WEC Energy Group, Inc. (WEC) Q1 2015 Earnings Report, Transcript and Summary

And now, we would like to take your questions. Your first question comes from the line of Greg Gordon with Evercore ISI. Please go ahead with your question. Gale E. Klappa - Chairman & Chief Executive Officer: Hi, Greg. How are you?

Hey, Gale. Gale E. Klappa - Chairman & Chief Executive Officer: How you doing?

I have two questions. The first one is how do you feel about the Packers draft? Gale E. Klappa - Chairman & Chief Executive Officer: My summation of that is the Jets still suck.

Fair enough. Fair enough. Probably true. Can you talk about the sales growth in the first quarter in the context of you still feeling like you are on track for the year? I know – because the residential weather-normal demand was down 3.1%. Gale E. Klappa - Chairman & Chief Executive Officer: Yeah.

Is that just sort of maybe a statistical issue or do you expect that to reverse later in the year? That's my main question. Gale E. Klappa - Chairman & Chief Executive Officer: Good question, Greg. The short answer is, yeah, I do think that the first quarter residential weather-normal numbers are a statistical anomaly. You've heard me say this before, but the weather-normalization techniques that are available to companies like ours, they simply break down when you get two to three standard deviations off the norm. And last year, with the polar vortex, particularly as it hit the Midwest and Wisconsin, I mean we were way, way off the norm. So, I honestly don't put much stock in the weather-normal numbers for the first quarter. On the other hand, if you look at our large commercial and industrial segment, which is far less weather sensitive, you saw an uptick of 0.6% even compared to the polar vortex numbers of a year ago. So, as we've looked at this and believe me, we have analyzed this about 14 ways to Sunday, our bottom line conclusion is we are on track overall for what we expected for the year. And we weren't expecting, as you know, significant uptick in kilowatt hour sales. So we feel pretty good about where we stand. And again, I would take with a grain of salt the weather-normal numbers when you compare it to such an extraordinary period a year ago. Hope that helps, Greg.

Yes, thank you very much. When you talk to your industrial and commercial customers about their planned economic activity for the next 12 months, I know you do a lot of economic development and you stay very close to those... Gale E. Klappa - Chairman & Chief Executive Officer: We do.

...those customers. What is the tenor of – their mood about capital investment, hiring and the outlook? Gale E. Klappa - Chairman & Chief Executive Officer: I would say – and let me answer that in two ways. From the standpoint of commercial development, downtown office towers, retail centers being developed, we're seeing more commercial development than I think we've seen in the entire decade that I have been in this region. So our commercial customers, I would say, are showing just very solid optimism. Our industrial customers are, I would say, much more cautiously optimistic, nothing that would show huge growth, but on the other hand, I would say steady as she goes from the general input we're getting from our industrial customers. And then, of course, we should see an interesting development in the second quarter. You may recall me mentioning that Amazon has built a 1 million square foot, it's huge, a 1 million square foot distribution center south of Milwaukee and north of the Illinois line, that construction is complete. They're hiring and we should see that that 1 million square foot facility and a lot of ancillary development opening this summer.

Thanks very much, Gale. Have a good day. Gale E. Klappa - Chairman & Chief Executive Officer: You take care, Greg.

Your next question comes from the line of Julien Dumoulin-Smith with UBS. Please go ahead with your question. Gale E. Klappa - Chairman & Chief Executive Officer: How you doing, Julien?

Hi, good afternoon. Gale E. Klappa - Chairman & Chief Executive Officer: Good afternoon to you.

