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Edited Transcript of HE earnings conference call or presentation 7-May-19 5:30pm GMT

Q1 2019 Hawaiian Electric Industries Inc Earnings Call

Honolulu May 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Hawaiian Electric Industries Inc earnings conference call or presentation Tuesday, May 7, 2019 at 5:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alan M. Oshima

Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc.

* Constance Hee Lau

Hawaiian Electric Industries, Inc. - President, CEO & Director

* Gregory C. Hazelton

Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer

* Joseph P. Viola

Hawaiian Electric Company, Inc. - VP of Regulatory Affairs

* Julie R. Smolinski

Hawaiian Electric Industries, Inc. - Director of IR & Strategic Planning

* Richard F. Wacker

Hawaiian Electric Industries, Inc. - President, CEO & Director of American Savings Bank FSB

* Tayne S. Y. Sekimura

Hawaiian Electric Industries, Inc. - Senior VP & CFO of Hawaiian Electric Company Inc.

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Conference Call Participants

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* Charles J. Fishman

Morningstar Inc., Research Division - Equity Analyst

* Gregory Harmon Gordon

Evercore ISI Institutional Equities, Research Division - Senior MD and Head of Power & Utilities Research

* Jacquelynne Chimera Bohlen

Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research

* Julien Patrick Dumoulin-Smith

BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research

* Paul Patterson

Glenrock Associates LLC - Analyst

* Vedula Murti

Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager

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Presentation

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Operator [1]

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Good morning, and welcome to the Hawaiian Electric Industries Incorporated First Quarter 2019 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Julie Smolinski, Director of Investor Relations and Strategic Planning. Please go ahead.

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Julie R. Smolinski, Hawaiian Electric Industries, Inc. - Director of IR & Strategic Planning [2]

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Thank you, and welcome to Hawaiian Electric Industries' First Quarter 2019 Earnings Conference Call. Joining me today are Connie Lau, HEI President and Chief Executive Officer; Greg Hazelton, HEI Executive Vice President, Chief Financial Officer and Treasurer; Alan Oshima, Hawaiian Electric Company President and Chief Executive Officer; and Rich Wacker, American Savings Bank President and Chief Executive Officer as well as other members of senior management. Connie will provide an overview followed by Greg, who will update you on Hawaii's economy, our results for the first quarter and our outlook for the remainder of the year. Then, we'll conclude with question and answers.

During today's call, we'll be using non-GAAP financial measures to describe our operating performance. Our press release and webcast presentation are posted on HEI's Investor Relations website and contain reconciliations of these measures to the equivalent GAAP measures.

Forward-looking statements will also be made on today's call. Factors that could cause actual results to differ materially from expectations can be found on our website slides, our filings with the SEC and on the HEI website.

I'll now ask the CEO, Connie Lau, to begin with an overview.

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [3]

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Thanks, Julie, and aloha to everyone. In the first quarter, we continued to make significant progress on our strategies across the enterprise and delivered solid results in line with our expectations for the year. Consolidated net income for the quarter was $45.7 million and $0.42 of EPS. At our utilities, continued cooperation among energy stakeholders, the Public Utilities Commission, customers and companies is helping us move forward together to achieve Hawaii's 100% renewable energy and carbon neutrality goals.

The commission's approval this March in record time of contracts for the largest amount of solar-plus storage procured in Oahu to date was a big step toward our collective goals. A recent state-wide opinion poll found that residents give high marks to the state's renewable energy transition, and we're excited to play a key role in that effort.

American continued to perform well, expanding net interest margin while remaining focused on disciplined growth, improving operational efficiency and deepening customer relationships. The bank is almost fully moved into its new campus, which opens new possibilities for it to deliver value for customers and strengthen efficiency.

Following a solid first quarter, we are reaffirming our earnings guidance range for the year, and Greg will go over that in more detail later.

In Hawaii, we are all working to achieve our 100% renewable energy and carbon-neutral economy goals. As we do so, the utility and the commission are thinking carefully about the best way to do so affordably and reliably. This is reflected in recent commission decisions.

As I touched on a moment ago, in March, the commission approved 6 solar-plus storage power purchase agreements that will bring 247 megawatts of solar and nearly 1 gigawatt of our of storage to our grids on Maui, Oahu and Hawaii Island. The power purchase agreements were approved within just 3 months of filing.

The hard work of the commission and its staff to expeditiously review these contracts will help these projects come online and start delivering renewable energy as soon as possible. When placed in operation and together with the other renewables projects in the pipeline, these new PPAs will help us reach a 50% renewable portfolio of standard in advance of the mandated target and reduce greenhouse gas emissions by 50% compared to a 2010 baseline roughly by 2022.

The 6 new projects will provide renewable energy at prices well below the cost of fossil fuel-generated energy. And in the first quarter, we recognized the first half of performance incentive rewards related to customer savings from these contracts. 2 more PPAs that are part of the same RFP process are pending commission decision.

In addition, the commission approved a groundbreaking pilot program through which we'll offer special time-of-use rate for up to 20 bus fleet customers to charge during the day when solar energy is most abundant. Last week, after considering the cost implications, the commission declined to approve our proposed addition of a battery storage system to the West Loch PV system. The PV system was approved in 2017 and construction is to be completed this year. So adding the storage after the fact proved less economic and other options.

The commission has encouraged us to expand or accelerate other resources to help us reach 100% clean energy here in Hawaii. In the first quarter, the commission approved Phase 1 of our grid monetization implementation, allowing investment of $86 million to deploy technology to collect, communicate and manage energy and information across our system and enable us to provide more information and options for our customers.

