May 5, 2008
Executives
Thomas J. Webb - EVP and CFO David W.
Joos - President and CEO
Analysts
John Kiani - Deutsche Bank Securities Inc. Brian Russo - Ladenburg Thalmann Paul Patterson - Glenrock Associates Paul Ridzon - KeyBanc Capital Markets Ashar Khan - SAC Capital
Operator
Good morning everyone, and welcome to the CMS Energy 2008 First Quarter results and outlook call. This call is being recorded.
Just as a reminder there will be a rebroadcast of this conference call today, beginning at 11:00 AM Eastern Time, running through May 12. This presentation is also being webcast and is available on CMS Energy's website in the Investor Relations section.
At this time, I would like to turn the call over to Tom Webb, Executive Vice President and Chief Financial Officer. Please go ahead Sir.
Thomas J. Webb - Executive Vice President and Chief Financial Officer
Good morning everybody and thanks for joining us today for our First quarter earnings presentation. Dave Joos, President and CEO is with me today and John Russell, Laura Mountcastl, and Phil McAndrews are at the AGA financial conference and many of you may have the opportunity to see them.
John will actually be presenting today at 3 pm. Our earnings press release issued earlier today and the presentation used in this webcast are available on our website at cmsenergy.com.
This presentation contains forward-looking statements. These statements are subject to risks and uncertainties and should be read in conjunction with our form 10-K's.
The forward-looking statements and information and risk factors sections discuss important factors that could cause results to differ materially from those anticipated in such statements. This presentation also includes non-GAAP measures when describing the company's results of operations and financial performance.
A reconciliation of each of these measures to the most directly comparable GAAP measure is included in the appendix and posted in the Investor section of our website. We expect 2008 reported earnings to be about the same as adjusted earnings.
Reported earnings could vary because of gains or charges relating to previously sold assets and business operations or other factors. We're not providing reported earnings guidance reconciliation, because of the uncertainties associated with those factors.
Now let me turn the call over to Dave, and then we'll be back with a bit more detail.
David W. Joos - President and Chief Executive Officer
Thanks, Tom, and good morning, ladies and gentlemen. Thanks for joining us today for our first quarter call.
As is our usual practice, I'll start the presentation with a brief update on the business, and then I'll turn the call over to Tom for more detailed discussion on the financial results and outlook, and then we'll close with questions and answers. Operating results for the first quarter 2008 were good.
In fact, they were right on our plan. Our non-GAAP adjusted earnings were $0.44 a share, up $0.02 from last year.
Incidentally, the adjustment was insignificant; our GAAP earnings were also $0.44 a share for the first quarter. Our full year guidance for adjusted earnings remains unchanged from the target set over a year ago of $1.20 a share.
Tom will get into more detail on both the first quarter results and our year-end forecast in a minute. First however, I want to update you on our regulatory and legislation progress.
Turning first to Regulatory, we're in the final stages of the electric rate case proceeding that began last year. The administrative law judge has recommended a $210 million revenue increase, compared to our request for $265 million.
The two primary differences are a lower recommended return on equity and his proposed disallowance of certain Palisades sale transaction cost. The administrative law judge recommended a 10.4 % ROE, compared to our request for 11.25% which represents a pre-tax difference of 27 million.
And the Palisades transaction cost represents another $15 million pre-tax. The case is now right for decision which we anticipate before mid year.
Last September, we exercised the regulatory out provision of the middle and co-generation venture power purchase agreement and reduce payments to the MCV to the amounts we collect from our customers. This action eliminated our losses associated with the contract because we exercised this right the MCV Partnership has the contractual right to terminate, or reduce the amount of capacity sold to us under the agreement.
Partnership has until mid June to notify us if it intends to do this. Meanwhile, the MCV has filed at the MPSC asking them to increase our cost recovery from customers and their discussions ongoing to resolve the issue.
In February, we filed a new gas rate case requesting a $91 million increase. The request assumes an 11% return on equity, a 50% equity ratio on our financial basis or about 43% under regulatory basis, and a $2.6 billion average rate base for the 2009 test year.