Excellent. So, first question here more on the balance sheet side of the equation. In terms of your pro forma metrics for the transaction, how do you see yourself trending within your targeted ranges? And ultimately as you see yourself more structurally what kind of metrics are you targeting pro forma, just perhaps with respect to your rating (27:40) but also even within that kind of the FFO metrics, if you will? Gale E. Klappa - Chairman & Chief Executive Officer: Well, let me start out by framing our overall objective, and then we can talk through some of the more specifics. Our overall objective, remember, going back to one of our three most important criteria for acquisitions would be that we would maintain largely credit neutrality for the acquisition. We would fully expect based on the input we're receiving from the credit rating agencies to maintain our A category credit rating. So that basically, fundamentally, where we expect to stay, and where we have planned to stay. And then of course, as you know, the agencies have very specific debt to total cap and FFO metrics tied to being in – being – qualifying to stay in that credit rating, but we would expect very much to stay within the A category credit rating. Current thinking, of course, is unchanged related to the amount of debt at the holding company that we would add for the acquisition. Right now, we are still projecting about $1.5 billion of debt at the holding company to complete the acquisition and that would be, Pat, in 3-year, 5-year and 10-year tranches. James Patrick Keyes - Chief Financial Officer & Executive Vice President: Correct, Gale. Gale E. Klappa - Chairman & Chief Executive Officer: And equally spread across the tranches. James Patrick Keyes - Chief Financial Officer & Executive Vice President: Yes. Gale E. Klappa - Chairman & Chief Executive Officer: So that's basically my general response to that. Perhaps Scott, Allen, anything you want to add? James Patrick Keyes - Chief Financial Officer & Executive Vice President: Julien, was there something more specific you were after?

Well, I was just wondering where within those metrics – I mean how much pressure, you talk about maintaining largely credit neutrality, but just how much pressure probably at the lower end of that range within the FFO? James Patrick Keyes - Chief Financial Officer & Executive Vice President: Let me try it this way. The one thing that when we talked to the rating agencies almost a year ago now, there is nothing going on at the utilities, so the only activity we focused on and they focused on was at the holding company. And you may have seen – let's use Moody's as an example. In June of 2014, I believe we were – outlook was down... Gale E. Klappa - Chairman & Chief Executive Officer: Negative outlook. James Patrick Keyes - Chief Financial Officer & Executive Vice President: Negative outlook, and then this morning they announced that we were on... Gale E. Klappa - Chairman & Chief Executive Officer: Negative watch. James Patrick Keyes - Chief Financial Officer & Executive Vice President: Yeah, negative watch. That's all consistent. So I mean, in that, when we first went in and said we're going to put $1.5 billion acquisition down in the holding company, they said okay, that's what we think in June. Now, the triggering event was the Wisconsin Commission approval and now we took the next step. So, fairly consistent. I don't know I can get any more specific than that.

Got you. Hey, no worries. Thank you. And then just in terms of execution of the transaction, I know it's a little early here, but can you talk a little bit to the best practices and just ability to kind of, how should we say, turn around the Peoples Gas business and opportunity set there? I don't want to get too close to the synergies per se, but just kind of more qualitative, if you will. Gale E. Klappa - Chairman & Chief Executive Officer: Well, I appreciate the questions, Julien, and I think very simply, let me start off with basically our overall mission statement. Once we complete the acquisition, we intend to function as one company, one team with seven customer facing brands, all focused on customer satisfaction and operational efficiency. That's basically the mantra, the mission, and how we will go about achieving the important objectives that we've laid out for the transaction including meeting all three of the criteria that we continue to talk about is the criteria that we use for any acquisition opportunity. As you probably have read specifically related to your question on Peoples Gas, we were asked by the Illinois Commerce Commission what our plans would be for management of Peoples Gas and we responded to the Illinois Commission in writing committing that we would essentially place a minimum of three new senior officers from our team at Peoples Gas. So that will be one of the first steps that we will take immediately following the acquisition. We will put a very experienced professional, solid management team in place at People Gas. We're going to find, we know this already some very talented people in the operational ranks with Peoples Gas. So I think we're going to have a really solid team from day one at Peoples Gas and the Peoples Gas organization will report directly to me.

Got it. And then lastly – were you saying something? Gale E. Klappa - Chairman & Chief Executive Officer: Obviously, I hope that gives you a flavor.

Absolutely. Just the last little detail. In terms of the timeline for closing you said late summer if I have it right. Is there any... Gale E. Klappa - Chairman & Chief Executive Officer: I think we said by the end of the summer.

