HE - Earnings call transcript Q2 2019 | Hawaiian Electric Industries, Inc.

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Operator

Good morning, and welcome to the Second Quarter 2019 Hawaiian Electric Industries Incorporated Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [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. ahead. go Please

Julie Smolinski

welcome earnings and Electric second Industries' Thank call. to XXXX conference quarter you, Hawaiian

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

non-GAAP we'll financial to call, describe performance. today's be our measures operating During using

press HEI's on these to are the release equivalent reconciliations Investor Relations presentation and measures. of Our and contain measures posted GAAP webcast website

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

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

Connie Lau

aloha and Thanks, Julie to everyone.

our across great for the $XX.X consolidated year. We our making key plans. line on quarter, expectations our XXXX per with in with and And, strides are share second on $X.XX net in the We million companies. of strategies delivered income of track earnings, remain

will do shortly. we some While earnings our Greg range year, are reaffirming address have the guidance updates, which for we

and to of hard commission our economy stakeholders, utility. are our XXX% a reach working by neutral ambitious to with XXXX. our our goals carbon and Turning Together clean energy we

This goals greater a the much expansive to options. achieve integrated to value, affordable, while and more customer and look including continue ways best resilient energy, reliable, approach. We requires providing more customer for these

generation, RFP enable in us Similarly, at X and and storage, For compare a siloed renewable simultaneously example, the time. services services than of allowing all solutions resources concurrently, evaluate same energy distribution, range will meet transmission needs to our are other grid to moving and grid rather resilience processes. planning and forward us grid stage to process load our integrated our RFP management, generation,

with planning, RFPs. stage storage have alternatives the the commission to proposals renewable we CIP deliver the and had the RFP denied The this grid Through reserve before denied prejudice and our integrated stage our year. for line April results projects earlier that integrated new regulating before customers. Loch and our X processes, proposed In these launch options find the last of better and X value we approach, battery PV were without and assess month. that of battery two These the filed best ability the West this denied in battery contingency

encouraged us accelerate our Commission all emergent or goal. and The to expand to achieve procurement clean has across traditional resources, both energy

stage commission, from guidance Following have our the expanded the renewable of X energy scale dramatically RFP. we

and megawatts RFPs, we're renewables, procurement grid and than renewable hours energy by services, filed more gigawatt our up XXX storage In this utility. about final US largest XXX recently of launched seeking to a the making among proposed ever of integrated

expire. fuel. this storage coal energy In accelerate from move renewable additional services from away XXXX, procurement will contract will grid plant our The and AES fossil the September

to a no faster toward plant has plan propel the as XXXX oil-fired this on We XXXX. our XX%. And to renewable even portfolio also later neutrality the potential exceed us XXX% clean goals. state milestone and track our than retire We're energy procurement to of carbon Kahului power

in state particularly add land, not all it's just energy that programs. our Hawaii take and demand the about together efficiency said this a to in and we important work we engage whole limited As will like it's utility; before, response with this renewable community, resources

while for will X well. depends XXXX, new come example, between online on hope projects that XXXX timing For and as stage other is the factors under contracted community projects our acceptance and

move be context. energy our Hawaiian achieved aggressively, progress developers larger Electric can community only a forward will in but and renewable

for out work the clean to elements. the issued principles, guiding collective energy and proceedings. regulation on regulation, outcomes, the including our decision framework phase to and structural its Our find conceptual for of first PBR, best extends In achieving PBR, path our performance-based May, performance-based evolving goals Commission goals, the laying the

X, has centered PBR goals, regulatory affordability, reflects integrity including phase Commission process. reduction, the the order electrification well conceptual the greenhouse Commission throughout the of strategic and distributed integration, energy consistently Throughout containment, importance and the administrative guiding outcomes the our and has thoughtful maintaining with principles approach goals resilience. own transportation, the effective Commission utility. three the of customer underscored the gas and that customer The the approach of one of PBR outlined the balanced financial pursued engagement, cost The identified along And for align proceeding, is with efficiency. appears gradual framework resources, in

in an As specifics PBR will mechanism are workshops, and December each and the anticipated timeline a the with as The the discovery, sessions, for of be while, group hearing, by series X month will in concluding we proposal, last phase with working phase really of Commission the a evidentiary and a released X, take and details, devil decision followed said shape XXXX. worked in out. Commission brief, technical

