Welcome to the American Electric Power Second Quarter 2015 Earnings Call. [Operator Instructions]. At this time I would like to turn the conference over to our host, Managing Director of Investor Relations Betty Jo Rozsa. Please go ahead.

Thank you Nick. Good morning everyone and welcome to the second quarter 2015 earnings call for American Electric Power. We're glad that you were able to join us today. Our earnings release, presentation slides and related financial information are available on our website at AEP.com. Today we will be making forward-looking statements during the call. There are many factors that may cause future results to differ materially from these statements. Please refer to our SEC filings for a discussion of these factors. Joining us this morning for opening remarks are Nick Akins, our Chairman, President and Chief Executive Officer and Brian Tierney, our Chief Financial Officer. We will take your questions following their remarks. I will now turn the call over to Nick.

Thanks Betty Jo. Good morning everyone and thank you for joining AEP's second-quarter 2015 earnings call. AEP once again had a strong quarter performance. At the risk of being redundant there are several reasons for this positive performance. The strength of geographic and state jurisdictional diversity, the passion and culture of AEP employees to continue our journey of efficiency gains through lean optimization activities, positive regulatory outcomes through our focus on operating company performance, continued expansion of our transmission business, increases in all three customer segments; residential, commercial and industrial; and continued positive performance by the unregulated business despite lower than forecasted power prices. These results continue to illustrate the disciplined execution of our business segments to produce consistent earnings performance for our shareholders. That's what is expected from the next premium regulated utility, our tagline at last year's EEEI financial conference. The second quarter GAAP and operating earnings came in at $0.88 per share, compared with second-quarter 2014 GAAP and operating earnings of $0.80 per share. For year-to-date with the positive performance of the first quarter as well, AEP's earnings stands at GAAP $2.16 per share and operating earnings at $2.15 per share. As you already know, two days ago the board of AEP authorized dividends to be paid to shareholders of $0.53 per share making this the 421st consecutive quarter of dividends being paid in the history of AEP. It was Plato who said, there is no harm in repeating a good thing. So in light of that, as we did last year, we are raising our guidance for 2015 from $3.40 to $3.60 per share to $3.50 to $3.65 per share and increasing our capital spend and transmission another $200 million from $4.4 billion to $4.6 billion. We are also reaffirming our 4% to 6% earnings-per-share growth…

Thank you Nick and good morning everyone. Let's begin on slide 5 with a review of the major drivers affecting the earnings comparison for the quarter. This year's second quarter operating earnings were $0.88 per share or $429 million compared to $0.80 per share or $390 million last year. This solid performance for the company was driven by our regulated businesses where we are investing for our customers, executing on our regulatory plans and spending O&M wisely. With that overview let's review the major earnings drivers by segment. Earnings per share for the vertically integrated utilities segment was $0.43, up $0.12 from last year. Key drivers in the quarterly comparison include rate changes which added $0.11 per share and are related to the recovery of incremental investment to serve our customer. This improvement includes the effect of annual true-ups related to FERC formula rate customers. Warmer temperatures in 2015 and higher normalized margins each added $0.01 per share to the quarter versus last year. The growth in normalized sales is primarily driven by improvements in the commercial class. I'll talk more about load and the economy in a few minutes. The vertically integrated segment also benefited from lower O&M expense, adding $0.02 per share for the quarter. Partially offsetting these favorable items is a $0.03 per share decline in off system sales margin which was driven by much lower power prices this year. The transmission and distribution utilities segment earned $0.16 per share for the quarter, down $0.02 from last year. The $0.02 per share decline in normalized margins is due in part to the elimination of seasonal rates in Ohio beginning in 2015. This will reverse over the balance of the year. This segment was also adversely affected by $0.01 per share from higher O&M expense primarily due to…

[Operator Instructions]. Our first question today comes from the line of Daniel Eggers with Credit Suisse. Please go ahead.

Nick, I know you cannot control the government and all regulators but certainly delays in Ohio and the [indiscernible] last night pushed that timeline the clarity on the generation business but can you walk through how you and the board are approaching a decision on monetization. What datapoint you guys think you need to see before you are comfortable formalizing that decision?

