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#One of our favorite things to talk about, actually.
Thanks, <UNK>.
So, <UNK>, I think you know that we continually run that analysis, and our Boards have actually charged us with doing so.
But in that analysis, there's many, many factors that go into that discussion, including the fact that Hawaii is a state that has a stakeholder statute.
And so, we have to make sure that we consider all factors, not just the financial factors, but community-based factors in those analyses.
Having said that, we will continue to look at it, going forward.
You probably know that some of the factors, obviously, have shifted recently with the run in the banks.
That would do things like increase the tax bill for the Bank on a spin.
With interest rates rising, financing costs for an acquirer are going to be changing.
So, there's a multitude of those of factors that we continue to look at, and our current view is that we have not seen a compelling case for our shareholders to move ahead with any different structure in the Company.
Thank you, <UNK>.
It's been an honor and a privilege.
Thanks, <UNK>.
Hi.
Very kind.
Thank you.
No, if you actually go back and look at the utility balance sheet, it has always been at around the 58% level.
And if we look in the appendix slides, you will see that that matches up with the approved capital structure for the utility that has existed for many years in our rate case.
So, you'll see about 56% common, about a 1% preferred.
You get close to 58%.
But that's the utility.
We may have confused you when we talked about the higher equity capitalization of the Holding Company, owing to the receipt of the termination fee and the release of the special dividend fund in July of last year on the breakage of the transactions.
That in turn allowed us to pay down all short-term debt.
We eliminated about $80 million of commercial paper.
Hence, the equity capitalization level on a consolidated basis went up by six or seven points.
That's why we're HEI level, we're about 56% now, but the utility's balance sheet, as <UNK> said, has been static for quite so many years.
Good observation.
We don't need equity even our dividend reinvestment plan equity, which we ordinarily receive as perhaps a 1% dilution.
So, no equity in 2017 and 2018.
We may even be able to go a little longer.
It just really depends on the pace and level of CapEx approvals that the utility's able to execute.
What will happen with time is like a seesaw, that equity capitalization will reduce a little bit as debt comes in in the near term to finance the activities.
We typically run at the Holding Company level about 50% equity.
Right now, we're quote, unquote, over-equitized at about 56%, due to what I said earlier about the release of the special dividend fund and the receipt of the merger termination fee.
$30 million.
We closed it in early December, actually, $30 million.
That covers three quarters, and then we switched to open market purchases in the fourth quarter.
We've been running $35 million to $40 million on a regular basis.
As <UNK> said, last year, $30 million, three quarters.
Yes, so with the reduction in the short-term debt, we have about $300 million of LTD outstanding, and the consolidated cost of that LTD is running just south of 3% pretax.
Modest.
As you know, there has been some reform here.
We're still going through a docket to see the next phase of rooftop private solar in our state.
But things are moving along.
The Company is working with stakeholders to see what's possible.
We have a lot of private solar in our PSIP, as you will see.
It's really coming up with regulatory programs that will benefit all customers.
I'll add that at the bottom of page 3, we've got 15% of customers that have solar PV.
We're up to just south of 600 megawatts there.
Very substantial for a grid of our size.
You may or may not remember that it was a reform, as <UNK> calls it, in October of 2015, where the net energy metering program, as it was constituted, was closed, and limits were set, and a mechanism that changed the pricing for the purchase of those kilowatt hours was changed and reduced, as well.
And it was a cap put on the program.
So, <UNK>'s really referring to the go-forward, what happens to that program next as the program has been subscribed and changed already.
Forgive me if I ---+ I thought that's what you were asking.
In the future, there's aspects for more private solar, but maybe more controllability with advanced inverters, once the smart grid is actually out there, the two-way communications for distributed generation, how it all fits in with our demand-response programs, as well.
So, it's a wholly-integrated plan to get to 100% renewable, not focused specifically on any specific resource.
I'd add that the power supply improvement plan that we filed does have significant room for increased private solar going forward into the future.
And we do expect that that will continue to be a major component of renewable generation in Hawaii.
Thanks.
Before you get off, let me just go back and talk a little bit about your question on Holding Company debt and interest deductibility, because as you know, taxes are done on a consolidated basis.
So, in our case, you also have to consider the fact that we do have the Bank, which has significant interest income, and of course that ---+ those tax discussions have been talking about netting interest income and interest expense.
I just want to make sure you don't lose sight of that piece of it, as well.
Hi, <UNK>.
All right.