Commission stakeholders in unintended has continuing with continue pleased it one the to phase and risk reduce with work out the reasonable from the will details the We allow a opportunity the X. of to other set to consequences. forward carefully phase develop believe and process look the approach and collaborative We're

rate will for this case, the our Hawaiian Electric planned July timing which later Oahu next. I’ll XXXX mentioned filing or briefly month be here but was for likely

reporting working the benefits proposal advocate. that delaying are XX August with ERP filing and process and initial the have sync incorporate Resource PBR tracking phase our been with Enterprise X or to consumer the We Planning to we up due system on

to of operations. efficiency is everyday our new key increasing Our platform

increasingly full benefit ramp the a annual with ago, launch recently planned. system by than becoming customer XXXX, new proficient We’re since to so committed months year up ERP we XX the its and earlier to level

lower move interest rate our Turning results to higher for one continues costs, including environment, was due for lower in volatility the It the American’s execute credit were commercial portfolio driven This includes relating new than although non-recurring bank, as costs to quarter the investment of well the also as certain American to exposure. in campus. our quarters. well, recent to to impact by

basis, solid peers. X.X% year increased lower net While the well was to due premium portfolio. to the in it margin a above date interest was investment quarter amortization On for a

improved making. portfolios. the completed is on already space, focus faster relationships teammates campus in and its new American for quarter, customers, annualized our strong to non-branch including the confident consolidating its X.X% American’s most workflow seen quarter helped move American the customer second across future and deepening more decision into second and drive new of loan increases during will of its the community. shareholders, benefits with that deliver even We're from its benefits in growth

I'll outlook. results, Greg quarter financial our second Now, Hawaii’s economy, to Greg? and XXXX ask cover

Greg Hazelton

last we remains Tourism economy versus year's particularly relatively the softening, we June. The have arrivals significantly in Connie. seeing rate first of Thanks, following in the continued in the year. healthy last although slight and and some X.X%. spending, the steady been total tourism half highs record the nation national below in are grow, reached lowest first the to at Hawaii's fifth declines has unemployment have X.X% quarter since expenditures rate stood peak of seen levels. Hawaii's in although

visitor June were to expenditures year-to-date up while down the compared year, X%. arrivals were period last X.X% same

expenditure the we Some reflects international the of in appreciation dollar decline given Hawaii. have tourism here

declined and GDP X.X% fundamentals Hawaii median prior homes slight the positive and by housing single-family Hawaii XXXX. appreciation prices condos, X.X% with for estate to and first XXXX. relatively of expected We've seven rise while from The outlook in year consecutive for for in homes sales X.X% economic remains declines both remains despite longer price positive of real trend term half remain were the state's flat. the years sound, had volumes condos, single-family

at QX versus results, the year. over compared $X.XX in year $X.XX share year’s utility at the consolidated our declining other helping grew earnings the earnings, and quarter, per as to the grew Pacific quarter. were company to last of offset Turning Current’s the the bank, for segments holding positively operating net out slightly to Year building prior X% declined earnings loss consolidated share per while the to income contribute and cost continues portfolio platform.

for for the utilities HEI’s the page, right highlighted ROE to GAAP strengthened last months consolidated interim year ROE I was rates the on on all more station in for through the recovery full X.X%. that or Schofield As place XX and new versus generating shortly. MPIR. the touch improved at with ROE Utility last months side the recovery XX hand three of the quarter, project mechanism on Bank down detail prior major will and in the quarter

maintenance reliability On follows: circuits of rate income the as renewable from Hawaii revenues quarter in XX, XX.X and are lava Electric for in performance system by was O&M in after-tax and incentive X to penalties. offset Electric These due higher maintenance expenses, O&M investments million response Island partially energy expenses Maui X were increases mechanism XX.X million preventative in most drivers the Hawaiian reliability X costs the items increase million were X XXXX. lower generating of and million earnings the eruption for and following revenues increasing the from resulting XXXX. offset depreciation primarily at adjustment slide more underground of improved station second customer the higher million million efficiency of on preventative X to and in million to partially net repairs. compared integrate Schofield significant experienced project. utility calculation absence net income to inclusion XXXX outages rate and MPIR of The The largely due items expense higher in by overall in

with credit, personal portfolio. from in loss bank portfolio net the to last for same amortization higher the growth, higher the lower portfolio one The net income and loan to from decreased the in provision both as for due additional XX, commercial resulting quarter, losses investment the as loan XX premiums reserves to and quarter primarily increased second slide for securities linked increase decrease down of loan reserves on unsecured income, million, of reserves to for was interest earnings quarter the compared quarter year. American linked lost Turning the due well

loan real of the of decrease estate credit by income credit net reserves provision and portfolios. in Compared quality for in in due the and personal higher provision driven lower XXXX was unsecured to to improved the primarily line quarter for commercial second equity a the losses portfolio for the XXXX, home release of loan

on slide profitable for second Return of the in Although quarter points same American did from net down XXX profitability and on the XXX shown assets remained XX. was income last points basis in the year. first the lower ratios basis quarter points quarter the impact XX basis the in quarter,

was also XX.X% American’s return prior down versus on for quarter the [indiscernible] equity the quarter. periods, and linked year the

compares However, favorably that to still peers.

