Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Faisel Khan of City. Sir, your line is open.
Barry Haimes – City
This is actually Barry Haimes. I had a few questions, sorry if I jump around a little bit. At the utilities, why won’t the volume declines get captured in decoupling, does it not include industrial customers or is it mostly at the electric utility or what’s the reason behind that?
Jerry Benkert
Yes, you’re right on track. It’s actually at the residential coal small customer level and it’s on the gas side right now. So we’ve got it and we have decoupling mechanisms in Indiana that pick up those two classes of customers, but not the industrial.
In Ohio, we’ve gone away from decoupling now with this most recent rate order to a straight fixed variable design that’s going to be phased in over the next the 12 months from a partial to full and once that’s in placed then those small customers classes would have a monthly bill that did not change overtime and that captures the margin and so that accomplishes the same thing.
It protects for usage decline, it would also protect from weather, but when we don’t have it, it does not pertain to the large classes and right now we don’t have it on the electric side at all, although we’re well down the road we believe. So, it’s working towards decoupling on the electric side with hearing scheduled for next week and there has been a little collaborative process on that subject.
Niel Ellerbrook
Yes, Barry I think the bottom line is that the economic implications that we’re trying to forecast are outside of what our tariff designs protect. So, that would be the large industrials, a little bit a bad debt, some ethanol loss, some things that we described.
Barry Haimes - City
I got you, and from the perspective of the electric utility, what type of usage declines are you anticipating?
Jerry Benkert
I think overall on the eclectic side and these estimates continue to move, but I’d say for a big picture look that generally the usage is flat in the smaller customer levels.
Niel Ellerbrook
Well, but explain to him what sort of a decline we have forecast that leads us to the margin decline that we have provided in the numbers.
Jerry Benkert
I guess looking a little closer; in 2009, we’ve got overall decline to residential, commercial, probably around the 2.5, just slightly over that level and so that certainly builds into margin decline. Now, we have the opportunity perhaps to capture some of that through decoupling if that comes down the pipe Barry and so that’s one of the items that showed up on the utility risk slide that Carl mentioned earlier, that’s included in our deck.
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