Good morning. My name is Tikia and I will be your conference operator today. At this time, I'd like to welcome everyone to the OGE Energy Corporation’s 2007 earnings conference call. [Operator Instructions] Thank you. Mr. Hatfield, Senior Vice President and Chief Financial Officer, you may begin your conference.

Thank you. Good morning and welcome everyone to OGE Energy Corp.'s fourth quarter 2007 conference call. I'm Jim Hatfield, Senior Vice President and Chief Financial Officer. I have with me today, Pete Delaney, Chairman, President and CEO, Dan Harris, Senior Vice President and Chief Operating Officer of OGE Energy Corp. and President of Enogex. Howard Motley, Vice President, Regulatory Affairs of OG&E, Steve Merrill, Vice President and CFO at Enogex, Mel Perkins, Vice President, Power Delivery, OG&E, and other members of the management team. In terms of the call today, we'll hear first opening remarks from Pete Delaney, then I'll cover the year-end and fourth quarter results, we will look at plant utility capital expenditures, cover 2008 outlook, Howard is going to give us a regulatory update, and then we'll close with Q&A. Before we begin, I want to remind everyone that we have prepared slides to accompany our webcast, so it will be easier to follow the numbers when we get to that point. Also, before we begin, I'd like to direct your attention of the Safe Harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. And with that, I'll now turn the call over to Pete Delaney. Pete?

Thanks Jim. Good morning everyone and thank you for joining us this morning. We're pleased to report another year of solid financial and operational performance in 2007. One of those operational accomplishments was the response of the December ice storm with a record 300,000 customers without power. The damage was extensive and widespread, centered in the metro region and we were able to have an injury free restoration effort over the ten-day period working in very difficult conditions. [inaudible] OG&E won the JD Power Number One ranking in the Southeast region for residential customer satisfaction. Enogex, once again, in 2007, they performed the first quartile in several categories with standout performance in safety, with the Number Two ranking in Safety Performance from the Gas Processors Association and also receiving an award for emission reduction from the Oklahoma Environmental Federation. Financially, on a consolidated basis, we earned $2.64 per share in 2007, up from $2.45 a share from continuing operations in 2006. At the utility OG&E energy earnings were up… were at $1.75 per share, up from $1.62, benefiting again from several one-time items and from the Centennial Wind Farm that went into operation, offsetting weather that was cooler than last year. We also continued to see steady customer growth of 1% as our economy here remains, at this point, in pretty good shape. We spent about $380 million at the utility to replace aging infrastructure, maintain our power plants, and expand our system to come accommodate those customer growth. We will continue that program in 2008 and with the Redbud acquisition, full capital investment can reach almost $800 million. We are pleased to be able to enter into a purchase agreement for the Redbud power plant, which was being optioned off in late 2007. With the Oklahoma Corporation Commission rejection…

Thank you, Pete. For 2007, we reported net income of $244.2 million or $2.64 per diluted share, as compared to net income of $262.1 million or $2.84 per diluted share in 2006. On a continuing operation basis, our earnings increased 7.7% over the $2.45 per diluted share posted in 2006. As a result of asset sales at Enogex in 2006, we will distinguish between net income and income from continuing operations throughout this presentation. The contribution by business unit on a comparative basis is as follows, OG&E, $1.75 versus $1.62 in 2006, Enogex, $0.93 versus $0.84 in 2006, holding company a $0.04 loss versus a $0.01 in 2006… $2.64 versus $2.45 on a continuing operation... we will start on slide 5 and we will start with a breakdown of 2007 results for OG&E. At OG&E, net income was $161.7 million or $1.75 per share as compared to net income of $149.3 million or $1.62 per share in 2006, an 8% increase in EPS. Some of the primary drivers are as follows. Gross margin on revenues increased 1.8% to $810 million from $795.7 million and I will provide details of gross margin in a moment. Operation and maintenance expense increased $4.2 million or 1.3%. Increases in outside services, employee costs and permits were partially offset by a higher amount of capitalized labor due to the December 2007 ice storm. It is also important to note that approximately $4 million of O&M was capitalized in association with the ice storm that normally would have hit the P&L in December. Depreciation increased $9.1 million or 6.9%, primarily due to the Centennial Wind Farm being placed in service during January 2007. Taxes other than income increased $2.9 million or 5.5%, primarily due to increased [inaudible] and payroll tax expense. Net other income, expense, decreased…

Thank you, Howard. As we officially close 2007, I'd like to state that we were pleased with operational and financial performance during the year. As we look forward to 2008, we approach the year from a position of financial strength. We have solid growth opportunities across both OG&E and Enogex and we continue to pursue balanced growth. We have sufficient liquidity to fund growth at opportunities as we have $1 billion of committed multi-year bank facilities. As we begin 2008, all of us at OGE Energy Corp. are focused on the execution of the financial plan. That ends our prepared remarks and we’d now take questions. Question and Answer

[Operator Instructions]. Your first question comes from [inaudible].

