Glen L. Kettering - Sr. VP, Corporate Affairs Robert C. Skaggs Jr. - President and CEO Michael W. O'Donnell - EVP and CFO

Paul Ridzon - McDonald Investments Inc./Keybanc Capital Markets Faisel Khan - Citigroup Jonathan Arnold - Merrill Lynch Elvira Scotto - Bank of America

Good day, ladies and gentlemen and welcome to the Fourth Quarter 2007 NiSource Earnings Conference Call. My name is Shekwana [ph] and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of this conference. [Operator Instructions]. I will now turn the call over to your host for today Mr. Glen Kettering, Senior Vice President of Corporate Affairs. Please proceed, sir. Glen L. Kettering - Senior Vice President, Corporate Affairs: Thank you and good morning to everyone. On behalf of NiSource, I would like to welcome you to our quarterly analyst call. We appreciate the opportunity to be with you today and thank you for taking the time to join us. Joining me this morning are Bob Skaggs, President and Chief Executive Officer; Mike O'Donnell, Executive Vice President and Chief Financial Officer; and Randy Hulen, Director of Investor Relations. As you know, the focus of today's call is to review our fourth quarter and year-end 2007 financial performance, share key accomplishments our teams made during 2007 and provide you with some insight on our path forward in 2008. We'll then open the call to your questions. I'd like to remind you that some of the statements made on this conference call will be forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. federal securities laws. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Information concerning factors that could cause actual results to differ materially is included in the Management's Discussion and Analysis section of our Form 10-Q quarterly report for the third quarter of 2007, which was filed November the 2nd, 2007 with the SEC. Our annual Form 10-K will be filed in late February. And now I'd like to turn the call over to Bob Skaggs. Robert C. Skaggs Jr. - President and Chief Executive Officer: Thanks Glen. Good morning and thanks for joining us today. My comments this morning will be relatively brief to allow as much time as possible for your questions. First and foremost, I want to provide you with an overview of our fourth quarter and 2007 earnings outcome. Along the way, I'll highlight a few of the many key results and accomplishments our teams delivered during the year, then finally, I'll wrap up with a discussion of our outlook for 2008, which we view as the pivotal year on our path-forward business strategy. Now, a few reflections on 2007; which was in many ways a landmark year for NiSource. As those of you who follow NiSource know, we took aggressive steps during 2007 to clear the decks of distractions and position our company for long-term growth. We resolved a number of critical legacy issues, we solidified our commitment to managing and growing our core regulated business segments. And we set the stage to deliver long-term sustainable growth for our shareholders. With that foundational work largely complete, each of our business segments is now poised to do what they do best, execute on a path-forward strategy to become North America's premier regulated company. In many ways our new release this morning is a testament to our team's many accomplishments during the year, culminating in our reported net operating earnings per share of $1.37 non-GAAP for 2007. That result is slightly higher than the guidance we provided in May, and we believe it's consistent with our balanced and investment driven long-term earnings outlook. I will touch on that in more detail later. Our consolidated operated earnings non-GAAP for 2007 were almost $998 million, about $4 million less than 2006. Focusing on the fourth quarter, our net operating earnings non-GAAP for the three months ended December 31st, 2007 were $118.5 million, or $0.43 per share. That's about even with $116.9 million or again $0.43 per share for the fourth quarter of 2006. As I mentioned before, we focus on net operating earnings and operating earnings, both non-GAAP measures, because we believe these measures better represent the fundamental earnings strength and performance of the company. Schedules 1 and 2 in the news release reconcile net operating earnings and operating earnings to GAAP. I'd now like to briefly highlight some of the key results and accomplishments in each of our business segments. As I said before, the news release catalogs many of these in more detail, so here are just a few. First, our NiSource Gas Transmission and Storage segment delivered operating earnings of $371.8 million in 2007, which constituted about a $14 million increase over 2006. Net revenues, excluding trackers were up more than $13 million, despite low revenues from optimization-related services due to less volatility in the natural gas market. Impact from capacity and commodity revenues; have been strong compared to last year. Key driver behind this improvement is that the Columbia Gulf's mainline and onshore capacity is almost fully subscribed. Pipeline throughput has also increased, as a result of higher storage injections, gas-fired electric generation demands and increased marketing activities. GT&S also benefited during 2007 from enhanced equity earnings, in large part from our Hardy Storage partnership which began operation in April. As I've discussed on previous calls, an important initiative for us during 2007 was the development of a master limited partnership, which we view as a strong complement of our Gas Transmission and Storage growth strategy. In December, NiSource Energy Partners, LP filed a registration statement with the SEC. The following proposals and the initial public offering of 12.5 million common units