Nicor Inc. Q2 2008 Earnings Call Transcript

Nicor Inc. (GAS)

Q2 2008 Earnings Call

August 4, 2008 9:30 am ET

Executives

Russ Strobel - Chairman, President and Chief Executive Officer

Mark Knox - Director, Investor Relations

Rick Hawley - Executive Vice President and Chief Financial Officer

Analysts

Gregory McGowan - Sidoti & Co.

Jeffrey R. Coviello - Duquesne Capital

Dave Parker - Robert W. Baird

Paul Patterson - Glenrock Associates

Daniel Fidell - Brean Murray, Carret & Co.

Chris Shelton - Millennium Partners

Presentation

Operator

Welcome to the Nicor 2008 second quarter earnings conference call. (Operator Instructions) I would now like to turn the call over to your host for today, Russ Strobel, Chairman, President and Chief Executive Officer.

Russ Strobel

With me today are Rick Hawley, our Chief Financial Officer, and Mark Knox our Director of Investor Relations.

This morning we’re going to discuss our second quarter and year-to-date financial results and our annual outlook for 2008 earnings. When we’ve completed our remarks we’ll be happy to take your questions.

Let me know turn things over to Mark.

Mark Knox

First I’d like to remind you that this call will include certain forward-looking statements about the operations and expectations of our company, subsidiaries and affiliates. Although we believe our representations are based on reasonable assumptions, actual results may vary materially from standard expectations. Information concerning the factors that could cause materially different results can be found in our periodic filings with the Securities Exchange Commission and in this morning’s press release.

As we reported in our press release this morning, preliminary second quarter 2008 diluted earnings per share were $0.64 compared to $0.40 per share for the same period in 2007. Six month ended June 30, 2008 diluted earnings per share were $1.55 compared to $1.44 per share in 2007. As a reminder, 2007 six month ended results included a positive effect of a reserve adjustment and cost recoveries of approximately $0.11 per share after tax related to our mercury inspection and repair program that commenced in 2000.

If you remove the effects of these items for comparison purposes, that gives you 2007 six months ended earnings of about $1.34 per share compared to $1.55 per share that we had in 2008.

Let me now turn things over to Rick for the discussion of our 2008 results and our outlook for the remainder of the year.

Rick Hawley

Compared to 2007, second quarter 2008 diluted earnings per share reflect improved operating results in our Gas Distribution business and other energy related businesses and higher corporate operating income, partially offset by lower operating results in our Shipping business. The quarter period comparisons were also favorably impacted by higher net equity investment income and lower net interest expense in 2008.

Turning to our year-to-date results, 2008 results versus 2007, absent the impact of noteworthy items, reflect higher operating results in our Gas Distribution business and other energy related businesses and improved corporate operating results, partially offset by lower operating results in our Shipping business. The six-month period comparisons were also favorably impacted by higher net equity investment income and lower net interest expense in 2008.

Nicor Gas’s year-to-date results compared to last year, absent the effect of the previously mentioned mercury related item, were positively impacted by increased natural gas deliveries due to the impact of colder weather and higher demand unrelated to weather and the impact of customer interest. Partially offsetting these factors were higher operating and maintenance costs due primarily to increased bad debt expense, offset in part by lower company use, gas and storage related gas costs, and legal recoveries of previously incurred costs and higher depreciation expense.

The legal recoveries recorded in the second quarter 2008 at the gas distribution level totaled $3.9 million, of which $2 million related to recovery of costs associated with last year’s PCV matter. We also recovered $5 million in previously incurred legal expenses, $1.9 million of which reduced operating and maintenance costs at the gas distribution company and $3.1 million of which was recorded at the corporate level.

Nicor Gas’s outlook for 2008 operating results has improved from our earlier expectations, but as we indicated in previous calls, we still expect to be significantly below last year’s levels. In the first half of the year we have benefited at the gas company from colder than normal weather and the cost recoveries noted earlier. In the second half, we expect results in the Gas Distribution business to be significantly impacted by higher-than-budgeted bad debt expense driven by higher natural gas costs and increases in other operating and maintenance expenses. As you will recall, increases in operating and maintenance costs, together with increases in depreciation expense, were significant factors in our need to file for rate relief earlier this year.