The commission encouraged us to deploy more advanced meters faster and more broadly than proposed. So we are working to expand our planned deployment. This year, we are launching RFPs for both Phase 2 of the renewable energy resource procurement and grid services. We and the commission are working to move these RFP processes forward together, so options can be considered and compared across types of resources, whether generation or grid services such as demand response aggregation. This aligns well with our integrated grid planning approach, which takes a holistic view of the resources that will be needed to achieve our goals rather than segregating certain types of resources into siloed processes.

The commission has also encouraged us to consider increasing the size of the Phase 2 of our renewables procurement and our grid services procurement. So we are in discussion with the commission to meaningfully upsize those compared to what was originally planned, accelerating renewables and grid services announced, originally targeted for 2025. As a result, we anticipate that the RFPs we will issue will seek to procure another significant amount of renewables in Phase 2 as well as the significant amount of demand response services. These efforts will allow us to add more renewable dispatchable generation on to our grid sooner, accelerate our RPS achievement and reduce our fossil fuel use and greenhouse gas emissions more quickly. Reducing our use of fossil fuels will also stabilize bills for our customers. We look forward to continued efforts with the commission and other stakeholders to work toward achieving 100% clean energy on the safest most efficient possible.

Turning to Slide 5. Our collective effort to create the best to path forward achieving the Hawaii's policy goals is also reflected in the performance-based regulation process. This docket continues to progress and is expected to conclude by early next year. The PUC staff issued its proposal in early February, and the utility and other stakeholders filed statements of position and replies over the last couple of months. We are now awaiting the commission decision and order on this first phase of the process. Phase 2 will then focus on implementation.

The PUC staff made clear in its proposal that the financial integrity of the utility is essential and must be maintained in order for us to continue to provide affordable, reliable electricity for our customers and achieve our state's important and ambitious goal. We agree, and we are pleased that we, the PUC staff, and many key stakeholders in the process are aligned on this key issue.

Our company's proposals in the PBR docket emphasize how important it is that any PBR framework help progress state renewable energy and carbon neutrality efforts, especially given the progress we have made to date.

Turning to the banks. American achieved continued solid financial performance for the quarter with strong year-over-year net income growth supporting an increased dividend to the holding company. The bank continued expanding net interest margin, benefiting from increased yields on assets and the low funding cost. We look forward to the opportunity for bank's consolidation of its team into its new campus offers for the bank to work better together for the customers and realize greater operational effectiveness and cost efficiencies.

American continues to maintain its low risk profile, prudently managed credit and grow assets in a disciplined manner. But the bank also continues to maintain a strong balance sheet and the lower cost funding base than peers. Greg will discuss the bank's performance in more detail shortly.

At Pacific Current, we now have a dedicated team in place, and they are focusing on completing Pacific Current's ongoing solar-plus-storage project for the University of Hawaii and optimizing operations on the Hamakua Energy Plant as well as developing local partnerships and identifying opportunities to invest in Hawaii's sustainable future. Pacific Current's existing portfolio provides a solid foundation for our new team, and we look forward to continued growth of the platform.

I'll now ask Greg to cover Hawaii's economy, our first quarter financial results and 2019 outlook. Greg?

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [4]

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Thanks, Connie. Despite some indications of coin, Hawaii's economy remains healthy. At 2.8% in March, Hawaii's unemployment rate remains among the nation's lowest and is below the national rate of 3.8%. Tourism arrivals continue to grow, although expenditures have slowed somewhat. March year-to-date arrivals were up 2.6% compared to the same period last year, while visitor expenditures were down 2.4%. In total, annual spend is expected to grow.

Hawaii real estate fundamentals remain sound, while sales volume declined from the prior year by 5.7% for single-family homes and 10.5% for condos. Median prices were mix, with single-family home prices up 2% and condos down 3.2%. Overall, the state's economic outlook remains positive, with Hawaii GDP expected to rise 1% in 2019.

Turning to our results. Q1 earnings increased to $0.42 per share compared to $0.37 per share in the prior year, with solid performance across the enterprise. Year-over-year earnings grew at both the utility and bank, while the holding company and other segment loss grew slightly. Net income rose 13.7% and consolidated EPS grew 13.5% versus last year. Pacific Current's operating portfolio continues to contribute positively to earnings helping offset the cost of building out the platform.

On the right side of the slide, HEI's consolidated GAAP ROE for the last 12 months was 9.7%. Utility ROE for the last 12 months improved 40 basis points with new rates in place at all 3 utilities and full recovery on -- of the Schofield Generating Station. Bank ROE for the quarter was 50 basis points higher than the prior year, driven by continued low-cost funding and strong net interest margin.

On Slide 10, utility earnings were $32.1 million compared to $27.5 million in the first quarter of 2018. And most significant net income drivers were as follows: $9 million from rate increases in the Hawaiian Electric 2017 and now final Maui Electric 2018 test year rate cases; $4 million from items that were onetime in nature. This includes $2 million of expenses incurred last year that did not recur this year, such as the write-off of smart grid costs and the onetime rents expense adjustment for existing substation land.

In addition, in Q1 2019, the utility reduced O&M by $2 million due to the commission granting recovery for previously incurred expenses to modify existing generating units on Maui to enable the integration of more renewable generation. Drivers included $3 million in major project interim recovery revenues for the Schofield project, $1 million from the first half of performance incentive rewards related to the 6 commission approved solar-plus-storage contracts and $1 million from incremental pole attachment fees resulting from the pole ownership agreement announced in 2018.