Dan, clearly we were looking at the capacity auctions to look at the long-term value generation. The supplemental auctions are by and large sum of the risk-adjusted items and filler in for 2016 and 17 during those years, but in particular 2016. If those supplemental auctions continue to occur before certainly before in September, October time for an even then we will have a good handle on what we 16 looks like. But the base residual auction is clearly the important one in terms of long-term valuation of generation and we continue to expect those valuations to improve. Our board has been along with us all along the way. As a matter fact we had a board meeting with them this week. And when over the issues involved and the primary issue was the upcoming auctions that would be a large part of presenting to us our options relative to the strategic valuation of generation. That is the key component. As far as the PPA is concerned that will continue on. It's really hard to tell when the pew co-will focus on that. I would say that we continue to push for the PPA obviously but the main determinant right now with the board is the capacity auction. Once we get that we will have a major data point for the board and we can continue our process of the strategic evaluation.

And on guidance and we're going into the summer but if you look at generation now above your full-year guidance and transmission and the run rate equals your full-year guidance, what are some of the things we should think about tempering the second half results to stay within this elevated band and how particular on some of the segments.

I think you have O&M spent obviously that there is timing issues with O& M. As far as the remaining they could be storm related activities, many things we hedge on. I know that sounds like sandbags to a certain point but it's not that. It's really we're trying to risk adjust some of these issues that can occur. Brian?

Yet another big driver is that PJM capacity revenue declined $0.35 almost all that is in the back half of the year. Five cents of that was in second quarter but the remaining $0.30 is back half of the year.

I guess maybe, just the other way how much O&M do you think you can incrementally pull forward from '16 into '15 just to give you a little more breathing room for next year given some of the other built-in challenges there already?

We pulled some already the sequential beyond what we did last year. It's around 14 million. It's getting harder and harder to do that obviously. You can pull some input you cannot pull everything in. I'm seeing that as more limited right now.

Thank you. Now we will go to the line of Stephen Byrd with Morgan Stanley. Your line is open.

I wanted to touch on transmission, you're making great progress in terms of incremental spend. I wondered if there were further opportunities that you saw or if you could maybe give us more color on the outlook there to create additional opportunities. What sort of - what are the drivers here as we should think about your ability to grow transmission even further.

There is a lot of color here. We have a lot of incremental spending that we can do in transmission. Right now transmission you think about it we have over 2000 projects going on right now. And those are small projects and larger projects in all that kind of thing. But it shows the bandwidth of what transmission is doing with look at the investment profile for transmission particularly for AEP in it continues to be - it's a huge footprint that we are able to invest in from Transco perspective and from an individual operating company perspective. We mentioned this last time. Just the rehabilitation of the existing grid we are challenged to keep up without that alone put an additional enhancements and we really want to do that because it improves the quality of service ultimately to our customers. And so we have a lot of runway left a lot to transmission. No question about it.

And switching back to clean power plant, after we see the final rule from EPA could you just talk about sort of the process overall. I know you’ve a bunch of things to think through but how should we think about how you might respond over time in terms of what that will mean for your overall spending plan and how the grid will look and make the power plant etcetera. Can you talk at a high level as to how we should view that for you?

Sure. Obviously it depends upon what the final rule looks like. If you look at the categories - if you're having to adjust natural gas dispatch versus call dispatch example that is one thing. That ultimately impacts the fuel cost to customers. As a result when you do that kind of switching, but in terms of infrastructure, we've made the plan - our initial approach to this is going to be we get the final rule and if the EPA is fully aware of the issues involved from a reliability standpoint but also from a implementation standpoint and if they wind up being respectful to the state of the resource process that they go through and allow time for that to occur and targets are more rational instead of - 11 states have over 75% of the requirement in 2020 and many states there's over 50% of requirement in 2020. That has to change. It's too early and it is too aggressive emission reduction targets. If they come off of that and have a rational plan to allow technology to continue to improve and we can actually wind up at a better place at the end of the day in 2030 then that would be a good outcome. In that case we could be able to work with the state. They obviously care about what we think in terms of liability standpoint and the infrastructure that we put in place and how quickly we can do it and that kind of thing. But it is a state plans. And the states have to have time to review those plans and then we start taking actions based upon or our individual states want us to go. In my mind it depends upon certainly the president because the president is driving the bus on this thing. And the EPA obviously is looking at the issues - all the issues involved and if there is moderation associated with the targeted implementation and being respectful of the state process that need to occur and the infrastructure and timing of infrastructure and having reliability provisions that make sense, then we can get about the process of investing from an AP perspective. We're in the middle of a transformation anyway. The industry is in the middle of a transformation. We've already reduced our emissions by 15% since 2005. And that process continuing with the advent of natural gas shale gas activity in the advent of renewables putting in solar and doing wind farms, but energy efficiency and better technologies are coming into play as well. There are real opportunities for us to invest in the right things for the future and actually balance out our energy portfolio which is a good thing for this company and the country as a matter fact.

