Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Paul Fremont - Jefferies & Co.
Paul Fremont - Jefferies & Co.
Yes, I just want to get a better understanding on the generation side. When you talk about $0.18 of higher margin, is that inclusive of the $0.10 that you realized through the sale of the wholesale contract?
Jack Thayer
Paul, the $0.10 would actually show up, that’s in our competitive supply business. The generation is driven by the roll off of lower priced hedges, and rolling into higher priced hedges.
Paul Fremont - Jefferies & Co.
Okay. Yes, because I was going to say, on the generation side, I mean you’re 100% hedged for the year. So the only difference is the timing of what prices look like on a quarter-over-quarter basis. So should we expect that the hedge price comparison on the generation side will look less favorable in the third and the fourth quarter to get to sort of your annual number, which is more flattish on the generation side?
Jack Thayer
No, the comparison is really a Q2 2008 versus Q2 2009 comparison, that’s what’s driving the improvement. Our guidance contemplates that the roll off of hedges in quarters three and four would also incorporate the benefit of the roll off of hedges.
Paul Fremont - Jefferies & Co.
One other question just relating to the proceeding at the commission; are there ongoing conversations between the company right now and other parties in the state looking to settle the proceeding, and in terms of timing, would that be easier to arrive at a settlement before the parties file their initial positions?
Mayo Shattuck
Paul, this is Mayo. I think what we have explained is that we are pursuing multiple paths, and the three week delay in the PSD process that was announced yesterday was disappointing, but doesn’t really alter the substance of the expectation that we expect to get a ruling now sometime in mid October, that would give an order presumably with, you know, covering as many things as the PSD would be addressing during these hearings.
Parallel to that, we’ve expressed our continued interest settlement discussion. There has been some sort of public back and forth of letters as you have seen. We are not going to get deeply into how that’s going at this point, other than our continued interest in seeing whether that process could actually result in something that would preemptively get this deal done before the October timeframe.
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