with the initial asset being the 3400 mile Columbia Gulf system. As I've mentioned in the past and somewhat limited as to what I can say at this point, regarding the development of our MLP. Moving beyond the MLP, our GT&S team has also advanced a number of key growth projects, such as the $140 million eastern market expansion, which the FERC approved just this month. The team also recently proposed a major expansion of capacity into the Florida Gas Transmission system. The team executed on several new low-cost, but high return connections to the Columbia Gulf system and in turn Millennium large construction on the first major new pipeline to metropolitan New York in decades. As you can see, developing and executing on the steady stream of pipeline and storage growth projects remains a key plank in our long-term growth platform. Another key component of our strategy is synchronizing commercial and regulatory initiatives with major infrastructure enhancement projects in our Gas Distribution segment. And here again; we made significant strides during 2007. From a long-term growth standpoint, the latest breaking news in the Gas Distribution segment is in Pennsylvania, where on Monday, Columbia Gas at Pennsylvania filed a base rate case seeking $60 million per year increase in the company's base rates to be effective during the fourth quarter of 2008. But Pennsylvania rate case follows more than a year of advance preparation, including our 2007 launch of a 20-year, $1.4 billion gas infrastructure enhancement program across Pennsylvania. Synchronizing infrastructure investments of this type, with complimentary regulatory initiatives is of course central to our growth strategy. In Pennsylvania, for example, a number of key stakeholders are now supporting legislation that would establish a timely cost recovery mechanism for natural gas infrastructure improvements. Meanwhile, in neighboring Ohio, Columbia Gas of Ohio and other stakeholders reached a landmark agreement in December that provides Columbia of Ohio and its key stakeholders with critically important certainty for the future. The agreement establishes the framework for operations under the company's CHOICE program for the next several years and provides for a wholesale gas supply auction by early 2010. With this agreement in place, the stage is now set for Columbia Gas of Ohio to proceed with its infrastructure oriented base rate case proceeding; in fact our notice of intent to solve that case will be submitted yet this week. Also during 2007, Columbia Gas of Virginia received approval to implement an off-system sales and capacity release incentive mechanism effective this month. Bay State Gas received approval for $6 million increase in base rate, effective last November 1st. Northern Indiana Public Service Company received approval in May for a rate simplification program that benefits both the company and customers. And Columbia Gas Kentucky received approval of a rate case settlement that increases revenues by $7.25 million. On an earnings basis, our Gas Distribution Operations reported operating earnings of $350.2 million for 2007, compared with $373.8 million for 2006. Net revenues, excluding trackers were up nearly $23 million for this segment, due to customer growth, regulatory initiatives and other service programs. These increases were more than offset by increased operating expenses, in fact as our news release points out, significant portion of the increased cost in each of our business segments related to the pricing structure under our business services agreement with IBM. We successfully restructured that agreement in the fourth quarter and going forward, we expect cost to be stabilized and quality to be improved. The accomplishments in our Gas Distribution segments speak to our continued commitment to take constructive, collaborative approaches to address business and regulatory issues affecting our company and our customers. That same approach holds true in our Electric business, where we reported 2007 operating earnings of $288.8 million. Those earnings compare with $314.1 million for 2006. Net revenues in our Electric business were up by $15.2 million, excluding trackers due to increased wholesale margins, residential and commercial deliveries, lower unrecoverable MISO charges, sales of emission allowances and overall customer growth. It's notable that revenues were up, even after $16.2 million accrual in the third quarter related to a NIPSCO purchase power settlement reached in November. Overall, operating earnings were down for the Electric business again, because revenue increases were more than offset by higher operating expenses. The purchase power settlement that I just mentioned was more in a several steps taken to set the stage with company's upcoming rate case. First, NIPSCO reached a settlement with regulatory stakeholders and large customers, resolving matters related to the cost of purchasing electric power to meet growing market demand. Then NIPSCO filed an Integrated Resource Plan or IRP with the Indiana Commission, outlining plans to meet increase customer demand for about 1000 megawatts of power by 2014. The IRP concluded that the best alternative to meeting that need would be the acquisition of gas-fired combined cycle generating capacity. And finally, in late November NIPSCO filed a request with the Commission to authorize the purchase of the Sugar Creek Power Plant, of 535 megawatt combined cycle gas cogeneration facility, owned by LS Power Group and NiSource's Whiting Clean Energy facility, a 525 megawatt combined cycle gas cogeneration facility, both facilities were successful bidders in a request for proposal process. The latest news on that front is that BP has indicated desire to exercise its contractual