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Westar Energy, Inc. (NYSE:WR)

Q1 2008 Earnings Call

May 9, 2008 10:00 am ET

Executives

Bill Moore - President, CEO

Mark Ruelle - EVP, CFO

Doug Sterbenz - EVP, COO

Kelly Harrison - VP, Transmission Operations and Environmental Services

Tony Somma - Treasurer

Analysts

Michael Lapides - Goldman Sachs

Edward Hans - Tadpole

Steven Cambata - Longbow Capital

Travis Miller - Morningstar

Hasan Doza - Luminus Management

Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2008 Westar Energy Earnings Call. My name is Katie and I'll be your coordinator for today. At this time all participants will be in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions)

I would like to now turn the call over to the host for today, Mr. Tony Somma, Treasurer. Sir you may proceed.

Tony Somma

Thank you, good morning. I am Tony Somma, Treasurer of Westar Energy. Welcome to our first quarter 2008 earnings conference call. Because some of our remarks will be forward-looking I remind you of uncertainties inherent in our comments during this call or that may be contained in our earnings release and materials that supplements the release.

This morning we posted the earnings release and supplemental materials on our website at westarenergy.com. The supplemental materials include information intended to assist investors in their analysis of our financial release. They can be found under the investor presentations within the Investor Relations section of our website. The applicable Safe Harbor disclosures are presented at the end of the release. We filed our 2008 first quarter Form 10-Q this morning.

With that I'll introduce Mark Ruelle, our Executive Vice President and Chief Financial Officer.

Mark Ruelle

Good morning and thank you for joining. On the call with me today in addition to Tony are Bill Moore, our President and Chief Executive Officer, Doug Sterbenz, our Chief Operating Officer, and other members of our senior management team.

In addition to commenting on the first quarter I'll provide updates on our regulatory matters and comment on 2008 earnings guidance. Tony will provide more in-depth discussion of the quarter's results and financing activities and Bill will provide and update regarding our major construction projects and our plans for the rate case. After that we will be pleased to take your questions.

Today, we reported first quarter 2008 earnings of $0.63 per share, an increase of $0.29 per share from the first quarter 2007. Our first quarter earnings included significant $0.40 per share benefit related to the completion of a Federal income tax audit for the years 1995 to 2002, which Tony will address in more detail later in the call. Without the tax benefit first quarter earnings per share would have been $0.23 compared with $0.34 last year.

Consistent with our expectations, first quarter per share results this year also reflect a greater number of shares outstanding, as we have issued an additional 10.3 million common shares since the first quarter of last year, all as part of funding our growth plan. This additional equity along with significant investments in new generating plant are not yet reflected in the prices we charge our customers.

Before Tony shares the details with you, let me provide just a few highlights. Positives in the quarter included higher retail and wholesale revenues, lower SG&A expense, higher other income, primarily equity AFUDC and lower interest in income tax expense due to the tax audit. Items serving to reduce earnings included higher fuel and purchase power expense, increased O&M expense, higher depreciation expense and of course on a per share basis, more shares outstanding.

Now let me turn to regulatory matters. As you may recall in December, we filed a requested at FERC to revise our transmission formula rate that has been in existence now for a couple of years. We proposed changes to the formula that would among other things allow us to earn an additional 50 basis points on our authorized ROE and to include forward looking adjustments or expected capital expenditures a step designed to reduce regulatory lag.

In March, the FERC approved our requested increase in the ROE, but set the other changes for settlement discussions and potential hearing. Although all changes are set to become effective June 1, the unsettled matters will still be subject to refund until they are resolved. In that regard, we've already had one settlement conference with the second scheduled for later this month. As a result of the already approved change, our current 10.8% authorized ROE will increase to 11.3% effective June 1.

In a companion December FERC filing, we also requested rate incentives for three transmission projects. FERC approved incentives for the largest of these, but denied them for the smaller two. Accordingly, we will receive incentives on our nearly 100-mile Wichita to Salina 345 kV transmission line that's already under construction and is expected to be completed by 2009.

The incentives for this investment are 100 basis points added to the authorized ROE and an accelerated book depreciation schedule of 15 years. Given our project budget of approximately $150 million, this implies about $75 million of equity that will earn a 12.3% authorized ROE with an annual depreciation recovery of about $10 million instead of less than one-third of that amount using typical depreciation rates.

