Question-and-Answer Session
Operator
Yes, sir. (Operator Instructions) We have a question from Dan Fidell with Brean, Murray and Carret.
Bob Hess
Morning, Dan.
Dan Fidell – Brean, Murray, Carret & Company
Good morning. Thanks for the call. Just had a question on the commodity cost piece, and thank you for giving us the color on it. Would it be fair to say that as the year goes on and this is reviewed that perhaps the small loss we saw in this first quarter may just be timing related? In other words, might we expect directionally the trend to reverse in future periods?
David Anderson
Yes, Dan. This is David. Good morning.
Dan Fidell – Brean, Murray, Carret & Company
Morning, David.
David Anderson
The key to—as we discussed many times before—is where the usage patterns are for the period. Obviously we’re entering the months that have less usage than you would typically see during the winter months, but we still could have some weather-driven usage.
And then the other factor that’s in place there is what prices are in place compared to what we have set in our PGA. And the prices out there—anybody can look at the NYMEX—are fairly high right now, so they’re actually a little bit higher than what we had set in the PGA.
So I think it’d be a little premature to call the loss that we had this quarter timing. I think if you look at the last 20 years of this mechanism, there’s been four years that we’ve had losses in the mechanism versus gains.
So, obviously, we’ve been able to manage this over the period of time, but this year has turned out to be a little bit unique because of the colder weather that we’ve experienced earlier this year, which drew down our storage inventories, which is our main tool to manage that exposure.
So a lot of it, Dan, depends on where the prices are going forward, and a lot of us feel that the prices are too high right now in the market, but that’s where the market is at this point in time.
Dan Fidell – Brean, Murray, Carret & Company
Okay, thanks. And then maybe just another question on Gill Ranch. If you could just sort of maybe just give us your own feel for—Mark or David or whomever—just in terms of how you perceive Gill Ranch. Are you pretty satisfied where things are, how the opening season went and how this is progressing? And if so, is there the potential to expand Gill Ranch at an even faster rate for the path that you see there?
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