right of first refusal to purchase the Whiting facility for the same price offered by NIPSCO. For its part, NIPSCO is reviewing potential alternative, should BP acquire the Whiting facility. As in this side, I should note that our Indiana segment is benefiting from the energy and the leadership of Eileen Odum, who joined NiSource in December as Executive Vice President and Group CEO of our Indiana Companies. Eileen is charged with profit and loss responsibility for Indiana businesses. Chris Helms has the same responsibility for our Gas Transmission and Storage segment and we plan to name a third Group CEO for our Gas Distribution segment during the first quarter of the year. We believe providing a single point of P&L responsibility for each of our business segments is key to driving execution. Back to 2007 results, since I mentioned Whiting earlier, I am also pleased to report significantly improved results in our so called Other Operation segments, primarily as a result of our first full year of Whiting's redefined agreement with BP. Other operations logged earnings of $9.2 million, versus a loss of $24.3 million in 2006. The $33.5 million improvement is primarily driven by positive results from Whiting. Finally, on the financial management front, I would like to remind you that in late August, NiSource successfully issued $800 million of senior unsecured notes maturing in 2018. The fact that our finance team was able to successfully complete this plan placement, despite choppy market conditions is evidence of NiSource's strong capital access and liquidity. Speaking of liquidity, net cash flows from operating activities for the year ended December 31st, 2007 were about $771 million, a decrease of $385 million from the $1.2 billion of cash flow in the year ended December 31st, 2006. You'll recall that the 2006 cash flow amount was unusually high, because of working capital changes, beginning in late 2005, stemming from cold weather and higher natural gas prices. Beyond the short-term changes in working capital, increases in net income and changes in deferred taxes, totaling $169 million improved net cash flow from operating activities relative to last year. Before leaving the topic of capital excess, I'd note that both Moody's and Standard & Poor's confirmed investment grade credit ratings for NiSource in late 2007. In the process, we were encouraged by the agencies favorable view of our business profile by accomplishing key milestones and continuing to deliver solid financial performance, we expect improvement in our ratings over time. The impressive list of 2007 key accomplishments is proved positive of our team's ability to execute on our game plan, to position the company to deliver on our four-part business plan for long-term sustainable growth. We moved aggressively and powerfully to clear the deck... decks of distractions, engage our stakeholders, make disciplined investments and position our teams to execute on NiSource's growth strategy. We also recognize some of the actions taken during 2007 to establish a foundation for future growth, will place pressure on NiSource's earnings in 2008. For example, our planned acquisition of new generating facilities will impact earnings, prior to the resolution of our electric rate case. Having said that, with our regulatory and commercial initiatives now firmly in queue; we are excited about the prospects for long-term earnings growth for NiSource. The bottom line is that we continue to believe that net operating earning per share for the 2008-2010 period will fall within a range of $1.25 to $1.35 per share on a non-GAAP basis. On a GAAP basis for 2008, the lower end of the range for basic earnings per share from continuing operations is $1.23 per share, due to transition cost associated with the amendment... amended IBM agreement that are projected to impact 2008 by approximately $0.02 per share. For 2009 and 2010, there are no forecasted differences between the ranges for the GAAP and non-GAAP measures. We believe that our forecast range reasonably reflects NiSource's near term earnings expectations, as our path-forward strategy unfolds over the course of the next few years. Thereafter, we expect our ongoing capital investment program and our growth projects currently in the pipeline to begin producing meaningful and sustainable annual growth in our earnings per share. With that in mind, 2008 will indeed be a pivotal year in our strategy with three critical areas of execution. First, we are focused on achieving our key regulatory initiatives, including gas base rate cases in Pennsylvania and Ohio, as well as NIPSCO's electric rate case scheduled for filing on July 1st, 2008. Second, we're advancing our NGT&S growth strategy, including securing approvals and timely construction of announced projects, developing an array of potential new growth opportunities and continuing with formation of NiSource Energy Partners. And finally, we are executing our major infrastructure enhancement projects, which will constitute a significant portion of NiSource's more than $1 billion annual capital investment program for the 2008 to 2010 period. And the capstone is that our entire team is energized, engaged and committed to this plan and quite frankly, as a regulated energy company, we welcome these priorities. This is absolutely what we do best. As always, we remain committed to communicating with our investors and all our stakeholders in a transparent and timely manner regarding these and all of our efforts. Ongoing updates will be provided through our analyst calls and new releases, posted on nisource.com. Thanks again for participating today and for your ongoing interest and support in NiSource. With that, we'll open the call to questions. Question And Answer