Recall that Kansas law permits an electric utility that recovers its transmission costs through rate set by the FERC to recover the retail portion of those rates through a separate transmission deliver charge or TDC rider. After some sorting out of the details over the past couple of years, we believe we are near the final steps of implementing the TDC rider that can adjust annually in accordance with changes to our FERC formula rate. We are hopeful to implement this yet this quarter.

While rates for transmission service are set by the FERC, the KCC retains citing authority for the location of new transmission lines. In December, we filed a request for citing authority for a 50-mile 345 kV transmission line from near Wichita south to the Oklahoma border. On April 25, the KCC approved our request.

You will recall that we updated our Environmental Cost Recovery Rider or ECRR. Each year based on our investment and emissions control equipment as of the end of the prior calendar year. We filed our updated tariff with the KCC in March.

In addition, to the regular tariff update we also requested that ECRR recoveries continue to be presented to customers as a standalone item on our bills. As supposed to be zeroed out by rolling those amounts in to base rates at the time of a rate case. Preserving this presentation we think, helps provide better visibility to customers about the cost of meeting environmental regulations included in our rates.

The KCC staff completed its review of the ECRR tariff and has recommended that the commission approve the changes. We expect effective June 1, the annual environmental surcharge will be reset to $27.2 million up from the current $5.2 million today. The increase reflects the progress on our Jeffrey Energy Center scrubber installation.

We still expect to file our retail rate case in late May, because Kansas has a 240 day calendar for rate cases. The KCC will render its decision no later than late January. Bill will discuss the planned rate filing later in the call.

Now let me turn to 2008 earnings guidance. Today we are affirming 2008 earnings guidance in a range of $1.50 to $1.65 per share. Exclusive of the $0.40 per share tax benefit we recorded in the first quarter.

Our ability to achieve earnings in accordance with guidance is dependent on a number of variables including weather, operation of our generating plants, prices in the fuel and wholesale power markets, conditions in the capital market and funding of our planned capital program among other factors.

Now let me ask Tony to share with you a few more of the details about earnings and to provide an update on our financing plans. Tony?

Tony Somma

Thanks, Mark, because you have access to our release and earnings packet, let me just touch on a few highlights rather than recite what is in the printed materials.

Retail revenues increased by $15.2 million due primarily to increased fuel and purchased power costs that we recover through a fuel adjustment cost and higher customer sales. Tariff-based wholesale sales increased $14.8 million resulting largely from long-term wholesale contract we entered into April 2007. Market-based wholesale sales increased $3.6 million due to higher average market prices even though lines were quiet a bit lower due to increased maintenance outages at our base load plants this year.

First quarter 2008 operating expenses increased $52.7 million. Excluding fuel and purchased power expense, operating expenses increased $9.6 million or about 5%. The increase in O&M expense was principally due to increased SPP network transmission costs, which are largely recovered through higher transmission revenues allocated back to us and higher maintenance expense at our generating plants, which resulted from increased outages at our base load plants.

The cost of fuel and purchased power increased $43 million, reflecting increased volumes as well as higher per unit cost. Due to the maintenance outages at our base load plants including the refueling outage of Wolf Creek, we utilized more of our natural gas fired units and relied more on purchased power.

The refueling outage took longer than we had planned. The plan is expected to be on line this weekend. The effects of the completed tax audit of that Mark mentioned is reflected in two places. First our income tax expense was lower by $30.3 million, due primarily to $28.7 million reversal of the tax reserve and second we reversed $17.8 million of interest accruals related to that tax reserve.

Offsetting the interest reduction was the $3.1 million, more interest due to higher debt balances and additional interest on the capital lease; we assumed as a result lease hold interest in Jeffrey Energy Center we acquired last spring. All said this resulted in an income tax benefit for the quarter of $18.2 million, which when compared to an income tax expense of $12 million last year, resulted in the positive variance of $30.3 million Mark and I mentioned earlier. These items are delineated on page 4 of the supplemental earnings packet located with the investor presentations on our website.

Our large CapEx program continues according to plan. Our three year forecast for capital expenditures for 2008 to 2010 has our total spend estimated about $2.5 billion. At the end of the first quarter 2008, short term debt was about $323 million. It continued to go through April and grow until May until we closed on the $150 million private placement of KGE First Mortgage Bonds to be priced last week. Through our CapEx program investors should expect us to access the capital market periodically for both debt and equity.