And assuming that again the EPA rule does give you a realistic path as you pointed out is that the past that is - you really couldn't achieve, should we be thinking about resource plan that can be filed and overall plans over time that you would submit that would be out how you see the best path forward and what that would involve in terms of spend an asset mix?

Yes that's right. We be working with the states to file the resource plans and then we was start the actions associated with it. This is a little different than the March reroll per customer approval was planned specific endpoint specific the new index we need to do. This it has got tentacles in many aspects of the electric utility business itself. And it will take some dialogue and serious dialogue and contemplation of how to address these types of issues to me state jurisdictional perspective. And will be a part of that process will follow our resource plan and we will go from there, just like we always have.

Thank you. Our next question comes from the line of Steve Fleishman with Wolfe Research.

You're for the couple times to the 2016 risk-adjusted assumptions. Could you just clarify exactly what you mean by that?

When you go into forecasting a year you are looking at what loads doing and obviously load is moving around on us. The customer mix is moving around on us. Capacity auctions were contemplated whether PPA would occur during that period of time and then of course looking at any transmission investment and those kinds of things that we need to evaluate. Those are important pieces but I think probably [indiscernible] thing we can do is come up with a plan and budget that risk-adjusted many of these items and some of them are externally driven. Significantly externally driven like the capacity auctions and the PPAs approach in Ohio. So as we go forward in the year, we obviously like to get more information that we can make - really make a quality forecast of what 2016 looks like. I think made a lot of progress. Because we know what we've done relative to the continuous improvement enhancements that have occurred that crescendo over time. And we expect that in our benefit in 2016. These external items are more difficult to tell and really what happened last night is another indication of how things can get adjusted at the last minute. So it's difficult to scale but I think in the next two 22 to 3 months we will see a lot of clarity.

And even with all those factors that make mentioned, Steve, as with that we 16 we're still into the operating earnings guidance range that we’ve given for that previously of $3.45 to $3.85 per share.

Okay. As part of this trying to judge how much you need to manage cost and move stuff around depending on how these play out? Is that also what currently you're referring to?

Yes absolutely. We've been moving costs from 2016 into 2015 and 2014. And now we're reaching the point of conclusion where we understand those cost components going into the year. It really is about load forecast and ladies external issues that we are doing with. But those will play themselves out in the next couple of months.

Okay. And maybe this is a bit of a commentary in the question but just I know you continue to focus very much on the auction outcomes and maybe a lesser extent PPAs in Ohio for the decision on generation. But there are a lot of other things that affect the value of the portfolio commodity prices, stock market, financing conditions, all those kinds of things. How much do you need - how are you weighing kind of answers to some of these questions versus just there can be periods of time where it's hard to get transactions done.

Obviously the answer is rate environment. We continue to deal with and certainly with Janet Yellen is trying to do with interest rates in the future. Might have an impact but as far as the sector itself and our performance within that sector, we feel very good about the past that we're taking and that is to take risks out of our business. And to make sure that we are able to invest in those things that provide quality returns to our shareholders. And. That is what we control. And we have to be very disciplined at it and there may be external things that occur around the world or nationally that could impact it but typically though even if you look at commodity prices I think where we're at right now is somewhat of a tenuous economy because we see residential commercial and industrial moving back and forth all during the year. It's like you're in a waiting stage. Who knows what will happen but you could have and energy economy take off or you could have an energy economy that stagnates but these based on public policy whether you exporting or we two other things. It would have an impact on the commodities themselves. And I think it's important for us to be knowledgeable about those kinds of issues so that we can manage our business around aggressiveness met shoulders consistent returns. And that's what we're doing.