to costs accident impacted ratios to for date one-time these and costs. and year quarter the transition Increased costs properties carrying occupancy for due the

XX from points XX fell remains and XX, of is cost continues interest the in linked the quarter and interest basis American’s income, slide margin our favorably environment. margin, points. earning the quarter class basis On driver X.XX%. rates, at ASB’s net in peers our remained asset due core net of slightly set. date, of to while yields Interest to lower of decreased funds rate second to peer ASB’s than in despite expected to net cost to the solid decile interest lower compare points X.XX%, top funds best is interest Year XX only the basis over

The linked On X% slide linked million about income investment amortization portfolio the same of quarter premiums due X% of the to up that decrease from the XX.X last to interest quarter year. securities the mentioned higher compared quarter was net I in and XX, versus down was earlier.

year the were yields same interest to last in XX than quarter on year increase net contributing higher year income. basis While points

owned up income, quarter. due from quarter million QX fee the year insurance increase XXXX. in The XX.X prior in X.X income quarter the mortgage bank debit up banking, due to the increases prior linked and and quarter was million to of versus proceeds received primarily was linked primarily was X million the while Non-interest increase year life card from approximately interchange,

loans June loans, Loan XX earning credit, year. contributed We solid during XX, deposits X.X commercial the all billion and equity X.X% and our annualized Total quarter. up still loans June our of billion portfolio, home from digit target residential Total the both low as to were deposit increased were XXXX. X of mid December core of single With asset XX. X.X% growth as lines growth growth were to expect annualized of with across and XX, December for solid gains. meet from

sound strong the commercial in On credit real slide prudent economic first and higher quality XX, despite credit are our residential due a risk of remains quality very half remained year. healthy environment. management our in portfolios to estate portfolio the provision commercial stable, and of The the

quarter Second reserves reserves million X.X growth, to linked credit, million for million increase second quarter compared loss was to unsecured X.X due one personal the and loan quarter of for was the for increased over in of the loan additional X.X Most provision in increased the linked XXXX. quarter loss reserves and the commercial portfolio. portfolio

off decreased during portfolio credit points loans XX to decreased the its the X.XX%. basis versus American points, basis quarter, ratio as just XX from continued the net while charge manage well, non-accrual to quarter linked conservatively

American’s Although XX on improved greater year during on reflecting quarter ratio points date reflecting continued the a basis bank's basis, basis, did to -- basis efficiency. the date XX efficiency increase points a it year improved focus on to it

occupancy year efficiency in nearly from point from year the XXX ratio. Those chart despite XX this to occupancy carried have costs the a The the the on new impact transition see costs improvement slide the can is on to the as increased basis you date campus.

basis properties. of costs improvement will as its bank target the we to year in points by ratio. Although sale our of the about continues XXX offset in through exited these per XXXX year complete later gains efficiency be The

slide, for the next utility updating the year. to our Turning we're projected CapEx

We level denial Connie of CIP the have Loch CapEx million, our XXX and of prejudice approximately about the year. As below for to our expectations touched the million battery project the CapEx on XXX. XXXX earlier, reserve of denial expect battery West guided contingency the without and energy regulating XX reduced storage now be project previously

the to as resiliency battery the well close Although and XXXX, the of across for already investments million was and XXXX CapEx to modernization planned the such grid XXX as help reliability gap. as close storage we expect acceleration project projects the

base The rate million growth in reduction will impact CapEx XXXX. approximately not XX expected in

rate Although we to will realize expectations. million expected XX is an when than impact in lower be XXXX previous basis about

integrate reliability however, more customer amounts as We growth investments of expect no in system. projects, change our our are needed base to of renewable long-term rate resilience deliver forecast ensure and increasing options,

of roughly in CapEx million XXX more expect to in XXXX continue We or XXXX.

