Question-and-Answer Session
[Operator Instructions] Your first question comes from Faisel Khan with Citi.
Barry Klein - Citigroup
This is actually Barry Klein over at Citi. Couple of questions first on the coal mining, the revenues are going up, are we? should we also see costs going up with the new safety regulations getting put in place?
Niel C. Ellerbrook - Chairman, President and Chief Executive Officer
[inaudible] a good question and we certainly saw some cost increases in 2007. Carl, why don't you talk a little bit about what we might expect to see in 2008?
Carl L. Chapman - President and Chief Operating Officer
Yes, and Barry, just again on the slide 11, in the appendix, we've given you a waterfall that we will show you how we've broken this down. And you are right, we've got the contract price increases and the elimination of the SO2 penalties and some increase productivity as Neil mentioned a 100,000 tons but then we've included some additional mining and fuel costs. Obviously, we'll get some higher diesel fuel costs at the surface mine but mostly some additional cost from additional regulation. Some of that can be passed through to customers based upon changes in law and some of those costs are more about just routine inspections and can be, but we got hit pretty hard in 2008. And you can see on the waterfall that we've included some additional costs beyond that and we feel like we factored in those costs.
Niel C. Ellerbrook - Chairman, President and Chief Executive Officer
Yeah, it hit hard in 2007.
Carl L. Chapman - President and Chief Operating Officer
I'm sorry. It hit hard in 2007, my mistake and then we factored in additional cost beyond that in 2008.
Barry Klein - Citigroup
And beyond 2008, those will be continuing types of charges?
Niel C. Ellerbrook - Chairman, President and Chief Executive Officer
Well, again, I think it's a little bit difficult. There would be some continuing. It’s a little bit difficult to predict right now because just a lot of uncertainty with the inspectors having all their rules nailed down, as those become clear, I think some of those costs could go away. But we'll see continued additional cost from inspection costs, our rotational inspections.
Barry Klein - Citigroup
Okay. And with regard to the Vectren North rate settlement the $16.3 million is for the base rate increase, the additional? how would you qualify that additional $10.6 million in costs, are those just purely tied to increases in expenses or is that all? should that be treated like the base rate increase?
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