In November we entered into an agreement to sell 8.2 million shares of common stock in a forward sale. The benefit of this agreement is that we were able to price the shares last November but not issue them until later when funds are needed. We issued some of those shares in December and again in February for a total of 5.2 million shares netting $125 million. This leaves about $75 million or 3 million shares yet to be issued from the November forward sale. Investors should expect us to issue these shares by summers end and will be one of the known (inaudible) adjustments in our rate case filing.

If all we were to do was issue the remaining shares from the primary forward agreement, we would be slightly above our target equity ratio of 50% of total capitalization. We may or may not issue additional equity to bring our equity ratio to at least 50%. We continue to evaluate the merits, timing and method of issuing any shares above and beyond those that will be issued pursuant to the forward sale agreement and we continue to look at the best way to issue shares or that maybe the sales agency agreement or more traditional offerings.

I know you've all heard about the turmoil around auction rate securities, currently we have about $272 million of issued and outstanding adjustable tax exempt Pollution Control Bonds, which are wrapped by bond insurer [and BIA]. Like most of our auctions had failed, however we have much more favorable auctions they reset rates then many. For example, our recent reset rates have been in the range of 4.5% to 5.5%.

We continue to review our auctions with respect to these securities but do not feel like we must do something in immediate future that is not in the best interest of our customers and shareholders.

Now let me turn things over to Bill Moore our President and Chief Executive Officer

Bill Moore

Thanks, Tony and good morning and thank you for joining us. Before we take your questions, let me update you on several of our major construction projects and share with you our thoughts about the upcoming Kansas rate filing. We continue to make progress on our large scrubber project at Jeffery Energy Center. The first unit is expected back from a [HRD] next week and the unit is expected to begin scrubbing in June. This a few weeks behind our schedule, but we don't expect this to have a significant impact on the overall project budget.

We have managed to hold our $360 million project budget for more than a year. Although, we have exhausted most of our contingency, we would expect any possible upward revisions to be modest, as all significant contracts have been executed. We also don't expect any meaningful change to the schedule for the two units to follow. The second unit's scrubber system is still planned for this fall with the third and final unit the following spring.

The first phase of Emporia Energy Center, our new 610 megawatt gas-fired peaking plant, is scheduled to go commercial in June, ready to help meet peak summer demand. All major equipment for the first phase some five turbine generators totaling 310 megawatts is in place.

Testing of the equipment has begun, and as part of that testing two of the units have already produced electricity. The first phase is within a few weeks of our original schedule and I am pleased to report the project remains on budget at $318 million. The remaining 300 megawatts in Phase II are still scheduled for commercial operation before next summer.

Our three wind projects totaling almost 300 megawatts are expected to begin commercial operation by year-end. Construction has begun for roads and tower foundations with turbine deliveries slated for summer and early fall. Recall, that we will own half of this capacity at a capital cost of about $290 million. Virtually, all of this cost is subject to fixed price contracts.

With respect to key transmission projects, construction is well underway on the first leg of our new 100-mile 345 kV transmission line running from near Wichita north to Salina along the west side of our system. The projected in service date for the first leg from Wichita to Hutchinson is late this year. We are pouring foundations on this segment.

For the second leg, from Hutchinson north to Salina, we have already acquired more than 40% of the right of way. We don't expect to energize the second leg before late next year. We estimate the cost of the entire line to be about $150 million unchanged from what we shared on our year end call. Recall that this is the project for which FERC incentives were authorized.

With regard to our second large 345 kV project, the 50 mile line from Wichita south to Oklahoma, Mark mentioned earlier that we received citing authority in late April as planned. Accordingly we are just now beginning the engineering design for this line and will start acquiring right of way soon. In addition to these projects and other rebuilds and upgrades to our transmission system we continue to evaluate other large transmission project opportunities in the region, particularly in light of the keen interest in wind generation in Kansas.

Consistent with our plans we will file a retail rate case later this month. The case will be substantial but straight forward, particularly because the largest components of the new rate base have already undergone regulatory scrutiny through the pre-determination process.

Key drivers for the case are: One, recognition of our acquisition of the Spring Creek peaking plant in late 2006 for $53 million; two, recognition of Emporia Energy Center Phase I, as plant in service and a request for Phase II spending to be included as construction work-in-progress; three, recovery of wind construction work-in-progress through August which should reflect a significant portion of the total investment; four, recovery of December 2007 ice storm cost; five, higher operating expenses; and six a slightly higher equity ratio since our last case which used a 2004 test year.

Importantly, we will not be asking for any significant changes to overall rate making mechanics. We are still putting finishing touches on the case, and accordingly we have not published a dollar estimate of the request.