Last question, the page with the credit metrics particularly the FFO to debt or the EBITDA metrics clearly shows you are way stronger than your targets. Can you give some thought on what's the ultimate goal? I assume your goal is not to stay dramatically above the targets.

It's to be within those targets, Steve. Part of that rationale is why we increased the CapEx for the balance of the year and of course will be looking at what we expect those metrics to be in 2016. And adjusting our apex forecast accordingly.

A lot of this is about making sure that the business is on firm and sound financial footing so that we can make continual judgments about where he put our capital. And we have this huge hedge out there called transmission that we are able to essentially do acquisitions all-time. And it's a good place to be but at the same time we improved our currency value we improved our position from a risk tolerance perspective. And it is an opportunity for us to reposition this company for the future. We just retired 3500 MW of coal-fired generation. So you are starting to see a rebalancing of the portfolio to address what customers truly want in terms of resources we believe a balanced set of resources is important including cold but we've got to get through the process of ensuring that we're advancing from the other technologies and addressing customers concerns relative to quality of service and that's what we're doing.

Thank you. We will now go to the line of Paul Ridzon with KeyBanc

The 200 million of incremental transmission capital, how is that going to be divided between holdco and the utilities?

About $80 million of that will go to the Transco and remainder will go to the integrated utility operating companies.

Could you give more flavor as to what went better than planned to allow you to raise guidance at this point in the year?

I think we covered that during the meat of the call to a large degree. Rate increases and whether were stronger than what we had forecasted. The regulated businesses are doing very well and the competitive businesses are doing about as well as last year. Cash flow is ahead of expectation and you put all of those things together in that gives us the confidence to raise the operating earnings guidance and raise the CapEx that we talked about

And the continuous improvement activities, they are starting to culminate across the Board. So it's cost control, it's certainly the underlying fundamentals of the business are very positive and it gives us the confidence to raise the earnings.

Next we will go to the line of [indiscernible]

Can you talk about the scale of the open position at AEP generation resources as you look out over the next few years or how to think about that as a sensitivity?

They are trying to stay in a hedged position of about 60% -70%. I think they've done that to pretty good effect really since early last year when the business started. And that allows them to do a couple things. Allows them to hedge in what some of the earnings are going to be at prices that they find attractive and they do that through both retail - they also auction they have to serve FFO vote and their normal trading activity. But then it also leads them with an open position to take advantage of what could be higher prices like they have during the Polar Vortex sees of last year. Take advantage of that. And to cover things like unit outages or load spikes or price spikes that can happen in the short term. They don't want to be sold out and fully committed. They want to have a significant portion hedged and a portion to cover from on expected short-term opportunities

Chuck and his team continually evaluate that but the 60 to 70% has been a target for a very long time now. It's for that reason - we are risk-averse from that standpoint because that business is really focused on making sure it continues to be an airtight business that has like I said earlier, Easton a great job of compartment slicing the risk. And that is a part of that ability for them to do that.

The assets that Chuck has in that business are great assets and the risk management they've applied to that is this has been phenomenal through some really pretty volatile circumstances over the last year and half. We really proud of the way they are managing that business and they've done it very to good effect financially.

Really when we look at it's not internally what the issues are because we can control what happens all to have Power Generation operates from operational excellence perspective. And how we manage risk within that envelope. The real issue is what happens outside with the regulatory commissions, FERC, Ohio and elsewhere. But certainly yesterday was another indication. Markets moving toward a certain set of conditions for the auction and it gets changed at the 11th hour and that is a concern because you never know what the rules of the game are and they can change at the last minute or change afterwards. And that is troubling. I think consistency - we have consistency internally. It's consistency externally that we need.

Is it presents us to say that you are bullish about power prices?

