Glen L. Kettering - Sr. VP, Corporate Affairs Robert C. Skaggs Jr. - President and CEO

Brook Glenn Mullin - J. P. Morgan Jonathan Arnold - Merrill Lynch

Good day ladies and gentleman and welcome to the First Quarter 2008 NiSource Earnings Conference Call. My name is Karen and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of this conference. [Operator Instructions]. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. Glen Kettering, Senior Vice President of Corporate Affairs. Please proceed. Glen L. Kettering - Senior Vice President, Corporate Affairs: Thank you very much 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 first quarter 2008 financial performance and provide a business update. We then will open the call to your questions. I would like to remind all of 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 2007 Form 10-K which was filed on March the 5th of this year with the SEC. And now, I'll 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 I am pleased to provide a review of NiSource's first quarter earnings and an update on a number of business initiatives that demonstrate NiSource's execution of its balanced plan to deliver long-term sustainable growth. As we point out in this morning's news release, NiSource's first quarter results reflect solid fundamentals are consistent with our business outlook and are squarely in line with the earnings and guidance of $1.25 to $1.35 per share that we provided for the 2008 through 2010 timeframe. As I said when we first provided our outlook, we have fully expected earnings to fall within the lower part of the range during 2008. So we established the necessary foundation for long-term growth. NiSource today reported net operating earnings non-GAAP of $189.3 million or 69% per share for the three months ended March 31, 2008, a decrease from $205.4 million or $0.75 per share for the first quarter of 2007. Operating earnings non-GAAP were $394.7 million compared to $428.5 million for the same period in 2007. First quarter net operating earnings compared to the year ago period were affected by NIPSCO items: non-recoverable purchased power expenses and non-recoverable Midwest Independent System Transmission Operator, MISO charges, relating to prior periods as well as increased operating and maintenance expenses. These impacts were partially offset by higher net revenues and lower interest expenses. With respect to the two NIPSCO regulatory-related items which negatively impacted operating earnings by nearly $0.03 a share, I would note that the MISO charges are basically non-recurring in nature and as such aren't expected to affect the company's earnings in the future. With respect to the non-recoverable purchased power cost, assuming the timely acquisition of the Sugar Creek generating facility, we believe our exposure to non-recovery would be significantly mitigated going forward. I'll expand a bit on this point later in my remarks. As a reminder, 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. These measures normalize for weather and certain other items such as restructuring charges, asset sales, impairments and significant reserve changes. For a reconciliation of net operating earnings and operating earnings to GAAP, please see schedules 1 and 2 of our news release which is also available at nisource.com. From a business standpoint, across each of our major segments, NiSource continued to execute on an aggressive range of regulatory, commercial and infrastructure-driven investment initiatives during the first quarter that are central to our four-part business strategy. Again, our strategy centers on expansion of and commercial growth in our Gas Transmission and Storage business, regulatory and commercial initiatives at our regulated utilities, financial management and process and expense management. Supporting that strategy is our unprecedented capital investment program, which this year is expected to exceed $1.3 billion and thereafter is targeted at about $1 billion annually. One more prefacing comment prior to my review the progress we're making. I would underscore that the steps we're taking this year are fundamental to establishing sustainable drivers of long-term earnings and cash flow growth for our shareholders. Starting with our Gas Distribution segment, during the first quarter, two of NiSource's largest gas distribution utilities filed for infrastructure-driven rate increases. In Pennsylvania, Columbia of Pennsylvania filed for a rate increase in January with Pennsylvania Public Utility Commission of approximately $60 million annually or about 10%. The rate case synchronizes with the recent launch of Columbia of Pennsylvania's 20-year $1.4 billion gas distribution improvement program. It's also in sync with our efforts to support recently introduced legislation in Pennsylvania that will facilitate the timely recovery of costs associated with natural gas infrastructure improvements. The Pennsylvania increase is expected to become effective in the fourth quarter this year. Meanwhile, in neighboring Ohio, Columbia Gas of Ohio filed a base rate case in March with the Public Utilities Commission of Ohio seeking an annual revenue increase of $80 million annually or about 6% with new rates to be effective during the fourth quarter of this year. The Ohio filing is integrated with COH's 25 million... 25 year 2 billion plus dollar infrastructure replacement program. The stage was set for the COH rate case in December when the company reached a landmark agreement with regulatory stakeholders that establishes the framework for operations under the company's customer choice program for the next several years and provides for a wholesale gas supply auction by early 2010. In a development that we believe bodes well for our long-term infrastructure investment plans, on April 9th, the Ohio Commission approved, with minor modifications, a joint stipulation that clarifies Columbia of Ohio's operational responsibilities for customer-owned service lines and risers. Notably, the recovery mechanism has been established for Columbia to collect certain repair or replacement costs for service lines and risers. We will be investing approximately $120 million under this program over the next several years. In Massachusetts, we encountered a bit of setback earlier this week when the Department of Public Utilities turned down a Bay State Gas request seeking an adjustment to its rates. In a nutshell, Bay State was seeking a special adjustment under its performance-based rate plan to recover the impact of decline in customer usage since its last rate case as well as a tracking mechanism to recover costs associated with the company's bare steel replacement program. Essentially, the Commission ruled that these items did not meet the extraordinary economy consequences test under the PBR plan. At this point, we are in the process of reviewing the order and assessing our rehearing or appeal options. I note that we continue to have the ability under the PBR to adjust our rates on an annual basis under a formula reflecting inflation, productivity and other factors. Our most recent adjustment, almost $6 million, took effect late last year. And finally, in February, NiSource announced that Unitil Corporation agreed to purchase Northern Utilities and Granite State Gas Transmission for $160 million plus an estimated $25 million in working capital items. Working with our counterparts in Unitil, the team continues to work towards securing the necessary regulatory reviews and approvals for a planned fourth quarter closing. As you can see, a central feature of NiSource's long-term strategy continues to be the synchronization of our significant infrastructure replacement programs and enhancement projects with thoughtful, collaborative