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Executives

Mark M. Kane - Director of IR

Gordon L. Gillette - EVP and CFO

John B. Ramil - President and COO

Analysts

Lasan Johong - RBC Capital Market

Ashar Khan - SAC Capital

Paul Ridzon - KeyBanc Capital Markets

Michael Grathin - Robert W. Baird

Edward Hinds - Catapult

Eric Beaumont - Copia Capital

Maurice May - Power Insights

TECO Energy Inc. (TE) Q1 FY08 Earnings Call April 29, 2008 5:00 PM ET

Operator

Good afternoon. My name is Elle and I will be your conference operator today. At this time I would like to welcome everyone to the TECO Energy's 2008 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

Thank you. Mr. Mark Kane you may begin your conference..

Mark M. Kane - Director of Investor Relations

Thank you, Elle. Good afternoon everyone and thank you for joining us on TECO Energy's first quarter results conference call and webcast. Our earnings release along with unaudited financial statements were released and filed with the SEC earlier this afternoon. This presentation is being webcast and our earnings release, financial statements and the slides for this presentation are available on our website at tecoenergy.com. The presentation will be available for replay through the website approximately two hours after the end of the presentation and will be available for 30 days.

In the course of our remarks, today we will be making forward-looking-statements regarding our financial outlook and plans for 2008 and beyond. There are a number of factors that could cause our actual results to differ materially from those that we'll discuss as our outlook and expectations today. For more complete discussion of these factors, we refer you to discussion of the risk factors in our Annual Report on Form 10-K for the period ended December 31st, 2007. Also today, we will be using non-GAAP measures in the course of the presentation. There are reconciliations to the nearest GAAP measures contained in the appendix to today's presentation as well as other useful information on TECO call.

On our call today, Gordon Gillette, our Chief Financial Officer, will cover first quarter results and the outlook for the remainder of 2008. Also with us today, to participate and answering your questions are John Ramil, our Chief Operating Officer and Sandy Callahan our Treasurer.

Now I will turn it over to Gordon.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Thanks, Mark, and good afternoon everyone. Thanks for joining us late in the day for this first quarter earnings call. As has become our practice with our Annual Shareholder Meeting tomorrow morning and our release of earnings is meant to go, we thought this timing was the best opportunity to review our first quarter results with you in the timely manner.

We are committed to communicating with you, and we appreciate your continuing interest in TECO Energy. We'll try to be very brief and focus on the quarter and the impact of the quarter's result on our outlook for the rest of the year. We are doing this because we just provided a longer range outlook in New York on March 27th, and because at this point in the year although the Florida housing and general economy are weaker then we originally expected, we don't see a fundamental need to modify the guidance for 2008 that we provided in February and updated in March.

For the quarter GAAP net income, which for the first time in a number of years dies not include synfuel, was $30.8 million, compared to $72.8 million in 2007, which included synfuel. First quarter non-GAAP results, excluding charges gains and synfuel with $31.4 million compared to $43.9 million in 2007.

On a per share basis, our non-GAAP results, excluding the items I just mentioned, were $0.15 per share this quarter, compared to per share results of $0.21 in 2007. Charges and gains in the quarter included a $600,000 after tax adjustment to previously estimated cost associated with the sale of TECO Transport last year. There are tables and appendix of this presentation that provide a reconciliation between GAAP net income and earnings per share and the non-GAAP measures that we just discussed.

The earnings drivers for the quarter were covered extensively on our earrings release, so we only cover the highlights at this time. Customer growth of 0.6% at Tampa Electric was significantly lower in the first quarter than last year's customer growth of 2.5%. The 0.6% growth for the quarter was also lower than the 1.3% growth experienced in the fourth quarter of 2007.

In addition to the lower customer growth rate, we had another extremely mild winter season. Total heating and cooling degree days were 10% below normal and 11% below last year, which reduced retail energy sales, especially to our residential customers. At the same time, some of our high volume, lower margin phosphate customers had outages at their production facilities, which further reduced retail sales.

As we have indicated to you previously, Tampa Electric is spending more on non-fuel operations and maintenance activities this year, and has impacted our year-over-year earnings comparisons for Tampa Electric as well. The high O&M spending at Tampa Electric was related to schedule generating unit outages, and bad debt expense, which is another indicator of the housing market and economic slowdown in our area.