Got you. Just in terms of the ICC schedule, is there any reason to think that it couldn't close earlier if you look at it at present? Gale E. Klappa - Chairman & Chief Executive Officer: Well, if we look at it at present, the Illinois Commerce Commission with the regulations and procedures that they follow in a case like this by statute unless there is some decision to delay, the Illinois Commerce Commission would make a decision by no later than July 6.

Got it. And then you would close very shortly thereafter in theory? Gale E. Klappa - Chairman & Chief Executive Officer: Once we receive the final approval, we'll close probably within three business days.

Okay. Just checking on the verbiage there. Thank you. Gale E. Klappa - Chairman & Chief Executive Officer: You're welcome. Thank you, Julien.

Your next question comes from the line of Steven Fleishman with Wolfe Research. Please go ahead with your question. Gale E. Klappa - Chairman & Chief Executive Officer: Steve, how are you today?

Hey, Gale, how are you? Gale E. Klappa - Chairman & Chief Executive Officer: I'm good.

That's good. So just on the Illinois approval, it sounds like they kept the timeline despite some parties concerned about this investigation going on at the – one of Peoples Gas's programs. Could you just talk about that? And I guess maybe more importantly just how you've gotten comfortable that that is not an issue? Gale E. Klappa - Chairman & Chief Executive Officer: Sure. I'd be happy to, Steve. Well, first of all, just to explain the procedure with the Illinois Commerce Commission. The State Attorney General in Illinois filed a motion with the administrative law judge that is presiding over our merger case, petitioning the administrative law judge to, in essence, delay a ICC decision on our merger from the statutory deadline of July 6 for an additional 90 days, while the review continues on the management of the advanced main replacement program that Peoples Gas is undertaking. Both we and Integrys felt that a delay was not necessary, because there's a separate docket where the Illinois Commerce Commission is reviewing any concern and reviewing the manner in which the gas main replacement program has been managed. So there's a separate docket underway that will probably go on for a number of months. The administrative law judge determined that a delay was simply not necessary and ruled in favor of no delay, the commission staff also suggested no delay. So at the moment, there would be nothing on the table that would postpone a decision by July 6. So I hope that's helpful on the scheduling standpoint. In terms of the review of the – what's called AMRP, the advanced main replacement program, the Illinois Commerce Commission had already authorized an independent audit, if you will, of how People's is managing that construction program. And of course, that construction program, as you know, is very extensive. It will last probably at least for a 10-year period. The legislation actually covers the 10-year period in Illinois for the replacement of aging gas pipes in the City of Chicago. Some of those pipes, by the way, are Civil War era pipes, and really do badly need replacing. So long story short, there already was an external audit going on of the AMRP program and how it's been managed. That audit is well along an interim report. There is an auditing firm called Liberty and the Liberty report – the interim report is out and has been shared with us and we would expect, Allen, a final Liberty report I would assume within the next 30 days to 45 days. Allen L. Leverett - Co-President, Wisconsin Energy; President & CEO, We Generation: There is a draft that's already out... Gale E. Klappa - Chairman & Chief Executive Officer: Yeah. Allen L. Leverett - Co-President, Wisconsin Energy; President & CEO, We Generation: ...of the final report. Gale E. Klappa - Chairman & Chief Executive Officer: So, we have obviously been able to review all of the recommendations and all of the findings in the audit, both the interim findings and now the draft final review findings. And, Steve, that's how we're comfortable that that this program is manageable and it's certainly needed from the standpoint of upgraded infrastructure.

Okay. And then just to clarify, in Wisconsin and the way the sharing works, my understanding is that above your ROE you share 50/50 for the first 50 basis points and then above that level earnings would be used to pay down this deferral balance? Gale E. Klappa - Chairman & Chief Executive Officer: Yeah.

Is that essentially how this works? Gale E. Klappa - Chairman & Chief Executive Officer: That is correct. We have a number of transmission costs that have been deferred on our balance sheet, that's we call it the transmission escrow. And what the commission has asked us to do, as you say correctly, above our authorized rates of return at Wisconsin Electric, which is 10.2 right now on that retail utility. So the first 50 basis points that we might earn in any years 2016, 2017 or 2018 above the 10.2, we would share with customers 50/50, stockholders would keep 50%. The customer would receive the benefit through paying down the transmission escrow.

