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Speaking this morning are Gregg Kantor, President and Chief Executive Officer; and David Anderson, Senior Vice President and Chief Financial Officer. Gregg and David have some opening remarks and then we’ll be available to answer your questions. Also, joining us today are other members of our executive team, who will be available to help answer your questions.With that, let me turn you over to Gregg. Gregg Kantor Good morning, everyone. Thank you for joining us for our second quarter earnings call. This morning, I’ll give you a brief overview of the quarter and then turn it over to David to provide more detail on the financials before wrapping up and taking your questions. Performance in the second quarter was as expected. Differences in our year-over-year financial results for the period were primarily driven by weather that was slightly colder than average in 2012, compared to a very cold 2011. In addition, we had higher O&M costs and I’ll touch on that in a moment. From a customer perspective, headline for the second quarter was the 10-year low in wholesale natural gas prices and the bonus of an early gas savings credit. In May, Commissioners approved our request to refund accumulated gas cost savings to customers earlier than our annual purchase gas adjustment in November. As a result, Washington customers received $4 million back and Oregon customers received $35 million back as a credit in their June bills. Over the last several months, we’ve continued to lock-in lower priced gas compared to what’s currently set in rates. So, at this point, we’re optimistic that we’ll be able to follow up the $39 million credit to customers with a decrease to the gas price portion of rates this fall, making it the fourth consecutive year of lower commodity costs. On the growth side, new construction activity remained relatively unchanged with new customer additions consistent at just under 1%. Not surprisingly, the low and stable gas prices that position us well for our housing market rebound also continue to impact storage values. Financial results for the storage business were slightly lower in the quarter compared to last year. While there’s no doubt this is a tough environment for storage, operations at our facilities continue to meet our expectations.
Now, before I turn it over to David, let me give you an update on the status of our Oregon rate case. In early July, the company, the Oregon PUC staff and other parties filed a partial settlement in the case. While we were pleased to be able to settle out some of the smaller items, we were unable to reach an agreement on key matters, such as ROE, recovery of pension expenses and our proposed environmental cost recovery mechanism. Even with the partial settlement, our case moving forward still includes a $35.9 million revenue request, which would mean an overall increase of about 5%.Approval of the environmental cost recovery mechanism would also mean an additional 1% to 3% increase, depending on the clean-up project costs and insurance recovery at the time new rates are set. On July 20, OPUC staff and other parties filed rebuttal testimony that highlights, as you’d expect, a number of disagreements. As I’ve said before, we feel very good about how we’ve managed this company over the last decade. We’ve held costs down for our customers, while maintaining a safe, reliable system and quality service. But after 10 years and the changing regulatory environment, we have reached a point where rising utility costs simply have to be addressed. For example, to respond the new pipeline – federal pipeline safety legislation and system integrity requirements, the company has added staff in the areas of pipeline maintenance, emergency response, compliance, training and field services. These resources and associated costs in O&M ensure we can continue to support the utility system and the service quality our regulators and customers have come to expect from us. The next step in the rate case process will be the filing of our surrebuttal testimony on August 9. Hearings are scheduled for late August with a Commission decision in late October. While there are always opportunities to reach settlement on some or all of the remaining issues, we are ready to make our case to the Commissioners. Read the rest of this transcript for free on seekingalpha.com