Interest expense also increased for Tampa Electric in the quarter from increased levels of debt outstanding and the impact of higher interest on the auction rate bonds during the quarter. Peoples Gas results were reduced to a very mild winter weather and much lower customer growth. Operations and maintenance expenses and property taxes were down slightly at Peoples Gas, a depreciation expense increased from working capital additions to our pipeline system.

For the unregulated companies, productions and sales of TECO Coal were higher in the first quarter, compared to last year's first quarter. As we indicated in a recent presentation in New York, TECO Coal is increasing production and sales this year in response to the much stronger expected coal prices in markets in the future, especially in 2009 and beyond. However, because of the timing of our contract cycle, we won't see the benefits of most of these market improvements until 2009 and 2010.

The average selling price for the quarter was in line with our prior expectations and production cost increased as expected. The higher costs are being driven by higher prices for materials that are driven by petroleum prices. An important factor influencing our current results is the timing of the contracts that TECO Coal has in place. Most of our first quarter contract sales were under contract that were signed in 2006 and 2007 before the coal markets improved.

Another way to look at TECO Coal's first quarter results is that we have 2006 and 2007 sales prices, but we are experiencing 2008 costs of production. And that's why the results of TECO Coal are expected to improved significant when we get to 2009.

At TECO Guatemala, the generating units perform well and our results reflected the benefit of an inflation adjustment to the non-fuel rate for contract energy sales from the San Jose power station, as well as lower interest expense on a non-recourse debt associated with that plan. We also had higher energy sales from customer growth at EEGSA, the distribution utility, and the affiliating companies had increased earnings.

Finally in the Parent and other line for TECO Energy, our debt redemption activities are paying off to a lower interest expense. For the quarter, after tax interest expense was $6.8 million lower than last year. The lower interest expense just about offset the loss of TECO Transport earnings in the first quarter, due to the December 2007th sale of TECO Transport.

Turning now to our cash and liquidity status at the end of the quarter. We ended the quarter on a very strong cash and liquidity position, with almost $800 million of cash and credit facilities available, and that's after purchasing a part of Tampa Electric's auction rate bonds. The rest of Tampa Electric's auction rate bonds were converted to a fixed rate mode. Specifically in the first quarter we purchased all of the $286 million of Tampa Electric's auction rate bonds, and we reissued a $191 million in fixed rate mode for various durations. We are still holding $95 million of these bonds, and we are monitoring the market to determine if these bonds are attracted for reissuance.

Now we'll provide an update on how we see the near term economic situation and the prospects for longer term growth affecting the utilities. We saw on our release that the economic situation in Florida and Tampa area is weaker than we anticipated. We now forecast full year average customer growth for Tampa Electric to be only slightly higher than the 0.6% growth we recorded in the first quarter.

This forecast is significantly lower than we projected earlier this year. We expect the housing market and the local economy to recover starting in 2009, as the excess housing inventory is absorbed. We also forecast a return to a more normal 2% growth rate in 2010, with a projected general economic recovery well underway by that time. In addition, after many years of energy sales growth exceeding customer growth, we are now forecasting our energy sales growth will attract customer growth, due to a leveling off, or even a slight reduction in the usage per residential customer that we've seen both at the electric and gas companies.

In addition, our customer growth projections, the economic conditions, and the usage patterns, that we've been seeing are causing us to continue to evaluate the timing and configuration of generating capacity additions for Tampa Electric beyond 2010. In addition to the residential usage patterns, People Gas is experiencing lower throughput to industrial customers, whose businesses are related to the housing industry, and to commercial customers that are focused on consumer discretionary purchases such as restaurants.

On a positive note, forecaster such as MoodysEconomy.com are forecasting that the housing market in the economy will start to recover in 2009, and that Florida will return to more normal growth in 2010. I'll close with a discussion of our earnings outlook for 2008 and a few other factors that we see driving our earnings longer term. We are maintaining our current expectations for non-GAAP earning in 2008 in the range between $0.95 and $1.10 a share.

Our forecast for the remainder of the year, assumes normal weather at the utilities and a longer maintenance period this year at the San Jose plant. We also expect that over the full year 2008, the benefits of higher sales and prices at TECO Coal will be largely offset by continued higher production costs, especially for the portion of our production costs that are driven by petroleum prices.

