Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Analyst
Analyst
I was looking at the income statement and I was looking at interest expense, it was up a bit, is some of that due to the financial market issues or is there, looks like about the same level of debt from the prior year.
Chris Capone
Primarily that is a result of the increase in interest rates in terms of actual borrowings. Certainly treasury rates have been volatile and have been for the most part trending down but given the risk premium involved now in the debt markets, we have been paying a bit more to borrow money.
Analyst
So as I look at that for the reporting period was through September and we’ve had some more stress in the October period, so some of that would probably continue into Q4.
Chris Capone
That’s correct, when you look at our auction rate securities, we have three issues outstanding. Those have tempered somewhat recently but yes, some of the increased borrowing costs will continue into the fourth quarter, especially compared to the fourth quarter of last year when credit conditions were much more benign.
Analyst
How much in principal do we have outstanding on it right now in the auction rate?
Chris Capone
Its $116 million.
Operator
Your next question comes from the line of Paul Patterson – Glen Rock Associates
Paul Patterson – Glen Rock Associates
Briefly, do you feel that this current level of rate relief, do you feel that what you’re seeing on supply and demand and the economy and everything, do you feel you might need to go in for a rate case after the--?
Steven Lant
We filed a one-year filing so the anticipation would be that we have the opportunity to have another rate case next year to go into effect the following year if needed. Its I guess hard to predict what kind of conditions we’ll be facing next year given how tumultuous and unpredictable this year has been but we certainly do have that opportunity if we feel that the costs and revenues are trending in ways that prevent us from managing them sufficiently and that rate relief is the required method of reaching a reasonable rate of return.
Paul Patterson – Glen Rock Associates
With Griffith you mentioned the bad debt expense and I just wasn’t clear why it was so large in the third quarter, it would just seem that it would be something that would be more oriented towards the fourth quarter. Was there something in particular, I just don’t think a lot people using the product so much during the third quarter, I’m just surprised. Could you elaborate a bit more.
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