Moving to our Shipping segment, year-to-date operating results were down due to increased operating costs, partially offset by higher revenues. Tropical’s year-to-date results have come in less than anticipated. While management has been working to mitigate the margin impact of lower volumes resulting primarily from the effects of an economic slowdown and its related impact on tourism in certain ports the Tropical serves, operating results continue to be negatively impacted by those lower volumes.

While second quarter volumes were closer to budget than first quarter, Tropical must continue to take steps to reduce this shortfall. Such steps include our previously disclosed acquisition of another shipper, rate adjustments in certain ports, adjustments to shipping schedules and a focus on fuel, personnel and other costs. Success in these efforts will, we believe, mitigate to some degree the impact of the lower than expected volumes projected for the remainder of the year.

Our other energy ventures year-to-date operating results were up compared to last year due to improved results at our Retail Products and Services business, partially offset by lower operating results at our Wholesale Natural Gas Marketing business. So far, overall other energy ventures results remain consistent with our earlier expectations. Although year-to-year operating results have shown improvement, as we stated in our previous calls, for the full year we continue to expect that our other energy ventures will be down from the levels of 2007, but still very strong compared to historical levels.

Year-to-date corporate operating results compared to 2007 were favorably impacted by the legal recoveries that I mentioned earlier, offset by a negative weather-related impact associated with certain of our retail utility bill management products. As we previously discussed, certain of our utility bill management products provide a natural and partial offset to the weather risk of our Gas Distribution business. In the first six months of 2008 we recorded a $4 million cost associated with this hedge due to the impact of colder-than-normal weather. This compares to a cost of $100,000 for the same period in 2007 when we had near normal weather. The amount of the offset will vary depending on a number of factors, but it has ranged from about 30% to 55% of our gas company’s weather impact.

Under the terms of the corporate swap agreement, benefit or cost for the retail products resulting from variances in normal weather are recorded primarily in corporate operating results.

Turning to our outlook for 2008, taking into consideration all the pieces I just discussed, our 2008 diluted earnings per share estimate is in the range of $2.20 to $2.40, unchanged from the guidance we provided in our first quarter call on May 1, 2008. Our outlook assumes normal weather for the remainder of the year but excludes, among other things, any future impacts associated with the ICC’s PBR plan and PGA reviews, other contingencies, and changes in tax laws. Our estimate also does not reflect the variability and earnings due to fair value accounting adjustments and other impacts that could occur because of volatility in the natural gas markets.

As a reminder, updates to our annual earnings outlook will only be provided as part of our quarterly and the annual earnings releases.

Let me take a moment to provide a brief update on our rate filing made last April in our Gas Distribution business. A schedule has been set for the case which calls for staff and intervener direct testimony by August 27th, company rebuttal by the end of September, and evidentiary hearings beginning on November 17th. If the proceeding takes the full 11 months allowed by law, we would expect a decision by the end of March, 2009.

With that, let me now turn things back to Russ for a wrap up.

Russ Strobel

I want to close by emphasizing several points.

As Rick mentioned, the outlook for our full year financial results remains in line with our earlier expectations. Although Nicor Gas results have benefited from colder weather and certain costs recoveries, our results continue to be pressured by higher operating costs, particularly those impacted by natural gas prices. This ingoing trend, combined with other factors, led to our decision in April to file for rate relief with the Illinois Commerce Commission. As I said before, we are seeking no more than what is necessary to allow Nicor Gas a fair opportunity to meet its obligations, to provide safe and reliable service and to recover its costs.

Even with the new requested rates, Nicor Gas would still be the lowest-cost natural gas provider among major Illinois utilities and among the lowest natural gas utilities in the entire nation. Nicor's low rates are a testament to our long history of being one of the most efficient natural gas utilities in the country.

Tropical Shipping is facing a challenging environment. I've been pleased with Tropical's ability to find ways to reduce costs, improve margins, and grow volumes in the past, and I remain confident that our experienced management team will continue to meet the challenges of the current operating environment.

Looking ahead for our other energy related ventures, we continue to be pleased with the performances of these businesses. Projected current-year performance remains in line with our earlier expectations. Businesses supporting this platform are expected to make increasingly important contributions to Nicor's long-term earnings and are an integral part of our overall growth strategy.

And with that, we'll be happy to take your questions.

Questions-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Greg McGowan - Sidoti & Co.

Greg McGowan – Sidoti & Co.