Hi guys. Could you... just going back to slide 24, could you talk a little bit more about the Redbud purchase and the sort of what you went through? I mean, you RFP and came up with Red Rock and obviously you did buy this through the RFP. Did you talk to the commission beforehand while the auction was going on and sort of what's your confidence level on getting this through?

The Red Rock plant was a PSO request for proposal for a base load need they had in the 2011 time period, and we had a baseline need around the same time and so we bid into their RFP and they selected our... we proposed a partnership with them and they selected that in their RFP process, of course, with the pre-approval, given the size of the project and given the issues associated with facilities these day, we thought that a prudent thing to do. As you know, [inaudible] that they did not approve that at coal plant. So, from a standpoint of what the alternatives were at that point in time to meet that need, you really don’t have any alternatives except for natural gas and then combined cycle facility, given that you're going to run this plant 80%, 75% at a time, that's really the most efficient… the best next option that we have. I guess it was fortunate in that the financial owner, it was not a strategic owner, they owned the portfolio of these merchant plants decided that they were going to sell that portfolio, we contacted them, and said we wanted to participate in the process, of course, we don’t need 1,230 megawatts for our need and we quickly got together a partnership with GRDA, Grand River Dam Authority, and the Oklahoma Municipal Power Authority, to as our partners and we were successful, I think, at a price of $695 per KW. In our own estimation, what we see out there is that, it seems the consensus is the build combined cycle today is $900 to $1000 per KW. So, I think from a standpoint of the purchase price and the fact of lack of construction risk, in fact, that we do have that need,…

The short answer I guess is it doesn't matter that you bought this outside of an RFP process?

I think there will be some parties that could argue that. Of course, one of the parties that usually argue, that’s Redbud. They are in the game with us now and I think the commission really is going to look at the end result. The plant is the below what it would cost to construct a plant like this. The risk and construction price to the consumers are fixed. I believe that the commission knows that we do need power in the future and I think that will not have quite a role in this case as in the Red Rock cases. Howard W. Motley Jr. - Vice President, Regulatory Affairs, OG&E Electric Services: We did not have requirement to competitively did and we did discuss… they were aware that we were bidding on the Redbud facility, so we kept them up to speed what we were doing. The opportunity and quick turnaround time, they were really briefed the whole way. So, it was not a surprise to the commissioners.

Thanks so much guys.

[Operator instructions] Your next question comes from Scott Engstrom with Glennhymn Capital Management.

Good morning. Jim, just a couple of question on the outlook for '08. One, I was wondering you mentioned the 2% sales growth at the utility, does that create a 2% margin growth as well?

No. I think, Scott, the key there is… look at last year we had 1% growth, primarily ran to the residential customer. 1% customer growth obviously the... from a margin perspective, residential has more margin than other customer classes. So, it’s not a direct sales margin perspective.

Okay. Was there a significant… I thought about '07 margins, just weather impacts on '07 at the utility level. Can you quantify that versus normal?

We were about $3.6 million below normal weather in 2007.

That's pre-tax margin?

Yes.

Okay. So you had… pick up the $3.6 million and then 2% sales growth on top of that?

Correct.

Okay. It just seems with the other assumptions in there, it’s hard to get down to your net numbers, but given some more close to 2% margin growth, but… maybe I will call up offline on that. The other question I had is on Enogex operating expenses, has seen fairly decent growth, growing from say $170 million in '06, to $190 million this year, up to the $200 million plus you are talking about this year. Can you kind of talk about what's going on there and what's driving that?

Scott, the question is what’s driving operating expenses and it’s essentially the O&M cost associated with materials and supplies and of course we have a lot of growth initiative going on and that requires us to add people to support that growth initiative, and that's really the main drivers behind operating expenses. Really in the O&M category, of course you are going to get a little higher depreciation, a little higher [inaudible] as you continue as planned, which we did significantly in '07 and look to do in ’08 as well.

Okay, so it's primarily higher O&M that’s supporting growth, not necessarily organic higher cost to run the business.

That's correct. And of course depreciation is going to be a big part of that as you have CapEx close to $300 million in '08.

One last question, I missed on the... at the utility, the large jump in interest expense, I assume, is related to closing of Redbud. Is that right and do you have an assumption on… is that kind of just a sort of fill in the blank… a mid-year assumption on closing that or end of the year or is there some other factor driving the jump in interest expense?

I think you’d have to look at '07 first, realize that we had the one-time IRS settlement, which drove down interest expenses in 2007 and then we issued $200 million at the end of January and we would probably look to issue $150 million of debt in the second half of the year, our assumption of the closing Redbud is in the November 30, sort of, timeframe. So, the debt would be associated with that would be later in the year.

Okay, thanks a lot guys.

There are no further questions at this time.

No other question again the... thank you all for your interest in the company. We have a lot of growth opportunities. We are executing on our financial plan, as Jim said, and we feel very good about 2008. Thank you for your interest and have a good day. Thank you.

This concludes today's conference. You may now disconnect.