These items were partially offset by the following after-tax items: $11 million higher O&M expenses, primarily due to the reset of pension costs, which are included in rates as part of the rate case decisions; higher costs for continued cleanup of our asset management data after the go live of our enterprise resource management system and higher personnel expenses; and $3 million higher depreciation expense due to increasing investments to integrate more renewable energy and improved customer reliability and system efficiency.

On Slide 11, turning to the bank. As Connie mentioned, American achieved another quarter of healthy financial performance. Net income of $20.8 million was down about $1 million from the linked quarter, but up $2 million compared to the same quarter last year. The variance compared to linked quarter was primarily driven by favorable credit events that reduced the provision for loan losses in late 2018 and prudent credit quality management leading to additional reserves for 2 loans in the commercial -- in commercial real estate portfolios in the first quarter of 2019.

Compared to the first quarter of 2018, American's $2 million higher net income was primarily driven by higher yields on earning assets combined with funding costs that have remained relatively low and stable. American's consistent profitability continued in the first quarter, with the return on assets of 118 basis points for the quarter below the 125 basis points in the linked quarter but above the 112 basis points in the same quarter last year. American's return on average equity continues to compare well versus peers at 13.1% in the first quarter.

On Slide 13, net interest margin continued to strengthen in the first quarter reaching 3.99% with interest-earning assets yields rising 7 basis points over the linked quarter due to higher interest rates while our cost of funds remained low at 31 basis points, just 3 basis points above the linked quarter and well below peers. As a reminder, a 100% of ASB's loan portfolio is funded with low-cost core deposits.

On Slide 14, net interest income of $63.7 million was up slightly from the linked quarter and up 8.8% compared to the same quarter last year, largely due to the higher asset yields and continued low cost -- low funding costs I just mentioned. Noninterest income of $14.6 million was approximately $1 million above each of the linked and prior quarters -- prior year quarters, with the increase primarily due to higher amounts of bank-owned life insurance proceeds recorded during the quarter.

As at March 31, total loans were up 1.2% annualized from the December 31 amount, largely due to growth in residential and home equity loan portfolios, partially offset by declines in commercial and commercial real estate portfolios. We still expect to meet our target of low- to mid-single-digit earning asset growth for the year. Total deposits increased by over 3% annualized from December 31, 2018, with low-cost core deposits growing 7.1%.

On Slide 15, credit quality remains sound due to prudent risk management in a healthy economic environment. The credit quality of our residential portfolio remains very strong, and our commercial and commercial real estate portfolios are stable despite the higher provision this quarter. First quarter provision of $6.9 million compared to $2.4 million in the linked quarter and $3.5 million in the first quarter of 2018. Most of the increase over the linked quarter was due to additional reserves for 2 loans in our commercial and commercial real estate portfolios, along with lower-than-expected fourth quarter 2018 provision due to positive credit events, notably the pay-off of the sizable criticized loan.

Nonaccrual loans as a percentage of total loans receivable held for investment increased to 0.83% reflecting the same factors that led to the higher provision. Our net charge-off ratio was relatively flat compared to the linked quarter.

American's continued focus on strengthening efficiency is reflected in its first quarter efficiency ratio of 57.8%. This represents an improvement of 170 basis points from the linked quarter and over 320 basis points from the prior year quarter. The bank continues to target a 100 basis point improvement per year through 2021.

Regarding utility capital expenditures. In the first quarter, we executed on approximately $100 million of investment, in line with plan. Looking forward to the remainder of the year, we're maintaining the 2019 utility CapEx and rate-based growth forecast we communicated on our fourth quarter 2018 earnings call while excluding the West Loch battery storage project.

As mentioned earlier, the $86 million of CapEx for Phase 1 of our grid modernization implementation included in our forecast has now been approved by the commission with potential to increase the size of the program.

Turning to Slide 17. As Connie previously mentioned, we are reaffirming HEI's 2019 consolidated earnings guidance of $1.85 to $2.05 per share.

Connie will now make her closing remarks.

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [5]

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Thanks, Greg. In summary, we continue to focus on our mission of being the catalyst for a better Hawaii, which is integral to our strategies across our enterprise.

Our utilities continue to focus on achieving 100% clean energy and helping move Hawaii towards a carbon-neutral economy. As we work with stakeholders and the commission to develop the best path to do so, we're evolving and in some cases accelerating our plans. We're also working to build resilience of our systems and our communities and ensure that all customers have access to affordable, reliable, renewable energy.

Our bank's healthy financial performance continues as it remains focused on making banking easy, deepening relationships with customers and strengthening efficiency, which the bank will be even better positioned to do now that it has moved into its new campus. With its team have in place, Pacific Current is well positioned to invest in opportunities to further Hawaii's sustainable future.

Our business model continues to provide the financial resources to invest in strategic growth of our company's and our state's sustainable future while supporting our dividend, which our Board maintained at $0.32 per share this quarter continuing our history of uninterrupted dividends since 1901.

And now we look forward to hearing your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from Julien Dumoulin-Smith with Bank of America Merrill Lynch.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [2]

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Can you hear me?

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [3]

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Hi, Julien. We can.

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [4]

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Yes, Julien.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [5]

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Excellent. So I wanted to first dig in a little bit on the battery storage side of the equation and CapEx. I know you guys have ranges for a reason. We'll be curious to get a sense here on the West Loch impact. I suppose there's been some developments on that specific project. What does it mean to your CapEx plan giving the rejection? And more importantly, I suppose what does it mean from a policy perspective looking forward, right, whether it relates to CIP project and others? Is there an ability to rate base these kinds of assets going forward?