Okay. Thank you. Gale E. Klappa - Chairman & Chief Executive Officer: You're welcome, Steve.

Your next question comes from the line of Brian Russo with Ladenburg Thalmann. Please go ahead with your question. Gale E. Klappa - Chairman & Chief Executive Officer: Rock and roll, Brian, how are you? Brian J. Russo - Ladenburg Thalmann & Co., Inc. (Broker): Good, thank you. Actually all my questions have been asked and answered. Thank you. Gale E. Klappa - Chairman & Chief Executive Officer: You're welcome.

Your next question comes from the line of Paul Ridzon with KeyBanc. Please go ahead. Gale E. Klappa - Chairman & Chief Executive Officer: Can you think of a new question that hasn't been asked or answered, Paul?

I have got a handful of them, thanks. Gale E. Klappa - Chairman & Chief Executive Officer: Good for you. All right. Give us your best shot here, Paul.

Pat, I just want to make sure I heard you correctly that the lower transmission was a function of the fact you are booking to a lower ROE? James Patrick Keyes - Chief Financial Officer & Executive Vice President: That's correct. We are... Gale E. Klappa - Chairman & Chief Executive Officer: Yes. James Patrick Keyes - Chief Financial Officer & Executive Vice President: That's correct.

And are you disclosing that ROE? Gale E. Klappa - Chairman & Chief Executive Officer: We've taken our best shot in the zone of reasonableness and we invite you to do the same.

And the merger costs showed up on the O&M line on the income statement, all of them? Gale E. Klappa - Chairman & Chief Executive Officer: That is correct.

So net-net, excluding those, O&M was actually down for the quarter. What drove that? Gale E. Klappa - Chairman & Chief Executive Officer: Actually, you are absolutely correct. O&M was down for the quarter on an ongoing operational basis and it was really effective cost controls across virtually every part of our organization. It's not just one thing, but it clearly was very good cost control across, literally, every organization.

And absent outage timing, should that continue through the year? Gale E. Klappa - Chairman & Chief Executive Officer: We will see. I will say one thing. We did benefit, for example, on the gas distribution side of our business. We had – even with the colder than normal weather, we had materially fewer gas leaks to respond to this year and that's I think a direct benefit from the investments we've been making in our gas distribution network. So, the fact that we wouldn't experience severe weather in the next two quarters might mean that we don't see those kind of O&M savings on the gas side of our business. But by and large, I mean, our folks have just done a tremendous job of managing effectively from the standpoint of cost control.

And then I think when you gave initial guidance, Presque Isle was still getting SSR payments. How has the turn of events kind of changed – how does that play into guidance? Gale E. Klappa - Chairman & Chief Executive Officer: Well, it doesn't play into guidance. We are no longer receiving SSR payments, but it doesn't play into guidance because the way rates were set at the end of 2014, in essence, the revenues, the margins from any sales to the mines, which have now basically stepped back into a power sales arrangement with us, any revenues and margins from those sales would really go to – go into escrow for dealing in the next – for treatment in the next rate case. Allen? Allen L. Leverett - Co-President, Wisconsin Energy; President & CEO, We Generation: Right. And then you also escrow for SSR revenues. Gale E. Klappa - Chairman & Chief Executive Officer: Right. Allen L. Leverett - Co-President, Wisconsin Energy; President & CEO, We Generation: So, what Gale was explaining is that they made an assumption about SSR revenues. And to the extent that SSR revenues in this case are less, you book an escrow item. And then to the extent we get margin from the mines, you escrow that as well. So, it just all goes up on the balance sheet and there really is no income statement impact. Gale E. Klappa - Chairman & Chief Executive Officer: Right. So, on the balance sheet, it's like Ragu, it's in there.