Turning $X.XX reaffirming to slide -- guidance XX, per we're $X.XX HEI’s to consolidated of earnings share. guidance

range some At remains within While to expect well remain guidance overall to $X.XX $X.XX assumptions. range have the our unchanged, to we key we updates the year. for utility, EPS do the

expenses for the of as renewable previously the higher This be O&M the and reflects levels, denied procurement the forecast as XXXX our pension and that above the well which year excludes include expansion expenses and increase above broaden and of now workshops phase also XXXX efforts, to We to projects, energy the year X% second the modernization one-time for items. in for grid efforts half phase guided customer extended significant benefits, resilience of and enable X% X% PBR. write-off environmental in the unplanned initiatives increased reserves X which for of remainder efforts reliability for and RFP timeframe planned first

expected are at from to performance. revenues end overall will project, level items than Schofield year planned better including be come O&M offset other that higher AFUDC, by The in the

the year As result, within guidance well a to end expect we utility its range. the

high to low the given end be end expectation at the range, the to margin bank driven the by and of earnings interest outlook year. to at rate range in is net of the our be expect the the $X.XX guidance for This the provision be change low $X.XX at range. for the for of We to the interest end

Although sales as in below gains year the and are expect offset on particularly, occupancy meet carrying. X.XX%. currently currently the year We from properties, is we its later target of the bank this which for costs transition asset exited we expect will do target campus to of return

remarks. closing will make Connie her now

Connie Lau

continue of across through advance a our for better our summary, strategies catalyst Thanks, to Greg. we Hawaii enterprise. mission our a In being

pace neutral clean carbon energy Our utilities our and economy have towards accelerated goals. state's XXX% our

As resilience. affordability value, reliability, strengthening we customer increased we're delivering ensuring and do so, on and focused

Our shareholders, continue a value bank customers, provides and for with to delivering to strengthening strong communities, banking platform easy, and and efficiency. continues our deepening on making relationships focus customers

sustainable [indiscernible] existing and is investment further assets evaluating optimizing opportunities.

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

now questions hearing we your look And forward to

Operator

from Instructions] Bank our And [Operator Eric of Lee first America question Merrill of comes Lynch.

Eric Lee

opportunity? which for light talk than term know CapEx a first that more could you've that storage there's the able just I in Maybe opportunities? [indiscernible] forward see mentioned longer opportunity but on of investment you for to terms we about offset battery do XXXX a term talked of longer being off, just CapEx, in need where mainly about basis, that I plenty since you've know actually the the here,

Alan Oshima

over turn of respond. to to CFO utility Sekimura, Tayne that our the We'll

Tayne Sekimura

Hi, Eric.

renewables forecast term there out, terms for infrastructures X with will RFPs be We're customer investments and integration also our in more looking the stage renewable to provide XXXX more need of onto In support to going at our for of longer more grids system. our beyond, options.

modernization We're we models advance types is at resilience. rapidly in at, particular how to what our and already at investments address necessary to climate and addition underway, well. that planning efforts, resilience, of of in can projects other more to project how and are incorporate address that our looking change that light as into X we're looking phase with that also looking grid on So we

speaking, looking of years. future the generally the are, those things kinds at So we're for

Eric Lee

about, then -- mean, the with that to is ability upon success hypothetically And the just front? just mean, renewable can renewable to I presumably, RFPS. on maybe since, touch of similar talk would X supportive right, of we this the X stage stage drive I further be

Tayne Sekimura

Yes, X most definitely. phase talk about Joe, do for want schedule the renewable. you to the

Joseph Viola

Yes.

So, Part final for of of The on that, will grid those that both -- now we RFP requests the for had those. that commissioner there's our mechanisms to the renewable rule recently review soon. piece proposal expect forms. deadlines updated incentive is proposed But submitted we kind those. of energy performance acquisition our we've process rule they -- be will and the but will no commission for services fairly specific just on

Tayne Sekimura

Yeah. And in did those if an stage job you X, commission record approving amazing recall, time. at of the

So be that with be able renewable will that move sustained. community wanting whole we're our to momentum hopeful to quickly future to

Eric Lee

like for briefly just safety the capacity and potentially the plus what of be meter That’s in I started. assets That's asking [indiscernible] what able terms to like the storage grid behind RFP, you there an disposal portfolio And exit it just solar for me. on to with the would the from just proposal contract XXs, what service would is that -- be sounded of for.