Thank you. [Operator Instructions]. Your first question comes from the line of Josh Gordon [ph] with JP Morgan, Please proceed.

Hi Good morning, just briefly. You touched on your investment grade credit ratings. Standard & Poor's did downgrade you in the quarter, couple of questions. Can you give me some color on the conversations that you've had with the rating agencies, also what metrics do you need to maintain to achieve investment grade ratings? Also given the amount of CapEx plans that you have on deck, would you be willing to let the ratings fall below investment grade? Robert C. Skaggs Jr. - President and Chief Executive Officer: Thanks Josh. Let me start with the last comment and just make it abundantly clear one more time that we are absolutely committed to investment grade competitive ratings and we have been working diligently to that position. Even as we go forward, this is very ambitious investment program. With the credit rating agencies in the way of color, very candid straight revolving around five-year plan that is very consistent with the earnings outlook that we had projected, the capital programs that we've been talking about, the regulatory and commercial activities that we've tried to share with everybody. So the agencies were involved in thoroughly reviewing, talking with me personally about that five-year plan and we believe their investment grade... maintaining the investment grade ratings both Standard & Poor's and Moody's reflects their understanding of what we are doing and I think their support of this plan makes sense and is worthy of investment grade ratings for foreseeable future.

So, you would... it's fair to characterize if there is significant cushion than at the low BBB ratings? Robert C. Skaggs Jr. - President and Chief Executive Officer: Well, let me start over the macro statement and then I'll turn it over to Mike. We understand that we need to execute in and some of our prepared remarks reflect this plan, particularly 2008 is focused on execution. And we think whether you are looking at earnings, cash, operating results, very ambitious plan and we have to execute. So that's first and foremost. We don't think in terms of broad latitude, we think we need to hit, squarely hit this plan.

Okay. Robert C. Skaggs Jr. - President and Chief Executive Officer: Mike, metrics? Michael W. O'Donnell - Executive Vice President and Chief Financial Officer: Yes, I think that's the best way to put it Bob, is hitting the plan. We were very candid, I think with the agency showing the five-year plan, that has increased capital investments and corresponding increases in debt over that time period and after reviewing that plan and considering the business position of the company the results came back from both S&P and Moody's and we should remember that which is pending, they had the same presentation, but haven't taken any action.