regulatory initiatives such as those underway in Pennsylvania and Ohio. Successful execution of these initiatives requires sharp management focus as well as the commitment to develop and implement constructive, collaborative approaches to address business and regulatory issues affecting our company and our customers. We believe that this is a NiSource core competency and we're encouraged with the progress our Gas Distribution team is making in advancing our plans. I'm confident we'll deliver on these commitments. A final note on Gas Distribution. I'm pleased to report that we recently welcomed aboard our new group CEO, Jimmy Staton. Jimmy has deep experience and a proven track record of delivering results in businesses very similar to ours. He'll provide a central point of responsibility for directing our various Gas Distribution operations, infrastructure and investment programs and regulatory initiatives in Kentucky, Maryland, New England, Ohio, Pennsylvania and Virginia. Jimmy's employment completes our transition to a business unit leadership approach with Eileen Odum leading NiSource's Indiana business operations and Chris Helms leading NiSource Gas Transmission and Storage, or as we refer to it, NGT&S. Moving to NGT&S, our teams continued to advance a steady stream of pipeline and storage growth projects designed to provide enhanced supply access and to meet ongoing demand growth throughout our market areas. The first quarter began with the Federal Energy Regulatory Commission authorizing the Eastern Market Expansion Project, the nearly 100,000 dekatherm per day expansion of our pipeline, compression and storage network to serve markets in the Mid-Atlantic region. Four customers: Washington Gas, Columbia Gas Virginia, the City of Charlottesville Virginia and Eastern Utilities have all executed 15 year contracts for the combined storage and transportation services. Construction on the Eastern Market Expansion began in April and is scheduled to be completed in the second quarter of 2009. In April, the FERC also authorized Millennium Pipeline Company's implementation plan for its 2008 construction activities. This brings us yet another step closer, placing that project into service during the fourth quarter of this year. Also in March, NGT&S filed an application with the FERC to expand its ability to transport natural gas from the Appalachian Supply Basin in southern West Virginia and eastern Kentucky. This project is also underpinned by 15 year contracts. This time with CNX Gas Company, Equitable Production Company and Chesapeake Appalachian LLC, all key producers in the Appalachian Basin with very substantial production programs. The $40 million Appalachian expansion project will add a new nearly 10,000 horsepower compressor station along Columbia Gas Transmission's existing pipeline system in West Virginia, enabling it to move an incremental 100,000 dekatherms more gas per day. We're targeting an in service during the fourth quarter of 2009. NGT&S also announced an open season in February for the New Penn Pipeline, which would provide up to 500,000 dekatherms of firm transportation service from Leidy storage in Pennsylvania to a new interconnection with the Millennium Pipeline in Steuben County, New York. I pointed out that we're seeing an unprecedented level of drilling activity in the Appalachian area, which will continue to spur a need for additional transmission and storage capacity. We have an unparalleled Appalachian Basin franchise and needless to say, we're very excited about the opportunity this is providing and will continue to provide for our NGT&S business. To state the obvious, advancing our growing array of other expansion projects that are in various stages of the development process continues to be a key focus for a ambitious 2008 agenda. In completing the NGT&S business review, I would be remiss if I didn't acknowledge the tremendous and tireless efforts of our NGT&S team in responding to the devastating tornado that destroyed our Columbia Gulf Hartsville Tennessee compressor station in February. This was a major mainline compressor station with over 50,000 horsepower of compression capability. While thankfully there were no injuries at the station, there were devastating losses throughout the surrounding region from this natural disaster. Concerted effort has been on going to restore that community and to recover Columbia's lost horsepower capacity at Hartsville on both a near-term and long-term basis. Temporary compression arrangements are expected to be in place at Hartsville within the next few months that will restore Columbia Gulf to its certificated capacity level in time to complete the storage injection season. A permanent solution is expected to be completed during late 2009. Also on Columbia Gulf, you'll recall that we experienced a rupture on our line 100 near Delhi, Louisiana in December of last year. Our NGT&S team is working to lift the pressure reduction on line 100. Again, we expect this situation to be resolved by mid year. Lastly and in a somewhat related matter, we continue to move forward with the development of a master limited partnership as a key component in our NGT&S strategy. As many of you know in December 2007, NiSource's new subsidiary, NiSource Energy Partners L.P. filed a registration statement with the U.S. Securities and Exchange Commission. The MLP's initial asset will be Columbia Gulf's 34,000 mile pipeline system, stretching from Louisiana to Kentucky West Virginia border. Although the temporary loss of our Hartsville Station has been a setback in our MLP public offering process, Chris Helms and his team have a solid game plan in place for moving forward on the MLP IPO later this year. Shifting to our electric operations, NIPSCO also remains on track with robust business agenda, dominated by initiatives related to investments in new electric generation capacity and the mid-year filing of electric rate case with the Indiana Utility Regulatory Commission. As you may be aware, FERC approved NIPSCO's purchase of the Sugar Creek gas-fired combined cycle generating facility in February and we hope that the Indiana Utility Regulatory Commission will follow suit with their approval in the second quarter of this year. NIPSCO's $330 million investment in Sugar Creek will significantly mitigate the impact of the settlement NIPSCO reached with the regulatory stakeholders in 2007 to resolve matters related to the cost of purchased electric power to meet growing demand. That settlement included a so-called benchmark that governs the allocation of costs for purchased power between customers and NIPSCO. It's based on the cost of power generated by a hypothetical natural gas-fired combined cycle generating facility using gas purchased by and delivered to NIPSCO. In addition, the benchmark defines the price below which customers will pay for FERC's powers and above which NIPSCO must absorb a portion of those costs. As anticipated, the benchmark has resulted in NIPSCO absorbing almost $4 million in purchase power costs that reduced net revenues during the first quarter of 2008. Looking forward, as we add new generating capacity, the benchmark will be adjusted. As a result, with the pending acquisition of the Sugar Creek plant, we believe our prospective exposure around this settlement [ph] will be mitigated significantly. It's also important to note the settling parties agreed to support NIPSCO's deferral and future recovery of carrying costs and depreciation associated with the acquisition of new electric generating facilities. In addition to the Sugar Creek purchase, NIPSCO is working to address its long-term capacity needs in the form of renewable wind energy supplies and conservation programs. Likewise, NIPSCO is