The majority of the increase relates to our improved capitalization and higher rate base along with higher state taxes. We also requested that the commission authorize revenue decoupling mechanism for residential customers that would eliminate the impact of planned energy efficiency and conservation programs.
Staff testimony is due August 25th.
Thomas J. Webb - Executive Vice President and Chief Financial Officer
Thanks, Steve. For the first quarter 2008, reported earnings of $0.44 a share were up from the loss of $0.97 last year.
Adjusted earnings also were $0.44, equal to our plan, and up $0.02 from adjusted earnings last year, and those excluded losses related primarily to asset sales. By, business segment, the utility contributed $0.54 and enterprise was breakeven.
This was offset partially by interest expense of $0.10. Now the $0.02 improvement in earnings from a year ago includes an increase of the utility of $0.08, and a decline of enterprises and the parent of $0.06.
Higher utility results reflect the benefits of exercising the MCV regulatory out, as well as the gas and Zeeland rate orders. This was offset partly, by higher cost associated primarily with capital spending.
Favorable weather was offset by the weak economy and some conservation. At Enterprises and the parent, earnings associated with international businesses sold last year, were partly offset by lower interest expense and reduced overhead.
Remember, additional benefits from asset sale proceeds invested in utility should be seen following the electric rate case decision expected sometime next month. Now here is a look at our full year guidance of $1.20, compared with 2007 results of $0.84.
The darker green and red portions of the waterfall bars illustrate what was completed in the first quarter. The lighter portion show what's left to go.
At the utility, we have an improvement of $0.34 ahead of us, the bulk of which is attributed to the electric rate case. We also should see benefits for six months from the MCV regulatory out taken last September.
At Enterprises and the parent we're not relying on further improvement. Lost earnings of $0.04 from assets sold in the second quarter of 2007 should be off-set by savings from the DIG contract restructuring completed in January.
Additional overhead and interest expense savings are offset by tax and interest income benefits in 2007 that do not repeat this year. As you'd expect, electric rate case timing and a fair return are important to us.
Let's switch over to cash flow. As shown on the right, we forecast utility operating cash flow at $1.3 billion.
Working capital includes $215 million of nuclear decommissioning fund proceeds to be refunded to customers and a $180 million for higher gas prices. Uses include $1.5 billion for interest, capital spending, dividends and tax sharing with CMS.
The net cash outflow of $620 million is off about a $100 million from our last forecast due the effect of the higher gas prices on working capital. Gas prices are up about $1.40 from our last call.
During the quarter, consumers refinanced or converted its three auction rate tax exempt bonds into variable rate demand bonds backed by a letter of credit from AAA rated bank. This eliminated our exposure to monoline insures on variable rate debt.
Now the parent shown on the left, the forecast in cash outflow of $15 million is unchanged from the last forecast. Without the one time DIG settlement payment, this would have been more than $250 million positive.
Dividends to CMS and tax sharing totaling $410 million provide substantial coverage of ongoing cash needs, primarily interest and dividends. With restructuring and international asset sales complete, the breadth of risk that impacts our earnings and cash flow is substantially narrower.
With that in mind, here are few examples of risks that can impact our earnings and cash flow in 2008. Except for the passage of time, the sensitivities around the utility, return on equity, timing of the electric rate case, and electric and gas sales have not changed since our last call.
We're simpler; we're more predictable, and clearly fair and timely rates are important to us. Longer term, the need in Michigan for infrastructure improvements also are important to meet capacity, reliability, efficiency and environmental requirements.
We strive the need for capital investment. We expect to invest about $6.4 billion over the next five years.
This fuels rate base growth by about 7% a year, pending energy legislation if it's enacted would mandate a portion of this, and facilitate a good portion of the rest. We're aligned with the needs of state.
Longer term, new generation is needed. Consistent with the state's 21st century energy plan, we're developing a clean coal plan.
Meaningful coal plan investment begins around 2011. As shown on the right, however, other important investment opportunities exist if the plan is delayed.