Rick, can you go through those legal recoveries that you mentioned, and I think those are with the PCB and the like. I think it was $3.9 million that went into O&M, and I thought I heard something about another $3.1 at the corporate level?

Rick Hawley

Sure, and I'll break it into pieces. At the gas company we had a $2 million recovery related to previously incurred PCB costs, and then we recovered $5 million in previously incurred legal expenses, $1.9 of which went to the gas company against O&M. So that's a total reduction of O&M at the gas company of $2 plus the $1.9, so that's $3.9.

And then you were right. $3.1 of the $5 million went against corporate operating income or increased corporate operating income.

Greg McGowan - Sidoti & Co.

Also it looks like, when you look at the demand here, I think you had $3 million from customer interest and [inaudible]. Could you just give me a sense of, you know, that's rather impressive. I mean, what do you kind of attribute this to?

Rick Hawley

I wasn't sure, Greg, I followed your question. You're asking about demand or customer interest?

Greg McGowan - Sidoti & Co.

Yes, both, if you can kind of get into those two.

Rick Hawley

Sure. Well on the demand at the gas company level - and, again, remember we give back about 55% of this at the corporate level - but at the gas company level, you know, weather added about $4.5 million to net income, just over $7 million in pre-tax income.

Greg McGowan - Sidoti & Co.

This is just for the quarter, correct?

Rick Hawley

No, that's year-to-date. Quarter had very little weather in - going through. So we're up, you know, about $4.5 million on a net income basis at the gas company because of weather. Compared to last year, we saw demand unrelated to weather up about $4 million but to be candid with you, according to our forecasts, we're looking at non-weather-related demand being about flat for the year compared to our budgets. So it's up a little bit compared to last year, but we're looking to be pretty close to what we forecasted earlier in the year for nonweather-related demand.

If you look at - then switching gears completely and going to the interest expense or the customer interest, that's a net number. Our customers are allowed to make budget pay payments so they get ahead on their bills. We pay them interest on that. We're actually - the interest expense related to that is down a little bit this year, driven primarily by the fact that because of higher gas bills it eats into the budget pay quicker than it has in previous years.

Then we also receive interest as really a reduction of gas costs on our undercollect balance. Remember we have a monthly PGA, and to the extent we're undercollected or overcollected, we either receive or pay interest. We've been on an undercollect basis, so we're actually getting a little more interest than we did last year on that.

And then we're also allowed to charge customers late pay charges - and this is all prescribed by the Illinois Commerce Commission - and the late pay charges are up. And they're a little bit of an offset to bad debt expense. As bills go higher, you know, past-due amounts are higher and therefore you see late pay charges are going to be higher. And obviously they're smaller than our bad debt increase, but that's one of the mitigating factors as we see gas prices go up and bad debt expense goes up.

Greg McGowan - Sidoti & Co.

Just one last question here and I'll kind of pass it along. So pretty much you've had two [inaudible] quarters here with utility, but you're keeping - with the company - but you're keeping your guidance at 223.40. That's really because of the higher O&M that you're expecting in the back half of the year. Is that correct?

Rick Hawley

Yes. If you look at where we're going to go, there are two things. With gas prices - and they've come down a little bit, but if you use the June 30 gas prices in going through - with the levels of revenue that we're projecting, bad debt expense will be up dramatically, where also the quarter and year-to-date benefited just from the timing of the other departmental O&M, the things not impacted by gas costs. We're actually ahead of budget, but we project that to be purely timing. We expect to be on for the year. We're scarily close to our forecast for other departmental O&M expenses for the year. But we've benefited from a timing perspective in the first quarter, excuse me, the first two quarters.

And so that makes the gas company results look better. As those turn around, as we see bad debt expense go around, we're assuming normal weather, and we won't have the legal recoveries, yes, gas company operating results compared to historical levels will be negatively impacted. And so we're forecasting the gas company to be up a little bit from earlier expectations but really by the amount of the weather benefit.

Greg McGowan - Sidoti & Co.

Yes. And very quickly, the bad debt expense, I think you said that's coming up above budget. So it was $10 million year-over-year before. What's it up to now?

Rick Hawley

Say that again, Greg? I'm sorry.

Greg McGowan - Sidoti & Co.

I thought you said earlier that for the full year 2008 bad debt expense was supposed to be up $10 million. How much is that going to be up now?