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [6]

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Yes. So Julien, let me start with that and then I'll ask Alan if he wants to add anything. I don't think it means anything really from the standpoint -- well, let me start over. As we said, what the commission is trying to do is look at the system holistically now, which is also something that we're trying to do and to balance all the resources across the system, whether they are generation resources, whether they are battery resources, which sometimes are generation and sometimes are grid support and grid services. And because of that, it's important to take a holistic look when you look at individual projects.

And so specifically in the case of the West Loch PV project, as I mentioned in the prepared remarks, that had originally been approved as the lowest cost solar on our grid. And then, when we went out for the renewable RFP Phase 1, what we actually got in response to our new renewable dispatchable PBA was solar-plus-storage. And as you know that was the trend it was all renewable and then people started hearing storage with the renewable in a very economic way.

And so the commission had asked if we would add a storage element, but it's not as easy to do that with a project that has already been begun as a renewable-only. So I don't think there's any other message in that -- in there than that. And it's just going to the same thing with the CIP BES that it will be looked at holistically both by us and by the commission as to what is the best way to get to the Hawaii to the renewable future but very importantly, in Hawaii, affordably for our customers and reliably for our customers. And I don't know, Alan, if you want to add?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [7]

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Well, the only thing I would add is it shows you the dramatic shift in pricing and how fast things are changing in the marketplace. So I don't think you can read any kinds of policy issues here. It's really a matter of timing. And as Connie had pointed out, we're grading our Phase 2 of our RFP, and we expect even better pricing.

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [8]

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Yes. That's the good thing, Julien, that's happening in Hawaii is that we are now able to move forward to the renewable future, but take advantage of all of the market changes that are occurring. And I think that's a really, really good thing. And for your question about how does that impact our capital, it's not changing our capital forecast because as we've said, we have provided to you guidelines as to what we think the CapEx should be for the year, and there are some projects that we have held in advance that we would put into the mix to still hit the targets that we've set forth.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [9]

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Just to make sure, you accelerate before you're talking into 2019 to hit the $400 million despite some of the shifts in West Loch?

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [10]

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Correct.

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [11]

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Yes.

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [12]

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Yes.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [13]

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Got it. Excellent. And then, just to be extra clear about this, it was related to West Loch being an adjacent project with solar-plus-storage, that's one of the core reasons here rather than being battery storage?

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [14]

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Wait. Ask your question, again?

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [15]

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The reason for the reduction at its essence, it was tied to the recognition of ITCs. And -- is that a fair way to characterize it, that's being colocated with solar?

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [16]

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No. It was that the -- we originally proposed West Loch just as a PV project, and so that was actually at the time the market was primarily doing just renewable. And then the market has now moved to renewable plus storage. And so then the West Loch storage project was looked at to combine that with the PV. But the economics when you try to do it that way versus doing it as solar-plus-storage from the beginning is different.

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [17]

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It's a bolt-on.

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [18]

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Yes.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [19]

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Right. Okay. Understood. That was the nuance about that specific procurement. Understood. All right. So if I could move on to PBRs real quickly, obviously, that continues to garner good amount of attention here. Can you discuss the balance between sort of incentives and penalties -- PIMs today, right, the pluses and minuses? Any developments of late? Obviously, there have been some, obviously, commentary out there in the marketplace from various stakeholders. Any evolution of late as best you see it?

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Joseph P. Viola, Hawaiian Electric Company, Inc. - VP of Regulatory Affairs [20]

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This is Joe Viola from Hawaiian Electric Regulatory. No, nothing to report lately. We finished up our briefing on Phase 1. And pretty, I think, I mentioned that on our last call, pretty balanced constructive report from the commission staff. Now what we're waiting to see is how the commission will rule in and define what will work on in Phase 2. So no real significant development since last time. Other than in the renewable procurement talk at the commission, again, encourage us to when we have suggested some performance incentive mechanisms relating to those procurements.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [21]

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Last quick question. The earlier report, I think, is due out next week at this point. Any commentary or thoughts in anticipation of that, that we should just be ready for?

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [22]

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No. Nothing that we are aware of.

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Operator [23]

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The next question comes from Greg Gordon with Evercore.

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Gregory Harmon Gordon, Evercore ISI Institutional Equities, Research Division - Senior MD and Head of Power & Utilities Research [24]

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Congratulations on the progress with the commission staff. Yes, I don't know if you've noticed, but I just ran some numbers, and your stock is like the second best performing utility stock since the staff document actually came out saying that they actually think you deserve to earn reasonable return. So the market's noticed. So it begs the question, if you think that everything gets -- as you go through this next rate cycle and everything gets adjusted along the lines of the way, the way the constructs are evolving, what is the structural regulatory lag that you think is sort of -- is permanent and how much do you think you can offset? So for instance, by 2022 your authorized ROEs are averaging around 9.5%. How much below that would you earn because of structural things that are not fixable even with the very constructive perspective that the staff is now taking towards rate making?

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Tayne S. Y. Sekimura, Hawaiian Electric Industries, Inc. - Senior VP & CFO of Hawaiian Electric Company Inc. [25]

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Greg, this Tayne Sekimura. Let me respond to your question. So if we look at 2019 -- and then I'll go into the future. For 2019, we'll still have some of that structural lag with us. And that's because we have the nonrecoverable items. Those are items that are not typically included in our rates. So that's about -- that together with the RAM accrual lag that we have as well as some of the other things we've talked about previously with the short-term interest debt rate on the RBA and also the return we're getting on our ERP project as well as the MPIR.