Do you have a range of debt-to-capital that you would like to stay in? Michael W. O'Donnell - Executive Vice President and Chief Financial Officer: I think we would like to stay under 60%.

Okay Michael W. O'Donnell - Executive Vice President and Chief Financial Officer: And on the key ratio, but I don't think I have a number that's definitive but the... the FFO to debt ratio is calculated a little different at S&P and Moody's but same basic concept; they are really the key ratios. Robert C. Skaggs Jr. - President and Chief Executive Officer: And may be just to belabor the point, again if you read those reports from Standard & Poor's and Moody's carefully, they understand that execution is the key and if we do execute, they certainly provided some reason to be optimism that the ratings have room for improvement over time.

Okay great, thank you.

Your next question comes from the line of Carrie St. Lewis [ph] with Fidelity. Please proceed

Hi Bob. Robert C. Skaggs Jr. - President and Chief Executive Officer: Hey Carrie, how are, you?

Thanks for those helpful comments on the balance sheet and credit outlook. I just wanted to touch on a couple of things. First, I was wondering, I know it's probably difficult to comment, but with respect to BP exercising its right of first refusal, what are the next steps there and when can we get some clear resolution? Robert C. Skaggs Jr. - President and Chief Executive Officer: We are currently in discussions with BP around their proposal and as you would expect there are... this is a very evolved arrangement, involving things such as environmental permits, consents and the like. We are engaged in intense conversions with them from our side and I believe from the BP side, both parties are working very, very hard to move this along with dispatch. And so from the corporate perspective, we want to move this, BP wants to move it, clearly from the operating company, NIPSCO, they need clarity on whether they have Whiting or they don't have Whiting. So all parties are moving with dispatch, don't have a firm timeline to give you on when this might be resolved, but clearly it needs to be done sooner rather than later. So I would think in terms of weeks and months as opposed to many, many months.

Okay. And I mean, is the process such that you could solicit third party bids or how does it work to kind of... I mean is there an opportunity for there to be like some market value placed on it. How do we get there? Robert C. Skaggs Jr. - President and Chief Executive Officer: Currently BP has the exclusive right to match, if you will, the bid that the NIPSCO put on this. So it is not an open market process at this point, it really is in BP's court at this point.

Okay. Robert C. Skaggs Jr. - President and Chief Executive Officer: And again I would just go back to the original process that NIPSCO went through. They went through a very, very robust comprehensive tested market and we think the pricing is fair.

Okay. And so if this does go the way that of BP, does that kind of bring into question NIPSCO settlement on the purchased power situation or do you just have to find an alternative? Robert C. Skaggs Jr. - President and Chief Executive Officer: It's more the latter, we are still bound by the so-called FAC settlement provisions and as you recall, there is benchmark pricing and the like that we have to... we have to abide by. So we are pursuing in a fast-forward way commission certification or approval to go on and acquire Sugar Creek.

Yes. Robert C. Skaggs Jr. - President and Chief Executive Officer: That certainly goes a long way to satisfying that benchmark. However, you'll also recall that our IRP indicated that we are at 1000 megawatt short of capacity. So under any scenario, we need capacity, more capacity than just one unit to satisfy what we think is a long-term need and either with Whiting or without Whiting, we're going to go on and satisfy that capacity need at NIPSCO.

Okay. And just to go over some questions about CapEx, I know you guys talked about $1 billion annually through '08 to '10 but if I remember correctly, this year might be slightly higher due to Sugar Creek? Robert C. Skaggs Jr. - President and Chief Executive Officer: That's correct.

Okay. And then I was wondering if you could talk about '08 funding and just general pass on how you would be accessing capital markets? Robert C. Skaggs Jr. - President and Chief Executive Officer: Sure. We can give you the outline of the '08 financing plan I am going to refer to Mike on that Carrie. Robert C. Skaggs Jr. - President and Chief Executive Officer: Okay thanks Michael W. O'Donnell - Executive Vice President and Chief Financial Officer: Yes thanks Bob. Carrie, it will probably be past the midpoint of the year, but early fall we probably will do some debt market financing. I don't know the exact amount yet, but it will depend in part on whether Sugar Creek is closed. If everything happens around that timeframe, it could be on the order of $500 million to $700 million of NiSource finance debt.

