Question-and-Answer Session
Kathleen Lally
Operator?
Operator
Ladies and Gentlemen we will now begin the question-and-answer session for members of the financial community. (Operator Instructions). And the first question is coming from the line of Ashar Khan with SAC Capital. Please proceed.
Ashar Khan - SAC Capital
Good morning. Tom, could you just go over what the hedges are? Could you update your hedge information, the last information I had was that EEI, could you update what the hedges stand currently for '07, '08 and '09?
Tom O'Flynn
Sure. Those are generally still reasonable numbers, still reasonable ranges for those folks who don't have the information there at the EEI presentation we said in '07, we are about 85% to 95% hedged, '08 was 65% to 80%, and '09 was 10% to 40%. Those are still reasonable ranges. When we talk about hedge ratios, we generally talk about our forward nuclear and coal as that represents about 85% of our megawatt hours, a higher percentage of our margin. We also would expect to update those in the K to the extent there is any material changes.
Ashar Khan - SAC Capital
Okay. I guess this PJM auction will move those hedges upwards, is that a fair assumption?
Tom O'Flynn
The BGS auction does commence next week. As you probably know, we are not able to comment on that even to the extent that we are participating in it, just for confidentiality reason. So, yes, there is BGS auction next week. Yes, it does allow all generators an opportunity including ourselves if they participate to move those hedges up.
Ashar Khan - SAC Capital
Okay. And if I can just end up, could you just give us what is -- I know you mentioned a $10 margin improvement in '07 gross margin, could you tell us roughly what it would be in '08, which is an excess of 10% the guidance?
Tom O'Flynn
Yeah, we are still -- and also this is your last first question. It would not be as -- we would still see margin improvement from '07 to '08. It would not be in the magnitude of 10 bucks per megawatt hour, but it would support an overall earnings increase for PSEG of 10% and more from '07 to '08.
Ashar Khan - SAC Capital
Okay. Thank you.
Operator
The next question is from Paul Ridzon with Keybanc Capital Markets. Please proceed.
- To read the full transcript on Seeking Alpha, click here »