Okay, so having said that, for 2019, it looks roughly to be about 90 basis points in structural lag. You may recall we also have 40 basis points related to our customer benefit adjustment, and we scheduled that out in previous slides. And then also this year, with our Hawaii Electric Light rate case currently in progress, that's the case we filed late last year. We're making progress through the rate case process, and we expect a decision sometime in the fourth quarter, and so we'll see some drag there.

So that would be sort of an overall for 2019. But moving forward, as we think about PBR and taking a look at the construct, for example, something like the a RAM accrual, looking at what the PUC staff paper talks about an escalator and then also that would help address the RAM, the RAM lag that we have. So there are opportunities to address some of that -- some of the RAM lag. And the RAM lag is roughly 30 basis points. So it is a meaningful part of the structural lag that we have today.

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Gregory Harmon Gordon, Evercore ISI Institutional Equities, Research Division - Senior MD and Head of Power & Utilities Research [26]

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Great. So as I look in your slides, on Slide 22 in the appendix, I think you've done a pretty good job showing the different -- many different things that impacted. That -- it sounds to me like in a world where you're being treated sort of more like the main lag utilities are treated on an ongoing basis that you could eliminate most of this lag, except for maybe the first 3 or 4 things and get the ROE lag down to somewhere between 50 and 75 basis points. Is that a fair summary? Or am I making an implication that that's too far than you want to go?

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [27]

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To that level, it would take some adjustments to the regulatory process, including the RAM element. We have provided, by the way, schedules around the customer benefit adjustment in that roll off, which as we proceed over the next couple of years, you should see improvement there.

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Tayne S. Y. Sekimura, Hawaiian Electric Industries, Inc. - Senior VP & CFO of Hawaiian Electric Company Inc. [28]

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Yes. And in addition to that, the expectation is we need to continue our cost efficiency efforts as well. That's all part of the PBR. And when we take a look at the escalators and increases in between rate cases, cost efficiencies have really important part of that.

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [29]

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I would note that this quarter we recorded incremental revenues associated with our performance on the renewable procurement program, which are independent of these -- of the rate case settled revenue requirement. So that -- those type of elements that we are likely to see more of, including in our Phase 2 potentially should also help offset some of the structural lag that we're talking about, Greg.

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Gregory Harmon Gordon, Evercore ISI Institutional Equities, Research Division - Senior MD and Head of Power & Utilities Research [30]

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Great. Quick question on ASB. Regarding the additional provisioning year-over-year, were there commonalities between the 2 commercial and CRE loans that you took reserves against?

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Richard F. Wacker, Hawaiian Electric Industries, Inc. - President, CEO & Director of American Savings Bank FSB [31]

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No. This is Rich. No, they just happened -- the only in commonality is the outlook's deteriorated in the same quarter, but very different exposures and customers.

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Operator [32]

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The next question comes from Paul Patterson with Glenrock Associates.

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Paul Patterson, Glenrock Associates LLC - Analyst [33]

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So to follow up on Greg's and Julien's PBR questions, what's the outlook for settlement in this case?

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Joseph P. Viola, Hawaiian Electric Company, Inc. - VP of Regulatory Affairs [34]

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This is Joe Viola again. I'm not sure there is -- we don't expect that kind of formal settlement per se. What we're looking and what we've been achieving, I think, to some extent is trying to build consensus that the commission can base its ruling upon. So I don't know if we're looking for formal settlement, again, trying to have the process, have the collaborative one where we can rally around positions.

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [35]

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And I'll just add a very transparent process as well. I mean, you've seen everyone's positions come forward. So, so far, it's been a very collaborative process it shows. I think, Alan you had a...

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [36]

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Paul, I think, what you have to go back to the commission's first annunciation that this will be a gradual process. There's not going to be a cliff. So I think the commission is holding true to that in the process and the procedures. So there's no settlement per se, but as is proceeding, you're very transparent, you're seeing everyone positions, and so you're -- including the staff. So we're hopeful for a gradual process that will lead to something that preserves our ability to earn and provide customer value.

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Paul Patterson, Glenrock Associates LLC - Analyst [37]

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Okay. I have been looking at some of these position statements and what have you (inaudible). And it seems that there is some sort of sticking point here on the inception of the MRP and, I guess, on the RAM cap as well. And I'm just sort of wondering when you're in your discussions with them, I mean, when you talk about like building a consensus, it seems like those are sticking points. Am I wrong about that? Are we coming to some sort of -- are you -- in your discussions with the other parties, are you feeling that you're coming to some sort of closure in those issues?

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Joseph P. Viola, Hawaiian Electric Company, Inc. - VP of Regulatory Affairs [38]

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Again, this is Joe Viola. We'll see. I mean, I think, conceptually we have a fair amount of consensus. Now that we've always said the details matter a great deal. So we'll see. You want to see what the commission says on this. But I think we are agreeable generally to having changes to our multiyear rate plan. We proposed the conditions that we think it will be helpful to us and achieve what the commission has identified as one of the guidepost in maintaining our financial integrity. So the details will matter. We have some differences certainly on how we would execute on some of these conceptual, call them conceptual consensus. So we'll have to see on those. We'll never have perfect agreement, but I think we're making progress.

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Paul Patterson, Glenrock Associates LLC - Analyst [39]

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Is there a definition that's been defined as to what financial integrity is? So they've quantified what that actually means?

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Joseph P. Viola, Hawaiian Electric Company, Inc. - VP of Regulatory Affairs [40]

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See, there is a definition in the commission staff reports on how they define financial integrity and financial health.

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Paul Patterson, Glenrock Associates LLC - Analyst [41]

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Can you remind us what the ROE was or what that metric is?

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Joseph P. Viola, Hawaiian Electric Company, Inc. - VP of Regulatory Affairs [42]

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I don't think they defined a metric for ROE. It's a traditional ROE.

