Hawaiian Electric Industries Inc. (NYSE:HE) Q2 2018 Earnings Conference Call - Final Transcript
Aug 03, 2018 • 04:00 pm ET
included a symmetrical fossil fuel risk sharing component for utility generation.
Variations above or below a benchmark are shared 98% for the customer and 2% to the utility and the utility's annual upside or downside is capped at $2.5 million. We're working through the details of that mechanism now. At the same time, the commission expanded the heat rate deadband in recognition that greater operating flexibility strengthens our ability to integrate more renewable sources. We continue to pave the way for more clean energy, and in June, applied to implement the first phase of our grid modernization strategy to enable more renewable generation and more customer options.
We are pleased to be receiving national attention for those efforts, with our utilities named Investor-Owned Utility of the Year by Smart Electric Power Alliance and featured in a Verizon ad, highlighting our use in their smart sensors to integrate more rooftop solar. We were also excited to bring our state-of-the-art Schofield Generating Station on line in June under budget. The flexible efficient facility runs on biofuels and conventional fuels, improves Oahu's grid resilience and reliability, as we add more solar and wind resources. With the commission's decision in June, Schofield also became the first project approved for recovery under the MPIR or major projects interim recovery mechanism.
In addition, our community based renewable energy program is off to a strong start after Commission approval last month, with applications from organizations seeking to build community solar facilities already exceeding program capacity on Oahu and Hawaii Island. During the performance based regulation or PBR docket, we are working together with our commission, the consumer advocate and other stakeholders to build additional performance considerations into our existing regulatory framework to further align it with the state's renewable energy policy.
We believe this docket will lead to a gradual evolution of our existing framework, rather than a wholesale change and that the commission has designed a thoughtful, collaborative process that recognizes the importance of avoiding unintended consequences. We see PBR as an opportunity for our company, as incentives may be developed to provide revenue opportunities for investment in services without completely changing cost of service regulation.
We also view the docket as an opportunity for all stakeholders to align on what is needed to achieve our collective goal of 100% renewable energy, including a financially stable utility and a safe, reliable and resilient grid. To that end, the first technical workshop among stakeholders was held late last month with good discussion on goals and desired outcomes for PBR.
Turning to the bank, as I mentioned, American achieved its second consecutive quarter of record quarterly net income, reflecting a healthy Hawaii economy and good operating execution, while the bank continues to benefit from lower tax rates due to tax reform. American continues to maintain its low risk profile, strong balance sheet and excellent funding base. Along with making banking easy for customers and building deeper relationships with them, American's new Honolulu campus remains a key focus for