Alan Oshima

right. That’s

Tayne Sekimura

response Yeah. IT contemplate does demand behind the meter. aggregators

Eric Lee

a regulatory to prior, minimize lag just believe, protracted decision I given queue. you December lastly, and what a of before the expectations then ‘XX Can in decision, for question XXXX I you might the about first see for expectations this one you to talk meantime? implementation be more to, now able to quarter about relative do And said delay to it PBR,

Joseph Viola

This Vice regulatory affairs. is don't President I that delay. it’s protracted Viola, a say I'd know again of Joe

a going in the process commission consider important. Connie as mentioned details, pretty we to be parties think which of that earlier, were very is actually to the I all the allow developing would supportive

us to has set a forth So that. process reasonable we commission the pretty to think do allow

question of part other the was? And the

Alan Oshima

to Mechanisms lag. up make any for

Joseph Viola

least at current but be adjustment reduce phase annual rate proposals one approved revenues to the accrual supportive to have a Yeah, Commission how lag would of switching mechanism ramp seems of what's the -- X, our of cases. to in an in between we'll potential that the has that of, off see in

Tayne Sekimura

all now you There's that if the adjustment PBR, nothing as that, to the now referring are balancing right because will remains and mechanisms, we account XXXX. project because lag be revenue in PBR the that place. in decision recovery mechanisms, interim Eric, expected forward, the including of changes, beta mechanism, still major really But, move the existing

Operator

of Our comes ExodusPoint. next question Levi from Andrew

Andrew Levi

the be on to want I daring. questions I want some ask to bank.

Tayne Sekimura

Rich All touring. happy. is He is right.

Andrew Levi

interest year, go just of Nothing how XX of kind the into in level, the too I at or just rates more rapidly very that could year. technical, with but something, was on guess first a of, I and you high detail yield just so curve, kind flat a rest XXX affect dropping obviously may the

Rich Wacker

Sure.

quarter second affected on of the premium dramatically backed fairly amortization it because portfolio. the securities mortgage first, So in the investment

the the assumption the on rates to So, comes as you securities premium have timeframe interest rates the and in, more prepayment on dropped, amortize so shortens those quickly.

million was that on that actually a first swing line. so And quarter income from interest second $X quarter to

hit they'll We forward. don't us expect we now. it that as further shorten that So like go much

relief of So be priced in, lower little there. necessarily existing bit we're production we a But at the come so as and seeing on new the book coming loan new than lower loan rates. production we'll will get

so in additional And feather pressure. some that'll

deposits rates the now. portfolio to new as will we might obviously the up then at investment that do lower grow than on make we And been able come investments in until we've

creates we had an So and it one maybe expecting come rate cost, the more. into increase just year opportunity

year. it’s a the a might been coming so And tailwind headwind into against what have

Andrew Levi

expecting too. was I increases Yeah.

for difficult it’s So us.

Tayne Sekimura

is as big me what’s you Andy, but a have to get levels capability then on a that people what expecting some mortgage, just to get us as wave Rich upfront, where rate premium for FAS was or may the in refinance quarter because be higher to don't of in prepayment let very they it start get on XX the you'll that the at reasons. prepayment there's but would a that class various elaborate bad about amortization just too at happened side said this not continue

it's straight not a why that. on curve that's line So

Rich Wacker

bump guess, mortgage think one silver just I a news. so of so on those, bright around is point. not it's some in sale the and all it. the on partially other spots potential some bad you see a bit helps offset production There's pressure, The gains little of that for lining, refinance Andy, Sorry, we

Tayne Sekimura

we've if talked of real at also you Yeah. the of deposit huge one are the And advantages about on their is always basis, American looking comparative base a funds. and core cost

that And banks. so banks less some have other might good a funding But that than of be down half look cost the as seeing of of faster. cost pure come funds if you base it's of don't funds their of deposit at the base American,

So, basis it's what, XX now. points

to real bank. a of that's So, benefit earnings stability keeping the the the at

Andrew Levi

guess, And first X just you million that you that's that that almost talking I quarter. don't every a true-up, have were so true-up so I like a about, understand

Rich Wacker

That’s correct.

but be dramatic as… it shouldn't do, You as

Andrew Levi

got I it.

of Okay. what, XX? And June marked that as was

Rich Wacker

Yes.

Andrew Levi

But Okay, of up to so look July, down end be the of again. we in trued rate at the can like see happened anything guess June, that I in would guess, rates where cut I general, or I kind moving were.