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [43]

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Yes. We go through the ROE, the appropriate ROE for the return to our rate case process.

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Paul Patterson, Glenrock Associates LLC - Analyst [44]

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Right. But I guess when we look at PBR mechanisms in other places and what have you, often it seems that there's sort of a characteristic approach, in other words, there's more variation that can happen. And I guess, what I'm sort of concerned about is when we're talking about financial integrity, it's one thing to say that, right, but I mean, the question is, of course, what are they willing to see you guys potentially in your default.

I mean just a step back a second. It seems like there was some issue concerning rates and affordability as I'm sure you guys are very much aware and very focused on. And it seems that there's some sort of effort to sort of have you guys have more skin in the game kind of thing. And I guess, what I'm trying to sense here is, is there a floor on what we can reasonably expect that the commission might be willing -- at a point where they don't want to see guys are in something too low, do you follow what I'm saying? Do you have any idea what that might be?

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Joseph P. Viola, Hawaiian Electric Company, Inc. - VP of Regulatory Affairs [45]

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We'd be speculating on that. We just go with what the commission has been saying that they're concerned about. They're obviously well aware of what our current ROE is and what the industry ROEs are but anything beyond that would be speculating.

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [46]

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Paul, let me help you understand because they did have a little bit of discussion in the PUC staff paper of what they meant by utility financial integrity. And basically, a couple of things that they noted is that we would have to be as an essential credit worthy off-taker for contracts, for nonutility power purchases. And now as you can see, with the amount of PPAs that are before the commission and recently approved, they did recognize the importance of a creditworthy off-taker. The other point they made is in their framework, they talk about helping to reduce regulatory lag and really preserving the utility's opportunity to earn a fair return on its investments. And so they recognize the need for the company to be able to go out and attract capital competitively at a low cost in the capital markets. So they did talk about those fundamentals in their staff paper.

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Paul Patterson, Glenrock Associates LLC - Analyst [47]

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Okay. So just moving along, just one last sort of question. As we're seeing combination, renewable and storage decrease in cost rapidly as you were just mentioning, do you see a competitive threat on the parts of institutions or commercial players in Hawaii, potentially going off the grid or simply reducing their use of Hawaiian electric power or your system? Do you follow what I'm saying? Do you see any threat of distributed generation with storage? What are your thoughts on that? I know you guys are focused on the future here. When you look at these trends and when we look at your cost structure, it does come to mind.

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [48]

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Yes, Paul, that's -- this is Alan. That's always a threat.

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Paul Patterson, Glenrock Associates LLC - Analyst [49]

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But is it more of a threat, I guess, Alan? I mean, I guess what I'm just trying to say is if you look at the trends now, I mean, I know it's always a threat but when you're talking about just the dramatic changes that we're seeing here, is there any change in the outlook on that?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [50]

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I don't know if there's an outlook, but let me tell you what -- how we're addressing it. It's really -- we're different in Hawaii because we're an isolated system with no access to other grids. So each of fence is stand-alone, and I think one of the -- our efforts is to emphasize everyone's role in reaching 100%. What we're after in the state is for the whole state to be totally of carbon producing energy.

So everybody has to play a role. As people go off the grid and raises the costs and really impedes our effort to get more renewables at an affordable price for everyone. And so part of our effort is to continue the education process, bring all the policies together and really help our customers see the value to retain grid connectivity. And there are things that we're doing in our transformation to add value to that connectivity, other types of ancillary services we can provide to large customers, for example, that they would miss if they just go off on their own. There are many things going on. So it would be unfair for me to say that that's not a concern. It's a big concern, but we try to address it in a positive way.

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Operator [51]

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The next question comes from Jackie Bohlen with KBW.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [52]

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I wanted to ask for an update, Rich. Just on -- I know I asked this every quarter, but how's the move is going? It sounds like it's nearing completion. If there were any direct moving costs that you incurred in the quarter and then where do you stand in terms of the depreciation run rate on the new facility?

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Richard F. Wacker, Hawaiian Electric Industries, Inc. - President, CEO & Director of American Savings Bank FSB [53]

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Yes. Great. So we did move basically during April, and we moved about 600 teammates into the building from 4 other locations. We've emptied out 3 of them, and we're working on the last one by the end of the third quarter, which has some data center operations in it. So that's going to lag a little bit. So it's been great. We are already seeing the benefits that we hope to see in terms of the speed of the decision-making, collaboration and the like. So it's been successful so far, and we're excited about what it represents.

So yes, we did have, in the first quarter, we had about $1.3 million of costs that would be attributed to the move -- moving costs, shredding costs, getting rid of paper and stuff at the other places. And the costs of carrying the other properties that we exited -- that we are exiting. So that's in the first quarter's reported results.