Okay. And also I am assuming the MLP will impact that amount as well? Michael W. O'Donnell - Executive Vice President and Chief Financial Officer: That's correct that's assuming that the MLP will have already happened actually.

Okay. So those are kind of two critical things. Michael W. O'Donnell - Executive Vice President and Chief Financial Officer: Right.

All right, thanks so much for the update. Robert C. Skaggs Jr. - President and Chief Executive Officer: Thank you.

Okay.

Your next question comes from the line of Paul Ridzon with Keybanc. Please proceed. Paul Ridzon - McDonald Investments Inc./Keybanc Capital Markets: Good morning. Can you hear me? Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes Paul. Good morning. Paul Ridzon - McDonald Investments Inc./Keybanc Capital Markets: Good morning, couple of questions. We saw OGE pull their or delay their IPO, okay what's your thinking there? And then if you could just kind of discuss how we ought to be thinking about the cash flow implications, with and without BP exercising the ROFR and I guess related to that, do you... was there a door number 3 option on the IRP? Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes. Good questions. Let me start with the MLP; clearly, market conditions are choppy and as you expect we are going to be very, very vigilant about the market. I would make couple of observations. Williams, went out I guess it was about a week ago now, may be 10 days ago, and their yield was 575 I believe, which is we think a good solid yield for that offering. I would also go on and add, we believe that the market will be receptive to quality and we believe that we do have foundations for a very quality MLP. But again, we are all going to have watch market conditions. And you have to bear with me that's about all I can say about the MLP and still be consistent with regs on MLP and the S1 where we stand on that. Secondly, cash flow implications. We believe that our outlook, our projections, earnings, cash, CapEx for that matter are more or less... still, we think they are still very credible and reasonable and very reflective to this situation even if BP does pick up Whiting. So I would just suggest that in terms of cash earnings and like, not a material negative impact on where we stand today. And then third, I believe you asked about other plans. Clearly, NIPSCO is looking at their alternative. I did mention, we have 2 robust processes;, number one, our grade resource planning and two, our RFP. We believe we have viable feasible alternatives and that's what the NIPSCO team is focusing on. Paul Ridzon - McDonald Investments Inc./Keybanc Capital Markets: If like... if BP were to go towards acquiring Whiting, how much cash would you receive for that? Michael W. O'Donnell - Executive Vice President and Chief Financial Officer: Paul, this is Mike. The purchase price would be the same as the NIPSCO RFP, would be about $210 million and we pretty much have a full tax basis in the property. So we would have after tax proceeds pretty close to that amount. And that would be 200 and we still be looking for the third door as you call it, going the other way, but I think what Bob was saying is the net difference wouldn't be a full $300 million for an additional plan. It would be whatever that is less the 210. So that amount in and of itself wouldn't be material. Paul Ridzon - McDonald Investments Inc./Keybanc Capital Markets: How much debt is associated with Whiting? Michael W. O'Donnell - Executive Vice President and Chief Financial Officer: Well at the moment it's all inter-company debt. You'll recall we refinanced that at the end of 2007. And the amount at that time was about 300 million. Paul Ridzon - McDonald Investments Inc./Keybanc Capital Markets: Okay, thank you.