We are now ready for questions from the financial community. Members of the media, we invite you to contact Karla Olsen at 888-613-0003 if you have questions. Operator, would you please open the lines for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Michael Lapides from Goldman Sachs. Please proceed.

Michael Lapides - Goldman Sachs

Hey, guys. Got a handful of questions, so I'll just kind of rattle them off and I apologize, they are not all necessarily tied to each other. First on the financing side, you did the 8.2 million forward share, forward sale of equity back in November. If I remember correctly, you had another one that wasn't fully tapped as well, what's left on that one?

Mark Ruelle

Okay, Michael we have got a $178 million remaining on the registration for the [Dribble] program, that is the agency issued program.

Michael Lapides - Goldman Sachs

Okay. Great, the second, the part you lost me a little bit at the very beginning at the conference call in terms of the transmission ROEs and the allowed ROEs. Can you walk us through a little bit about how that's going to work it's a little bit of rehash from the beginning of the call? How that works and how much of your rate base is that?

Mark Ruelle

Okay. I'll let Tony think about the exact number of the rate base, while I answer the basics of how it works. Our present authorized ROE has been in place for a couple of years is 10.8%. In December we asked for and it was approved to get a 50 basis points added on that for being in the SPPRTO. So, that takes our 10.8% to 11.3% and that will be effective June 1, for all of our transmission, jurisdictional transmission investment. But in addition to that, and only related to the one big transmission project, the Wichita-Salina project, we received an incentive ROE of 12.3%. So a 100 basis point added to our 11.3% applicable only to the Wichita-Salina line. So, that line and about $75,000 of equity attributable to that line will receive 12.3%. And Somma have a good number for the rig base.

Tony Somma

Michael this is Tony. Our total transmission rate base probably is around $300 million plus or minus.

Michael Lapides - Goldman Sachs

Okay, and is that all for FREC [trend] it has been meeting, none of that is ROEs and rate of returns are set at the KCC?

Tony Somma

Correct. So that $300 million if you split it 50-50 debt to equity, we get additional 50 basis points on the equity portion then for the line that Mark was talking about will have another 100 bps on top of that.

Mark Ruelle

So roughly $150 million of equity earning [11/3] and another $75 million of equity earning about [12/3].

Michael Lapides - Goldman Sachs

Got it, that's extremely helpful. Last question, energy marketing was down pretty big year-over-year. Can you talk about what kind of trends you're seeing and what your outlook is for kind of that revenue stream?

Mark Ruelle

Sure, we'll let Doug Sterbenz to answer that.

Doug Sterbenz

Yes, this Doug. Our marketing folks are primarily the same people that do all of the activity for that area. And this year with our extended maintenance additives on our units, they have primarily been spending all their time, purchasing the lowest priced piece of power they can for the system. Some day, we have been purchasing in excess of 1,000 megawatts an hour. So that is really just consuming all their time in the first quarter of the year.

Michael Lapides - Goldman Sachs

Okay, if you are sitting in my shoes and it's not kind of traditional rate base earnings. Do you have a recommendation in terms of how to think about what your annualized run rate for that would be?

Bill Moore

Well let me give you our market outlook. Of course prices for the remainder of the year are very high. That generally works in our favor, both for the asset piece and a non-asset piece. So, whether we are marketing for others or selling of our own resources. When our power plants come back, I would fully expect that operation to improve.

Michael Lapides - Goldman Sachs

Okay, and so last year's level of kind of $36 million, $37 million is that directionally in the right ballpark or kind of at normal? I am just trying to get a sense of direction not necessarily a --

Tony Somma

Michael, this is Tony. That was the number that we had last year about $36 million and directionally that's the kind of plus or minus than that numbers where we are?

Michael Lapides - Goldman Sachs

Okay cool. Thanks guys I will see you next week.

Bill Moore

Look forward, too.

Operator

Your next question comes from the line of [Edward Hans from Tadpole]. Please proceed.

Edward Hans - Tadpole

Had a few quick questions. First on the, can you refresh us on the adjustment in retail rates you need from the KCC for this transmission stuff and how does that plan to the rulings you just got a FERC?

Mark Ruelle

Ed, by Kansas statute we have the right and in fact we did unbundle our transmission rates from what otherwise would be a bundle of retail rate and then the transmission rates are actually made at FERC. The plan is that once you have your rates made at FERC and they change annually as a result of the transmission formula rate changing, which I talked about in some detail in the call.