We would expect that the run rate of depreciation on the campus is -- hold on, it's about $1 million a quarter for the campus and the F&E in the campus, and that's an increase of about $400,000 to $500,000 over the straight depreciation of the other properties. We've got savings on the other lines on things like carrier and telecommunications and parking and other things that cuts that about in half, that net increase. So the cost -- the hard cost at that level before other efficiencies, we find is about $1 million overall for the year.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [54]

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Okay. That -- so that -- sorry, I just want to make sure I understand the difference between the net savings and the $1 million. And so the $1 million will be reduced by lower carrier and all the other saving all the other saving you've got from being in one building?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [55]

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Yes. Right. Yes.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [56]

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Okay. Fair enough. That makes sense. And was any of that in the first quarter's number? Or does that start in 2Q, given the April move?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [57]

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Yes. Those things start to kick in from April. We are exiting -- the exit of the lease cost come during this quarter from the 2 leased properties. We've got 2 properties that are for sale, and we'll have some carrying costs on those until they sell. So if you remember the original guidance, we had $0.03 to $0.05 net benefit that we estimated for the year of what we expect to be gains on the sale of those 2 properties net of the costs of carrying and the move and all that stuff. So in total, for the year, we expect the move to be a positive to the reported financials because of the gains on those properties that we expect to sell.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [58]

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Okay. And then the BOLI income moved up quite a bit in the quarter. Was there any onetime insurance proceeds included in that?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [59]

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Yes. There's about $1 million that's benefiting there.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [60]

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All right. And then, overall, just in terms of growth, I know you reiterated guidance for earning assets. It sounds like steady as it goes, no surprises, just continued level of lending and deposit gathering?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [61]

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Correct. And we're working hard to continue that core deposit growth, the relationship expansion with the customers is the big focus. And we've been able to keep control on the cost to funds because we're doing a good job on that. The team's really working hard on those core deposits and the customer relationships to control the cost of funds.

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Jacquelynne Chimera Bohlen, Keefe, Bruyette, & Woods, Inc., Research Division - MD, Equity Research [62]

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Well, it shows, given how low your funding costs have remained. And then, in that light, if I look at the margin for the quarter and then I look at the 3.85% to 3.95% guidance, what would it take to move you back into that range? What would be the driver of that?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [63]

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FAS 91. We continue to end up with lower costs on amortization fees than we are forecasting, and we do expect it to bounce up. First quarter was a little bit lower than fourth quarter, but we expect that, that'll normalize, again, during the remaining quarters. And we would have -- it's probably a couple 3 or 4 basis points for the quarter that we benefited from the lower FAS 91 costs.

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Operator [64]

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The next question comes from Charles Fishman with Morningstar Research.

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Charles J. Fishman, Morningstar Inc., Research Division - Equity Analyst [65]

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If I could circle back to Slide 23, that's the waterfall chart that gets you from allowed ROE to core. In hearing the answer to the previous question, concern that I have a misconception about the very last item, the other net, in this case for the trailing 12 months, it was $0.15 positive. I thought that was for things like joint pole revenues and the benefit from many PPAs that you are allowed. It sounded like from the way you answered the previous question, that's not the case. What is that other then?

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Tayne S. Y. Sekimura, Hawaiian Electric Industries, Inc. - Senior VP & CFO of Hawaiian Electric Company Inc. [66]

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Yes. Charles, this is Tayne. So what can be in the other categories are just miscellaneous items like things that are included in rate base like for example, you've got your inventory set at a certain level in your rate case and they fluctuate every quarter. So we have things like that, that just vary. But in terms of joint pole, that's not included in that other category.

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Charles J. Fishman, Morningstar Inc., Research Division - Equity Analyst [67]

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So that -- like the benefit from the PPAs, that's not in your core ROE. That's -- I mean, obviously, it's going to be concluded in your consolidated ROE, but that doesn't make this chart, correct?

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [68]

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No, this is a reconciliation to our actual. So I think we concluded most of the -- all of those actual elements in here. So I think, maybe on the confusion though is that, we were talking about structural elements that create lag. You always have things to the right-hand side -- the far right-hand side of the chart during the current period that create onetime events, pluses and minuses relative to your allowed, which are not structural and embedded as part of the regulatory rate making process and other types of elements.

And that's when we talk about those, those are in the left-hand side. And that's -- those are either have to be addressed through further rate making activity and dialogue with the commission and so forth, and that's what we're trying to identify as how to eliminate for, I would say, how to overcome some of the structural lag where the performance incentive mechanisms, incremental revenues. But as -- in our quarterly reporting, we often do a reconciliation to provide transparency that includes both the structural as well as the current onetime elements and dynamics. Does that help?

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Charles J. Fishman, Morningstar Inc., Research Division - Equity Analyst [69]

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Yes. Okay. That does. And then, just real quick second question. It's my understanding with the PBR, Phase 2 does not have to go back for any additional legislation. I mean, it's in the commission's wheelhouse. So it's up to them to decide, correct?

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [70]

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That's correct.

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Operator [71]

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(Operator Instructions) The next question comes from Vedula Murti with Avon.

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Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [72]

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Let's see, a few things. One, probably fairly straightforward. I want to make sure, when do you expect the actual order on PBR from the commission that then would set the terms and then keep moving next phase for how to implement everything on that?

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Joseph P. Viola, Hawaiian Electric Company, Inc. - VP of Regulatory Affairs [73]

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There's no -- this is Joe Viola. There's no stated deadline for the commission to come out with that order. We do know when they opened up the docket about a year ago, the schedule they had laid out would call for the Phase 2 to be concluded early in 2020. So we would expect they're going to get nod around on Phase 1 fairly soon. We know it's a high priority docket for the commission.

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Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [74]

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Okay. Let's see. You mentioned, I think, on the Big Island, there's a rate case currently going on that can be resolved at the end of the year. Do you have minimum rates in place there like I think you did in Maui?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [75]

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No. It's just started.

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [76]

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Not yet.

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Joseph P. Viola, Hawaiian Electric Company, Inc. - VP of Regulatory Affairs [77]

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Actually November is actually the key target for the interim rate adjustment for that case.

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Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [78]

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Okay. So -- but the filings are already been made?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [79]

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Correct.

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Joseph P. Viola, Hawaiian Electric Company, Inc. - VP of Regulatory Affairs [80]

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Probably at the end of the layer.

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [81]

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In December of 2018.