Your next question comes from the line of Faisel Chan [ph] with Citigroup. Please proceed. Faisel Khan - Citigroup: I have a no idea what company it was, but it's Faisel Khan from Citigroup. Robert C. Skaggs Jr. - President and Chief Executive Officer: Hi Faisel, how are you? We had a puzzled look. Faisel Khan - Citigroup: Yes. On... just a quick follow-up on the Whiting facility, this... so that, if this facility gets sold to BP then the contract, this team contracts goes away. But if you drop Whiting into NIPSCO, then that same contract would still be there, is that correct? Robert C. Skaggs Jr. - President and Chief Executive Officer: That's correct. You can recall that contract terminates late in 2009 on its normal terms. Faisel Khan - Citigroup: Okay. And then in terms of just and your... and how you've been, and how you reported your earnings this quarter. There were some line items here I think you talked this in your prepared remarks, but I missed it. You've got these tracking amount, up O&M trackers, other taxes trackers, I take it that those trackers actually mean that you recover any sort of incremental amount in your revenues, is that how it works? Robert C. Skaggs Jr. - President and Chief Executive Officer: That's correct. Faisel Khan - Citigroup: Okay. And then the --. Robert C. Skaggs Jr. - President and Chief Executive Officer: The big one, the big ones tend to be uncollectibles, obviously we track fuel and purchased gas. Faisel Khan - Citigroup: Right. Robert C. Skaggs Jr. - President and Chief Executive Officer: Tax as you mentioned. Michael W. O'Donnell - Executive Vice President and Chief Financial Officer: And Faisel they are shown in separate line items on the income statements, both consolidated and for the segments. Faisel Khan - Citigroup: Okay, got you. And then in terms of just your core O&M, which is, which you've reported, kind of going up from, for the 12 months to 12.50, $1.25 billion from $1.17 billion, is that kind of... is that normal inflation we are seeing in your O&M numbers, is that the sort of O&M increases we should see going forward? Robert C. Skaggs Jr. - President and Chief Executive Officer: Well, I would say in several buckets. Number one, we mentioned that there was contractual pricing adjustment related to the IBM services agreement. Faisel Khan - Citigroup: Sure. Robert C. Skaggs Jr. - President and Chief Executive Officer: So that was contractual step-up that ballpark approached $30 million. So it's significant amount of the O&M increase and you recall, we restructured that agreement, we believe we are going to flatten out that curve. Faisel Khan - Citigroup: Okay. Robert C. Skaggs Jr. - President and Chief Executive Officer: We also then, to your point, normal payroll, pension, incentive compensation across the company. And then we have an array of what I would call, fixed catch-up items, be it increasing work on leakage, preparing for generation outages, you are aware we have been spending a lot of money to handle generation outages on the CapEx side. We do have O&M elements that track that. We also had other outages so it's that fixed catch-up build component of it as well. Going forward, we think the O&M curve will be relatively flat. Faisel Khan - Citigroup: Okay so going forward O&M should be relatively in flat or -- Robert C. Skaggs Jr. - President and Chief Executive Officer: Relatively flat, we still have to deal with as you suggested, normal payroll increases, benefit increases and the like. Faisel Khan - Citigroup: Okay, got you. And then on Columbia of Ohio, looking at how the pipeline storage from transportation contracts are done on with Columbia of Ohio, with the stipulation ending this year, those contracts actually are up for renewal, is that correct? Robert C. Skaggs Jr. - President and Chief Executive Officer: They are up for renewal and we believe that with this resolution the capacity situation between Columbia of Ohio and Columbia Pipeline is stabilized, so we see renewal. Faisel Khan - Citigroup: Okay. Is there, I mean, are there opportunities to renew at higher tariffs given may be other demands from other potential customers? Robert C. Skaggs Jr. - President and Chief Executive Officer: No, again, we have FERC regulated rates. So these are full max tariff rates on Columbia Gas Transmission and Columbia Gulf. Faisel Khan - Citigroup: Okay. And just I am trying to remember on Columbia of Ohio, you guys share ND capacity release revenues from what Columbia of Ohio can sell in the open market, is that correct? Robert C. Skaggs Jr. - President and Chief Executive Officer: That's correct and again you point out one stipulation will lapse or expire October of this year, where we just negotiated, we replaced that and extended through 2000, through most of 2010. Faisel Khan - Citigroup: Okay, got you. And then just on the Millennium construction that started in June and I just think that the construction will end at the end of this year? Robert C. Skaggs Jr. - President and Chief Executive Officer: We expect to be in service during the fourth quarter of 2008. Faisel Khan - Citigroup: Are you seeing any sort inflation in cost or labor and how is the construction contract for that pipeline, is it a fixed turnkey contract or is there room for both labor and cost escalation? Robert C. Skaggs Jr. - President and Chief Executive Officer: Well, on that there are combination of contractual arrangements and we have had pressure like everyone else on the construction side. We also though have certain arrangements with customers in terms of increases in cost. So there is a sharing if you will between the partners and the customers. Again, we feel like it's going to be delivered on time and again we believe it's going to be within our financial parameters. Faisel Khan - Citigroup: Okay. Is this the construction timetable which is 18 months, for a 200 mile pipeline, roughly if I look at kind of other pipelines in the Mid West, it takes six months to construct a 500-mile pipeline kind of, what logistics involved or is that just this is all around in this area? Robert C. Skaggs Jr. - President and Chief Executive Officer: It's a great observation. It's a southern tier of New York. There are many, many environmental local community issues that we've had to deal with and in terms of permitting, you solve the involve process that, that has taken. So mainly it is sensitive area issue, you can enter only at certain portion at certain times in the year. So it's two season build because of those considerations. And I would again say, generally speaking, East, Northeast, Mid Atlantic these are the sorts of things you encounter on large scale construction. Faisel Khan - Citigroup: Okay. And any update on potentially other projects you are looking at open seasons on other systems that you are waiting on? Robert C. Skaggs Jr. - President and Chief Executive Officer: As you would expect we are very, very active, we just secured approval for eastern market expansion, I mentioned in the prepared remarks. I would expect steady string of additional projects we'll be announcing in the not too distant future. Faisel Khan - Citigroup: Okay, great. Thanks guys for the time.