in the process of evaluating options to meet its generating capacity needs in light of last week's announcement, BP Alternative Energy's planned purchase of Whiting Clean Energy and the Whiting Clean Energy facility from NiSource for $210 million. In December, as many of you know, BP Alternative Energy indicated its intent to exercise contractual right of first refusal related to NIPSCO's offer to purchase the Whiting Clean Energy facility. On April 18th, NiSource reached an agreement with BP Alternative Energy for its purchase of the Whiting facility. That transaction is expected o close within a few months. Now let me shift to an overview of NiSource's first quarter operating earnings. Gas Distribution operations reported operating earnings of $255.5 million compared to operating earnings of $250.9 million for the first quarter of 2007. Net revenues excluding the impact of trackers increased $15.2 million, primarily attributable to increased residential and commercial volumes and regulatory initiatives and other service programs. Operating expenses excluding the impact of trackers were $9.1 million higher than the comparable quarter due primarily to increases in employee and administrative costs, environmental expenses pertaining to former manufactured gas plant sites and other tax. Gas Transmission and Storage operations recorded operating earnings of $104.4 million versus operating earnings of $107.3 million in the first quarter of 2007. The decrease resulted primarily from higher operating expenses and the impact of business interruption insurance proceeds that improved last year's results. Operating expenses increased by $4.6 million excluding the impact of trackers, which are offset in revenues due to higher pipeline integrity management costs and employee and administrative costs. Partially offsetting these impacts were higher net revenues from firm capacity reservation fees. This was the result of higher Columbia Gas Transmission transportation deliveries from the Hardy storage field and incremental demand revenues from new inter connects along the Columbia Gulf pipeline system. Electric Operations reported operating earnings of $38 million versus operating earnings of $73.3 million from the same quarter last year. Lower net revenues and higher operating expenses both contributed to the lower operating earnings. Net revenue decreased by $15.7 million, due primarily to non-recoverable MISO charges related to prior periods and non-recoverable purchase power costs under the benchmark settlement that I just discussed. Lower residential and commercial margins in the quarter were partially offset by higher industrial and wholesale margins. Operating expenses increased by $19.6 million, due primarily to higher employee and administrative cost, and electric generation of maintenance expenses. A portion of the increase in employee and administrative cost was due to an accounting adjustment that reduced benefits extensions about $5.7 million during 2007. The higher generation the maintenance expenses of $7.4 million were primarily due to planned turbine and boiler maintenance activities. Just a brief note with respect to the MISO cost, they resulted from a reallocation of charges previously built by MISO to various market participants. The reallocation was prompted by FIRC returning MISO's original allocation. Unfortunately, the reallocation resulted in increased charges to NIPSCO with about $7.6 million relating to period's prior to December of 2005, which made them non recoverable pursuant to the terms of a prior IURC order. While this issue was well as well as the benchmark matter, adversely impacted earnings for the quarter. The bright spot is that we view the MISO charges, as effectively one time items and again assuming Sugar Creek plan is in the portfolio within the next month or so, we'll be in a position to minimize the impact of the benchmark. Other operations reported operating earnings loss of $0.5 million compared with operating earnings of $0.3 million in the prior period. Notably, these results no longer include earnings associated with the Whiting Clean Energy facility. In light of BP Alternative Energy's spending purchase of the facility, earnings associated with Whiting's operations have been reclassified to discontinued operations for the current and comparable periods. Other operations primarily include commercial and industrial gas marketing activities. Turning to interest expense. Notably, interest expense decreased by $7.3 million during the course of the first quarter due primarily to lower short-term interest rates and the retirement late in 2007 of high cost debt associated with the Whiting facility. Just a few comments on income from continuing operations GAAP. On a GAAP basis, NiSource reported income from continuing operations for the three months ended March 31, 2008 of $189.4 million or $0.69 per share compared with $206.5 million or $0.75 per share in the same period a year ago. Operating income was $394.8 million versus $430.4 million in 2007. The decrease in earnings was primarily due to the impacts already discussed. In the first quarter of 2008, NiSource began accounting for the operations of Northern Utilities, Granite State Gas and Whiting Clean Energy as discontinued operations. As such, net income of $6 million and $0.02 per share from continuing operations was reclassified as net income from discontinued operations for the three months ended March 31, 2008, and $2.7 million or $0.01 per share was reclassified for the three months ended March 31, 2007. In the first quarter of 2008, NiSource recorded an estimated after-tax loss of $96.1 million, $0.35 per share for the disposition of these operations. Net assets for Northern Utilities, Granite State Gas and Whiting Clean Energy of $397.4 million and $481.9 million have been reclassified to assets and liabilities held for sale on the consolidated balance sheet as of March 31, 2008 and December 31, 2007 respectively. I would refer you to schedule one for a complete list of the items included in 2008 and 2007 GAAP income from continuing operations, but excluded from net operating earnings. Focusing on liquidity for a moment, net cash flows from operating activities for the three months ended of March 31, 2008 were $846 million, an increase of $67.6 million over the first three months of 2007. Cash generated from inventory and accounts payable was partially offset by increases in accounts receivable. Cash used for capital expenditures was $42.9 million higher than last year as a result of the infrastructure-driven growth strategy. To wrap up, NiSource's overall financial performance for the quarter is consistent with our business plan, and as I mentioned earlier, fully in line with our outlook of $1.25 to $1.35 per share. Again, I'm pleased with the strong progress our team is making on executing our aggressive game plan, although admittedly, we have much more to accomplish before the year is over, in particular executing in our major infrastructure programs, successfully concluding our rate proceedings and advancing our NGT&S growth agenda. As is abundantly clear from these long list of initiatives, we view 2008 as a pivotal year in our long-term growth strategy, and I can assure you that the entire team's intently focused on delivering on these commitments. As always, we remain committed to communicating with our investors in a transparent and timely manner regarding these and all of our efforts. Ongoing updates will be provided through our analyst calls and news releases posted on nisource.com. Thanks again for your participation today and for your continued interest and support of NiSource. We are grateful. At this point, we'll open up the call to questions. Question And Answer

