Question-and-Answer Session
Operator
Thank you. Ladies and gentlemen if you wish to ask a question, press star followed by a one on your touch tone telephone. If a question has been answered or you wish to withdraw your question, please press star followed by a two. All questions must be submitted at this time in order to be registered. Question to be taken that were to receive please press star one to begin please. Our first question comes from Travis Miller from Morningstar, please proceed.
Travis Miller – Morningstar
Hi, Jeff question for you, on the meter inventory that you mentioned earlier that a number of about 29,700. What kind of success rate have you guys had in the past in converting those to new customers? Is there a percentage success rate and then what kind of time lag time does it typically take to convert those.
Jeffrey Shaw
Well, let me explain it this way, hopefully it will help. Normally our new net customers in a year is very close to our first time meter sets. What we’ve experienced and we’re kind of in new territory. We have some vacant homes as a result of foreclosures. And with the growing services area like we have we expect over time and I can’t predict with certainty how long that time period is going to be, but we expect over time that those homes will be absorbed in the market. Right now, new home construction in both Phoenix and Las Vegas is at a much slower pace than we saw let’s say in the 2004, 5 and 6 time periods, much slower. Housing prices have declined significantly in our markets as well. We are starting to see auctions for some of these homes and it’s going to take some time for them to be absorbed.
But the good news with respect to that number of homes that are sitting vacant right now which probably let our service territories somewhere between 20-30,000, I’ll pick 25,000 as the midpoint. We have already made the capital investment in those homes, so it’s going to be pure margin with no cost associated with those when we absorb them so it’s just a time, it’s a period of time we have to get through with is unusual, something we haven’t necessarily experienced before that being said, in 2007, we still had a, I believe a very strong performance, and so we’ll continue to, again to focus on our strategies to get us through 2008. There are a lot of opinions as to when that may turn around probably not in 2008 but one cannot fully tell until you start to see what happens in the market.
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