To access the replay, please call 1 (800) 642-1687 or (706) 645-9291 and enter the conference ID number 75341557. You can also listen to an online replay of the call through the website that I just mentioned. We will archive the call on CenterPoint Energy's website for at least one year. And with that, I will now turn the call over to David McClanahan.David McClanahan Thank you, Marianne. Good morning, ladies and gentlemen, thank you for joining us today and thank you for your interest in the company. This morning, I will update you on our true-up appeal, then describe our second quarter financial results, and provide the operating results for each of our business segments. Let me begin with our true-up appeal. As most of you probably know, the 1999 law, which restructured the electric industry in Texas, allowed electric utilities to recover certain costs and certain other transition expenses in what is known as a true-up proceeding. In 2005, the Texas PUC issued a decision that tailed to allow us to recover some of the amounts, which we had requested in our application. As a result, we took a $1.5 billion pretax charge to earnings and appeal the PUC decision. The appeal was heard in the District Court, followed by the Court of Appeals and finally, the Texas Supreme Court. In March of this year, the Supreme Court issued a favorable decision in our appeal and reversed the PUC on a number of points. Several parties subsequently filed motions for rehearing, which have been denied by the court. The case has now been remanded to the commission for implementation. Based on the court's decision, we will be seeking recovery of approximately $1.9 billion in the remand proceeding, an amount which includes interest through October of this year. Intravenous [ph] of asset condition to hold hearings to review several issues, including the tax normalization issue that arose from the PUC's original decision, the interest rates to be applied to the true-up balance and certain tax benefits and the recoverability of transaction costs associated with the sale of Texas Genco and rate case expenses.
We believe the commission can properly complete any necessary reviews of these issues. And while there has not been a procedural schedule established, we hope these proceedings can be concluded by early fall.Now let me review the company's overall results for the second quarter. This morning, we reported net income of $119 million, or $0.28 per diluted share. This compares to net income of $81 million or $0.20 per diluted share for the second quarter of 2011. Operating income for the second quarter was $303 million compared to $263 million last year. We also reported $10 million in lower interest expense this year compared to the second quarter of 2010. Houston Electric had a strong quarter, reporting operating income of $153 million, about $31 million above the second quarter of 2010. Operating income benefited from increased usage, primarily related to warmer weather. Higher transmission revenues received from other providers partially offset by higher transmission cost and lower depreciation expense. We also benefited from growth of more than 32,000 customers since the second quarter of last year. This represents a growth rate of over 1.5%, and is an indication that our service territory continues to rebound. Offsetting these benefits were higher operating expenses. The second quarter results do not reflect the impact of our recent Houston Electric rate case. Although there are pending motions for rehearing, we now expect new tariffs to be implemented in early September. As I indicated earlier this year, the cash flow impact from this case should be minimal, but we anticipate Houston Electric's operating income will be negatively impacted by approximately $30 million on an annualized basis once the new rates are in effect. Read the rest of this transcript for free on seekingalpha.com