Got it. And then kind of relative to 1Q guidance, I think you beat the midpoint by $0.10. Can you kind of explain where that came from? Gale E. Klappa - Chairman & Chief Executive Officer: Well, basically – and I'll frame it and Pat can give you some more specifics, but essentially, there are a couple of drivers. One would be – in terms of our guidance, one would be the colder weather that drove stronger gas and electric margins than we had anticipated in the budget; and the second is largely O&M control. Pat? James Patrick Keyes - Chief Financial Officer & Executive Vice President: Right. I'll just put a little color to that, Paul. I agree completely with Gale. Weather was roughly $0.05 better than what we thought versus the guidance, and O&M was roughly $0.03 better. And again the best example of that, as Gale mentioned, was the gas expense for leaks.

Sounds good. Thank you very much. Gale E. Klappa - Chairman & Chief Executive Officer: Terrific. Thank you.

Your next question comes from the line of Caroline Bone with Deutsche Bank. Please go ahead with your question. Gale E. Klappa - Chairman & Chief Executive Officer: Good afternoon, Caroline. How are you doing?

Good. Good afternoon. I was just curious if you could remind us what base year you are using when guiding to the 5% to 7% EPS CAGR for the pro forma company. Gale E. Klappa - Chairman & Chief Executive Officer: Well, the 5% to 7% combined company EPS projection really would be off of the year 2015.

Okay. That's great. And then also a minor question here, but what should we expect transaction costs to be for the full year in 2015? Gale E. Klappa - Chairman & Chief Executive Officer: Well, it depends upon how well Susan Martin controls our attorneys. And so far, that ain't so good. No, actually our attorneys have done very, very good work obviously and we're very much on schedule in terms of all the approval process. I'm looking at Pat to see if you have a total for this year only. James Patrick Keyes - Chief Financial Officer & Executive Vice President: Yeah. For this year only, about $20 million to $30 million and that's...

Okay. James Patrick Keyes - Chief Financial Officer & Executive Vice President: That's just the out-of-pocket lawyers and bankers. That's not all the other stuff that goes around change of control, et cetera. Gale E. Klappa - Chairman & Chief Executive Officer: That is – Pat is correct. That's the out-of-pocket expenses, legal fees, investment banking fees, expert witness fees, other outside consultant fees that are required as we work through the regulatory process.

Okay, great. Thank you. Just one more minor one. In your earnings package you guys talked about rate cases adding $14.7 million versus last year. Is that kind of a good run rate assumption for the rest of the year in each quarter in terms of the benefit? Gale E. Klappa - Chairman & Chief Executive Officer: No. I would not use that as a run rate. Pat? James Patrick Keyes - Chief Financial Officer & Executive Vice President: Yeah, I think this quarter is going to be a little higher.

Okay. James Patrick Keyes - Chief Financial Officer & Executive Vice President: And the reason for that is if you look back at 2014, January, we did not collect SSR. So that delta is going to be higher. In this quarter, so – then running out will be the same. So whatever you see in Q2 might be a good prediction, but one is a little high.

Okay, great. Thanks a lot. Gale E. Klappa - Chairman & Chief Executive Officer: You're welcome, Caroline.