Rick Hawley

Yes, we managed to blow through that number. We were projecting about $58 million in bad debt expense, and with gas prices where they were at June 30th, that number was $77 million. And again, it's come back a little bit from then but, you know, who knows where it'll be by the end of the year?

Operator

Your next question comes from Jeffrey R. Coviello - Duquesne Capital.

Jeffrey R. Coviello - Duquesne Capital

I was just wondering, on the demand increase at the LDC, you said a non-weather-related demand. And I think you, in a question earlier, you clarified that that seemed to be, I don't know if it's a timing impact. I was wondering if you could just dig into what you're actually seeing, you know, a strong economy or if it's some timing issue that's moving from one quarter to another.

Russ Strobel

Well, yes, a couple of things. One, it's certainly not a strong economy driving anything.

We've seen a little bit of an uptick on the commercial side just in relative terms, but again, it's very modest. What I said, obviously not very well, was as you compare to last year, we have about $4 million pre-tax of higher demand unrelated to weather year-to-date. That's more the relationship between the years because as we look at demand unrelated to weather for the year compared to our forecast, we really don't see much of a change. You know, you might be $1 million or $2 million, but it's not a factor at all.

Jeffrey R. Coviello - Duquesne Capital

And then as far as the other energy ventures go, I think you said that that looked like it was - it's obviously had a very good first half of the year, and I was just wondering if you expected it to be in line with last year for the remainder of the year or if it was, you know, what was going to be [inaudible] performance, I guess, for the rest of the year at that entity?

Russ Strobel

For the year, I think, when we started the year we said we were going to be down because we had a great fourth quarter last year driven by where the markets went. And again, remember the GAAP earnings get impacted a little bit by the marked-to-market accounting.

We had a big fourth quarter last year. That drove last year's results a little higher than we expected. So coming into this year we were projecting other energy ventures to be down slightly from - probably $3 or $4 million from where they were. And we still look at that because while we're ahead a little bit right now, we're not projecting we're going to have that same strong fourth quarter.

And again that, the fourth quarter, it's last year's fourth quarter that was the anomaly, not the results we're projecting for the year.

Operator

Your next question comes from Dave Parker - Robert W. Baird.

Dave Parker - Robert W. Baird

First, was there anything that prompted the counterparty recovery of costs this quarter? And I guess secondly, anything going on at the PBR case at the Commission? And then maybe finally, if we could get just an update of the business kind of environment at Tropical, and is there anything that you can do to improve the cost recovery of increased fuel expenses there? And then I guess lastly - I guess it's more than just a couple questions - lastly, I know you've been great at your cost containment efforts. Is there anything you could give us as far as some examples or are there additional things that you could do for the remainder of the year to help offset some of the margin weakness here?

Russ Strobel

On the legal recoveries, that was just a matter of, you know, we actually made the lawyers work for awhile as far as going out. You know, we had last year's PCB incident. We thought we were due some money from some other parties, and we've been pursuing that and we were successful. And the same thing on, you know, we spent $25 million in legal expenses on a variety of things with the SEC matter and stuff over the last several years. And we've pursued insurance recoveries and we've pursued legal recoveries from some parties, and it was just a matter of those came to fruition in the second quarter. It's just, you know, they came due when they came due kind of a deal.

On PBR, you remember the last several status hearings have been postponed as they've come up on the date. The last one in, I believe it was April, was postponed to September, I believe. I think Mark's checking, but I think it's  and I don't know what's going to happen on that one. But as far as we know there's not a lot going on on that hearing. I think we know they're looking at our rate case and things like that, and I'm sure they have other things to do. So as far as we know, not much is going on on the PBR proceeding.

Switching to Tropical, on the cost recovery for fuel we actually have taken a number of steps, including accelerating the timeframe in which we seek recovery, shortening, instead of using - we've cut in about half the number of weeks that we wait in order to seek recovery. And as a result of that, even though fuel expense is up significantly, for the year we're expecting we're going to be in a situation where fuel is not a major driver - maybe $1 million or $2 million of the down Tropical results. And that's actually quite an improvement from what we were concerned about and what we saw in the first quarter. So they're reacted very positively to modifying the fuel surcharge methodology in order to get a more timely recovery.