These include extending the life of existing generation plans and adding gas generation capacity. We do not lack for attractive investment opportunities.
We prefer a base plan in part because we believe it will be the most cost efficient for our customers and minimize risk by providing sensible fuel diversity and flexibility. We've developed our investment plan to meet the most important needs of our customers who are balancing the opportunity to grow earnings for our owners, sustain a practical capital structure, and importantly, minimize price increases for our customers.
We anticipate electric rates to rise about an average of 3% a year. This includes investment in renewables and energy efficiency that maybe mandated in new legislation.
It does not however, include potential carbon related cost or fuel. Rising fuel costs could increase this.
Our present forecast would add about a point. Maintaining fuel diversity will provide the best chance to minimize these increases.
Concentrating our investment on projects that reduce O&M, minimize fuel costs, and or generate efficiencies also should help to hold down price increases. This may set us apart a little bit from other companies.
Now, recapping on our progress this year, we're on track in each of the financial targets on our scorecard with one exception. Our cash flow is short of target by about $100 million reflecting the impact I mentioned of higher gas prices on short term working capital.
This will be recovered over time. Capital structure and earnings at $1.20 continue on plan.
Operator, we'd now like to take calls, we look forward to those from each of you. Operator if we can take questions now that will be great.
Question And Answer
Operator
Thank you very much Mr. Webb.
The question and the answer session will be conducted electronically. [Operator Instructions] We will pause for just a second.
Our first question comes from the line of John Kiani with Deutsche Bank. Please proceed.
John Kiani - Deutsche Bank Securities Inc.
Good morning.
David W. Joos - President and Chief Executive Officer
Good morning John.
Thomas J. Webb - Executive Vice President and Chief Financial Officer
Good morning.
John Kiani - Deutsche Bank Securities Inc.
I have two questions. The first is, can you talk just a little bit about longer terms.
You mentioned some comments on the quarter about Michigan just in general, but can you talk longer term, kind of where you think you are in the cycle or where you think the state of Michigan is in the economic cycle?
David W. Joos - President and Chief Executive Officer
Well, it's always difficult to forecast these kind of things as you know Michigan is probably been hit harder than any state in the union in the last few years with regard to industrial downturn. Primarily, because of the autos and I should mention by the way that lot of folks ask us what percentage of our sales are related to the autos, it's only about 6% today and it is a lower margin sales.
So, the impacts haven't been as much on us as you might expect. It's difficult to forecast when and how we'll come out of this.
I would suggest that we're at troth [ph] in long term. This sector has been cyclical.
How cyclical is this, it is this time around is a little bit difficult to tell, but there is certainly an awful lot of work being done by the autos and the unions to try to improve the future here at Michigan. I should also point out, of course that we are a little less dependent on the Auto sector, than we are on the rest of the state of Michigan, who are doing a little bit better than Southeast Michigan is doing.
So again, I won't try to forecast it, but I simply see it's having more upside than we have downside economically in the state than we have had in the past few years.
John Kiani - Deutsche Bank Securities Inc.
That's helpful Dave. And then on the dividend policy, can you just help me get a better feel for...
what, what you all think about the payout ratio and potential dividend increases in the future again?
David W. Joos - President and Chief Executive Officer
Yes, well I can just sort of recap where we've been. Obviously, we restored the dividend at the beginning of 2007 at $0.20 a share for that year.
We increased the dividend earlier this year to $0.36 of share, so 90% increase. And we announced at that point in time that we would expect that we would continue to move the payout ratio up from the roughly 30% we are at right now, though certainly not at that rate every year.
And frankly, with the amount of capital investment that we see over the next five, six, seven, eight years, it wouldn't make sense for us to move up very quickly to the sort of industry payout ratios that we have seen recently. And I think that's, that's consistent with what the Board's current thinking is.
John Kiani - Deutsche Bank Securities Inc.
Okay. And then one last question is, what's your latest view just on M&A in the sector and in the industry and what you all see or think there especially for some of the smaller utilities in the sector?