Your next question comes from the line of Michael Lapides with Goldman Sachs. Please go ahead with your question. Gale E. Klappa - Chairman & Chief Executive Officer: Michael, do you have any more of those blue things we drank one night? Michael J. Lapides - Goldman Sachs & Co.: No. I have not. That's a good idea. It's been a while. It's been a couple of years. We should catch up on that if we can find that place. Gale E. Klappa - Chairman & Chief Executive Officer: Exactly. Michael J. Lapides - Goldman Sachs & Co.: Two questions. One, really a little bit of a follow-up on Caroline's one. Can you remind us what were the rate increases – base rate increases granted in 2015 by the PSC for both WEPCO and WG? Gale E. Klappa - Chairman & Chief Executive Officer: We didn't – have got the specific numbers here with us and we're going to ask Scott Lauber or Pat to give you that. Overall, when you take into account a fuel cost reduction that we were able to put into rates (45:05), overall, our electric rates are only up about 0.1%, but it differs between customer segments. Scott? Scott J. Lauber - Treasurer & Vice President: Yeah. That's correct. So, Wisconsin Electric is just up a small 0.1%; if you put the fuel and it's actually down about 0.4%; and if you look at Wisconsin Gas, it was up about 2.6% on the margin. Michael J. Lapides - Goldman Sachs & Co.: Yeah, my apologies, I may have asked the question poorly. I recall that there was a base rate increase at WEPCO for this year? Gale E. Klappa - Chairman & Chief Executive Officer: There was. Michael J. Lapides - Goldman Sachs & Co.: Okay. Can you just – let's leave fuel out of the equation, I'm just trying to think about base rates. Scott J. Lauber - Treasurer & Vice President: Yeah, the base rates were up were 0.1%, but remember, we're giving about 0.5% back as a credit this year and that credit was really like a base rate, it increase also. Gale E. Klappa - Chairman & Chief Executive Officer: So, a long story short, I would use 0.1%. Scott J. Lauber - Treasurer & Vice President: That's what the customers are seeing. Gale E. Klappa - Chairman & Chief Executive Officer: Yeah, the customers for base rates are seeing 0.1%. Michael J. Lapides - Goldman Sachs & Co.: Okay. So, on an annualized basis I'm just trying to get to a rough dollar millions number here, okay? I just wanted to sanity check that, because I don't know why I thought it was somewhere in kind of the $30 million to $45 million for WEPCO. Gale E. Klappa - Chairman & Chief Executive Officer: Because you're probably not far off. Michael J. Lapides - Goldman Sachs & Co.: Okay, that's fine. I can follow up offline. Second, on – when you look at your businesses, electric and gas utilities, do you see when you kind of look out too hard to predict 10 years down the road, but next two years to three years, two years to four years, one side of the business growing faster than the other, meaning electric growing faster than gas or maybe something we haven't seen in a long time, gas growing faster than electric? Gale E. Klappa - Chairman & Chief Executive Officer: Well, if I were a betting man, I would project that we would see gas – our gas distribution business growing slightly faster than our electric business for a couple of reasons. One, clearly, just the low price of natural gas; and secondly, the opportunity that we have to continue to gain customers through switching from propane to natural gas. You may have heard me say this before, but the national statistics from a year ago would indicate that Wisconsin is one of the five heaviest using propane states in the United States. And I think there is a tremendous opportunity for customer growth. Forget about per usage customer for a minute, but I think there is a tremendous opportunity for customer growth as we continue to see customers wanting to switch to our natural gas distribution network. In fact, I mentioned in the script, the uptick in customer growth that we are seeing and it's double-digit so far this year compared to the uptick we saw even last year. So to make a long story short, if I were a betting man, I would say, gas grows faster than electric by a bit over the next four years to five years. Michael J. Lapides - Goldman Sachs & Co.: And can you frame for us what percentage of the potential kind of addressable market is actually using propane versus natural gas in Wisconsin? Gale E. Klappa - Chairman & Chief Executive Officer: The last number I saw, but please don't hold me to this, was that there were a couple of – somewhere between 220,000 and 250,000 propane users still in the state. Now many of them are in rural areas, where there is not a strong natural gas distribution networks. I don't want to mislead you that a quarter of a million customers could automatically just switch tomorrow to natural gas. But it gives you a sense of what the longer term prospects might look like. Michael J. Lapides - Goldman Sachs & Co.: Got it. And finally on electric transmission, you are booking a lower ROE, this isn't a – you are not booking a charge related to a potential refund, you are booking a – this is an assumed number up, an ROE percentage that you think will be the adjudicated number that comes out of the MISO case and what you will earn on until whatever future rate filing occurs 5 years or 10 years down the road. Gale E. Klappa - Chairman & Chief Executive Officer: Yeah. You've phrased it exactly correctly. Michael J. Lapides - Goldman Sachs & Co.: Okay. Thanks, guys. Much appreciating. Congrats on a good quarter. Gale E. Klappa - Chairman & Chief Executive Officer: Thank you, Michael.

Your next question comes from the line of Paul Patterson with Glenrock Associates. Please go ahead with your question. Gale E. Klappa - Chairman & Chief Executive Officer: Greetings, Paul.