When we get to 2009, we expect that stronger coal markets and increased sales at TECO Coal will result in almost doubling of 2008 net income for TECO Coal. About utilities, we're assuming that we get appropriate regulatory support to allow them to continue to invest in the necessary facility, to reliably provide energy of high levels of customer service and appropriate prices. We'll be very active on the investor communications front over the next six weeks. You can see that in addition to today's call and tomorrow's Shareholder Meeting. Mark will be working as hard and will have a number of opportunities to meet with investor.

I'll now turn it back to the operator to open the phones for your questions.

Question and Answer

Operator

[Operator Instructions] And to our first question, it comes from the line of Lasan Johong of RBC Capital Market

Lasan Johong - RBC Capital Market

Good afternoon. I'm assuming that the difference in your outlook for '08, in terms of your utility business is you're looking to make that up on your coal business and increase production and prices there. Is that correct?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

I think you're right in picking up on our utility projection, our customer growth being lower. In terms of the coal business, we indicated in February and again in March that this year we expect higher prices, and are now expecting production at TECO Coal but at the same time, we expect the cost of production to be higher as well. And as a result of that there is some significant offsets at TECO Coal for this year.

Lasan Johong - RBC Capital Market

Then how is it that, you can maintain your guidance at the same range, if there is no makeup for that [inaudible] in the utility?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Well, one of the reasons that we provided range was just that, we knew that there was going to be some variability and utility earnings with weather. And I think it's important to note that, we are only through one quarter here, and I think you are right to point out that the utilities were impacted, not only by customer growth, but by weather. At the same time, if the weather were to follow the same pattern as it did in 2007, we can have a very strong summer.

Lasan Johong - RBC Capital Markets

Right.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

And on a full year basis we could theoretically still windup with normal weather.

Lasan Johong - RBC Capital Markets

A couple of questions on the coal; one, the increase production is that met coal or steam coal? And two can I assume or can we assume that the increased production will be sold at spot and therefore will have potentially bigger margins than even with the cost increase, potentially have bigger margin than the $4 that you started as the kind of round number guidance?

John B. Ramil - President and Chief Operating Officer

Lasan, this is John Ramil, the increased production will be both types of coal, and we will sell that at higher prices or reflective of today's market. But remember we do have that as upside, but we also… When we gave the guidance earlier in the year, we were looking at cost that was related more to $80 to $90 a barrel oil price not a $18 oil price. So those cost increases are going to offset the upside from more tonnage at higher prices. So, our expectations for coal for the whole year are still about where they were. We initially gave our guidance.

Lasan Johong - RBC Capital Markets

Okay. Thank you.

Operator

Your next question comes from the line of Ashar Khan of SAC Capital.

Ashar Khan - SAC Capital

Can you just tell us, what additional contracting you did for '09, 2010 in the last couple of months from your last public data filing in the coal area?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Well. When we gave guidance in February, we were about 40% contracted for '09. And when we had our meeting in New York, in March, we updated that to 70%. And that increase was all steam coal for '09 and 2010, new agreements that we made, and we have no new ones since then.

Ashar Khan - SAC Capital

So, no new agreements since Analyst Presentation, is that correct?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Most of that open position is met coal, and we won't be doing that until later in the year. Although, we are talking to customers earlier than normal, it's still not time to strike a deal.

Ashar Khan - SAC Capital

Okay. Thank you.

Operator

Your next question comes from Paul Ridzon of KeyBanc.

Paul Ridzon - KeyBanc Capital Markets

Hello. Can you hear me?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Yes.

Paul Ridzon - KeyBanc Capital Markets

It sounds like you are kind of suggesting that coal net income is going to be flat for the years. Is that the right way?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

We are not giving point guidance on any of the companies. But in terms of the drivers this year, we were pretty explicit in our February in terms of average price expectations and average costs and thus far the trends on our margins, and costs, and prices are pretty much as we expected. We are expecting somewhat higher production than we indicated in February, and that actually with a fairly constant margin, that increased volume should give us a little better earnings at TECO Coal year-over-year.

Paul Ridzon - KeyBanc Capital Markets

Strategically as you look forward, are you starting to may be hedge your input costs as your signing contracts to kind of prevent what we are seeing this year?

