What kind of trends are you seeing in the sector?Constructive regulation has been positive for the sector overall. We expect to see higher expense for environmental compliance over time. But most of the companies can recover these costs through higher rates. Perhaps the biggest problem the industry has faced in recent memory was when a few companies moved away from generating electricity and started energy trading businesses -- to disastrous results, of course. Have we seen the last of that? The theme in the industry has been "back to basics." Managements are refocusing on their core regulated utility franchises. Balance sheets are getting fixed and cash flows are improving. One of the problems of partial deregulation was that dividend payout ratios were cut in favor of investing in noncore businesses. Now these companies are looking to raise their dividends when they can, and investors appreciate that. A lot of companies also tried to expand overseas, once again with an ugly result. Will they try and expand abroad again now that they can use their stock as currency again? We think there is a less of a risk that utility executives will return to their bad habits and start looking for opportunities outside their core competencies and outside the U.S. For the next several years, distributable cash flow is going to go to dividend growth. After you see a period of strong dividend growth you will probably see it go to investment in the transmission grid. Which stocks do you like in particular? We look for utilities that benefit from strong customer and demand growth. Florida Power & Light ( FPL) is a good example. They also have a small unregulated power subsidiary that will benefit from the recovery in the power cycle. We also like Exelon, which is the largest operator of nuclear plants in the country and is seeing fantastic margin expansion. They are showing strong dividend and earnings growth because of an aggressive cost savings program. Beyond that, they are undervalued when compared to the group. How does it feel for people to turn away from sexy things like tech stocks in favor of boring old utilities? We think this is another positive thing for the sector because we don't think investors have really caught on to all the positives going on in the industry. According to a recent Merrill Lynch study, utilities are still the most underowned sector out there. Institutions still don't hold utility shares. Furthermore, they continue to have the highest short interest of any sector in the equity markets, which shows you that there is still negative sentiment toward the sector. We think this will change over time and help the stocks. We also think utilities will also benefit from the country's demographic changes. Baby boomers entering retirement will increasingly demand high dividend yields. Utilities are the highest yielding equity sector that qualifies for the new 15% tax rate on dividends. That's going to be important to folks for a long time to come.