[Operator Instructions]. Your first question comes from the line of Brook Glenn Mullin with J. P. Morgan. Please proceed. Robert C. Skaggs Jr. - President and Chief Executive Officer: Good morning Brook Brook Glenn Mullin - J. P. Morgan: Good morning. Can you just walk us through the process for replacing the capacity that you would have gotten from Whiting? Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes, right now, we are investigating on a long-term base how we add additional capacity. And there are several courses of action we can take. Number one, we can purchase capacity under what I would call a purchase power agreement or purchase capacity agreement. So that's one viable near-term option. The second option is we could go back to market, review options for the purchase of facilities comparable to Whiting and facilities that we had seen in earlier RFP proceedings. The third option is that we could look at a build option. And at this point I'll just be clear, we are not necessarily thinking of building big major base load generating facilities. It would be more along the lines of a CCGT that we considered with Whiting and Sugar Creek. And then the fourth option would be to do a combination of all the above. So that's the process that the team is literally involved in as we speak to address capacity. We clearly need capacity long term to bolster our reserve margins and we are committed to doing that over time. Brook Glenn Mullin - J. P. Morgan: Could you just give us a sense of timing as to when sort of the decision as to what route you will go? Robert C. Skaggs Jr. - President and Chief Executive Officer: I can't give you a definitive timeline, but it is certainly going to be latter part of this year, perhaps even into next year. Right now the priorities are one, certification of Sugar Creek to get that facility up and running so that we have that in the fleet for this summer. And then second priority is ensuring we get this NIPSCO rate case properly developed, properly communicated and then filed with the Commission by mid July. So I see this process of deciding where to go next on capacity unfolding somewhat parallel to the rate case. Clearly, Brook, though, it could spill into next year as we, working with our stakeholders, get a better view on where we need to go. Brook Glenn Mullin - J. P. Morgan: Okay. And then just lastly, can you remind us what the test year will be for the NIPSCO filing? Robert C. Skaggs Jr. - President and Chief Executive Officer: Calendar year 2007, the procedures do provide for certain updating as we go throughout 2008. Brook Glenn Mullin - J. P. Morgan: Thank you.