Hi. How're you doing? Gale E. Klappa - Chairman & Chief Executive Officer: We're great. How're you doing?

I'm managing. Gale E. Klappa - Chairman & Chief Executive Officer: Wait a minute. I thought you – last time you told me you were wonderful and award winning.

I got that, but then I will strive, how about that? Gale E. Klappa - Chairman & Chief Executive Officer: We appreciate that, Paul.

Yeah. I want to follow up on Steve's question on this gas main thing, because just to make sure I understand this. Is the gas – this accelerated main replacement issue, is that now out of this merger case and in the separate dockets that they opened up because of whistleblowers? So, we are not going to hear about this anymore? Because I'm just trying to – it seems that the AG's always coming out going back to this thing saying this is some – she is very upset about it and what have you. So I'm just trying to – is it out of the case? Gale E. Klappa - Chairman & Chief Executive Officer: I think, well, let me answer it two ways. I think you probably will continue to hear about it, but in terms of technically, the whistleblower letters and the review of the program – well, let me put it this way. The whistleblower letters and our review of those whistleblower letters and any other investigations that are going on are now part of a separate docket.

Okay. Gale E. Klappa - Chairman & Chief Executive Officer: Separate and apart from the merger case. But that doesn't mean that someone couldn't inject a discussion about it in our merger case. But it might be helpful, Paul, to clarify for you where we stand in the merger case itself. In essence, all the hearings have been completed, all the testimony is in, all the briefs are done and we would expect some time in the next few – certainly in the next couple of weeks, we would expect to see a draft order by the administrative law judge who is hearing the case. So once that draft order is out, then all the parties will have a comment – will have an opportunity to comment on the draft order, after that then the draft order will go to the commissioners themselves for a final decision. So in terms of evidence, in terms of positions in the case, all of that is basically in the record and the record is now essentially closed other than comments on a draft order, if that's helpful to you.

That's very helpful. And then so I mean, does the settlement makes sense at this point given how far along everything is? Gale E. Klappa - Chairman & Chief Executive Officer: At this point, well, this being this close to a draft order, my own view would be the most sensible thing to do is to let the process play out and the process is getting close to the deadline.

Okay. Gale E. Klappa - Chairman & Chief Executive Officer: And if you think about sitting here on today we're at May 5, we would be less than 60 – well, about 60 days away from the statutory deadline for a decision.

Okay. And now you've actually seen the Liberty Consulting report which I'm afraid I have not, I guess it's been publicly released now. Is that right? Or it's just you guys who get it. I don't know, because I... Gale E. Klappa - Chairman & Chief Executive Officer: I'm not sure that it's been publicly released, but the commission asked or gave us specific authority and all the parties were fine with us reviewing the material in the interim Liberty report and in the draft – as Allen said, draft final report. So yes, we have seen the review. We have seen the audit.

So you guys are in a great position to answer some of these – well, I am not going to ask you to go over all of it. But I mean it just this idea that the budget has ballooned according to some of the filings that they are attributing to this program and that it is – that they are behind schedule and way over budget, I guess, is basically sort of what we are hearing. When you look at it, and knowing what you know about obviously gas utility work and what have you, you guys feel comfortable that this is a program that can be managed and completed in a commercially effective way, is that a good way to put it or do you follow me? Gale E. Klappa - Chairman & Chief Executive Officer: Well, let me answer it this way. There are a lot of moving pieces in terms of what the eventual cost might be. But do we believe based on what we've seen that, A, the work is needed; and B, it can be done professionally and in a long-term cost effective way? Yes. But at this point, I don't think it's appropriate for us to comment on what the exact right budget number should be.

Okay. Gale E. Klappa - Chairman & Chief Executive Officer: But as we look at the recommendations from the Liberty audit, I mean the recommendations frankly make a great deal of sense. There is nothing in the Liberty audit that I have seen that is troublesome from the standpoint of can we effectively manage the program. I'm confident we can.

Excellent. Thanks so much. Gale E. Klappa - Chairman & Chief Executive Officer: You're more than welcome.