Question-and-Answer Session
Operator
(Operator Instructions) Our first question is from Paul Ridzon of Keybanc Capital Markets.
Paul Ridzon - Keybanc Capital Markets
Could you run through the drivers behind increased guidance again?
Pamela J. Keefe
Sure. One is the Rabbi trust performance, which is a below-the-line item. And we had budgeted pretty conservatively for that and we are actually seeing returns to more normal performance.
Secondly, we budget a five-year average for storm expenses and we haven’t had any storms this year. And then also, reductions in our original estimates of medical, leasing, pension, and fuel costs.
Paul Ridzon - Keybanc Capital Markets
So the Rabbi trust is upside versus budget but not different from what historically has been in kind of average?
Pamela J. Keefe
Yes, it -- usually it performs in a pretty narrow band and last year it performed very badly and this year it is sort of making up for the bad performance last year, so I would expect that going forward, it would return to its pretty tight range of performance.
Paul Ridzon - Keybanc Capital Markets
Is this year within that historic band or is this year exceeding the band?
Pamela J. Keefe
This is exceeding the band.
Paul Ridzon - Keybanc Capital Markets
Okay. And then on the cost cutting side, kind of what costs have you taken out kind of versus original budget?
Pamela J. Keefe
Well, we did go through a cost-cutting exercise that was primarily aimed at 2010 and beyond, so that will really play itself out going forward. It wasn’t so much aimed at 2009. I think for 2009, it is mostly in those areas that I mentioned already.
Paul Ridzon - Keybanc Capital Markets
And then the $16.6 million rate increase, how does that compare to what CPI minus one would have spit out?
Pamela J. Keefe
That is really the same because the -- if CPI, which is negative in the measurement period, if we had assumed that yes in fact that does go negative, we would just have more disallowed costs that we would pick up at the end of the year in the earnings adjustment mechanism. When we filed our base rate filing, we are making the assumption that per the board’s order, per the language in the order, it references inflation and so we are making the assumption that CPI itself cannot go negative, though we do still have the 1% productivity adjustment.
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