Hi, how are you guys doing? Robert C. Skaggs Jr. - President and Chief Executive Officer: Hi Ben, how are you?

Well, I just wanted to know could you give us an update on the West Virginia court case? I haven't heard on that in a while. And then also, these numbers look a little light compared to Street consensus, but you are reiterating your full year. I was just wondering how you expect to make up that gap. I guess probably in Q4 perhaps, you seem to be seasonally weighted in your earnings. Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes, let me start with West Virginia, if you may recall and certainly other folks on the call recall that case is now before the West Virginia's supreme court we filed a petition for appeal at the supreme court there is not an automatic appeal in West Virginia you have to petition for that. We are confidant that the West Virginia court is going to grant that appeal, in fact the plaintiff in the case recently filed a motion to expedite the supreme courts hearing of the appeal and we are literally waiting for the court act on that. At the earliest, the court could even begin to hear this case, I believe is the fall term of the West Virginia court, given the way this is has unfolded my guess its unlikely they will hear the appeal this fall not saying that's going to happen but it just appears that's unlikely. So, my best guess non-legal guess is the court will hear the appeal in 2009. Now your second question about street consensus, from our announcements it does appear that the street consensus was significantly higher, relatively higher for the first quarter then what we've reported. However the street consensus for the year by our estimate is still about $30, and then as you mentioned and as we said during remarks we are still at $30 our review of the first quarter is and was a very solid quarter and consistent with plan, but one outliers for the quarter was the MISO reallocation of charges, that I mentioned in my remarks, that was the one outlier for the quarter, outlier for the year, but again we're saying we're on plan, and we felt like the first quarter was consistent with the plan, and we're still in $1.25 to $1.30 range, and as we've said consistently, probably at the lower end of the range 2008.

Did you consider reporting this maybe 2 weeks ago, or when you felt it was going to be light against maybe last week when you had the last press release? Robert C. Skaggs Jr. - President and Chief Executive Officer: Reporting... I'm sorry, Ben, reporting what?

Well, I'm saying... well, to the extent that you knew you were going to be lower than consensus, you recently went out with a press release on the Whiting sale. Robert C. Skaggs Jr. - President and Chief Executive Officer: Well, we focus on really the annual results and... and quite frankly, we just did not focus on consensus for the quarter as opposed to where was the consensus for the year?

Okay. Robert C. Skaggs Jr. - President and Chief Executive Officer: So the answer is no, we did not really consider going forward with an alert.

All right, thank you. No further questions.

Your next question comes from the line of Faisel Khan with Citigroup. Please proceed.

This is actually about Barry Klien [ph] of Citi. Robert C. Skaggs Jr. - President and Chief Executive Officer: Hi Barry.

How are you? Robert C. Skaggs Jr. - President and Chief Executive Officer: Good.

Couple of question here. You talked about the MISO, the non recurring charges relating to the MISO charges -- Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes.

But you didn't give an amount on that, the tornado, was there any impact, because they mean, I guess it took out the compressors at the beginning of February, and how much impact was in this quarter, and how much impact will we see going forward, and how much of a delay will we see in the MLP, any time table on that. Robert C. Skaggs Jr. - President and Chief Executive Officer: Let me start with the MISO, the non recoverable amount of attributable to the MISO ruling almost $8 million.

Okay. Robert C. Skaggs Jr. - President and Chief Executive Officer: Pre-tax to that issue.

