The decrease in earnings for the quarter was due primarily to lower retail revenues resulting from extremely cool summer weather and the effects of the soft economy on industrial sales. Wholesale revenues, too, declined due principally to lower average market prices.

The increase in earnings for the nine months ended Sept. 30, 2009 was due primarily to price increases authorized for capital investments and higher operating costs. The effects of higher prices were partially offset by reduced energy sales and higher operating and maintenance, depreciation and interest expenses. The earnings for the nine months ended Sept. 30 for both years include substantial federal income tax adjustments related to prior period activity.

Per share results for both periods also reflect more shares outstanding as a result of the company having issued additional shares to fund capital investments.

  Revenues
  --------
                                   Three Months Ended September 30,
                            -----------------------------------------------
                               2009        2008       Change     % Change
                            ----------- ----------- ----------  ----------
                                        (Dollars in Thousands)
Retail                      $   417,399 $   422,314 $   (4,915)       (1.2)
Wholesale                        70,383     114,566    (44,183)      (38.6)
Energy marketing                  2,013       8,845     (6,832)      (77.2)
Other                            38,739      29,128      9,611        33.0
                            ----------- ----------- ----------
  Total Revenues            $   528,534 $   574,853 $  (46,319)       (8.1)
                            ----------- ----------- ----------
                                    Nine Months Ended September 30,
                            -----------------------------------------------
                               2009        2008       Change     % Change
                            ----------- ----------- ----------  ----------
                                        (Dollars in Thousands)
Retail                      $ 1,063,101 $ 1,021,478 $   41,623         4.1
Wholesale                       221,779     305,490    (83,711)      (27.4)
Energy marketing                 15,720      12,539      3,181        25.4
Other                           117,513      93,392     24,121        25.8
                            ----------- ----------- ----------
  Total Revenues            $ 1,418,113 $ 1,432,899 $  (14,786)       (1.0)
                            ----------- ----------- ----------

Retail revenues for the quarter decreased due to lower kilowatt-hour (KWh) sales reflecting extremely cool weather and the effects of the soft economy on industrial sales. The impact of lower KWh sales was offset partially by price increases earlier this year. Retail revenues for the nine months ended Sept. 30, 2009 increased due primarily to higher prices, more than offsetting a 5 percent decline in KWh sales.

Wholesale revenues decreased for both periods due principally to lower average market prices resulting from reduced demand.

Energy marketing gross margins decreased for the quarter due primarily to lower market prices and lower demand. For the nine months ended Sept. 30, 2009 energy marketing gross margins increased due primarily to the settlement of forward contracts for the sale of electricity on favorable terms. Excluding the gains from forward contracts, gross margins decreased $6 million for the period. These forward contracts related to sales that produced margins for the benefit of retail customers. The energy for the contracts was initially intended to be produced by the company, but was later satisfied by favorable open market purchases.

  Fuel and Purchased Power Expense
  --------------------------------
                                  Three Months Ended September 30,
                                ------------------------------------
                                                               %
                                  2009     2008    Change   Change
                                -------- -------- --------  -------
                                      (Dollars in Thousands)
Fuel and purchased power        $141,470 $220,140 $(78,670)   (35.7)
                                      Nine Months Ended September 30,
                                -------------------------------------------
                                  2009       2008       Change   % Change
                                ---------- ---------- ---------  ---------
                                          (Dollars in Thousands)
Fuel and purchased power        $  402,622 $  557,944 $(155,322)     (27.8)

Fuel and purchased power expense for both periods decreased due to lower demand for electricity and lower unit costs for both fuel and purchased power.