Good morning. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. [Operator Instructions]. Thank you. It is now my pleasure to turn it over to our host, Mr. Todd Tidwell.

Good morning, everyone, and welcome to OGE Energy Corp.'s second quarter 2008 earnings call. I am Todd Tidwell, Director of Investor Relations and with me today I have Pete Delaney, Chairman, President and CEO of OGE Energy Corp, Dan Harris, Senior Vice President and COO of OGE Energy Corp and President of Enogex; Scott Forbes, Interim CFO of OEG Energy Corp, Mel Perkins, Vice President of Power Delivery; Howard Motley, Vice President of Regulatory Affairs, Steve Merrill, Vice President and CFO of Enogex and several other members of the management team to address any questions that you may have. In terms of the call today, we will first hear an explanation of second quarter results from Scott Forbes, then an overview of regulatory issues from Howard Motley. Pete Delaney will then follow up with closing remarks and finally, as always, we will answer your questions. I would like to remind you that this conference is being webcast and you may follow along on our Web site at www.oge.com. In addition, the conference call and accompanying slides, including required non-GAAP reconciliation information, will be archived following the call on that same Web site. Before we begin the presentation, I would like to direct your attention to 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. I will now turn the call over to Scott Forbes to discuss second quarter results. Scott?

Thank you, Todd, and good morning. For the second quarter, we reported net income of $57.1 million or $0.62 per average diluted share. As compared to net income of $62.6 million or $0.68 per average diluted share in 2007. The contribution by business unit on a comparative basis is as follows. For the second quarter of 2008, OG&E earned $0.33. Enogex also earned $0.33, and the holding company had a $0.04 loss for a total of $0.62. For the second quarter of 2007, OG&E earned $0.38 and Enogex earned $0.30, for a total of $0.68. Please keep in mind that in 2008, the marketing business is included with the holding company results, while in 2007, it was included in Enogex. Over the next few slides, I will go into more detail regarding the results of our businesses. For the second quarter of 2008 and 2007, the Company had certain write downs and timing items which we do not consider representative of our ongoing business. You can see that these items reduced earnings by $0.11 per share in 2008 and increased earnings by $0.07 per share in 2007. In OG&E, the net income for the second quarter was $30.9 million or $0.33 per share, as compared to net income of $35.1 million, or $0.38 per share, in 2007. Some of the primary drivers were as follows. Gross marginal revenues increased 8% from $192.6 million to $208 million. I'll provide details of gross margin on the next slide. Operating and maintenance expenses increased $7.7 million, or 9.9%, primarily due to higher employee costs, higher contract services due to an overhaul at one of OG&E's power plants, higher professional service costs and higher fleet costs associated with increased fuel costs. These increases were partially offset by a lower provision for uncollectible accounts receivable.…

Thanks, Scott. Slide 14 is an illustration of our regulatory plan and expected timing and our regulatory plan is to seek approval for riders and regulatory assets to reduce regulatory lag between rate cases. The Company has implemented recovery riders for our Centennial wind farm and our enhanced security projects in the Oklahoma jurisdiction. As illustrated in the chart, we have added a Redbud rider for 2009. Yesterday, a settlement agreement in the Redbud pre-approval case was filed with the Oklahoma commission which includes a recovery rider. I will discuss the Redbud settlement in a moment. OG&E has also requested a renewable rider in the Oklahoma jurisdiction to be effective in 2010 to recover the revenue requirement associated with the transmission line that will promote wind energy development in the state of Oklahoma. In our last Oklahoma rate case, the Company was authorized a regulatory asset for excess storm damage costs above $3.5 million, which proved to be a definite benefit in 2007 because of our ice storm in December. I will also discuss the storm recovery in a moment. Finally, OG&E will be filing an Arkansas rate case in August and plans to file frequent rate applications in both retail jurisdictions in the future. Slide 15 is the Redbud acquisition and on July 30th, the settlement agreement was signed yesterday in the pre-approval application. The settlement provides that the acquisition of a 51% interest in Redbud at the agreed upon $434.5 million purchase price plus transaction costs is prudent, and the facility is found to be used and useful. A rider will be implemented upon closing of the purchase and the integration of the Redbud facility into OG&E's generation portfolio. The rider will recover the Oklahoma jurisdiction revenue requirement until new rates are implemented that include Redbud's net investment,…