Okay. Robert C. Skaggs Jr. - President and Chief Executive Officer: The second point was the Hartsville incident and in terms of revenue impact, we don't see any material revenue impact from Hartsville, this is cover with insurance both from property loss and business interruption and again we believe that... we believe that it's going to be material to this year's earnings. Then the third one was the MLP and again I have restrictions on what I can say about the MLP and directionally what we are doing I can say a repeat what I said in the prepared remarks, that we intend to move forward the MLP IPO and we are talking to later this year. Focus, primary focus and I just want to underline this its getting the Hartsville situation, getting that compression replaced an operational by July and also mentioned the line 100 situation and the rupture we experienced Louisiana in December, we need to have pressure restrictions lifted, again we think we are going to have that done by mid year, but prior to advance in the need to get those two operational issues resolved. Again Chris, Helms and the team have done a marvelous job of getting them resolved and we believe that's going to be accomplished by July which is an incredible recovery given the extent of the loss at Hartsville.

Okay. And with regard to the sale of Whiting and your purchase power benchmark, how will the two jive? Will you be going over this benchmark and should we we see some hits to unrecoverable the purchase power? Robert C. Skaggs Jr. - President and Chief Executive Officer: The Sugar Creek, the... the acquisition and putting Sugar Creek in service, we think will go a great way to... to mitigating, eliminating the exposure under the benchmark, and I mentioned the hypothetical benchmark was promised on a combined cycle gas turbine, that effectively is equivalent to Sugar Creek.

Okay. Robert C. Skaggs Jr. - President and Chief Executive Officer: Again, the plan is to get that in service, this summer, and mitigate that exposure, again all of that has been baked into our outlook for this year, and really for a three year period.

I see. Okay. Thanks a lot.

And you next question comes from the line of John Hansen [ph]. Please proceed.

Good morning. Robert C. Skaggs Jr. - President and Chief Executive Officer: Good morning.

Just a follow up on a couple things that Brook was asking about with all the rate cases coming up here. Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes.

You were outlining kind of the possible options you might have, but any of those options for the next tranche of generation, they would not necessarily be included in rate base for this perhaps, would they? Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes, I think its practical matter. We will not capture that next tranche in this rate case rate base.

All right. You mentioned that the test here would be 2007? Robert C. Skaggs Jr. - President and Chief Executive Officer: Calendar year 2007, but adjustment opportunities throughout 2008.

Okay. As we look at that, what's your allowed return from the last rate case? Robert C. Skaggs Jr. - President and Chief Executive Officer: Ball Park, 12, ROE, and that's a ball park, that rate case was 20 plus years ago. So that's a ballpark number.

All right, all right. Well, maybe more relatively, what kind of return is in the 2007 12 months ended. Robert C. Skaggs Jr. - President and Chief Executive Officer: Well we're going to be approaching this rate case, and it will reflect returns that are consistent with the returns you are seeing being filed for and allowed in Indiana and other states. '07, what was the actual return?

Yes, what was the actual return? Robert C. Skaggs Jr. - President and Chief Executive Officer: Was in the healthy lower teens.

All right, thank you very much. Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes.

Your next question comes from the line of Raymond Luanne [ph] with Goldman Sachs. Please proceed.

Hey, good morning everybody. Robert C. Skaggs Jr. - President and Chief Executive Officer: Good morning.

Couple of things. One, could you talk about the gas purchases in LA, and what does the short term debt, and given that short term are pretty high, and layering it on, what are financing plans that you have for this year, is hybrids still on the table, can you talk a little bit about that, and the second question I would have, any update on the economy/usage patterns, and maybe your uncollectible, has there been any pressure there? Thanks. Robert C. Skaggs Jr. - President and Chief Executive Officer: Okay. Let me start with the financing question. Just make a couple of observations. Number 1, we are in a fairly healthy cash position as we speak today. Having said that, we are going to be injecting gas over the summer, the gas LDC is at a much higher rate then we did last year and in prior year, so we are going to have some pressure on cash, ramble a bit. Hybrid, or not part of the current game plan, so just want to be clear, we don't see as that, as a preferred viable option that we consider near term. We still intend to go to the conventional debt market this year, we've quoted a range of 500 million to $700 million, we are looking at the market right now, we'll continue to look at the market over the coming weeks and months, we find the right opportunity, we consider going to the market, again conventional debt the range will be 500 to $700 million