David W. Joos - President and Chief Executive Officer
Well, I thought we've been playing for six or seven or eight years that I think that some consolidation is going to take place overtime. We didn't see the kind of impact.
A lot of companies stop, we would see when Cooper reform took place, and then of course in recent years, we've seen private equity move in, the infrastructure funds move in more than they have in the past. There's also though probably some impacts of recent debt market upsets that may affect all of that.
So from a broad industry perspective, I guess my own view is I continue to believe that we're going to see some consolidation over time, but beyond that with regard to our own company, we have a policy of not commenting, you should know.
John Kiani - Deutsche Bank Securities Inc.
Thanks Dave.
David W. Joos - President and Chief Executive Officer
You are welcome.
John Kiani - Deutsche Bank Securities Inc.
Thanks Tom.
Thomas J. Webb - Executive Vice President and Chief Financial Officer
Thank you.
Operator
And your next question comes from the line of Brian Russo with Ladenburg Thalmann. Please proceed.
Brian Russo - Ladenburg Thalmann
Good morning.
David W. Joos - President and Chief Executive Officer
Good morning.
Thomas J. Webb - Executive Vice President and Chief Financial Officer
Good morning.
Brian Russo - Ladenburg Thalmann
You mentioned earlier on the call that you're forecasting approximately 3% average annual of rate increases. It seems fairly impressive given your predicted rate base investment.
I am just wondering maybe you could just talk a little bit more about some of the offsets to increasing rates?
David W. Joos - President and Chief Executive Officer
Well, yes I think it's important to recognize as Tom clarified in those remarks. We find it difficult to predict impacts of fuel costs, although right now when we look at the fuel cost impacts, it could increase those numbers from roughly 3% to roughly 4% and certainly, I don't know how to predict the impacts of future carbon increases.
I think you've seen large numbers there, so when we talk about our roughly inflation, or roughly 3% increases, largely it's around our general rates and associated with the investment that we are making. I guess the way I would characterize is that we really prioritize those investments around investment opportunities that have minimal or in some cases, beneficial impact on our customers.
The example we have been using for the past several years is that we spent almost a $1 billion dollars complying with Clean Air Act requirements and in the end they cost customers less than where they were started, because we shifted over largely to western coal. Another good example of that, that I would give is the EMI Project that we built in to here which is all about $800 million total investment over the lifecycle of that project, the lions share of which is associated with installing the meter modules on all of our meters across the state.
But when we look at the numbers, particularly on the electric side of the business, we actually think it's neutral to maybe even slightly positive for our customers, because we can take so much operating and maintenance cost out along with effectively implementing energy efficiency programs in the light. So those are examples of the kinds of things that we are doing, that have offsets in either fuel or O&M or both and a lot of the things we have in our plan accomplish the same sort of things go forward.
Brian Russo - Ladenburg Thalmann
Okay. And lastly, can you be more specific in terms of the $6.4 billion rate base investment over the next five years.
Can you quantify what is... what part of that is contingent on energy reform?
David W. Joos - President and Chief Executive Officer
It's actually not a large portion over that five year period. The biggest issue associated with energy reform is the new coal plant plan, because we simply don't think it would make for...
make sense to go forward with the multibillion dollar investment that have more certainty as to how much customer service is involved. There are some other issues in the legislation, however, that, and by the way, in that five year period, the coal plant is about $575 million, obviously it's a lot more than that, but lot of it falls outside of that window.
We also have roughly $700 million, a little bit more than that between renewables, I'm sorry, energy efficiency renewables about $300 million, which is tied to that program. AMI is an enabler of that.
There's about $650 million during that timeframe, but frankly, we think that makes sense with or without the legislation. So if you look at the $6.4 million directly, a less than $1 billion of it is really directly associated with things that are in the legislation, and the rest of it are broader programs.
So to me they are long term needs including things like electric reliability, additional investment, our gas infrastructure, of course the Zeeland plant investment which is already done is a $0.5 plus in there, and allow the rest of it as base capital.
