Question-and-Answer Session
Operator
Thank you. (Operator instructions). Our first question is from John Kiani from Deutsche Bank.
John Kiani – Deutsche Bank
Good morning.
Gerry Anderson
Good morning. John.
Dave Meador
Good morning.
John Kiani – Deutsche Bank
A few questions. First, on the 2009 guidance, just wanted to be clear it sounds like there – is there an incremental 100 million of cost cutting or O&M savings that is assumed or embedded in that guidance?
Gerry Anderson
Yes, we are pursuing an incremental companywide $100 million cost reduction.
John Kiani – Deutsche Bank
So I guess that's about $0.38 a share or so based on my calculations. Can you talk a little bit about where that's coming from and what the drivers of that $0.38 are?
Gerry Anderson
I would say, John, that it's heavily already in place. We saw the economy softening like everybody else did in the fourth quarter and by year-end we had moved to put our leadership and team in place around the plans we just talked about. These aren't back end weighted or anything of that nature. They are I would say 90% to 95% implemented at this point. And they really are playing out around the company, significant piece of Detroit Edison, MichCon as well. And then the non-utility businesses have dug in on costs to in this environment.
Dave Meador
John, just to build on that, just to give you a sense, 60 million to 70 million of that comes just right through procurement. We virtually brought commodity spend and PO by PO, and brought in a lot of our relationships and just said we know commodity prices have come off and we wanted a significant step down in prices and got that. We also pressed hard on contract labor and other outside spend and working all the other levers. With the goal that 80% of what we're doing, we wanted out of the box we wanted to be sustainable savings, not just scope reductions or one-time cost cutting. And then during the year we are going to work our continuous improvement hard to backfill that other 20%. That we – there were one time things that we did that are not sustainable but over time we want to backfill that.
John Kiani – Deutsche Bank
And so then – that's helpful. And so when we think abut the rate case filing, the rate increases you're asking for, for O&M at Detroit Edison I guess are net of these decreases at the utility?
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