Okay, great Robert C. Skaggs Jr. - President and Chief Executive Officer: In terms of, let me start with usage patterns, as you noticed when you looked at the results for our gas distribution companies, it would suggest that usage is hanging in there and in fact compared to our plan residential commercial usage is a little bit more robust than what we had expected, its still in that, the customer usage reduction rate is still in that 1% range give or take but its certainly not like the erosion we saw two years ago. So, we are guardedly optimistic and hopeful that residential commercial usage would hang in there, so that is good news continue to watch it very carefully, obviously price as at the $10 range do give you pause for concern, but we have not seem anything that's disturbing, in fact we have seen some help. What we have seen the impact of the economy of the customer, or customer adds new customer adds on the gas side of our business are down dramatically and say they are up 10% this year from the reduced level that we expected, so customer has a prior reason historic loss for us, typically we use to have 40 to 45,000 customers, we think its going to be more like 20 to 25,000 customers this year, again, that's baked in to our financial outlook, so we are sluggish and its all a function of the economy and new home construction. On the full side, we continue to see relatively strong industrial volume gas and electric, from the electric side the steel industry is robust, strong throughput their, strong margins and so we continue to see relatively encouraging industrial, large commercial throughput activities. And then I think the final thing that you mentioned were uncollectibles and again with prices in the economy as they are you do begin to see pressure on uncollectibles. We are seeing a modest up tick on exposure there but one thing has helped mitigate that exposure. We have been very aggressive on our collection activities over the past number of years. We continue to be aggressive on that front, so we see the up tick being somewhat modest and manageable. Last thing I would add is that we have fairly effective trackers in place for bad debt. Ohio's was the most notable tracker program we have in place, it's been very effective and so net we think the exposure is manageable.

Great. Just one last question, any issues with respect to the sale in New England, any interveners or is it too early in the process? Robert C. Skaggs Jr. - President and Chief Executive Officer: It's relatively early in the process but I am not aware of any intervener in the, in our any interveners or any issues that seem to be problematic at this point. The process seems to have gone relatively smooth. We're very pleased with view to our counter party. They have done a marvelous job. Our team has done a good job in the process and beginning work on integration and the like.

Great, thank you.

Your next question comes from the line of Josh Goldem [ph] with JPMorgan. Please proceed.

Hi, good morning. Robert C. Skaggs Jr. - President and Chief Executive Officer: Good morning Josh.

My questions [indiscernible] I want to know when the last time that you sat down with some credit rating agencies and discussed your current plan [ph]. You are now BBB by S&P and Moody's. And I wanted to get a feel from you in your conversations with them how much leeway do you have at the low BBB ratings and do you think that you can remain investment grade? Robert C. Skaggs Jr. - President and Chief Executive Officer: Well, let me maybe start from the back. One, we have indicated our commitment to credit and investment grade. We do believe that we are going to be able to manage to stay investment grade. We spoke with the credit rating agencies in November of 2000. It was an expansive all of the credit rating agencies, a thorough, thorough, deep review that I led with Mike and the team of the five year business. Absolutely positively consistent with the guidance that we provide you, not only in terms of earnings, but the initiatives. Consistent with the capital program, five year capital program that we have showed you in the 10-K that we recently filed. So it was absolutely transparent, thorough, in depth with the credit rating agencies, and they will [indiscernible] after we went through that review. So I would say that we are committed to we feel like we manage through this. Three [ph] of the agencies have seen everything that we have in motion. And then maybe I would just close. Clearly, this year is a pivotal year. These are the largest rate case undertakings we have had. We have more than doubled the CapEx program. But everything we have in motion we think is fundamentally sound, makes long-term sense. We think the credit rating agencies agree with the long-term plan, take a look at their reports. I think they have a deep understanding of what they look forward to over in the next 12 to 18 months. We continue to work with them very closely to ensure they understand what we're doing and what we think as a plan for growth.

So just to clarify, you are strongly committed to investment grade ratings and would you do what's necessary to maintain those? Robert C. Skaggs Jr. - President and Chief Executive Officer: We're strongly committed. We're going to look at the entire business going forward, and maintaining investment grade credit rating is critical to supporting the overall programs [ph] that we've launched and the way we see this business growing.

Okay, thank you.