Brian Russo - Ladenburg Thalmann
Okay, and then just lastly, if I heard you correctly. You're hopeful that you'll have energy reform before the early July recess, is that correct?
David W. Joos - President and Chief Executive Officer
I'd say that's a correct characterization. It's always difficult to predict the political process.
There's a lot of momentum, though we are very pleased with the broad bipartisan, both coming out of the house, the Senate committee has started it's hearing process in all the... all of what we're hearing from the Senate committee is they want to have something out and get legislation on the governor's desk before the summer recess.
Brian Russo - Ladenburg Thalmann
Okay, thank you very much.
David W. Joos - President and Chief Executive Officer
You're welcome.
Operator
And your next question comes from the line of Paul Patterson with Glenrock Associates. Please proceed.
Paul Patterson - Glenrock Associates
Good morning.
David W. Joos - President and Chief Executive Officer
Good morning.
Paul Patterson - Glenrock Associates
Just a few quick items, line loss adjustment of about $0.02 on the gas side. What was that?
Thomas J. Webb - Executive Vice President and Chief Financial Officer
We watched our unbilled revenues creep up a little bit and for those that are following us very carefully, you'll know that we've talked about accelerating our billing just a little bit as we move into the launch of our new systems this summer. In doing that though, we also want to go a little bit, and we're not sure whether it could be around metering, maybe it could be around theft [ph] with high gas prices as we've seen in copper by the way.
So we took a little adjustment to be on the safe side. In terms of where we are on our line loss, because we have had a good track record at keeping that better than industry standards and it...
we think it maybe creeping up a little bit. So that's all that is.
It's to trying to make sure that our look for the year is pretty accurate.
Paul Patterson - Glenrock Associates
Okay, and then I just want a little bit of a clarification. You mentioned, on your last slide that the free cash will be for CapEx and dividend of $400 million.
I guess you are not on target with this, is that correct?
Thomas J. Webb - Executive Vice President and Chief Financial Officer
That's right. We are off by a little more than a $100 million and that's all attributed to higher gas prices.
Paul Patterson - Glenrock Associates
All right.
Thomas J. Webb - Executive Vice President and Chief Financial Officer
Compared to where we were, last time we talked with you, we're up about $1.40 on gas prices. That flows through our working capital.
We collect that later, but near term in the year we are in, we'll take that hit. So we just handled that with our short term financing.
Paul Patterson - Glenrock Associates
Okay and I am looking at page 9 of the press release, and it looks like you guys have $474 million at this... in terms of operating cash flow.
I guess that's including working capital. Is that correct, cash from operating activities 474?
Thomas J. Webb - Executive Vice President and Chief Financial Officer
Should be, that's correct.
Paul Patterson - Glenrock Associates
Okay and how much of that is working capital?
Unidentified Company Representative
If the working capital changes, we can just give that to you.
Paul Patterson - Glenrock Associates
Well, I just wondered
Thomas J. Webb - Executive Vice President and Chief Financial Officer
Why we're just looking that up for the first quarter, I would also refer you to slide 9, so that you can see the annual impact and if you look at that you'll see for consumers which is our key area there. You'll see that our working capital piece is about $430 million inside there, and that's the key piece you want to look at and that's got...
refunding to our customers, the nuclear decommissioning benefits that we received last year, but also that's where that gas price is.
Paul Patterson - Glenrock Associates
Okay, I got you. So that's why...
okay so I got the direct [ph] account ... okay and then just for the $434 million, how much of that will be working capital?
Thomas J. Webb - Executive Vice President and Chief Financial Officer
We'll have to get back to you.
Paul Patterson - Glenrock Associates
Okay, thanks a lot guys.
David W. Joos - President and Chief Executive Officer
You're welcome.
Operator
And your next question comes from the line of Paul Ridzon with KeyBanc. Please proceed.
Paul Ridzon - KeyBanc Capital Markets
Would you give a kind of an update where things are in the Senate, what has happened and what needs to happen, just kind of key milestones, and then the House Bill that passed do not include the generational liability charge. How comfortable are you with that?