You know, looking at Tropical, we're down, what, $8 or $9 million compared to last year. We've taken a number of steps which I'll outline for you that come under the category of cost containment and revenue enhancement. We think that will help mitigate and leave us pretty close to forecasted results for the rest of the year, but I don't believe we'll make up the shortfall that we've achieved so far. I guess achieved is the wrong word. That makes it sound like we were trying to do that. We see volumes are down versus budget about 8% year-to-date. We'll be down but not quite that much for the - excuse me, yes, we'll be down but not quite that much in the second half if you go through.

And the kinds of things that they're doing in order to kind of hold the line on where we are, operating results and the shortfall we've seen so far, I talked about the fuel surcharge, which is a big deal. We've increased rates in certain ports. We've increased, you know, some of our insurance charges. We've taken some cost containment on the salary side. We've increased some LCL rates. We've modified our sailing schedule to both reduce sailings where we've seen demand down and to reduce fuel consumption as we go forward. We've taken limited but, you know, some personnel action to cut back in ports where we've seen volume increases. And all of those things, like I said, our success in those areas would mitigate the projected shortfall in volumes in the second half.

Dave Parker - Robert W. Baird

As a utility, I know you run a tight ship there, but is there anything you can do to help offset some of this margin squeeze there as well?

Russ Strobel

Well, as I said, you know, the bad debt, we continue to pursue collection efforts, etc., but, you know, that also, you have some certain policy issues about when you can cut people, how many people you want to cut, all those kinds of things. So there's only so much you can do on the collection side there.

As I indicated, we're actually looking for the full year, in spite of all the inflationary pressures, to be essentially right on our budget for $150, $180 million worth of other O&M expenses, so we feel pretty good about doing that. And then the legal recoveries we went after, even though they're one time, you know, they helped in this particular year to mitigate some of the increase in bad debt expense that we're seeing.

And it's all, you know, well, I'd be repeating myself, I guess.

Dave Parker - Robert W. Baird

One last thought was acquisition costs at Tropical. Did that drive - have any impact on the quarter?

Russ Strobel

Acquisition of the new business?

Dave Parker - Robert W. Baird

Yes.

Russ Strobel

No. No, not at all.

Operator

Your next question comes from Paul Patterson - Glenrock Associates.

Paul Patterson - Glenrock Associates

Most of my questions have been answered but just on, sort of just give us a flavor on this rate case, the last 12 months on a weather-adjusted basis, could you give us just a flavor for what the ROE has been? The actual earned ROE that you guys are experienced versus what you guys are going in and asking for?

Russ Strobel

Yes, I mean it's been, as we've talked about, given the different calculations, it's been well below our authorized rate of return. I haven't done a 12 months ended, but if you look at last year, you know, projected net income's scheduled to be, you know, for the year it's scheduled to be about two-thirds of what last year is, and it's getting worse as quarters go by as these costs, you know, build up over time. So, you know, we're projecting to be substantially under our authorized ROE. It was 1051 in the last case.

Paul Patterson - Glenrock Associates

And I know you're asking for, like, I think it's - is it still $140 million that you're asking for, is that right?

Russ Strobel

Our filing in April asked for $140 million. You know, there've been no changes in that. We filed our testimony. We'll have our rebuttal later on in the year. But yeah, it was $140 million in April when we filed.

Paul Patterson - Glenrock Associates

Do you know off the top of your head what the equity ratio was?

Russ Strobel

It's about 56% equity, which is consistent with what it's been historically and what our actual is.

Paul Patterson - Glenrock Associates

You guys have had high equity ratios. Okay, and then just on the marked-to-market impact that you mentioned, for the six months ended in June, what would be the non-cash marked-to-market gains that you guys have gotten and when do you expect them to reverse, if you do expect them to reverse?

Rick Hawley

Yes. If you look at it - and, you know, that's one side of the transaction, so we really don't get into breaking out the components of marked-to-market because the other half of it is what goes on in inventory, etc., so it's really a misleading picture - but if you look at it the way I look at is my cumulative marked-to-market versus GAAP, and we're virtually unchanged from the end of the year about the amount of unrecognized marked-to-market gains that haven't found their way into the GAAP income statement. So this year hasn't either benefited or suffered much from marked-to-market accounting.

Paul Patterson - Glenrock Associates

Okay, so in other words, I mean, the idea that you're getting realizations that are coming in that are offsetting the recognitions that you're getting, is that what you mean by that?