John B. Ramil - President and Chief Operating Officer

We are looking for opportunities to do that, but with the price of those commodities continually moving up, we haven't found an attractive point to do that. But we are looking at that everyday.

Paul Ridzon - KeyBanc Capital Markets

Okay, thank you.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Just as point of data last year we did hedge oil prices and it worked out real well for us, in terms of the diesel that we used at TECO Coal, and we wish we would have done it this year.

Paul Ridzon - KeyBanc Capital Markets

Thank you.

Operator

Our next question is from [Michael Grathin] of Robert W. Baird.

Michael Grathin - Robert W. Baird

Good afternoon gentleman. Wondering if you could share your thoughts as to timing of rate cases at both Tampa Electric and Peoples Gas?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Sure. We have not been specific and aren't prepared to be specific today on the exact timing. We have indicated that, we expect that Peoples Gas will be filing in 2008 new rates in 2009, and we've indicated that Tampa Electric will need a rate increase in 2009, and at this point we are not prepared to be anymore specific than that.

Michael Grathin - Robert W. Baird

Okay, thank you.

Operator

Your next question is from Lasan Johong of RBC Capital Market

Lasan Johong - RBC Capital Market

Just wanted to quickly follow up on what changed in the last approximately three months that the guidance on the utility growth is rather dramatic, 2% to 0.6% and I think why it didn't change to 0.3%. Has the market really solid that much in three months or is there some other factors that we're not aware of, that's contributing to this rather dramatic change in guidance?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

This Gordon, and I think perhaps, both John and I may want to speak to this a little bit. But basically we've been monitoring extraordinarily closely the developments in the Tampa Economy and the housing market in our area, and have been very closely monitoring what's been happening on the customer growth front as well.

Lasan Johong - RBC Capital Market

I'm sure.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

You may remember, in our February call, the kind of state of play at that point in terms of customer growth was that, on an average basis for 2007, we'd experience 1.9% customer growth. But in the fourth quarter, we had experienced 1.3% customer growth. And so when we were looking at those numbers and doing our forecast for 2008 and beyond, we saw kind of two basic scenarios, one scenario was that we could again experience kind of 1.9% to 2% kind of customer growth in 2008 and that may be the fourth quarter customer growth figure were an anomaly.

But the other scenario that we were looking at is, the possibility that customer growth could stay down for an extended period. And so, we monitored the first quarter very closely and looked at where we were at the end of the first quarter, which as we reported was even lower growth than the 1.3% customer growth that we had in the fourth quarter at 0.6% customer growth. And on the basis of that, our forecast in Peoples did a lot of demographic and modeling work, and concluded that it was more likely than not, that we would in fact continue to see lower customer growth rates throughout 2008.

And what we've said today and I know I was cruising very fast when we were saying just part of it, but what we said today was that we now expect a full year customer growth for Tampa Electric slightly above the 0.6% that we experienced in the first quarter and that we expect that to rebound somewhat in 2009, but that we won't be back to that 2% that we were talking about until probably 2010.

Lasan Johong - RBC Capital Market

I see. Can I ask you kind of somewhat related question, which is, the government has started mailing our checks to individuals and families, can we correctly or can we assume that may be during the summer that your bad debt expenses won't be as bad as might expect given that people are a little bit more richer and they can pay off basic bills with that money. In other words, do you think you can see some benefit from that government check coming or is that just going to get spent on woolly Nellie [ph] stuff that you have nothing to do with your business?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Well we would obviously be hopeful that that would be the case. And I think your thesis has some real merit, unfortunately the other side of it is, summer is the higher usage time period and --

Lasan Johong - RBC Capital Market

Yeah.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Our average customer bills will be higher in the summer, and so I think that's another thing that we are going to have to watch fairly closely.

John B. Ramil - President and Chief Operating Officer

Lasan, this is John Ramil. Most uses of those checks in any kind of consumer spending is probably good for both of our utilities, so we see that as a positive. And I think, just a little more color; I think Gordon was right on his response on customer growth. What we saw? We saw some pretty strong growth for a long time. And what we learned, is we examine things in the fourth quarter is, a lot of that growth was growth in customers and meters. But they were empty houses on the backend. So, we are using up that inventory of empty homes, if you will, that are carried as customers. And we are trying to find out just where the bottom of that is before it turns around for new growth and we kind of --

Lasan Johong - RBC Capital Markets

I see.