David W. Joos - President and Chief Executive Officer
Yes, let me talk about both of those issues. The process in the Senate...
it would go through the Senate committee that I referred to earlier, chaired by Senator Patterson. He has in fact had hearings over the past year, so on the general topic of electric restructuring, but was waiting for our legislation to come out of the house before they started more specific hearings.
They did have a hearing last Thursday in fact where they went through the details of House Bill, and I would say there is no specific timetable or specific milestones to point to other than the fact that they expect to have some additional hearings and room for legislation here before the summer recess. So it will go through the committee that will go to the Senate floor for both depending on whether or not there are significant changes or not would dictate whether or not it would go to conference.
At this point, I'm not sure that I would expect it to go to conference. Your second question related to the reliability surcharge that was a surcharge that was put into place that would be the equivalent to the kind of thing that we talked about a decade ago in terms of stranded costs, related to new investments in power plants.
In the end, it was a controversial and very complicated calculation, opposed by a lot of the business community. We ultimately were satisfied that as long as there was a hard cap at 10% of the choice that we could live without that, and still finance new power plants, and that brought an awful lot of support onboard from a number of the business groups which is part of the reason we got such strong support coming out of the house.
So we are comfortable with that change, so long as the cap on total choice remains at the level that it's at in the legislation.
Paul Ridzon - KeyBanc Capital Markets
I guess Patterson, during the press said... he's not going to...
he is going to take his time on this legislation, is that consistent with your views that was to have something early summer?
David W. Joos - President and Chief Executive Officer
We'll I... I won't comment on what he quoted in the press, because you see a lot of things quoted in the press coming from different sources and what not...
all I can tell you is that we've had direct conversations with the various players in this legislative process, and we're hearing consistently that they'd like to get the legislation out in the late summer.
Paul Ridzon - KeyBanc Capital Markets
Great, thank you very much.
David W. Joos - President and Chief Executive Officer
You're welcome.
Operator
And your final question comes from the line of Ashar Khan with SAC Capital. Please proceed.
Ashar Khan - SAC Capital
Hi, good morning. Tom, I was just trying to get a sense, the $0.28 of earnings that are still to come in the utility area.
What is... how much of that is related to the electric rate increase, and is it fair to say all of that would show up in the third and fourth quarter, majority of that?
Thomas J. Webb - Executive Vice President and Chief Financial Officer
The bulk of that is from the electric rate increase and if we get our order in June and which right for that to occur, then you will see it the second half.
Ashar Khan - SAC Capital
Okay, so is it fair to say something like $0.21 to $0.22 is from the electric rate increase?
Thomas J. Webb - Executive Vice President and Chief Financial Officer
We actually haven't given that number, but I would say the bulk of the $0.28 is correct.
Ashar Khan - SAC Capital
Okay, thank you. And then just going on to this coal plant, I guess you've listed alternatives to...
if I understand that these are alternatives that the coal plant doesn't get built, is that correct, from slide 11?
David W. Joos - President and Chief Executive Officer
We get a lot of questions from both because obviously, the political environment for building a coal plant is challenging. We still think it's the right thing to do and our plant would have all the environmental bells and whistles on it.
But a lot of folks ask us what's going to happen if you are unable to build the coal plant for whatever reason and we'd said, look what we'll do is shift our investment over to other things and you see in this slide, which number is that?
Thomas J. Webb - Executive Vice President and Chief Financial Officer
This is number 11.
David W. Joos - President and Chief Executive Officer
Number 11, we have laid out for you, some of the alternative plans that we would be involved, if we weren't to forward with the coal plant and obviously, one of the things we would have to do is to extend the life on our existing coal plants and our base plant, we assume we will retire some of those because they are over 50 years old by that time. And then another thing we have to do is to invest in a combination of new gas turbines or conversion of some existing simple cycle plants to combined cycle plants.