Rick Hawley

What I mean by that is if I were - if you compare cumulative marked-to-market, which is kind of what I look at as what you have in bank, you know, and quarter by quarter you can see fluctuations in there, the cumulative amount by which marked-to-market gains exceed what's been run through the GAAP income statements is virtually the same at the end of June as it was at the end of December. So you haven't flushed a lot of gains out or reversed itself.

Paul Patterson - Glenrock Associates

But how many, I guess, what was the gain impact that you guys - I'm just trying to get a flavor for how much marked-to-market was there that you're expecting to have come back? Do you follow me? Maybe I'll follow up with you guys offline.

Rick Hawley

Yes.

Operator

Your next question comes from Daniel Fidell - Brean Murray, Carret & Co.

Daniel Fidell - Brean Murray, Carret & Co.

Can you talk a little bit about what's driving the equity investment income line? And then, I guess, secondly can you give us some guidance in terms of what effective tax rate you think we should be using for the next few periods and on a consolidated basis for the year?

Rick Hawley

Sure. Yes, on the equity income what you really see there, I think, is probably last year's equity income was down a bit from what I would say is the normal level with some trueups and things coming down. I mean, we're talking hundreds of thousands of dollars, not anything big. But it was down this year's our - you know, more than normal levels. And if you go into our footnotes, they give you the components of the various companies that are in our equity investment income. But like I said, it's really the absence of a few negative adjustments last year bring us back up to a more normal level.

Daniel Fidell - Brean Murray, Carret & Co.

And can you talk a little bit about the tax number for the year, tax rate.

Rick Hawley

I'm sorry. I went brain dead there for a minute. For the remainder of the year, assuming - I should start with this. Remember, our effective tax rate does get impacted by Tropical's earnings, a number of which, to the extent we believe they're indefinitely reinvested, we don't provide tax on. So this is based on what we're forecasting Tropical's earnings to be and if that changes, up or down, it can impact the number that I give you.

But we're looking for probably about a 27% effective tax rate for the remainder of the year. And that'll probably, once you combine - I don't know what it'll put the combined at. It was just over 25% year-to-date, which is essentially the 27% plus a couple million dollars worth of tax trueups. And then for the remainder of the year we're not anticipating other tax trueups at this point, and so the remainder of the year effective rate would be 27%. So the composite's probably, I don't know, 26% or so for the full year.

Operator

(Operator Instructions) Your next question comes from Chris Shelton - Millennium Partners.

Chris Shelton - Millennium Partners

I had one quick clarification question on this customer interest that you guys explained before. Is that interest that's been collected already or is it forecasted to be collected?

Rick Hawley

I mean, it's on the accrual basis so it's cash plus receivables.

Chris Shelton - Millennium Partners

Okay. So that's cash in the door already and then also receivables?

Rick Hawley

Yes. Yes.

Chris Shelton - Millennium Partners

And then the other question, I wanted to see if I could get a sense on how much of the gas for this coming winter you guys have purchased and just see, you're obviously forecasting a pretty good jump in bad debt, but if some of that may have been mitigated by the fall in gas prices we've seen recently, just a sense there.

Rick Hawley

Yes. To the extent - to go to the last part of your comment first, prices have come down from June 30th, and so the bad debt numbers I gave you, if those prices stayed, we'd see some improvement in the $77 million bad debt forecast that I gave you. We would also see some declines in the positive benefit we're forecasting on the customer interest line. But net-net it would be an improvement if prices stayed down.

You know, we're in the process of filling up storage. When we're all done we'll have 140 Bcf. So there's some - and we buy flowing gas in the winter, so to the extent that prices stay down, we and our customers would benefit from that.

Chris Shelton - Millennium Partners

Does the $77 million assume the higher gas prices?

Rick Hawley

It assumed where they were - the first week of July, actually, is when we ran the forecast, so that number would be down a bit at this point in time. If you'll tell me what they'll be for the rest of the year, I'll tell you what my bad debts should be.

Chris Shelton - Millennium Partners

Right. Maybe we'll take that one offline.

Rick Hawley

Okay.

Chris Shelton - Millennium Partners

The other question I had is given the lower gas prices, why wouldn't you have updated the $77 million? Or maybe I'm not understanding. The $77 million assumed higher gas prices than you have right now?

Rick Hawley

We updated our forecast - we don't reforecast every single day.

Operator

And there are no other questions in the queue. I'd like to turn the call back over to management for your closing remarks.

Mark Knox

Thank you all for your interest in Nicor and have a great day.

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