Your next question comes from the line of Jonathan Arnold with Merrill Lynch. Please proceed. Jonathan Arnold - Merrill Lynch: Good morning, guys. Robert C. Skaggs Jr. - President and Chief Executive Officer: Good morning. Jonathan Arnold - Merrill Lynch: Aquick question. I mean you have several rate cases in the gas side already outstanding and then in the electric case, which I imagine is not really going to be a big factor in 2009 in terms of timing. But I'm wondering, you have this guidance out there that you expect earnings to be in the $1.25-$1.35 range over this year and the next two. I mean to what extent, as you see things today, does making that range in 2009 depend on decent constructive outcomes out of some of these cases? And to what extent would those represent upside to what you've laid out as your growth expectation? Robert C. Skaggs Jr. - President and Chief Executive Officer: Well, all of the cases are critical to 2009 going forward. We will have outcomes in Ohio and Pennsylvania this year. So there will be a full calendar year, fiscal year impact in 2009 from those cases. So those are absolutely critical to plan going forward. I would also add, just for clarity's sake, that NIPSCO is likely to have a 2009 impact. And given the size and magnitude of that case, that will be a significant... have a significant bearing on 2009. There are scenarios... a full litigation scenario in NIPSCO that that outcome would not be known till mid third quarter, pressing fourth quarter of 2009. So it's definitely relevant under virtually any scenario you can think of to 2009. I would say this that, again, we have thought long and hard about the guidance that we have provided everybody and the guidance assumes reasonable outcomes in all of our regulatory activity. When I say reasonable outcome, just to provide a little more color, in the middle of the fairway, we are not expecting homeruns or extraordinarily high rates of return out of these cases. These are fundamental basic cases. We are expecting good solid outcomes in these proceedings. Jonathan Arnold - Merrill Lynch: Would that encompass having to add an additional asset in NIPSCO, or if you end up with a kind of power purchase option, would that also get you where you need to be? Robert C. Skaggs Jr. - President and Chief Executive Officer: Well, I am not sure how to respond to that. The case is what the case is going to be and you will see it when we file it in July and it will effectively reflect a Sugar Creek asset and it will not reflect another CCGT. I mentioned that in a prior answer that we don't see another asset being added to the rate base in this instant rate case. Jonathan Arnold - Merrill Lynch: Okay. So that's a change since you kind of originally gave the guidance? Robert C. Skaggs Jr. - President and Chief Executive Officer: Again, we feel like what we have positioned in the rate case and what we have positioned with you externally and what our plan is again, we are saying that we feel good with the range that we've provided. Jonathan Arnold - Merrill Lynch: Okay. Robert C. Skaggs Jr. - President and Chief Executive Officer: Again, just in the spirit of clarity, the longer term plan, we're in a rate case mode now in all of our states and we've been clear in saying that if an outcome is not what was expected or we feel is less than satisfactory, then we are going to be in the rate case filing mode if need be. And we've said that about infrastructure trackers, we have talked about rate design. I would just extend that to other assets and other needs that we might have throughout this period. Jonathan Arnold - Merrill Lynch: Okay. And I have just follow up. In your answer just now on the NIPSCO case and the timing, it seemed to suggest that the fully litigated scenario would not be your core scenario. Am I reading too much into what you said there? Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes, you probably are. Our regulatory philosophy is we try to work closely with our regulatory stakeholders. We prefer to reach negotiated resolution of entire cases or the bulk of cases. In NIPSCO, Ohio, Pennsylvania, we are working as we speak with our stakeholders on a variety of issues. And so we certainly prefer that approach as opposed to full blown litigation. Having said that, we've not been in a major rate case in Indiana for over 20 years, this case has many, many moving parts including the addition of capacity. We know cost allocation is going to be an issue in that case. That case has many moving parts, and given the passage of time and that sort of thing, we know this case is going to be closely scrutinized and folks are going to be involved in this case. So, again, preferred route, negotiated resolution that meets everybody's needs, but we also realize litigation might be required for all or part of that case. Jonathan Arnold - Merrill Lynch: Okay, thanks a lot for the extra color. Robert C. Skaggs Jr. - President and Chief Executive Officer: Thank you.

And your final question comes from the line of Mark Caruso with Millennium Partners. Please proceed.

Good morning guys. Robert C. Skaggs Jr. - President and Chief Executive Officer: Hey, how are you?

Good. Bob, I just want to circle back on the earlier question about conservation. I remember a couple of years ago there was a lot of conservation, you did the big study. I guess I just want to get your sense considering all that commentary about the economy and where natural gas is, how you think this time will be different than it was a few years ago when you were facing a sea of conservation issues? Robert C. Skaggs Jr. - President and Chief Executive Officer: The last time the fly up was so sudden and so large relatively speaking. And I can't recall now, it's been a few years, but in certain respects, I think it doubled, maybe even gone up a little bit higher than that in a relatively short period of time on the heels of the hurricane activity in the Gulf. This time increases have been "relative", and I say that in quotes, relatively smooth, not quite as abrupt. And hopefully we are seeing consumers adjust accordingly. It's just not that abrupt turning down the thermostats or closing off rooms and the like. That's about all I can give you right now, although you will recall the studies that was done by us and the America Gas Association and others showed or demonstrated or approved a very strong elasticity to significant price movements. And over a period of time, the elasticity was shown. So again, right now, first quarter... fourth quarter of last year, consumer consumption hung in there. But I guess I'm saying there is some susceptibility to another drop. We just have not seen it yet and hopefully this smoothing, if that's the right term, is mitigating usage drops.

Got you. Thanks so much. I appreciate it. Robert C. Skaggs Jr. - President and Chief Executive Officer: Maybe just one promo. A key part of the rate cases that we're pursuing is rate design changes to help address conservation, better alliance with our customers. And as you would expect, those are central parts of these cases.

Great. Thanks again, Bob. Robert C. Skaggs Jr. - President and Chief Executive Officer: Yes, thanks.

And there are no additional questions at this time. I would now like to turn the presentation over to your host for closing remarks. Robert C. Skaggs Jr. - President and Chief Executive Officer: Again, this is Bob Skaggs. I just want to thank everybody for your participation, your interest in NiSource, your ongoing support. We look forward to speaking with you next time. Have a good day, good weekend.

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