Rich Wacker

Yeah. And don't always a basis. priced cuts of wait some it gets in on forward it the for rate Right. the and markets

Andrew Levi

going math. Okay, because good some at so dumb now I'm I'm dumb math, do to

about have built you look just you of I gain kind actually, because how in of going. months how us and $X.XX any or to of go is that, are before step -- the on give just if you're idea year-to-date, campus, sell back the year get then can to the at do campus, campus, I let in you timing is $X.XX from going to sale where that, old So five me the process you could the

Alan Oshima

one, we -- four our campus. So moved have different of into we properties new out actually into

leased of one standpoint. a of May were were and out and at two The of two owned. so, And standpoint those, of we were them from end leased the properties, cost physical

through property, out third carried actively being are of quarter. The then the marketed. two the of second cost physically but And properties remaining the end lease we're

But hard of is we very and the quarter, happen also are One slide but in year. that and call. the contributes gain Which see. to next that to this other, that it's is it the property them confident most year. close we'll to should may process, that It's

Andrew Levi

the to just have or Okay. on And to announce this. you it close you recognize gain to just to have get

Alan Oshima

only when the will We bank. in money's the recognize again

Andrew Levi

to Okay, so back math. my now dumb

at like second to year, throw million that the if gain where in you of year-to-date, assuming in of to net half then, do get something look XX are for the the gain, bank of have to $X.XX the the So you the low again, end income and like or we'll you guidance. kind possible, And the in quarter did a fourth in same about you kind quarter. of number? do the get then at the to I then what XX that million it asking? How XX.X you and in quarter and the million you first looking guess think did I did Is is the you I’m

Alan Oshima

will provision that be made course, is -- the line. of some statement. contributor biggest normalization would have the it not we Of No,

second the second first is We other that we would for property principally. seen to have the expect are commercial year quarters for date that been factors hot you've half. in inside one and the but related the to rate hotter than There

Andrew Levi

in $XX million be, That done two don't ever recall. I you would Have quarters?

Alan Oshima

and it. we So didn't quarter those each have fourth you quarter, and quarter if on first took XX properties gains were in

Andrew Levi

Yeah. I’m But the including gain XX that million. in

the So I add at the stripping beginning. out

at So year to gain I'm the to be million? you XX date, still where plus you need giving you are

Alan Oshima

Right.

Operator

Our Paul comes Associates. Patterson next Glenrock from question of

Paul Patterson

in that wanted go sort regulatory get the be go never phase order to want that guys seem just items a of you about along savings how with I might terms but everything they company's not dividend order. how just this X of I So, they And didn't expecting, up little back of go where are were that. sort But your I number wanted a more just you be. several to the way. big And there phase I all or you and, positions, elaborate still a to and customer things the follow was just this were feeling seem wondering I if didn't you guys X about decision, one the of be see there implications you mean, to we bit realized just as know, everything, that day you in thing. could are financially to to on guys PBR

Joseph Viola

is didn't X This like that feel phase say way. our Yeah, we that Hi. go Joe. the order can't I

little actually the time present said going consistent I with with bit they're that phase things discussion X to to we throughout the more, our intending think, pursue phase we're The elements at on they take the weren't was in more consistent things pretty a this decision are framework. time with things agreed the commission that to order. [indiscernible]. X, with they'll the develop, right of pleased bit docket, I the focus regulatory think It are little a

So say we against us. it I went think that can’t

Paul Patterson

clear the I'm Well, again, things order, mean, I year reading don't I'm grid to I one, that, saying, it customer for is the lower which they buying were would go big into savings thing. of I didn't place. they MRP one to like, be like grid I'm when think five as guys how the thought not take seem period previously when you mod I those initial seem and else, things it's up that. well this rates can I sort of there everything are And mean, sort to three to a me or and mod I follow reconciled. to the day through dividend, I others. wanted the you sort about follow might that guess of the like this MRP, what do environmental, the on went take Okay. way. of as day your discussion referring be and year the mean, Also, one want what the is seems these desire to

Joseph Viola

take a company's the between consider three the to So couple just, be. was the difference years, we going just we a of what change would five five to those, would know to position we to that years, need were

were that of plan were outcomes interim the so in in elements we the going the manner five the pursue a multi-array of outcome, other year long adjusted, as achieve us allows to So conditionally period. supportive a to

need to are a opportunities a see to see revenue there this other have decided again, approach, productivity There attributable thing. In what customer is yes, and terms of elements will the factors comprehensive the are to other will involved, be factor. framework, regulatory will the achieving this we’ll dividend, for we be, is what

and and So, it it, what's think reasonable least we going Commission verdict a good, in the says feel think, approach? pretty out really has their guiding they're principles on as is it look I the at to is, factors I the

desire there's we well. Yes, lower as a desire for share that rates,

be So, how pieces work. will lot this determined us see need will of that for to to again, a

Alan Oshima

Hey, is Paul, this Alan.