We continued throughout the year to opportunistically get out of some of the exposures.
So, we continued.
Probably 4Q was about $10 million of additional.
So, for the year-end total, just north of $90 million.
On a profitable basis.
We got out of all of them in 2016.
All were profitable, and we got out above our basis.
Selectively, we don't think the decline will be anything like what you saw.
We feel pretty good about where we are with what's left.
There are always prunings of the portfolio as we look at the relative risk and opportunity in the exposures, and the timing of that against new originations.
So, you may see some volatility in the quarter, but not a big shift.
No.
We're through the conversion.
We're into ongoing production mode.
We're realizing the ongoing savings on a run rate basis against where we were before.
So, we have the ongoing normal course upgrades that we'll do as the platform evolves, but we're through that implementation.
We always have year-end true-ups on performance compensation that comes in based on how the year is for all of our production teams and that.
There's a little bit of that in there.
Otherwise, the fourth quarter didn't have any meaningful one-time items.
Yes.
We are baselining one more ---+ one bump this year on the timing.
That's it.
Otherwise, we tend to not do our own.
We use external forecasters and guys like you to tell us what's going to happen, because if we were smart enough about it, we'd have your job.
So, we're looking at one more bump during the year on the Fed rate.
It was a November pay down.
We'll see a little of that ripple through a little bit more on the run rate.
We're expecting a slight decline in production that will affect the split.
We haven't yet gotten our heads around where it's going to affect more, the jumbo or the saleable.
The way we see it, rolling through, we tend to sell about 40% of our production as we work to remix the book.
We're holding that flat now as we go into the year, but on lower production, so we'll see a decline in the mortgage banking income.
Thanks, <UNK>.
I'm not going to be far from American.
That's for sure.
I'll start, <UNK>.
Thank you very much for your wishes.
I'll start, referring to slide 25 in the deck, which explains where we are vis-a-vis the allowed, and what, as it were, fixable of the possible matter from the rate cases.
We're very early on from the rate cases, so it's really hard to describe or prejudge any of those matters that might actually occur.
But we tried to anticipate your question by showing you what is possible here, and I could probably leave it at that by showing you eight or so elements of where we stand from the 9.8%.
As you know, we printed the 8.1%.
So, there's quite a gap, 170 basis points.
This decomposition provides you a sense of what's possible and what is not possible, based on the current structure.
The utility team is fine with that explanation.
Yes.
Looking at items one, two and three, the possible as it were, the non-recovery items ---+ sorry, the impossible items are pictured on the left-hand side; non-recovery of incentive comp, short-term interest rate on the outstanding RBA balance, that was already fixed in a prior proceeding.
And this matter that we've actually been spending quite a lot of time on so far is the RAM revenue accrual delay, I'll call it, the June 1.
So, those are the items on the order of 50 basis points here, identified in those three, labeled as such, 1, 2, 3, that are currently hard-wired, as it were.
I'll call it that.
Proceeding to the right-hand side, the plant add-ons over the RAM cap are applied for, and can be fixed.
The O&M in excess of the test year RAM, the pension assets there trued-up to test-year levels are a very important item for us, because (technical difficulty) for six years now.
Quite a long time, and so forth.
So, that gives you a flavor here.
I hope the slide is helpful in that regard.
So, the right-hand side are really the things that the mandatory three-year rate case basically true-up is meant to address.
So, these are the things that happen during ---+ in between a rate case, when we only have the RAM-type adjustment mechanisms, ECAT going, and so these things can be addressed in rate cases.
That's contained here.
Can I speak, <UNK>.
Sure.
On the ROE guidance, we didn't give any guidance, because there's a lot of uncertainty with our impending rate cases.
We're going through that process now.
It's very difficult to determine what that ROE would be.
Well, let me just correct you on one thing, <UNK>, is that, remember on that down $0.10, $0.13 of that is the difference in that RAM accrual, the change in the timing on the RAM accrual.
It does impact our ROE calculations.
Right.
It does.
But the point is that, given ---+
You're quite right.
I would say that, however, given the puts and takes that could happen in the rate case, we didn't want to go further and speculate what could be the outcomes of the rate case that could.
I could confirm that the adjustment of the $0.13 puts it in the 7% range, right.
But what I can't ---+
Just to balance the answer, I can confirm that that would be the negative effect.
What we don't know is, what are the other adjustable items coming out of the rate case.
That's the imprecision right now.
Thanks, <UNK>.