[Operator Instructions]. Your next question comes from the line Jonathan Arnold with Merrill Lynch. Please proceed. Jonathan Arnold - Merrill Lynch: Good morning. My questions were answered. Thank you. Robert C. Skaggs Jr. - President and Chief Executive Officer: Thank you, Jonathan.

[Operator Instructions]. Your next question comes from the line of Elvira Scotto with Bank of America. Please proceed. Elvira Scotto - Bank of America: Hi. I just had a quick follow up on the Whiting Clean Energy and the BP. I think on the last call you had mentioned that the acquisitions for Sugar Creek and Whiting were expected or targeted to be completed in the second quarter of 2008. I'm just wondering, I know you had gone through an RSP process. If BP were to acquire Whiting and I know you talked about timing earlier in the call, but can you just run through that again? Robert C. Skaggs Jr. - President and Chief Executive Officer: Sure. Elvira Scotto - Bank of America: Yes, and then especially in terms of how it relates to your outlook for 2008, your guidance? Robert C. Skaggs Jr. - President and Chief Executive Officer: Right. Let me start with Sugar Creek. We are continuing pushing forward, fast-forwarding approval of Sugar Creek and the hearing is slated for the end of March, commission... Indiana Commission hearing on Sugar Creek. So we are pushing forward on that track. In fact, we had originally made application for the approval of both Sugar Creek and Whiting. We amended that once we became aware of the BP effort. And again we are pushing forward with Sugar Creek. Once we get clarification on BP or someone said the third door, we'll push forward with that plan in current estimates forecast would be that we would have approval of that at some point during the fall of 2008. Again we are very cognizant of the need number one; number one, we have a rate case we are going to filing in July. We certainly want these facilities to be addressed, handled, treated in the context of that rate case. Its timings very point, but at this point, I would think I would in two tracks. In terms of the outlook, we stand by the outlook that we provided on the earnings side. CapEx you have a sense of what that is and I think it's applicable no matter how we proceed with Whiting. Elvira Scotto - Bank of America: Okay thank you.

At this time, there are no further questions. I will now like to turn the call over to Mr. Bob Skaggs for closing remarks. Robert C. Skaggs Jr. - President and Chief Executive Officer: Again, we thank everybody for your participation, your ongoing support. Have a good day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a good day.