I wouldn't say that's presumptuous. I really believe we have taken substantial amount of capacity that's been retired and we believe that capacity prices will improve.

Thank you. Our next question comes from the line of Jonathan Arnold with Deutsche Bank.

Any update on the River Ops transaction that you talked about last quarter?

The process we're going through terms of valuation continues. That's really all that we can report at this point.

And we will now go to the line of Paul Fremont with Nexus. Your line is open.

I guess I wanted to follow up on the PECO [ph] decision yesterday to get further consideration at some point in the future of your rehearing request in the [indiscernible] proceeding.

It just looks like it is some continued delay really. We don't seem to be getting answers or schedules or the things we need to be able to get the answers we're looking for. They seem to be putting some of the decisions further out into the future and as Nick said we need some clarity and we don't seem to be getting it.

I don’t know far you can delay these things. It's an issue where there needs to be an answer and I'm just concerned that we are either waiting until after the capacity auctions or whatever. Ohio needs to be concerned about - yesterday was another indication if you're going to depend upon from the federal side to address the market issues that changes will occur that you didn't - you may not anticipate. And I think from a generation perspective we've got to make sure that Ohio continues to develop and certainly with the natural gas out there that nothing will happen until there is some resolution so you're in a hold pattern. We're not going to make any investments in central station generation in Ohio. I have not seen many others step up to the plate. I know there's maybe one or two units that are being built out there but keep in mind you've retired thousands and thousands of megawatts and you're short in Ohio. And so the delays need to come to an end.

Thank you. We will now go to the line of Brian Chin with Merrill Lynch.

Just a brief one on your earlier balance sheet comments, clearly the metrics are looking a little better debt to cap numbers of strategy around and even the pension funding numbers looked really solid. Given all of that does it make sense on the margin to reconsider capital deployment towards maybe looking at the dividend policy as opposed to truly looking at transmission CapEx? And marginal changes there to think about?

The real question is what happens to the dividend.

In so many words, yes.

Yes. Usually we review the dividend policy in the October timeframe and our board certainly will be considering the dividend policy. We still maintain our 60% to 70% range we stated earlier and the dividend will be commensurate with the earnings profile looks like. We stand by that. There's no reason to see it will change but obviously we look at the baseline of the business and with the forward long-term view would looks like and the board will reevaluate and do that in October timeframe.

Thank you. We will go to the line of Anthony Crowdell with Jefferies.

I guess this is a softball question. Do you think Governor Kasich entering into the race slows decisions down in Ohio? It looks like [indiscernible] with the endgame is where they are looking to punch you but do you think this slows things down or speeds things up or has no impact?

My bet would be no impact because Governor. Kasich obviously has confidence in the commission and certainly Andre Porter is chairman has taken over there and my belief is that he is going to leave it to the commission to decide what this Ohio policy looks like. I don't see his running for office of the president to slow things down. I guess the real question is will the PCO actually speed up? That is something that they need to address.

Do think they are waiting for - Brian had used that football metaphor for they keep punting. Are they punting to a certain calendar date or a certain time whether it's PGM is resolved or is that their target or is not really sure?

Only they can answer that. It's one thing to have one delay but to have delays of several cases occurring, that's really not a good message. And to said energy policy in the state, you've got to have the courage to step up and make a decision.

And see them score touchdown or field goal rather than punt again.

We will now go to the line of Ali Agha with SunTrust.

I just wanted to make sure I heard your original commentary correctly, with regards to your thinking on the generation business. So as you said these Ohio PPA [indiscernible] most likely now we’re looking at that maybe in 2016. But if I'm hearing you right should we still expect your final decision on the merchant business this year in the remaining months of this year? Or is that also going to be dependent on when this PPA rider stuff now comes out?

