Question-and-Answer Session
Operator
(Operator instructions). And our first question comes from the line of Yiktak Fung from Zimmer Lucas Partners, please go ahead.
Yiktak Fung – Zimmer Lucas Partners
Good afternoon. My first question pertains to the [unintelligible] adjustments to gas cost inventory and supplier refunds, can you just go into a bit more detail as to what these adjustments are and whether they’re I guess more or less recurring items or kind of onetime items?
Tom Skains
Thank you for the question Yiktak, it’s nice to hear from you. Really these are just normal gas cost accounting adjustments that occur following our prudence reviews. There’s really nothing I can add to it other than that. As I mentioned in the first quarter of 2007 we had gas cost accounting adjustments that went the other way and in the first quarter of 2008, we had gas cost accounting adjustments that went in our favor. I really can’t comment on whether they’re recurring or not.
Yiktak Fung – Zimmer Lucas Partners
So basically these adjustments happen once every year in the first quarter?
Tom Skains
Well it seems to in the last two years Yiktak.
Yiktak Fung – Zimmer Lucas Partners
Okay and do you generally expect that these adjustments do average out to zero over time?
Tom Skains
Well it’s hard to tell I mean the nature of gas cost accounting is fairly complex, plus we’re operating across three states, we’re served by multiple pipelines and have probably 20 or 25 producers from whom we buy gas. One would think just the law of large numbers is that they would average out but it’s impossible for me to hypothesize about that.
Yiktak Fung – Zimmer Lucas Partners
I see and were these process adjustments for 2008 contemplated when the company issued guidance last year?
Tom Skains
Yes.
Yiktak Fung – Zimmer Lucas Partners
Okay, my last question is, I was wondering if you could I guess break out the joint ventures, the earnings from each of the joint ventures, especially Hardy and SouthStar, some more granularity?
Tom Skains
Breakout their earnings?
Yiktak Fung – Zimmer Lucas Partners
Yeah.
Tom Skains
I can try. You know if you refer to page 23 of the 10Q, you’ll see there that the increase quarter on quarter is roughly coming equally from both Hardy and SouthStar. We had a $1.7 million increase quarter on quarter from SouthStar and $1.6 million from Hardy, those are pretax numbers. And as we said, these SouthStar increase again is being very attentive to their basic retail business as well as their ability to manage price risk in a volatile market. Hardy of course as I mentioned in my prepared remarks was not in service in the first quarter of 2007. So what you’re seeing is pretax earnings comings from the commercial operations of Hardy. And Hardy is a FERC regulated entity that bills, that has a rate design of straight fixed variable rates. So you would expect that to be a fairly constant number under FERC rate design premises.
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