re still working out the details but a filing is imminent.

Billy Haggstrom - Catapult Capital

Thanks.

Operator

Your next question comes from the line of Julian [Demulan] Smith with UBS.

Julian Demulan Smith - UBS

Basically, what are you guys seeing on the sales front? I mean, I understand that a weather normalized number might be difficult to discern just given the weather patterns you saw in the third quarter but any kind of sense as to what the underlying trends there were or alternatively what your thinking is for the back half of the year or the remaining quarter and/or 2010 at this point?

William L. Gipson

Well you know, as Gregg said, our customer growth is depressed from what it would have been, what we have seen normally. Normally we would expect to see something in the 1.5% range and year over year we’re at about 0.2%, so that’s definitely going to have an impact. And then as we’ve talked in a number of calls, our industrial class, although we’ve only had one plant closing on the electric property and none on the gas property, our industrial consumption on the electric property is still not -- it’s in the mid-single digits, like 6% or so year over year decline in kilowatt hour usage, so those factors are going to continue to have an impact on kilowatt hour sales as we move forward into the fourth quarter and probably into next year as well.

Operator

(Operator Instructions) We do have a follow-up question from the line of Julian Demulan Smith with UBS.

Julian Demulan Smith - UBS

While we were waiting, if you could just address very quickly what your alternative arrangements you made for the shift [inaudible] for capacity and energy given the Plumpoint [Iatan-2].

William L. Gipson

Good question, Julian. We have a -- we were able to rearrange or -- what’s the right word, Gregg, on the transmission -- reassign -- we were able to reassign the 50-megawatts of the transmission related to Plumpoint to another station in Arkansas and then able to secure capacity from that station from Merrill Lynch.

Operator

Thank you, and gentlemen at this time we have no further questions. Please continue.

William L. Gipson

Okay, as we close this call, there’s just one more item -- last week we celebrated our 100 year anniversary of [service]. As we begin our second century of service, our goal remains the same, and that is to be a respected supplier of energy and services as we provide our customers with safe, reliable service, utilizing the least cost alternatives and our shareholders a fair return. Thank you again for this opportunity to share our earnings report with you and have a great day.

Operator

Thank you, sir. Ladies and gentlemen, if you would like to listen to a replay of today’s conference, please dial 1-800-406-7325, or 303-590-3030 using the access code of 4171947 followed by the pound key. This does conclude the Empire District Electric third quarter earnings conference call. Thank you for your participation. You may now disconnect.

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