John B. Ramil - President and Chief Operating Officer

We have the growth we saw on the fourth quarter and then what we saw just now on the first quarter. And then we have kind of growing consensus from Gordon's remarks that things maybe back to normal in 2010. So we are piecing together the curve from here to there and hopefully we are hitting the bottom and would start to turn around, but that inventory of unfilled homes is still out there and it really has to be consumed before we are going to see significant new growth.

Lasan Johong - RBC Capital Markets

And you think that's not going to happen until maybe 2010?

John B. Ramil - President and Chief Operating Officer

We think it will be more at full stride in 2010. Hence we could --

Lasan Johong - RBC Capital Markets

Okay.

John B. Ramil - President and Chief Operating Officer

Hence between now and then there is going to be some upward slope, but its hard to tell when we are going to hit the bottom and when is going to start to head back to that more normal growth.

Lasan Johong - RBC Capital Markets

Understood. That was very helpful. Thank you very much gentlemen.

John B. Ramil - President and Chief Operating Officer

Thank you.

Operator

Your question first from Edward Hinds [ph] at Catapult [ph].

Edward Hinds - Catapult

Good afternoon.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Good afternoon.

Edward Hinds - Catapult

You made a comment about the customer growth levels and also assessing your generation needs going forward. I was wondering if you could add a little more color on that, based on, kind of what you have proposed to the commission or put in your CapEx forecast. Does this lower customer growth rate affect the potential CapEx spend going forward or how long would this kind of lower growth period have to persist for that kind of forecast change?

John B. Ramil - President and Chief Operating Officer

It will change a little bit as we see the… What Gordon described, the main affect it will have is may be moving some of the peakers we have in the 2011, 2012 time period out and that next large combined cycle unit that we have for 2012, 2013, it may delay it a year or two. And we are planning that kind of flexibility in how we approach those projects. But we believe that the growth is still going to be there and drive the needs for those investors.

Edward Hinds - Catapult

Okay. And so, just to clarify, if under your current projection you may see the need to move stuff out a year over, would that have to be worse than your kind of customer growth projections to see that schedule being pushed off?

John B. Ramil - President and Chief Operating Officer

I think it have to be worst to see it pushed off much more than that.

Edward Hinds - Catapult

Much more than a year. Okay.

John B. Ramil - President and Chief Operating Officer

We might see more dropping of peakers in between and maybe with further softening in the entire state maybe will extend the purchase contracts that we have a little bit on, we might have that opportunity as well.

Edward Hinds - Catapult

Fair enough. I appreciate it, that's helpful.

John B. Ramil - President and Chief Operating Officer

We are in a good position, because the growth [inaudible] short lead times for those projects.

Edward Hinds - Catapult

Okay. Great, thank you.

Operator

Your next question comes Eric Beaumont of Copia Capital

Eric Beaumont - Copia Capital

Good afternoon guys.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Hi, Eric

Eric Beaumont - Copia Capital

Couple of quick questions, first you talked about, in coal that there is essentially a timing impact because of deliveries of met coal. Does that supposed that you just mine, for when it has to come out or is this going to be a continued timing and that Q2 maybe a make up and how that may or may not flow in various quarters?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Yeah Eric, I think we'll be where we plan to be by the end of the year. I think its timing between quarters and the sales mix.

Eric Beaumont - Copia Capital

Okay. And do you go ahead and absorb cost if you are taking the met coal, but you haven't shipped it, and as far as how you accrue the income there?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

No, no, we lined up revenues and expense [ph].

Eric Beaumont - Copia Capital

Okay. And secondly, obviously, weather and some of the residential impact, but you talked about lower sales for the phosphate customers due to production outages. Could you quantify that result?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

I don't have a quantification of that, I'm not sure if we did that in our publications, but that, we think that's temporary with some maintenance work that they are taking advantage of in the first quarter to do. We believe their business is going to continue to remain strong.

Eric Beaumont - Copia Capital

Okay

Mark M. Kane - Director of Investor Relations

And Eric, this is Mark, in the company's financials statistical data.

