Commenting this morning will be Tony Somma, CFO; and Mark Ruelle, CEO. Other members of our senior management team are also available to answer questions.Tony will offer highlights on the quarter, comment on earnings guidance and the updated CapEx forecast for 2012 through 2014, including an update on major projects. Mark will comment on regulatory activities, EPA regulations, offer a few thoughts on the Kansas economy and share some specifics on our dividend increase. With that, I will turn the call to Tony. Tony Somma Thanks Bruce. Good morning. Earnings and earnings per share for the quarter were $19 million and $0.16 respectively compared with $5 million and $0.04 in 2010. EPS for the quarter reflect additional shares issued to fund investment in our utility infrastructure. For the quarter, gross margin increased $6m or 2%, due mostly to higher price as measured by heating degree days. Weather in the fourth quarter was a bit milder than the fourth quarter of 2010. We estimate weather costs us about $0.01 a share. On the expense side, O&M for the quarter was about $9 million or 8% lower, excluding a $4 million increase in SPP transmission cost, most of which has a revenue offset. Principal reasons for the lower O&M were a $11 million for reduced maintenance expense and a $2 million reduction in storm amortization. Those decreases were partially offset by a $3 million increase in property taxes, which like transmission has a revenue offset. SG&A expenses also decreased by about $11 million, due primarily to lower compensation expense. In combination, O&M and SG&A excluding SPP transmission costs and legal settlements, were 11% lower for the quarter and 2% higher for the full year 2011. Depreciation expense increased $2 million, in line with guidance, largely reflecting plant additions. During the quarter, we settled a forward equity sale from 12 months earlier by issuing an additional 8.5 million shares and receiving proceeds of almost $200 million. This raised our equity ratio to 52.6%, the level used in the settlement agreement in our rate filing. With respect to credit ratings, in January, Moody’s upgraded all of our ratings by one notch. Our secured debt is now A3 and we have a P2 commercial paper rating.
We returned to the commercial paper market in January, the first time in over a decade, which reduces our cost of short-term debt. As far as additional financing needs for the foreseeable future in light of current interest rates look for us to issue first mortgage bonds.Now, let me turn to our updated CapEx forecast. As has been the case for the last several years, our plans call for utility plans and investment of almost $2.5 billion over the next three years. Two-thirds of this year’s plan and investment is to satisfy environmental regulations and support the Southwest Power Pool’s efforts to ensure reliable transmission. We are investing an air quality project at our Lawrence and Jeffrey Energy Centers in our jointly-owned La Cygne station that Great Plains manages. I will only touch briefly on each of those major projects, as not much has changed with all projects running at or below budget and no change in our expected completion dates. The $300 million air quality upgrade at Lawrence is slated for completion by year-end and well below its original cost estimate. Construction of the SCR at Jeffrey continue as planned, with equipment to be in service by the end of 2014. Its cost estimate remains at $240 million. The most significant single project underway is at La Cygne, our share is estimated to be just over $600 million, with the project target for completion by June 2015. Turning to transmission, we expect to complete our Wichita to Oklahoma line this spring, a couple of months early and well on our budget at a cost of $80 million. In addition, the SPP has identified significant transmission improvements required in the region. We estimate our investment will be about $0.5 billion over the next three years. This year, we will invest about $140 million in transmission infrastructure improvements. Read the rest of this transcript for free on seekingalpha.com