So there are alternatives that we would obviously have to take advantage of to meet our supply requirements in the future. We think our base plan with a coal plant is best for our customers but our, I guess our growth forecast, our long term 7% and 9% kind of growth forecast is not dependent on building the coal plant although that is within our base plan.
Ashar Khan - SAC Capital
And Dave, I'd heard from other parties that you guys might be interested if the DTE goes through with the nuclear plant, a share of it and I had heard if you go for that share this coal plant might be... you may not pursue this coal plant.
Could you just talk about that and in terms of realms of making these decisions and how they might affect the whole thing?
David W. Joos - President and Chief Executive Officer
Well, let me just be a little bit philosophical about that. We still believe long term that it's important that the nuclear power be expanded, and that's certainly going to be very important in a carbon constrained environment.
We are open to participating in new nuclear plant investments longer term in the 2020 beyond. We have not had specific discussions with specific parties about how we might participate in that and it certainly doesn't have any impact on our plans to invest in the coal plant, which is significantly earlier than that in the 2015 kind of a time frame.
Ashar Khan - SAC Capital
Okay. I appreciate.
If I could just finish off saying on this, Tom so despite 75 of our current export [ph] come under the same time frame right, 2008 to 2012. Is that the way I read this slide?
Thomas J. Webb - Executive Vice President and Chief Financial Officer
It would, and I can tell you that obviously the timing on that would be tuned a little bit, if we really felt we had to go there. Here's the message is that we are watching how much we invest to make sure that it helps our earnings, but it keeps our prices down for our customers and we keep a good balance sheet in the process.
So we are very tuned into those subjects, the message here is that, Wow! We have a lot of things we need to invest in, these being some which could meet generation capacity requirements or other things.
And so there's not an issue for how much spending we have. The issue is trying to keep it to a reasonable level.
Keep it down to a reasonable level, so yes, in one fashion or another, this would substitute for the coal spending.
Ashar Khan - SAC Capital
Okay thank you vary much.
Thomas J. Webb - Executive Vice President and Chief Financial Officer
You bet.
Operator
There are no additional questions at this time. I would like to turn the presentation over to Mr.
Webb for closing remarks.
Thomas J. Webb - Executive Vice President and Chief Financial Officer
Let me just answer one of the open questions that we had about working capital and the number for the first quarter would've been about $471 million. The important thesis to that would be there's good news on accounts receivable financing and then there is of course the gas prices being up, and they are the major factors inside of that and I'd like to actually turn the call over to Dave Joes for concluding comments.
David W. Joos - President and Chief Executive Officer
Thank you for joining us today. Let me start the outset saying, a minute ago I mentioned our long term growth forecast and I said 7% to 9%, I misspoke.
We forecast about 6% to 8% on an average of around 7%. I didn't want to...
didn't intend to give you different numbers today. We're comfortable with that plan.
We talk about how we would achieve that long term plan and certainly, we have a lot of investment opportunity here in Michigan. We think the best opportunity is to plan that we have laid forward...
going forward with the coal plant, but our plan is not dependant our ability to do that, we have alternatives as well. A lot of that plan is dependant on good fair rate treatment from our regulators.
We have electric rate case and the gas rate case before the commission today and we're certainly optimistic that we'll get reasonable rate treatments there. There's some dependence as well on legislation in Michigan, and there's really two key features to that legislation.
One would allow us to make future investment in jobs and in the state of Michigan, and we think the environment is right for that. A second one simply, is to give us longer term assurance as to how that rate making process would work, and we're very optimistic with that...
that also. We will be part of that final legislation and be helpful in providing further assurance as we implement our plan on a go forward basis.
So, our overall plan is a lot simpler than it has been. We've been successful as you know in implementing the changes over the past couple of years to reduce the impact of enterprise, as we do have a small enterprise as business that continues to contribute, but not in the way that it has in the past, and our focus is on the utility, and we think we're making good progress there.
We'll certainly keep you updated in future calls. And I thank you for your participation today.
Operator
This concludes today's conference. We thank everyone for your participation.