Then there is a companion rider that adjusts the retail rates accordingly and that companion rider is the only part of that, that's sort of taken some sorting out for the last couple of years. So when it's up and running with the TDC rider. You simply have the transmission rate adjusting at the FERC every June and then you would have the retail rate following it in direct proportion to how the FERC rate changed. Today that retail portion doesn't yet track the change in the FERC rate that's the thing we expect to get in place and approved by the end of the quarter.

Edward Hans - Tadpole

So, hopefully you get that in place. But if you were not to get that in place would the retail, the increases at FERC essentially not flow to the bottom line, because there would be incremental costs that the retail wasn't recovering?

Mark Ruelle

That's correct. If we didn't have the TDC rider in place then we would suffer regulatory lag with between what we collect from our retail rates and what we collect from the FERC approved rate. That's why it's important to get the tracker in place.

Edward Hans - Tadpole

And so you are hoping the tracker gets done by the end of 2Q?

Mark Ruelle

Yes.

Edward Hans - Tadpole

Okay, and then just the other question I had was also on transmission. There was an article a couple of days ago that you guys were contesting I think a ITCs plan to build a certain portion of transmission lines in Kansas. Now I was wondering if you could kind a talk about that and ITCs broader plans of potential opportunities for you?

Mark Ruelle

Sure, our VP of transmission Kelly Harrison is sitting next to me I'll let him to answer that.

Kelly Harrison

Yes, this is Kelly Harrison. We had a read in the docket at KCC that ITC filed recently and basically all we said was that we want ITC to comply with the agreement, which they voluntarily entered into when they got the utility certificate in Kansas. And what that agreement provides for is that incumbent transmission owners have right of first refusal for transmission. So we are just trying to make sure that the agreement is honored.

Edward Hans - Tadpole

How much projects have they actually or have they announced any projects that they are planning on doing and how big are those opportunities?

Kelly Harrison

The only two that I am aware that they have announced is a line from outside Dodge City north to Nebraska, which is substantial length of line, I don't know the dollar amounts and then a line from that Dodge City area back to Wichita, which should be about a 160 miles.

Edward Hans - Tadpole

Okay, and under the settlement you should be able to get a piece of those economics if you so chose.

Mark Ruelle

But we waived our opportunity on the line going to Nebraska and we are not waiving our opportunity on the one, coming back to Wichita.

Edward Hans - Tadpole

Got you. Thanks a lot guys.

Operator

Your next question comes from the line of [Steven Cambata] from Longbow Capital. Please proceed.

Steven Cambata - Longbow Capital

Good Morning. Just a question on the Jeffrey scrubber project, the number that I heard you say was $360 million. Is that for scrubbers at all three units?

Bill Moore

Yes.

Steven Cambata - Longbow Capital

And is there anything else included in that number or is it just for your share of the scrubbers?

Bill Moore

Well, actually the plant we have co-owner at the plant, so that's the entire project cost, not just our share of it. Our share of it is effectively 84% own and another 8% leased.

Steven Cambata - Longbow Capital

So it is 92% of [360].

Bill Moore

Right

Steven Cambata - Longbow Capital

So, you are actually, you are, okay, so 92% of [360]. But, I guess my question is the scope, it's just three scrubbers, there's nothing else in that number?

Bill Moore

That's right. Just the three scrubbers and the common facilities that go with those.

Steven Cambata - Longbow Capital

Okay, the common facilities for the scrubbers.

Bill Moore

Correct, Yeah.

Steven Cambata - Longbow Capital

Okay. Thank you very much.

Operator

Your next question comes from the line of Travis Miller from Morningstar. Please proceed.

Travis Miller - Morningstar

Hi guys. Question on the fuel costs for this quarter. Can you give us an idea of the break down between how much of that increase was due to the outage and how much was due to just rising prices for coal, natural gas et cetera?

Mark Ruelle

Well, I'll address that on the retail piece of our business, because and then maybe address the wholesale piece and Doug can also join in on here. But with respect to our fuel cost that we will recover through the rate case, you look at our retail sales, they were about $15.2 million higher than the last quarter about $9.5 million of that was a result of just having higher fuel prices flow through the balance of that variance resulted from just increased volume and native load.

Then the balance of those fuel costs, which I think were probably $40 million or so in total for the quarter which has power or fuel would have resulted from sales either made on our tariff based sales or our market based sales. So, we had to burn more natural gas this quarter than we did last quarter. We burned 300,000 megawatt hours this quarter and we only burned the 100,000 megawatt hours last quarter. And also, as an example, our nuclear production was down over 250,000 megawatt hours as result of Wolf Creek being on a refueling outage. Doug, do you want to add anything more to that?