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Constance Hee Lau, Hawaiian Electric Industries, Inc. - President, CEO & Director [82]

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And Vedula, that's the one that is also still on a lag as we are catching up to the regular cycle.

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Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [83]

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Okay. If I take a look at Slide 10, when you go through the pluses and minuses here, the O&M, excluding net income neutral items, one of the factors you mentioned was a pension reset, and I would have figured that a pension reset would likely be a net income neutral type of item. So one, I want to make sure I understand that. But two, is $11 million after tax in 1Q, what should then be -- what should we then be expecting for that kind of an item over the course of 2019?

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [84]

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Well, first of all, Vedula, those costs are embedded in our forecast and our guidance. Two, when you say net income neutral, what I would say, that's different terminology for different types of elements that we collect and remit as opposed to parts that are part of our overall core operating costs and expenses such as employee benefits reflected here. But the reset of the pension costs were included in the revenue requirement that we collected. So in some sense, you're seeing with this as a reconciliation by line item, we have increased revenues and we also have increased costs, but they were all embedded in part of the calculation of our revenue requirement that is part of...

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Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [85]

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No, that's what I was kind of getting at. So that would be a net income-neutral item?

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [86]

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Well, then you could talk about generating costs. You could talk about headquarters costs and everything. You could consolidate the whole financial statement and just talk about...

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Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [87]

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No. I'm only referring to the fact that, that the slide simply says O&M excluding net income-neutral items. That's all.

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [88]

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Yes. And we -- I think, it's more about the definition of net income-neutral items from that perspective, again, not -- which we don't tend to wrap into that or operating expenses, employee expenses as part of that -- it's just a definitional difference.

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Tayne S. Y. Sekimura, Hawaiian Electric Industries, Inc. - Senior VP & CFO of Hawaiian Electric Company Inc. [89]

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This is Tayne. How we define net income-neutral items is, one, the items that are coming from a surcharge or from a third-party reimbursement. And so for pension, like Greg mentioned, the higher pension costs reset in the rate case were included in the revenues. So I think that's how we define it.

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Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [90]

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Okay. So if I was to then take a look over the course of 2019, if this was a minus 11% in 1Q, kind of what should we be basically expecting because the range of aggregate for that over the course of 2019, although I recognize -- sorry, been reflected in your forecast?

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Tayne S. Y. Sekimura, Hawaiian Electric Industries, Inc. - Senior VP & CFO of Hawaiian Electric Company Inc. [91]

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Yes. So in our guidance, we did call out on the guidance slide, we have there on our O&M and we are anticipating 1% year-over-year, excluding onetime items from last year.

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Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [92]

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Okay. I'm wondering also Pacific Current, can you -- I just want to have a sense like what type of income you're expecting from that? And kind of like what the asset basis, just some basic data as to kind of how -- what kind of size it is now and kind of if you can help us think qualitatively where it's going?

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Gregory C. Hazelton, Hawaiian Electric Industries, Inc. - CFO, Executive VP & Treasurer [93]

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Yes. We haven't -- well, we haven't broken out Pacific Current because it's still early stage. The operating asset, Hamakua, is performing well and providing positive earnings and cash flow, which is helping fund Pacific Current's development efforts. As you know, so that -- Hamakua was acquired in November of 2017. And then we did a second acquisition or investment in early February time frame of 2018 collectively, I think, that's -- I'm not sure that we've reported that, but it's about $130-or-so million in total investment. And they're continuing to look at other potential investment opportunities.

The second project, which is not yet operating and, therefore, not in position to contribute to earnings growth, and so forth because it's under construction are the UH PV and battery storage projects across 5 University of Hawaii Community College campuses. Those are in construction, going well. The Pacific Current team is focused on completing those in partnership with JCI and University of Hawaii, as well as expanding and developing their -- building out their core strategies and business plan. So it'll be a while before we actually start providing specific guidance information relative to Pacific Current as it continues to scale up.

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Vedula Murti, Millennium Management LLC - Senior Analyst & Assistant Portfolio Manager [94]

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Okay. And I guess, one last thing relating -- following up on Paul Patterson's question about kind of distributed generation and large power users and we've seeing this like in Nevada in terms of the casinos choosing to leap system with an exit fee and things of that nature. Is there a mechanism that's already setup for that? Are there appropriate exit fees in place like a major hotel complex choose to what do something similar to like a major casino in Las Vegas has done or have you had any experiences so far in either dealing with that or being able to address the parties' concerns such that the initial interest basically was ameliorated by your own efforts?

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Alan M. Oshima, Hawaiian Electric Industries, Inc. - President, CEO & Director of Hawaiian Electric Company Inc. [95]

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There are no exit fees today. We continue to work with our customers very closely and the associations as well as the commission and consumer advocate. Unlike Nevada, our -- at least on Oahu, our hotels are in a very concentrated area in Waikiki and installing their own generation and emitting gas emissions and going off on fossil fuel. It's not in alliance with our state's policy. And I think we can provide alternatives to that, that align with state policy, the green visitor that people come to Hawaii expecting. And so there's customer-by-customer outreach, and we go to extraordinary lengths with our large customers to make sure that they're satisfied and see the value of staying connected to the grid. But it's not something that we're not unaware of and we are working on other kinds of solutions for our large customers.

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Operator [96]

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This concludes our question-and-answer session. I would like to turn the conference back over to Julie Smolinski for any closing remarks.

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Julie R. Smolinski, Hawaiian Electric Industries, Inc. - Director of IR & Strategic Planning [97]

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Thank you all for your questions and for joining us today. Have an excellent week.

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Operator [98]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.