Eric Beaumont - Copia Capital

Yeah

Mark M. Kane - Director of Investor Relations

Its $2.1 million on a revenue basis changed downward year-over-year. They're just high volume users so --

Eric Beaumont - Copia Capital

Okay

Mark M. Kane - Director of Investor Relations

So they are quite noteworthy on that basis.

Eric Beaumont - Copia Capital

Okay. And I guess, last thing if you talked, that gas transfer at the PowerGen increased over the first quarter and when I take a look at them, they look like nuclear outages throughout the state were significantly different, little bit more [inaudible] some time down. If power generation from gas was up for the various either power purchasing contracts that were lower and/or other generation that was lower, it seems somewhat at odd with the lower usage overall?

John B. Ramil - President and Chief Operating Officer

I think what's that reflective of is just the difference in generation mix, for instance in our situation with our outages on our coal units for SCRs…

Eric Beaumont - Copia Capital

Yeah.

John B. Ramil - President and Chief Operating Officer

Those types of things. We had longer outages on our coal units, so we use more natural gas.

Eric Beaumont - Copia Capital

Okay. I figure that because….

John B. Ramil - President and Chief Operating Officer

I think everybody experienced similar weather in Florida.

Eric Beaumont - Copia Capital

Yeah, no, I would agree, I just want to make sure this also seemed [ph] out, if that was specific to your, if it was power being made up elsewhere or other outages, so I appreciate it guys thanks.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Eric, one more thing that I would add that. A lot of Peoples customers that are power generation are co-generation type customers and run at very high capacity factors, and so their gas usage is depended on their outage schedule.

Eric Beaumont - Copia Capital

Okay.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

In the winter time a lot of times they aren't given the possibility of cold weather so they tend to use more because of that.

Eric Beaumont - Copia Capital

Okay, that's helpful, thanks a lot guys.

Operator

And you have a question from Maurice May with Power Insights.

Maurice May - Power Insights

Good afternoon gentlemen. A couple of quick questions. First of all returning to the coal business, looking for some clarification on gypsum [ph] boarding, but I believe in March you've said that '09 coal margins would see a doubling from '08. And Gordon if I recall, earlier on the conference call you use a term near doubling. And am I hearing this right and our higher oil prices reducing margins from the doubling to a near doubling?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

It may be splitting hairs a bit here, but I think we talk more in terms of the possibility of coal's net income doubling. And that net income doubling is going to come from various significant increases in margins that we are expecting. And I think we said kind of $7 to $10 increases in margins. But also from increase volume as well we are looking, yeah, we are looking to get the kind of the 11 million ton level by 2009 as well. And so it's a combination of margins and increased volume that will probably cause our net income to double.

Maurice May - Power Insights

So it's net income rather than margins?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

That's the way I think about it.

Maurice May - Power Insights

Okay.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

I agree.

Maurice May - Power Insights

And then my second question has to do with the Peoples rate case, and I know you haven't made any decisions yet. But you did say you wanted to file in '08 for new rates in '09. Do you mean January 1st, '09?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Again, probably splitting here is a bid here. But if we look at where Peoples Gas has been from an ROE standpoint, they are clearly in need of rates both based on their 2007 ROE and their projected 2008 ROE, and so we are focused on doing on what we need to do there in a timely fashion for Peoples.

Maurice May - Power Insights

Okay. And you remind us how long it takes… remind us again, how long it takes to litigate a rate case in Florida? It's been a while.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Eight months?

Maurice May - Power Insights

Eight months.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Okay. So you could still file at May 1st, like later this week for rates January 1st?

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Yes--

Maurice May - Power Insights

Theoretically, I mean you could.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Theoretically, yes. And the other thing is that eight months clock that exist in Florida [ph] has the potential to have some stock points in it and so it could take a little bit longer.

Maurice May - Power Insights

Okay great. Thank you folks.

Operator

[Operator Instructions]. And I show no further questions at this time.

Gordon L. Gillette - Executive Vice President and Chief Financial Officer

Thank you very much everybody for attending our call today, and we look forward to seeing you in the upcoming events.

Mark M. Kane - Director of Investor Relations

Thank you operator

Operator

And thank you. This does conclude today's conference call. You may now disconnect.

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