products the realize level, for that, my new savings, regulatory from internally. of revenues. realized expect transforming, think operational realize company the think yet been only is We lines to people other But couple transforming the not benefits has side haven't just have services, transformation years the and a but I to I all now. of of we

preaching we're think model. have will that's And old that's PBR So discard it of it's think I at utility getting in just not the business the past. assist we a the what house. utility of And us looking to. in I to through where And lens

Paul Patterson

sort how follow-up that's for of the Well, that's should of this when impact so and to we think else, I mean, rates. awesome. everything wanted you're talking on. all RFPs I opportunity mod, about the on what And about grid sort

are majority, some they're fuel actually some How and in sort this is which we're in about doing sort something the investments, Hawaii? what of guys have So of are about with grid have we you your given should when come terms to mod guys impact, net up savings sort. certain that there situation in guys CapEx, the or of unique expectations in that these you decreases lead think utilities that something rate the rates which or you what in hearing in cases are, come not of and the

Alan Oshima

So, out updating parts. a rate Paul, of customer we're add to it moving bill. our then impact. many and the good move It's thing, fall see question. because models When complicated, all you there's so one how very And thing another does you to

get as analysis. some we So that be new as moves moves as final these updating inputs reach we're stage, we more to forward, of we give forward, should the and all can renewables grid seeing results have the online, things dockets of those PBR transformation so as

Tayne Sekimura

off we savings a in think move costs, renewables, you remember, big on side, to as the just And obviously, generation Paul, that no to of I our and is fuel has energy general, the fossil customer which energy.

Alan Oshima

$X.XX levelized about will relative in be coming that fall. on at cost a RFPs new It’s the to our

which significantly on based higher So is $X.XX.

Greg Hazelton

we fuel, Which out we're of after have burn, integrated have savings all good we doing we are weigh do give and the all do. there And the then then on and choice, which to our to investments to is grid maintain all to and to is what thing, energy, then in capacity and have the good a resilience. to news, right, allow have fuel investments intended and reduces that's on to we customer the significant -- the this to be

we're and So model developing that's the that updating.

Paul Patterson

said. of dockets these Okay, with. what And up as see quantification, get interesting and I be some guess, we'll sort progress, as it to that'll you comes

follow this, the question, curve? Just apologize about if impact talked we et bank’s How about on we impact term through should curve, speak, How be the but cetera. I on we weird this yield what would kind so about seeing I the up, bank missed you should to of I if curve the sort XXXX to situation yield continue? guess, of Andy's think these the conditions yield think keep longer impact if

Alan Oshima

bad, on costs, produce the the stimulates time maybe deposit able the right curve and Obviously, because out hard little now we'll if you bit I markets guidance. settles generally how because out, Lower curve. difference see on to is think of pressure and Lower and growth, you of more settles steep bit we on can is aren't into over the performing. we little not banks. a loan lower money steepness the give creates and less make the for more activity tell back it be also it's money a and volatility flows flatter challenging to yield the banks,

variables we and the it. as we'll And guidance a So we'll year. I of you get give end think, lot the a little in of to there's out watch more how it plays

Tayne Sekimura

thinking the to jeez, longer, are started that the was when are that going And rates of rates Paul, my time. which period if rise, rates from low or before long perspective, that, was rise, right? for rise, everybody remember they year were period we I'd add kept going when going which to a is didn't, until so when if and to you period saying all last low a for

during again, And remember you bank's of So continued timeframe, because situation. in kind well, back deposits, they've a if great perform quite they earnings period. throughout the we're got through I think that that base, that funding with to earnings the solid

Operator

of comes Morningstar. question next from Charles Fishman Our

Charles Fishman

to yes, I And a direction going a asked from I'm Paul same and lot them. questions he Patterson was has of coming ask

be establish utility? might Let other custom customer me does a to that what centric establish utilities big that their be? a have a for utility approach In to thinks peer to me, is words, bondholder one more. benchmarks what might financially metrics A utility. US In I health healthy what groups it phase and There's customer between means of a try not a utilities fine is give utilities, a the and lot of X, gap healthy healthy there any think what other to a shareholder financial a a having and working comfort. group financial are

Joseph Viola

one well. So centric is Commission the workshop And, as principles, understand of modeling. and I includes guiding the question, customer specific think, this approach, your three integrity The right. get Joe, to in is Financial one broad, the of approach November, again. established is customer financial on But is, other centric again, two. is that it's we'll to have I value customer a

informed financial is analysis. some of type So made, that decision we’ll by be

kick workshops changes week of be really there couple understanding X, So that setting part benchmarks next phase and over of financial of the process. the I think that's be where And would proposed least of seven months. implications at we're series off a to starting out next certainly will