Thank you, Howard. Good morning, everyone. The increased earning guidance for 2008 and our progress on the recovery of our utility investments reflect the positive business fundamentals of both the electric utility and natural gas midstream business. That said, our work to position OGE Energy to be able to continue to capture opportunities for our customers and shareholders continues. My remarks today will follow closely the themes in the last quarter. We continue to experience higher profitability and increased capital investment at Enogex, reflecting greater investment opportunities in Enogex's natural gas midstream. At OG&E, we continue to pursue investments in wind- and renewable-related transmission projects. The acquisition of the natural gas-fired Redbud plant and a host of regulatory filings for the recovery are under way. On the regulatory front, we have made significant progress since the last call, negotiating settlements for the Redbud acquisition, which we announced this morning, the 2007 ice storm and Red Rock cost recovery cases. From a financial standpoint, we're increasing our 2008 earnings guidance to $2.50 to $2.70 per share despite a $0.06 per share charge to OG&E in the second quarter for the costs associated with the canceled Red Rock plan and the 2007 ice storm recovery cases. At the end of the first quarter, our expectations of increased profits at Enogex put us towards the high end of our previously announced guidance of $2.40 to $2.60. It is our continuing expectation of higher profits at Enogex that's the driver for the increase in our earnings guidance at this time. Assuming the midpoint of $2.60 per share of our guidance, such results would compare very favorably to our reported earnings of $2.64 per share in 2007, which included approximately $20 million, or $0.22 per share, of unusual products or items. OG&E continues to make…

[Operator Instructions] And your first question comes from the line of David Frank with Catapult Capital.

Yeah, Hi. Good morning, guys

Good morning, David.

I just had a question, I want to clarify something. It looks like your revised guidance, you said in the press release, now includes a $0.06 one-time hit at the utility?

That's correct. That is the $9 million pre-tax charge for Red Rock, which was $7.5 million, and $1.5 million towards the storm.

And then, in the first quarter, you also had another $0.06 one-time hit when you reiterated your '08 guidance. So I guess my question to you is does your revised guidance... if I'm understanding this correctly, your revised guidance for 2008 now includes $0.12 of nonrecurring items, of hits.

Yes, it does.

Okay. All right. I just wanted to clarify that. Thank you.

Your next question comes from the line of Brian Russo with Ladenburg Thalmann.

Good morning, guys.

Good morning, Brian.

On the Redbud settlement, can you quantify the rider that you expect and when that might be implemented?

Yes, the recovery rider would recover the rate of return on Redbud, operating expenses, depreciation, ad valorem taxes. We're estimating that the annual revenue requirement that we would recover through the rider would be about $75.4 million from our Oklahoma customers, and that's about 85% of our jurisdiction of cost. The rider would be implemented, let's just say if the commission approved this in August or September, and we owned this September 1 or owned it October 1, whenever we do own it, the day that we integrate Redbud into our generation fleet and start generating with it, that will trigger the rider to start recovering the $75 million a year.

Okay, so it's possible for this rider to be implemented in early fourth quarter, and the contribution of that would be incremental to your revised guidance.

Brian, this is Todd. No, that incremental amount is included in the guidance.

Okay. And also, what is the unhedged frac spread that you're assuming in your guidance, the 40% that's unhedged?

The market spread that is in our guidance is between... well, the realized spread is $7.03 to $8.32. I believe the market spread is right around $8.00 to $9.00.

Okay. And I think for the month of July it looks like a frac spread was a little... close to $11. Are you just assuming maybe that for the full year it's $8.00 to $10.00? It looks like second half is fairly strong.

That's correct.

Okay. And then I think I missed your comment on the issuance of common equity in 2008. Could you just repeat that please?

Yeah, I'd be happy to, Brian. We filed the continuous offering program. We have not issued anything under that in terms of equity, but our plans would be to issue around $75 million of common stock this year under the continuous offering program starting sometime in the next few months.

Okay. Thank you very much.

You're welcome.

[Operator Instructions] At this time, there are no further questions.

No other questions? I'd like to close the call. Thank you for your time this morning and your continued interest in OGE Energy. Have a nice day. Thank you.