I think certainly the capacity performance and the base residual auctions are significant piece of that discussion. We're going to have to see - what the lay of the land is after that is concluded to visit with our board and determine what the next steps are. But that doesn't stop us from pushing ahead with the PPA proposals regardless of the outcome. But certainly I think Ohio could send a great message by proving those PPAs. It remains to be seen whether we're going to actually wait. This can't go on for a long time. We're after certainty for our investors and from a shelter perspective, we cannot have this overhang because it really not only confuses us on how to invest in the unregulated generation or lack of investment, but it also is so convoluted that it is difficult to understand exactly what it is you have in terms of valuation of that generation. And so the steps being taken particularly with the clean power plan and other things that are occurring I think those units will survive the clean power plan because there absolutely needed. They are great units and they are 2/3.1/3 gas. A lot of fuel switching occurs between coal and gas. So they are valuable units but they just need to be reflected that way. I just think it's something we've got to get a handle on. As far as timing is concerned, we want to make that decision as quickly as we possibly can. But we have to do what is right for the shareholders and we have to do on analysis based upon what we can determine the best we can with the value of that generation on the forward basis will be. If you get a great capacity performance number, then that may diminish the need for PPA. But I still think PPA is needed. It's an important part of the hedging for customers in Ohio. It's important part of that generation being maintained in Ohio with the jobs taxes and everything else I've talked about. We're not going to - we have not and will not give up on the PPA approach with the commission. They need to answer that question. It would be great if the answered it relatively quickly so we can get on with the business at hand. But certainly those two items are still outstanding and we're hopeful that at least one of them will get resolved very quickly, so that we can start filling in the blanks.

And from a logistics point of view, Nick, there would be no constraint for you to exit the merchant business while this PPA rider application was still outstanding ask

We don't believe there is a constraint because the real value of the PPA is again to maintain the generation in Ohio and make sure that economically there is still there and regardless of the outcome of the disposition of that business.

And last question, is it fair to assume that previously you had looked at scale and spin off as two trajectories. Is still look a little more likely outcome than spin off? Is that fair to say?

We don't know that yet. We've all these events look at things like the tax efficiency and other parameters before we can really make a decision on sale versus spin. Or for that matter keep but certainly sale and spin which you mentioned. Those are areas where we have to look at the economics and it depends on - you've got to be offered a sale price that overcomes the tax efficiency of the spin and there is other things involved with it from a business perspective as well. I would say both are still part of the decision process.

Thank you. And we will go to the line of Julien Dumoulin-Smith with UBS.

A quick question if you look at all and get some clarity around transmission spending, [indiscernible] has been The gems been evaluating reduction in the forecast but from what I understand you are investing below the [indiscernible] level as in its basic transmission investments at the lower KV. How do think about the impact of potential reduction in PJM load forecast relative to your investment plans near term and long term it's actually in the context of having more proceeds from any prospective sale of the River Ops or [indiscernible] etcetera.

I don't anyone knows what the load forecast is at this point and certainly we don't know the level of investment needed from a transmission perspective. We are in the process of redefining this electric grid. And we have retirements that occurred on one of the transmission has been built because of the retirements but also there continues to be optimization across the grid as a result of their will be more optimization after the clean power plan gets resolved. The changes occurring in PJM now are more about generation and certainly reliability and less so about load. And so I wouldn't put much context in terms of a forward-looking transmission plant. We've seen over and over how transmission plans change with varying degrees and sometimes we get irritated by that because we plan transmission like PATH and things happen. But if you look at the underlying fundamentals of transmission, the grids is changing dramatically. The flows on the grid are going to change dramatically. So when you look at the four power transmission system you can be bullish about that and then the underlying which you mentioned the lower KV levels be some transmission and those levels, there is a massive amounts of rehab work and follow-up work to forward purchasers and at least be done. And we happen to have the largest transmission system in the country so that bodes well for the investment potential for AEP.

Perhaps just to clarify if you will, in the increase in transmission spend off late and just thinking about the sensitivity if there were to be a shift in the RTEP [ph], it seems that you guys have historically had some element of comfort around projections given that they don't primarily seem to flow out of the [indiscernible] process, if you could elaborate a little bit. Just getting some sense of how hedged are you presently to changes either way in RTEP.

We have a bunch of big buckets and a lot of those big buckets are not RTO dependent.

Our transmission spend and forecast is not dependent on a RTEP load forecast. I would not put a lot of stock in a RTEP load forecast anyway.