Doug Sterbenz

Yeah, the lion share of the increased cost is driven by the outage.

Travis Miller - Morningstar

Okay

Doug Sterbenz

We have locked in coal prices saw a slight escalation in those this year, but again the lion share is because those base load plants have been unavailable due to plant outages.

Travis Miller - Morningstar

Okay and you think in that number that it was directly recoverable through the rider the fuel cost adjustments there, anything you have to recover later?

Mark Ruelle

Anything that's related to sales made on the wholesale side, generally is not recoverable through the fuel cost. So as an example, the opportunistic sale that we make are for generating stations, the market based wholesale sales. Those are not recovered in the fuel rider and as a result. We may lesser them, but also may be the margins weren't as robust they were last quarter.

Travis Miller - Morningstar

Sure, okay. And then actually another quick question on that topic. The quarter-over-quarter or year-over-year increase was that April '07 tariff wholesale adjustment the new contract rather that you mentioned?

Mark Ruelle

Yes.

Travis Miller - Morningstar

What the kind of run rate for the next couple of quarters that we should think about. Is that similar to what we saw this first quarter?

Mark Ruelle

Yeah that was a contract we entered into in April of '07 and it's a many year contract. So, whatever the run rate was starting April '07 will be the run rate kind of going forward.

Travis Miller - Morningstar

Okay.

Mark Ruelle

It's based on the cost of serving that load. And in fact it's related to that 8% of Jeffrey Energy Center that we acquired through a leasehold interest last year that I just mentioned to Steven.

Doug Sterbenz

But, all things being equal, if you compare quarter-over-quarter sales, in the second quarter, it should not stick out of much that --

Mark Ruelle

Second quarter should be --

Travis Miller - Morningstar

Okay.

Bill Moore

At that amount

Travis Miller - Morningstar

Great I will appreciate that.

Operator

Your next question comes from the line of Hasan Doza from Luminus Management. Please proceed.

Hasan Doza - Luminus Management

Good morning, guys. Can you guys comment on Kansas economy, like areas of economy that are doing well and not doing well, just give us the picture on the economy there?

Bill Moore

This is Bill Moore. The economy has been pretty strong here in Kansas. We do not have the boost, the bust or the boom times that many areas of the country have. I would say in the southern part of our territory the aircraft industries have just been doing fantastic with the major aircraft manufacturers that are in that area. So I think we're running in the south, unemployment in the mid the low fours and up in the north we're probably in the five or low five area in unemployment. So things have been pretty good here and continue to be strong and of course the farm economies last year had a great year and they are again looking for that.

Hasan Doza - Luminus Management

Thank you.

Operator

(Operator Instructions)

You have a follow-up question from the line of [Steven Cambata] from Longbow Capital. Please proceed, sir.

Steven Cambata - Longbow Capital

Just a follow-up on the cost for Jeffries, when did you block in the capital, labor cost for that project for the scrubbers?

Mark Ruelle

Well, it's been over a period time from late 2006 through second or third quarter of '07?

Steven Cambata - Longbow Capital

Okay. And who is your general contractor?

Mark Ruelle

We have several different major labor contractors. We have Power Plant Maintenance, Wolf Construction and MJ Electric.

Steven Cambata - Longbow Capital

Okay. Thanks very much.

Operator

Your next question comes from the line of (inaudible) from Wachovia. Please proceed.

Unidentified Analyst

Good morning. A follow up question on the [V] Plant project. Where do you guys stand in your evaluation process, what are you are going to go ahead and file that project with the STT and if you do decide to proceed what kind of timeframe are we looking at for that?

Kelly Harrison

This is Kelly Harrison, we remain interested in that project.

Unidentified Analyst

Okay. Thank you.

Operator

At this time I am sure you have no further questions. I would now like to turn the call back over to Mr. Bill Moore. Sir you may proceed.

Bill Moore

Well, thank you all for joining us this morning. Members of Westar's management team will be attending the Goldman Sachs Power and Utility Conference in New York next week. And we hope to meet with some of you there. If you have follow up questions please contact Bruce Burns, our Director of Investor Relations, at 785-575-8227. Thanks again for joining us.

Operator

Ladies and gentlemen, thank you for your participation in today's call. You may now disconnect. Have a wonderful day.

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