Hawaiian Electric Industries Inc. (NYSE:HE) Q2 2018 Earnings Conference Call - Final Transcript

Aug 03, 2018 • 04:00 pm ET

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Hawaiian Electric Industries Inc. (NYSE:HE) Q2 2018 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

We will now begin the question and answer session. [Operator Instructions] The first question comes from Julien Dumoulin-Smith of Bank of America Merrill Lynch. Please go ahead.

Analyst
Julien Dumoulin-Smith

Hey, good afternoon everyone. Good morning.

Executive
Connie Lau

Hi, Julien.

Executive
Greg Hazelton

Hi, Julien.

Analyst
Julien Dumoulin-Smith

Hey, so, a couple of questions for you if you can. First, just going back to some of the commentary here on the capital spending for the year and more broadly, just, what happened in terms of just the trend here for the balance of the year and should we be a bit worried at all just with respect to implications on forward years at all.

Executive
Greg Hazelton

We don't think that there's any implication for the forward years and we've maintained our guidance range in the $400 million to $500 million moving forward. The delay in the West Loch PV project has contributed to it some. We did bring Schofield in under budget some, and as is typical, there tends to be some scheduled delays permitting some technical issues, which allow us to fully deploy, which allowed -- didn't allow us to fully deploy the capital. We also had some work interruptions, as we experienced the lava flows on Hawaii Island that had delayed some work as well. So again, I wouldn't extrapolate from that to future years or future periods. In fact, 2019, we'll see some continued investment in PV -- in the PV project at West Loch as well.

Analyst
Julien Dumoulin-Smith

You preempt sort of the next question and how should we think about the volcano impacts from -- an impact year-to-date as well as prospectively for the balance of the year, maybe described in terms of O&M or ROE impact and does that normalize out in the subsequent year? And then similarly, I suppose, what kind of capital investment might be required here, just as you think about it.

Executive
Greg Hazelton

Capital investment -- the capital investment was related to the lava lows, Julien.

Analyst
Julien Dumoulin-Smith

Yeah. Just in to the future periods, how do you think about, shall we say, reinvestment needs created from the lava flows?

Executive
Connie Lau

So Julien, let me break in here. The lava activity is really concentrated on the Big Island of Hawaii, which is only about maybe 1% or 2% of that entire island. So it is not a huge impact on our consolidated facilities. So that was the reason why in my remarks, we said that we're not expecting that the impact is going to be material, even across our entire enterprise, including the bank side after the 2014 lava flow in the relatively the same area, the bank actually stopped making mortgages in that area. So the exposure for both companies is relatively small.

Also on the utility side, some of those areas -- residents have had to have been mandatorily evacuated and people are not yet -- not moving back into those areas and so we will likely not rebuild those portions of the system. We're looking at some other ways to serve customers that might have been cut off