We will go now to the line of [indiscernible].

Couple of ones, first one with the transmission auction have you guys heard from PJM or do you guys have any idea when the new schedule might be or when we might get more information on that?

Yes we will know soon. I think certainly PJM will have to speak about the ins and outs of that but we suspect it will be within maybe a month or three weeks delay or something like that. I don't think it's a substantial thing. Still have to observe the same performance criteria when they did in. I think it should be a large delay.

If it might be before the PRA?

I don't know about that. They will have to answer that obviously but I don't think we're talking about moving into fourth quarter or anything.

Let's hope not, just another quick one for you. In terms of the potential asset sale or spend which you guys be open to idea of accepting other entities currency like a stock deal? I'm sorry guys would prefer cash if short sell the Junco would you guys be open to the idea of maybe taking the equity of whatever one of the players out there that has been acquiring these things?

Paul, at this point is worth evaluating. I think everything would be on the table. We wouldn't say no to that if we felt that was the highest value for our shareholders.

I think we haven't closed off on any of these parameters that we keep talking about because frankly we don't have the full answers yet.

On the delays that have been happening in Ohio etcetera, have you sensed any change in tone or issues that have come up or any flavor as to the environment there with respect to this? Or is this regulatory stuff that happens in a lot of major proceedings that are not exactly run-of-the-mill?

Obviously the PUCO I speak for supplement issue but it is a major issue. You can't get around that. I'm sure there's a lot of deliberations occurring over in their camp and it's part of the regulatory process. Many times I think it support for policymakers to understand the business disruptions that occur relative to either waiting for decisions or not making decisions let alone the wrong decisions. We really do need some consistency and delivering on orders and rulings on a timely basis. I think it's particularly important to the industry and particularly important to electric utilities in Ohio.

Okay but you have noticed a significant shift I guess or any change in what's going on there other than normal back-and-forth and what have you? Or have you?

I don't think there's been a significant shift or anything. I think there's a lot of dialogue going on. We have dialogue going on these issues in the Ohio business Roundtable and the close partnership and of course at the commission as well. It is an important issue but I haven't sensed a change. I think it's a very deliberative approach.

The final question will then come from the line of [indiscernible].

We have touched a lot on PGM and PPA. Fix it over to transmission back again. Could you talk about what you guys are thinking any update on potential alternative structures? I know last time you talked about the restructure doesn't make sense for you guys. Any updated thought process on that? And the second non-related question that could you talk about what you are - I know demand looked pretty good on normalized basis. Angel more insight into with respect to you see pattern to what you're seeing there are what sort of aside from just a general economy improving that striving the growth or demand improvement there?

Brian, covered the economy piece of it. As far as transmission is concerned we have in changed our approach to the transmission business we're still heavily investing in it and we still want to make sure that we continue to do it in a positive way from a state perspective. We haven't changed our approach from that perspective. Brian?

I think on the customer usage side a large part of what is driving residential in particular is customer counts. We are seeing average customer usage hang in there. We're not seeing decreased to the degree some others are. But it is customer count that is driving it. I've been this job for five and half years maybe more and I've been talking about 5.3 million customers that whole time. I'm finally through to be able say we're rounding at 5.4 million customers. Customer counts particularly in the West helping us out. It's largely driven by is not the talk about macro factors but a lot of it is shale gas and with the economy are doing well. We are seeing increased usage. In places like Kentucky Power that is being particularly hard-hit by mining shutdowns in the like we're seeing customer counts decrease and used down. It really does unfortunately follow the macroeconomic factors that we are seeing and we are blessed to have the shale gas plays in our service areas and that's really driven a lot of the load increases that we've seen.

Thank you everyone for joining us on today's call. As always the IR team will be available to answer any additional questions you may have. Nick, would you please give the replay information.

Today's call will be available for replay beginning today at 11.15 and running through July 30 until midnight. You may access the playback system by telling 1-800-475-6701 and entering the access code 364235. The dial-in number again is 800-475-6701 and International 320365 320-365-3844 with access code of 364 364235. That does conclude our conference for today. Thank you for your participation for using AT&T executive teleconference. You may now disconnect.