Tayne Sekimura

workshops, Charles, phase coming represented bring part markets about the be on to capital the this lot of also of integrity the the board an renewables financial time the infrastructure there utility’s in advisor a the wanted access the Tayne. to where markets, did of to and support add talk due that a needed our on X as importance to I commission is that. needs to to

a And so of advisor one that. the about came actually that to discussion workshops to have

Joseph Viola

of capital cost to and quickest continued the the projects. and to renewable XXX% the in access way all funding is get customers’ to low of the and So It’s facilitate renewable interest. integration

capital is access appropriately. capital, that metrics, investment appropriate stated with as returns capital, can and So have that they be about priced cost so the consistent low to grade to

Alan Oshima

because element Let me more it's add our in jurisdiction. one important just so

providers capital we think our party important providers those I to in renewable future, there's to to it an move to third our based get awareness as increasing how for upon is financial needs, their getting integrity. access

parties third are So our get their projects. for in access cost can capital utility low financial integrity, preserving behind the all the otherwise, to they

Charles Fishman

on I on really very PPAs. that's your balance are Yeah, point sheet. they leaning the mean, a good

Alan Oshima

growing other and And docket realization And coming Absolutely. many understood means. of PBR think a I that, the people there's not that. through and it's

Charles Fishman

part process a consultants, consultant phase the of this he still during be financial Will will X?

Joseph Viola

in what invite. support sure their or plans not commission the terms We're of who they'll

Connie Lau

has affordable party and to go on gives level piece a that slide if IP the on We're third important to make whole which high future, to just point is calculation point was just capital this the I the third renewable Charles, demand for capital that of advanced talks to and also area providers. D&O it societal going the out in party from Connie. customers, in you cost really for where X moving Hey, the a that about outcomes five, we're the aggregators. Alan way referring our formation. recognition it that, phase response utility, for is which now but That's

a So, very important piece. that's

Charles Fishman

there didn't I in formation that Good point. see good capital that Okay, point. box.

Operator

of Michael from next question Weinstein Credit Suisse. comes Our

Michael Weinstein

respond of Moody’s equity I'll to and I at was there phase X, least to in dead briefly actually, and PBR X, the Yeah, the the investors investors. workshop represent interests and, Charles, the was also for in that

workshops. So, interests making these very PBR in and with Chairman conversation that investor are represented just in interested I a had Griffin, sure seems Jay he

goes. that where see we'll So

dividends think wanted ask, I thing Like, means you to be might And wondering any? which that ideas what do going I you do satisfy the can had, own maybe ask Patterson your is, customers provided that requirement. sure actually have what of dividend? to if same to some kinds I'm you, Paul guys of I have that question also customer was The about their by just you asked,

Joseph Viola

this I customer and So now. Massachusetts think Actually, to understand the the Joe, that framework, it's is dividend, of be I in regulatory again. part right

not it's new. something So entirely

the benefit part cases. the the control control I framework realizing notion between is and that the utility’s cost expenses, read of will PBR cost think in actually will incentivize

of upfront down bit there'll a during is well. benefit little payment there those the little of containment a achieving payment the bit a those on benefit realization of a customers, will benefits. cost So by to period, again, be interim the as utility And

Michael Weinstein

rear this their are question ugly have trade on again, you as -- economy the wars, tourism start or at any on head the the Another or is from seeing impact anything to I they else point? once

Connie Lau

of driver is not arrivals, the holding expenditures being Greg it the from economy, are it's the and bit, for we've numbers through up, here So in the federal happening and a little far, tourism, expenditures. but come what's to impact seen still government over Hawaii, tourism major down had gone also yeah. then standpoint

Michael Weinstein

of kind it And insulates inverted yield from understood saying is or the curve. yield it's deposit you're a I what Great. that the customer basically flat base kind your of curve bank about

Connie Lau

don't know that. I Yeah,

Alan Oshima

helps it that to Because in I our wouldn't of But have costs deposit and actually. insulated. we've on to funding able cushion Yeah. say compared us kind peers. all markets, a costs been our

then and higher markets have there the you flight costs. all and more yield weather in you're going had better if us helps the room it So curve, the you to

Connie Lau

strong about very you that an bearing interest a checking example rates. have think they by might changes that and is it so Yeah, non-interest base impacted help is not that in

Operator

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

Julie Smolinski

Thank and great Friday. joining everyone, us today you, a have aloha for Happy weekend.

Operator

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

now disconnect. may You

Hawaiian Electric Industries (HE) 2 Aug 192019 Q2 Earnings call transcript